Annual Report on Exchange Arrangements and Exchange Restrictions 2005
Chapter

ST. KITTS AND NEVIS

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: December 3, 1984.
Exchange Arrangement
CurrencyThe currency of St. Kitts and Nevis is the Eastern Caribbean dollar, issued by the ECCB.
Exchange rate structureUnitary.
Classification
Exchange arrangement with no separate legal tenderThe Eastern Caribbean dollar is pegged to the U.S. dollar, under a currency board arrangement, at EC$2.70 per US$1.
Exchange taxNo.
Exchange subsidyNo.
Forward exchange marketNo.
Arrangements for Payments and Receipts
Prescription of currency requirementsSettlements with residents of ECCB countries must be effected in Eastern Caribbean dollars.
Payments arrangements
Regional arrangementsSt. Kitts and Nevis is a member of the CARICOM.
Administration of controlExchange control is administered by the MOF and applies to transactions with all countries. Effective September 1, 2004, the ECCB lifted the requirement of MOF approval for foreign currency transactions exceeding the equivalent of EC$250,000. However, the authorities have not yet implemented this measure.
International security restrictionsNo.
Payments arrearsNo.
Controls on trade in gold (coins and/or bullion)No.
Controls on exports and imports of banknotesNo.
Resident Accounts
Foreign exchange accounts permittedU.S. dollar accounts may be operated freely, but permission of the MOF is required to maintain other foreign currency accounts.
Held domesticallyYes.
Approval requiredThese accounts may be credited with only foreign currency earned or received from abroad, but may be debited freely. A minimum balance of US$1,000 must be maintained at all times to maintain a U.S. dollar account. Permission is normally granted only to major exporters.
Held abroadNo.
Accounts in domestic currency held abroadNo.
Accounts in domestic currency convertible into foreign currencyNo.
Nonresident Accounts
Foreign exchange accounts permittedThe regulations governing resident accounts apply.
Approval requiredPermission to operate foreign currency accounts is normally granted only to foreign nationals whose primary residence is not in St. Kitts and Nevis.
Domestic currency accountsNo.
Convertible into foreign currencyNo.
Blocked accountsNo.
Imports and Import Payments
Foreign exchange budgetNo.
Financing requirements for imports
Advance payment requirementsEffective September 1, 2004, the ECCB lifted the requirement of MOF approval for foreign currency transactions exceeding the equivalent of EC$250,000. However, the authorities have not yet implemented this measure.
Documentation requirements for release of foreign exchange for importsPayments for authorized imports payable in foreign currency are permitted upon the presentation of an invoice to a bank.
Import licenses and other nontariff measuresIndividual licenses are required for imports that compete with local products, unless the imports come from CARICOM member countries.
Negative listYes.
Open general licensesMost goods are imported under OGLs.
Import taxes and/or tariffsSt. Kitts and Nevis applies the third phase of the CARICOM CET, and the maximum external tariff is 25%. A customs surcharge of 6% is levied on all imports.
State import monopolyNo.
Exports and Export Proceeds
Repatriation requirementsYes.
Surrender requirementsExport proceeds must be deposited into an ECCB currency account or an approved U.S. dollar account.
Financing requirementsNo.
Documentation requirements
Preshipment inspectionThe Customs Department carries out preshipment inspections.
Export licensesSpecific licenses are required for the exportation of certain goods to any destination. However, the regulations governing export licenses are not formally enforced.
Without quotasYes.
With quotasYes.
Export taxesExport duties are levied on a few products.
Other export taxesYes.
Payments for Invisible Transactions and Current Transfers
Controls on these transfersEffective September 1, 2004, the ECCB lifted the requirement of MOF approval for foreign currency transactions exceeding the equivalent of EC$250,000. However, the authorities have not yet implemented this measure.
Trade-related payments
Prior approvalYes.
Quantitative limitsYes.
Indicative limits/bona fide testYes.
Investment-related paymentsProfits and dividends may be remitted in full, subject to confirmation of registration by the Commissioner of Inland Revenue for income tax purposes. Information is not available on the payment of amortization of loans or depreciation of direct investments.
Prior approvalYes.
Quantitative limitsYes.
Indicative limits/bona fide testYes.
Payments for travel
Prior approvalYes.
Quantitative limitsYes.
Indicative limits/bona fide testYes.
Personal payments
Prior approvalYes.
Quantitative limitsYes.
Indicative limits/bona fide testYes.
Foreign workers’ wages
Prior approvalYes.
Quantitative limitsYes.
Indicative limits/bona fide testYes.
Credit card use abroad
Prior approvalYes.
Quantitative limitsYes.
Indicative limits/bona fide testYes.
Other payments
Prior approvalYes.
Quantitative limitsYes.
Indicative limits/bona fide testYes.
Proceeds from Invisible Transactions and Current Transfers
Repatriation requirementsYes.
Surrender requirementsProceeds must be sold to a bank or deposited into an approved U.S. dollar account if the proceeds are in U.S. dollars.
Restrictions on use of fundsNo.
Capital Transactions
Controls on capital transactionsYes.
Controls on capital and money market instrumentsEffective September 1, 2004, the ECCB lifted the requirement of MOF approval for foreign currency transactions exceeding the equivalent of EC$250,000. However, the authorities have not yet implemented this measure.
On capital market securities
Shares or other securities of a participating nature
Purchase locally by nonresidentsAn Alien Land Holding license is required for purchases of equity shares.
Sale or issue locally by nonresidentsYes.
Purchase abroad by residentsThe regulations governing the sale or issue of capital market securities by nonresidents apply.
Bonds or other debt securities
Sale or issue locally by nonresidentsYes.
On money market instruments
Sale or issue locally by nonresidentsThe regulations governing the sale or issue of capital market securities by nonresidents apply.
Purchase abroad by residentsThe regulations governing the sale or issue of capital market securities by nonresidents apply.
On collective investment securities
Purchase locally by nonresidentsThe regulations governing the sale or issue of capital market securities by nonresidents apply.
Sale or issue locally by nonresidentsThe regulations governing the sale or issue of capital market securities by nonresidents apply.
Sale or issue abroad by residentsThe seller of the instruments must be licensed under the Banking Act.
Controls on derivatives and other instrumentsAt present, there is no market in derivatives and other instruments.
Controls on credit operations
Financial credits
By residents to nonresidentsMOF approval is required. On January 1, 2004, the payment of a 2.5% Alien Loan Levy for these transactions was abolished.
To residents from nonresidentsYes.
Guarantees, sureties, and financial backup facilities
By residents to nonresidentsYes.
To residents from nonresidentsYes.
Controls on direct investment
Outward direct investmentYes.
Inward direct investmentInvestments in equity require an Alien Land Holding license.
Controls on liquidation of direct investmentThe remittance of proceeds from the liquidation of direct investments is permitted, subject to the discharge of any liabilities related to the investment.
Controls on real estate transactions
Purchase abroad by residentsPurchasing real estate abroad for private purposes is not normally permitted.
Purchase locally by nonresidentsNonresidents require an Alien Land Holding license to purchase real estate.
Controls on personal capital transactions
Transfer of gambling and prize earningsYes.
Provisions specific to commercial banks and other credit institutions
Lending to nonresidents (financial or commercial credits)MOF approval is required for these transactions.
Lending locally in foreign exchangeMOF approval is required, which is granted only in the case of projects generating foreign exchange to service the loan. The purchase of locally issued securities denominated in foreign currencies requires MOF approval.
Purchase of locally issued securities denominated in foreign exchangeLocally issued securities must be denominated in Eastern Caribbean dollars.
Provisions specific to institutional investorsNo.
Other controls imposed by securities lawsNo.
Changes During 2004
Arrangements for payments and receiptsSeptember 1. The ECCB lifted the requirement of MOF approval for foreign currency transactions exceeding the equivalent of EC$250,000. However, the authorities have not yet implemented this measure.
Imports and import paymentsSeptember 1. The ECCB lifted the requirement of MOF approval for foreign currency transactions exceeding the equivalent of EC$250,000. However, the authorities have not yet implemented this measure.
Payments for invisible transactions and current transfersSeptember 1. The ECCB lifted the requirement of MOF approval for foreign currency transactions exceeding the equivalent of EC$250,000. However, the authorities have not yet implemented this measure.
Capital transactionsSeptember 1. The ECCB lifted the requirement of MOF approval for foreign currency transactions exceeding the equivalent of EC$250,000. However, the authorities have not yet implemented this measure.
Controls on credit operationsJanuary 1. The 2.5% Alien Loan Levy required for financial credits by residents to nonresidents was abolished.

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