Chapter

GRENADA

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: January 24, 1994.
Exchange Arrangement
CurrencyThe currency of Grenada is the Eastern Caribbean dollar, which is 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 EC$2.70 per US$1.
Exchange taxNo.
Exchange subsidyNo.
Forward exchange marketNo.
Arrangements for Payments and Receipts
Prescription of currency requirementsSettlements with residents of member countries of the CARICOM must be made either through external accounts in Eastern Caribbean dollars, in the currency of the CARICOM country concerned, or in U.S. dollars. Settlements with residents of the former Sterling Area, other than CARICOM countries, may be made in pounds sterling, in any other former Sterling Area currency, or in Eastern Caribbean dollars to and from external accounts. Settlements with residents of other countries are made in any foreign currency or through an external account in Eastern Caribbean dollars.
Payment arrangements
Regional arrangementsGrenada is a member of the CARICOM.
Clearing agreementsGrenada participates in the CMCF.
Administration of controlExchange control is administered by the MOF and applies to all countries. The MOF delegates to authorized dealers (ADs) the authority to approve some import payments and certain other outward payments. The Trade Division of the MOF administers trade control.
International security restrictions
In accordance with UN sanctionsThere are restrictions on trade relations with Libya.
Payment arrearsNo.
Controls on trade in gold (coins and/or bullion)
Controls on domestic ownership and/or tradeResidents other than the monetary authorities, ADs, and industrial users are not permitted to hold or acquire gold in any form other than jewelry or coins for numismatic purposes.
Controls on external tradeImports of gold are permitted for industrial purposes only and are subject to customs duties and charges. The MOF issues licenses to import gold. The exportation of gold is not normally permitted.
Controls on exports and imports of banknotes
On exports
Foreign currencyNonresident travelers may export, with the approval of the MOF, any foreign currency they previously brought into Grenada, and both residents and nonresidents must receive permission from the MOF to take out, in any one transaction, sums in excess of EC$250,000.
Resident Accounts
Foreign exchange accounts permittedThese accounts may be freely debited but may be credited only with foreign exchange earned or received from outside the ECCB area. Holders of these accounts must submit regular statements of debits and credits to the MOF.
Held domesticallyYes.
Held abroadn.a.
Accounts in domestic currency convertible into foreign currencyn.a.
Nonresident Accounts
Foreign exchange accounts permittedThe same regulations apply as for resident accounts.
Domestic currency accountsThese accounts must be credited with funds from an external source.
Convertible into foreign currencyYes.
Blocked accountsNo.
Imports and Import Payments
Foreign exchange budgetNo.
Financing requirements for importsNo.
Documentation requirements for release of foreign exchange for importsPayments for documented imports are free of restrictions. Payments for restricted imports and any goods and services in excess of the limits of ADs require permission from the MOF.
Letters of creditYes.
Import licenses and other nontariff measures
Negative listProhibited goods include whole chickens, chicken eggs, live breeding poultry, war toys, animal skins, and various drugs deemed to be dangerous.
Open general licensesThere are quantitative restrictions on certain items from non-CARICOM sources, including arms and ammunition; carbonated beverages; flour; industrial gas; paints; and miscellaneous items associated with furniture and the construction industry. Items from the CARICOM area that require licenses include curry products, industrial gas, furniture, and solar water heaters.
Licenses with quotasYes.
Import taxes and/or tariffsAll imports from non-CARICOM countries are subject to the following CET rates: zero for agricultural imports; 40% for agricultural products; and 15% to 25% for most other items. All imports are subject to a 5% customs service charge. Imports not granted exemptions from customs duties are subject to a general consumption tax (GCT) regime with three broad rates of 10%, 15%, and 25%. There are three additional GCT rates of 50%, 55%, and 75% that are applied to specific items such as new cars, foreign used cars, and cigarettes, respectively. An environmental levy is charged that consists of an EC$0.25 duty on each imported bottle of liquor, carbonated and noncarbonated beverages, and syrups. The levy also consists of a 1% charge on the c.i.f. of white goods (durable consumer items) and a 2% charge on the c.i.f. of imported cars. Imports of capital equipment are subject to a minimum charge of 5% under the CET and 25% under the consumption tax. However, most capital imports are granted exemptions from import duties, and all capital imports by domestic associations involved in the growing or packaging of bananas, maize, or nutmeg are exempt from import duties, provided that the imports are used for improvements in the industries. On January 1, 2000, the fourth phase of the CARICOM CET came into effect.
State import monopolyThe Marketing and National Importing Board is the sole authorized importer of bulk purchases of milk, flour, and sugar.
Exports and Export Proceeds
Repatriation requirementsYes.
Surrender requirementsProceeds must be surrendered to ADs (commercial banks) in foreign exchange.
Financing requirementsn.a.
Documentation requirementsn.a.
Export licensesSpecific licenses are required for the exportation of exotic birds, coral, mineral products, and live sheep and goats to any destination.
Without quotasYes.
Export taxesNo.
Payments for Invisible Transactions and Current Transfers
Controls on these transfersPayments for invisibles related to authorized imports are not restricted but require the approval of the MOF whenever a single transaction exceeds EC$250,000.
Trade-related payments
Prior approvalYes.
Quantitative limitsYes.
Indicative limits/bona fide testYes.
Investment-related payments
Prior approvalApproval is granted if all related liabilities have been discharged and the investment was registered with the MOF.
Quantitative limitsYes.
Indicative limits/bona fide testYes.
Payments for travel
Prior approvalYes.
Quantitative limitsYes.
Indicative limits/bona fide testYes.
Personal payments
Prior approvalFor studies abroad, MOF approval is required, and permission is usually granted on presentation of documentation of registration and the costs of tuition and other expenses. For transfer of pensions, approval is granted upon proof of immigrant status. For family maintenance and alimony payments, approval is granted upon proof of established liabilities.
Indicative limits/bona fide testYes.
Foreign workers’ wages
Prior approvalApproval is granted upon proof of immigrant status.
Indicative limits/bona fide testYes.
Other paymentsThere are no restrictions on the payment of subscriptions and membership fees.
Prior approvalMOF approval, which is granted on the basis of agreements incorporating payment for consulting and legal fees services, is required. Payments may be made up to the amount approved, subject, where applicable, to withholding on income tax.
Quantitative limitsYes.
Indicative limits/bona fide testYes.
Proceeds from Invisible Transactions and Current Transfers
Repatriation requirementsYes.
Surrender requirementsThe surrender of foreign currency proceeds from invisibles is mandatory.
Restrictions on use of fundsNo.
Capital Transactions
Controls on capital and money market instrumentsAny single outward capital transaction in excess of EC$250,000 requires exchange control approval.
On capital market securities
Shares or other securities of a participating nature
Purchase locally by nonresidentsMOF approval is required.
Sale or issue locally by nonresidentsYes.
Purchase abroad by residentsCertificates of title to foreign currency securities held by residents must be lodged with an authorized depository in Grenada, and earnings on these securities must be repatriated.
Bonds or other debt securities
Purchase locally by nonresidentsMOF approval is required.
Sale or issue locally by nonresidentsYes.
Purchase abroad by residentsYes.
On money market instruments
Sale or issue locally by nonresidentsYes.
Purchase abroad by residentsYes.
On collective investment securities
Sale or issue locally by nonresidentsYes.
Purchase abroad by residentsYes.
Controls on derivatives and other instruments
Sale or issue locally by nonresidentsYes.
Purchase abroad by residentsYes.
Controls on credit operations
Commercial credits
By residents to nonresidentsLocal currency financing is not ordinarily permitted and requires the approval of the MOF.
Financial credits
By residents to nonresidentsYes.
Controls on direct investment
Outward direct investmentYes.
Inward direct investmentCabinet approval via the Industrial Development Corporation is normally required for nonresidents operating manufacturing enterprises and hotels, and an alien landholding license is required for nonresidents to hold both financial and physical property. Nonresident labor services are generally permitted with work permits, which are issued by the Ministry of Labor.
Controls on liquidation of direct investmentRemittances of proceeds are permitted, provided that all related liabilities have been discharged and that the original investment was registered with the MOF.
Controls on real estate transactions
Purchase abroad by residentsAn alien landholding license must be issued by the Office of the Prime Minister.
Controls on personal capital movements
Loans
By residents to nonresidentsYes.
To residents from nonresidentsAny borrowing abroad by nationals to finance their domestic operations generally requires the approval of the MOF.
Gifts, endowments, inheritances, and legacies
By residents to nonresidentsYes.
Settlement of debts abroad by immigrantsYes.
Transfer of assets
Transfer abroad by emigrantsYes.
Provisions specific to commercial banks and other credit institutions
Borrowing abroadADs may freely assume short-term liability positions in foreign currencies to finance approved transfers for both trade and nontrade transactions. Any borrowing abroad by ADs to finance their domestic operations requires the approval of the MOF.
Lending to nonresidents (financial or commercial credits)Local currency financing requires the approval of the MOF but is not ordinarily permitted.
Provisions specific to institutional investorsNo.
Other controls imposed by securities lawsn.a.
Changes During 1999
No significant changes occurred in the exchange and trade system.
Changes During 2000
Imports and import paymentsJanuary 1. The fourth phase of the CARICOM CET came into effect.

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