Annual Report on Exchange Arrangements and Exchange Restrictions 2005
Chapter

NICARAGUA

Author(s):
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: July 30, 1964.
Exchange Arrangement
CurrencyThe currency of Nicaragua is the Nicaraguan córdoba.
Exchange rate structureUnitary.
Classification
Crawling pegThe official exchange rate of the córdoba is determined and preannounced by the Central Bank of Nicaragua (CBN). Effective January 1, 2004, the exchange rate of the córdoba against the dollar depreciates 5% a year (previously, 6% a year).
Exchange taxThere is no tax, but the CBN charges a commission of 1% on sales of foreign exchange.
Exchange subsidyNo.
Forward exchange marketNo.
Arrangements for Payments and Receipts
Prescription of currency requirementsInternational loans may be settled in the currency of the lender or in any other currency set by the lender.
Payments arrangements
Bilateral payments arrangements
OperativeYes.
Regional arrangementsNicaragua is a member of the CACM.
Administration of controlExchange operations between private agents are not restricted. The CBN allows the central government, authorized commercial banks, and exchange houses to conduct foreign exchange transactions.
International security restrictionsNo.
Payments arrears
OfficialPayments arrears are maintained with non–Paris Club members.
Controls on trade in gold (coins and/or bullion)
Controls on domestic ownership and/or tradeThe Ministry of Development, Industry, and Commerce (MIFIC) and the National Administration of Geological Resources coordinate, manage, and supervise the mining, production, and exportation of gold. Natural and juridical persons may trade gold coins for numismatic purposes only (commemorative gold coins were issued in 1967, 1975, 1980, and 2001).
Controls on external tradeA permit from the MIFIC is required to export gold.
Controls on exports and imports of banknotesNo.
On importsImports of the equivalent of $10,000 or more require a customs declaration.
Foreign currencyThe CBN is the only entity authorized to import nonredeemable currencies.
Resident Accounts
Foreign exchange accounts permittedYes.
Held domesticallyYes.
Held abroadYes.
Accounts in domestic currency held abroadNo.
Accounts in domestic currency convertible into foreign currencyAccounts denominated in córdobas are dollar indexed, except for current account deposits. Conversion may be effected through transfers of funds into a foreign exchange account.
Nonresident Accounts
Foreign exchange accounts permittedOnly foreigners with approved immigration status (e.g., diplomatic missions and international organizations) may open these accounts.
Domestic currency accountsOnly foreigners with approved immigration status may open these accounts.
Convertible into foreign currencyNo.
Blocked accountsNo.
Imports and Import Payments
Foreign exchange budgetNo.
Financing requirements for importsNo.
Documentation requirements for release of foreign exchange for imports
Letters of creditSome import payments are made through certified drafts, but almost all are made through LCs.
Import licenses and other nontariff measuresLicenses are required for the following imports: cane sugar and sucrose, alcoholic and nonalcoholic beverages, medications for human and veterinary use, cosmetics, vegetables, agrochemicals, and bananas.
Negative listCertain categories of imports, such as antipersonnel land mines, are banned.
Other nontariff measuresMeasures apply to certain imports, including those related to public health, national security, the environment, and national emergencies.
Import taxes and/or tariffsThe import tariff regime is harmonized with that of the CACM. The maximum tariff rate, which applies to chicken legs and thighs, is 170%. A 72% duty applies to rice imports from non-WTO countries. A selective consumption tax is imposed on imports of alcoholic and nonalcoholic beverages and cigarettes. An additional 35% sovereignty tax is imposed on imports from Colombia. All imports are subject to a VAT of 15%, with few exceptions.
State import monopolyNo.
Exports and Export Proceeds
Repatriation requirementsNo.
Financing requirementsNo.
Documentation requirementsNo.
Export licensesExport licenses are generally not required, but all exports must be registered with the Ministry of Economy. Licenses are required for exports of wildlife and forestry products, including worked goods and taxidermic work; precious woods (excluding cedar and mahogany); shrimp and lobster; coffee; live animals; automobiles; personal effects; scientific or commercial samples; itinerant exhibitions; and toluene. Controls also apply on sea cucumbers, giant pink or queen conches, agrochemical and veterinary products, and ornamental fish.
With quotasQuotas apply on exports of sugar and beef to the United States and on exports of black beans, powdered milk, and cheese to Mexico.
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 transactionsNo.
Controls on capital and money market instrumentsNo.
Controls on derivatives and other instruments
Controls on credit operationsNo.
Commercial credits
To residents from nonresidentsFor statistical purposes, these credits must be reported to the CBN within 30 days after being granted.
Financial credits
To residents from nonresidentsThe regulations governing commercial credits apply.
Controls on direct investment
Inward direct investmentForeign exchange from new investments or additions to capital must be surrendered to the CBN through commercial banks. However, as a result of the elimination of exchange controls, this regulation is not enforced in practice.
Controls on liquidation of direct investmentNo.
Controls on real estate transactionsNo.
Controls on personal capital transactionsNo.
Provisions specific to commercial banks and other credit institutions
Purchase of locally issued securities denominated in foreign exchangeThese instruments may be issued by the CBN, the government, or any private corporation registered in the local stock exchange.
Investment regulations
Abroad by banksThere are prudential limits established by the Superintendency of Banks and Other Financial Institutions (SOBOFI).
Provisions specific to institutional investors
Currency-matching regulations on assets/liabilities compositionThere are prudential limits established by the SOBOFI.
Other controls imposed by securities lawsNo.
Changes During 2004
Exchange arrangementJanuary 1. The annual rate of crawl (depreciation) of the córdoba against the dollar was reduced to 5% from 6%.

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