Annual Report on Exchange Arrangements and Exchange Restrictions 2005
Chapter

GRENADA

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: January 24, 1994.
Exchange Arrangement
CurrencyThe currency of Grenada is the Eastern Caribbean dollar, which is 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 member countries of the CARICOM must be made either through external accounts in Eastern Caribbean dollars, in the currency of the CARICOM country concerned, or in U.S. dollars. Settlements with residents of the former Sterling Area, other than CARICOM countries, may be made in pounds sterling, in any other former Sterling Area currency, or in Eastern Caribbean dollars from external accounts. Settlements with residents of other countries are made in any foreign currency or through an external account in Eastern Caribbean dollars.
Payments arrangements
Regional arrangementsGrenada is a member of the CARICOM.
Clearing agreementsGrenada participates in the CMCF.
Administration of controlExchange control is administered by the MOF. Effective September 1, 2004, transactions in foreign currency exceeding the equivalent of EC$250,000 no longer require MOF approval. The MOF delegates to ADs the authority to approve some import payments and certain outward payments. Exchange controls are not applied to payments for authorized imports. The Trade and Industry Unit of the MOF administers trade control.
International security restrictions
In accordance with UN sanctionsRestrictions apply to trade with Libya.
Payments arrearsNo.
Controls on trade in gold (coins and/or bullion)
Controls on domestic ownership and/or tradeResidents other than the monetary authorities, ADs, and industrial users are not permitted to hold or acquire gold in any form other than jewelry or coins for numismatic purposes.
Controls on external tradeImports of gold are permitted for industrial purposes only and are subject to customs duties and charges. The MOF issues licenses to import gold. The exportation of gold is not normally permitted.
Controls on exports and imports of banknotes
On exports
Foreign currencyNonresident travelers may export, with the approval of the MOF, any foreign currency they previously brought into Grenada. Effective September 1, 2004, residents and nonresidents no longer require permission from the MOF to take out, in any one transaction, a sum exceeding the equivalent of EC$250,000.
Resident Accounts
Foreign exchange accounts permittedThese accounts may be freely debited but may be credited only with foreign exchange earned or received from outside the ECCB area. Holders of these accounts must submit regular statements of debits and credits to the MOF.
Held domesticallyYes.
Accounts in domestic currency held abroadn.r.
Accounts in domestic currency convertible into foreign currencyn.r.
Nonresident Accounts
Foreign exchange accounts permittedThe regulations governing resident accounts apply.
Domestic currency accountsThese accounts must be credited with funds from an external source.
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 importsPayments for documented imports are free of restrictions. Payments for restricted imports require permission from the MOF. Effective September 1, 2004, payments exceeding the equivalent of EC$250,000 no longer require approval from the MOF.
Letters of creditYes.
Import licenses and other nontariff measures
Negative listProhibited goods include whole chickens, chicken eggs, live breeding poultry, war toys, animal skins, and various drugs deemed to be dangerous.
Open general licensesThere are quantitative restrictions on certain items from non-CARICOM sources, including arms and ammunition, carbonated beverages, flour, industrial gas, paint, and miscellaneous items associated with furniture and the construction industry. Items from the CARICOM area that require licenses include curry products, industrial gas, furniture, and solar water heaters.
Import taxes and/or tariffsGrenada applies the fourth phase of the CARICOM CET. All imports from non- CARICOM countries are subject to the following CET rates: 40% for most agricultural imports and 5% to 20% for most other items. All imports are subject to a 5% customs service charge, except for some manufactured products, for which a rate of 2.5% applies. Imports not granted exemptions from customs duties are subject to a general consumption tax (GCT) regime with three broad rates of 10% and 15% for CARICOM countries, and 25% for all other countries. There are three additional GCT rates of 50%, 55%, and 75% that are applied to specific items, such as new cars, foreign used cars, and cigarettes, respectively. There are environmental levies of EC$0.25 on each imported glass bottle and of EC$0.50 on each plastic bottle containing liquid (including carbonated and noncarbonated beverages and syrups). Other levies include a 1% charge on the c.i.f. value of white goods (durable consumer items), a 2% charge on the c.i.f. value of imported used cars under five years old, and a 30% charge on cars five years old or older. Imports of capital equipment are subject to a minimum charge of 5% under the CET and 25% under the consumption tax. However, most capital imports are granted exemptions from import duties, and all capital imports by domestic commodity boards involved in the growing or packaging of bananas, cocoa, or nutmeg are exempt from import duties, provided that the imports are used for improvements in these industries.
State import monopolyThe Marketing and National Importing Board is the sole authorized importer of bulk purchases of whole milk, white and brown sugar, and brown rice.
Exports and Export Proceeds
Repatriation requirementsYes.
Surrender requirementsProceeds must be surrendered to ADs (commercial banks).
Financing requirementsn.a.
Documentation requirementsn.a.
Export licensesLicenses are required for traditional export crops (i.e., bananas, cocoa, nutmeg, and minor spices). Licenses are also required to export fresh fruits, fish, plants required for the establishment or expansion of any agricultural industry in Grenada, gas cylinders, coral, all minerals, and live sheep. Certain exports, such as birds, live goats, fauna, flora, and items considered part of Grenada’s national heritage, are prohibited.
Without quotasYes.
Export taxesNo.
Payments for Invisible Transactions and Current Transfers
Controls on these transfersPayments for invisibles related to authorized imports are not restricted. Effective September 1, 2004, MOF approval is no longer required for a single payment for invisibles exceeding the equivalent of EC$250,000.
Investment-related payments
Prior approvalApproval is granted if all related liabilities have been discharged and the investment is registered with the MOF.
Personal payments
Prior approvalFor study abroad, MOF approval is required, and permission is usually granted on presentation of documentation of registration and the costs of tuition and other expenses. For the transfer of pensions, approval is granted upon proof of immigrant status. For family maintenance and alimony payments, approval is granted upon proof of established liabilities.
Indicative limits/bona fide testYes.
Foreign workers’ wages
Prior approvalApproval is granted upon proof of immigrant status.
Indicative limits/bona fide testYes.
Other payments
Prior approvalMOF approval is required and is granted on the basis of agreements incorporating payments for consulting services and legal fees. Payments may be made up to the amount approved, subject to withholding of income tax, where applicable.
Quantitative limitsYes.
Indicative limits/bona fide testYes.
Proceeds from Invisible Transactions and Current Transfers
Repatriation requirementsYes.
Surrender requirementsYes.
Restrictions on use of fundsNo.
Capital Transactions
Controls on capital transactionsEffective September 1, 2004, MOF approval is no longer required for any single outward capital transaction exceeding the equivalent of EC$250,000.
Controls on capital and money market instruments
On capital market securities
Shares or other securities of a participating nature
Purchase locally by nonresidentsMOF approval is required.
Sale or issue locally by nonresidentsYes.
Purchase abroad by residentsCertificates of title to foreign currency securities held by residents must be lodged with an authorized depository in Grenada, and earnings on these securities must be repatriated.
Bonds or other debt securities
Purchase locally by nonresidentsMOF approval is required.
Sale or issue locally by nonresidentsYes.
Purchase abroad by residentsYes.
On money market instruments
Sale or issue locally by nonresidentsYes.
Purchase abroad by residentsYes.
On collective investment securitiesThe regulations governing money market instruments apply.
Controls on derivatives and other instrumentsThe regulations governing money market instruments apply.
Controls on credit operations
Commercial credits
By residents to nonresidentsLocal currency financing requires the approval of the MOF, but is not ordinarily permitted.
Financial credits
By residents to nonresidentsYes.
Controls on direct investment
Outward direct investmentYes.
Inward direct investmentCabinet approval via the Industrial Development Corporation is normally required for nonresidents to operate manufacturing enterprises and hotels, and an alien landholding license is required for nonresidents to hold both financial and physical property. Nonresident labor services are generally permitted with work permits, which are issued by the Ministry of Labor.
Controls on liquidation of direct investmentRemittances of proceeds are permitted, provided that all related liabilities have been discharged and the original investment was registered with the MOF.
Controls on real estate transactions
Purchase abroad by residentsAn alien landholding license must be issued by the Office of the Prime Minister.
Controls on personal capital transactions
Loans
By residents to nonresidentsYes.
To residents from nonresidentsAny borrowing abroad by nationals to finance their domestic operations generally requires the approval of the MOF.
Gifts, endowments, inheritances, and legacies
By residents to nonresidentsYes.
Settlement of debts abroad by immigrantsYes.
Transfer of assets
Transfer abroad by emigrantsYes.
Provisions specific to commercial banks and other credit institutions
Borrowing abroadADs may freely assume short-term liability positions in foreign currencies to finance approved transfers for both trade and nontrade transactions. Any borrowing abroad by ADs to finance their domestic operations requires the approval of the MOF.
Lending to nonresidents (financial or commercial credits)Local currency financing requires the approval of the MOF, but is not ordinarily permitted.
Provisions specific to institutional investorsNo.
Other controls imposed by securities lawsn.a.
Changes During 2004
Arrangements for payments and receiptsSeptember 1. The requirement of MOF approval for transactions in foreign currency in excess of the equivalent of EC$250,000 was removed.
September 1. Exports of foreign currency exceeding the equivalent of EC$250,000 no longer required MOF approval.
Imports and import paymentsSeptember 1. The requirement of MOF approval for import payments exceeding the equivalent of EC$250,000 was removed.
Payments for invisible transactions and current transfersSeptember 1. The requirement of MOF approval for purchases of foreign exchange for invisible transactions exceeding the equivalent of EC$250,000 was removed.
Capital transactionsSeptember 1. The requirement of MOF approval for purchases of foreign exchange for outward capital transactions exceeding the equivalent of EC$250,000 was removed.

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