Annual Report on Exchange Arrangements and Exchange Restrictions, 2007


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

Status under IMF Articles of Agreement
Article VIIIDate of acceptance: December 13, 1979.
Exchange Measures
Restrictions and/or multiple currency practicesNo restrictions as reported in the latest staff report as of December 31, 2006.
International security restrictionsTrade with Iraq is prohibited.
Other security restrictionsYes.
References to legal instruments and hyperlinksSuppression of the Financing of Terrorism Act No. 3 of 2006.
Exchange Arrangement
CurrencyThe currency of Dominica is the Eastern Caribbean dollar, issued by the ECCB.
Exchange rate structureUnitary.
Currency board arrangementDominica participates in a currency union with seven other members of the ECCU and has no separate legal tender. The Eastern Caribbean dollar is pegged to the U.S. dollar under a currency board arrangement at EC$2.70 per US$1. Effective January 1, 2007, the exchange arrangement of the ECCU countries has been reclassified to the category currency board arrangement from the category exchange arrangement with no separate legal tender. The new classification is based on the behavior of the common currency, whereas the previous classification was based on the lack of a separate legal tender. The new classification thus reflects only a definitional change, and is not based on a judgment that there has been a substantive change in the exchange regime or other policies of the currency union or its members.
Exchange taxNo.
Exchange subsidyNo.
Forward exchange marketNo.
References to legal instruments and hyperlinksn.a.
Arrangements for Payments and Receipts
Prescription of currency requirementsSettlements with residents of the territories participating in the ECCB Agreement must be made in Eastern Caribbean dollars; those with member countries of CARICOM must be made in the currency of the CARICOM country concerned. Settlements with residents of other countries may be made in any foreign currency that is acceptable to the country where the settlement is being made.
Controls on the use of domestic currencyn.a.
Use of foreign exchange among residentsn.a.
Payments arrangements
Regional arrangementsDominica is a member of CARICOM and the OECS.
Clearing agreementsYes.
Administration of controlForeign exchange control is inoperative. The Ministry of Trade administers import and export arrangements and controls.
Payments arrears
Controls on trade in gold (coins and/or bullion)
On domestic ownership and/or tradeResidents are permitted to acquire and hold gold coins for numismatic purposes only.
On external tradeSmall quantities of gold may be imported for industrial purposes only with the approval of the MOF.
Controls on exports and imports of banknotes
On exports
Domestic currencyThe exportation of Eastern Caribbean dollar notes and coins outside the ECCB area is limited to amounts prescribed by the ECCB.
References to legal instruments and hyperlinksStatutory Rules and Orders No. 13 of 2004.
Resident Accounts
Foreign exchange accounts permittedYes.
Held domesticallyThese accounts are normally confined to major exporters and may be credited only with foreign currencies obtained abroad. Payments from these accounts do not require approval.
Approval requiredYes.
Held abroadNo.
Accounts in domestic currency held abroadn.a.
Accounts in domestic currency convertible into foreign currencyYes.
References to legal instruments and hyperlinksn.a.
Nonresident Accounts
Foreign exchange accounts permittedThese accounts are permitted, but approval is required.
Approval requiredYes.
Domestic currency accountsYes.
Convertible into foreign currencyNo.
Approval requiredYes.
Blocked accountsNo.
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 importsPayments for authorized imports are permitted on presentation to a commercial bank of documentary evidence of purchase.
Letters of creditYes.
Import licenses and other nontariff measuresAll imports from Iraq are prohibited.
Negative listImports of specified goods originating from non-OECS countries, Belize, and CARICOM countries require a license. Imports of certain goods from the more developed countries of CARICOM (Barbados, Guyana, Jamaica, and Trinidad and Tobago) also require a license.
Open general licensesCertain goods require a license for public health or safety reasons.
Licenses with quotasThere are certain quantitative restrictions on imports of flour.
Import taxes and/or tariffsMost rates are ad valorem. Dominica applies the fourth phase of the CARICOM CET. The maximum tariff on most CARICOM agricultural and nonagricultural products is 40% and 20%, respectively. Lower rates apply to machinery (zero to 15%) and some essential foodstuffs (zero to 15%), whereas higher rates apply to import-substituting domestic appliances (20% to 35%) and motor vehicles (10% to 40%). Specific taxes are applied to some goods. These include an excise tax that is levied on (1) motor vehicles, (2) alcohol, (3) petroleum products, and (4) tobacco and tobacco substitutes at the rates set out in the Excise Tax Regulations (SRO 5) of 2006. Certain imports are exempt. A VAT was introduced in March 2006 and legislation provides for certain zero-rated items and exempt imports. Imports are subject to a 1.5% environmental surcharge in addition to the 3% customs service charge. An environmental surcharge of EC$3,000 is payable on vehicles more than five years old. Vehicles less than five years old are subject to a rate of 1.5%, but a concessionary rate of 1% is extended to returning residents.
State import monopolyBulk imports of sugar and rice are effected by a state agency.
References to legal instruments and hyperlinksExcise Tax Regulations (SRO 5) of 2006.
Exports and Export Proceeds
Repatriation requirementsYes.
Surrender requirements
Surrender to authorized dealersThe conversion of export proceeds to an ECCB currency account is mandatory, unless the exporter has a foreign currency account to which the proceeds may be credited.
Financing requirementsn.a.
Documentation requirementsNo.
Export licensesExports to Iraq are prohibited, and specific licenses are required for the exportation of protected plant and animal species to any destination.
Without quotasYes.
Export taxesYes.
References to legal instruments and hyperlinksn.a.
Payments for Invisible Transactions and Current Transfers
Controls on these transfersNo.
References to legal instruments and hyperlinksn.a.
Proceeds from Invisible Transactions and Current Transfers
Repatriation requirementsNo.
Restrictions on use of fundsNo.
References to legal instruments and hyperlinksn.a.
Capital Transactions
Controls on capital transactionsThe Securities Act allows non-OECS countries to trade on the OECS exchange.
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 abroad by residentsYes.
Bonds or other debt securities
Purchase abroad by residentsYes.
On money market instruments
Purchase abroad by residentsYes.
On collective investment securities
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 derivatives and other instrumentsn.a.
Controls on credit operationsAll credit operations by residents to nonresidents require MOF approval.
Commercial credits
By residents to nonresidentsYes.
Financial credits
By residents to nonresidentsYes.
Guarantees, sureties, and financial backup facilities
By residents to nonresidentsYes.
To residents from nonresidentsn.a.
Controls on direct investment
Outward direct investmentYes.
Inward direct investmentNonresidents are generally required to have an alien landholding license to hold shares in private and public companies and to hold property.
Controls on liquidation of direct investmentProceeds may be remitted after the discharge of any related liabilities.
Controls on real estate transactions
Purchase abroad by residentsYes.
Purchase locally by nonresidentsAn alien landholding license is required.
Sale locally by nonresidentsn.a.
Controls on personal capital transactions
By residents to nonresidentsYes.
Gifts, endowments, inheritances, and legacies
By residents to nonresidentsYes.
Settlements of debts abroad by immigrantsYes.
Transfer of assets
Transfer abroad by emigrantsYes.
Transfer of gambling and prize earningsYes.
References to legal instruments and hyperlinksn.a.
Provisions Specific to the Financial Sector
Provisions specific to commercial banks and other credit institutions
Maintenance of accounts abroadn.a.
Lending to nonresidents (financial or commercial credits)MOF approval is required.
Lending locally in foreign exchangeThese transactions generally are not permitted.
Purchase of locally issued securities denominated in foreign exchangen.a.
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
No significant changes occurred in the exchange and trade system.
Changes during 2007
Exchange arrangementJanuary 1. The exchange arrangement of the ECCU countries was reclassified to the category currency board arrangement from the category exchange arrangement with no separate legal tender. The new classification reflects only a definitional change.

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