Annual Report on Exchange Arrangements and Exchange Restrictions 2005
Chapter

HUNGARY

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, 1996.
Exchange Arrangement
CurrencyThe currency of Hungary is the Hungarian forint.
Exchange rate structureUnitary.
Classification
Pegged exchange rate within horizontal bandsThe Hungarian forint trades against the euro within a band of ±15% around the central parity, which is fixed to the euro at Ft 282.36 per €1.
Exchange taxNo.
Exchange subsidyNo.
Forward exchange marketAll banks may engage in forward transactions at exchange rates that are negotiated freely between the banks and their customers.
Arrangements for Payments and Receipts
Prescription of currency requirementsNo.
Payments arrangements
Regional arrangementsOn May 1, 2004, Hungary became a member of the EU.
Administration of controlNo.
International security restrictions
In accordance with UN sanctionsHungary maintains payment restrictions against the former government of Iraq, Libya, and certain persons and entities associated with Osama Bin Laden, the Al-Qaida network, and the Taliban.
Payments arrearsNo.
Controls on trade in gold (coins and/or bullion)No.
Controls on exports and imports of banknotesImports and exports of more than Ft 1 million or its equivalent in foreign currency must be declared.
Resident Accounts
Foreign exchange accounts permittedYes.
Held domesticallyYes.
Held abroadYes.
Accounts in domestic currency held abroadYes.
Accounts in domestic currency convertible into foreign currencyYes.
Nonresident Accounts
Foreign exchange accounts permittedYes.
Domestic currency accountsYes.
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 importsNo.
Import licenses and other nontariff measuresLicenses are required for a number of products, including imports destined for the settlement of outstanding balances in transferable or clearing rubles. About 95% of Hungarian imports are fully liberalized.
Negative listIn accordance with EU regulations, no import licenses are required except for certain products that are subject to quantitative restrictions, safeguard measures, or import surveillance. For agricultural products, the import licensing system is automatic and used only for statistical purposes. Import of certain products (e.g., explosives and firearms, ammunition, dual-use goods, and certain drugs) are subject to licensing.
Licenses with quotasIn accordance with EU regulations, licenses are required with respect to a number of tariff quotas in the agricultural sector. Also, licenses are required for certain imports subject to quantitative restrictions.
Other nontariff measuresYes.
Import taxes and/or tariffsGoods for personal use brought in by returning Hungarian travelers are subject to import duties in accordance with the Community Common Customs Tariff (CCCT) based on the actual invoice price with a duty-free allowance of an amount equivalent to €175. Goods imported into Hungary are subject to customs duties in accordance with the CCCT.
State import monopolyNo.
Exports and Export Proceeds
Repatriation requirementsNo.
Financing requirementsNo.
Documentation requirementsNo.
Export licenses
Without quotasExports of certain products (mainly military and dual-use goods) require a license.
Export taxesNo.
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 operationsNo.
Controls on direct investmentNo.
Controls on liquidation of direct investmentNo.
Controls on real estate transactions
Purchase abroad by residentsReal estate investments by insurance companies must be localized in EEA or OECD countries. Mandatory and voluntary pension funds may invest only in real estate localized in the EEA.
Controls on personal capital transactionsNo.
Provisions specific to commercial banks and other credit institutions
Borrowing abroadFinancial institutions must report monthly all foreign borrowing to the Magyar Nemzeti Bank (MNB), the central bank of Hungary, for statistical purposes.
Lending to nonresidents (financial or commercial credits)Lending is allowed within the following rules: (1) a bank may not have an aggregate lending with an individual borrower of more than 25% of its adjusted capital; and (2) country risk rules prescribe the placement of specific reserves against possible losses on credits extended to problem countries, the list of which is based on the assessment of the MNB and published by the MOF.
Medium- and long-term lending to nonresidents from OECD member countries may be effected freely.
Differential treatment of deposit accounts held by nonresidents
Reserve requirementsNonresident liabilities with a maturity of less than two years (denominated either in forint or foreign currency) are subject to the same 5% reserve requirement as resident liabilities with a maturity of less than two years. Effective January 1, 2004, both resident and nonresident liabilities with maturities of more than two years are exempt from reserve requirements. Previously, only nonresident liabilities denominated in forint or in foreign exchange with maturities of more than two years were exempt from reserve requirements.
Provisions specific to institutional investors
Currency-matching regulations on assets/liabilities compositionInsurance companies are subject to these regulations.
Other controls imposed by securities lawsNo.
Changes During 2004
Arrangements for payments and receiptsMay 1. Hungary became a member of the EU.
Capital transactions
Provisions specific to commercial banks and other credit institutionsJanuary 1. Both resident and nonresident liabilities with maturities of more than two years became exempt from reserve requirements.

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