Annual Report on Exchange Arrangements and Exchange Restrictions 2005
Chapter

ROMANIA

Author(s):
International Monetary Fund. Monetary and Capital Markets Department
Published Date:
September 2005
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(Position as of April 30, 2005)

Status Under IMF Articles of Agreement
Article VIIIDate of acceptance: March 25, 1998.
Exchange Arrangement
CurrencyThe currency of Romania is the Romanian leu.
Other legal tenderThe transferable ruble continues to be used as a unit of account for outstanding balances of the former CMEA.
Exchange rate structureUnitary.
Classification
Managed floating with no predetermined path for the exchange rateThe exchange rate of the leu is determined in the interbank foreign exchange market. Since November 2, 2004, the National Bank of Romania (NBR) limited the degree of its intervention in the foreign exchange market to allow more flexibility in the exchange rate movements. As a result, the exchange rate regime of Romania has been reclassified to the category managed floating with no predetermined path for the exchange rate from the category crawling band. Previously, the NBR intervened in the foreign exchange market to guide the exchange rate in line with the annual inflation objective which allowed modest real appreciation of the leu vis-à-vis the euro; this policy was aimed at using the exchange rate as an implicit nominal anchor.
Effective March 1, 2005, dealings in the foreign exchange market may take place without supporting documents. Credit institutions require NBR authorization to participate in the interbank market as intermediaries. Juridical persons other than authorized credit institutions may purchase or sell foreign exchange through authorized credit institutions. Natural persons may purchase or sell foreign currency either through authorized credit institutions or through foreign exchange offices authorized by the NBR. The NBR quotes rates for 17 foreign currencies based on the rates for these currencies against the euro in the countries concerned. Foreign exchange offices conduct transactions with banknotes of all the above foreign currencies and accept traveler’s checks denominated in those currencies.
Exchange taxNo.
Exchange subsidyNo.
Forward exchange marketThe forward market is not yet developed.
Arrangements for Payments and Receipts
Prescription of currency requirementsPayments to and from countries with which Romania has bilateral payments arrangements are made only in convertible currencies and in accordance with the procedures set forth in those arrangements.
Use of foreign exchange among residentsNormally, the use of foreign exchange among residents is not permitted, except for certain categories of residents and situations.
Payments arrangements
Bilateral payments arrangements
OperativeThere are arrangements with the Democratic People’s Republic of Korea, and some former CMEA members, aimed at liquidating the balance of the CMEA accounts.
InoperativeThere are arrangements with Albania, Algeria, Costa Rica, Egypt, and Greece.
Regional arrangementsEffective April 25, 2005, Romania joined the EU. Romania is a member of the CEFTA and has free trade agreements with the EFTA countries, Albania, Bosnia and Herzegovina, Israel, Lithuania, the former Yugoslav Republic of Macedonia, Moldova, Serbia and Montenegro, and Turkey.
Clearing agreementsThere are no operative clearing arrangements currently in force. The former clearing arrangements with Bangladesh, the Democratic People’s Republic of Korea, and a few countries of the former CMEA, are used only to settle previous balances.
Administration of controlThe NBR issues rules and regulations related to the control of foreign exchange transactions and authorizes certain capital transfers.
International security restrictions
In accordance with IMF Executive Board Decision No. 144-(52/51)Yes.
In accordance with UN sanctionsMeasures have been taken to freeze the accounts and assets of listed individuals, groups, and organizations associated with terrorism. These measures were taken in accordance with UN Security Council resolutions.
Payments arrears
PrivateYes.
Controls on trade in gold (coins and/or bullion)Processing and trade in gold by natural and juridical persons are subject to authorization by the National Authority for Consumer Protection.
Controls on exports and imports of banknotesEffective April 10, 2004, controls on the export and import of banknotes were lifted. However, customs declarations are required for amounts in excess of the equivalent of €10,000 in foreign currency or €1,000 in domestic currency. Undeclared amounts exceeding these limits are subject to confiscation.
On exports
Domestic currencyPrior to April 10, 2004, natural persons could take out lei 500,000 a person a trip.
Foreign currencyPrior to April 10, 2004, natural persons could take out foreign exchange up to the equivalent of $10,000 a person a trip.
On imports
Domestic currencyPrior to April 10, 2004, natural persons could bring into Romania up to lei 500,000 a person a trip.
Foreign currencyPrior to April 10, 2004, natural persons could bring into Romania up to the equivalent of $10,000 a person a trip.
Resident Accounts
Foreign exchange accounts permittedThese accounts may be held by (1) autonomous state agencies, commercial companies, associations, clubs, leagues, and any other profit or nonprofit juridical persons authorized to perform activities in Romania; (2) foreign branches’ subsidiaries, representatives, and agencies registered and/or authorized to conduct business in Romania; (3) embassies, consulates, or other Romanian representatives abroad; (4) branches, subsidiaries, representatives, and agencies of Romanian entities that conduct activities but are not registered abroad as legal entities; (5) Romanian citizens; (6) natural persons with foreign citizenship; and (7) stateless persons domiciled in Romania.
Held domesticallyYes.
Held abroadYes.
Approval requiredSome exceptions apply from the approval requirement.
Accounts in domestic currency held abroadCurrent and time deposit accounts in domestic currency are limited to the countries with which Romania has regional convertibility.
Accounts in domestic currency convertible into foreign currencyFull convertibility is permitted, except for credit institutions, mortgage companies, and foreign exchange offices.
Nonresident Accounts
Foreign exchange accounts permittedYes.
Domestic currency accountsCurrent accounts may be opened freely. Effective April 10, 2005, deposit accounts no longer require the prior authorization of the NBR.
Convertible into foreign currencyFull convertibility applies to permitted current and capital account transactions, as well as to capital transactions that are subject to authorization of the NBR.
Blocked accountsAccounts are blocked in accordance with international security restrictions.
Imports and Import Payments
Foreign exchange budgetNo.
Financing requirements for importsNo.
Documentation requirements for release of foreign exchange for importsDocumentation is required for all import payments.
Import licenses and other nontariff measuresImports, in general, are not subject to licensing. The government may restrict imports for reasons of public health, national defense, and state security, in accordance with the provisions of the WTO.
Negative listRomania’s list of restricted imports contains the following goods: reusable waste; conditionally imported goods that pose dangers for public health and the environment; radioactive materials; nuclear installations and apparatus based on the use of x-rays or of alpha, beta, or gamma radiation; hunting and target-shooting weapons; firearms for spreading harmful, irritating, or neutralizing gas; weapons; assemblies, subassemblies, and devices that can constitute or function as firearms; ammunition; and explosive materials generally used in economic activities.
Other nontariff measuresThere is a customs fee of 0.5% for imports other than those from the CEFTA, EFTA, EU, Albania, Israel, Lithuania, and Turkey.
Import taxes and/or tariffsTariff rates range between zero and 220%, averaging about 19%.
State import monopolyNo.
Exports and Export Proceeds
Repatriation requirementsNo.
Financing requirementsNo.
Documentation requirementsNo.
Export licenses
Without quotasExport licenses are required for statistical purposes on certain raw materials and minimally processed goods, as follows: nonferrous concentrates, ashes, and residues; raw hides and skins of bovine and swine; wood in the rough; sawn wood; waste and scrap of paper or paperboard; ferrous and nonferrous waste and scrap; precious metals, stones, and objects made thereof; substances frequently used for the illicit production of drugs (precursors); radioactive materials; nuclear installations and apparatus based on the use of x-rays or of alpha, beta, or gamma radiation; hunting and target-shooting weapons; firearms for spreading harmful, irritating, or neutralizing gas; weapons; assemblies, subassemblies, and devices that can constitute or function as firearms; ammunition for these types of weapons; and explosive materials generally used in economic activities.
Export taxesNo.
Payments for Invisible Transactions and Current Transfers
Controls on these transfersThere are no controls on these transactions; however, payments and transfers are subject to documentary procedures.
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
Sale or issue locally by nonresidentsEffective January 1, 2004, these transactions no longer require NBR authorization.
Bonds or other debt securities
Sale or issue locally by nonresidentsEffective January 1, 2004, these transactions no longer require NBR authorization.
On money market instrumentsThese transactions require NBR authorization.
Purchase abroad by residentsBanks may undertake on their own behalf and account these transactions without NBR authorization.
On collective investment securities
Sale or issue locally by nonresidentsEffective January 1, 2004, these transactions no longer require NBR authorization.
Controls on derivatives and other instrumentsEffective January 1, 2004, derivatives may be purchased freely on capital markets, but the purchase of derivatives on money markets is subject to NBR authorization, except for operations aimed at hedging locally against risks arising from international commercial transactions.
Purchase locally by nonresidentsYes.
Sale or issue locally by nonresidentsThe issue must be approved by the National Commission for Securities.
Purchase abroad by residentsYes.
Sale or issue abroad by residentsYes.
Controls on credit operationsNo.
Controls on direct investmentNo.
Controls on liquidation of direct investmentNo.
Controls on real estate transactions
Purchase locally by nonresidentsYes.
Sale locally by nonresidentsYes.
Controls on personal capital transactionsNo.
Provisions specific to commercial banks and other credit institutions
Differential treatment of deposit accounts in foreign exchange
Reserve requirementsRatios on reserves differ according to the currency and residual maturity involved. The reserve requirement rates are 18% for leu deposits and effective February 11, 2005, 30% (previously, 25%) for foreign currency deposits. The maturity period for banks’ liabilities in foreign exchange subject to the reserve requirement is two years, or longer if they involve contractual clauses referring to repayments, withdrawals, advance transfers, or nonredeemable loans. The reserve ratio is zero for lei and foreign currency–denominated funds included in the reserve base, which have residual maturity longer than two years from the end of the observance period and which do not involve contractual clauses referring to repayments, withdrawals, advanced transfers, or nonredeemable loans.
Investment regulations
Abroad by banksYes.
In banks by nonresidentsNBR authorization is required for investments by residents or nonresidents of more than 10% in a bank’s equity.
Open foreign exchange position limitsThe daily maximum foreign exchange limits are 10% of a bank’s own funds for each currency and 20% of a bank’s own funds for all currencies in aggregate. For branches of foreign banks, the daily maximum foreign exchange limit is up to the equivalent of $1 million.
Provisions specific to institutional investorsn.r.
Other controls imposed by securities lawsn.r.
Changes During 2004
Exchange arrangementNovember 2. The NBR limited the degree of its intervention in the foreign exchange market. As a result, the exchange rate regime of Romania was reclassified to the category managed floating with no predetermined path for the exchange rate from the category crawling band.
Arrangements for payments and receiptsApril 10. Controls on the export and import of banknotes were lifted. However, customs declarations were required for exports and imports of banknotes exceeding the equivalent of €10,000 in foreign currency and the equivalent of €1,000 in domestic currency.
Capital transactions
Controls on capital and money market instrumentsJanuary 1. NBR authorization was no longer required for the sale or issue locally of the capital and money market instruments by nonresidents.
Controls on derivatives and other instrumentsJanuary 1. NBR authorization was no longer required for the purchase of derivatives on capital markets.
Changes During 2005
Exchange arrangementMarch 1. Dealings in the foreign exchange market were allowed to take place without supporting documents.
Arrangements for payments and receiptsApril 25. Romania joined the EU.
Nonresident accountsApril 10. The requirement of NBR prior authorization for deposit accounts in domestic currency was lifted.
Capital transactions
Provisions specific to commercial banks and other credit institutionsFebruary 11. The reserve requirement for foreign currency deposits was raised to 30% from 25%.

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