Annual Report on Exchange Arrangements and Exchange Restrictions 2005
Chapter

PANAMA

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: November 26, 1946.
Exchange Arrangement
CurrencyThe currency of Panama is the Panamanian balboa. It is the unit of account and is limited to coins.
Other legal tenderThe dollar is legal tender and circulates freely in Panama.
Exchange rate structureUnitary.
Classification
Exchange arrangement with no separate legal tenderThe balboa is pegged to the dollar at the rate of B 1 per $1.
Exchange taxNo.
Exchange subsidyNo.
Forward exchange marketNo.
Arrangements for Payments and Receipts
Prescription of currency requirementsNo.
Payments arrangementsNo.
Administration of controlNo.
International security restrictionsNo.
Payments arrearsNo.
Controls on trade in gold (coins and/or bullion)
Controls on external tradeImports and exports of gold in any form, other than jewelry carried as personal effects by travelers, require a license if effected by residents other than the monetary authorities. Exports of unworked gold produced in Panama are subject to an export duty of 1% ad valorem, and exports of gold coins (other than U.S. coins, which are exempt) are subject to a duty of 0.5%.
Controls on exports and imports of banknotesNo.
Resident Accounts
Foreign exchange accounts permittedYes.
Held domesticallyYes.
Held abroadYes.
Accounts in domestic currency held abroadYes.
Accounts in domestic currency convertible into foreign currencyYes.
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 measuresFor rice products, pork meat, poultry meat, and tomato paste and puree, a contingent mechanism was negotiated under the WTO agreement to facilitate the exchange of permits, thereby allowing imports of these products at preferential tariff rates.
Import taxes and/or tariffsAll tariff rates are calculated on an ad valorem basis and are assessed on the c.i.f. value of imports. Trade reform has resulted in simplified tariff bands of zero, 3%, 5%, 10%, and 15%. The exceptions to the maximum tariff of 15% are automobiles (17%) and sugar (50% on imports exceeding a historical average price range). Also included are several other products (mainly foodstuffs) whose tariffs are the maximum (and declining) levels negotiated with the WTO, including dairy products (90–173%); rice (130%); onions (90%); beef (40%); pork (70–90%); boneless and whole hams (83%); some poultry (300%); cabbages, carrots, celery, and lettuce (32.5%); cooking oils (20–30%); margarine (20%); salt (87%); ketchup (70%); and tomato paste and puree (87%). All imports into the area designated as the Colón Free Zone and the newly established export-processing zones are exempt from duties.
State import monopolyNo.
Exports and Export Proceeds
Repatriation requirementsNo.
Financing requirementsNo.
Documentation requirementsNo.
Export licensesExports of certain drugs, firearms, and ammunition are prohibited or restricted. Any product (including raw materials and machinery) may be imported into the Colón Free Zone and stored, modified, processed, assembled, repacked, and reexported without being subject to customs procedures.
Export taxesExport taxes are levied on gold, silver, platinum, manganese, other minerals, unrefined sugar, coconuts, scrap metal, pearls, tallow, gum, ipecac root, and rubber. Certain nontraditional exports (with a minimum local cost-of-production content of 20%) are eligible for tax credit certificates equivalent to 20% of value added. Export-processing zones are exempt from all taxes.
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 instrumentsNo.
Controls on credit operationsNo.
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.
Provisions specific to institutional investorsNo.
Other controls imposed by securities lawsNo.
Changes During 2004
No significant changes occurred in the exchange and trade system.

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