Annual Report on Exchange Arrangements and Exchange Restrictions 2005
Chapter

URUGUAY

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: May 2, 1980.
Exchange Arrangement
CurrencyThe currency of Uruguay is the Uruguayan peso.
Exchange rate structureUnitary.
Classification
Independently floatingThe exchange rate of the Uruguayan peso is determined on the basis of supply and demand, although the Central Bank of Uruguay (CBU) reserves the right to intervene to ensure orderly market conditions. The dollar is the intervention currency.
Exchange taxPurchases of foreign exchange by public sector institutions are subject to a tax of 2%, with the exception of those by the CBU and official banks, which are exempt from the tax.
Exchange subsidyNo.
Forward exchange marketUnder a contract executed between the CBU and Banco de la Republica Oriental del Uruguay, the latter sells dollars forward to the CBU (however, this facility has not been used since January 9, 2003). Effective August 24, 2004, the central bank established a market for forward purchases of dollars and pesos.
Official cover of forward operationsAll open positions are covered through immediate offsetting transactions in the spot market.
Arrangements for Payments and Receipts
Prescription of currency requirementsAll settlements of balances under the multilateral clearing system are made in dollars.
Payments arrangements
Bilateral payments arrangements
Payments arrangements
InoperativeA bilateral payments arrangement with Cuba is inoperative.
Regional arrangementsPayments between Uruguay and the other LAIA countries may be made through accounts maintained with each other by the central banks within the framework of the multilateral clearing system of the LAIA.
Clearing agreementsYes.
Administration of controlOperations are carried out through banks and finance houses that have been authorized by the CBU.
International security restrictionsNo.
Payments arrearsNo.
Controls on trade in gold (coins and/or bullion)
Controls on domestic ownership and/or tradeResidents and nonresidents may freely purchase, hold, and sell gold with a fineness of not less than 0.9.
Controls on external tradeResidents may freely import and export gold with a fineness of not less than 0.9. Gold for industrial purposes is subject to the general policy that governs the exportation, importation, and trading of goods.
Controls on exports and imports of banknotesNo.
Resident Accounts
Foreign exchange accounts permittedYes.
Held domesticallyYes.
Held abroadYes.
Accounts in domestic currency held abroadn.r.
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 measures
Negative listThe National Customs Office maintains a negative list.
Open general licensesAll imports are subject to registration that is generally valid for 180 days; goods must be cleared through customs during that period.
Import taxes and/or tariffsUnder MERCOSUR, a CET exists among Argentina, Brazil, Paraguay, and Uruguay. There are 11 tariffs. The maximum rate is 15%. Uruguay imposes a 2% tariff on capital goods and computer and telecommunications equipment, although a large number of capital goods enjoy a zero rate until December 2005. Under MERCOSUR, each country has a list of 100 items that have CET waivers until December 2005.
State import monopolyImports of oil and oil by-products are subject to a state monopoly.
Exports and Export Proceeds
Repatriation requirementsNo.
Financing requirementsNo.
Documentation requirementsNo.
Export licenses
Without quotasOccasionally, and for special reasons (e.g., stock position, protection, or sanitary considerations), certain exports are prohibited or are subject to special requirements.
With quotasNo.
Export taxesExports of cured, pickled, and wet blue hides are subject to a 5% tax.
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 transactionsNo.
Controls on capital and money market instrumentsThe Capital Market Securities and Negotiable Obligations Law provides a framework in which financial markets are largely self-regulating but supervised by the CBU. Private pension funds, as well as insurance companies, are regulated separately. Although private pension funds must hold a minimum percentage of 30% in the form of government securities, transitional time deposits with the CBU are permitted without limitations. In the public sector, the type of transaction authorized depends on the type of institution. Public institutions are bound by their own regulations, and the central and sub-departmental governments use their own more restrictive procedures.
On collective investment securitiesThe Investment Funds Law governs the tendering of local and foreign investment funds, and has provisions on investment policy, as well as a number of requirements regarding conflict of interest and custody of securities.
Controls on derivatives and other instrumentsn.r.
Controls on credit operationsNo.
Controls on direct investmentNo.
Controls on liquidation of direct investmentNo.
Controls on real estate transactionsNo.
Controls on personal capital transactionsNo.
Provisions specific to commercial banks and other credit institutions
Differential treatment of deposit accounts in foreign exchange
Reserve requirementsThe mandatory minimum reserve requirements for deposits in local currency are 17%, 9%, 6%, and 4% for maturities of less than 30 days, 30 to 90 days, 91 to 180 days, and 181 to 367 days, respectively.
The mandatory reserve requirements on foreign currency interest-bearing deposits are 25% for maturities of less than 180 days and 19% for longer maturities. In addition, a mandatory minimum interest–bearing reserve requirement of 15% is applied to total deposits in foreign currency. Certain banks are subject to higher reserve requirements. Until January 1, 2004, banks were required to partially satisfy this requirement by holding dollar-denominated certificates of deposit issued by the CBU in an amount equal to at least 6% of total deposits. The remaining reserve requirement is met with deposits in the CBU. Reserves are computed on the basis of daily deposits, including weekends. For foreign currency deposits, at least 90% of the required reserves need to be complied with on a daily basis. For peso deposits, reserve balances are allowed to be less than the required level for up to four days a month without incurring a fine.
Differential treatment of deposit accounts held by nonresidents
Reserve requirementsForeign currency deposits of nonresidents are exempt from the foreign currency reserve requirement.
Liquid asset requirementsAt least 30% of nonresident deposits are required to be held in a high-quality asset portfolio with a minimum of 15% in liquid assets.
Open foreign exchange position limitsA ceiling is placed on foreign or local currency asset positions of 150% of the book value equity less administrative fixed assets (i.e., nonperforming loans that are two years or more overdue, fixed assets, investments, and deferred charges). The ceiling on the long or short asset-liability positions in foreign currency–denominated “operations to be settled” (i.e., future contracts and sales of securities subject to repurchase agreements) is 150% of the book value equity less administrative fixed assets. In addition, a ceiling applies on the foreign currency position (after deduction of the operations to be settled position) of 170% of the book value equity less administrative fixed assets.
Provisions specific to institutional investorsFor foreign currency, the same day buy/sell ceiling for pension funds is 0.4% of assets or the equivalent of $2 million. However, if 0.4% of assets is less than $1 million, it may trade up to that absolute amount daily. Further, there is a limit on trading the same instrument on the same day of up to 1.5% of the pension fund assets for the previous day.
Limits (max.) on investment portfolio held abroadInsurance companies may invest abroad a maximum of 30% of total assets used for covering technical provisions and required capital.
Limits (min.) on investment portfolio held locallyPrivate pension funds must hold a minimum of 30% and a maximum of 60% of total assets in the government securities. In the public sector, the type of operation permitted depends on the type of institution. Public institutions are bound by their own by-laws, and the central government and sub-governments use their own procedures, which are more restrictive. Effective August 24, 2004, pension funds are required to hold 40% (previously, 30%) of their assets in peso-denominated instruments. With respect to this limit, private issue securities and personal loans to affiliates and social security beneficiaries are calculated at 1.8% of their value.
Currency-matching regulations on assets/liabilities compositionInsurance companies must match assets with liabilities in each currency.
Other controls imposed by securities lawsEffective January 23, 2004, requirements and limits apply on the investment of provident funds in instruments that constitute financial trusts.
Changes During 2004
Exchange arrangementAugust 24. The central bank established a market for forward purchases of dollars and pesos.
Capital transactions
Provisions specific to commercial banks and other credit institutionsJanuary 1. The requirement that banks hold 6% of foreign currency assets in dollar-denominated certificates of deposit issued by the CBU was eliminated.
Provisions specific to institutional investorsAugust 24. The share of assets that pension funds were required to invest in pesodenominated instruments was raised to 40% from 30%.
Other controls imposed by securities lawsJanuary 23. Requirements and limits were established for the investment of provident funds in instruments that constitute financial trusts.

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