Chapter

GUINEA-BISSAU

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 1, 1997.
Exchange Arrangement
CurrencyThe currency of Guinea-Bissau is the CFA franc.
Exchange rate structureUnitary.
Classification
Exchange arrangement with no separate legal tenderThe CFA franc is pegged to the euro, the intervention currency, at the fixed rate of CFAF 100 per €0.8385. Exchange rates for other currencies are derived from the rate for the currency concerned in the Paris foreign exchange market and the fixed rate between the euro and the CFA franc.
Exchange taxThere is a bank commission of 0.25% on transfers to all countries outside the WAEMU, which must be surrendered in its entirety to the Treasury.
Exchange subsidyNo.
Forward exchange marketEffective February 1, 1999, residents were authorized to contract forward exchange cover to settle payments related to imports and exports of goods and services.
Official cover of forward operationsYes.
Arrangements for Payments and Receipts
Prescription of currency requirementsBecause Guinea-Bissau is linked to the French Treasury through an Operations Account, settlements with France, Monaco, and other Operations Account countries (WAEMU and CAEMC members and the Comoros) are made in CFA francs, euros, or the currency of any other Operations Account country. Certain settlements are channeled through special accounts. Settlements with all other countries are usually effected either through correspondent banks in France in the currencies of those countries or in euros through foreign accounts in euros.
Payment arrangements
Bilateral payment arrangements
InoperativeYes.
Regional arrangementsAn Operations Account is maintained with the French Treasury that links Operations Account countries. All purchases or sales of foreign currencies or euros against CFA francs are ultimately settled through a debit or credit to the Operations Account.
Administration of controlExchange control is administered by the Directorate of the Treasury in the MOF. The approval authority for exchange control (except for imports and exports of gold, forward exchange cover, and the opening of external accounts in foreign currency) has been delegated to the BCEAO, which is also authorized to collect—either directly or through banks, financial institutions, the Postal Administration, or judicial agents—any information necessary to compile the balance of payments statistics.
All exchange transactions relating to foreign countries must be effected through authorized banks, the Postal Administration, or the BCEAO. Settlements with a country outside the Operations Account area must be formally approved by the customs administration. Effective February 1, 1999, the amount of transfers authorized without supporting documentation was raised to CFAF 300,000 from CFAF 100,000.
International security restrictionsNo.
Payment arrears
OfficialYes.
Controls on trade in gold (coins and/or bullion)
Controls on external tradeExports and imports of gold are prohibited unless expressly authorized.
Controls on exports and imports of banknotes
On exports
Domestic currencyThe exportation of CFA franc banknotes by nonresident travelers is not prohibited. However, repurchases by the BCEAO of exported banknotes are suspended. In addition, shipments of BCEAO banknotes among authorized intermediaries and their correspondents situated outside the WAEMU are officially prohibited.
Foreign currencyThe reexportation of foreign banknotes by nonresident travelers is allowed up to the equivalent of CFAF 500,000; the reexportation of foreign banknotes above these ceilings requires documentation demonstrating either the importation of the foreign banknotes or their purchase against other means of payment registered in the name of the traveler or through the use of nonresident deposits lodged in local banks.
On imports
Domestic currencyThere are no restrictions on the importation by resident or nonresident travelers of banknotes and coins issued by the BCEAO.
Foreign currencyResidents and nonresidents may bring in any amount of foreign banknotes and coins (except gold coins) of countries outside the Operations Account area. Residents bringing in foreign banknotes and foreign currency traveler’s checks exceeding the equivalent of CFAF 50,000 must declare them to customs upon entry and sell them to an authorized intermediary bank within eight days.
Resident Accounts
Foreign exchange accounts permittedEffective February 1, 1999, residents are allowed to open foreign exchange accounts with local banks or with banks abroad after obtaining authorization from the MOF, and with the approval of the BCEAO.
Held domesticallyThese accounts are permitted, but approval is required.
Held abroadThe holding of these accounts is not explicitly prohibited, but regulations prohibit any transfer with the aim of increasing a resident’s foreign holdings, unless approved by the MOF.
Accounts in domestic currency convertible into foreign currencyNo.
Nonresident Accounts
Foreign exchange accounts permittedEffective February 1, 1999, authorization for these accounts is issued by the BCEAO.
Domestic currency accountsBecause the BCEAO has suspended the repurchase of banknotes circulating outside the WAEMU territories, nonresident acounts may not be credited or debited with BCEAO banknotes. These accounts may not be overdrawn without the prior authorization of the MOF. Transfers of funds between nonresident accounts are not restricted.
Convertible into foreign currencyForeign accounts denominated in CFA francs may be freely debited for the purpose of purchases by nonresidents of any foreign currency on the official exchange market.
Blocked accountsNo.
Imports and Import Payments
Foreign exchange budgetNo.
Financing requirements for importsNo.
Documentation requirements for release of foreign exchange for imports
Preshipment inspectionYes.
Import licenses and other nontariff measuresAll imports, regardless of whether they involve the use of official or free market foreign exchange, require a prior import license issued by the Ministry of Commerce and Tourism, primarily for statistical purposes. Except for a short negative list, licenses are issued automatically after verification of invoice prices for goods to be taxed.
Negative listYes.
Import taxes and/or tariffsThe tariff rates are zero, 5%, 10%, 20%, and 30%.
State import monopolyNo.
Exports and Export Proceeds
Repatriation requirementsEffective February 1, 1999, proceeds from exports to WAEMU countries are no longer required to be repatriated.
Surrender requirementsExport proceeds must be surrendered within one month of the date on which payments fall due. The authorized intermediary bank must then surrender such foreign exchange to the BCEAO via transfer through the bank of issue.
Financing requirementsNo.
Documentation requirementsYes.
Export licensesAll exports require a prior export license. Only exporters registered with the Ministry of Commerce and Tourism may obtain these licenses, which are granted automatically in most cases. Prior licenses are intended primarily for statistical purposes, although they are also used to check the prices of exports. There are no products of which the exportation is reserved solely for the public sector.
Without quotasYes.
Export taxesCashew nut exports are subject to a special tax of 10%, except those to ECOWAS countries. Other agricultural exports are subject to a rural property tax of 2%.
Payments for Invisible Transactions and Current Transfers
Controls on these transfersEffective February 1, 1999, payments and incomes of foreign ships in the WAEMU zone and WAEMU ships abroad are included under current operations.
Investment-related paymentsInformation is not available for payment of amortization of loans or depreciation of direct investments.
Payments for travel
Indicative limits/bona fide testEffective February 1, 1999, limits on foreign exchange allowances were eliminated. The threshold of foreign exchange to be surrendered by residents after travel was raised to CFAF 300,000 from CFAF 50,000.
Personal paymentsInformation is not available for payment of pensions, family maintenance, or alimony.
Foreign workers’ wages
Indicative limits/bona fide testYes.
Proceeds from Invisible Transactions and Current Transfers
Repatriation requirementsYes.
Surrender requirementsEffective February 1, 1999, all amounts due from residents of other countries in respect of services and all incomes earned in those countries from foreign assets must be collected and surrendered within one month of the due date or the date of receipt.
Restrictions on use of fundsNo.
Capital Transactions
Controls on capital and money market instrumentsOutward capital transfers are subject to authorization from the MOF, and a maximum of 75% of investment abroad may be financed by foreign loans. The liquidation of foreign investment is subject to reporting to the MOF, and the reinvestment of proceeds is subject to prior authorization. If no authorization is given for the reinvestment, the proceeds in foreign exchange must be surrendered to an authorized intermediary bank within one month.
Capital transfers to the WAEMU member countries are unrestricted, except for direct investments, which are subject to prior declaration, as are certain borrowing operations. Prior authorization is waived, however, in the following cases: (1) borrowing guaranteed by the government of Guinea-Bissau; and (2) foreign shares that are similar to securities, the issuance, public announcement, or sale of which has already been approved in Guinea-Bissau. There is also special surveillance of calls for subscribed funds for purposes of deposit with foreign nationals, corporations, or institutions, as well as of any public announcement for the purpose of investing funds abroad or subscribing to foreign construction or real estate operations. These special provisions also apply to France, Monaco, and Operations Account countries.
On capital market securities
Shares or other securities of a participating nature
Sale or issue locally by nonresidentsYes.
Purchase abroad by residentsYes.
Sale or issue abroad by residentsResidents are free to sell the shares of resident companies abroad. If the effect of such operations is to place resident Guinea-Bissau companies under foreign control, the foreign investors must make a prior declaration to the MOF.
Bonds or other debt securities
Purchase abroad by residentsYes.
Sale or issue abroad by residentsYes.
On money market instruments
Sale or issue locally by nonresidentsYes.
Purchase abroad by residentsYes.
Sale or issue abroad by residentsYes.
On collective investment securities
Purchase abroad by residentsYes.
Sale or issue abroad by residentsYes.
Controls on derivatives and other instrumentsThese investments are governed by the regulations generally applicable to securities and investments, except for commodity and security call and put options, which residents may freely purchase abroad.
Purchase abroad by residentsYes.
Controls on credit operations
Commercial credits
By residents to nonresidentsThere are no controls on credits related to exports of goods, provided that the date on which payment falls due is not more than 180 days after the goods arrive at their destination. There are no controls on credits in connection with services rendered. In these cases, no deadline is set for the date on which payment falls due.
To residents from nonresidentsThere are no controls, and repayments of commercial credits are generally approved, subject to the presentation of documents attesting to the validity of the commercial operation or of the services rendered.
Financial credits
By residents to nonresidentsYes.
To residents from nonresidentsIf such transactions take place between a direct investment company established in Guinea-Bissau and its parent company situated abroad, the transactions are regarded as direct investments and are therefore subject to prior declaration to the MOF.
Guarantees, sureties, and financial backup facilities
By residents to nonresidentsYes.
Controls on direct investment
Outward direct investmentYes.
Inward direct investmentThe Investment Code provides for incentives to investments and protection against the nationalization and expropriation of assets.
Controls on liquidation of direct investmentNo.
Controls on real estate transactionsYes.
Controls on personal capital movements
Loans
By residents to nonresidentsThese transactions are subject to authorization of the MOF.
To residents from nonresidentsLoans from nonresidents require notification to the MOF.
Gifts, endowments, inheritances, and legacies
By residents to nonresidentsThese transactions are subject to authorization of the MOF.
Settlement of debts abroad by immigrantsThese transactions are subject to authorization of the MOF.
Transfer of assets
Transfer abroad by emigrantsThese transactions are subject to authorization of the MOF.
Transfer into the country by immigrantsThese transactions require notification to the MOF.
Provisions specific to commercial banks and other credit institutions
Lending to nonresidents (financial or commercial credits)There are no controls if these operations involve commercial credits. Effective February 1, 1999, other loans granted to nonresidents are subject to the prior authorization of the MOF, after the approval of the BCEAO.
Lending locally in foreign exchangeThe same regulations apply as for lending to residents.
Purchase of locally issued securities denominated in foreign exchangeThe same regulations apply as for lending to residents.
Differential treatment of deposit accounts in foreign exchange
Credit controlsYes.
Differential treatment of deposit accounts held by nonresidentsMonetary regulations make no distinction between resident deposit accounts, nonresident deposit accounts, and foreign deposit accounts.
Investment regulationsYes.
Open foreign exchange position limitsYes.
Provisions specific to institutional investorsEffective February 1, 1999, controls are imposed by the insurance code of the Inter-African Conference on Insurance Markets.
Other controls imposed by securities lawsn.a.
Changes During 1999
Exchange arrangementJanuary 1. The CFA franc peg to the French franc was replaced by a peg to the euro.
February 1. Residents were authorized to contract forward exchange cover to settle payments related to imports and exports of goods and services.
Arrangements for payments and receiptsFebruary 1. The amount of transfers authorized without supporting documentation was raised to CFAF 300,000 from CFAF 100,000.
Resident accountsFebruary 1. Residents were allowed to open foreign exchange accounts with local banks or with banks abroad after obtaining authorization from the MOF and with the approval of the BCEAO.
Nonresident accountsFebruary 1. The authorization to open nonresident accounts must be issued by the BCEAO.
Exports and export proceedsFebruary 1. Proceeds from exports to WAEMU countries are no longer required to be repatriated.
Payments for invisible transactions and current transfersFebruary 1. Payments and incomes of foreign ships in the WAEMU zone and WAEMU ships abroad are included under current operations.
February 1. Limits on foreign exchange allowances were eliminated. The threshold of foreign exchange to be surrendered by residents after travel was raised to CFAF 300,000 from CFAF 50,000.
Proceeds from invisible transactions and current transfersFebruary 1. All amounts due from residents of other countries in respect of services and all incomes earned in those countries from foreign assets must be collected and surrendered within one month of the due date or the date of receipt.
Capital transactions
Provisions specific to commercial banks and other credit institutionsFebruary 1. Except for commercial credits, loans granted to nonresidents are subject to the prior authorization of the MOF, after the approval of the BCEAO.
Provisions specific to institutional investorsFebruary 1. Restrictions are imposed by the Insurance Code of the Inter-African Conference on Insurance Markets.

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