Annual Report on Exchange Arrangements and Exchange Restrictions 2005
Chapter

GUINEA-BISSAU

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 1, 1997.
Exchange Arrangement
CurrencyThe currency of Guinea-Bissau is the CFA franc.
Exchange rate structureUnitary.
Classification
Exchange arrangement with no separate legal tenderThe CFA franc is pegged to the euro, the intervention currency, at a fixed rate of CFAF 655.957 per €1. Exchange rates for other currencies are derived from the rate for the currency concerned in the Paris foreign exchange market vis-à-vis the euro.
Exchange taxA bank commission of 0.25% is levied on transfers to all countries outside the WAEMU. It must be surrendered to the treasury in its entirety.
Exchange subsidyNo.
Forward exchange marketResidents may obtain forward exchange cover with respect to payments for imports and exports of goods and services. Forward exchange cover is required to be in the settlement currency of the contract and the maturity date may not be later than the due date of payments in the trade contract.
Official cover of forward operationsYes.
Arrangements for Payments and Receipts
Prescription of currency requirementsBecause Guinea-Bissau is linked to the French Treasury through an Operations Account, settlements with France, Monaco, and other Operations Account countries (WAEMU and CAEMC members and the Comoros) are made in CFA francs, euros, or the currency of any other Operations Account country. Certain settlements are channeled through special accounts. Settlements with all other countries are usually effected either through correspondent banks in France in the currencies of those countries or in euros through foreign accounts in euros.
Payments arrangements
Bilateral payments arrangements
InoperativeYes.
Regional arrangementsAn Operations Account maintained with the French Treasury links Operations Account countries. All purchases or sales of foreign currencies or euros against CFA francs are ultimately settled through a debit or credit to the Operations Account.
Clearing agreementsA multilateral clearing agreement exists within the WAMA, between the WAEMU members and Cape Verde, The Gambia, Ghana, Guinea, Liberia, Nigeria, and Sierra Leone.
Administration of controlExchange control is administered by the Directorate of the Treasury in the Ministry of Economy and Finance (MEF). The approval authority for exchange control (except for imports and exports of gold, forward exchange cover, and the opening of external accounts in foreign currency) has been delegated to the BCEAO, which also is authorized to collect—either directly or through banks, financial institutions, the postal administration, or government officials—any information necessary to compile the balance of payments statistics.
All exchange transactions relating to foreign countries must be effected through authorized banks, the postal administration, or the BCEAO. Settlements with a country outside the Operations Account area must be formally approved by the customs administration. No supporting documents are required for transfers of up to the equivalent of CFAF 300,000.
International security restrictionsNo.
Payments arrear
OfficialYes.
Controls on trade in gold (coins and/or bullion)
Controls on external tradePrior authorization from the MEF is required for all imports and exports of gold except: (1) imports or exports by the Treasury or the BCEAO, (2) imports or exports of goods with low gold content (gold-filled or -plated items), and (3) imports or exports of gold items by travelers up to a maximum of 500 grams.
Controls on exports and imports of banknotes
On exports
Domestic currencyThe exportation of CFA franc banknotes by nonresident travelers is not prohibited; however, repurchases by the BCEAO of exported banknotes are suspended. In addition, shipments of BCEAO banknotes between authorized intermediaries and their correspondents situated outside the WAEMU are officially prohibited.
Foreign currencyThe reexportation of foreign banknotes by nonresident travelers is allowed up to the equivalent of CFAF 500,000; the reexportation of foreign banknotes above this ceiling requires documentation demonstrating either the importation of the foreign banknotes or their purchase against other means of payment registered in the name of the traveler or through the use of nonresident deposits held in local banks. Residents traveling to non-WAEMU countries may carry up to the equivalent of CFAF 2 million in foreign currency a person. Amounts above this limit may be carried in the form of traveler’s checks or other means of payment.
On imports
Foreign currencyResidents and nonresidents may bring in any amount of foreign banknotes and coins (except gold coins) of countries outside the Operations Account area. Residents bringing in foreign banknotes and foreign currency traveler’s checks exceeding the equivalent of CFAF 300,000 must declare them to customs upon entry and sell them to an authorized intermediary bank within eight days of their return. Nonresidents entering or leaving Guinea-Bissau are required to declare all means of payment in their possession exceeding the equivalent of CFAF 1 million.
Resident Accounts
Foreign exchange accounts permittedResidents are allowed to open foreign exchange accounts with local banks or with banks abroad after obtaining authorization from the MEF and the approval of the BCEAO.
Held domesticallyThese accounts may be opened, but approval is required.
Approval requiredYes.
Held abroadThe holding of these accounts is not explicitly prohibited, but regulations prohibit any transfer with the aim of increasing a resident’s foreign holdings unless approved by the MEF.
Approval requiredYes.
Accounts in domestic currency held abroadn.a.
Accounts in domestic currency convertible into foreign currencyNo.
Nonresident Accounts
Foreign exchange accounts permittedNonresidents are allowed to open these accounts with authorized intermediaries in Guinea-Bissau, but BCEAO authorization is required.
Approval requiredYes.
Domestic currency accountsBecause the BCEAO has suspended the repurchase of banknotes circulating outside the WAEMU territories, nonresident accounts may not be credited or debited with BCEAO banknotes. These accounts may not be overdrawn without the prior authorization of the MEF. Transfers of funds between nonresident accounts are not restricted.
Convertible into foreign currencyForeign accounts denominated in CFA francs may be freely debited for purchases by nonresidents of any foreign currency on the official exchange market.
Blocked accountsNo.
Imports and Import Payments
Foreign exchange budgetNo.
Financing requirements for importsNo.
Documentation requirements for release of foreign exchange for importsTo purchase foreign exchange for import payments, importers are required to submit supporting documents not later than eight days prior to shipment of goods if a documentary credit is to be opened, or not later than the due date of the payment if the goods have already been imported.
Domiciliation requirementsImports from countries outside the CFA franc zone and valued at more than CFAF 5 million or its equivalent must be domiciled through an authorized bank.
Preshipment inspectionYes.
Import licenses and other nontariff measuresAll imports, regardless of whether they involve the use of official or free market foreign exchange, require a prior import license issued by the Ministry of Commerce and Tourism, primarily for statistical purposes. Except for a short negative list, licenses are issued automatically after verification of the invoiced prices of taxable goods.
Negative listYes.
Import taxes and/or tariffsThe CET of the WAEMU consists of four rates; zero, 5%, 10%, and 20%. Imports are also subject to a statistical fee of 1% and a Community Solidarity Levy of 1%. Imports from countries outside the ECOWAS are subject to a Community Levy of 0.5%.
State import monopolyNo.
Exports and Export Proceeds
Repatriation requirementsProceeds from exports to non-WAEMU countries must be collected within 120 days of shipment and repatriated through the BCEAO within 30 days after receipt.
Surrender requirementsAll foreign currency income or proceeds received from abroad or paid by nonresidents to residents must be surrendered within one month of the due date to an authorized bank.
Financing requirementsNo.
Documentation requirements
DomiciliationExports to non-WAEMU countries and valued at more than CFAF 5 million or its equivalent must be domiciled through an authorized intermediary.
Export licensesAll exports require a prior export license. Only exporters registered with the Ministry of Commerce and Tourism may obtain these licenses, which are granted automatically in most cases and are for statistical purposes. No products are reserved for export by the public sector.
Without quotasYes.
Export taxesCashew nut exports, except those to ECOWAS countries, are subject to a special tax of 10%. Other agricultural exports are subject to an agricultural fee of 2%.
Payments for Invisible Transactions and Current Transfers
Controls on these transfersOutward current payments may be made by authorized banks without restriction, subject to the presentation of supporting documents.
Investment-related payments
Indicative limits/bona fide testOutward transfers of proceeds from the liquidation of investments may be made by authorized banks, subject to presentation of supporting documents.
Payments for travelReturning resident travelers must surrender unspent foreign exchange exceeding the equivalent of CFAF 300,000.
Prior approvalTo obtain foreign currency, resident travelers must present a travel instrument and passport or identity card to an authorized intermediary.
Quantitative limitsResidents traveling to non-WAEMU countries may carry up to the equivalent of CFAF 2 million in foreign currency a person. Amounts above this limit may be carried in the form of traveler’s checks or other means of payment.
Personal payments
Indicative limits/bona fide testAll personal payments may be conducted through an authorized bank, subject to presentation of supporting documents.
Foreign workers’ wages
Indicative limits/bona fide testRemittances of wages, salaries, professional fees, payroll taxes, and employee benefits are authorized upon presentation of supporting documents.
Proceeds from Invisible Transactions and Current Transfers
Repatriation requirements
Surrender requirementsAll amounts due from residents of other countries with respect to services and all income earned in those countries from foreign assets must be collected and surrendered within one month of the due date or the date of receipt.
Restrictions on use of fundsNo.
Capital Transactions
Controls on capital transactionsAll outward capital transfers by residents require prior MEF authorization. At least 75% of the amount of investments abroad must be financed with borrowing from abroad. The liquidation of investments abroad must be reported to the MEF, and the reinvestment of earnings is subject to prior authorization. If authorization is not granted for such reinvestment, the foreign exchange proceeds must be surrendered to an authorized bank within one month.
Capital transfers to WAEMU member countries are unrestricted, except for direct investments, which are subject to prior declaration, and certain borrowing operations, which are subject to prior authorization. Prior authorization is waived with respect to(1) borrowing guaranteed by the government of Guinea-Bissau and (2) foreign shares that are similar to securities, the issuance, advertisement, or sale of which has already been approved in Guinea-Bissau. There is also special surveillance of calls for subscribed funds for deposit with foreign nationals, corporations, or institutions, as well as of any advertisement for the purpose of investing funds abroad or investing in foreign construction or real estate operations. These special provisions also apply to France, Monaco, and the Operations Account countries.
Controls on capital and money market instruments
On capital market securities
Shares or other securities of a participating nature
Sale or issue locally by nonresidentsYes.
Purchase abroad by residentsYes.
Sale or issue abroad by residentsResidents are free to sell their shares of resident companies abroad. If the effect of such operations is to place resident Guinea-Bissau companies under foreign control, the foreign investors must make a prior declaration to the MEF.
Bonds or other debt securities
Purchase abroad by residentsYes.
Sale or issue abroad by residentsYes.
On money market instruments
Sale or issue locally by nonresidentsYes.
Purchase abroad by residentsYes.
Sale or issue abroad by residentsYes.
On collective investment securities
Purchase abroad by residentsYes.
Sale or issue abroad by residentsYes.
Controls on derivatives and other instrumentsThese investments are governed by the regulations generally applicable to securities and investments, except for call and put options for commodities and securities, which residents may freely purchase abroad.
Purchase abroad by residentsYes.
Controls on credit operations
Commercial credits
By residents to nonresidentsThere are no controls on credits related to exports of goods, provided that the due date of the payment does not exceed 180 days after the goods arrive at their destination. There are no controls on credits in connection with services rendered. In these cases, no deadline is set for when payment is due.
To residents from nonresidentsThere are no controls, and repayments of commercial credits are generally approved, subject to the presentation of documents attesting to the validity of the commercial operation or of the services rendered.
Financial credits
By residents to nonresidentsYes.
To residents from nonresidentsIf these transactions take place between a direct investment company established in Guinea-Bissau and its parent company situated abroad, they are considered direct investments and are subject to prior declaration to the MEF.
Guarantees, sureties, and financial backup facilities
By residents to nonresidentsYes.
Controls on direct investment
Outward direct investmentYes.
Inward direct investmentThe Investment Code provides for investment incentives and protection against nationalization and expropriation of assets.
Controls on liquidation of direct investmentNo.
Controls on real estate transactionsYes.
Controls on personal capital transactions
Loans
By residents to nonresidentsThese transactions require prior MEF authorization.
To residents from nonresidentsLoans from nonresidents require notification to the MEF.
Gifts, endowments, inheritances, and legacies
By residents to nonresidentsThese transactions require prior MEF authorization.
Settlement of debts abroad by immigrantsThese transactions require prior MEF authorization.
Transfer of assets
Transfer abroad by emigrantsThese transactions require prior MEF authorization.
Transfer into the country by immigrantsThese transactions require notification to the MEF.
Provisions specific to commercial banks and other credit institutions
Lending to nonresidents (financial or commercial credits)There are no controls if these operations involve commercial credits. Other loans to nonresidents require prior authorization of the MEF, after the approval by the BCEAO.
Lending locally in foreign exchangeThe regulations governing lending to residents apply.
Purchase of locally issued securities denominated in foreign exchangeThe regulations governing lending to residents apply.
Differential treatment of deposit accounts in foreign exchange
Credit controlsYes.
Differential treatment of deposit accounts held by nonresidentsMonetary regulations make no distinction among resident accounts, nonresident accounts, and foreign currency deposit accounts.
Investment regulationsYes.
Open foreign exchange position limitsYes.
Provisions specific to institutional investorsControls are imposed by the Insurance Code of the Inter-African Conference on Insurance Markets.
Other controls imposed by securities lawsn.a.
Changes During 2004
No significant changes occurred in the exchange and trade system.

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