Annual Report on Exchange Arrangements and Exchange Restrictions, 2007
Chapter

BURUNDI

Author(s):
International Monetary Fund. Monetary and Capital Markets Department
Published Date:
October 2007
Share
  • ShareShare
Show Summary Details

(Position as of December 31, 2006)

Status under IMF Articles of Agreement
Article XIVYes.
Exchange Measures
Restrictions and/or multiple currency practicesThe staff report for the 2006 Article IV consultation with Burundi states that as of July 5, 2006, Burundi maintained two multiple currency practices inconsistent with Article VIII, Section 3, arising from or in connection with the current Dutch auction system, and one exchange restriction inconsistent with Article VIII, Section 2 (a), resulting from the authorization process that is applied to certain current international transactions. One multiple currency practice results from the fact that no mechanism limits the potential variation of winning bids from differentiating from each other by more than 2 percent. The other multiple currency practice results from the fact that the exchange rate used for government transactions takes place at a rate that may differ by more than 2 percent from market exchange rates. The exchange restriction results from the central bank having discretion to refuse to authorize the sale of foreign exchange for reasons other than in connection with verifying the bona fide nature of the transaction. An exchange restriction was eliminated on May 30, 2006. (Country Report No. 06/311)
International security restrictions
In accordance with IMF Executive Board Decision No. 144-(52/51)On May 19, 2006, the authorities notified the IMF that Burundi maintains restrictions on financial transactions and accounts involving terrorist individuals and organizations, pursuant to (1) UN Security Council Resolution No. 1269 (1999) and (2) the updated list of terrorist organizations prepared by the U.S. Department of State.
Other security restrictionsYes.
References to legal instruments and hyperlinksn.a.
Exchange Arrangement
CurrencyThe currency of Burundi is the Burundi franc.
Exchange rate structure
MultipleEffective July 5, 2006, the exchange rate structure was reclassified to multiple because the exchange rates may differ by more than 2% on the foreign exchange auction. In addition, the exchange rate used for official transactions may deviate from the market exchange rates by more than 2%. Effective July 7, 2006, the auction rules were changed, limiting the potential variation of the winning bids to 2%.
Classification
Managed floating with no predetermined path for the exchange rateThe Bank of the Republic of Burundi (BRB) sets the official exchange rate daily on the basis of a weighted average of commercial bank rates. Effective July 7, 2006, the foreign exchange auction rules have been changed, limiting the potential variation of winning bids to 2%.
Exchange taxNo.
Exchange subsidyNo.
Forward exchange marketn.r.
References to legal instruments and hyperlinksn.a.
Arrangements for Payments and Receipts
Prescription of currency requirementsSettlements relating to trade with the Democratic Republic of the Congo and Rwanda in products specified in the trade agreements with these countries are effected through a clearing process, with balances paid in convertible currencies. Nonresidents staying in a hotel or guesthouse in Burundi may pay their hotel bills in foreign currency or Burundi francs.
Controls on the use of domestic currencyExcept for the above, all payments for goods and services in Burundi must be made in domestic currency.
For current transactions and paymentsn.a.
For capital transactionsn.a.
Use of foreign exchange among residentsTransactions in foreign currency among residents are not permitted.
Payments arrangements
Bilateral payments arrangements
OperativeThere are trade agreements with the Democratic Republic of the Congo and Rwanda. These agreements are not fully operational.
Regional arrangementsRegional agreements exist with eastern and southern African countries.
Clearing agreementsClearing agreements exist with members of COMESA and the CEPGL.
Administration of controlControl over foreign exchange transactions is vested in the BRB; authority to carry out some transactions is delegated to authorized banks. On December 6, 2006, a new foreign exchange regulation was published to eliminate restrictions on all current transactions.
Payments arrears
OfficialYes.
Controls on trade in gold (coins and/or bullion)
On domestic ownership and/or tradeNatural and juridical persons holding gold mining permits issued by the ministers responsible for mining and customs may establish purchasing houses for gold in transit or mined by artisans in Burundi. Gold produced by artisans may be sold only to approved firms.
On external tradeExports of gold must be declared in Burundi francs at the average daily rates in effect at the time of declaration. Gold exports are authorized jointly by the mining and customs departments.
Controls on exports and imports of banknotes
On exports
Domestic currencyEffective December 6, 2006, the export of banknotes in any amount exceeding Fbu 100,000 is subject only to a customs declaration (previously, the limit was Fbu 5,000).
Foreign currencyEffective December 6, 2006, restrictions on the export of foreign currency purchased in cash from an authorized intermediary were eliminated. Previously, there was a licensing requirement for those who did not hold foreign exchange accounts. Foreign currency that was subject to an optional declaration in customs at entry may be reexported on presentation of said declaration.
On imports
Domestic currencyEffective December 6, 2006, the import of Burundi franc banknotes in any amount exceeding Fbu 100,000 is subject to customs declaration.
Foreign currencyEffective December 6, 2006, all restrictions were eliminated on the import of banknotes.
References to legal instruments and hyperlinksn.a.
Resident Accounts
Foreign exchange accounts permittedYes.
Held domesticallyResident natural persons or legal entities may open foreign exchange accounts with local banks. Foreign exchange accounts may be credited freely. Withdrawals of Burundi francs are unlimited. Effective October 8, 2006, the previous limit of $5,000 a year on withdrawals without supporting documents (e.g., an airline ticket) was raised to $50,000 a year.
Held abroadYes.
Accounts in domestic currency held abroadNo.
Accounts in domestic currency convertible into foreign currencyEffective April 10, 2006, domestic currency accounts are no longer convertible into foreign exchange accounts.
References to legal instruments and hyperlinksn.a.
Nonresident Accounts
Foreign exchange accounts permittedAny nonresident natural or juridical person may open a foreign exchange account in an authorized bank. Nonresident foreign exchange accounts may be debited and credited freely. There is a limit of $50,000 a year on withdrawals in banknotes without a travel document.
Domestic currency accountsYes.
Convertible into foreign currencyYes.
Blocked accountsn.a.
References to legal instruments and hyperlinksn.a.
Imports and Import Payments
Foreign exchange budgetNo.
Financing requirements for importsNo.
Documentation requirements for release of foreign exchange for importsEffective April 3, 2006, imports are subject to declaration of intent to import (DII) validation performed by the Société Générale de Surveillance (SGS) Liaison Office in Bujumbura.
Preshipment inspectionAccording to paragraph (a) at the end of Article 39 of the Exchange Regulations of December 6, 2006, and the Specific Rule of April 3, 2006, on import controls, the shipment of imported food, pharmaceuticals, and chemicals exceeding the equivalent of $3,000 in c.i.f. value and of all other goods exceeding $5,000 in c.i.f. value is subject to preshipment inspection by international supervising and oversight agents on behalf of the Burundi authorities with regard to quality, quantity, and price. Article 40 of the above-mentioned Exchange Regulations also refers to this matter and mentions the verification notice (avis de vérification) required of authorized banks whenever cash amounts are allocated to importers.
Currently, inspections are carried out by the SGS.
Letters of creditThere is no obligation to settle import transactions by LCs.
Import licenses used as exchange licensesEffective December 6, 2006, the requirement that exchange licenses be issued on the basis of an import and payment declaration was eliminated. The validation of a DII now serves as an exchange license.
OtherGoods imported into Burundi are required to be insured by approved Burundi insurers; premiums need not be paid in Burundi francs.
Import licenses and other nontariff measuresEffective April 3, 2006, only a DII is required. Previously, importers had to file a DIP. Imports of commercial samples, personal luggage, and personal effects of travelers, as well as all imports by diplomatic and UN missions, are exempt from the DII requirement.
Negative listEffective December 12, 2006, the prohibition on the import of 100% cotton printed cloth (pagne) was eliminated.
Open general licensesYes.
Import taxes and/or tariffsImports from COMESA member countries enter Burundi duty-free. Effective January 1, 2006, the tariff structure consists of four rates: 5%, 10%, 15%, and 30% (previously, three rates: 10%, 15%, and 30%). Imports of petroleum products are subject to 20% duties. On January 1, 2006, the 6% service tax levied on the c.i.f. value of all nondiplomatic imports was abolished. A flat-rate profits tax of 4% is withheld for commercial imports by the informal sector and those importers not in good standing with the income tax department.
State import monopolyNo.
References to legal instruments and hyperlinksn.a.
Exports and Export Proceeds
Repatriation requirementsExport proceeds for all products must be collected within 30 days of the date of shipment recorded by customs for shipment by air or within 90 days for all other shipments.
Financing requirementsNo.
Documentation requirementsValidation of the export declaration by a commercial bank is required.
Letters of creditAn LC is required for any export payable by documentary credit.
GuaranteesExports paid for by means other than preshipment payment, documentary remittance, or documentary credit must be covered by a performance bond warranty underwritten by the intervening bank in favor of the BRB.
Export licensesOnly export declarations are required.
Export taxesTaxes are levied on a range of exports. The generally applicable rate is 5%. For green coffee, the rate is set each crop season.
References to legal instruments and hyperlinksn.a.
Payments for Invisible Transactions and Current Transfers
Controls on these transfersEffective July 1, 2006, the prior approval requirement on payment for invisibles by the BRB was removed. Previously, all payments for invisibles required prior approval. Banks and foreign exchange bureaus were authorized to approve requests for amounts within the prescribed limits. Effective March 23, 2006, banks may sell their customers up to $3,000 on presentation of an identification document and, effective November 28, 2006, up to $5,000 on presentation of an airline ticket. Previously, only foreign exchange bureaus were allowed to sell foreign exchange up to $3,000 on presentation of an identification document.
Trade-related paymentsShipping insurance on coffee exports normally must be taken out in Burundi francs with a domestic insurer.
Indicative limits/bona fide testEffective December 12, 2006, the limits on unloading and storage costs were removed. Previously, these costs were limited to amounts indicated by the invoice.
Investment-related payments
Indicative limits/bona fide testPrivate joint-stock companies may transfer 100% of the return on foreign capital and of the profits distributed to foreign directors after payment of taxes. Airlines are authorized to transfer abroad 100% of their earnings after deduction of local expenses. Transfer of rental income is permitted after payment of taxes and a deduction of 20% for maintenance expenses.
Payments for travelCommercial banks and the BRB provide foreign exchange for personal and business travel, respectively.
Quantitative limitsEffective June 9, 2006, indicative limits based on a daily allowance and the number of travel days apply as follows: (1) official travel, $250-$350 a day, according to category and destination; (2) business travel, $300 a day, for up to 20 days; and (3) tourism and personal travel, $5,000 a year.
Indicative limits/bona fide testYes.
Personal paymentsCommercial banks sell foreign exchange for personal payments within the limits of their available foreign exchange. Pension transfers are effected through the Social Security Institute.
Quantitative limitsFor health-related travel, an initial allowance up to $5,000 is granted on departure, and additional transfers are authorized on presentation of invoices. For an accompanying traveler, the maximum allowance is $5,000.
Allowances for studies abroad are authorized on the basis of proof of enrollment in an institution of higher education. University students with domestically sourced scholarships may receive up to the amount of their scholarships. Other university students are allowed to purchase the equivalent of the university tuition and €3,000 a quarter for subsistence and €1,000 a year for materials. Non-university students are allowed €1,800 a quarter. Interns are allowed up to the amount given for official travel, after deducting any support awarded by their employer.
Indicative limits/bona fide testYes.
Foreign workers’ wages
Quantitative limitsOn presentation of evidence of payment of taxes, foreign nationals residing and working in Burundi are permitted to transfer abroad up to 70% of their net annual income (80% in the case of foreign nationals working for companies that export at least 50% of their production).
Indicative limits/bona fide testA work contract is required.
Credit card use abroadn.r.
Other payments
Quantitative limitsConsulting and legal fees are limited to amounts indicated by invoices.
Indicative limits/bona fide testYes.
References to legal instruments and hyperlinksn.a.
Proceeds from Invisible Transactions and Current Transfers
Repatriation requirementsYes.
Restrictions on use of fundsYes.
References to legal instruments and hyperlinksn.a.
Capital Transactions
Controls on capital transactionsCapital transfers abroad by residents require individual authorization.
Repatriation requirementsn.a.
Surrender requirementsn.a.
Controls on capital and money market instruments
On capital market securities
Shares or other securities of a participating nature
Purchase locally by nonresidentsPurchases may be effected in foreign exchange or, effective December 12, 2006, in Burundi francs of lawful origin.
Sale or issue locally by nonresidentsn.r.
Purchase abroad by residentsEffective December 6, 2006, purchases are subject to approval by the BRB. Previously, the MOF approved these transactions.
Bonds or other debt securities
Purchase locally by nonresidentsPurchases may be made with nonresidents’ own foreign exchange funds or, effective December 12, 2006, in Burundi francs of lawful origin.
Sale or issue locally by nonresidentsn.r.
Purchase abroad by residentsYes.
Sale or issue abroad by residentsn.r.
On money market instruments
Purchase locally by nonresidentsn.r.
Sale or issue locally by nonresidentsn.r.
Purchase abroad by residentsBRB approval is required.
Sale or issue abroad by residentsn.r.
On collective investment securitiesn.r.
Controls on derivatives and other instrumentsn.r.
Controls on credit operations
Commercial creditsControls apply to all these transactions.
Financial credits
By residents to nonresidentsYes.
To residents from nonresidentsBRB approval is required.
Guarantees, sureties, and financial backup facilities
By residents to nonresidentsBRB approval is required.
Controls on direct investment
Outward direct investmentEffective December 12, 2006, outward direct investments are subject to BRB approval. Previously, the provision of foreign exchange for outward direct investments had been suspended. Even with the emergence of the free foreign exchange market, banks were not authorized to sell foreign exchange for outward direct investments.
Inward direct investmentYes.
Controls on liquidation of direct investmentTransfers of foreign capital for which repatriation guarantees have been granted do not require individual authorization.
Controls on real estate transactions
Purchase abroad by residentsYes.
Purchase locally by nonresidentsPurchases may be effected in foreign exchange or, effective December 12, 2006, in Burundi francs of lawful origin.
Sale locally by nonresidentsTransfer of proceeds from the sale of real estate by nonresidents is permitted, provided the purchaser pays in foreign currency if the purchaser is not a resident. Resident buyers pay in domestic currency, and the seller receives foreign exchange.
Controls on personal capital transactions
Loans
By residents to nonresidentsThese transactions are not specifically regulated if they are effected in domestic currency.
To residents from nonresidentsBRB approval is required.
Gifts, endowments, inheritances, and legaciesThese transactions are not specifically regulated if they are effected in domestic currency.
Settlements of debts abroad by immigrantsn.r.
Transfer of assets
Transfer abroad by emigrantsAuthorized banks may sell foreign currency, up to the limits set by the BRB, to residents who have decided to emigrate.
Transfer into the country by immigrantsYes.
Transfer of gambling and prize earningsn.r.
References to legal instruments and hyperlinksn.a.
Provisions Specific to the Financial Sector
Provisions specific to commercial banks and other credit institutions
Borrowing abroadBRB approval is required.
Maintenance of accounts abroadOnly commercial banks may hold accounts abroad.
Purchase of locally issued securities denominated in foreign exchangen.r.
Differential treatment of deposit accounts in foreign exchange
Credit controlsYes.
Differential treatment of deposit accounts held by nonresidents
Credit controlsDebit balances are not permitted on foreign exchange accounts.
Investment regulations
Abroad by banksPrior approval of the BRB is required.
In banks by nonresidentsn.r.
Provisions specific to institutional investors
Pension fundsn.a.
Investment firms and collective investment fundsn.a.
References to legal instruments and hyperlinksn.a.
Changes during 2006
Exchange measuresMay 19. The authorities notified the IMF that Burundi maintains restrictions on financial transactions and accounts involving terrorist individuals and organizations, pursuant to (1) UN Security Council Resolution No. 1269 (1999) and (2) the updated list of terrorist organizations prepared by the U.S. Department of State.

May 30. One exchange restriction was eliminated.
Exchange arrangementJuly 5. The exchange rate structure was reclassified to multiple because the exchange rates may differ by more than 2% on the foreign exchange auction. In addition, exchange rate used for official transactions may deviate from the market exchange rates by more than 2%.

July 7. A mechanism was put in place to limit the potential variation of winning bids to 2%.
Arrangements for payments and receiptsDecember 6. Imports and exports of domestic currency exceeding Fbu 100,000 (previously, Fbu 5,000) are subject to a customs declaration.

December 6. The limits on the export and import of foreign currency were eliminated (previously, there was a prior licensing requirement for those who did not hold a foreign exchange account).

December 6. A new foreign exchange regulation was published to eliminate restrictions on all current transactions.
Resident accountsApril 10. Domestic currency accounts were no longer convertible into foreign exchange accounts.

October 8. The previous limit of $5,000 on withdrawals without supporting documents (e.g., an airline ticket) was raised to $50,000 a year.
Imports and import paymentsJanuary 1. The 6% service tax on all nondiplomatic imports was abolished.
January 1. The tariff structure was changed to four rates: 5%, 10%, 15%, and 30%.

April 3. Importers were required to file a DII (previously, a DIP).

April 3. Imports were made subject to DII validation, performed by the SGS Liaison Office in Bujumbura.

December 6. The requirement that exchange licenses be issued on the basis of a DIP was eliminated and replaced with the requirement that exchange licenses be issued on the basis of a DII.

December 12. The prohibition on the import of 100% cotton printed cloth was lifted.
Payments for invisible transactions and current transfersMarch 23. Banks were permitted to sell their customers up to $3,000 on presentation of an identification document.

June 9. The limits based on a daily allowance and the number of travel days were established as follows: (1) official travel, $250-$350 a day, according to category and destination; (2) business travel, $300 a day, for up to 20 days; and (3) tourism and personal travel, $5,000 a year.

July 1. Foreign exchange bureaus and banks were allowed to sell foreign exchange without presentation of an identification document, up to an amount determined by the BRB.

July 1. The prior approval requirement on payment for invisibles by the BRB was removed. Previously, all payments for invisibles required prior approval.

November 28. Banks were permitted to sell their customers up to $5,000 on presentation of an airline ticket.

December 12. Limits on unloading and storage costs were removed.
Capital transactions
Controls on capital and money market instrumentsDecember 6. Purchase of shares and other securities of a participating nature were made subject to approval by the BRB (previously, the MOF).

December 12. Purchases by nonresidents were permitted to be effected in foreign currency or Burundi francs of lawful origin.
Controls on direct investmentDecember 12. Direct investments abroad were made subject to prior approval by the BRB.
Controls on real estate transactionsDecember 12. Purchases by nonresidents were allowed in foreign currency and Burundi francs of lawful origin.

    Other Resources Citing This Publication