Annual Report on Exchange Arrangements and Exchange Restrictions 2005
Chapter

SWAZILAND

Author(s):
International Monetary Fund. Monetary and Capital Markets Department
Published Date:
September 2005
Share
  • ShareShare
Show Summary Details

(Position as of December 31, 2004)

Status Under IMF Articles of Agreement
Article VIIIDate of acceptance: December 11, 1989.
Exchange Arrangement
CurrencyThe currency of Swaziland is the Swaziland lilangeni.
Other legal tenderOn March 4, 2004, the South African rand was declared official legal tender.
Exchange rate structureUnitary.
Classification
Conventional pegged arrangementThe lilangeni is pegged to the South African rand at E 1 per R 1. Exchange rates for the U.S. dollar quoted by the Central Bank of Swaziland (CBS) are based on the exchange rate of the South African rand against the U.S. dollar. Rates are also quoted for the Canadian dollar, the euro, the Japanese yen, the pound sterling, and the Swiss franc, based on the London and New York market quotations for these currencies against the U.S. dollar.
Exchange taxNo.
Exchange subsidyNo.
Forward exchange marketThe CBS permits ADs to engage in forward exchange operations. The forward exchange rates are market determined.
Arrangements for Payments and Receipts
Prescription of currency requirements
Controls on the use of domestic currencyThese transactions may be effected through nonresident accounts only, and international transfers to outside the CMA are subject to a limit of E 5,000 a transaction.
For current transactions and paymentsYes.
For capital transactions
Transactions in capital and money market instrumentsYes.
Transactions in derivatives and other instrumentsYes.
Credit operationsCBS approval is required.
Use of foreign exchange among residentsThese transactions must be effected through foreign currency accounts.
Payments arrangements
Regional arrangementsSwaziland is part of the CMA; no restrictions are applied to payments within the CMA, and, in principle, payments are not controlled. Residents of Swaziland have access to the Johannesburg market, in accordance with the terms and conditions applied in that market.
Clearing agreementsYes.
Barter agreements and open accountsBarter agreements require CBS approval.
Administration of controlThe CBS, on behalf of the MOF, controls all external currency transactions. In relations with countries outside the CMA, Swaziland applies exchange controls that are generally similar to those of South Africa.
International security restrictionsNo.
Payments arrearsNo.
Controls on trade in gold (coins and/or bullion)
Controls on domestic ownership and/or tradeYes.
Controls on external tradeYes.
Controls on exports and imports of banknotes
On exports
Domestic currencyExports of up to E 5,000 are allowed.
Foreign currencyExports of the applicable travel entitlement are allowed.
On imports
Domestic currencyImports of up to E 5,000 are allowed.
Resident Accounts
Foreign exchange accounts permittedAuthority to open foreign currency accounts is delegated to ADs.
Held domesticallyIndividuals may hold foreign currency deposits of up to the equivalent of E 750,000 with domestic ADs. These accounts may also be opened to deposit foreign exchange proceeds for a period not exceeding 90 days.
Held abroadIndividuals may hold foreign currency deposits abroad up to the equivalent of E 750,000. Companies must obtain approval and may hold only the needed working balances.
Approval requiredThe authority to approve foreign investments by individuals is delegated to ADs.
Accounts in domestic currency held abroadPrior CBS approval is required to open these accounts.
Accounts in domestic currency convertible into foreign currencyConversion from these accounts is subject to exchange control approval.
Nonresident Accounts
Foreign exchange accounts permittedThese accounts are permitted, and authority to open them is delegated to ADs.
Domestic currency accountsYes.
Convertible into foreign currencyYes.
Blocked accountsBalances in these accounts may be invested in quoted equity securities in Swaziland and in other investments, subject to CBS approval.
Imports and Import Payments
Foreign exchange budgetNo.
Financing requirements for imports
Minimum financing requirementsYes.
Advance payment requirementsAdvance payments are limited to 33.33% of the ex-factory cost of the goods.
Advance import depositsPrior CBS approval is required.
Documentation requirements for release of foreign exchange for imports
Domiciliation requirementsYes.
Preshipment inspectionInspection is carried out by the Department of Customs and Excise.
Import licenses used as exchange licensesPermits are required to import goods on the negative list, and these permits entitle the holders to purchase foreign exchange required to make import payments.
Import licenses and other nontariff measures
Negative listImport permits are required for goods on the negative list.
Open general licensesSwaziland is a member of the SACU, and no import restrictions are imposed on goods originating in any country of the customs union. Imports from South Africa do not require licenses. Imports from countries outside the SACU require licenses. Ports of entry outside Swaziland may be used, but the Swazi authorities are responsible for controlling import licenses and payments procedures.
Import taxes and/or tariffsSwaziland applies the customs tariff system of the SACU on imports from outside the customs union.
State import monopolyNo.
Exports and Export Proceeds
Repatriation requirementsFor goods shipped to countries outside the SACU, licensing is administered to ensure that export proceeds are repatriated in the prescribed manner and within the stipulated period.
Surrender requirementsExport proceeds must be surrendered within 90 days from the date of receipt.
Financing requirementsNo.
Documentation requirementsContract statements are required.
DomiciliationYes.
Preshipment inspectionYes.
Export licenses
Without quotasAll exports are subject to licensing. For goods shipped to SACU member countries, licenses are used mainly for tax purposes.
With quotasQuotas apply to exports of beef and sugar.
Export taxesA sugar export levy applies to export proceeds from the EU market.
Payments for Invisible Transactions and Current Transfers
Controls on these transfersPayments to nonresidents for current transactions, while subject to control, are not normally restricted. Authority to approve some types of current payments up to established limits is delegated to ADs.
Trade-related paymentsDocumentary evidence confirming the amount due must be provided.
Prior approvalYes.
Indicative limits/bona fide testYes.
Investment-related paymentsAuthority to transfer dividends, profits, and other income is delegated to ADs.
Indicative limits/bona fide testDocumentary evidence confirming the amount due must be provided.
Payments for travel
Quantitative limitsThe annual limits on foreign exchange purchases by permanent residents for business and holiday travel are the equivalent of E 160,000 an adult and E 50,000 a child under 12 years.
Indicative limits/bona fide testLarger amounts are granted upon application supported by proof of need.
Personal payments
Prior approvalClearance from the CBS is required for any agreements or amendments with respect to technical consulting, management, professional, and royalty fees.
Quantitative limitsThe maximum annual study allowances for students in non-CMA countries are the equivalent of E 160,000 for single students and E 320,000 for married students accompanied by their spouse. The maximum annual travel allowances for students studying in non-CMA countries during vacation periods are E 50,000 for single students and E 100,000 for married students accompanied by their spouse. Family maintenance transfers are limited to the equivalent of E 9,000 a month.
Indicative limits/bona fide testDocumentary evidence must be provided.
Foreign workers’ wages
Indicative limits/bona fide testDocumentary evidence substantiating the income earned must be produced.
Credit card use abroad
Prior approvalTo use credit cards outside the CMA, a resident cardholder must complete a letter of intent before departure.
Quantitative limitsResidents may use up to 100% of the approved travel facility.
Indicative limits/bona fide testYes.
Other payments
Indicative limits/bona fide testYes.
Proceeds from Invisible Transactions and Current Transfers
Repatriation requirementsYes.
Surrender requirementsYes.
Restrictions on use of fundsYes.
Capital Transactions
Controls on capital transactionsAll inward capital transfers, except for equity investments by nonresidents, require the prior approval of the CBS and must be properly documented to facilitate the subsequent repatriation of interest, dividends, profits, and other income.
Inward payments toward a loan and investments in unquoted companies may be made freely, but CBS approval is required for registration of equity status prior to investment.
Controls on capital and money market instruments
On capital market securities
Shares or other securities of a participating nature
Shares or other securities of a participating nature
Purchase locally by nonresidentsPurchases may be processed through normal banking channels either directly in foreign currency or through local currency nonresident accounts held in a CMA member country.
Sale or issue locally by nonresidentsBalances in blocked accounts for emigrants may be invested in quoted securities and other such investments as may be approved by the CBS. Other nonresidents may effect these transactions freely as well.
Purchase abroad by residentsYes.
Sale or issue abroad by residentsYes.
Bonds or other debt securities
Purchase locally by nonresidentsThere are no specific controls; however, the underlying documentation must specify that a nonresident is effecting the transaction in order to distinguish nonresidents’ certificates from those of residents.
Sale or issue locally by nonresidentsYes.
Purchase abroad by residentsThese transactions are restricted to private persons’ investment entitlements. Purchases by a resident noncorporate individual are limited to the equivalent of E 750,000.
Sale or issue abroad by residentsThere are no specific controls; however, the underlying documentation must specify that a nonresident is effecting the transaction in order to distinguish nonresidents’ certificates from those of residents.
On money market instruments
Purchase abroad by residentsThe regulations governing bonds or other debt securities apply.
Sale or issue abroad by residentsThe regulations governing bonds or other debt securities apply.
On collective investment securities
Purchase abroad by residentsYes.
Sales or issue abroad by residentsYes.
Controls on derivatives and other instrumentsAll transactions in derivatives and other investments are controlled.
Controls on credit operationsAll credit operations are controlled. Borrowing in foreign currency is subject to CBS approval.
Guarantees, sureties, and financial backup facilities
By residents to nonresidentsThese transactions are allowed, provided they relate to successful tenders for the supply of goods and technical services.
To residents from nonresidentsThese transactions are allowed, provided the bank is satisfied that payment from a foreign guarantor will be received in accordance with the exchange control rulings, should it be required to effect a payment under the guarantee.
Controls on direct investment
Outward direct investmentPrivate individuals are allowed to invest abroad up to the equivalent of E 750,000. Applications by corporate entities abroad require approval, which is granted on merit.
Controls on liquidation of direct investmentNo.
Controls on real estate transactions
Purchase abroad by residentsThese transactions are subject to the prior approval of the CBS. Private individuals may invest in real estate within the SADC region with prior CBS approval.
Purchase locally by nonresidentsPurchases by nonresidents are subject to approval. Applicants must go through the Land Speculation Board to determine if there is effective local demand.
Sale locally by nonresidentsThese transactions require prior CBS approval.
Controls on personal capital transactionsAll personal capital transfers are controlled. Private individuals are allowed to invest abroad up to the equivalent of E 750,000.
LoansThese transactions require prior CBS approval. The annual limit on loans is E 30,000 a person.
By residents to nonresidentsYes.
To residents from nonresidentsYes.
Gifts, endowments, inheritances, and legacies
By residents to nonresidentsThe annual limit of gift transfers is E 30,000 a person. Documentary proof is required for legacies and distributions of estates.
To residents from nonresidentsDocumentary evidence for these transactions must be provided.
Settlement of debts abroad by immigrantsYes.
Transfer of assetsControls apply to funds drawn from blocked accounts.
Transfer abroad by emigrantsThe settling-in allowance for emigrants is E 750,000 a single person or E 1.5 million a family.
Transfer into the country by immigrantsYes.
Transfer of gambling and prize earningsTransfers of casino, gambling, and lottery winnings by nonresidents may be effected through ADs upon presentation of documentary evidence. Residents are not allowed to participate in lotteries organized abroad.
Provisions specific to commercial banks and other credit institutions
Borrowing abroadResidents are not permitted to borrow funds from abroad without prior approval.
Lending to nonresidents (financial or commercial credits)Yes.
Lending locally in foreign exchangeYes.
Differential treatment of deposit accounts in foreign exchange
Reserve requirementsYes.
Liqiud asset requirementsYes.
Differential treatment of deposit accounts held by nonresidents
Reserve requirementsThe ratio is 3% of a bank’s total domestic public liabilities, excluding any balances for which the bank is liable to any financial institution; 100% of vault cash is eligible to satisfy the reserve requirement.
Liquid asset requirementsThe ratio is 10% of total public liabilities for the Swaziland Development and Savings Bank and 13% for commercial banks.
Investment regulations
In banks by nonresidentsYes.
Open foreign exchange position limits
On resident assets and liabilitiesYes.
On nonresident assets and liabilitiesYes.
Provision specific to institutional investors
Limits (max.) on securities issued by nonresidentsYes.
Limits (max.) on investment portfolio held abroadYes.
Limits (min.) on investment portfolio held locallyInstitutional investors are allowed to invest abroad 35% of their assets in Swaziland by way of asset swaps after obtaining CBS approval.
Other controls imposed by securities lawsNo.
Changes During 2004
Exchange arrangementMarch 4. The South African rand was declared official legal tender.

    Other Resources Citing This Publication