Annual Report on Exchange Arrangements and Exchange Restrictions 2005
Chapter

SIERRA LEONE

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 14, 1995.
Exchange Arrangement
CurrencyThe currency of Sierra Leone is the Sierra Leonean leone.
Exchange rate structureDual.
Classification
Independently floatingThe exchange rate of the leone is determined in the interbank market. Commercial banks and licensed foreign exchange bureaus may buy and sell foreign exchange with customers and trade freely among themselves or with the Bank of Sierra Leone (BSL). The BSL determines the exchange rate to be used in official transactions, including the rate for customs valuation purposes, which is based on the weighted average mid-rate of purchases and sales made by commercial banks and foreign exchange bureaus during the last five business days and at the weekly auction. The official buying and selling rates are set within ±1% of the official mid-rate. Foreign exchange bureaus are limited to spot transactions and are not allowed to sell traveler’s checks. Effective January 1, 2004, Sierra Leone participates in the W-ERM II of the WAMZ and maintains the spot exchange rate between the Sierra Leonean leone and the dollar within margins of ±15% around the central rate of Le 2,562.18 per $1. However, the BSL has yet to implement these measures.
Exchange taxNo.
Exchange subsidyNo.
Forward exchange marketNo.
Arrangements for Payments and Receipts
Prescription of currency requirementsPayments for imports may be made in leones and credited to an external account in the currency of the exporting country, in pounds sterling, or in dollars. Receipts from exports to countries other than China may be obtained in leones from an external account in the currency of the importing country or in any specified convertible currency.
For capital transactions
Credit operationsYes.
Use of foreign exchange among residentsYes.
Payments arrangements
Bilateral payments arrangements
InoperativeYes.
Regional arrangementsYes.
Clearing agreementsYes.
Administration of controlThe MOF formulates exchange control policy in consultation with the BSL, but the day-today administration of exchange control is carried out by the BSL with the assistance of the commercial banks.
International security restrictionsNo.
Payments arrears
OfficialYes.
PrivateYes.
Controls on trade in gold (coins and/or bullion)
Controls on domestic ownership and/or tradeResidents may freely purchase, hold, and sell gold coins in Sierra Leone for numismatic purposes. Also, residents and nonresidents may freely purchase, hold, or sell certain Sierra Leonean commemorative gold coins. Residents are not allowed to hold gold in the form of bars or dust without a valid miner’s or dealer’s license.
Controls on external tradeExports of gold require a license. Imports of gold in any form, other than jewelry constituting the personal effects of a traveler, require an individual import license.
Controls on exports and imports of banknotes
On exports
Domestic currencyOn leaving Sierra Leone, travelers may take out up to Le 50,000.
Foreign currencyNonresident travelers may take out any amount of foreign currency notes they declared on arrival. Employees on official business may take out up to the amount of the per diem allowance provided for that purpose. Resident travelers may take out up to the equivalent of $5,000 without restriction. Residents should declare on departure foreign exchange in excess of $5,000 with supporting documents.
On imports
Domestic currencyThe importation of domestic banknotes is limited to Le 50,000 for each traveler.
Foreign currencyCommercial banks (ADs) are allowed to import foreign currency to meet their operational requirements.
Resident Accounts
Foreign exchange accounts permittedResidents are permitted to maintain foreign currency accounts denominated in any convertible currency. These accounts, for which minimum balances vary from bank to bank, earn interest at a rate determined by the commercial banks. They may be credited with funds transferred from abroad, and balances on these accounts may be converted into leones to meet the account holder’s local expenditures. Transfers abroad of balances in foreign currency accounts are permitted for current international transactions without prior approval from the BSL, subject to fulfilling the regulations governing the transactions.
Held domesticallyYes.
Accounts in domestic currency held abroadn.a.
Accounts in domestic currency convertible into foreign currencyn.r.
Nonresident Accounts
Foreign exchange accounts permittedThe regulations governing resident accounts apply. All documented inward remittances may also be transferred abroad without reference to the BSL.
Domestic currency accountsAccounts in leones held on behalf of diplomatic missions, UN agencies, and their accredited staff are designated as external accounts. Leone deposits into external accounts are vetted by the BSL, and credit balances of the accounts may be used for external payments without reference to the BSL.
Convertible into foreign currencyThese accounts may be converted into foreign currency, but approval is required for capital transactions.
Approval requiredYes.
Blocked accountsYes.
Imports and Import Payments
Foreign exchange budgetNo.
Financing requirements for importsn.r.
Documentation requirements for release of foreign exchange for importsAll applications for purchases of foreign exchange to pay for imported goods must be submitted to a commercial bank in Sierra Leone and supported by the following documents: completed exchange control form, original pro forma invoice, final invoice, original bill of lading/airway bill, and preshipment inspection certificate.
Preshipment inspectionAll goods imported into Sierra Leone, except petroleum and goods specifically exempted by the MOF, are subject to preshipment inspection and price verification by an international company appointed by the government.
Letters of creditGoods to be financed with importers’ own foreign exchange resources do not require LCs established with a local commercial bank.
Import licenses and other nontariff measures
Negative listAll goods, except military goods, may be imported freely without a license.
Import taxes and/or tariffsThe customs tariff rates are 15% on rice and baby food, 20% on most food items, and 30% on other food items (e.g., soft drinks, beer, spirits, stout, and imported water); 5% on raw materials and petroleum products; and 20% on luxury consumer goods. Certain goods are subject to a sales tax of 17.5%.
State import monopolyn.a.
Exports and Export Proceeds
Repatriation requirementsExporters must repatriate export proceeds within 90 days of the date of export (approval of the BSL is required for an extension beyond 90 days). Proceeds from exports of diamonds that were prefinanced from external sources are not subject to the repatriation requirement.
Financing requirementsn.r.
Documentation requirementsAll exporters of commercial goods are required to complete export forms that must be endorsed by the exporter’s commercial bank.
Preshipment inspectionAll exports, except for those exempted by the MOF, are subject to preshipment inspection and price verification, which is undertaken by an inspection company appointed by the government. Exporters who are subject to inspection must pay an export inspection fee of 1% before clearing their goods through customs.
Export licensesLicenses are required only for exports of gold and diamonds; these export licenses, valid for one year, are issued by the Department of Mines. Exports of the following articles are prohibited: those containing more than 25% silver; those manufactured or produced more than 75 years before the date of exportation; those mounted or set with diamonds, precious stones, or pearls (excluding personal jewelry or ornaments up to a value not exceeding the equivalent of $1,000); postage stamps of philatelic interest; and works of art.
Without quotasYes.
Export taxesLicensed exporters of diamonds are subject to an export tax of 3%, based on the value in dollars of diamonds exported.
Payments for Invisible Transactions and Current Transfers
Controls on these transfersAuthority to provide foreign exchange for legitimate expenses is delegated to the commercial banks.
Payments for travel
Quantitative limitsThe limit is the equivalent of $5,000.
Indicative limits/bona fide testApplications for travel allowances in excess of the limit must be supported by travel documents, e.g., a ticket or passport.
Foreign workers’ wages
Prior approvalCommercial banks may make remittances in favor of nonresident employees of international institutions, agencies, or foreign nongovernmental organizations only up to the remuneration package and in favor of other nonresidents when requests for such payments are supported by a valid work permit, a remuneration package agreement, and a tax clearance certificate.
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 nonresidentsBSL approval is required before a security registered in or outside Sierra Leone may be transferred to or purchased by a nonresident.
Sale or issue locally by nonresidentsThese transactions are not permitted.
Purchase abroad by residentsPermission of the BSL is required both to purchase securities abroad and to transfer funds abroad to effect the purchase.
All funds accruing on such investment, as well as the capital upon termination of the investment, must be repatriated to Sierra Leone.
Sale or issue abroad by residentsCapital related to securities registered in Sierra Leone may not be transferred abroad without permission; for permission to be given, the company is usually required to obtain bank certification of the funds brought into Sierra Leone.
On money market instruments
Sale or issue locally by nonresidentsThese transactions are not permitted.
Purchase abroad by residentsPurchases funded with domestic resources are not permitted.
Purchase abroad by residentsPurchases funded with domestic resources are not permitted.
On collective investment securities
Purchase abroad by residentsPurchases with funds brought from abroad are allowed. BSL certification is required.
Sale or issue abroad by residentsYes.
Controls on derivatives and other instrumentsThese instruments are not yet available in Sierra Leone.
Controls on credit operations
Financial credits
By residents to nonresidentsGenerally, permission of the BSL is required for the granting of any loan in Sierra Leone, whether by way of advance or bank overdraft, to nonresident entities. Permission of the BSL is also required for nonresident entities to borrow outside Sierra Leone. In addition to the above documentation, the proposed arrangement for repayment should be provided.
To residents from nonresidentsPrior approval of the BSL is required.
Guarantees, sureties, and financial backup facilities
By residents to nonresidentsPrior approval of the BSL should be obtained for the giving or renewal of any guarantee or similar undertaking, and the resident’s exposure must be fully covered by the nonresident.
To residents from nonresidentsPrior approval of the BSL is required for these transactions and for the transfer of funds to service the facilities.
Controls on direct investment
Outward direct investmentInvestments abroad are not allowed.
Inward direct investmentYes.
Controls on liquidation of direct investmentNo.
Controls on real estate transactions
Purchase abroad by residentsThese transactions are prohibited.
Purchase locally by nonresidentsNonresidents may purchase real estate with funds transferred through ADs with proper documentation.
Controls on personal capital transactionsn.r.
Provisions specific to commercial banks and other credit institutionsCommercial banks should not hold more than 25% of their deposit liabilities in foreign currency.
Maintenance of accounts abroadYes.
Lending to nonresidents (financial or commercial credits)Banks do not engage in foreign lending, and there are no regulations in this respect.
Lending locally in foreign exchangeBanks do not engage in this lending.
Provisions specific to institutional investorsn.r.
Other controls imposed by securities lawsn.a.
Changes During 2004
Exchange arrangementJanuary 1. Sierra Leone joined the W-ERM II of the WAMZ.

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