Chapter

KUWAIT

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: April 5, 1963.
Exchange Arrangement
CurrencyThe currency of Kuwait is the Kuwaiti dinar.
Exchange rate structureUnitary.
Classification
Conventional pegged arrangementThe external value of the Kuwaiti dinar is determined on the basis of a special weighted basket of currencies of Kuwait’s trade and financial partners. The Central Bank of Kuwait (CBK) sets the exchange rate vis-à-vis the dollar on the basis of the latest market quotations in relation to the other currencies included in the basket.
Exchange taxNo.
Exchange subsidyNo.
Forward exchange marketYes.
Official cover of forward operationsOfficial coverage is extended to forward contracts related to commercial transactions.
Arrangements for Payments and Receipts
Prescription of currency requirementsNo.
Payment arrangements
Regional arrangementsGCC central banks maintain a regional arrangement to exchange GCC banknotes.
Barter agreements and open accountsYes.
Administration of controlThere is no exchange control, and both residents and nonresidents may freely purchase and sell foreign exchange. All trade with Israel is prohibited. Payments may not be made to or received from Israel for any type of transaction.
International security restrictionsNo.
Payment arrearsNo.
Controls on trade in gold (coins and/or bullion)
Controls on external tradeMonetary authorities and merchants registered with the Ministry of Commerce and Industry (MCI) may import and export gold in any form if such gold is at least 18-karat fine; gold jewelry may not be imported or sold unless it is properly hallmarked. Jewelry and precious metals in any form, manufactured or unmanufactured, are subject to an import duty of 4%.
Controls on exports and imports of banknotesNo.
Resident Accounts
Foreign exchange accounts permittedYes.
Held domesticallyYes.
Held abroadYes.
Accounts in domestic currency convertible into foreign currencyYes.
Nonresident Accounts
Foreign exchange accounts permittedYes.
Domestic currency accountsYes.
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 importsNo.
Import licenses and other nontariff measuresImport licenses are required for all commercial imports other than fresh fruits and vegetables. Licenses, except for wheat and flour, are issued freely to registered Kuwaiti merchants and companies. To be registered, the importer must be either a Kuwaiti citizen, a firm in which all partners are Kuwaiti nationals, or a shareholding or limited liability company in which Kuwaiti nationals own at least 51% of the stock.
Negative listThe importation of oxygen, certain steel and asbestos pipes, pork and foodstuffs containing pork, alcoholic beverages, used vehicles over five years old, portable telephones, chewing tobacco, and gas cylinders is prohibited.
Open general licensesImports of industrial equipment, machinery, and their spare parts require industrial licenses valid for onetime use only. Licenses are issued to registered and licensed industrial establishments with the approval of the Industrial Development Commission at the MCI. Private imports of personal objects may be permitted under individual or specific licenses. Registered importers handling a variety of commodities may obtain a general license valid for one year. Other importers must obtain specific licenses for individual commodities, which are also valid for one year.
Other nontariff measuresGovernment procurement policies grant preferences to Kuwaiti-produced goods up to a price margin of 5% over goods produced in other GCC countries, and 10% over goods produced in non-GCC countries.
Import taxes and/or tariffsKuwait applies the uniform tariff structure of the GCC. A minimum tariff of 4% applies to non-GCC imports, while no tariffs apply to imports with at least 40% local value added from other GCC members. Imports of foodstuffs, as well as some machinery and equipment, spare parts, and raw materials are exempt from import duties. Kuwait applies higher tariffs in industries where domestic producers cater to at least 40% of the local market. Tariff rates differ depending on the domestic value-added content of the products in question. If the domestically produced goods contain at least 20%, 30%, or 40% of domestic value added, protective duties of 15%, 20%, and 25%, respectively, may be applied to competing imports. The degree of protection given by the formula is reduced by 5% in the case of consumer goods. The maximum duty imposed on products that compete with locally manufactured goods is 100%.
State import monopolyNo.
Exports and Export Proceeds
Repatriation requirementsNo.
Financing requirementsNo.
Documentation requirementsNo.
Export licensesExports of live sheep and poultry, sugar, fats, rice, meat, eggs, milk, cheese, butter, olive oil, fresh fruits, vegetables in any form, beans, lentils, chickpeas, jams, and cement may be prohibited in time of emergency or shortage in Kuwait. These items may be exported in limited quantities only under a special license issued by the MCI. Exports of arms and ammunition also require licenses.
With quotasYes.
Export taxesNo.
Payments for Invisible Transactions and Current Transfers
Controls on these transfersNo.
Proceeds from Invisible Transactions and Current Transfers
Repatriation requirementsNo.
Restrictions on use of fundsNo.
Capital Transactions
Controls on capital and money market instrumentsThe listing of foreign stocks and bonds on the Kuwait Stock Exchange is subject to the approval of the Exchange Committee.
On capital market securities
Shares or other securities of a participating nature
Purchase locally by nonresidentsGCC nationals are allowed to purchase local stocks up to a certain limit. Other nonresidents are not allowed to purchase capital market securities, namely, stocks. However, nonresidents may purchase local treasury bills and bonds through local banks and investment companies.
Sale or issue locally by nonresidentsYes.
Bonds or other debt securities
Sale or issue locally by nonresidentsYes.
Sale or issue abroad by residentsControls apply to banks and financial institutions subject to CBK supervision.
On money market instruments
Sale or issue locally by nonresidentsYes.
On collective investment securities
Purchase locally by nonresidentsYes.
Sale or issue locally by nonresidentsYes.
Controls on derivatives and other instruments
Purchase locally by nonresidentsYes.
Sale or issue locally by nonresidentsYes.
Controls on credit operationsNo.
Controls on direct investment
Inward direct investmentGovernment agreement is necessary for the participation of nonresident capital in resident corporations in Kuwait; foreign participation in new Kuwaiti companies must be less than 49%. The participation of GCC nationals in companies established in Kuwait may reach up to 75% of the capital, and there are no restrictions on participation in retail trade enterprises by non-Kuwaiti GCC nationals.
Controls on liquidation of direct investmentNo.
Controls on real estate transactions
Purchase locally by nonresidentsOnly GCC nationals may purchase real estate for private residence purposes of up to 3,000 square meters.
Sale locally by nonresidentsYes.
Controls on personal capital movementsNo.
Provisions specific to commercial banks and other credit institutions
Borrowing abroadControls apply to the sale or issue of bonds or other debt securities abroad.
Lending to nonresidents (financial or commercial credits)Yes.
Differential treatment of deposit accounts in foreign exchange
Liquid asset requirementsYes.
Interest rate controlsYes.
Differential treatment of deposit accounts held by nonresidents
Liquid asset requirementsYes.
Open foreign exchange position limits
On resident assets and liabilitiesOpen foreign exchange position limits may not exceed 10% of a bank’s capital, and in some cases, lower limits are set.
Provisions specific to institutional investorsNo.
Other controls imposed by securities lawsNo.
Changes During 1999
No significant changes occurred in the exchange and trade system.

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