Annual Report on Exchange Arrangements and Exchange Restrictions 2005
Chapter

UGANDA

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: April 5, 1994.
Exchange Arrangement
CurrencyThe currency of Uganda is the Uganda shilling.
Exchange rate structureUnitary.
Classification
Independently floatingThe external value of the Uganda shilling is determined in the interbank foreign exchange market. Certain transactions may be effected in exchange bureaus that are licensed to buy and sell foreign exchange at freely negotiated rates.
Exchange taxNo.
Exchange subsidyNo.
Forward exchange marketAuthorized banks may deal with customers in the forward exchange market.
Arrangements for Payments and Receipts
Prescription of currency requirementsAuthorized payments, including import payments to nonresidents, may be made in Uganda shillings to the credit of a nonresident account in Uganda or in any other currency that is appropriate to the country of residence of the payee.
Payments arrangements
Bilateral payments arrangements
InoperativeTrade and payments agreements exist with Algeria, Cuba, Egypt, the Democratic People’s Republic of Korea, and Libya.
Regional arrangementsUnder the terms of the East African Cooperation Agreement, Uganda, Kenya, and Tanzania shillings are now freely convertible in the three countries. Excess holdings of Kenya and/or Tanzania shillings are repatriated to the respective central banks for immediate credit in dollars.
Clearing agreementsUganda maintains clearing arrangements with Burundi, the Democratic Republic of the Congo, and Rwanda.
The Bank of Uganda (BOU) settles accounts in dollars with COMESA member countries through the COMESA clearinghouse. Residents of member countries may use national currencies in day-to-day payments during a transaction period of two calendar months; the monetary authorities settle net balances at the end of this period in convertible currencies.
Administration of controlNo.
International security restrictions
In accordance with UN sanctionsTransactions are not allowed with countries subject to UN sanctions.
Payments arrearsArrears are normally paid in the currency in which the loan was denominated, although the government may negotiate a new payment arrangement with the creditor.
OfficialYes.
PrivateYes.
Controls on trade in gold (coins and/or bullion)
Controls on domestic ownership and/or tradeResidents may hold and acquire gold coins for numismatic purposes. Only monetary authorities and licensed dealers are allowed to hold or acquire gold in any form other than jewelry.
Controls on external tradeDealing in gold in any form other than jewelry constituting the personal effects of a traveler requires licenses issued by the Ministry of Energy and Mineral Development. On the basis of these licenses, the Ministry of Tourism, Trade, and Industry issues export and import permits.
Controls on exports and imports of banknotesNo.
Resident Accounts
Foreign exchange accounts permittedResidents are free to open accounts in domestic or foreign currency locally or abroad.
Held domesticallyYes.
Held abroadYes.
Accounts in domestic currency held abroadYes.
Accounts in domestic currency convertible into foreign currencyYes.
Nonresident Accounts
Foreign exchange accounts permittedNonresidents are free to open and maintain domestic or foreign currency accounts.
Domestic currency accountsNo.
Convertible into foreign currencyNo.
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 measures
Negative listImports of firearms, pornographic materials, tires, and goods banned under international agreements to which Uganda is a signatory are prohibited.
Import taxes and/or tariffsCustoms duties on goods imported from countries outside the COMESA are zero, 7%, and 15%. For COMESA members, they are zero, 4%, and 6%. The rate for machinery is zero, and duties for intermediate goods and raw materials range up to 7%.
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 transactionsYes.
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 transactions
Purchase locally by nonresidentsLeases on land granted to non-Ugandan persons, irrespective of their residency status, may not exceed 99 years.
Sale locally by nonresidentsYes.
Controls on personal capital transactionsNo.
Provisions specific to commercial banks and other credit institution
Borrowing abroadEffective February 20, 2004, borrowing abroad by commercial banks is subject to reserve requirements.
Maintenance of accounts abroadAccount balances may not exceed 25% of total capital, and the financial institution should have a good credit rating.
Lending to nonresidents (financial or commercial credits)BOU approval is required for any lending (to residents or nonresidents) exceeding 25% of core capital.
Lending locally in foreign exchangeOnly short-term lending is permitted, and it may not exceed in aggregate 80% of a bank’s total foreign currency deposits.
Differential treatment of deposit accounts in foreign exchange
Reserve requirementsBanks must maintain with the BOU unremunerated cash reserves of 10% and 9% against demand and time deposits, respectively.
Liquid asset requirementsThere are requirements of 20% against demand deposits and of 15% on time and savings deposits. These apply to both domestic and foreign currency accounts.
Open foreign exchange position limitsCommercial banks are allowed to maintain an open position equivalent to 25% of core capital.
On resident assets and liabilitiesYes.
On nonresident assets and liabilitiesYes.
Provisions specific to institutional investorsNo.
Other controls imposed by securities lawsNo.
Changes During 2004
Capital transactions
Provisions specific to commercial banks and other credit institutionsFebruary 20. Borrowing abroad by commercial banks became subject to reserve requirements.

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