Annual Report on Exchange Arrangements and Exchange Restrictions 2005


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: November 30, 1994.
Exchange Arrangement
CurrencyThe currency of Malta is the Maltese lira.
Other legal tenderMalta has 25 denominations of gold coins, 53 silver coins, and 3 cupronickel coins that are legal tender but do not circulate.
Exchange rate structureUnitary.
Conventional pegged arrangementThe exchange rate of the Maltese lira is determined on the basis of a weighted basket of currencies. The basket consists of the dollar (10%), the euro (70%), and the pound sterling (20%). A fixed spread of approximately 0.125% is applied to the middle rate to compute the buying and selling rates for transactions between the Central Bank of Malta (CBM) and credit and financial institutions. These transactions may be conducted in dollars, euros, or pounds sterling, normally in amounts of not less than the equivalent of Lm 150,000. The CBM also quotes indicative rates for other currencies based on international market rates. There is no limit on the spread between the buying and selling rates that ADs may quote in the foreign exchange market.
Exchange taxNo.
Exchange subsidyNo.
Forward exchange market
Official cover of forward operationsThe CBM may provide forward cover directly to government departments and public sector agencies. In exceptional circumstances, the CBM may also engage in forward transactions with credit institutions, which are permitted to provide forward cover to their resident customers. Forward rates are based on interest rate differentials between domestic and international money market rates.
Arrangements for Payments and Receipts
Prescription of currency requirementsNo.
Payments arrangements
Bilateral payments arrangements
OperativeA banking agreement with Libya operates through the respective central banks to clear payments in connection with commercial transactions between the two countries. Outstanding balances are settled in convertible currencies at the end of each calendar quarter.
Regional arrangementsOn May 1, 2004, Malta became a member of the EU.
Administration of controlThe CBM, as agent for the Ministry of Finance (MOF), administers exchange controls under the External Transactions Act.
International security restrictions
In accordance with IMF Executive Board Decision No. 144-(52/51)Yes.
In accordance with UN sanctionsRestrictions apply on payments and financial transfers to the Democratic Republic of the Congo, Liberia, Rwanda, and the UNITA movement in Angola. All assistance, except for humanitarian assistance to Georgia, is prohibited. In accordance with UN Security Council resolutions, Malta maintains restrictive measures with respect to (1) Mr. Slobodan Milosevic and persons associated with him; (2) Osama Bin Laden, the Al-Qaida network, and the Taliban; (3) Somalia; (4) the former government of Iraq; (5) the Democratic Republic of the Congo; (6) effective January 26, 2004, Sudan; (7) effective February 10, 2004, Liberia; (8) effective February 19, 2004, Zimbabwe; (9) effective April 26, 2004, Myanmar (these measures included prohibiting the sale, supply, and export of equipment that might be used for internal repression or terrorism, and the freezing of funds of certain persons involved in important government functions); (10) effective April 29, 2004, former President Taylor of Liberia and persons associated with him; and (11) organizations and other entities engaged in or associated with terrorism.
Payments arrearsNo.
Controls on trade in gold (coins and/or bullion)No.
Controls on exports and imports of banknotesThere are no limits on the amount of foreign and local currency that may be exported and imported. However, effective January 1, 2005, exports and imports of banknotes and other monetary instruments valued in excess of the equivalent of Lm 5,000 must be declared to customs.
Resident Accounts
Foreign exchange accounts permittedYes.
Held domesticallyYes.
Accounts in domestic currency held abroadNo.
Accounts in domestic currency convertible into foreign currencyNo.
Nonresident Accounts
Foreign exchange accounts permittedYes.
Domestic currency accountsYes.
Blocked accountsNo.
Imports and Import Payments
Foreign exchange budgetNo.
Financing requirements for importsNo.
Documentation requirements for release of foreign exchange for importsNo.
Import licenses and other nontariff measuresThe Commerce Division of the Ministry of Finance and Economic Affairs administers certain import controls in accordance with the Importation (Control) Regulations.
Negative listLicenses are required only for imports of items that need clearance for health, safety, security, or environmental reasons, as well as for certain items, such as fresh and frozen fish, meat, chemicals, and weapons.
Open general licensesAll products not on the negative list may be imported without a license.
Other nontariff measuresQuantitative restrictions apply on footwear, ceramics, porcelain, textiles, iron and steel from non-EU countries. A number of surveillance measures apply on imports of footwear, textiles, iron, and steel products from WTO member countries.
Import taxes and/or tariffsYes.
State import monopolyImports of petroleum products are controlled by a state monopoly.
Exports and Export Proceeds
Repatriation requirementsNo.
Financing requirementsNo.
Documentation requirementsNo.
Export licenses
Without quotasExports of articles of historical value and antiques require a license, in accordance with the Export Control Regulations.
Export taxesNo.
Payments for Invisible Transactions and Current Transfers
Controls on these transfers
Other paymentsResidents are not permitted to enter into long-term insurance contracts with nonresident companies outside of the EU or EEA member states.
Proceeds from Invisible Transactions and Current Transfers
Repatriation requirementsNo.
Restrictions on use of fundsNo.
Capital Transactions
Controls on capital transactionsEffective April 19, 2004, controls are removed from certain capital transactions.
Controls on capital and money market instruments
On capital market securities
Shares or other securities of a participating nature
Purchase locally by nonresidentsApplications by residents of a non-EEA country for the issue, acquisition, sale, or redemption of securities of Maltese companies not listed on the Malta Stock Exchange require clearance from the Registrar of Companies. Nonresidents are permitted to purchase securities that are listed on the Malta Stock Exchange; however, approval from the Malta Financial Services Authority is required to purchase or acquire unlisted securities.
Controls on derivatives and other instrumentsControls apply to all these transactions.
Controls on credit operationsNo.
Controls on direct investmentNo.
Controls on liquidation of direct investmentNo.
Controls on real estate transactions
Purchase locally by nonresidentsAll applications for the acquisition of real estate in Malta by nonresidents from outside the EU/EEA area require MOF approval. Nonresidents from the EU/EEA area may acquire one piece of immovable property in Malta to be used as their primary residence; they are not permitted to acquire a secondary residence without MOF approval unless they have resided in Malta for a period of not less than five years. Nonresidents from the EU/EEA area may acquire property freely in specially designated areas of the country.
Sale locally by nonresidentsNonresidents are not allowed to engage in real estate property transactions, except for sales of properties that were acquired with the approval of the MOFEA.
Controls on personal capital transactions
By residents to nonresidentsYes.
Provisions specific to commercial banks and other credit institutions
Open foreign exchange position limitsOpen foreign exchange position limits are subject to prudential limits set by the MFSA.
Provisions specific to institutional investorsOverseas portfolio investments by insurance companies are fully liberalized, but remain subject to prudential limits set by the MFSA. Investment management companies are permitted to invest, without limit, eligible funds originating from both resident and nonresident sources abroad.
Limits (max.) on securities issued by nonresidentsCollective investment fund companies that collect funds in local currency from residents with the aim of investing in local currency–denominated securities on the local market may invest up to 15% of shareholders’ funds in foreign currency assets. There are no limits, however, on the amount that may be invested by resident shareholders’ funds.
Other controls imposed by securities lawsNo.
Changes During 2004
Arrangements for payments and receiptsJanuary 26. Certain restrictive measures were imposed against Sudan.
February 10. Certain restrictive measures were imposed against Liberia.
February 19. Certain restrictive measures were imposed against Zimbabwe.
April 26. Certain restrictive measures were imposed against Myanmar.
April 29. Certain restrictive measures were imposed against the former President Taylor of Liberia and persons associated with him.
May 1. Malta became a member of the EU.
Capital transactionsApril 19. Controls on certain capital transactions were removed.
Changes During 2005
Arrangements for payments and receiptsJanuary 1. Exports and imports of banknotes and other monetary instruments exceeding the equivalent of Lm 5,000 were required to be declared to customs.

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