Annual Report on Exchange Arrangements and Exchange Restrictions 2005
Chapter

BOSNIA AND HERZEGOVINA

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 XIVYes.
Exchange Arrangement
CurrencyThe currency of Bosnia and Herzegovina is the convertible marka.
Other legal tenderEuro banknotes and coins also circulate freely and are used for payments.
Exchange rate structureUnitary.
Classification
Currency board arrangementThe convertible marka is pegged to the euro at the rate of KM 1 per €0.51129.
Exchange taxNo.
Exchange subsidyNo.
Forward exchange marketNo.
Arrangements for Payments and Receipts
Prescription of currency requirementsControls apply only to prevent money laundering.
Payments arrangementsNo.
Administration of controlNo.
International security restrictions
In accordance with IMF Executive Board Decision No. 144-(52/51)Yes.
In accordance with UN sanctionsIn accordance with the relevant UN Security Council resolutions, restrictions are imposed on certain financial transactions related to listed terrorist groups
Payments arrearsNo.
Controls on trade in gold (coins and/or bullion)No.
Controls on exports and imports of banknotesControls apply on exports and imports of domestic and foreign currency banknotes.
Resident Accounts
Foreign exchange accounts permittedYes.
Held domesticallyIndividuals and exporters may hold foreign exchange in accounts with commercial banks and do not need to supply evidence of the source of these funds.
Held abroadYes.
Approval requiredLegal entities need approval from the relevant ministry.
Accounts in domestic currency held abroadYes.
Accounts in domestic currency convertible into foreign currencyYes.
Nonresident Accounts
Foreign exchange accounts permittedYes.
Domestic currency accountsYes.
Convertible into foreign currencyYes.
Blocked accountsYes.
Imports and Import Payments
Foreign exchange budgetNo.
Financing requirements for importsNo.
Advance payment requirementsImports must arrive within 90 days from the date of the advance payment.
Documentation requirements for release of foreign exchange for importsCommercial banks may require documents verifying the purpose of the transaction before effecting payment.
Import licenses and other nontariff measuresThere are no import quotas for any product. All imports are free from licensing requirements.
Positive listYes.
Negative listThere is no official list of prohibited imports, but the Council of Ministers may establish such a list as circumstances require.
Open general licensesYes.
Other nontariff measuresMeasures related to security and public health apply.
Import taxes and/or tariffsImport tariffs range from zero to 15%, with an average unweighted rate of 6%.
State import monopolyNo.
Exports and Export Proceeds
Repatriation requirementsYes.
Financing requirementsNo.
Documentation requirementsExporters must be authorized to engage in foreign trade. Customs requires that exporters provide documents accompanying the goods; in some cases, documents verifying the origin of the goods are also required. Approval from the Ministry of Foreign Trade is required for exports of military equipment, blood, narcotics and medicines containing narcotics, and other pharmaceutical products.
Preshipment inspectionYes.
Export licensesExports are free of restrictions except for certain products, such as weapons, drugs, and works of art, for which permits are required.
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 fundsFollowing an agreement with Germany, the Central Bank of Bosnia and Herzegovina will provide documentation to Germany on pensions from Germany that are being paid by the commercial banks under German jurisdiction to workers in Bosnia and Herzegovina.
Capital Transactions
Controls on capital transactionsSecurities market participants must be authorized to trade on the organized markets, in accordance with laws on securities transactions.
Controls on capital and money market instruments
On capital market securities
Shares or other securities of a participating nature
Purchase locally by nonresidentsYes.
On collective investment securities
Purchase locally by nonresidentsYes.
Sale or issue locally by nonresidentsYes.
Controls on derivatives and other instruments
Purchase locally by nonresidentsYes.
Sale or issue locally by nonresidentsYes.
Controls on credit operations
Guarantees, sureties, and financial backup facilities
By residents to nonresidentsPrudential regulations on banks apply.
Controls on direct investmentInvestments must be registered with the relevant ministry.
Inward direct investmentForeign equity ownership may not exceed 49% of the equity of an enterprise engaged in the production and sale of arms, ammunition, explosives for military use, and military equipment, or in the dissemination of public information.
Controls on liquidation of direct investmentYes.
Controls on real estate transactions
Purchase locally by nonresidentsA reciprocity agreement applies to countries that were previously part of the former Republic of Yugoslavia.
Controls on personal capital transactions
Loans
By residents to nonresidentsYes.
To residents from nonresidentsYes.
Gifts, endowments, inheritances, and legacies
By residents to nonresidentsYes.
To residents from nonresidentsYes.
Transfer of assets
Transfer abroad by emigrantsYes.
Transfer of gambling and prize earningsYes.
Provisions specific to commercial banks and other credit institutionsThe Foreign Exchange Entity Law and the Banking Law regulate these transactions.
Borrowing abroadYes.
Maintenance of accounts abroadYes.
Lending locally in foreign exchangeYes.
Investment regulations
Abroad by banksYes.
In banks by nonresidentsYes.
Open foreign exchange position limits
On resident assets and liabilitiesYes.
On nonresident assets and liabilitiesYes.
Provisions specific to institutional investors
Limits (max.) on securities issued by nonresidentsSecurities of a particular company may not comprise more than 10% of total assets of the Investment Fund.
Other controls imposed by securities lawsThere are legal controls on stocks, shares, and securities.
Changes During 2004
No significant changes occurred in the exchange and trade system.

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