Annual Report on Exchange Arrangements and Exchange Restrictions 2005
Chapter

ZAMBIA

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 19, 2002.
Exchange Arrangement
CurrencyThe currency of Zambia is the Zambian kwacha.
Exchange rate structureUnitary.
Classification
Managed floating with no predetermined path for the exchange rateThe official foreign exchange rate is determined in the interbank market. The market relies on primary dealers as market makers to provide two-way bid/offer prices during business hours with the spread based on market fundamentals and with trades quoted in lots of $50,000. All foreign currency trades are required to pass through the interbank market. The Bank of Zambia (BOZ) intervenes in the market primarily through transactions with the primary dealers but may also transact with market makers (i.e., other banks). The interbank rates provide the basis for determining the BOZ exchange rates: the BOZ’s buying rate is the simple average of the primary dealers’ low bid rates while the BOZ’s selling rate is the simple average of the primary dealers’ high offer rates.
Exchange taxNo.
Exchange subsidyNo.
Forward exchange marketNo.
Arrangements for Payments and Receipts
Prescription of currency requirementsn.a.
Payments arrangements
Regional arrangementsZambia is a member of COMESA, the COMESA Free Trade Area, RIFF, and the SADC.
Administration of controlNo.
International security restrictionsNo.
Payments arrears
OfficialYes.
PrivateYes.
Controls on trade in gold (coins and/or bullion)
Controls on external tradeImports and exports of gold in any form other than jewelry require approval from the Ministry of Mines.
Controls on exports and imports of banknotesAmounts exceeding the equivalent of $5,000 must be declared for statistical purposes.
Resident Accounts
Foreign exchange accounts permittedYes.
Held domesticallyYes.
Held abroadYes.
Accounts in domestic currency held abroadn.a.
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 imports
Letters of creditYes.
Import licenses and other nontariff measuresTrade in petroleum products requires a license. The license is granted by the Energy Regulation Board to all oil-marketing companies that meet set criteria pertaining to fuel uplift and import, pricing, and storage. All other imports, excluding those on the negative list, do not require licenses. The Ministry of Commerce, Trade, and Industry is responsible for trade arrangements.
Negative listRestrictions apply on imports of firearms, ammunition, and ivory.
Import taxes and/or tariffsMFN tariff rates range from zero to 25%. In addition, there is a 5% import declaration fee. A number of products are subject to specific rates. Imports from COMESA countries are subject to a tariff equivalent to 60% of the MFN tariff. Some imports are exempt under the Investment Act. Imports from signatories of the COMESA Free Trade Agreement are tax exempt.
State import monopolyNo.
Exports and Export Proceeds
Repatriation requirementsNo.
Financing requirementsNo.
Documentation requirementsFor statistical purposes, all exports must be declared on the prescribed export declaration form.
Export licenses
Without quotasExport declarations are required for most goods (mainly for statistical purposes), and they are administered routinely by commercial banks under authority delegated by the Ministry of Commerce, Trade, and Industry. Restrictions apply on exports of firearms, ammunition, and ivory.
With quotasWhite maize and fertilizers may be subject to a quota if domestic supply is short.
Export taxesNo.
Payments for Invisible Transactions and Current Transfers
Controls on these transfersAll payments for invisibles, except official external debt-service payments, may be effected through banks.
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 instrumentsNo.
Controls on derivatives and other instrumentsNo.
Controls on credit operations
Commercial creditsAll borrowing must be registered with the BOZ for statistical purposes.
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
Borrowing abroadInformation on borrowing abroad must be submitted to the BOZ for statistical purposes.
Open foreign exchange position limitsThe overnight overall foreign exchange and the single currency exposure limits are 15% and 10% of regulatory capital, respectively. The intraday overall foreign exchange and the single currency exposure limits may be maintained within prudential limits as established in a written policy statement by the bank’s or financial institution’s board of directors. However, these exposure limits may not exceed 30% and 20%, respectively, of regulatory 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
No significant changes occurred in the exchange and trade system.

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