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: June 21, 2003.
Exchange Arrangement
CurrencyThe currency of Libya is the Libyan dinar.
Exchange rate structureUnitary.
Conventional pegged arrangementThe Libyan dinar is pegged to the SDR at LD 1 per SDR 0.5175. The margin on sales of foreign exchange is 1%.
Exchange taxNo.
Exchange subsidyNo.
Forward exchange marketNo.
Arrangements for Payments and Receipts
Prescription of currency requirementsAll transactions with Israel are prohibited. Transactions with other countries are made in convertible currencies.
Use of foreign exchange among residentsTransactions may be executed through the use of the Libyan dinar as a middle currency in determining the exchange rates.
Payments arrangements
Bilateral payments arrangements
OperativeAgreements are maintained with Algeria, Malta, Morocco, and Tunisia. Outstanding balances are settled in convertible currencies 15 days after the end of each month, with the exception of balances vis-à-vis Malta, which are settled every 90 days.
Regional arrangementsEffective December 31, 2004, Libya joined in the Greater Arab Free Trade Agreement (GAFTA).
Administration of controlThe Central Bank of Libya (CBL) administers exchange controls and has delegated some powers to authorized banks. The General People’s Congress regulates policy on imports and exports, which is executed by the Secretariat of Economy and Commerce (SEC).
International security restrictionsNo.
Payments arrearsNo.
Controls on trade in gold (coins and/or bullion)
Controls on domestic ownership and/or tradeResidents may freely purchase, hold, and sell gold in any form other than bars.
Controls on external tradeThe CBL imports processed and unprocessed gold and precious metals; it also sells gold bars to domestic goldsmiths for manufacture at prices announced from time to time. The gold must be processed before it may be sold to the public. Imports of unworked gold are subject to a duty of 15%.
Controls on exports and imports of banknotes
On exports
Domestic currencyResidents and nonresidents are not allowed to export Libyan currency.
Foreign currencyResidents and nonresidents may export any amount of foreign exchange for personal, noncommercial purposes through authorized banks. To control money laundering, ceilings of the equivalent of $5,000 and $10,000 a transaction are enforced on the purchase of foreign exchange in cash and traveler’s checks, respectively.
Foreign exchange converted into Libyan dinars by visiting tourists may be reconverted upon departure.
On imports
Domestic currencyResidents and nonresidents are not allowed to import Libyan currency.
Resident Accounts
Foreign exchange accounts permittedYes.
Held domesticallyIndividual residents are allowed to keep foreign currencies in domestic bank accounts and to transfer balances abroad without restriction. Exporters are allowed to retain foreign exchange earnings in a special account that may be used to finance imports of raw materials, spare parts, and machinery needed for export production.
Accounts in domestic currency held abroadn.a.
Accounts in domestic currency convertible into foreign currencyn.a.
Nonresident Accounts
Foreign exchange accounts permittedYes.
Approval requiredYes.
Domestic currency accountsNonresidents who are employed in the country are permitted to open these accounts, which may be credited with their legitimate earnings. All other credits to nonresident accounts require the prior approval of the CBL.
Funds brought in by nonresident contractors undertaking contracts in their own names must be kept with an authorized bank. Payments received by contractors for contracts may also be credited to these accounts. Remittances from these accounts are subject to the prior approval of the CBL after submission of the prescribed evidence, but, in general, remittances are permitted up to the net-of-tax amount specified in the contract. Funds brought in by nonresidents may be reexported if not used, after submission of evidence. Accounts held by foreign contractors licensed under Law No. 5 (1997) for the promotion of foreign capital investment are exempt from any restrictions.
Convertible into foreign currencyThese accounts may be converted, but approval is required.
Blocked accountsNo.
Imports and Import Payments
Foreign exchange budgetNo.
Financing requirements for importsNo.
Documentation requirements for release of foreign exchange for imports
Letters of creditAuthorized banks may open LCs without approval from the CBL. Before an LC is established, a marine insurance policy from a local insurance company must be submitted.
Import licenses used as exchange licensesExchange permits required for imports are readily granted by the authorized banks, provided that a firm contract exists.
Import licenses and other nontariff measuresImport licenses are not required, but importers may import only the types of products that relate to their business specialty. With the exception of strategic goods (i.e., nine essential food items, medicines, insecticides, petroleum products, tobacco, and gold) that may be imported only by public corporations, all other goods may be imported by either public or private entities.
Negative listImports of the following are prohibited: Arabic lounge materials; candles; electro-oil heaters; hand brooms; iron, plastic, and wooden pipes; plastic barrels and bottles; plastic covers; Portland cement; school supplies; telephone equipment; unpainted pottery; medical alcohol; organic and urea fertilizers; potash; soap bars; canned juices; chocolate not made with cacao; green vegetables; harissa; industrial fruit powder; mineral water; olive oil; potato chips; eggs; poultry; pork meat and fats; preserved meats and vegetables; alcoholic beverages; used equipment and machinery; tractors; used cars; luxury cars; and yachts.
Other nontariff measuresAll imports from Israel are prohibited. Importers are required to deal directly with producers abroad and not through intermediaries.
Import taxes and/or tariffsImports are subject to customs duties and surcharges; effective December 31, 2004, these surcharges are 15% (previously, 10%) of the applicable customs duties. A consumption tax of 10% to 50% applies to a list of imports. All products from Arab countries are exempt from customs duties, provided domestic value added is at least 40%. Imports by commercial public enterprises are exempt from customs duties.
State import monopolyA state-owned company controlled by the CBL has a monopoly on the importation of gold and precious metals. This company is, however, currently under liquidation.
Exports and Export Proceeds
Repatriation requirementsAll proceeds must be repatriated within three months of shipment.
Surrender requirementsExporters are allowed to retain up to 100% of nonhydrocarbon earnings.
Financing requirementsn.a.
Documentation requirements
Letters of creditAll exports require the opening of LCs.
Export licensesIn general, exporters do not need export licenses but must register with the SEC and supply on a regular basis the relevant documentation on their exports. Exports of electricity, hides, nonmonetary gold (other than for processing abroad), paper products, school supplies, scrap metals, and telecommunication services are prohibited. Exports or reexports of vegetable oils, wheat, wheat flour, crushed wheat, barley, rice, coffee, tea, sugar, and tomato paste—all of which are subsidized products—are prohibited. All exports to Israel are prohibited.
Without quotasExport licenses are required for raw wool, hides and skins, and agricultural products.
Export taxesn.a.
Payments for Invisible Transactions and Current Transfers
Controls on these transfersPayments for invisibles related to authorized imports are not restricted.
Investment-related paymentProfits generated by foreign capital invested in projects deemed to contribute to the economic development of the country may be transferred freely to the country of origin, provided that the paid-up capital is not less than the equivalent of LD 200,000 and that at least 51% of the shares are held by foreign nationals. Profits generated by foreign capital invested in projects set up within the context of Law No. 5 and approved by the Foreign Investment Board may also be transferred without restriction.
Payments for travelResidents are allowed to purchase foreign exchange for tourism from authorized banks up to the equivalent of $10,000 in traveler’s checks or $5,000 in cash.
Prior approvalYes.
Other payments
Prior approvalYes.
Proceeds from Invisible Transactions and Current Transfers
Repatriation requirements
Surrender requirementsAll foreign exchange receipts must be surrendered.
Restrictions on use of fundsn.a.
Capital Transactions
Controls on capital transactionsYes.
Controls on capital and money market instrumentsThe purchase abroad of these instruments by residents requires approval.
On capital market securities
Shares or other securities of a participating nature
Purchase abroad by residentsYes.
On money market instruments
Purchase abroad by residentsYes.
On collective investment securities
Purchase abroad by residentsYes.
Controls on derivatives and other instrumentsn.a.
Controls on credit operationsPublic enterprises are allowed to sell any amount of foreign exchange they earn to open or settle credit through the banking system, provided they report the sources and uses of the foreign exchange.
Commercial credits
By residents to nonresidentsYes.
To residents from nonresidentsResidents must obtain prior CBL approval to borrow funds from abroad.
Financial credits
To residents from nonresidentsYes.
Guarantees, sureties, and financial backup facilities
To residents from nonresidentsYes.
Controls on direct investment
Outward direct investmentYes.
Inward direct investmentForeign participation in industrial ventures set up after March 20, 1970, is permitted on a minority basis, but only if it leads to increased production in excess of local requirements, introduction of the latest technology, and cooperation with foreign firms in exporting the surplus production. Full foreign ownership is permitted, however, in ventures established in the context of Law No. 5 and approved by the Foreign Investment Board. Approval is granted for projects that lead to domestic job creation or training, use of local raw materials, transfers of technology, and inflows of foreign currencies.
Controls on liquidation of direct investmentForeign capital invested in projects deemed to contribute to the economic development of the country may be transferred freely to the country of origin, provided that the paid-up capital is not less than the equivalent of LD 200,000 and that at least 51% of the shares are held by foreign nationals. Capital invested in projects set up in the context of Law No. 5 and approved by the Foreign Investment Board may also be transferred freely to the country of origin.
Controls on real estate transactions
Purchase abroad by residentResidents must have prior permission from the Committee of the People’s Bureau for Foreign Affairs and International Economic Cooperation to purchase real estate abroad.
Purchase locally by nonresidentsYes.
Controls on personal capital transactionsn.a.
Provisions specific to commercial banks and other credit institutionsn.a.
Provisions specific to institutional investorsn.a.
Other controls imposed by securities lawsn.a.
Changes During 2004
Arrangements for payments and receiptsDecember 31. Libya joined the GAFTA.
Imports and import paymentsDecember 31. The rate of the import surcharge was raised to 15% from 10% of applicable customs duties.

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