Annual Report on Exchange Arrangements and Exchange Restrictions 2005
Chapter

TIMOR-LESTE

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: July 23, 2002.
Exchange Arrangement
CurrencyThe currency of Timor-Leste is the U.S. dollar.
Other legal tenderTimorese coins also circulate; these are legally convertible to U.S. dollars at par.
Exchange rate structureUnitary.
Classification
Exchange arrangement with no separate legal tenderThe U.S. dollar is legal tender and circulates freely. Foreign exchange transactions are effected through three foreign-owned commercial banks and one licensed currency exchange bureau.
Exchange taxNo.
Exchange subsidyNo.
Forward exchange marketNo.
Arrangements for Payments and Receipts
Prescription of currency requirementsAll domestic transactions and settlements must be conducted in domestic currency.
Use of foreign exchange among residentsYes.
Payments arrangementsNo.
Administration of controlOverall responsibility for the administration of exchange controls rests with the Banking and Payments Authority, which has the power to regulate the payment and settlement system for domestic and foreign currency.
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 permittedYes.
Held domesticallyYes.
Held abroadYes.
Accounts in domestic currency held abroadYes.
Accounts in domestic currency convertible into foreign currencyYes.
Nonresident Accounts
Foreign exchange accounts permittedYes.
Domestic currency accountsYes.
Convertible into foreign currencyYes.
Blocked accountsNo.
Imports and Import Payments
Foreign exchange budgetNo.
Financing requirements for importsNo.
Documentation requirements for release of foreign exchange for importsNo.
Import licenses and other nontariff measuresNo.
Import taxes and/or tariffsWith the exception of selected items (e.g., cigarettes and alcohol—with certain limits—and the household effects of returning former residents), a uniform ad valorem tariff of 6% is levied on all imports, and excise taxes are levied on imports of selected goods at specific or ad valorem rates of 10% to 170%, depending on the types of goods. A sales tax of 6% is levied on the combined value of customs assessment, import duty, and excise tax.
State import monopolyNo.
Exports and Export Proceeds
Repatriation requirementsNo.
Financing requirementsNo.
Documentation requirementsNo.
Export licensesNo.
Export taxesNo.
Payments for Invisible Transactions and Current Transfers
Controls on these transfersNo.
Proceeds from Invisible Transactions and Current Transfers
Repatriation requirementsNo.
Restrictions on use of fundsNo.
Capital Transactions
Controls on capital transactionsDomestic capital and money markets have not yet been developed.
Controls on capital and money market instrumentsNo.
Controls on derivatives and other instrumentsNo.
Controls on credit operationsNo.
Controls on direct investmentNo.
Controls on liquidation of direct investmentNo.
Controls on real estate transactionsOwnership of land by foreigners is prohibited.
Purchase locally by nonresidentsYes.
Sale locally by nonresidentsYes.
Controls on personal capital transactionsNo.
Provisions specific to commercial banks and other credit institutions
Lending locally in foreign exchangeAll domestic transactions must be conducted in dollars.
Purchase of locally issued securities denominated in foreign exchangeAll domestic transactions must be conducted in dollars.
Provisions specific to institutional investorsNo.
Other controls imposed by securities lawsNo.
Changes During 2004
No significant changes occurred in the exchange and trade system.

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