Annual Report on Exchange Arrangements and Exchange Restrictions 2005


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: August 31, 1970.
Exchange Arrangement
CurrencyThe currency of Ecuador is the U.S. dollar.
Other legal tenderA limited issue of domestic coins of small value remains in circulation to facilitate small transactions. These are fully backed by dollars.
Exchange rate structureUnitary.
Exchange arrangement with no separate legal tenderThe currency of Ecuador is the U.S. dollar, which circulates freely.
Exchange taxNo.
Exchange subsidyNo.
Forward exchange marketBanks and other financial institutions authorized to conduct foreign exchange transactions are permitted to conduct forward swaps and options, and transactions in other financial derivative instruments, subject to the supervision and control of the Superintendency of Banks.
Arrangements for Payments and Receipts
Prescription of currency requirementsExchange proceeds from all countries, except LAIA member countries, must be received in convertible currencies. Whenever possible, import payments must be made in the currency stipulated in the import license. Some settlements with Hungary are made through bilateral accounts.
Payments arrangements
Bilateral payments arrangements
OperativeThere are arrangements with Cuba and Hungary, under which balances are settled every four months and three months, respectively.
Regional arrangementsEcuador is a member of the LAIA.
Clearing agreementsPayments between Ecuador and the other LAIA countries may be made within the framework of the multilateral clearing system of the LAIA.
Administration of controlPublic sector foreign exchange transactions are carried out exclusively through the Central Bank of Ecuador (CBE). Exports must be registered with the CBE for statistical purposes. Private sector foreign exchange transactions related to the exportation, production, transportation, and commercialization of oil and its derivatives may be carried out through the financial market. Private sector foreign exchange transactions may be effected through banks and exchange bureaus authorized by the Superintendency of Banks.
International security restrictionsNo.
Payments arrears
OfficialThere are arrears with multilateral agencies, except the Austrian Development Cooperation, International Monetary Fund, and Latin American Reserve Fund, for which arrears are cleared 30 days after the maturity date.
PrivateCommercial banks under the control of the Deposit Insurance Agency maintain external payments arrears on commercial credit lines.
Controls on trade in gold (coins and/or bullion)No.
Controls on exports and imports of banknotesNo.
Resident Accounts
Foreign exchange accounts permittedYes.
Held domesticallyYes.
Approval requiredApproval is required for accounts denominated in currencies other than the dollar.
Held abroadPublic sector entities may hold foreign exchange accounts abroad.
Approval requiredYes.
Accounts in domestic currency held abroadThe dollar is used as domestic currency, and no distinction is made between accounts in dollars held domestically and those held abroad.
Accounts in domestic currency convertible into foreign currencyThe U.S. dollar is used as domestic currency and balances may be converted into foreign currency without restriction.
Nonresident Accounts
Foreign exchange accounts permittedYes.
Approval requiredYes.
Domestic currency accountsThere are dollar accounts.
Convertible into foreign currency Yes.
Blocked accountsNo.
Imports and Import Payments
Foreign exchange budgetNo.
Financing requirements for imports
Advance payment requirementsPrepayments for imports by the private sector are permitted.
Documentation requirements for release of foreign exchange for importsNo.
Import licenses and other nontariff measuresPrior import licenses are required for agricultural, medical, and psychotropic imports. In addition, Petroecuador (the state oil company) may, without a license, import supplies, materials, and equipment during emergencies.
Negative listImports of psychotropics, used vehicles, used tires, and used clothes are prohibited, primarily to protect the environment and public health. Imports of certain items related to health or national security are also prohibited. Certain imports require prior authorization from government ministries or agencies for ecological, health, or national security reasons.
Other nontariff measuresYes.
Import taxes and/or tariffsTariff rates for most goods are zero, 5%, 10%, 15%, 20%, and 35%. Automobiles are subject to a 35% rate calculated on the basis of c.i.f. value. Variable tariffs under a price band system are applied to about 140 agricultural products. Under an agreement with the WTO, tariff rates for goods subject to price bands are bound at 45%. Discriminatory excise taxes are in place against a limited number of goods, including automobiles, beer, liquors, soft drinks, and cigarettes.
State import monopolyNo.
Exports and Export Proceeds
Repatriation requirementsNo.
Financing requirementsNo.
Documentation requirements
Letters of creditYes.
Preshipment inspectionYes.
Export licensesExports require licenses and must be registered with the CBE for statistical purposes.
Without quotasThe export prices of bananas, cocoa, coffee, fish, and semifinished cocoa products are subject to minimum reference prices.
Export taxesAll crude oil exports are subject to a tax of $0.0002 a barrel. A fee of $1.02 a barrel has been modified by Petroecuador through a tariff table, based on the viscosity of the crude oil and the distance it is transported (in kilometers), and is applied to crude oil exported through a pipeline. Coffee and banana exports are subject to taxes of 2% and 0.7%, respectively.
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 transactionsYes.
Controls on capital and money market instrumentsNo.
Controls on derivatives and other instrumentsNo.
Controls on credit operationsAll foreign loans granted to or guaranteed by the government or official entities, whether or not they involve the disbursement of foreign exchange, are subject to prior approval from the CBE. A request for such approval must be submitted by the Ministry of Finance and Public Credit to the CBE, accompanied by detailed information on the loan contract and the investment projects it is intended to finance. In examining the request, the CBE considers the effects that the loan and the related investment may have on the balance of payments and on the level of indebtedness. For public sector entities, the projects to be financed must be included in the General Development Plan.
External credits with a maturity of over one year that are contracted by the private sector, either directly or through the domestic financial system, must be registered with the CBE within 45 days of disbursement. Nonregistered credits are subject to a service charge equivalent to 0.25% of the credit amount.
Commercial credits
By residents to nonresidentsCommercial credits to private enterprises are supervised by the Superintendency of Banks.
Guarantees, sureties, and financial backup facilities
By residents to 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
Differential treatment of deposit accounts in foreign exchange
Reserve requirementsThe reserve requirement for accounts denominated in dollars is 4%.
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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