Chapter

LITHUANIA

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: May 3, 1994.
Exchange Arrangement
CurrencyThe currency of Lithuania is the Lithuanian litas.
Exchange rate structureUnitary.
Classification
Currency board arrangementThe litas is pegged to the dollar at LTL 4 per $1 since April 1994 when the currency board arrangement was established.
Exchange taxNo.
Exchange subsidyNo.
Forward exchange marketYes.
Arrangements for Payments and Receipts
Prescription of currency requirementsNo.
Payment arrangements
Bilateral payment arrangements
OperativeCorrespondent accounts exist between the Bank of Lithuania (BOL) and the central banks of the Baltic countries, Russia, and the other countries of the FSU. These accounts need not be used for payments originating after October 1992.
InoperativeRuble-denominated correspondent accounts maintained with the central banks of the Baltic countries, Russia, and the other countries of the FSU have been closed and are in the process of being settled.
Administration of controlParliament has the legislative authority in foreign exchange and trade matters; it has adopted a banking law delegating to the BOL the authority to issue regulations governing foreign exchange transactions. All foreign exchange transactions must be effected through authorized banks licensed by the BOL. Authorized banks are allowed to transact among themselves, as well as with residents and nonresidents of Lithuania; the BOL may limit the types of transactions that may be conducted on a case-by-case basis.
International security restrictionsNo.
Payment arrearsNo.
Controls on trade in gold (coins and/or bullion)No.
Controls on exports and imports of banknotes
On exportsNatural or juridical persons, excluding the BOL or commercial banks, are not allowed to export more than LTL 500,000 in cash in domestic or foreign currency, except in cases where it is allowed by law or an international agreement.
Domestic currencyYes.
Foreign currencyYes.
Resident Accounts
Foreign exchange accounts permittedYes.
Held domesticallyYes.
Held abroadJuridical persons need the permission of the BOL to hold accounts abroad.
Accounts in domestic currency convertible into foreign currencyYes.
Nonresident Accounts
Foreign exchange accounts permittedYes.
Approval requiredApproval is required if the legislation of the other country requires approval.
Domestic currency accountsYes.
Convertible into foreign currencyYes.
Blocked accountsn.a.
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 measuresThere are no quantitative restrictions or licensing requirements on imports, except for health and national security reasons and as noted below. Certain food products, such as meat semiproducts, poultry, and fish, are subject to licensing.



Certain agricultural goods and alcoholic beverages are subject to duties, and certain quantitative restrictions are used to control trade in strategic goods and technology to protect Lithuania’s cultural heritage. Alcoholic beverages and tobacco may be imported only by traders registered with the government, but import quantities are unrestricted.
Import taxes and/or tariffsA three-tier tariff structure exists consisting of (1) a “conventional” rate applied to countries granted MFN status; (2) a “preferential” rate applied to countries with which Lithuania has a foreign trade agreement; and (3) an “autonomous” rate that is usually 5% higher than the MFN rate and is applied to all other countries. Imports entering under a majority of tariff lines are duty free; and most other tariff lines carry duty rates of 20% or less; however, rates on agricultural products range as high as 87%. Some non-ad valorem duty rates remain in effect. On June 30, 1999, import tariffs on refined oil products from CIS countries were increased to 15% from 5%.



A tax at the uniform rate of 0.01% is imposed on imports (and exports) for the sole purpose of collecting statistical information on trade.
State import monopolyNo.
Exports and Export Proceeds
Repatriation requirementsNo.
Financing requirementsNo.
Documentation requirementsNo.
Export licensesThere are license requirements governing trade in strategic goods and technology.
Without quotasYes.
With quotasYes.
Export taxesA tax at the uniform rate 0.01% is imposed on exports. Taxes are applied to exports of raw hides, certain types of logs, glands and other organs for therapeutic purposes or for use in the preparation of pharmaceutical products, and feathers.
Other export taxesYes.
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 instrumentsNo.
Controls on derivatives and other instrumentsNo.
Controls on credit operationsNo.
Controls on direct investment
Inward direct investmentThere are no controls, except in fields that are subject to prohibition under the Law on Foreign Capital Investments: state defense, production and sale of narcotic substances, and lottery transactions. The law permits the state to sell shares to nonresidents, guarantees nondiscriminatory national treatment to foreign investors, and protects investments against nationalization and expropriation. The purchase of state-owned enterprises is subject to authorization from the Central Privatization Committee. One of the main conditions in this process is that the company must remain engaged in the same type of business for at least one year under the new ownership. While firms with 100% foreign capital ownership are allowed to operate in Lithuania, the government reserves the right to establish limits on foreign investment in Lithuanian enterprises. In joint ventures in the transportation and communication sectors, the domestic partner is required to hold the majority of shares. Wholly owned ventures in the alcoholic beverage or tobacco industries are prohibited. Enterprises with foreign investment must be insured by Lithuanian insurance companies, even if the company retains other insurance services outside Lithuania.
Controls on liquidation of direct investmentNo.
Controls on real estate transactions
Purchase locally by nonresidentsThe ownership of land by nonresidents in Lithuania is prohibited, but lease contracts with limits up to two hectares of land in Vilnius and ten hectares outside the capital are permitted for up to 99 years and may be renewed thereafter.
Sale locally by nonresidentsYes.
Controls on personal capital movementsn.a.
Provisions specific to commercial banks and other credit institutions
Maintenance of accounts abroadResident banks or other credit institutions must inform the BOL about their accounts with foreign banks.
Purchase of locally issued securities denominated in foreign exchangeLocally issued securities must be denominated in the national currency.
Differential treatment of deposit accounts held by nonresidents
Reserve requirementsThere are reserve requirements on nonresidents’ deposits and on commercial banks’ borrowing from foreign financial institutions.
Open foreign exchange position limitsBanks’ overall open positions may not exceed 30% of their capital, and the open position in individual currencies may not exceed 20% of the banks’ capital.
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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