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: April 5, 1963.
Exchange Arrangement
CurrencyThe currency of Kuwait is the Kuwaiti dinar
Exchange rate structureUnitary.
Conventional pegged arrangementThe exchange rate for the Kuwaiti dinar is pegged to the dollar within margins of ±3.5% around a parity rate set at KD 0.29963 per $1.
Exchange taxNo.
Exchange subsidyNo.
Forward exchange marketYes.
Official cover of forward operationsOfficial coverage is extended to forward contracts related to commercial transactions.
Arrangements for Payments and Receipts
Prescription of currency requirementsNo.
Payments arrangements
Regional arrangementsKuwait is a member of the Greater Arab Free Trade Agreement and the GCC Customs Union.
Barter agreements and open accountsYes.
Administration of controlThere is no exchange control, and both residents and nonresidents may freely purchase and sell foreign exchange. All trade with Israel is prohibited; payments may not be made to or received from Israel for any type of transaction.
International security restrictions
In accordance with IMF Executive Board Decision No. 144-(52/51)Measures have been taken to implement the relevant UN Security Council resolutions with regard to anti–money laundering operations through financial transfers involving charitable organizations and suspect accounts.
In accordance with UN sanctionsRestrictions are imposed on Iraq.
Payments arrearsNo.
Controls on trade in gold (coins and/or bullion)
Controls on external tradeMonetary authorities and merchants registered with the Ministry of Commerce and Industry (MCI) may import and export gold in any form if such gold is at least 18-karat fine; gold jewelry may not be imported or sold unless it is properly hallmarked. Jewelry and precious metals in any form, manufactured or unmanufactured, are subject to an import duty of 5%.
Controls on exports and imports of banknotesNo.
Resident Accounts
Foreign exchange accounts permittedYes.
Held domesticallyYes.
Held abroadYes.
Accounts in domestic currency held abroadn.a.
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 measuresImport licenses are required for all commercial imports other than fresh fruits and vegetables, wheat, and flour. Licenses are issued freely to registered Kuwaiti merchants and companies. To be registered, the importer must be either a Kuwaiti citizen, a firm in which all partners are Kuwaiti nationals, or a shareholding or limited liability company in which Kuwaiti nationals own at least 51% of the stock.
Negative listImports of the following goods are prohibited: fireworks; oxygen; gas cylinders; certain steel and asbestos pipes; pork and foodstuffs containing pork; alcoholic beverages; used vehicles more than five years old; portable telephones; chewing tobacco; products, machinery, and equipment that operate with ozone-depleting materials; and fresh, chilled, frozen, or processed bovine meat and/or its derivatives. Source-specific import prohibitions apply as follows: (1) all kinds of scrap material from Iraq; (2) all kinds of bird meat (fresh, chilled, or frozen) from India, all Eastern and Southern Asian countries, and Southern African countries; (3) all kinds of horses from Switzerland and the U.S.; (4) all kinds of ruminant meat from Iraq; (5) all kinds of cow meat (fresh, chilled, or frozen) from Washington State, U.S.; (6) ruminant animals imported from the EU and Turkey; and (7) olive oil (third compression) from Spain.
Source-specific temporary import prohibitions apply as follows: (1) all kinds of live birds and eggs from Canada, Eastern and Southern Asia Countries, and Iran; (2) all kinds of live birds from Oman, Morocco, and Southern African countries; (3) all kinds of bovine meat from Switzerland; (4) all kinds of sheep from Portugal; (5) all kinds of live animals from Tajikistan; (6) all kinds of ruminant meat from Colombia and other Latin American countries, Iraq, and Morocco; (7) all kinds of horses from Latin American countries; and (8) all kinds of cows from Nigeria.
As a precautionary measure, imports of fresh, chilled, or frozen bovine, buffalo, camel, gazelle, goat, and sheep meats from countries affected by ulcerative stomatitis are temporarily prohibited; imports of the above-mentioned meats are permitted from India and Pakistan. Imports of potentially diseased or disease-carrying animals, plants, or feed from infected areas are prohibited.
There are also prohibitions on the importation of certain goods, or goods in certain types of packaging, for moral or religious reasons.
Trade in endangered species of wild fauna and flora or their derivatives is prohibited in accordance with the Convention on International Trade in Endangered Species of Wild Fauna and Flora.
Open general licensesImports of industrial equipment, machinery, and their spare parts require industrial licenses valid for one-time use only. Licenses are issued to registered and licensed industrial establishments with the approval of the Industrial Development Commission at the MCI. Private imports of personal objects may be permitted under individual or specific licenses. Registered importers handling a variety of commodities may obtain a general license valid for one year. Other importers must obtain specific licenses for individual commodities, which are also valid for one year.
Other nontariff measuresGovernment procurement policies grant preferences to Kuwaiti-produced goods up to a price margin of 5% over goods produced in other GCC countries, and 10% over goods produced in non-GCC countries.
Import taxes and/or tariffsIn accordance with the GCC Customs Union, a minimum tariff of 5% applies to non-GCC imports, while no tariffs apply to imports with at least 40% local value added from other GCC members. Imports of foodstuffs, as well as some machinery and equipment, spare parts, and raw materials, are exempt from import duties. Kuwait applies higher tariffs in industries where domestic producers cater to at least 40% of the local market. Tariff rates differ depending on the domestic value-added content of the products in question. If the domestically produced goods contain at least 20%, 30%, or 40% of domestic value added, protective duties of 15%, 20%, and 25%, respectively, may be applied to competing imports. The degree of protection given by the formula is reduced by 5% in the case of consumer goods. The maximum duty imposed on products that compete with locally manufactured goods is 100%. Duties on goods imported from member countries of the Greater Arab Free Trade Agreement are being gradually reduced.
State import monopolyNo.
Exports and Export Proceeds
Repatriation requirementsNo.
Financing requirementsNo.
Documentation requirementsNo.
Export licensesExports of live sheep and poultry, sugar, fats, rice, meat, eggs, milk, cheese, butter, olive oil, fresh fruits, vegetables in any form, beans, lentils, chickpeas, jams, and cement may be prohibited in time of emergency or shortage in Kuwait. These items may be exported in limited quantities only under a special license issued by the MCI. Exports of arms and ammunition also require licenses. Exports of scrap iron are temporarily prohibited.
With quotasYes.
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 instrumentsThe listing of foreign stocks and bonds on the Kuwait Stock Exchange is subject to the approval of the Exchange Committee.
On capital market securities
Shares or other securities of a participating nature
Sale or issue locally by nonresidentsYes.
Bonds or other debt securities
Sale or issue locally by nonresidentsYes.
Sale or issue abroad by residentsControls apply to banks and financial institutions subject to Central Bank of Kuwait supervision.
On money market instrumentsThe regulations governing shares or other securities of a participating nature apply.
On collective investment securities
Purchase locally by nonresidentsYes.
Sale or issue locally by nonresidentsYes.
Controls on derivatives and other instrumentsThe regulations governing collective investment securities apply.
Controls on credit operationsNo.
Controls on direct investment
Inward direct investmentGovernment approval is necessary for the participation of nonresident capital in resident corporations in Kuwait. Foreigners are allowed to own up to 100% of Kuwaiti companies, subject to conditions determined by the Council of Ministers.
Controls on liquidation of direct investmentNo.
Controls on real estate transactions
Purchase locally by nonresidentsOnly GCC nationals may purchase real estate of up to 3,000 square meters for private residence purposes.
Sale locally by nonresidentsYes.
Controls on personal capital transactionsNo.
Provisions specific to commercial banks and other credit institutions
Borrowing abroadControls apply to the sale or issue of bonds or other debt securities abroad.
Lending to nonresidents (financial or commercial credits)Yes.
Differential treatment of deposit accounts in foreign exchange
Liquid asset requirementsYes.
Interest rate controlsYes.
Differential treatment of deposit accounts held by nonresidents
Liquid asset requirementsYes.
Open foreign exchange position limitsOpen foreign exchange position limits may not exceed 10% of a bank’s capital, and in some cases, lower limits are set.
On nonresident assets and liabilitiesYes.
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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