Annual Report on Exchange Arrangements and Exchange Restrictions 2005
Chapter

GUINEA

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

Status Under IMF Articles of Agreement
Article VIIIDate of acceptance: November 17, 1995.
Exchange Arrangement
CurrencyThe currency of Guinea is the Guinean franc.
Other legal tenderSilver commemorative coins are also legal tender.
Exchange rate structureDual.
Classification
Managed floating with no predetermined path for the exchange rateOn March 1, 2005, the Central Bank of the Republic of Guinea (CBRG) discontinued the official exchange rate auction. As a result, the exchange rate regime has been reclassified to the category managed floating with no predetermined path for the exchange rate from the category conventional pegged arrangement. The arithmetic average of the rates quoted weekly by commercial banks has been used as a reference rate by the CBRG. Effective May 25, 2005, rates of foreign exchange bureaus are included in the calculation of this reference rate. Previously (between end-July 2004 and mid-January 2005) the official exchange rate was determined in weekly foreign exchange auctions managed by the CBRG. Guinea participates in the W-ERM II of the WAMZ, which limits the fluctuations of the Guinean franc to ±15% around a central rate vis-à-vis the dollar. However, the CBRG maintains a steady relationship vis-à-vis the dollar within margins of ±1%. A significant number of transactions take place on the parallel market at a large spread from the official rate.
Exchange taxNo.
Exchange subsidyNo.
Forward exchange marketNo.
Arrangements for Payments and Receipts
Prescription of currency requirementsAll current transactions effected in Guinea must be settled in Guinean francs. Settlements for transactions covered by bilateral payments agreements are made in currencies prescribed by, and through accounts established under, the provisions of the agreements. Settlements with countries other than members of the WAMZ are made in designated convertible currencies quoted by the CBRG.
Use of foreign exchange among residentsAll payments and transactions among residents must be made or settled in Guinean francs.
Payments arrangements
Bilateral payments arrangements
InoperativeGuinea maintains bilateral payments agreements with Bulgaria, China, the Czech Republic, Egypt, Romania, and Russia.
Clearing agreementsA multilateral clearing agreement exists between the WAEMU members and Cape Verde, The Gambia, Ghana, Guinea, Liberia, Nigeria, and Sierra Leone.
Administration of controlExchange control authority is vested in the CBRG, which has delegated to commercial banks authority to (1) sign import descriptions and import applications, (2) allocate foreign exchange to travelers holding airline tickets for travel abroad, and (3) manage foreign currency accounts. All international settlements, including payments for imports, may be effected by commercial banks.
International security restrictions
In accordance with UN sanctionsYes.
Payments arrears
OfficialYes.
PrivateYes.
Controls on trade in gold (coins and/or bullion)The CBRG purchases gold only in Guinean francs at international prices.
Controls on domestic ownership and/or tradeTransactions in nonmonetary gold are not subject to restrictions.
Controls on external tradeThe exportation of gold is subject to prior authorization by the CBRG and requires the payment of applicable taxes.
Controls on exports and imports of banknotes
On exports
Domestic currencyExports are limited to GF 100,000 a person a trip.
Foreign currencyExports of foreign currency are subject to prior authorization by the CBRG. There is no limit on exports; however, travelers must provide supporting documents for amounts exceeding the equivalent of $5,000.
On imports
Domestic currencyImports are limited to GF 100,000 a person a trip.
Foreign currencyThe importation of foreign banknotes and traveler’s checks is permitted, subject to declaration on entry. Residents, however, must surrender both to commercial banks or exchange them for Guinean francs.
Resident Accounts
Foreign exchange accounts permittedYes.
Held domesticallyResidents are free to open foreign exchange accounts with local banks. Exporters may hold all of their earnings in foreign currency in local bank accounts.
Held abroadThese accounts are permitted, but prior approval of the CBRG is required for juridical persons and a simple notification to the CBRG is required for natural persons.
Accounts in domestic currency held abroadNo.
Accounts in domestic currency convertible into foreign currencyAccounts in convertible Guinean francs may be credited with deposits in foreign exchange, irrespective of their origin. The accounts may be debited freely and converted by commercial banks into foreign currencies without prior authorization from the CBRG. Interest rates on these accounts are negotiated between the account holder and the bank.
Nonresident Accounts
Foreign exchange accounts permittedYes.
Domestic currency accountsThe regulations governing resident accounts apply.
Convertible into foreign currencyYes.
Blocked accountsNo.
Imports and Import Payments
Foreign exchange budgetYes.
Financing requirements for imports
Minimum financing requirementsThe minimum financing requirement is $2,000 or its equivalent.
Advance payment requirementsAdvance payments may be made on the basis of commercial contracts.
Documentation requirements for release of foreign exchange for imports
Domiciliation requirementsYes.
Preshipment inspectionYes.
Letters of creditYes.
Import licenses and other nontariff measures
Negative listImports of armaments, ammunition, and narcotics are prohibited.
Import taxes and/or tariffsAll imports are subject to an 18% VAT, a fiscal import duty (DFE) of 8%, and a customs duty (DDE) of 7%, with the following exceptions: animals, flour, sugar, pharmaceutical products, and fertilizers are subject to a DFE of 6% and a DDE of 2%; and food industry imports, cement, and agricultural machinery are subject to a DFE of 8% and a DDE of 2%. In addition, a surtax of 20% to 70% is imposed on all luxury goods, nonalcoholic beverages, certain wines, and spirits. Imports by the three semipublic enterprises in the mining sector are regulated by special agreements and are subject to a 5.6% levy.
State import monopolyNo.
Exports and Export Proceeds
Repatriation requirementsYes.
Surrender requirementsPrivate traders may retain all of their proceeds to finance authorized imports. Gold exporters and vendors may retain all of their proceeds. Semipublic enterprises may retain abroad all of their proceeds and may use them for import payments, operating expenses, and external debt service.
Financing requirementsNo.
Documentation requirements
Letters of creditYes.
GuaranteesYes.
DomiciliationAll private sector exports require domiciliation with a commercial bank and submission of an export description aimed at preventing shortages of goods needed for domestic consumption and at identifying capital outflows. Mining sector exports are exempt from this requirement.
Preshipment inspectionYes.
Export licensesThe exportation of wild animals (dead or alive), meats, articles of historic or ethnographic interest, jewelry, articles made of precious metals, and plants and seeds require special authorization from designated agencies.
Without quotasThese are applicable to agricultural exports.
With quotasThere are quotas on the export of wild animals and articles of historic or ethnographic interest.
Export taxesExports of diamonds are subject to a tax of 3%, and exports of gold and other precious metals to a 5% tax.
Other export taxesMining and petroleum products are subject to other export taxes.
Payments for Invisible Transactions and Current Transfers
Controls on these transfers
Trade-related paymentsThere are no controls on payments of unloading and storage expenses.
Indicative limits/bona fide testYes.
Investment-related payments
Prior approvalPrior approval is required for government operations.
Indicative limits/bona fide testYes.
Payments for travel
Quantitative limitsYes.
Indicative limits/bona fide testYes.
Personal payments
Prior approvalPrior approval is required for payments of pensions.
Indicative limits/bona fide testThere are no indicative limits or bona fide rates for payments of pensions.
Foreign workers’ wages
Prior approvalApproval is granted only for contracts approved by the Ministry of Labor.
Quantitative limitsForeign workers may transfer up to 50% of their taxable income.
Indicative limits/bona fide testYes.
Other payments
Indicative limits/bona fide testYes.
Proceeds from Invisible Transactions and Current Transfers
Repatriation requirementsYes.
Restrictions on use of fundsNo.
Capital Transactions
Controls on capital transactionsYes.
Controls on capital and money market instrumentsAll capital transfers through the official exchange market require authorization from the CBRG. Outward capital transfers by Guinean nationals through the official market are prohibited.
On capital market securities
Shares or other securities of a participating nature
Purchase locally by nonresidentsYes.
Sale or issue locally by nonresidentsYes.
Bonds or other debt securitiesThere are currently no transactions involving bonds.
On money market instruments
Purchase locally by nonresidentsYes.
Sale or issue locally by nonresidentsYes.
Controls on derivatives and other instrumentsNo.
Controls on credit operationsThere are controls on all credit and guarantee operations.
Controls on direct investment
Outward direct investmentAuthorization by the CBRG is required.
Inward direct investmentThere are no limits on amounts that nonresidents may invest in Guinea, and all Guinean and foreign nationals may hold controlling interests in Guinean enterprises.
Controls on liquidation of direct investmentNo.
Controls on real estate transactionsAuthorization by the CBRG is required for all real estate transactions.
Controls on personal capital transactionsThere are controls on all these operations.
Provisions specific to commercial banks and other credit institutions
Borrowing abroadYes.
Maintenance of accounts abroadYes.
Lending to nonresidents (financial or commercial credits)The only form of lending to nonresidents allowed is overdraft protection on checking accounts denominated in domestic currency.
Lending locally in foreign exchangeYes.
Differential treatment of deposit accounts in foreign exchange
Reserve requirementsYes.
Liquid asset requirementsYes.
Interest rate controlsYes.
Credit controlsYes.
Differential treatment of deposit accounts held by nonresidents
Liquid asset requirementsYes.
Interest rate controlsYes.
Credit controlsYes.
Investment regulations
Abroad by banksYes.
In banks by nonresidentsYes.
Provisions specific to institutional investorsNo.
Other controls imposed by securities lawsNo.
Changes During 2004
No significant changes occurred in the exchange and trade system.
Changes During 2005
Exchange arrangementMarch 1. The CBRG discontinued the official exchange rate auction. As a result, the exchange rate regime was reclassified to the category managed floating with no predetermined path for the exchange rate from the category conventional pegged arrangement.
May 25. The rates of foreign exchange bureaus were included in the calculation of the reference rate used by the CBRG.

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