Annual Report on Exchange Arrangements and Exchange Restrictions, 2007
Chapter

ALGERIA

Author(s):
International Monetary Fund. Monetary and Capital Markets Department
Published Date:
October 2007
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(Position as of December 31, 2006)

Status under IMF Articles of Agreement
Article VIIIDate of acceptance: September 15, 1997.
Exchange Measures
Restrictions and/or multiple currency practicesNo restrictions as reported in the latest staff report as of December 31, 2006.
International security restrictionsNo.
References to legal instruments and hyperlinksOrdinance 03-11 of August 26, 2003, on Money and Credit (Articles 62 and 127); Regulation 95-08 of December 23, 1995, on the Exchange Market; Regulation 07-01 of January 9, 2007, Regulating Current Transactions with the Rest of the World and Foreign Currency Accounts.
Exchange Arrangement
CurrencyThe currency of Algeria is the Algerian dinar.
Exchange rate structureUnitary.
Classification
Managed floating with no predetermined path for the exchange rateThe external value of the Algerian dinar is determined in the interbank foreign exchange market, where the CB is the main buyer and seller. No margin limits are imposed on the buying and selling exchange rates in this market. However, a margin of DA 0.015 has been established between the buying and selling rates of the Bank of Algeria (BA) for the Algerian dinar against the dollar.
Exchange taxNo.
Exchange subsidyNo.
Forward exchange marketAuthorized banks may provide forward cover to clients. However, they may cover the resulting positions only through foreign currency loans to nonfinancial entities.
References to legal instruments and hyperlinksRegulation on Foreign Investment, June 6, 2005.
Arrangements for Payments and Receipts
Prescription of currency requirementsSettlements with countries with which no payments agreements are in force are made in convertible currencies. Payments under foreign supply contracts may be made in either the currency in use at the headquarters of the supplier or that of the country of origin of the merchandise, except for transactions with Morocco, which may be effected in dollars through special clearing accounts maintained at the CBs of each country.
Controls on the use of domestic currencyAll invoicing and sales of goods and services in the national customs territory must be in Algerian dinars, except as provided by the prevailing regulations (Art. 5 of Regulation 07-01).
For current transactions and paymentsYes.
For capital transactionsn.a.
Use of foreign exchange among residentsn.a.
Payments arrangements
Bilateral payments arrangements
Operativen.a.
Inoperativen.a.
Clearing agreementsSpecified commercial settlements with Morocco and Tunisia are made through a Moroccan dirham account at the Bank of Morocco and a Tunisian dinar account at the Bank of Tunisia.
Administration of controlThe Council on Money and Credit (monetary authority) delegates implementation of the exchange regulations to banks and financial institutions, which are exclusively authorized to handle foreign trade and exchange operations. The financial services of the Algerian Post Office are authorized, within the limits of the powers devolved to them by law (the law applicable to these services), to make some payments and transfers and repatriations of funds. The BA provides ex post control to ensure the legitimacy of transactions.
Payments arrearsNo.
Controls on trade in gold (coins and/or bullion)
On domestic ownership and/or tradeResidents may purchase, hold, and sell gold coins in Algeria for numismatic purposes. Unworked gold for industrial and professional use is distributed by the Agence nationale pour la distribution et la transformation de l’or et des autres métaux précieux (AGENOR); this agency is also authorized to purchase gold in Algeria and to hold, process, and distribute other precious metals.
On external tradeAGENOR is authorized to import and export precious metals, including gold. Gold used by dentists and goldsmiths is imported by AGENOR. Gold and other precious metals are included on the list of items importable by concessionaires.
Controls on exports and imports of banknotes
On exportsUnless expressly authorized by the BA, the export and import of any means of payment denominated in domestic currency is prohibited. However, travelers are authorized to export and/or import banknotes and coins in Algerian dinars up to an amount set by instruction of the BA.
Domestic currencyResident travelers may take out up to DA 200 a person.
Foreign currencyNonresident travelers may reexport any foreign currency they declared on entry, less any amounts legitimately surrendered to authorized intermediaries and exchange bureaus. Resident travelers may export foreign currency withdrawn from their foreign currency accounts up to €7,642.25 a trip for an unlimited number of trips a year.
On imports
Domestic currencyResident travelers may reimport up to DA 200 a person. Residents are not permitted to bring in Algerian dinar banknotes.
Foreign currencyThere are no restrictions on the importation of foreign banknotes or traveler’s checks, but residents and nonresidents must declare any amount in excess of a threshold set by the BA when they enter Algeria.
References to legal instruments and hyperlinksRegulation 91-03 of February 20, 1991, Governing Imports and Exports of Goods and Services; Regulation 07-01 of January 9, 2007, Regulating Current Transactions with the Rest of the World and Foreign Currency Accounts.
Resident Accounts
Foreign exchange accounts permittedYes.
Held domesticallyThese accounts may be freely credited with book transfers of convertible foreign exchange from abroad through the postal system, by banks in convertible foreign exchange that was imported and declared by the account holder on entry into the country, or with domestic book transfers from banks to accounts held by individuals. The accounts are remunerated at rates representing the average of the rates observed on the euro-currency market, not including margins between–2% and +1.25%, or for call deposits only, at rates representing the average of the overnight rates of either the discount rate or the monetary market rates prevailing in the country of the currency involved. Foreign exchange assets owned by banks and their clients are currently deposited in accounts at the BA, which manages these assets and pays interest on them. Accounts may be debited freely for book transfers abroad only through the banking system. They may also be debited for purchases of Algerian dinars, book transfers in dinars, and purchases of convertible foreign exchange that will be physically exported by the account holder.
Companies may also open foreign exchange accounts for receiving and making foreign exchange transfers, including the retained portion of their export proceeds. They may transfer funds in these accounts to other foreign exchange accounts, or use them to make payments in Algeria or abroad for goods and services needed for their activities.
Held abroadNo.
Accounts in domestic currency held abroadNo.
Accounts in domestic currency convertible into foreign currencyThese accounts are permitted in limited cases, such as for embassies.
References to legal instruments and hyperlinksRegulation 07-01 of January 9, 2007, Regulating Current Transactions with the Rest of the World and Foreign Currency Accounts.
Nonresident Accounts
Foreign exchange accounts permittedThese accounts may be credited with foreign currency banknotes and other means of payment denominated in foreign currency, as well as other Algerian-dinar-denominated funds that meet all requirements for transfers abroad. They may be debited without restrictions to make transfers abroad, to export through withdrawals of foreign banknotes, and to make dinar payments in Algeria. These accounts are remunerated at the same rates as resident foreign exchange accounts. Foreign exchange assets owned by banks and their clients are currently deposited in accounts at the BA, which manages these assets and pays interest on them. These accounts may not show a debit balance.
Domestic currency accountsEmbassies and foreign firms in Algeria may open accounts without prior authorization for making and receiving payments in relation to other business activity. Accounts pay no interest and cannot be in overdraft.
Convertible into foreign currencyYes.
Approval requiredOutward transfers require individual approval from the BA.
Blocked accountsIndividual suspense accounts may be opened without authorization and may be credited with payments from any country.
References to legal instruments and hyperlinksRegulation 07-01 of January 9, 2007, Regulating Current Transactions with the Rest of the World and Foreign Currency Accounts.
Imports and Import Payments
Foreign exchange budgetNo.
Financing requirements for importsPayments for imports of gold, other precious metals, and precious stones must be made from foreign currency accounts. External borrowing by importers for import financing purposes must be arranged through an authorized intermediary bank.
Advance payment requirementsExcept when otherwise indicated by the BA, down payments for imports may not exceed 15% of the total value of imports. When a public agency, public enterprise, or ministry incurs expenditures for imports deemed to be urgent or exceptional, the bank may effect payment before exchange and trade control formalities have been completed.
Advance import depositsAlthough not mandatory, domiciled banks may require from the importer, as part of their normal commercial operations, a deposit in Algerian dinars up to the full value of the imports.
Documentation requirements for release of foreign exchange for imports
Domiciliation requirementAll imports are subject to obligatory domiciliation at an authorized intermediary bank, which an importer must establish by submitting to an authorized bank a commercial contract or pro forma invoice. Import payments may be made freely but only through the domiciled bank, which effects payments in foreign exchange and debits the importer’s account with corresponding amounts in Algerian dinars valued at the official exchange rate.
Preshipment inspectionYes.
Letters of creditYes.
OtherImporters willing to insure merchandise or capital goods transported by air or sea must purchase insurance from authorized Algerian insurers. However, this requirement does not apply to the following: (1) gift items; (2) material and equipment imported under the temporary admission regime; (3) goods, including capital goods, financed by international and regional institutions; and (4) goods imported under an agreement that renders the vendor liable for transportation risks.
Import licenses and other nontariff measures
Negative listThere are no legal restrictions against imports from Israel, but there are no such imports in practice. A small number of imports are prohibited for religious or security reasons.
Other nontariff measuresJuridical and natural persons registered under the Commercial Register (including dealers and wholesalers) and having the required minimum capital may import goods and services without prior authorization.
Import taxes and/or tariffsImports are subject to tariffs of zero, 5%, 15%, and 30%. A temporary additional duty on certain categories of imports was introduced in July 2001, initially at 60% and reduced annually by 12 percentage points starting January 1, 2002. On January 1, 2005, this duty was reduced to 12% and it was eliminated January 1, 2006.
State import monopolyNo.
References to legal instruments and hyperlinksRegulation 07-01 of January 9, 2007, Regulating Current Transactions with the Rest of the World and Foreign Currency Accounts.
Exports and Export Proceeds
Repatriation requirementsFor all exports, excluding hydrocarbons, proceeds must be repatriated within 120 days of delivery date of the goods.
Surrender requirements
Surrender to the central bankAll export proceeds from crude and refined hydrocarbons, by-products from gas, and mineral products must be surrendered to the BA. Proceeds from hydrocarbon exports are considered to be surrendered when deposited in the BA foreign correspondent banks. The value date of the deposit is the payment due date indicated in the invoice and/or trade contract.
Surrender to authorized dealersFifty percent of proceeds from export of products other than crude and refined hydrocarbons, by-products from gas, and mineral products must be surrendered to the commercial banks; the remaining portion may be retained in a foreign currency account held in Algeria. Exporters may use the funds in these accounts for imports or other payments pertaining to their business, or they may transfer the funds to another foreign currency account.
Financing requirementsNo.
Documentation requirementsThe requirements are enforced in accordance with the terms of the contract.
Letters of creditYes.
GuaranteesYes.
DomiciliationYes.
Preshipment inspectionYes.
Export licensesAll exports to Israel are prohibited, and certain exports are prohibited for social or cultural reasons regardless of destination.
Export taxesNo.
References to legal instruments and hyperlinksRegulation 07-01 of January 9, 2007, Regulating Current Transactions with the Rest of the World and Foreign Currency Accounts.
Payments for Invisible Transactions and Current Transfers
Controls on these transfers
Trade-related payments
Indicative limits/bona fide testYes.
Investment-related paymentsThe transfer abroad of profits is permitted, but only through an authorized intermediary and provided tax obligations have been met. Authorized intermediaries review requests for transfers and execute without delay transfers of dividends, profits, and proceeds from the sale of foreign investments and attendance and percentage fees for foreign directors.
Payments for travelResidents traveling abroad receive an annual foreign exchange allowance, and pilgrims traveling to Saudi Arabia receive an allowance in Saudi Arabian riyals; the amount may be provided in the form of checks that are cashed on arrival for those traveling by air or by sea. Tickets purchased by nonresidents for travel abroad must be paid for with imported foreign exchange.
Prior approvalBona fide requests for amounts in excess of established limits are authorized on a case-by-case basis.
Quantitative limitsThe limit for nonbusiness trips is DA 15,000 or its equivalent a person a year. For business trips, per diem and transport allowances, respectively, are (1) DA 16,000 and DA 10,000 for executives, (2) DA 12,000 and DA 8,000 for mid-level staff, and (3) DA 10,000 and DA 6,000 for technical staff. For nonbusiness trips, the BA reviews and approves all bona fide requests for foreign exchange above the established threshold.
Indicative limits/bona fide testYes.
Personal payments
Prior approvalTransfers of alimony payments are permitted, provided the arrangement was issued by an Algerian court and is enforceable in Algeria. BA authorization is required for payments relating to family support payments; limits are set on a case-by-case basis.
Quantitative limitsThe limits for medical costs are the equivalent of DA 15,900 for adults and DA 7,600 for children under 15 years of age. The limit for studies abroad is DA 9,000 a month between September 1 and June 30. Bona fide requests for amounts in excess of these annual limits are subject to review and approval by the BA.
Indicative limits/bona fide testYes.
Foreign workers’ wagesSubject to the laws and regulations governing the recruitment and employment of foreigners in Algeria, foreign workers recruited by the government and Algerian economic agents have the right to transfer savings from their wages under conditions established by instruction of the BA.
Indicative limits/bona fide testYes.
Other payments
Prior approvalPayments for imports of technical, economic, and scientific magazines and periodicals are made in the context of domiciliation procedures. Payments of subscription fees are made on presentation of a subscription contract at the domiciliation window.
Indicative limits/bona fide testYes.
References to legal instruments and hyperlinksRegulation 07-01 of January 9, 2007, Regulating Current Transactions with the Rest of the World and Foreign Currency Accounts.
Proceeds from Invisible Transactions and Current Transfers
Repatriation requirementsYes.
Surrender requirements
Surrender to authorized dealersFifty percent of receipts must be surrendered to banks.
Restrictions on use of fundsNo.
References to legal instruments and hyperlinksRegulation 07-01 of January 9, 2007, Regulating Current Transactions with the Rest of the World and Foreign Currency Accounts.
Capital Transactions
Controls on capital transactionsResidents may transfer capital abroad to finance activities that are complementary to those undertaken in Algeria. The Monetary and Credit Council sets the conditions for implementation of this article and issues authorization.
Repatriation requirementsYes.
Surrender requirementsn.a.
Controls on capital and money market instrumentsNonresidents may invest in shares or other investment securities. Transfers abroad of proceeds from the sale of these investments on the stock exchange or the revenue generated by these investments are allowed, as long as they are conducted through an authorized intermediary.
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 residentsYes.
Bonds or other debt securities
Sale or issue locally by nonresidentsYes.
Purchase abroad by residentsYes.
Sale or issue abroad by residentsYes.
On money market instruments
Sale or issue locally by nonresidentsn.a.
Purchase abroad by residentsn.a.
Sale or issue abroad by residentsn.a.
On collective investment securities
Purchase locally by nonresidentsn.r.
Sale or issue locally by nonresidentsn.r.
Purchase abroad by residentsYes.
Sale or issue abroad by residentsn.r.
Controls on derivatives and other instruments
Purchase locally by nonresidentsn.a.
Sale or issue locally by nonresidentsn.a.
Purchase abroad by residentsYes.
Sale or issue abroad by residentsn.a.
Controls on credit operationsThere are controls on all credit transactions, guarantees, sureties, and financial backup facilities.
Controls on direct investment
Outward direct investmentYes.
Inward direct investmentForeign direct investment is permitted freely except in certain specified sectors, provided it conforms to the laws and regulations governing regulated activities, and prior declaration is made to the authorities.
Controls on liquidation of direct investmentProceeds from disinvestment following the closing or relocation of a business operation may be transferred abroad through authorized banks and financial intermediaries only up to the verified portion of the foreign investment out of the total liquidated investment.
Controls on real estate transactionsThe regulations governing capital market instruments apply.
Purchase abroad by residentsYes.
Purchase locally by nonresidentsn.a.
Sale locally by nonresidentsn.a.
Controls on personal capital transactionsn.a.
References to legal instruments and hyperlinksOrdinance 03-11 of August 26, 2003, on Money and Credit (Article 126); Regulation 2000-03 on Foreign Investment; Regulation 2000-04 on Capital Transfers for Nonresident Portfolio Investment.
Provisions Specific to the Financial Sector
Provisions specific to commercial banks and other credit institutions
Borrowing abroadYes.
Maintenance of accounts abroadYes.
Lending to nonresidents (financial or commercial credits)n.a.
Lending locally in foreign exchangeBanks and financial institutions may on-lend foreign funds borrowed abroad.
Purchase of locally issued securities denominated in foreign exchangen.a.
Differential treatment of deposit accounts in foreign exchange
Interest rate controlsYes.
Differential treatment of deposit accounts held by nonresidents
Interest rate controlsYes.
Open foreign exchange position limitsBanks and financial institutions are required to meet the following: (1) a maximum spread of 10% between their position (short or long) in each currency and the amount of their equity capital, and (2) a maximum spread of 30% between total exposure (short and long positions, whichever is highest) for all foreign currencies and their equity capital.
Provisions specific to institutional investors
Insurance companies
Limits (max.) on securities issued by nonresidentsn.a.
Pension fundsn.a.
Investment firms and collective investment fundsn.a.
References to legal instruments and hyperlinksn.a.
Changes during 2006
Imports and import paymentsJanuary 1. The temporary additional duty on certain imports was eliminated.

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