Chapter

CAPE VERDE

Author(s):
International Monetary Fund. Monetary and Capital Markets Department
Published Date:
September 2004
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(Position as of January 31, 2004)
Status Under IMF Articles of Agreement
Article XIVYes.
Exchange Arrangement
CurrencyThe currency of Cape Verde is the Cape Verde escudo.
Exchange rate structureUnitary.
Classification
Conventional pegged arrangementThe Cape Verde escudo is pegged to the euro at the rate of CVEsc 110.27 per €1.
Exchange taxNo.
Exchange subsidyNo.
Forward exchange marketInstitutions legally authorized to conduct foreign exchange business in Cape Verde may freely engage in forward exchange transaction among themselves, with their customers, with the Bank of Cape Verde (BCV), and with other banks domiciled abroad.
Arrangements for Payments and Receipts
Prescription of currency requirementsMost dealings in foreign exchange with the general public are conducted by four commercial banks: Banco Comercial do Atlântico (BCA), Caixa Economica de Cabo Verde (CECV), Banco Totta e Açores, and Banco Interatlântico. Proceeds from invisibles must be repatriated in convertible currencies.
Use of foreign exchange among residentsYes.
Payments arrangements
Bilateral payments arrangements
OperativeThere are agreements with Cuba, under which Cape Verde is a net creditor.
InoperativeThere are agreements with Angola, which are currently under negotiation.
Administration of controlAll foreign exchange transactions are under the control of the BCV, the central bank. Current account transactions, investments in securities, and foreign borrowing and lending in connection with current transactions have been liberalized.
International security restrictionsn.a.
Payments arrears
OfficialThere are external arrears to Russia and Brazil, for which rescheduling negotiations are under way. Rescheduling negotiations with Spain have been concluded.
Controls on trade in gold (coins and/or bullion)
Controls on external tradeImports and exports of gold require prior licensing by the BCV.
Controls on exports and imports of banknotes
On exports
Domestic currencyThe exportation of domestic currency by travelers is permitted up to a limit of CVEsc 20,000 a person a trip.
Foreign currencyResidents traveling abroad may take out the equivalent of CVEsc 1 million (approximately $10,000).
On imports
Domestic currencyThe importation of domestic currency is permitted up to specified limits.
Foreign currencyForeign travelers may import foreign currency up to specified limits.
Resident Accounts
Foreign exchange accounts permittedResidents are permitted to open foreign currency accounts at commercial banks authorized to deal in foreign exchange. The operation of these accounts is subject to BCV regulations, which are currently nonrestrictive.
Held domesticallyThese accounts are permitted, but prior approval is required.
Approval requiredYes.
Held abroadThese accounts are permitted, but prior approval is required.
Approval requiredYes.
Accounts in domestic currency held abroadn.a.
Accounts in domestic currency convertible into foreign currencyn.a.
Nonresident Accounts
Foreign exchange accounts permittedThese accounts may be opened and operated as demand or term deposit accounts. Term deposit accounts may be maintained for no more than one year. Approval is required to open these accounts.
Approval requiredYes.
Domestic currency accountsNonresident foreigners may open nonremunerated demand deposit accounts in local currency. Nonresident nationals and certain family members may open interest-bearing accounts. The operation of these accounts is subject to BCV regulations, which are currently nonrestrictive.
Convertible into foreign currencyYes.
Blocked accountsn.a.
Imports and Import Payments
Foreign exchange budgetYes.
Financing requirements for importsNo.
Documentation requirements for release of foreign exchange for imports
Letters of creditYes.
OtherImports of goods exceeding CVEsc 100,000 and not involving payments from the country’s foreign exchange resources are subject to a preregi stration requirement.
Import licenses and other nontariff measuresLicenses, which are issued by the General Directorate of Commerce in the Ministry of Economy, Transportation, and Communications, require the endorsement of the BCV and are generally valid for 90 days; they are renewable. The provision of foreign exchange is guaranteed when the license has been previously certified by the BCV. Licenses are, in general, granted liberally for imports of medicines, capital goods, and other development-related equipment. Imports with a value of less than CVEsc 100,000 are exempt from the licensing requirement.
Positive listYes.
Import taxes and/or tariffsEffective January 1, 2004, the 9% customs fee no longer applies, reducing the number of tariff bands to seven, with rates ranging up to 50% and with an unweighted average of 13% (previously 15%).
State import monopolyNo.
Exports and Export Proceeds
Repatriation requirementsExport proceeds must be repatriated within three months, but this period may be extended.
Surrender requirementsYes.
Financing requirementsNo.
Documentation requirementsNo.
Export licensesNo.
Export taxesNo.
Payments for Invisible Transactions and Current Transfers
Controls on these transfers
Trade-related payments
Indicative limits/bona fide testYes.
Investment-related payments
Prior approvalYes.
Indicative limits/bona fide testYes.
Payments for travelPurchases in excess of the equivalent of CVEsc 1 million in foreign currency a person a trip are subject to prior approval and submission of appropriate supporting documents.
Prior approvalYes.
Quantitative limitsYes.
Indicative limits/bona fide testYes.
Personal payments
Indicative limits/bona fide testYes.
Foreign workers’ wagesTransfers by foreign technical assistance personnel working in Cape Verde are authorized within the limits specified in the individual contracts. These contracts, as well as other contracts involving foreign exchange expenditures, are subject to prior screening by the BCV. Requests by other foreigners are examined on a case-by-case basis.
Prior approvalYes.
Indicative limits/bona fide testYes.
Credit card use abroad
Indicative limits/bona fide testYes.
Other payments
Indicative limits/bona fide testYes.
Proceeds from Invisible Transactions and Current Transfers
Repatriation requirementsProceeds from invisibles must be repatriated in convertible currencies.
Surrender requirementsYes.
Restrictions on use of fundsn.a.
Capital Transactions
Controls on capital transactionsYes.
Controls on capital and money market instrumentsInward capital transactions, except those for investments in securities and foreign borrowing and lending in connection with current account transactions, must be approved in advance by the BCV.
On capital market securities
Shares or other securities of a participating nature
Purchase locally by nonresidentsYes.
Purchase abroad by residentsThese transactions are permitted; however, they must be effected through the stock market or authorized dealers.
Bonds or other debt securities
Purchase abroad by residentsThese transactions are permitted; however, they must be effected through the stock market or authorized dealers.
On money market instruments
Purchase abroad by residentsYes.
Controls on derivatives and other instrumentsThese instruments do not exist.
Controls on credit operationsForeign borrowing and lending in connection with current transactions have been liberalized. However, these transactions are subject to verification by the BCV.
Commercial credits
By residents to nonresidentsYes.
To residents from nonresidentsYes.
Financial creditsSpecial authorization from the BCV is required for these transactions.
By residents to nonresidentsYes.
To residents from nonresidentsYes.
Guarantees, sureties, and financial backup facilities
By residents to nonresidentsYes.
Controls on direct investment
Outward direct investmentYes.
Inward direct investmentAll direct investments require a permit (Certificado de Investidor Externo) and must be registered with the BCV.
Controls on liquidation of direct investmentNo.
Controls on real estate transactionsSpecial authorization from the BCV is required for these transactions.
Controls on personal capital transactionsControls apply on all these transactions.
Provisions specific to commercial banks and other credit institutions
Borrowing abroadSpecial authorization from the BCV is required for these transactions.
Maintenance of accounts abroadThese accounts may be freely opened and operated.
Lending to nonresidents (financial or commercial credits)Special authorization from the BCV is required for these transactions.
Reserve requirementsForeign currency deposits are aggregated with local currency deposits valued at the official exchange rate for the purpose of calculating required reserves.
Provisions specific to institutional investorsn.a.
Other controls imposed by securities lawsn.a.
Changes During 2003
No significant changes occurred in the exchange and trade system.
Changes During 2004
Imports and import paymentsJanuary 1. The 9% customs fee was eliminated, reducing the number of tariff bands to seven and reducing the unweighted average rate to 13% from 15%.

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