Annual Report on Exchange Arrangements and Exchange Restrictions 2005
Chapter

PORTUGAL

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: September 12, 1988.
Exchange Arrangement
CurrencyThe currency of Portugal is the euro.
Exchange rate structureUnitary.
Classification
Exchange arrangement with no separate legal tenderPortugal participates in the EMU with 11 other members of the EU: Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, and Spain. The ECB reserves the right to intervene to smooth out fluctuations in the euro exchange rate.
Exchange taxNo.
Exchange subsidyNo.
Forward exchange marketYes.
Arrangements for Payments and Receipts
Prescription of currency requirements
Use of foreign exchange among residentsOperations in foreign exchange are permitted through the banking system.
Payments arrangementsNo.
Administration of controlThere are no exchange controls. Foreign trade policy is implemented by the Ministry of Economy, which is responsible for administering trade controls and for issuing import and export licenses, declarations, and certificates.
International security restrictions
In accordance with IMF Executive Board Decision No. 144-(52/51)On February 5, 2004, Portugal notified the IMF of certain exchange restrictions, which have been imposed in accordance with EU regulations.
In accordance with UN sanctionsIn accordance with EU regulations and the relevant UN Security Council resolutions, certain restrictions are maintained with respect to the former government of Iraq, Myanmar, certain individuals associated with the previous government of the former Federal Republic of Yugoslavia, and Zimbabwe. Financing of and financial assistance related to military activities in the Democratic Republic of the Congo and Somalia are prohibited. Restrictions also apply on transfers with respect to persons and entities associated with Osama Bin Laden, Al-Qaida, the Taliban, and former Liberian president Charles Taylor and his allies and associates. Special caution is recommended in transactions with countries with counterparties located in countries or territories not cooperating in efforts to prevent money laundering.
Payments arrearsNo.
Controls on trade in gold (coins and/or bullion)A declaration is required for exports or imports by resident or nonresident travelers of gold (coins or bullion) valued at the equivalent of €12,500 or more.
Controls on exports and imports of banknotesThe exportation or importation by resident or nonresident travelers of banknotes, coins, checks, and traveler’s checks equal to or exceeding the equivalent of €12,500 must be declared to the authorities.
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 measuresIn accordance with UN Security Council resolutions and EU regulations, sanctions are imposed on specific transactions involving diamonds (Liberia and Sierra Leone), armaments (Iraq; Liberia; Zimbabwe; the Taliban; and individuals, groups, and organizations associated with terrorism), and oil (Iraq).
Negative listImports of certain products are subject to an import license and are allowed under specific conditions, or are prohibited for reasons of health, public order, or the prevention of commercial fraud. For agricultural products covered by the CAP, an import certificate may be required. A few industrial products, such as steel products and some textiles and clothing, are subject to EU import restrictions when they originate in certain third countries.
Open general licensesProducts of dual use may require a certificate. Precursor chemicals are subject to licensing.
Licenses with quotasImports subject to quantitative restrictions require an import license. Generally, licenses are valid for six months for customs clearance purposes.
Other nontariff measuresFor products under EU surveillance, the appropriate import documents, when required, are issued for statistical purposes and are granted automatically in four or five days.
Import taxes and/or tariffsYes.
State import monopolyNo.
Exports and Export Proceeds
Repatriation requirementsNo.
Financing requirementsNo.
Documentation requirementsNo.
Export licenses
Without quotasFor agricultural products covered by the CAP, an export certificate may be required. Products of dual use may require a certificate. Precursor chemicals are subject to licensing.
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 instruments
On capital market securities
Shares or other securities of a participating nature
Purchase locally by nonresidentsPurchases made through a public takeover bid are subject to a preliminary announcement to, as well as registration with, the Portuguese Stock Market Committee (CMVM).
Sale or issue locally by nonresidentsFor sales through a public offering, prior CMVM registration and approval of a prospectus are required. If the offeror has a head office in an EU country, a prospectus approved by a competent authority of that country may be used in Portugal.
Sale or issue abroad by residentsSales or issue through a public offering launched simultaneously in Portugal and abroad are subject to registration with the CMVM, which approves the prospectus. If the sale or issue occurs through a public offering launched only abroad, the CMVM has no authority to control such offer but may be consulted by foreign authorities.
Bonds or other debt securities
Purchase locally by nonresidentsPurchases made through a public takeover bid are subject to registration with the CMVM.
Sale or issue locally by nonresidentsThe regulations governing shares or other securities of a participating nature apply.
Sale or issue abroad by residentsThe regulations governing shares or other securities of a participating nature apply.
On collective investment securities
Sale or issue locally by nonresidentsThe sale or issue of units of foreign investment funds is subject to CMVM’s authorization. This control by the CMVM does not apply to UCITS from EU countries that, following an EU directive, are regulated according to the principle of home country authorization. In such a case, the CMVM is requested to ascertain whether the marketing arrangements for units comply with the directive.
Sale or issue abroad by residentsIn the case of UCITS regulated by the EU directive, the CMVM has competence to authorize even when they are marketed in other EU countries.
Controls on derivatives and other instrumentsNo.
Controls on credit operationsNo.
Controls on direct investment
Inward direct investmentInvestments are permitted in all sectors except those that, under general law, are closed to private enterprise corporations. Projects of special interest to the Portuguese economy are covered by a separate and contractual regime.
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
Investment regulations
Abroad by banksNondiscriminatory prudential rules apply to (1) the establishment of branches abroad, for which prior notification to and permission of the Banco de Portugal (BDP) is required; (2) the establishment of subsidiaries in non-EEA member countries, for which prior notification to and permission of the BDP is required; (3) the acquisition of qualifying holdings in foreign banks or other credit institutions, for which prior notification to the BDP is required; and (4) limits on other investments (e.g., capital holdings in a company may not exceed 15% of a bank’s own funds and the total amount of qualifying holdings may not exceed 60% of a bank’s own funds—in both cases, these limits are not applied to shareholdings in companies included in the supervision on a consolidated basis to which the shareholding bank is subject).
In banks by nonresidentsNondiscriminatory prudential rules apply to the acquisition of qualifying holdings.
Open foreign exchange position limitsThe prudential minimum own-funds requirements are applied on a nondiscriminatory basis.
Provisions specific to institutional investors
Limits (max.) on securities issued by nonresidentsThere are limits on these acquisitions, and the acquisition of some securities is prohibited. There are no maximum limits on investments in securities by insurance companies and pension funds issued by nonresidents.
Currency-matching regulations on assets/liabilities compositionThe currency-matching requirement for insurance companies is 80%, and that for pension funds is 70%.
Other controls imposed by securities lawsRegulations pertaining to financial markets are issued by the MOF and the CMVM.
Changes During 2004
Arrangements for payments and receiptsFebruary 5. The authorities notified the IMF of certain exchange restrictions, which were imposed in accordance with EU regulations.

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