Annual Report on Exchange Arrangements and Exchange Restrictions 2005
Chapter

ALGERIA

Author(s):
International Monetary Fund. Monetary and Capital Markets Department
Published Date:
September 2005
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(Position as of January 31, 2005)

Status Under IMF Articles of Agreement
Article VIIIDate of acceptance: September 15, 1997.
Exchange Arrangement
CurrencyThe currency of Algeria is the Algerian dinar.
Exchange rate structureUnitary.
Classification
Managed floating with no predetermined path for the exchange rateThe external value of the dinar is determined in the interbank foreign exchange market, where the central bank is the main buyer and seller. No margin limits are imposed on the buying and selling exchange rates in this market. However, a margin of DA 0.015 has been established between the buying and selling rates of the Bank of Algeria (BA) for the dinar against the dollar.
Exchange taxNo.
Exchange subsidyNo.
Forward exchange marketAuthorized banks may cover their own forward positions and provide forward cover to clients.
Arrangements for Payments and Receipts
Prescription of currency requirementsSettlements with countries with which no payment agreements are in force are made in convertible currencies. Payments under foreign supply contracts may be made in either the currency in use at the headquarters of the supplier or that of the country of origin of the merchandise, except for transactions with Morocco, which may be effected in dollars through special clearing accounts maintained at the central banks of each country.
Payments arrangements
Clearing agreementsSpecified commercial settlements with Morocco and Tunisia are made through a Moroccan dirham account at the Bank of Morocco and a Tunisian dinar account at the Bank of Tunisia.
Administration of controlThe BA has general jurisdiction over exchange controls. Authority for a number of exchange control procedures has been delegated to commercial banks and the Postal Administration.
International security restrictionsNo.
Payments arrearsNo.
Controls on trade in gold (coins and/or bullion)
Controls on domestic ownership and/or tradeResidents may purchase, hold, and sell gold coins in Algeria for numismatic purposes. Unworked gold for industrial and professional use is distributed by the Agence nationale pour la distribution et la transformation de l’or et des autres métaux précieux (AGENOR); this agency is also authorized to purchase gold in Algeria and to hold, process, and distribute any other precious metals.
Controls on external tradeAGENOR is authorized to import and export any precious metals, including gold. Gold used by dentists and goldsmiths is imported by AGENOR. Gold and other precious metals are included on the list of items importable by concessionaires.
Controls on exports and imports of banknotes
On exports
Domestic currencyResident travelers may take out up to DA 200 a person.
Foreign currencyNonresident travelers may reexport any foreign currency they declared upon entry. Resident travelers may export foreign currency withdrawn from their foreign currency accounts up to the equivalent of €7,622.45 a trip for an unlimited number of trips a year.
On imports
Domestic currencyResident travelers may reimport up to DA 200 a person. Nonresidents are not permitted to bring in Algerian dinar banknotes.
Foreign currencyThere are no restrictions on the importation of foreign banknotes, but residents and nonresidents must declare them when they enter Algeria.
Resident Accounts
Foreign exchange accounts permittedYes.
Held domesticallyThese accounts may be freely credited with book transfers of convertible foreign exchange from abroad through the postal system, or by banks in convertible foreign exchange that was imported and declared by the account holder upon entry into the country, or domestic book transfers from banks to accounts held by individuals. These accounts are remunerated at rates representing the average of the rates observed on the euro-currency market, not including margins between –2% and +1.25%, or for call deposits only, at rates representing the average of the overnight rates of either the discount rate or the monetary market rates prevailing in the country of the currency involved. Foreign exchange accounts of commercial banks in the BA are not remunerated. Accounts may be debited freely for book transfers abroad only through the banking system. They may also be debited for purchases of dinars, book transfers in dinars, and purchases of convertible foreign exchange that will be physically exported by the account holder.
Companies may also open foreign exchange accounts for receiving and making foreign exchange transfers, including the retained portion of their export proceeds. They may transfer funds in these accounts to other foreign exchange accounts, or use them to make payments in Algeria or abroad for goods and services needed for their activities.
Entities incorporated in Algeria that export hydrocarbon and minerals must maintain their foreign exchange accounts at the BA.
Held abroadNo.
Accounts in domestic currency held abroadNo.
Accounts in domestic currency convertible into foreign currencyThese accounts are permitted in limited cases, such as for embassies.
Nonresident Accounts
Foreign exchange accounts permittedThese accounts may be credited with foreign currency banknotes and other means of payment denominated in foreign currency, as well as other dinar-denominated funds that meet all requirements for transfers abroad. They may be debited without restrictions to make transfers abroad, to export through withdrawals of foreign banknotes, and to make dinar payments in Algeria. These accounts are remunerated at the same rates as resident foreign exchange accounts. Foreign exchange accounts of commercial banks in the BA are not remunerated. These accounts may not show a debit balance.
Domestic currency accountsEmbassies and foreign firms in Algeria may open accounts without prior authorization for making and receiving payments in relation to other business activity. Accounts pay no interest and cannot be in overdraft.
Convertible into foreign currencyYes.
Approval requiredOutward transfers require individual approval from the BA.
Blocked accountsIndividual suspense accounts may be opened without authorization and may be credited with payments from any country.
Imports and Import Payments
Foreign exchange budgetNo.
Financing requirements for importsPayments for imports of gold, other precious metals, and precious stones must be made from foreign currency accounts. External borrowing by importers for import financing purposes must be arranged through an authorized intermediary bank.
Advance payment requirementsExcept when otherwise indicated by the BA, down payments for imports may not exceed 15% of the total value of imports. When a public agency, public enterprise, or ministry incurs expenditures for imports deemed to be urgent or exceptional, the bank may effect payment before exchange and trade control formalities have been completed.
Advance import depositsAlthough not mandatory, domiciled banks may require from the importer, as part of their normal commercial operations, a deposit in dinars up to the full value of the imports.
Documentation requirements for release of foreign exchange for imports
Domiciliation requirementsAll imports are subject to obligatory domiciliation at an authorized intermediary bank, which an importer must establish by submitting to an authorized bank a commercial contract or pro forma invoice. Import payments may be made freely but only through the domiciled bank, which effects payments in foreign exchange and debits the importer’s account with corresponding amounts in dinars valued at the official exchange rate. Importers willing to insure merchandise or capital goods transported by air or sea must purchase insurance from authorized Algerian insurers. However, this requirement does not apply to the following: (1) gift items; (2) material and equipment imported under the temporary admission regime; (3) goods, including capital goods, financed by international and regional institutions; and (4) goods imported under an agreement that renders the vendor liable for transportation risks.
Preshipment inspectionYes.
Letters of creditYes.
Import licenses and other nontariff measures
Negative listThere are no legal restrictions against imports from Israel, but there are no such imports in practice. A small number of imports are prohibited for religious or security reasons.
Other nontariff measuresJuridical and natural persons registered under the Commercial Register (including concessionaires and wholesalers) may import goods without prior authorization.
Import taxes and/or tariffsImports are subject to tariffs of zero, 5%, 15%, and 30%. A temporary additional duty on certain categories of imports was introduced in July 2001 initially at 36%. On January 1, 2004, this duty was reduced to 24%. On January 1, 2005, it was further reduced to 12%, to be phased out by January 2006.
State import monopolyNo.
Exports and Export Proceeds
Repatriation requirementsFor all exports, excluding hydrocarbons, proceeds must be repatriated within 120 days of delivery date of the goods. Proceeds from hydrocarbon exports are considered to be surrendered when deposited in the BA foreign correspondent banks. The value date of the deposit is the payment due date indicated in the invoice and/or trade contract.
Surrender requirementsAll export proceeds from crude and refined hydrocarbons, by-products from gas, and mineral products must be surrendered to the BA. Exporters of other products must surrender 50% of the proceeds to the commercial banks; the remaining portion may be retained in a foreign currency account held in Algeria. Exporters may use the funds in these accounts for imports or other payments pertaining to their business, or they may transfer the funds to another foreign currency account.
Financing requirementsNo.
Documentation requirementsThe requirements are enforced in accordance with the terms of the contract.
Letters of creditYes.
GuaranteesYes.
DomiciliationYes.
Preshipment inspectionYes.
Export licensesAll exports to Israel are prohibited, and certain exports are prohibited for social or cultural reasons regardless of destination.
Export taxesNo.
Payments for Invisible Transactions and Current Transfers
Controls on these transfers
Investment-related paymentsThe transfer abroad of dividends and interest is permitted, but only through an authorized intermediary.
Prior approvalProfit remittances are permitted, provided tax obligations have been met. Authorization is to be granted by the exchange control authorities within two months of request. Transfer must be effected through an authorized intermediary.
Payments for travelResidents traveling abroad receive an annual foreign exchange allowance, and pilgrims traveling to Saudi Arabia receive an allowance in Saudi Arabian riyals; the amount may be provided in the form of checks that are cashed on arrival for those traveling by air or by sea. Travel tickets purchased by nonresidents for travel abroad must be paid for with imported foreign exchange.
Prior approvalYes.
Quantitative limitsThe limit for nonbusiness trips is DA 15,000 a person a year. For business trips, per diem and transport allowances, respectively, are: (1) DA 16,000 and DA 10,000 for executives, (2) DA 12,000 and DA 8,000 for mid-level staff, and (3) DA 10,000 and DA 6,000 for technical staff. Amounts in excess of these limits are authorized on a case-by-case basis.
Indicative limits/bona fide testYes.
Personal payments
Prior approval
Transfers of alimony payments are permitted provided that the arrangement was issued by an Algerian court and is enforceable in Algeria. BA authorization is required for payments relating to family support payments; limits are set on a case-by-case basis
Quantitative limitsThe limits for medical costs are DA 15,900 for adults and DA 7,600 for children under 15 years of age. The limit for studies abroad is DA 9,000 a month between September 1 and June 30. Amounts in excess of these limits are authorized on a case-by-case basis.
Indicative limits/bona fide testYes.
Foreign workers’ wagesResidents of other countries working in Algeria under technical cooperation programs for public enterprises and agencies or for certain mixed companies may transfer abroad up to 100% of their salaries.
Indicative limits/bona fide testYes.
Other payments
Prior approvalBA approval is required for payments relating to membership, consulting, and legal fees.
Indicative limits/bona fide testYes.
Proceeds from Invisible Transactions and Current Transfers
Repatriation requirementsYes.
Surrender requirementsFifty percent of receipts must be surrendered to the banks.
Restrictions on use of fundsNo.
Capital Transactions
Controls on capital transactionsCapital transfers to any destination abroad are subject to BA approval. Under Article 126 of the 2003 Ordinance on Money and Credit, residents may transfer capital abroad to finance activities that are complementary to those undertaken in Algeria. The Monetary and Credit Council sets the conditions for implementation of this article and issues authorization.
Controls on capital and money market instrumentsNonresidents may invest in shares or other investment securities. Transfers abroad of proceeds from the sale of these investments on the stock exchange or the revenue generated by these investments are allowed, as long as they are conducted through an authorized intermediary.
On capital market securities
Shares or other securities of a participating nature
Purchase locally by nonresidentsYes.
Sale or issue locally by nonresidentsYes.
Purchase abroad by residentsYes.
Bonds or other debt securities
Purchase locally by nonresidentsYes.
Sale or issue locally by nonresidentsYes.
Purchase abroad by residentsYes.
On money market instruments
Purchase abroad by residentsYes.
On collective investment securities
Purchase abroad by residentsYes.
Controls on derivatives and other instruments
Purchase abroad by residentsYes.
Controls on credit operationsThere are controls on all credit transactions, guarantees, sureties, and financial backup facilities.
Controls on direct investment
Outward direct investmentYes.
Inward direct investmentForeign direct investment is permitted freely except in certain specified sectors, provided that it conforms to the laws and regulations governing regulated activities and that prior declaration is made to the authorities.
Controls on liquidation of direct investmentProceeds from disinvestment following the closing or transfer of a business operation may be transferred abroad through banks or authorized intermediaries, subject to prior approval.
Controls on real estate transactions
Purchase abroad by residentsYes.
Controls on personal capital transactionsn.a.
Provisions specific to commercial banks and other credit institutions
Borrowing abroadYes.
Maintenance of accounts abroadYes.
Lending locally in foreign exchangeBanks and financial institutions may on-lend foreign funds borrowed abroad.
Differential treatment of deposit accounts in foreign exchange
Interest rate controlsYes.
Differential treatment of deposit accounts held by nonresidents
Interest rate controlsYes.
Open foreign exchange position limitsBanks and financial institutions are required to meet the following: (1) a maximum spread of 10% between their position (short or long) in each currency and the amount of their equity capital, and (2) a maximum spread of 30% between total exposure (short and long positions, whichever is highest) for all foreign currencies and their equity capital.
Provisions specific to institutional investorsNo.
Other controls imposed by securities lawsn.a.
Changes During 2004
Imports and import paymentsJanuary 1. The temporary import duty on certain categories of imports was reduced to 24% from 36%.
Changes During 2005
Imports and import paymentsJanuary 1. The temporary additional duty on certain imports was reduced to 12% from 24%.

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