Chapter

BANGLADESH

Author(s):
International Monetary Fund. Monetary and Capital Markets Department
Published Date:
September 2004
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(Position as of March 31, 2004)
Status Under IMF Articles of Agreement
Article VIIIDate of acceptance: April 11, 1994.
Exchange Arrangement
CurrencyThe currency of Bangladesh is the Bangladesh taka.
Exchange rate structureUnitary.
Classification
Managed floating with no preannounced path for the exchange rateOn May 31, 2003, the Bangladesh Bank (BB) ceased announcing a buying-selling rate band for the taka against the dollar for its transactions with authorized dealer (AD) banks, effectively allowing the taka to float; the BB continues to intervene in the market, mainly on the buying side, to limit undue fluctuations in the exchange rate. Previously, the BB had announced a narrow rate band and trends of the real effective exchange rate of the taka were tracked to monitor the competitiveness of the exchange rate. As a result of this change, the exchange rate regime of Bangladesh has been reclassified to the category managed floating with no preannounced path for the exchange rate from the category conventional pegged arrangement.
Exchange taxNo.
Exchange subsidyNo.
Forward exchange marketADs are free to buy and sell foreign-currency forwards in accordance with international practices but must cover forward sales with forward purchases. ADs are permitted to retain working balances with foreign correspondent banks. Effective February 25, 2004, currency swaps and forward exchange transactions are permitted only when effected against underlying approved commercial transactions.
Official cover of forward operationsThe BB does not deal in the forward market, nor does it regulate transactions beyond the normal requirements of prudential supervision.
Arrangements for Payments and Receipts
Prescription of currency requirementsSettlements normally take place in convertible currencies and, in some cases, through nonresident taka accounts. Settlements with ACU member countries must be effected through the ACU and in units denominated in AMUs (equivalent in value to the dollar). Payments for imports may be made to any country (with the exception of countries from which imports are prohibited). They may be made (1) in taka for credit in Bangladesh to a nonresident bank account of the country concerned; (2) in the currency of the country concerned; or (3) in any freely convertible currency. Export proceeds must be received in freely convertible foreign exchange or in taka from a nonresident taka account.
Controls on the use of domestic currency
For current transactions and paymentsYes.
For capital transactions
Transactions in capital and money market instrumentsYes.
Transactions in derivatives and other instrumentsYes.
Credit operationsYes.
Use of foreign exchange among residentsYes.
Payments arrangements
Bilateral payments arrangementsYes.
OperativeThere is an operative bilateral payments arrangement with Myanmar.
Regional arrangementsBangladesh is a member of the ACU.
Clearing agreementsYes.
Administration of controlExchange control is administered by the BB in accordance with general policy formulated in consultation with the MOF. Licenses are issued to banks as ADs in foreign exchange. The Chief Controller of Imports and Exports of the Ministry of Commerce is responsible for registering exporters and importers and for issuing Import Policy Orders (IPOs). Registered importers may make their imports under the terms of the IPO against LCs. LC authorization forms (LCAFs) are issued by ADs and do not require a separate import license.
International security restrictions
In accordance with IMF Executive Board Decision No. 144-(52/51)Banks and other financial institutions have been instructed to freeze all capital transfers and financial assets of individuals, groups, and organizations associated with terrorism, pursuant to the relevant UN Security Council resolutions.
In accordance with UN sanctionsOn the basis of UN Security Council resolutions, all settlements with the Taliban and the former government of Iraq are prohibited.
Payments arrearsNo.
Controls on trade in gold (coins and/or bullion)
Controls on domestic ownership and/or tradeThere are no restrictions on the internal sale, purchase, or possession of gold or silver ornaments (including coins) and jewelry, but there is a prohibition on the holding of gold and silver in all other forms except by licensed manufacturers or dentists.
Controls on external tradeThe importation and exportation of gold and silver require special permission. However, adult female travelers are free to bring in or take out any amount of gold jewelry without prior approval from the BB. Exports of gold jewelry and imports of gold and silver for the export or manufacture of jewelry are allowed under the Jewelry Export Scheme.
Controls on exports and imports of banknotes
On exports
Domestic currencyA resident or nonresident may take out up to Tk 500 in domestic currency.
Foreign currencyEffective June 1, 2003, residents may take out foreign currency and traveler’s checks up to the amount of any travel allocation they are granted, and also up to the equivalent of $3,000 (previously, $5,000) brought in without declaration when returning from a previous visit abroad, and nonresidents may take out the foreign currency and traveler’s checks they declared on entry or up to the equivalent of $3,000 (previously, $5,000) brought in without declaration. Foreign tourists may reconvert unspent taka at ADs upon production of documentary evidence that the taka were acquired through a conversion of foreign exchange that had been brought into the country.
On imports
Domestic currencyThe importation of Bangladesh currency exceeding Tk 500 is prohibited.
Foreign currencyEffective June 1, 2003, foreign currency traveler’s checks and foreign currency notes may be brought in freely up to the equivalent of $3,000 (previously, $5,000), but larger amounts should be declared to customs upon arrival in Bangladesh. Effective March 23, 2004, only amounts in excess of the equivalent of $5,000 are required to be declared to customs.
Resident Accounts
Foreign exchange accounts permittedYes.
Held domesticallyResidents returning from abroad may bring in any amount of foreign currency and may maintain a resident foreign currency deposit account with the foreign exchange brought in. However, proceeds of exports of goods and services from Bangladesh or commissions arising from business deals in Bangladesh may not be credited to such accounts. Balances in these accounts are freely transferable abroad and may be used for travel in the usual manner. These accounts may be opened in dollars, euros, pounds sterling, and Japanese yen. Local and joint-venture contracting firms executing projects financed by a foreign donor or international agency may open foreign currency accounts. Returning nonresident Bangladeshis who did not open or maintain a foreign currency deposit account while abroad may open a resident foreign currency deposit account with foreign exchange brought in from abroad within six months of the date of their return to take up permanent residence in Bangladesh. Foreign currency accounts may also be opened in the names of diplomatic missions in Bangladesh, their expatriates, the UN and its agencies, and diplomatic bonded warehouses (duty-free shops). Foreign currency accounts may be opened in the name of resident Bangladesh nationals working for foreign or international organizations operating in Bangladesh if their salaries are paid in foreign currency.
Exporters are permitted to open Exporters’ Retention Quota accounts against a certain percentage of the repatriated export proceeds.
Held abroadResidents who opened an account abroad when residing abroad may maintain it after returning to Bangladesh.
Accounts in domestic currency held abroadNo.
Accounts in domestic currency convertible into foreign currencyAll foreign nationals, regardless of their status; diplomatic missions and their local officers; international nonprofit organizations; and foreign oil companies may maintain convertible taka accounts. These accounts may be credited freely with the proceeds of inward remittances in convertible foreign currency and may be debited for local payments in taka as well as for remittances abroad in convertible currency.
Nonresident Accounts
Foreign exchange accounts permittedBangladesh nationals residing abroad; foreign nationals, companies, and firms registered or incorporated abroad; banks and other financial institutions, including institutional investors; officers and staff of Bangladesh missions and government institutions; autonomous bodies; and commercial banks may open nonresident foreign currency deposit accounts that bear interest and are denominated in dollars, euros, pounds sterling, or Japanese yen. These accounts may be credited in initial minimum amounts equivalent to $1,000 or £500 ($25,000 for foreigners) with remittances in convertible currencies and transfers from existing foreign currency deposit accounts maintained by Bangladesh nationals abroad. The accounts bear interest if their terms range from one month to one year. Bangladesh nationals may maintain a foreign currency account abroad while residing abroad and may continue to hold the account after returning to Bangladesh. The balance, including interest earned, may be transferred in foreign exchange by the account holder to any country or to any foreign currency deposit account maintained by Bangladesh nationals abroad. The balances in the accounts, which are freely convertible into taka, must be reported monthly by banks to the BB. Nonresident Bangladesh nationals who did not open or maintain a foreign currency deposit account while abroad may open a resident foreign currency deposit account with foreign exchange brought in from abroad within six months of the date of their return to take up permanent residence in Bangladesh.
All nonresident accounts are regarded for exchange control purposes as accounts related to the country in which the account holder is a permanent resident. (The accounts of the UN and its agencies are treated as resident accounts.)
Bangladesh nationals and persons of Bangladesh origin who are working abroad are permitted to open foreign currency accounts denominated in dollars, euros, pounds sterling, or Japanese yen. These accounts may be credited with (1) remittances in convertible currencies received from abroad through normal banking and postal channels; (2) proceeds of convertible currencies (banknotes, traveler’s checks, drafts, etc.) brought into Bangladesh by the account holders, provided that amounts exceeding the equivalent of $3,000 have been declared to customs upon arrival in Bangladesh; (3) transfers from other foreign currency accounts opened under the former Wage Earners’ Scheme; and (4) transfers from nonresident foreign currency deposit accounts. The accounts may be debited without restriction, but are subject to reporting to the BB.
Domestic currency accountsForeign missions and embassies, their expatriate personnel, foreign airline and shipping companies, and international nonprofit organizations in Bangladesh may open interest-bearing accounts, but the interest earned may be disbursed in local currency only. For portfolio investments in Bangladesh, a nonresident may open a nonresident investor’s taka account (NITA) with any AD with foreign exchange remitted from abroad through normal banking channels or through transfer of funds from a foreign currency account. These accounts may be used to effect all approved current transactions.
Convertible into foreign currencyOnly funds from NITAs may be converted.
Blocked accountsAmounts in nonresident taka accounts covering unapproved payments may be blocked by the BB.
Imports and Import Payments
Foreign exchange budgetNo.
Financing requirements for imports
Minimum financing requirementsEffective January 14, 2003, the margin requirements on 55 goods were reduced to 50% from 100% and the margin requirements for the opening of LCs against imports of rice and wheat were reduced to 25% from 50%. On October 16, 2003, banks were authorized to negotiate freely the margin requirements on LCs for imports of food items, except rice. Effective December 2, 2003, the fixed margin requirements were lifted.
Advance payment requirementsAdvance payments for up to the equivalent in value of $2,500 may be made for certain imports. The BB allows other advance payments covering imports of specialized or capital goods, usually against a guarantee from a first-class overseas bank.
Documentation requirements for release of foreign exchange for imports
Domiciliation requirementsYes.
Preshipment inspectionAn inspection is required for all imports, with a few exceptions.
Letters of creditPayment against imports is generally permissible only under irrevocable LCs. However, a consignment of perishable food items not exceeding $7,500 or its equivalent in value may be imported overland without LCs; capital machinery and industrial raw materials may also be imported without LCs. Recognized export-oriented units operating under the bonded warehouse system may import up to four months’ requirements of their raw and packing materials by establishing import LCs without reference to any export LC. They may also effect such imports by opening back-to-back LCs (either on a sight basis under the Export Development Fund, or for up to 180 days on a usance basis) against export LCs received by them. ADs may establish LCs on an f.o.b. basis without the approval of the BB, subject to certain conditions. Foreign exchange for authorized imports is provided automatically by ADs when payments are due.
OtherYes.
Import licenses and other nontariff measuresAll importers (including all government departments, with the exception of the Ministry of Defense) are required to obtain LCAFs for all imports. Under the authority of the IPO issued by the Chief Controller, importers are allowed to effect imports against LCAFs that are issued for imports under bilateral trade or payments agreements and for imports under tied-aid programs. LCAFs are otherwise valid worldwide, except for imports from Israel and imports transported on Israeli flag vessels, which are prohibited. Goods must be shipped within 18 months of the date of issuance of LCAFs in the case of machinery and spare parts, and 12 months in the case of all other items.
Positive listItems not specified in the control list of the IPO may be imported freely, provided that the importer has a valid import registration certificate.
Negative listThe control list contains 110 items in about 1,400 categories at the four-digit level of the Harmonized System Codes. The importation of these items is restricted or prohibited for public safety, religious, environmental, or social reasons, or if similar items are produced locally. Up to 26 items are restricted purely for trade purposes (7 of which are banned and 19 restricted). Exports of polybags are banned. On March 17, 2003, imports of sugar were banned; this ban was lifted on August 24, 2003.
Open general licensesAll items not on the control list may be imported freely by registered importers.
Licenses with quotasImports of specified raw materials and packing materials by industrial consumers are governed by a quota system, based on the requirements for various industries during each import program period established by the Board of Investment (BOI). Firms in the industrial sector are assigned an import quota for specified raw materials and packing materials, and LCAFs are issued on the basis of the quota. The quota system does not apply to raw materials and packing materials that may be imported freely but applies to items appearing on the control list. Separate LCAFs may be issued to industrial consumers of machinery parts and accessories. Goods imported against LCAFs issued to industrial consumers must be used in the industry concerned and may not be sold or transferred without prior approval.
Import taxes and/or tariffsThere are five tariff bands: zero, 5%, 15%, 25%, and 37.5%. A number of goods are subject to regulatory duties, import license fees, and infrastructure development charges.
State import monopolyNo.
Exports and Export Proceeds
Repatriation requirementsProceeds from exports must be repatriated within four months of shipment unless otherwise permitted by the BB.
Surrender requirementsEffective January 19, 2003, exporters are required to surrender to ADs 90% (previously, 92.5%) of the proceeds from exports of ready-made garments and other goods with high import content, and 50% (previously, 60%) of the proceeds from exports of merchandise and computer data entry and software services. They may use retained earnings for bona fide business purposes, such as business travel abroad; establishment and maintenance of offices abroad; participation in trade fairs and seminars; and imports of raw materials, spare parts, and capital goods. Fully foreign-owned industries and joint ventures or Bangladesh industries, other than in the garment industry, located in export-processing zones (EPZs) are allowed to retain 100% and 80%, respectively, of their export earnings in a foreign currency deposit account. Joint ventures and Bangladesh industries in the ready-made garment sector located in EPZs may retain 75% of their export earnings in a foreign currency deposit account.
Financing requirementsNo.
Documentation requirements
DomiciliationYes.
OtherYes.
Export licensesExports to Israel are prohibited. Exports of about 20 product categories are banned. Some of these are restricted for nontrade reasons, while others are restricted to ensure the supply in the domestic market. Export licenses are required for all restricted items.
With quotasThe Chief Controller of Imports and Exports imposes quotas on garment exports on the basis of the previous year’s performance. The Export Promotion Bureau monitors quota use to reallocate unfilled quotas.
Export taxesExports of jute are taxed.
Payments for Invisible Transactions and Current Transfers
Controls on these transfersPayments for invisibles related to authorized trade transactions are generally not restricted.
Trade-related paymentsThere are controls on administrative expenses and commissions.
Prior approvalPayments for unloading and storage services require prior approval. Up to 5% of export receipts (up to 33.3% in the case of books) may be remitted abroad for commissions without prior approval from the BB.
Indicative limits/bona fide testYes.
Investment-related paymentsADs are allowed to remit dividends to nonresident shareholders without prior approval from the BB upon the receipt of applications from the companies concerned. Applications must be supported by an audited balance sheet; a profit and loss statement; and a board resolution declaring to their head offices dividends from profits earned from foreign firms, banks, insurance companies, and other financial institutions operating in Bangladesh. These remittances are, however, subject to ex post checking by the BB.
Prior approvalNo approval is required if loan agreements have been cleared by the BOI.
Indicative limits/bona fide testYes.
Payments for travel
Quantitative limitsThe limit for personal travel by resident Bangladesh nationals to countries other than Bhutan, India, Maldives, Myanmar, Nepal, Pakistan, and Sri Lanka is $3,000 a person a year or its equivalent; the allowance for air travel to these seven countries is $1,000. For new exporters, the indicative limit for business travel is $6,000 a person a year or its equivalent, while established exporters are permitted to use balances held under the Export Retention Scheme (7.5% of exports of ready-made garments and 40% of other export proceeds). Manufacturers producing for the domestic market and importers are granted business travel allowances equivalent to 1% of turnover as declared in tax returns, and 1% of the value of imports, respectively. There is an annual ceiling of $5,000 or its equivalent in both cases. Amounts in excess of these limits require documents attesting to the bona fide nature of the transaction.
Indicative limits/bona fide testYes.
Personal paymentsForeign exchange for education is available up to the cost of tuition and living expenses, as estimated by the educational institution concerned. Prior permission is not required for the remittance of fees for approved undergraduate, postgraduate, and professional courses. Foreign exchange is available for the costs of dependents abroad, after production of a certificate from the Bangladesh embassy in the country concerned, up to a reasonable level that is based on prevailing prices.
Prior approvalPrior approval is required for the transfer of pensions.
Quantitative limitsUp to $10,000 or its equivalent may be obtained for medical expenses without prior approval. Larger amounts may be obtained with approval of the BB after submission of documents attesting to the bona fide nature of the transactions.
Indicative limits/bona fide testApplications for foreign exchange for studies abroad and for family maintenance are approved upon verification of their bona fide nature.
Foreign workers’ wages
Quantitative limitsForeign nationals may remit freely up to 50% of net salary in connection with service contracts approved by the government. The entire amount of their earned leave pay and savings may also be freely remitted.
Indicative limits/bona fide testYes.
Credit card use abroad
Prior approvalGeneral approval is given for credit card use by exporters against the foreign exchange retention entitlement and for use by other residents against the travel allowance.
Quantitative limitsCredit cards may be used up to the amounts authorized for travel allowances and up to balances held in retention quota accounts.
Other payments
Prior approvalPrior permission is not required for the remittance of royalties and technical fees of up to 6% of sales by firms that are registered with the BOI.
Indicative limits/bona fide testIndustrial enterprises producing for local markets may remit up to 1% of sales receipts declared in the previous year’s tax return for the purpose of training and consultancy.
Proceeds from Invisible Transactions and Current Transfers
Repatriation requirementsYes.
Surrender requirementsExporters of services are required to surrender to ADs 95% of the proceeds (50% in the case of proceeds from computer services) and may use retained earnings for bona fide business purposes. Bangladesh nationals working abroad may retain their earnings in foreign currency accounts or in nonresident foreign currency deposit accounts. Unless specifically exempted by the BB, all Bangladesh nationals who reside in Bangladesh must surrender any foreign exchange coming into their possession, whether held in Bangladesh or abroad, to an AD within one month of the date of acquisition. However, returning residents may keep, in foreign currency accounts opened in their names, foreign exchange brought in at the time of return from abroad, provided that the amount does not represent proceeds from exports from Bangladesh or commissions earned from business activities in Bangladesh. Residents may retain up to $3,000 or its equivalent brought into the country without declaration. Foreign nationals residing in Bangladesh continuously for more than six months are required to surrender within one month of the date of acquisition any foreign exchange representing their earnings with respect to business conducted in Bangladesh or services rendered while in Bangladesh.
Restrictions on use of fundsRetained foreign exchange may be used for travel abroad or bona fide business purposes.
Capital Transactions
Controls on capital transactionsYes.
Controls on capital and money market instruments
On capital market securities
Shares or other securities of a participating nature
Purchase locally by nonresidentsNonresidents may buy Bangladesh securities through stock exchanges against payment in freely convertible currency remitted from abroad through banking channels.
Sale or issue locally by nonresidentsProceeds from sales, including capital gains and dividends earned on securities purchased in Bangladesh, may be remitted abroad in freely convertible currency. Nonresidents may not issue securities in Bangladesh.
Bonds or other debt securities
Sale or issue locally by nonresidentsYes.
Purchase abroad by residentsYes.
Sale or issue abroad by residentsYes.
On money market instrumentsThese transactions are not allowed.
On collective investment securities
Purchase locally by nonresidentsThese transactions are not allowed.
Sale or issue locally by nonresidentsThese transactions are not allowed.
Purchase abroad by residentsThese transactions are not allowed.
Sale or issue abroad by residentsThese transactions are subject to prior approval of the Securities and Exchange Commission. If an instrument is denominated in foreign currency, prior BB approval is required.
Controls on derivatives and other instruments
Purchase locally by nonresidentsThese transactions are not allowed.
Sale or issue locally by nonresidentsThese transactions are not allowed.
Purchase abroad by residentsADs may obtain hedging abroad against exchange rate risks on underlying trade transactions.
Sale or issue abroad by residentsYes.
Controls on credit operations
Commercial, credits
By residents to nonresidentsExport payments deferred for more than 120 days require BB authorization.
To residents from nonresidentsDeferred import payments are permitted for up to 360 days for equipment and machinery and for up to 180 days for industrial raw materials. Private industrial units may borrow funds from abroad with the approval of the BOI.
Financial credits
By residents to nonresidentsExcept in certain cases, credits are subject to prior BB approval.
To residents from nonresidentsADs may obtain short-term loans and overdrafts from overseas branches and correspondents for a period not exceeding seven days at a time.
Guarantees, sureties, and financial backup facilities
By residents to nonresidentsBanks may issue guarantees or sureties in favor of nonresidents in relation to permissible current transactions on behalf of residents.
To residents from nonresidentsReceipt of guarantees or sureties by residents from abroad requires full disclosure of the underlying transaction.
Controls on direct investment
Outward direct investmentAll outward transfers of capital require approval. For resident-owned capital, approval is granted only in exceptional cases.
Inward direct investmentInvestments, except in the industrial sector, require approval. The Foreign Private Investment (Promotion and Protection) Act provides for the protection and equitable treatment of foreign private investment, indemnification, protection against expropriation and nationalization, and guarantee for repatriation of investment. There is no ceiling on private investment. Tax exemptions are granted for periods of up to nine years, depending on location.
Controls on liquidation of direct investmentRequests for repatriation of the proceeds from liquidation of direct investment (in unlisted companies) are subject to prior scrutiny of the BB; however, proceeds from the disinvestment of nonresidents’ equity investments in unlisted public limited companies and in private limited companies may be repatriated freely. When a nonresident liquidates investment through a sale to a resident investor, the net asset value of the shares of the company is used as the basis for calculating the repatriation of proceeds.
Controls on real estate transactions
Purchase abroad by residentsRemittances of funds for these purchases are not permitted.
Purchase locally by nonresidentsPurchases of real estate by a nonresident with funds from abroad are allowed.
Sale locally by nonresidentsRepatriation of sales proceeds are subject to prior approval by the BB, which is not normally granted.
Controls on personal capital transactions
Loans
By residents to nonresidentsThese transactions are not allowed.
To residents from nonresidentsThese transactions are not allowed, except for borrowing by industrial enterprises in accordance with BOI guidelines and/or approval.
Gifts, endowments, inheritances, and legacies
By residents to nonresidentsTransfers of title to nonresidents by way of inheritances are not restricted, but income and sales proceeds from such assets are not normally transferable abroad and are required to be used locally with prior authorization from the BB.
To residents from nonresidentsA resident Bangladesh national must obtain prior approval from the government to receive gifts or endowments from a foreign donor. Inheritances must be reported to the BB. Net current income from estates inherited abroad must be repatriated.
Settlement of debts abroad by immigrantsThese transactions are normally not allowed, except for repayments on borrowing for industrial investments in accordance with BOI guidelines.
Transfer of assets
Transfer abroad by emigrantsThese transactions are not allowed, except for the normal travel allowances that are allowed to residents for personal effects.
Transfer into the country by immigrantsThese transactions are permitted, subject to a requirement that transfers exceeding $5,000 or its equivalent must be declared.
Transfer of gambling and prize earningsGambling is prohibited in Bangladesh.
Provisions specific to commercial banks and other credit institutions
Borrowing abroadThe regulations governing financial credits apply.
Maintenance of accounts abroadThe maintenance of these accounts is subject to notification to the BB.
Lending to nonresidents (financial or commercial credits)Lending to nonresidents is not allowed, except with prior BB approval and in specific cases.
Lending locally in foreign exchangeLending is subject to prior approval from the BB. ADs are permitted to use up to 50% of nonresident foreign currency deposit balances for (1) lending to exporters for settlement of back-to-back sight LCs for imports of inputs, and (2) discounting usance bills of wholly foreign-owned (type “A”) EPZ units against input supplies to exporters.
Purchase of locally issued securities denominated in foreign exchangePurchases are subject to prior approval from the BB.
Differential treatment of deposit accounts in foreign exchange
Interest rate controlsBanks are required to maintain interest rates on foreign currency deposits in line with international market rates.
Differential treatment of deposit accounts held by nonresidents
Interest rate controlsADs are authorized to allow interest payments on ACU dollar accounts maintained with ADs by their correspondent banks in other ACU member countries.
Open foreign exchange position limitsIn accordance with BB limits, authorized dealers’ net open positions may not exceed 12.5% of their capital.
Provisions specific to institutional investorsNo.
Other controls imposed by securities lawsNo.
Changes During 2003
Exchange arrangementMay 31. The BB ceased announcing a trading band for the taka against the dollar for its transactions with ADs. As a result, the exchange rate regime of Bangladesh was reclassified to the category managed floating with no preannounced path for the exchange rate from the category conventional pegged arrangement.
Arrangements for payments and receiptsJune 1. The limits for exports and imports of foreign currency without declaration were reduced to the equivalent of $3,000 from $5,000.
Imports and import paymentsJanuary 14. The margin requirements for the opening of LCs against imports of rice and wheat were reduced to 25% from 50%. The margin requirements on 55 items were reduced to 50% from 100%.
March 17. Imports of sugar were banned.
August 24. The ban on imports of sugar was lifted.
October 16. Banks were authorized to negotiate freely with customers margin requirements on LCs for imports of food, except rice.
December 2. The fixed margin requirements were eliminated.
Exports and export proceedsJanuary 19. The surrender requirements were reduced to 90% from 92.5% for export proceeds from ready-made garments and other goods with high import content; and to 50% from 60% for proceeds from exports of merchandise and computer and data entry software services.
Changes During 2004
Exchange arrangementFebruary 25. ADs were permitted to undertake currency swaps and forward exchange transactions only against underlying approved commercial transactions.
Arrangements for payments and receiptsMarch 23. The threshold in excess of which imports of foreign currency banknotes and traveler’s checks must be declared to customs was raised to the equivalent of $5,000 from $3,000.

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