Chapter

CZECH REPUBLIC

Author(s):
International Monetary Fund. Monetary and Capital Markets Department
Published Date:
September 2000
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Status Under IMF Articles of Agreement
Article VIIIDate of acceptance: October 1, 1995.
Exchange Arrangement
CurrencyThe currency of the Czech Republic is the Czech koruna.
Exchange rate structureUnitary.
Classification
Managed floating with no pre-announced path for the exchange rateThe external value of the koruna is determined by supply and demand conditions in the foreign exchange market. The Czech National Bank (CNB) may intervene in the foreign exchange market in order to smooth large intraday volatility swings of the euro/koruna rate. The CNB publishes daily rates of some selected currencies against the koruna for customs and accounting purposes. Commercial banks set their own exchange rate with no limitation.
Exchange taxNo.
Exchange subsidyNo.
Forward exchange marketYes.
Arrangements for Payments and Receipts
Prescription of currency requirementsNo.
Payment arrangements
Regional arrangementsThe Czech Republic is a member of the CEFTA.
Administration of controlThe MOF and the CNB are responsible for the administration of exchange controls and regulations, in accordance with the Foreign Exchange Act. In general, the MOF exercises authority over ministries and other administrative authorities, municipal authorities, budgetary organizations, state funds, and all types of credits being extended to or accepted by the Czech Republic. The CNB exercises authority over the activities of all other agents.
International security restrictions
In accordance with UN sanctionsYes.
Payment arrearsNo.
Controls on trade in gold (coins and/or bullion)
Controls on domestic ownership and/or tradeGold bullion may, with some exceptions, be traded only with authorized agents (generally banks). Trade in gold coins is free.
Controls on external tradeThe export and import of gold bullion and/or more than 10 gold coins must be reported.
Controls on exports and imports of banknotesThere are reporting obligations on exports and imports exceeding CZK 200,000.
On exports
Domestic currencyYes.
Foreign currencyYes.
On imports
Domestic currencyYes.
Foreign currencyYes.
Resident Accounts
Foreign exchange accounts permittedYes.
Held domesticallyYes.
Held abroadApproval is required with some exceptions.
Accounts in domestic currency convertible into foreign currencyYes.
Nonresident Accounts
Foreign exchange accounts permittedForeign exchange may be deposited freely, and payments may be made from these accounts in the Czech Republic or abroad without restriction.
Domestic currency accountsDomestic currency accounts may be opened with commercial banks in koruny. Balances on these accounts may be used freely to make payments in the Czech Republic. All transfers abroad from these accounts may be made freely.
Convertible into foreign currencyYes.
Blocked accountsThere are blocked accounts on the basis of an embargo against the Islamic State of Afghanistan and the Federal Republic of Yugoslavia (Serbia/Montenegro).
Imports and Import Payments
Foreign exchange budgetNo.
Financing requirements for importsNo.
Documentation requirements for release of foreign exchange for importsForeign invoices may be settled only through bank transfers.
Import licenses and other nontariff measures
Negative listYes.
Open general licensesImport licenses are required for a few strategic items, such as uranium ore and its concentrates, coal, natural gas, poisons, military materials, firearms and ammunition, dual-use goods and technologies, narcotics, and clothing (excluding imports from the EU and the EFTA). In addition, an automatic licensing system accompanied by levies applies to some agricultural products, mineral fuel and oils, iron and steel and their products, and some chemical products.
Licenses with quotasImports of hard coal (from Poland and Ukraine), uranium ore and its derivatives, and technological components containing uranium are subject to licenses with quotas.



Imports of cane sugar or beet sugar and chemically pure saccharase from the Slovak Republic were subject to tariff quotas of 3,500 tons for 1999.



Imports of isoglucose from the Slovak Republic were subject to tariff quotas of 5,000 tons for 1999.
Import taxes and/or tariffsAll imports are subject to an ad valorem customs duty of up to 31.5% for industrial goods and up to 146.5% for agricultural goods. Imports are also subject to a value-added tax of 5% or 22%. Imports from the Slovak Republic are exempt from customs duties under a customs union agreement. Imports from developing countries are granted preferences.
State import monopolyNo.
Exports and Export Proceeds
Repatriation requirementsYes.
Financing requirementsNo.
Documentation requirementsNo.
Export licenses
Without quotasThe Ministry of Industry and Trade, after approval by the Ministry of Foreign Affairs, the Ministry of Defense, and the Ministry of the Interior, grants export licenses for armaments. A limited number of products require export licenses for purposes of health control (including livestock and plants); facilitating voluntary restraints on products on which partner countries have imposed import quotas (such as textiles and steel products); or preserving for the internal market natural resources or imported raw materials (such as energy, metallurgical materials, wood, foodstuffs, pharmaceutical products, and construction materials). For the two latter groups of products, neither quantitative nor value limits are in force.
Export taxesNo.
Payments for Invisible Transactions and Current Transfers
Controls on these transfers
Trade-related paymentsn.r.
Investment-related paymentsRemittance of in vestment-related payments is permitted, once tax obligations have been met.
Payments for traveln.r.
Personal paymentsn.r.
Foreign workers’ wagesn.r.
Credit card use abroadn.r.
Other paymentsn.r.
Proceeds from Invisible Transactions and Current Transfers
Repatriation requirementsYes.
Restrictions on use of fundsNo.
Capital Transactions
Controls on capital and money market instrumentsEffective January 1, 1999, controls were eliminated on most of the operations in foreign securities.
On capital market securitiesCNB bonds may be purchased only by resident institutional investors.
Shares or other securities of a participating nature
Purchase locally by nonresidentsThe purchase of shares and other securities of a participating nature may be affected by regulations on inward direct investments.
Bonds or other debt securities
Sale or issue locally by nonresidentsPrior authorization is required for nonresidents to issue debt securities.
Sale or issue abroad by residentsPrior authorization is required for issuing debt securities abroad.
On money market instruments
Sale or issue locally by nonresidentsPrior authorization is required for nonresidents to issue money market securities.
Sale or issue abroad by residentsPrior authorization is required for issuing debt securities abroad.
On collective investment securities
Sale or issue locally by nonresidentsShare certificates may be issued in the Czech Republic only by resident investors.
Sale or issue abroad by residentsShare certificates may be issued by residents having a general license to issue collective investment securities.
Controls on derivatives and other instrumentsEffective January 1, 1999, controls were eliminated on transactions in derivatives.
Controls on credit operationsEffective January 1, 1999, controls were eliminated on extending financial credits and operations with guarantees, sureties, and financial backup facilities.
Controls on direct investment
Inward direct investmentThere are restrictions on nonresidents investing in local telephone networks and services, air transport, gaming, and setting up branches of mortgage banks.
Controls on liquidation of direct investmentNo.
Controls on real estate transactions
Purchase locally by nonresidentsA nonresident who is not a citizen of the Czech Republic may acquire real estate only in the following cases: (1) by heritage; (2) for the diplomatic representation of a foreign country under the terms of reciprocity; (3) if it is real estate acquired in an unapportioned coownership of a married couple of which only one is a nonresident, or where a nonresident acquires property from a husband, wife, parents, or grandparents; (4) through the exchange of domestic real estate that the nonresident owns for other domestic real estate, the usual price of which does not exceed the usual price of the former real estate; (5) if the nonresident has a preemption by reason of a proportioned coownership of real estate; (6) if it is a construction built by a nonresident on his own land; and (7) under the terms explicitly stipulated by the Act on Mitigating the Consequences of Property Injustice. Branches of nonresident corporations may not purchase real estate.
Controls on personal capital movementsNo.
Provisions specific to commercial banks and other credit institutions
Lending locally in foreign exchangeThe range is determined by the banking license granted.
Purchase of locally issued securities denominated in foreign exchangeThe range is determined by the banking license granted.
Investment regulations
Abroad by banksn.r.
In banks by nonresidentsResident and nonresident investors are treated equally.
Open foreign exchange position limitsOpen foreign exchange limits are applied on both on- and off-balance sheet exposures and are 20% of the capital for all currencies and 15% for open koruna positions.
On resident assets and liabilitiesYes.
On nonresident assets and liabilitiesYes.
Provisions specific to institutional investorsA portfolio of securities held in a trust or in an investment fund’s assets may not be formed by more than 11% of the total nominal value of securities of one kind issued by the same issuer. Effective April 1, 2000, insurance companies and pension funds may place their assets abroad, subject to specific prudential regulations.
Limits (min.) on portfolio invested locallyYes.
Other controls imposed by securities lawsThe Securities Commissions Act of 1998 removed most controls.
Changes During 1999
Capital transactionsJanuary 1. A new government decree entered into force, eliminating most controls on capital transactions.
Controls on capital and money market instrumentsJanuary 1. Controls on operations with foreign securities were eliminated.
Controls on derivatives and other instrumentsJanuary 1. Controls on operations in derivatives were eliminated.
Controls on credit operationsJanuary 1. Controls on extending financial credits and operations with guarantees, sureties, and financial backup facilities were eliminated.
Changes During 2000
Capital transactions
Provisions specific to commercial banks and other credit institutionsApril 1. Insurance companies and pension funds may place their assets abroad, subject to specific prudential regulations.

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