Chapter

BENIN

Author(s):
International Monetary Fund. Monetary and Capital Markets Department
Published Date:
September 2004
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(Position as of December 31, 2003)
Status Under IMF Articles of Agreement
Article VIIIDate of acceptance: June 1, 1996.
Exchange Arrangement
CurrencyThe currency of Benin 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 rate of CFAF 655.957 per €1, which is the official buying and selling rate. Exchange rates for other currencies are derived from the rates for the currencies concerned in the Paris foreign exchange market vis-à-vis the euro.
Exchange taxThere is a bank commission of 0.25% on transfers to all countries outside the WAEMU, which must be surrendered to the treasury. Banks are authorized to charge a maximum commission of 2% on nonelectronic exchange transactions in euros.
Exchange subsidyNo.
Forward exchange marketResidents are authorized to contract forward exchange cover to settle payments related to imports and exports of goods and services.
Arrangements for Payments and Receipts
Prescription of currency requirementsBenin is linked to the French Treasury through an Operations Account; therefore, settlements with France, Monaco, and other Operations Account countries (WAEMU and CAEMC members and the Comoros) are mainly made in euros, but they may also be made in foreign currencies. Settlements outside the Operations Account area may be effected freely.
Payments arrangements
Bilateral payments arrangements
InoperativeYes.
Regional arrangementsAn Operations Account is maintained with the French Treasury that links Operations Account countries. Most purchases or sales of foreign currencies or euros against CFA francs are ultimately settled through a debit or credit to the Operations Account.
Clearing agreementsA multilateral clearing agreement exists between the WAEMU members and Cape Verde, The Gambia, Ghana, Guinea, Liberia, Mauritania, Nigeria, and Sierra Leone.
Administration of controlExchange control is administered jointly by the MOF and the BCEAO. Regulations governing the external financial relations of WAEMU member states delegate the approval process for most foreign exchange transactions to authorized banks. The only transactions that remain subject to the prior authorization of these institutions relate to outward investment, the domestic and foreign currency accounts of residents, and resident accounts abroad. Within the framework of the regional financial market, the placement and soliciting of foreign and domestic securities in Benin require the prior authorization of the RCPSFM.
International security restrictionsNo.
Payments arrearsNo.
Controls on trade in gold (coins and/or bullion)
Controls on external tradeImports and exports of gold from or to any other country require prior authorization of the MOF.
Controls on exports and imports of banknotes
On exports
Domestic currencyThe export of CFA franc banknotes by travelers is allowed. However, repurchase of exported banknotes by the BCEAO remains suspended. Furthermore, the shipment of BCEAO banknotes between authorized intermediaries and their correspondents located outside the WAEMU zone is strictly 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 in local banks. Residents traveling outside the BCEAO zone are allowed to take out foreign currency equivalent to CFAF 2 million a person. Larger amounts may be exported in the form of traveler’s checks, bank drafts, or other means of payment.
On imports
Foreign currencyResident and nonresident travelers may bring in any amount of foreign banknotes and coins (except gold coins) of countries outside the Operations Account area. Nonresidents bringing in foreign banknotes and foreign currency traveler’s checks exceeding the equivalent of CFAF 1 million must declare them to customs upon entry. Residents bringing in foreign banknotes exceeding the equivalent of CFAF 300,000 must surrender the excess amount to an authorized intermediary bank within eight days of their return.
Resident Accounts
Foreign exchange accounts permittedResidents are allowed to open foreign exchange accounts with local banks or with banks abroad with the authorization of the MOF, which is granted after obtaining approval of the BCEAO.
Held domesticallyYes.
Held abroadYes.
Accounts in domestic currency held abroadn.a.
Accounts in domestic currency convertible into foreign currencyNo.
Nonresident Accounts
Foreign exchange accounts permittedCommercial banks are authorized to approve requests for opening nonresident accounts in euros. Opening accounts in other currencies requires BCEAO authorization. Nonresident accounts are valid for two years. At the end of this period, the beneficiary of the account must submit a request for renewal.
Domestic currency accountsBecause the BCEAO has suspended the repurchase of banknotes circulating outside the WAEMU area, nonresident accounts may not be credited or debited with BCEAO banknotes. These accounts may not be overdrawn without prior authorization of the MOF. Transfers of funds between nonresident accounts are not restricted.
Convertible into foreign currencyNonresidents may freely debit their foreign accounts in francs for the purpose of purchasing foreign currency on the official foreign exchange market.
Blocked accountsNo.
Imports and Import Payments
Foreign exchange budgetNo.
Financing requirements for importsNo.
Documentation requirements for release of foreign exchange for importsImporters may purchase foreign exchange for import payments after establishing bank payment order accounts and submitting supporting documents, but not earlier than eight days before shipment if a documentary credit is opened, or on the due date of payment if the products have already been imported.
Domiciliation requirementsA domiciliation requirement applies to all imports from outside the franc zone exceeding CFAF 5 million.
Preshipment inspectionAll imports arriving by sea and exceeding CFAF 3 million and overland imports exceeding CFAF 1.5 million are subject to prior inspection.
Import licenses and other nontariff measures
Negative listCertain imports, e.g., narcotics, are prohibited from all sources.
Import taxes and/or tariffsThe CET of the WAEMU consists of four rates (zero, 5%, 10%, and 20%). A 1% common solidarity fee and a tax of 0.5%, based on the c.i.f. value of imports, are levied on ECOWAS imports. A statistical tax of 1% is levied on all imports.
State import monopolyNo.
Exports and Export Proceeds
Repatriation requirementsProceeds from exports must be received within 120 days of the arrival of the goods at their destination. Proceeds from exports to WAEMU countries are not required to be repatriated.
Surrender requirementsProceeds must be surrendered to authorized banks within 30 days of the payment due date. Authorized intermediaries must then surrender the foreign exchange to the BCEAO by transfer through the bank of issue.
Financing requirementsNo.
Documentation requirementsAll export transactions require a customs declaration.
Letters of creditYes.
DomiciliationAll exports of more than CFAF 5 million, except those to WAEMU countries, must be domiciled with an authorized bank.
OtherYes.
Export licenses
Without quotasExports are permitted on the basis of a simple authorization from the Directorate of Foreign Trade, which issues a certificate of origin as needed. Exports of diamonds, gold, and all other precious metals, however, require prior authorization of the MOF, with the exception of articles with small gold content, travelers’ personal effects weighing less than 500 grams, and coins (fewer than 10 pieces, irrespective of their face value and denomination).
With quotasExports of teakwood and other varieties of unprocessed wood and charcoal are banned.
Export taxesNo.
Payments for Invisible Transactions and Current Transfers
Controls on these transfersPayments for invisibles to France, Monaco, and the Operations Account countries are permitted freely; those to other countries are subject to approval. Payments for invisibles related to trade are permitted by a general authorization when the basic trade transaction has been approved or does not require authorization. Bona fide tests are conducted by authorized intermediary banks.
Trade-related payments
Indicative limits/bona fide testYes.
Investment-related payments
Indicative limits/bona fide testYes.
Payments for travel
Quantitative limitsThe threshold of foreign exchange to be surrendered by residents after travel is CFAF 300,000.
Indicative limits/bona fide testYes.
Personal payments
Indicative limits/bona fide testYes.
Foreign workers’ wagesPayments abroad related to wages, salaries, and honoraria; contributions and benefits; pensions and work-related activities; and service contracts are generally authorized upon presentation of the appropriate documentation.
Prior approvalYes.
Indicative limits/bona fide testYes.
Credit card use abroadThe use of credit cards is allowed only when issued by specialized institutions.
Other payments
Indicative limits/bona fide testYes.
Proceeds from Invisible Transactions and Current Transfers
Repatriation requirementsProceeds from invisible transactions with non-WAEMU member countries must be repatriated.
Surrender requirementsProceeds from transactions with WAEMU members may be retained. All amounts due from residents of other countries with respect to services and all income 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 transactionsAccording to exchange regulations within the WAEMU, essentially all capital inflows may take place freely. Capital outflows in the form of repayment of credits, liquidation of investments, and purchases of option contracts may also be carried out freely, but they must be declared to the MOF for information purposes. All investments abroad by residents require prior MOF authorization, and at least 75% of the financing of such investments should be effected by borrowing from abroad. The granting of credits by residents to nonresidents requires documentation for statistical purposes.
Prior RCPSFM authorization is required for the issue or sale of securities or real estate by nonresidents as well as for the solicitation and advertisement of investments abroad.
Controls on capital and money market instruments
On capital market securities
Shares or other securities of a participating nature
Sale or issue locally by nonresidentsThe issue of securities and the sale of corporate or foreign securities in Benin by nonresidents are subject to prior RCPSFM authorization. There are no controls on the sale of securities resulting from the divestiture of investment in the form of a transfer between a nonresident and a resident, but such sales are subject to the regulations governing the financial settlement of the operation.
Settlement of securities transactions by transfer abroad or by credit to a nonresident account requires an exchange authorization to be submitted to the MOF for approval, accompanied by supporting documentation.
Purchase abroad by residentsPrior MOF authorization is required.
Sale or issue abroad by residentsResidents may sell local corporate securities abroad. If these operations result in foreign control of Beninese establishments, foreign investors are required to make a prior declaration to the MOF. The sale of securities to liquidate an investment abroad is subject to declaration to the MOF for statistical purposes. The proceeds in foreign exchange from sale or liquidation must be surrendered to an authorized intermediary bank within one month.
Residents may also issue securities abroad, except for those constituting a loan. Issuance of the latter to nonresidents must be made through an authorized bank and must be reported to the MOF for statistical purposes.
Bonds or other debt securitiesThe regulations governing shares or other securities of a participating nature apply.
On money market instruments
Purchase locally by nonresidentsNonresidents may acquire money market instruments through local banks.
Sale or issue locally by nonresidentsThe sale or issue by nonresidents of money market instruments on the local market is subject to prior authorization by the RCPSFM. The transfer of the proceeds from these operations is unrestricted if the issue itself has received prior authorization, and must be effected through an authorized bank and reported to the MOF for statistical purposes.
Purchase abroad by residentsYes.
Sale or issue abroad by residentsThere are no controls on the sale of money market instruments abroad by residents. Sales to liquidate an investment are subject to a declaration to the MOF for statistical purposes. The proceeds in foreign exchange from sale or liquidation must be surrendered to an authorized intermediary bank. The issue by residents of money market instruments abroad is governed by the provisions pertaining to borrowing.
On collective investment securitiesThe regulations governing money market instruments apply.
Controls on derivatives and other instrumentsResidents are not allowed to purchase abroad new securities with the aim of delivering these within the framework of a sell option contract. If the execution of a contract requires delivery abroad, the sell option must have underlying assets that may be bought locally by residents.
Purchase locally by nonresidentsYes.
Sale or issue locally by nonresidentsYes.
Purchase abroad by residentsYes.
Sale or issue abroad by residentsYes.
Controls on credit operationsThe issue of a loan in the form of securities requires prior approval by the MOF. Such approval is not required, however, for loans contracted by authorized intermediaries or those that comply with specific conditions as to amount and interest rate. Foreign borrowing by residents is subject only to reporting for statistical purposes.
Commercial credits
By residents to nonresidentsGranting of such credits is subject to two provisions. First, claims resulting from exports of goods must be collected and the corresponding amounts repatriated through the BCEAO within 30 days of the payment due date stipulated in the commercial contract. Generally, the period allowed for payment must not exceed 120 days following the arrival of the merchandise at its destination. Second, claims resulting from services must also be collected and surrendered to an authorized dealer or the BCEAO no later than one month after the payment due date.
To residents from nonresidentsThese credits may be freely granted. Repayment is usually authorized, subject to presentation of the relevant proof of execution of the commercial transaction or the provision of the service, as well as the payment due date.
Financial credits
By residents to nonresidentsThe granting of financial credits requires the prior authorization of the MOF. In order to transfer funds abroad to service these facilities, an exchange authorization must be submitted with the required documentation to the MOF.
To residents from nonresidentsThese credits may be granted freely. Transfers of the funds must be processed through an authorized intermediary. However, if these operations take place between a direct investment company established in Benin and its parent company abroad, they are considered direct investments and are therefore subject to prior declaration to the MOF.
Guarantees, sureties, and financial backup facilities
By residents to nonresidentsThe granting of these facilities requires the prior authorization of the MOF.
To residents from nonresidentsThe regulations governing financial credits apply.
Controls on direct investment
Outward direct investmentPrior approval by the MOF is required. At least 75% of such investments must be financed by foreign loans. The investor must submit a written request indicating the authorized intermediary charged with making the payment. Whether the funds are transferred abroad or deposited to a foreign exchange account in CFA francs, the payment may not be made before the end of the period agreed to by the parties.
Inward direct investmentThese investments, including their transfer between nonresidents, are subject to prior declaration to the MOF for statistical purposes.
Controls on liquidation of direct investmentProceeds may be freely transferred abroad or credited to a foreign exchange account in CFA francs upon presentation of the required documentation to an authorized intermediary responsible for payment.
The liquidation of investments abroad by a resident requires a declaration to the MOF for information purposes. The reinvestment of the proceeds of the liquidation is subject to the prior authorization of the MOF. If the reinvestment has not been authorized, the proceeds of the liquidation must be repatriated within one month through an authorized intermediary.
Controls on real estate transactions
Purchase abroad by residentsReal estate investments abroad by residents are subject to prior approval by the MOF. The investor must submit a written request indicating the authorized intermediary charged with making the payment. Whether the funds are transferred abroad or deposited to a foreign exchange account in CFA francs, the payment may not be made before the end of the period agreed to by the parties.
Purchase locally by nonresidentsThere are no controls on purchases, except in the case of direct investment in an enterprise, branch, or corporation.
Sale locally by nonresidentsProceeds from the sale of real estate may be freely transferred abroad or credited to a foreign exchange account in CFA francs upon presentation of the required documentation to the authorized intermediary responsible for payment.
Controls on personal capital transactionsPersonal capital movements between residents and nonresidents must be made through the BCEAO, the postal service, or an authorized intermediary bank, unless prior authorization is obtained from the MOF.
Loans
By residents to nonresidentsThese transactions require the prior authorization of the MOF. The individuals concerned may not engage in such operations as a professional occupation without first being licensed and included in the list of financial institutions.
To residents from nonresidentsLoans from nonresidents to residents may be granted freely, requiring only a declaration to the MOF for statistical purposes.
Gifts, endowments, inheritances, and legacies
By residents to nonresidentsExcept for inheritances and dowries, for which payments are generally authorized, payments pertaining to these operations require prior MOF authorization.
Settlement of debts abroad by immigrantsImmigrants who have obtained resident status must obtain prior authorization from the MOF to settle debts incurred abroad while they were nonresidents.
Transfer of assets
Transfer abroad by emigrantsUpon presentation of emigration documents, the parties concerned may, without prior authorization, transfer up to CFAF 300,000 a person. Larger amounts may be transferred with MOF authorization.
Transfer of gambling and prize earningsYes.
Provisions specific to commercial banks and other credit institutions
Borrowing abroadAuthorized intermediaries may borrow freely abroad, but these transactions must be reported to the MOF for statistical purposes.
Maintenance of accounts abroadBanks and financial institutions are not permitted to hold liquid assets outside the WAEMU zone, except to cover current operations.
Lending to nonresidents (financial or commercial credits)These transactions may be freely conducted, but are subject to prior MOF and BCEAO authorization in the case of loans, financial credits, and the purchase of securities issued abroad.
Lending locally in foreign exchangeNo explicit regulations exist regarding these transactions, but prior authorization by the MOF is required with the approval of the BCEAO.
Purchase of locally issued securities denominated in foreign exchangeThese purchases require prior MOF approval.
Differential treatment of deposit accounts in foreign exchange
Credit controlsAny overdraft or advance granted to a nonresident requires the prior authorization of the MOF with the approval of the BCEAO.
Differential treatment of deposit accounts held by nonresidents
Credit controlsAll overdrafts and advances require prior MOF authorization with BCEAO approval.
Investment regulationsThe regulations governing foreign investment apply.
Abroad by banksYes.
In banks by nonresidentsYes.
Open foreign exchange position limitsThere are no prudential ratios; open positions result from special dispensations.
Provisions specific to institutional investorsControls are imposed by the Insurance Code of the Inter-African Conference on Insurance Markets.
Limits (min.) on investment portfolio held locallyThe Insurance Code in effect in Benin includes rules applicable specifically to the use of the technical reserves of insurance companies.
Other controls imposed by securities lawsYes.
Changes During 2003
No significant changes occurred in the exchange and trade system.

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