Annual Report on Exchange Arrangements and Exchange Restrictions 2005
Chapter

SEYCHELLES

Author(s):
International Monetary Fund. Monetary and Capital Markets Department
Published Date:
September 2005
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(Position as of January 31, 2005)

Status Under IMF Articles of Agreement
Article VIIIDate of acceptance: January 3, 1978.
Exchange Arrangement
CurrencyThe currency of Seychelles is the Seychelles rupee.
Other legal tenderVarious commemorative gold coins issued on several occasions since 1976 are also legal tender.
Exchange rate structureUnitary.
Classification
Conventional pegged arrangementThe Seychelles rupee is pegged to a weighted basket of currencies of Seychelles’ main trading and tourism partners, with the weights as follows: the euro (37.7%), the yen (2.7%), the pound sterling (15.7%), the Singapore dollar (7.7%), the South African rand (10.5%), and the U.S. dollar (25.7%). However, the Central Bank of Seychelles (CBS) pegs de facto the rupee to the U.S. dollar at SR 5.50 per US$1 when calculations based on the basket indicate a rate that is more appreciated against the U.S. dollar.
Exchange rates for various currencies are quoted on the basis of their New York closing rates for the U.S. dollar on the previous day, using the dollar rate for the Seychelles rupee as derived from the fixed parity to the currency basket or the appreciation limit of the rupee. The CBS circulates these rates daily to the commercial banks. The CBS charges a commission of 0.125% on purchases and 0.875% on sales of euros, pounds sterling, and U.S. dollars.
The commercial banks are authorized to deal in pounds sterling and other currencies at rates based on the exchange rates circulated daily by the CBS. Other ADs include casinos, guest houses, hotels, restaurants, self-catering establishments, tour operators, travel agents, car rental services, boat charters, shipping agents, and ship chandlers. These dealers are restricted to buying only in the course of their licensed activity. They must sell a certain percentage of their foreign currency proceeds to commercial banks.
Exchange taxNo.
Exchange subsidyNo.
Forward exchange marketNo.
Arrangements for Payments and Receipts
Prescription of currency requirements
Controls on the use of domestic currencyNonresidents are required to pay for selected services in foreign currency.
Use of foreign exchange among residentsYes.
Payments arrangements
Bilateral payments arrangements
OperativeYes.
Regional arrangementsSeychelles is a participant in the COMESA and RIFF.
Administration of controlThe exchange control authorities are the CBS. The Department of Finance (DOF) partially controls foreign trade through a mechanism of import, export, and price controls.
International security restrictionsNo.
Payments arrears
OfficialYes.
PrivateYes.
Controls on trade in gold (coins and/or bullion)
Controls on domestic ownership and/or tradeResidents may purchase, hold, and sell gold freely in any form, except for dealings in gold bullion, which are restricted to ADs.
Controls on exports and imports of banknotesThe maximum amount of domestic currency that travelers may take in and out of the country is SR 2,000. Travelers may take in and out any amount of foreign exchange.
On exports
Domestic currencyYes.
On imports
Domestic currencyYes.
Resident Accounts
Foreign exchange accounts permittedYes.
Held domesticallyThese accounts are permitted, but approval is required.
Held abroadYes.
Accounts in domestic currency held abroadn.a.
Accounts in domestic currency convertible into foreign currencyn.a.
Nonresident Accounts
Foreign exchange accounts permittedYes.
Domestic currency accountsYes.
Convertible into foreign currencyNo.
Blocked accountsn.a.
Imports and Import Payments
Foreign exchange budgetNo.
Financing requirements for imports
Advance import depositsEffective April 1, 2004, except for those from small businesses, all requests for foreign exchange must be accompanied by a rupee deposit equivalent to the value of the items to be imported.
Documentation requirements for release of foreign exchange for importsEffective January 1, 2005, an import permit is required for a few restricted goods (e.g., food items and chemicals). Previously, an import permit was required for all imports, except that effective July 1, 2004, items imported for personal use did not require an import permit.
Import licenses and other nontariff measuresImporters other than individuals are required to obtain import licenses from the Seychelles Licensing Authority. In addition, for each shipment of goods, an importer must apply to the Import Control Division of the DOF for a permit. Permits are normally not granted for used vehicles.
Import taxes and/or tariffsEffective January 1, 2005, imports are subject to taxes of up to 200%, with most goods subject to rates ranging between zero and 25% (previously, between 5% and 30%).
State import monopolyEffective July 1, 2004, the import monopoly of the Seychelles Marketing Board is reduced to seven categories of food items: rice, sugar, meat, cooking oil, fruits and vegetables, flour, and milk. Previously, the Seychelles Marketing Board also had a monopoly on margarine, tomato sauce, animal feed, coffee and tea, and chili sauce. Effective January 1, 2005, the import monopoly of the Seychelles Marketing Board no longer applies.
Exports and Export Proceeds
Repatriation requirementsYes.
Surrender requirementsAll export proceeds must be received through domestic commercial banks, which are the only authorized sellers of foreign exchange. Surrender requirements are 45% of net proceeds and are mostly earmarked to finance essential imports and debt-service payments. The remainder is used by commercial banks in accordance with the priority listing.
Financing requirementsNo.
Documentation requirementsNo.
Export licensesNo.
Export taxesNo.
Payments for Invisible Transactions and Current Transfers
Controls on these transfersA priority listing for payments for invisible transactions and current transfers applies.
Trade-related payments
Prior approvalYes.
Quantitative limitsYes.
Indicative limits/bona fide testYes.
Investment-related payments
Prior approvalYes.
Quantitative limitsYes.
Indicative limits/bona fide testYes.
Personal payments
Prior approvalYes.
Quantitative limitsYes.
Indicative limits/bona fide testYes.
Personal payments
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 requirementsResidents must surrender the proceeds to a commercial bank within 90 days of the transaction.
Restrictions on use of fundsReceipts may be disposed of freely, except for dividend remittances and transfers.
Capital Transactions
Controls on capital transactionsA priority listing for outward transfers of capital transactions applies.
Controls on capital and money market instruments
On capital market securities
Shares or other securities of a participating nature
Purchase locally by nonresidentsYes.
Sale or issue locally by nonresidentsYes.
Bonds or other debt securities
Purchase locally by nonresidentsYes.
Purchase abroad by residentsYes.
On money market instrumentsThe regulations governing bonds or other debt securities apply.
On collective investment securitiesThe regulations governing bonds or other debt securities apply.
Controls on derivatives and other instruments
Purchase locally by nonresidentsYes.
Purchase abroad by residentsYes.
Controls on credit operations
Commercial credits
By residents to nonresidentsYes.
Financial credits
By residents to nonresidentsYes.
Controls on direct investment
Outward direct investmentYes.
Inward direct investmentForeign investment is permitted freely, provided that such investment does not involve ownership of land.
Controls on liquidation of direct investmentNo.
Controls on real estate transactions
Purchase abroad by residentsYes.
Purchase locally by nonresidentsYes.
Sale locally by nonresidentsYes.
Controls on personal capital transactions
LoansYes.
By residents to nonresidentsYes.
Settlement of debts abroad by immigrantsYes.
Provisions specific to commercial banks and other credit institutions
Differential treatment of deposit accounts in foreign exchange
Liquid asset requirementsThe liquidity reserve ratio for commercial banks is 50% of their deposit liabilities. The cash reserve ratio is 2.5%.
Investment regulations
Abroad by banksYes.
In banks by nonresidentsYes.
Provisions specific to institutional investorsNo.
Other controls imposed by securities lawsNo.
Changes During 2004
Imports and import paymentsApril 1. All importers, except for small businesses, requesting foreign exchange were required to make advance deposits with authorized banks of the local currency equivalents of the value of the imports.
July 1. Items imported for personal use were exempted from the import permit requirement.
July 1. The import monopoly of the Seychelles Marketing Board was limited to seven food categories: rice, sugar, fruits and vegetables, meat, cooking oil, flour, and milk.
Changes During 2005
Imports and import paymentsJanuary 1. The import monopoly of the Seychelles Marketing Board on certain food items ceased.
January 1. Import permits were required for a few restricted items (e.g., food and chemicals).
January 1. Imports were subject to taxes up to 200%. Import duty rates on most goods were reduced to a range of zero to 25% from 5% to 30%.

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