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 December 31, 2004)

Status Under IMF Articles of Agreement
Article VIIIDate of acceptance: May 21, 1992.
Exchange Arrangement
CurrencyThe currency of the Marshall Islands is the U.S. dollar.
Exchange rate structureUnitary.
Exchange arrangement with no separate legal tenderThe authorities do not buy or sell foreign exchange. Foreign exchange transactions are handled by three commercial banks, which are authorized foreign exchange dealers and are regulated by a statutory Banking Commissioner. The banks buy and sell foreign exchange at the rates quoted in the international markets.
Exchange taxNo.
Exchange subsidyNo.
Forward exchange marketForward transactions may be conducted through commercial banks without restrictions.
Arrangements for Payments and Receipts
Prescription of currency requirementsOutward and inward payments may be settled in dollars or in any other convertible currency.
Payments arrangements
Regional arrangementsThe Marshall Islands participates in PACER and PICTA.
Administration of controlThere are no exchange control regulations.
International security restrictionsNo.
Payments arrearsNo.
Controls on trade in gold (coins and/or bullion)n.a.
Controls on exports and imports of banknotesn.a.
Resident Accounts
Foreign exchange accounts permittedYes.
Held domesticallyYes.
Held abroadCommercial banks are not permitted to transfer abroad more than 30% of deposits received from residents. In practice, this regulation is not strictly enforced and does not prevent banks from transferring deposits abroad.
Accounts in domestic currency held abroadThe dollar is used as domestic currency, and no distinction is made between accounts in dollars held domestically and those held abroad.
Accounts in domestic currency convertible into foreign currencyThe 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.
Documentation requirements for release of foreign exchange for importsNo.
Import licenses and other nontariff measuresImports are not subject to licensing requirements, but importers must obtain a business license.
Negative listImports of some products are prohibited for environmental, health, safety, or social reasons.
Import taxes and/or tariffsSpecific and ad valorem duties are levied on imports. Ad valorem duties range from 5% to 150%. Most items are subject to an 8% tariff rate, while higher rates are applied to motor vehicles (15%), gasoline (20%), and alcoholic drinks (25%). Specific duties are applied to motor vehicles whose value cannot be determined; cigarettes and other tobacco products (excluding cigars, which have a tariff rate of 150%); soft drinks; beer; wine; and spirits.
State import monopolyNo.
Exports and Export Proceeds
Repatriation requirementsNo.
Financing requirementsNo.
Documentation requirementsNo.
Export licensesThe exportation of copra and its by-products is conducted solely by the government-owned Tobolar Copra Processing Plant, Inc.
Export taxesNo.
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 instrumentsn.a.
Controls on derivatives and other instrumentsn.a.
Controls on credit operations
Inward direct investmentForeign investors are required to submit applications to the Registrar of Corporations and obtain licenses in order to engage in business or to acquire an interest in a business in the Marshall Islands.
Controls on liquidation of direct investmentn.a.
Controls on real estate transactions
Purchase locally by nonresidentsForeigners are prohibited from owning land, but investors may obtain long-term leases for up to 50 years with an option to renew on land needed for their business.
Controls on personal capital transactionsn.a.
Provisions specific to commercial banks and other credit institutionsn.a.
Provisions specific to institutional investorsn.a.
Other controls imposed by securities lawsn.a.
Changes During 2004
No significant changes occurred in the exchange and trade system.

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