Annual Report on Exchange Arrangements and Exchange Restrictions 2005
Chapter

BOLIVIA

Author(s):
International Monetary Fund. Monetary and Capital Markets Department
Published Date:
September 2005
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(Position as of July 31, 2005)

Status Under IMF Articles of Agreement
Article VIIIDate of acceptance: June 5, 1967.
Exchange Arrangement
CurrencyThe currency of Bolivia is the boliviano.
Other legal tenderThe dollar is also legal tender.
Exchange rate structureUnitary.
Classification
Crawling pegThe official selling rate is determined daily by the Central Bank of Bolivia (CBB) at a daily competitive auction (“bolsín”). The Committee for Exchange and Monetary Policy (CEMP) makes recommendations to the president of the CBB on the amount of foreign exchange to be auctioned and a floor price below which the CBB will not accept any bids. This floor price, which is expressed in dollars, is the official exchange rate. The CEMP determines the difference between the selling rate and a buying rate, which is currently Bs 0.02. The private sector may participate in the auctions (with a minimum bid of $100,000 or the equivalent) through financial institutions that have accounts with the CBB.
Exchange taxEffective July 1, 2005, a temporary tax applies on domestic or foreign transfers or remittances of funds through authorized financial institutions without the use of current or savings accounts or through legally established money transfer agencies. The tax rate is 0.3% for the first 12 months and 0.25% for the following 12 months.
Exchange subsidyNo.
Forward exchange marketNo.
Arrangements for Payments and Receipts
Prescription of currency requirementsNo.
Payments arrangements
Regional arrangementsPayments between Bolivia and the other LAIA countries must be made through accounts maintained with each other by the CBB and the central banks of the countries concerned, within the framework of the multilateral clearing system of the LAIA.
Clearing agreementsYes.
Administration of controlThe CBB is in charge of operating the auction market for foreign exchange.
International security restrictionsNo.
Payments arrearsNo.
Controls on trade in gold (coins and/or bullion)Gold may be traded freely, subject to the following tax scale in accordance with the gross value of the sale of gold bullion: 7% for official quotations larger than $700 a troy ounce; between 4% and 7% for official quotations between $400 and $700 a troy ounce, calculated as a 0.01 factor multiplied by the official quotation; and 4% for official quotations of less than $400 a troy ounce.
Controls on exports and imports of banknotesNo.
Resident Accounts
Foreign exchange accounts permittedYes.
Held domesticallyYes.
Held abroadYes.
Accounts in domestic currency held abroadNo.
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 creditLCs have to be opened at a bank in the Bolivian banking system.
Import licenses and other nontariff measures
Negative listCertain imports are controlled for reasons of public health or national security.
Import taxes and/or tariffsBolivia applies an import tariff of 10% on consumer goods. Tariffs of zero and 5% are applied to capital goods in accordance with approved lists. A zero rate is also applied to imports of books and printed materials. Donated food, including wheat, is exempt from the import tariff.
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 transfers
Investment-related paymentsThere are no restrictions on payments for amortization of loans or depreciation of direct investments. A 25% income tax is applied to the taxable net profit, which is presumed to be 50% of the amount of profit remitted.
Indicative limits/bona fide testYes.
Proceeds from Invisible Transactions and Current Transfers
Repatriation requirementsNo.
Restrictions on use of fundsNo.
Capital Transactions
Controls on capital transactions
Controls on capital and money market instrumentsNo.
Controls on derivatives and other instrumentsNo.
Controls on credit operationsAll foreign credits, including suppliers’ credits to government agencies and autonomous entities, and credits to the private sector with official guarantees are subject to prior authorization by the national congress, which is conducted by the MOF. All cash proceeds of borrowings from foreign public sector agencies are channeled through the CBB. Commercial and financial credits to the private sector without official guarantees are not subject to authorization but must be reported to the CBB for statistical purposes.
Commercial credits
To residents from nonresidentsYes.
Financial credits
To residents from nonresidentsYes.
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 abroadShort-term foreign liabilities are subject to reserve requirements, except for liabilities incurred solely for foreign trade operations and provided that assets and liabilities are fully matched for each transaction.
Differential treatment of deposit accounts in foreign exchange
Reserve requirementsA reserve requirement of 2% is applied to time deposits in domestic currency with a maturity of up to 60 days and in foreign currency with a maturity of up to 360 days.
Liquid asset requirementsA liquid asset requirement of 10% applies to time deposits in foreign exchange with a maturity of up to 720 days.
Open foreign exchange position limitsFinancial institutions may maintain a short foreign exchange position up to the equivalent of 20% of the sum of capital and reserves and effective January 1, 2004, up to 90% (previously, 100%) of the balance of provisions for losses on the indexed foreign currency and domestic currency portfolios. The latter percentage was reduced to 70% on June 30, 2004, 50% on December 31, 2004, to 25% on June 30, 2005, and is scheduled to decline to zero on December 31, 2005.
On resident assets and liabilitiesYes.
On nonresident assets and liabilitiesYes.
Provisions specific to institutional investors
Limits (max.) on investment portfolio held abroadThe maximum limit that pension fund administrators may invest abroad varies between 10% and 50% of each individual capitalization fund. The specific limit within this range is decided by the CBB. The CBB sets the annual limit—currently 10%—for investments by insurance companies in securities issued abroad. On January 27, 2004, the CBB adopted limits on investments abroad by insurance companies; the new limits apply effective January 18, 2005.
Other controls imposed by securities lawsNo.
Changes During 2004
Capital transactions
Provisions specific to commercial banks and other credit institutionsJanuary 1. The limit on the short foreign exchange position was reduced to 90% from 100% of the balance of provisions for losses on indexed foreign and domestic portfolios.
June 30. The limit on the short foreign exchange position was reduced to 70% from 90% of the balance of provisions for losses on indexed foreign and domestic portfolios.
December 31. The limit on the short foreign exchange position was reduced to 50% from 70% of the balance of provisions for losses on indexed foreign and domestic portfolios.
Provisions specific to institutional investorsJanuary 27. The CBB adopted limits on investments abroad by insurance companies.
Changes During 2005
Exchange arrangementJuly 1. A temporary tax on certain financial transactions was introduced at the rate of 0.3% for the first 12 months and 0.25% for the following 12 months.
Capital transactions
Provisions specific to commercial banks and other credit institutionsJune 30. The limit on the short foreign exchange position was reduced to 25% from 50% of the balance of provisions for losses on indexed foreign and domestic portfolios.
Provisions specific to institutional investorsJanuary 18. The CBB’s new limits on investments abroad of insurance companies went into effect.

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