Annual Report on Exchange Arrangements and Exchange Restrictions 2005
Chapter

DOMINICA

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

Status Under IMF Articles of Agreement
Article VIIIDate of acceptance: December 13, 1979.
Exchange Arrangement
CurrencyThe currency of Dominica is the Eastern Caribbean dollar, issued by the ECCB.
Exchange rate structureUnitary.
Classification
Exchange arrangement with no separate legal tenderThe Eastern Caribbean dollar is pegged to the U.S. dollar under a currency board arrangement at EC$2.70 per US$1.
Exchange taxNo.
Exchange subsidyNo.
Forward exchange marketNo.
Arrangements for Payments and Receipts
Prescription of currency requirementsSettlements with residents of the territories participating in the ECCB Agreement must be made in Eastern Caribbean dollars; those with member countries of the CARICOM must be made in the currency of the CARICOM country concerned. Settlements with residents of other countries may be made in any foreign currency that is acceptable to the country where the settlement is being made. Effective January 1, 2005, the Securities Act allows non- OECS member countries to trade on the OECS exchange.
Payments arrangements
Regional arrangementsDominica is a member of the CARICOM
Clearing agreementsAs a member of the CARICOM, Dominica participates in the CMCF.
Administration of controlExchange control is administered by the MOF and applies to all countries outside the ECCB area. The MOF has delegated to commercial banks certain powers to approve sales of foreign currencies. Effective September 1, 2004, foreign currency transactions in excess of EC$250,000 no longer require approval by the MOF. Exchange controls are not applied to authorized import payments. The Ministry of Trade administers import and export arrangements and controls.
International security restrictionsTrade with Iraq is prohibited.
In accordance with UN sanctionsYes.
Payments arrears
OfficialYes.
Controls on trade in gold (coins and/or bullion)
Controls on domestic ownership and/or tradeResidents are permitted to acquire and hold gold coins for numismatic purposes only.
Controls on external tradeSmall quantities of gold may be imported for industrial purposes only with the approval of the MOF.
Controls on exports and imports of banknotes
On exports
Domestic currencyThe exportation of Eastern Caribbean dollar notes and coins outside the ECCB area is limited to amounts prescribed by the ECCB.
Resident Accounts
Foreign exchange accounts permittedYes.
Held domesticallyThese accounts are normally confined to major exporters and may be credited only with foreign currencies obtained abroad. Payments from these accounts do not require approval.
Approval requiredYes.
Accounts in domestic currency held abroadn.a.
Accounts in domestic currency convertible into foreign currencyYes.
Nonresident Accounts
Foreign exchange accounts permittedThese accounts are permitted, but approval is required.
Domestic currency accountsYes.
Convertible into foreign currencyEffective September 1, 2004, transactions in excess of EC$250,000 no longer require approval from the MOF.
Blocked accountsNo.
Imports and Import Payments
Foreign exchange budgetNo.
Financing requirements for importsNo.
Documentation requirements for release of foreign exchange for importsPayments for authorized imports are permitted upon presentation to a commercial bank of documentary evidence of purchase.
Letters of creditYes.
Import licenses and other nontariff measuresAll imports from Iraq are prohibited.
Negative listImports of specified goods originating from non-OECS countries, Belize, and CARICOM countries require a license. Imports of certain goods from the more developed countries of the CARICOM (Barbados, Guyana, Jamaica, and Trinidad and Tobago) also require a license.
Open general licensesCertain goods require a license for public health or safety reasons.
Licenses with quotasThere are certain quantitative restrictions on imports of beverages, flour, and margarine; quotas are allocated to traditional importers based on their historical market shares.
Import taxes and/or tariffsMost rates are ad valorem. Dominica applies the fourth phase of the CARICOM CET. The maximum tariff on most non-CARICOM goods is 20%. Lower rates apply to machinery (zero to 15%) and some essential foodstuffs (10% to 15%), while higher rates apply to domestic appliances (25% to 40%) and motor vehicles (25% to 45%). Specific duties are applied to some goods. Imports are also subject to a 3% customs service charge.
State import monopolyBulk imports of sugar and rice are effected by a state agency.
Exports and Export Proceeds
Repatriation requirementsYes.
Surrender requirementsThe conversion of export proceeds to an ECCB currency account is mandatory, unless the exporter has a foreign currency account to which the proceeds may be credited.
Financing requirementsn.a.
Documentation requirementsNo.
Export licensesExports to Iraq are prohibited, and specific licenses are required for the exportation of protected plant and animal species to any destination.
Without quotasYes.
Export taxesBananas exported by the Dominica Banana Marketing Corporation are subject to a levy of 1% if the export price is between EC$0.55 and EC$0.60 a pound; if the export price exceeds EC$0.60 a pound, an additional levy equivalent to 25% of the excess is imposed.
Payments for Invisible Transactions and Current Transfers
Controls on these transfersEffective September 1, 2004, commercial banks are authorized to sell foreign currency in amounts exceeding the equivalent of EC$250,000 without MOF approval.
Trade-related payments
Prior approvalYes.
Quantitative limitsYes.
Indicative limits/bona fide testYes.
Investment-related payments
Prior approvalYes.
Quantitative limitsYes.
Indicative limits/bona fide testYes.
Payments for travel
Prior approvalYes.
Quantitative limitsYes.
Indicative limits/bona fide testYes.
Personal paymentsThere are controls on payments for family maintenance and alimony, medical expenses, remittances of pensions, and educational expenses.
Prior approvalYes.
Indicative limits/bona fide testBona fide tests apply to payments of medical expenses.
Foreign workers’ wages
Prior approvalEarnings of foreign workers may be remitted after settlement of all taxes and other public liabilities.
Credit card use abroad
Prior approvalYes.
Quantitative limitsYes.
Indicative limits/bona fide test
Other payments
Prior approvalYes.
Indicative limits/bona fide testYes.
Proceeds from Invisible Transactions and Current Transfers
Repatriation requirementsYes.
Surrender requirementsForeign currency proceeds from these transactions must be sold to a bank or deposited into a foreign currency account.
Restrictions on use of fundsNo.
Capital Transactions
Controls on capital transactionsEffective September 1, 2004, outward transfers of capital in excess of EC$250,000 or its equivalent no longer require MOF approval.
Controls on capital and money market instruments
On capital market securities
Shares or other securities of a participating nature
Purchase abroad by residentsYes.
Bonds or other debt securitiesThe regulations governing shares or other securities of a participating nature apply.
On money market instrumentsThe regulations governing shares or other securities of a participating nature apply.
On collective investment securities
Purchase abroad by residentsYes.
Controls on derivatives and other instrumentsn.a.
Controls on credit operationsAll credit operations by residents to nonresidents require MOF approval.
Commercial credits
By residents to nonresidentsYes.
Financial credits
By residents to nonresidentsYes.
Guarantees, sureties, and financial backup facilities
By residents to nonresidentsYes.
Controls on direct investment
Outward direct investmentYes.
Inward direct investmentNonresidents are generally required to have an alien landholding license to hold shares in private and public companies and to hold property.
Controls on liquidation of direct investmentProceeds may be remitted after the discharge of any related liabilities.
Controls on real estate transactions
Purchase abroad by residentsYes.
Purchase locally by nonresidentsAn alien landholding license is required.
Controls on personal capital transactions
Loans
By residents to nonresidentsYes.
Gifts, endowments, inheritances, and legacies
By residents to nonresidentsYes.
Settlement of debts abroad by immigrantsYes.
Transfer of assets
Transfer abroad by emigrantsYes.
Transfer of gambling and prize earningsYes.
Provisions specific to commercial banks and other credit institutions
Lending to nonresidents (financial or commercial credits)MOF approval is required.
Lending locally in foreign exchangeThese transactions generally are not permitted.
Provisions specific to institutional investorsNo.
Other controls imposed by securities lawsNo.
Changes During 2004
Arrangements for payments and receiptsSeptember 1. The requirement of MOF approval for foreign currency transactions exceeding the equivalent of EC$250,000 was abolished.
Nonresident accountsSeptember 1. The requirement of MOF approval for foreign currency transactions exceeding the equivalent of EC$250,000 was abolished.
Payments for invisible transactions and current transfersSeptember 1. The requirement of MOF approval for commercial bank sales of foreign currency exceeding the equivalent of EC$250,000 was abolished.
Capital transactionsSeptember 1. The requirement of MOF approval for outward transfers exceeding the equivalent of EC$250,000 was abolished.
Changes During 2005
Arrangements for payments and receiptsJanuary 1. Non-OECS member countries were allowed to trade on the OECS exchange.

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