Chapter

ECUADOR

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: August 31, 1970.
Exchange Arrangement
CurrencyThe currency of Ecuador is the U.S. dollar.
Other legal tenderA limited issue of domestic coins of small value remains in circulation to facilitate small transactions. These are fully backed by dollars.
Exchange rate structureUnitary.
Classification
Exchange arrangement with no separate legal tenderThe currency of Ecuador is the U.S. dollar, which circulates freely.
Exchange taxNo.
Exchange subsidyNo.
Forward exchange marketBanks and other financial institutions authorized to conduct foreign exchange transactions are permitted to conduct forward swaps and options, and transactions in other financial derivative instruments, subject to the supervision and control of the Superintendency of Banks.
Arrangements for Payments and Receipts
Prescription of currency requirementsExchange proceeds from all countries, except LAIA member countries, must be received in convertible currencies. Whenever possible, import payments must be made in the currency stipulated in the import license. Some settlements with Hungary are made through bilateral accounts.
Payments arrangements
Bilateral payments arrangements
OperativeThere are arrangements with Cuba and Hungary; balances are settled every four months.
Regional arrangementsPayments between Ecuador and the other LAIA countries may be made within the framework of the multilateral clearing system of the LAIA.
Clearing agreementsYes.
Administration of controlPublic sector foreign exchange transactions are carried out exclusively through the Central Bank of Ecuador (CBE). Exports must be registered with the CBE to guarantee repatriation of any foreign exchange proceeds from the transaction. Private sector foreign exchange transactions related to the exportation, production, transportation, and commercialization of oil and its derivatives may be carried out through the financial market. Private sector foreign exchange transactions may be effected through banks and exchange houses authorized by the Central Bank Board (CBB).
International security restrictionsNo.
Payments arrearsYes.
OfficialArrears are maintained with respect to public and publicly guaranteed debt-service payments to official creditors. On June 13, 2003, an agreement was reached with Paris Club creditors to reschedule eligible maturities.
PrivateCommercial banks under the control of the Deposit Insurance Agency maintain external payments arrears on trade and interbank credit lines.
Controls on trade in gold (coins and/or bullion)No.
Controls on exports and imports of banknotesNo.
Resident Accounts
Foreign exchange accounts permittedYes.
Held domesticallyYes.
Held abroadYes.
Accounts in domestic currency held abroadThe U.S. dollar is used as domestic currency, and no distinction is made between accounts in U.S. dollars held domestically and those held abroad.
Accounts in domestic currency convertible into foreign currencyThe U.S. dollar is used as domestic currency and balances may be converted into foreign currency without restriction.
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.
Advance payment requirementsPrepayments for imports by the private sector are permitted.
Documentation requirements for release of foreign exchange for importsNo.
Import licenses and other nontariff measuresPrior import licenses are required for agricultural, medical, and psychotropic imports. In addition, Petroecuador (the state oil company) may, without a license, import supplies, materials, and equipment during emergencies.
Negative listImports of psychotropics, used vehicles, used tires, and used clothes are prohibited, primarily to protect the environment and public health. Imports of antiques and certain items related to health and national security are also prohibited. Certain imports require prior authorization from government ministries or agencies for ecological, health, and national security reasons.
Import taxes and/or tariffsTariff rates for most goods are zero, 5%, 10%, 15%, 20%, and 35%. Automobiles are subject to a 35% rate calculated on the basis of a set of reference prices. Variable tariffs under a price band system are applied to about 140 agricultural products. Under an agreement with the WTO, tariff rates for goods subject to price bands are bound at 45%. Discriminatory excise taxes are in place against a limited number of goods, including automobiles, beer, liquors, soft drinks, and cigarettes.
State import monopolyNo.
Exports and Export Proceeds
Repatriation requirementsYes.
Surrender requirementsAll export proceeds must be surrendered to authorized financial entities. However, exporters may retain up to 15% from their surrender requirement to cover the actual cost of consular fees and commissions paid abroad. The surrender requirement does not apply to exports effected under authorized barter transactions or to exports to countries with which Ecuador has bilateral payment agreements. In such cases, exporters are required to provide official documentation from the recipient country establishing the applicable forms of payment. Exporters of marine products are permitted to retain up to 30% of the f.o.b. value of their shipments to cover the actual cost of leasing foreign ships. Minimum reference prices are established for exports of bananas, coffee, fish products, cocoa, and semifinished products of cocoa to help ensure that exchange proceeds are fully surrendered. Receipts in foreign exchange for petroleum exports are effected on the basis of the sale prices stated in the sales contracts and must be surrendered within 30 days of the date of shipment. In addition, exporters may deduct from their surrender requirements the cost of kraft paper and starch or inputs and raw materials imported under the “Industrial Deposits Temporary Admission” regime when exporters require cardboard packing boxes built with kraft paper and starch.
Financing requirementsNo.
Documentation requirementsBarter transactions require the prior approval of the Ministry of Foreign Trade, Industrialization, Fisheries and Competitiveness, and must be registered with the CBE.
Export licensesExports do not require licenses, but must be registered for statistical purposes.
Without quotasThe export prices of bananas, cocoa, coffee, fish, and semifinished cocoa products are subject to minimum reference prices.
Export taxesAll crude oil exports were subject to a tax of $0.0002 a barrel. A fee of $1.02 a barrel has been modified by Petroecuador through a tariff table, based on the viscosity of the crude oil and the distance it is transported (in kilometers), and is applied to crude oil exported through the pipeline.
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 transactionsYes.
Controls on capital and money market instrumentsNo.
Controls on derivatives and other instrumentsNo.
Controls on credit operationsAll foreign loans granted to or guaranteed by the government or official entities, whether or not they involve the disbursement of foreign exchange, are subject to prior approval from the CBB. A request for such approval must be submitted by the Minister of Finance and Public Credit to the CBB, accompanied by detailed information on the loan contract and the investment projects it is intended to finance. In examining the request, the CBB considers the effects that the loan and the related investment may have on the balance of payments and on monetary aggregates. For public sector entities, the projects to be financed must be included in the General Development Plan.

New external credits with a maturity of over one year that are contracted by the private sector, either directly or through the domestic financial system, must be registered with the CBE within 45 days of disbursement. Nonregistered credits are subject to a service charge equivalent to 0.25% of the credit amount.
Commercial credits
By residents to nonresidentsYes.
To residents from nonresidentsYes.
Financial credits
By residents to nonresidentsYes.
To residents from nonresidentsYes.
Guarantees, sureties, and financial backup facilities
By residents to nonresidentsYes.
To residents from nonresidentsYes.
Controls on direct investmentNo.
Controls on liquidation of direct investmentNo.
Controls on real estate transactionsNo.
Controls on personal capital transactionsNo.
Provisions specific to commercial banks and other credit institutionsNo.
Differential treatment of deposit accounts in foreign exchange
Reserve requirementsThe reserve requirement for accounts denominated in dollars or foreign exchange is 4%.
Provisions specific to institutional investorsNo.
Other controls imposed by securities lawsNo.
Changes During 2003
Arrangements for payments and receiptsJune 13. An agreement was reached with Paris Club creditors to reschedule eligible maturities.

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