Chapter

DOMINICA

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: December 13, 1979.
Exchange Arrangement
CurrencyThe currency of Dominica is the Eastern Caribbean dollar, issued by the ECCB.
Exchange rate structureUnitary.
Classification
Exchange arrangement with no separate legal tenderThe Eastern Caribbean dollar is pegged to the U.S. dollar, the intervention currency, at ECS2.70 per US$1.
Exchange taxNo.
Exchange subsidyNo.
Forward exchange marketNo.
Arrangements for Payments and Receipts
Prescription of currency requirementsSettlements with residents of the territories participating in the ECCB Agreement must be made in Eastern Caribbean dollars; those with member countries of the CARICOM must be made in the currency of the CARICOM country concerned. Settlements with residents of other countries may be made in any foreign currency that is acceptable to the country where the settlement is being made.
Payment arrangements
Regional arrangementsDominica is a member of the CARICOM.
Clearing agreementsAs a member of CARICOM, Dominica participates in the CMCF.
Administration of controlExchange control is administered by the MOF and applies to all countries outside the ECCB area. The MOF has delegated to commercial banks certain powers to approve sales of foreign currencies but requires that any individual foreign currency transaction in excess of EC$250,000 must be approved by the MOF. The Ministry of Trade administers import and export arrangements and controls.
International security restrictionsTrade with Iraq is prohibited.
In accordance with UN sanctionsYes.
Payment arrears
OfficialYes.
Controls on trade in gold (coins and/or bullion)
Controls on domestic ownership and/or tradeResidents are permitted to acquire and hold gold coins for numismatic purposes only.
Controls on external tradeSmall quantities of gold may be imported for industrial purposes only with the approval of the MOF.
Controls on exports and imports of banknotes
On exports
Domestic currencyThe exportation of Eastern Caribbean dollar notes and coins outside the ECCB area is limited to amounts prescribed by the ECCB.
Resident Accounts
Foreign exchange accounts permittedYes.
Held domesticallyThese accounts are normally confined to major exporters and may only be credited with foreign currencies obtained abroad. Payments from these accounts do not require approval.
Held abroadNo.
Accounts in domestic currency convertible into foreign currencyYes.
Nonresident Accounts
Foreign exchange accounts permittedThese accounts are permitted, but approval is required.
Domestic currency accountsYes.
Convertible into foreign currencyFor any single transaction in excess of EC$250,000, approval from the MOF is required.
Blocked accountsNo.
Imports and Import Payments
Foreign exchange budgetNo.
Financing requirements for importsNo.
Documentation requirements for release of foreign exchange for importsPayments for authorized imports are permitted upon presentation of documentary evidence of purchase to a commercial bank.
Letters of creditYes.
Import licenses and other nontariff measuresAll imports from Iraq are prohibited.
Negative listImports of specified goods originating elsewhere than OECS countries, Belize, and CARICOM countries require a license. Imports of a subset of these goods from the more developed countries of CARICOM (Barbados, Guyana, Jamaica, and Trinidad and Tobago) also require a license.
Open general licensesApplicable to public health and safety goods.
Licenses with quotasThere are certain quantitative restrictions on imports of beverages, flour, and margarine; quotas are allocated to traditional importers based on their historical market shares.
Import taxes and/or tariffsDominica applies the CET of CARICOM. Effective January 1, 1999, most rates are ad valorem, with the maximum rates having been reduced to 25% from 30%. Lower rates apply to machinery (zero to 15%) and some essential foodstuffs (10% to 15%), while higher rates apply to domestic appliances (25% to 40%) and motor vehicles (25% to 45%). Specific duties are applied to some goods. Imports are also subject to a 1% customs service charge. On January 1, 2000, the fourth phase of the CARICOM CET went into effect.
State import monopolyBulk imports of sugar and rice are effected by a state agency.
Exports and Export Proceeds
Repatriation requirementsYes.
Surrender requirementsThe conversion of export proceeds to an ECCB currency account is mandatory, unless the exporter has a foreign currency account into which the proceeds may be paid.
Financing requirementsn.a.
Documentation requirementsNo.
Export licensesExports to Iraq are prohibited, and specific licenses are required for the exportation of protected plant and animal species to any destination.
Without quotasYes.
Export taxesBananas exported by the Dominica Banana Marketing Corporation are subject to a levy of 1% if the export price is between EC$0.55 and EC$0.60 a pound; if the export price exceeds ECS0.60 a pound, an additional levy equivalent to 25% of the excess is imposed.
Payments for Invisible Transactions and Current Transfers
Controls on these transfersCommercial banks are authorized to sell foreign currency in amounts up to EC$250,000. Amounts over this limit require approval by the MOF, which is generally granted. Remittances of pensions, family maintenance funds, and subscriptions and membership fees are not subject to controls.
Trade-related payments
Prior approvalYes.
Quantitative limitsYes.
Indicative limits/bona fide testYes.
Investment-related payments
Prior approvalYes.
Quantitative limitsYes.
Indicative limits/bona fide testYes.
Payments for travel
Prior approvalYes.
Quantitative limitsYes.
Indicative limits/bona fide testYes.
Personal paymentsThere are controls on the payment of medical costs and studies abroad.
Prior approvalYes.
Indicative limits/bona fide testBona fide tests apply to the payment of medical costs.
Foreign workers’ wages
Prior approvalEarnings of foreign workers may be remitted after settlement of all taxes or other public liabilities.
Credit card use abroad
Prior approvalYes.
Quantitative limitsYes.
Indicative limits/bona fide testYes.
Other paymentsThere are no controls on subscriptions and membership fees.
Prior approvalYes.
Quantitative limitsYes.
Indicative limits/bona fide testYes.
Proceeds from Invisible Transactions and Current Transfers
Repatriation requirementsYes.
Surrender requirementsForeign currency proceeds from these transactions must be sold to a bank or deposited into a foreign currency account.
Restrictions on use of fundsNo.
Capital Transactions
Controls on capital and money market instrumentsAll outward transfers of capital in excess of EC$250,000 require MOF approval.
On capital market securities
Shares or other securities of a participating nature
Purchase abroad by residentsYes.
Bonds or other debt securities
Purchase abroad by residentsYes.
On money market instruments
Purchase abroad by residentsYes.
On collective investment securities
Purchase abroad by residentsYes.
Controls on derivatives and other instrumentsn.a.
Controls on credit operationsAll credit operations by residents to nonresidents require MOF approval.
Commercial credits
By residents to nonresidentsYes.
Financial credits
By residents to nonresidentsYes.
Guarantees, sureties, and financial backup facilities
By residents to nonresidentsYes.
Controls on direct investment
Outward direct investmentYes.
Inward direct investmentNonresidents are generally required to have an alien landholding license to hold shares in private and public companies and to hold property.
Controls on liquidation of direct investmentProceeds may be remitted after the discharge of any related liabilities.
Controls on real estate transactions
Purchase abroad by residentsYes.
Purchase locally by nonresidentsAn alien landholding license is required.
Controls on personal capital movements
Loans
By residents to nonresidentsYes.
Gifts, endowments, inheritances, and legacies
By residents to nonresidentsYes.
Settlement of debts abroad by immigrantsYes.
Transfer of assets
Transfer abroad by emigrantsYes.
Transfer of gambling and prize earningsYes.
Provisions specific to commercial banks and other credit institutions
Lending to nonresidents (financial or commercial credits)MOF approval is required.
Lending locally in foreign exchangeThese transactions are generally not permitted.
Provisions specific to institutional investorsNo.
Other controls imposed by securities lawsNo.
Changes During 1999
Imports and import paymentsJanuary 1. The maximum import tariff under the CARICOM CET was reduced to 25% from 30%.
Changes During 2000
Imports and import paymentsJanuary 1. The fourth phase of the CARICOM CET went into effect.

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