Annual Report on Exchange Arrangements and Exchange Restrictions 2005
Chapter

TOGO

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: June 1, 1996.
Exchange Arrangement
CurrencyThe currency of Togo is the CFA franc.
Exchange rate structureUnitary.
Classification
Exchange arrangement with no separate legal tenderThe CFA franc is pegged to the euro, the intervention currency, at the rate of CFAF 655.957 per €1, which is the official buying and selling rate. Exchange rates for other currencies are derived from the rate for the currency concerned in the Paris foreign exchange market and the fixed rate between the euro and the CFA franc.
Exchange taxThere is a bank commission of 0.25% on transfers to all countries outside the WAEMU, which must be surrendered to the treasury.
Exchange subsidyNo.
Forward exchange marketResidents are authorized to contract forward exchange cover to settle payments related to imports and exports of goods and services. Forward exchange cover is required to be in the currency of payment stipulated in the contract. The maturity is required to be no later than the import or export payment due date stipulated in the contract.
Arrangements for Payments and Receipts
Prescription of currency requirementsTogo is linked to the French Treasury through an Operations Account; therefore, settlements with France, Monaco, and other Operations Account countries (WAEMU and CAEMC members and the Comoros) are made mainly in euros, but may also be made in other foreign currencies. Settlements outside the Operations Account area may be conducted freely.
Use of foreign exchange among residentsForeign exchange held in a WAEMU member state is required to be transferred or deposited with an authorized intermediary or, where appropriate, with the BCEAO, whether the assets belong to a resident or a nonresident.
Payments arrangements
Regional arrangementsAn Operations Account is maintained with the French Treasury that links Operations Account countries. Most purchases or sales of foreign currencies or euros against CFA francs are ultimately settled through a debit or credit to the Operations Account.
Clearing agreementsA multilateral clearing agreement exists between the WAEMU members and Cape Verde, The Gambia, Ghana, Guinea, Liberia, Nigeria, and Sierra Leone.
Administration of controlExchange control is administered jointly by the MOF and the BCEAO. Regulations governing the external financial relations of WAEMU member states delegate the approval process for most foreign exchange transactions to authorized banks, which must report on operations conducted under their authority. The only transactions that remain subject to the prior authorization of the MOF and the BCEAO relate to outward direct investment, domestic foreign exchange accounts, and accounts of residents abroad. Within the framework of the regional financial market, the issue, soliciting, and sale of foreign or domestic securities in Togo is subject to the prior approval of the RCPSFM.
International security restrictions
In accordance with UN sanctionsIn accordance with the relevant UN Security Council resolutions, the WAEMU adopted measures to freeze funds and financial assets of individuals and entities associated with terrorism.
Payments arrears
OfficialYes.
Controls on trade in gold (coins and/or bullion)
Controls on external tradeImports and exports of gold from or to any other country require prior authorization from the MOF. This provision does not apply to (1) imports and exports by the public treasury or the BCEAO, (2) imports and exports of articles with low gold content (e.g., articles with gold inlay or gold plate), and (3) imports and exports by visitors to the country of gold articles weighing no more than 500 grams.
Controls on exports and imports of banknotes
On exports
Domestic currencyThe export of CFA franc banknotes by travelers is allowed. However, repurchase of exported banknotes by the BCEAO remains suspended. Furthermore, the shipment of BCEAO banknotes between authorized intermediaries and their correspondents located outside the WAEMU is strictly prohibited.
Foreign currencyThe reexportation of foreign banknotes by nonresident travelers is allowed up to the equivalent of CFAF 500,000; the reexportation of foreign banknotes above these ceilings requires documentation demonstrating either the importation of the foreign banknotes or their purchase against other means of payment registered in the name of the traveler or through the use of nonresident deposits in local banks. Residents traveling to non-WAEMU countries are allowed to take out foreign currency up to the equivalent of CFAF 2 million a person. Larger amounts may be exported in the form of traveler’s checks, bank drafts, or other means of payment.
On imports
Foreign currencyResident and nonresident travelers may bring in any amount of foreign banknotes and coins (except gold coins) of countries outside the Operations Account area. Nonresidents bringing in foreign banknotes and foreign currency traveler’s checks exceeding the equivalent of CFAF 1 million must declare them to customs when entering Togo. Residents bringing in foreign banknotes exceeding the equivalent of CFAF 300,000 must surrender the excess amount to an authorized intermediary bank within eight days of their return.
Resident Accounts
Foreign exchange accounts permittedResidents are allowed to hold foreign exchange accounts after obtaining authorization from the MOF, subsequent to the approval of the BCEAO.
Held domesticallyYes.
Held abroadYes.
Accounts in domestic currency held abroadn.a.
Accounts in domestic currency convertible into foreign currencyNo.
Nonresident Accounts
Foreign exchange accounts permittedNonresidents are allowed to open these accounts, but BCEAO authorization is required.
Domestic currency accountsBecause the BCEAO has suspended the repurchase of banknotes circulating outside the WAEMU area, nonresident accounts may not be credited or debited with BCEAO banknotes. These accounts may not be overdrawn without prior MOF authorization. Transfers of funds between nonresident accounts are not restricted.
Convertible into foreign currencyNonresidents may freely debit their accounts in CFA francs for the purpose of purchasing foreign currency on the official foreign exchange market.
Blocked accountsNo.
Imports and Import Payments
Foreign exchange budgetNo.
Financing requirements for importsNo.
Documentation requirements for release of foreign exchange for importsImporters may purchase foreign exchange for import payments after establishing bank payment order accounts and submitting supporting documents, but not earlier than eight days before shipment if a documentary credit is opened, or on the due date of payment if the products have already been imported.
Domiciliation requirementsA domiciliation requirement applies to all imports from outside the franc zone that exceed CFAF 5 million.
Preshipment inspectionAll imports arriving by sea and exceeding the equivalent of CFAF 3 million, and overland imports exceeding CFAF 1.5 million, are subject to prior inspection.
Letters of creditLCs may be opened for all import operations, regardless of origin.
Import licenses and other nontariff measures
Positive listYes.
Negative listCertain imports, such as narcotics, are prohibited from any source.
Open general licensesLicenses are issued for imports of pharmaceuticals, explosives, and firearms. Imports of potatoes may be prohibited during the period when local production is adequate to meet local demand (between August and February).
Other nontariff measuresCertain imports, such as narcotics, are prohibited from any source.
Import taxes and/or tariffsThe CET of the WAEMU consists of four rates (zero, 5%, 10%, and 20%). A common solidarity fee of 1% and a tax of 0.5%, based on the c.i.f. value of imports, are levied on ECOWAS imports. A statistical tax of 1% is levied on all imports.
State import monopolyNo.
Exports and Export Proceeds
Repatriation requirementsProceeds from exports must be received within 120 days following the shipment of the goods. Proceeds from exports to WAEMU countries do not need to be repatriated.
Surrender requirementsProceeds must be surrendered to authorized banks within 30 days of the payment. The authorized intermediaries must then surrender the foreign exchange to the BCEAO by transfer through the bank of issue.
Financing requirementsNo.
Documentation requirementsAll export transactions are subject to a customs declaration. Letters of credit
Letters to creditYes.
DomiciliationAll exports of more than the equivalent of CFAF 5 million, except those to WAEMU countries, must be domiciled with an authorized bank.
Preshipment inspectionYes.
Export licensesDiamonds, gold, and all other precious metals are subject to MOF authorization. Exports to all countries require licenses in certain cases.
Without quotasYes.
Export taxesPhosphate rock is subject to a specific export tax.
Payments for Invisible Transactions and Current Transfers
Controls on these transfersPayments for invisibles to France, Monaco, and the Operations Account countries are permitted freely. Payments for invisibles related to trade are permitted by a general authorization, when the basic trade transaction has been approved or does not require authorization. Payments abroad for invisible transactions may be made freely, subject to the presentation of documentary evidence.
Investment-related paymentsCurrent transfers abroad of funds required to service loans are unrestricted. These must, however, be carried out through an authorized bank and are to be reported for statistical purposes to the MOF. Payments for depreciation of direct investments require prior authorization from the MOF, since this type of depreciation is not specifically mentioned in the regulations.
Prior approvalFunds necessary for the repayment of a loan may be transferred freely, but this must be effected through an authorized bank and reported to the MOF for statistical purposes.
Indicative limits/bona fide testThe MOF verifies transactions that require its authorization.
Payments for travelAllocations for payments exceeding the equivalent of CFAF 2 million may be taken out in traveler’s checks, bank drafts, or other means of payment.
Quantitative limitsThe threshold of foreign exchange to be surrendered by residents after travel is the equivalent of CFAF 300,000.
Indicative limits/bona fide testYes.
Personal paymentsPayments abroad relating to pensions and benefits resulting from a contract of employment, educational costs, family maintenance, or alimony may be executed freely upon presentation of appropriate documentation.
Indicative limits/bona fide testYes.
Foreign workers’ wagesPayments abroad related to wages, salaries, and honoraria; contributions and benefits; pensions and work-related activities; and service contracts are generally authorized upon presentation of the appropriate documentation.
Indicative limits/bona fide testBona fide tests are conducted by authorized agents.
Proceeds from Invisible Transactions and Current Transfers
Repatriation requirementsProceeds from invisible transactions with non-WAEMU countries must be repatriated.
Surrender requirementsProceeds from transactions with WAEMU members may be retained. All amounts due from residents of other countries with respect to services, and all income earned in those countries from foreign assets, must be surrendered within one month of the due date or the date of receipt.
Restrictions on use of fundsNo.
Capital Transactions
Controls on capital transactionsAll investments abroad by residents require prior MOF authorization, and at least 75% of the financing of such investments should be effected by borrowing from abroad. Authorization is not required in the case of capital transfers for investments of residents abroad involving securities that were previously issued or sold with the approval of the RCPSFM. Transfers of capital abroad are subject to controls. Capital inflows to WAEMU countries are unrestricted, with the exception of direct investment, which is subject to prior declaration, and certain borrowing operations, which require prior authorization.
In the implementation of regulations on capital transactions, the term “foreigner” refers to all non-WAEMU countries with respect to limiting the open positions of banks and financial institutions and with respect to the following operations: repatriation of export proceeds, issue and sale of foreign securities, exports and imports of gold, foreign direct investments, credit operations with nonresidents, and exports through the post by means of payment related to transactions in securities.
For statistical purposes related to the compilation of the balance of payments of an individual WAEMU member, all other countries are considered foreign.
Controls on capital and money market instrumentsWith the exception of the issue and sale in the country of foreign securities, operations in securities are not covered explicitly by specific laws. However, by their nature, these operations are still subject to the provisions governing foreign investment and lending.
There are no controls on transfers related to the proceeds of disinvestments by nonresidents. However, the reinvestment of proceeds from the liquidation of a foreign investment by a resident requires prior MOF authorization. Foreign investments in WAEMU countries are subject to reporting for statistical purposes. The prior authorization of the RCPSFM is required for the issuance and marketing of securities and capital assets of foreign entities, as well as for publicity and advertising of investments abroad. Any investment by residents abroad requires the prior approval of the MOF.
On capital market securities
Shares or other securities of a participating nature
Sale or issue locally by nonresidentsThe issue of securities and the sale of corporate or foreign securities in Togo by nonresidents are subject to prior RCPSFM authorization. Residents may freely purchase securities that have been previously authorized for issue and sale. Payments related to such purchases require presentation of the appropriate documentation.
There are no controls on the sale of securities resulting from the divestiture of an investment in the form of a transfer between a nonresident and a resident, subject to the regulations governing the financial settlement of the operation.
Settlement of securities transactions by transfer abroad or by credit to a nonresident account requires an exchange authorization to be submitted to the MOF for approval, accompanied by supporting documentation.
Purchase abroad by residentsPrior MOF authorization is required.
Sale or issue abroad by residentsResidents may sell local corporate securities abroad. If these operations result in foreign control of Togolese establishments, foreign investors are required to make a prior declaration to the MOF. The sale of securities to liquidate an investment abroad is subject to prior declaration to the MOF. The proceeds in foreign exchange from the sale or liquidation must be surrendered to an authorized intermediary bank.
Residents may also issue securities abroad, except for those constituting a loan. Issuance of the latter to nonresidents must be made through an authorized intermediary and must be reported to the MOF for statistical purposes, but does not require prior authorization.
Bonds or other debt securitiesThe regulations governing shares and other securities of a participating nature apply.
On money market instruments
Purchase locally by nonresidentsNonresidents may acquire money market instruments through local banks.
Sale or issue locally by nonresidentsThe sale or issue by nonresidents of money market instruments on the local market is subject to prior authorization by the RCPSFM. The transfer of the proceeds from these operations is unrestricted if the issue itself has received prior authorization, and must be effected through an authorized bank and reported to the MOF for statistical purposes.
Purchase abroad by residentsYes.
Sale or issue abroad by residentsThere are no controls on the sale of money market instruments abroad by residents. Sales to liquidate an investment must be declared in advance. The proceeds in foreign exchange of the sale or liquidation must be surrendered to an authorized intermediary bank. The issue by residents of money market instruments abroad is governed by the provisions pertaining to borrowing.
On collective investment securitiesThe regulations governing money market instruments apply.
Controls on derivatives and other instrumentsThese instruments, which are almost nonexistent in Togo, are governed by the regulations generally applicable to securities and investments. Residents may purchase and sell options freely.
Controls on credit operationsThe issue of a loan in the form of securities requires prior approval by the MOF. Such approval is not required, however, for loans contracted by authorized intermediaries or those that comply with specific conditions as to amount and interest rate. Foreign borrowing by residents is subject only to reporting for statistical purposes.
Commercial credits
By residents to nonresidentsThe granting of such credits is subject to two provisions. (1) Claims resulting from exports of goods must be collected and the corresponding amounts repatriated through the BCEAO within 30 days of the payment due date stipulated in the commercial contract. The period allowed for payment must not exceed 120 days following the shipment of the goods. (2) Claims resulting from services must also be collected and surrendered to an AD or the BCEAO no later than one month after the payment due date.
To residents from nonresidentsThese credits may be granted freely. Repayment is usually authorized, subject to presentation of the relevant proof of execution of the commercial transaction or the provision of the service, as well as the payment due date.
Financial credits
By residents to nonresidentsThe granting of financial credits requires the prior authorization of the MOF. To transfer funds abroad to service these facilities, an exchange authorization must be submitted with the required documentation to the MOF.
To residents from nonresidentsThese credits may be granted freely. Transfers of the funds must be processed through an authorized intermediary. However, if these operations take place between a direct investment company established in Togo and its parent company located abroad, they are considered direct investments and are therefore subject to prior declaration to the MOF.
Guarantees, sureties, and financial backup facilities
By residents to nonresidentsThe granting of these facilities requires prior MOF authorization.
To residents from nonresidentsThe regulations governing financial credits apply.
Controls on direct investment
Outward direct investmentPrior MOF approval is required. At least 75% of such investments must be financed by foreign loans. The investor must submit a written request specifying the authorized intermediary charged with making the payment. Whether the funds are transferred abroad or deposited to a foreign account in francs, the payment may not be made before the end of the period agreed to by the parties.
Inward direct investmentThese investments, including their transfer between nonresidents, are subject to prior declaration to the MOF for statistical purposes.
Controls on liquidation of direct investmentProceeds may be freely transferred abroad by a nonresident or credited to a foreign account in francs upon presentation of the required documentation to an authorized intermediary responsible for payment.
The liquidation of investments abroad by a resident requires a declaration to the MOF for information purposes. The reinvestment of the proceeds of the liquidation is subject to the prior authorization of the MOF. If the reinvestment has not been authorized, the proceeds of the liquidation must be repatriated within one month through an authorized intermediary.
Controls on real estate transactions
Purchase abroad by residentsThe purchase of real estate abroad by residents is subject to prior approval by the MOF, and at least 75% of such purchase is required to be financed by foreign loans. The investor must submit a written request indicating the authorized intermediary charged with making the payment. Whether the funds are transferred abroad or deposited in a foreign account in francs, the payment may not be made before the end of the period agreed to by the parties.
Purchase locally by nonresidentsThere are controls on purchases when they do not involve direct investment in an enterprise, branch, or corporation.
Sale locally by nonresidentsProceeds from the sale of real estate may be freely transferred abroad or credited to a foreign account in francs upon presentation of the required documentation to the authorized intermediary responsible for payment.
Controls on personal capital transactionsPersonal capital transactions between residents and nonresidents must be made through the BCEAO, the postal service, or an authorized intermediary bank, unless prior authorization is obtained from the MOF.
Loans
By residents to nonresidentsThese transactions require the prior authorization of the MOF. The individuals concerned may not engage in such operations as a professional occupation without first being licensed and included in the list of financial institutions.
To residents from nonresidentsThese credits may be granted freely on the condition that they are effected through an authorized bank and reported to the MOF.
Gifts, endowments, inheritances, and legacies
By residents to nonresidentsExcept for inheritances and dowries, for which payments are generally authorized, payments pertaining to other Operations Account countries require prior MOF authorization.
Settlement of debts abroad by immigrantsImmigrants who have obtained resident status must obtain prior authorization from the MOF to settle debts incurred abroad while they were nonresidents.
Transfer of assets
Transfer abroad by emigrantsUpon presentation of documents justifying their income, emigrants may transfer their pensions, rents, or salaries freely through banks. Transfers of more than the equivalent of CFAF 300,000 are subject to the submission of supporting documentation.
Provisions specific to commercial banks and other credit institutions
Borrowing abroadAuthorized intermediaries may borrow freely abroad, but these transactions must be reported to the MOF for statistical purposes.
Maintenance of accounts abroadBanks and financial institutions are not authorized to keep liquid assets outside the WAEMU zone, except to meet the needs of their current operations.
Lending to nonresidents (financial or commercial credits)These transactions may be conducted freely but are subject to prior MOF and BCEAO authorization in the case of loans, financial credits, and the purchase of securities issued abroad.
Lending locally in foreign exchangeDomestic lending denominated in foreign exchange or the purchase of foreign currency–denominated securities in Togo requires prior authorization by the MOF with approval of the BCEAO.
Purchase of locally issued securities denominated in foreign exchangeThese purchases require prior MOF approval.
Differential treatment of deposit accounts in foreign exchange
Credit controlsAny overdraft or advance granted to a nonresident requires the prior authorization of the MOF with the approval of the BCEAO.
Investment regulationsThe regulations governing foreign investments apply.
Abroad by banksYes.
In banks by nonresidentsYes.
Open foreign exchange position limitsThere are no prudential ratios; open positions result from special dispensations.
Provisions specific to institutional investorsControls are imposed by the Insurance Code of the Inter-African Conference on Insurance Markets.
Other controls imposed by securities lawsYes.
Changes During 2004
No significant changes occurred in the exchange and trade system.

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