Annual Report on Exchange Arrangements and Exchange Restrictions, 2007
Chapter

ECUADOR

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: August 31, 1970.
Exchange Measures
Restrictions and/or multiple currency practicesThe staff report for the 2005 Article IV consultation with Ecuador states that as of January 5, 2006, Ecuador maintains an exchange restriction subject to Fund approval under Article VIII, Section 2 (a), in the form of a freeze on demand and savings deposits held in closed banks managed by the Deposit Guarantee Agency. (Country Report No. 06/98)
International security restrictionsNo.
References to legal instruments and hyperlinksn.a.
Exchange Arrangement
CurrencyThe currency of Ecuador is the U.S. dollar.
Other legal tenderA limited issue of domestic coins of small value remains in circulation to facilitate small transactions. These are fully backed by dollars.
Exchange rate structureUnitary.
Classification
Exchange arrangement with no separate legal tenderThe currency of Ecuador is the dollar, which circulates freely.
Exchange taxNo.
Exchange subsidyNo.
Forward exchange marketBanks and other financial institutions authorized to conduct foreign exchange transactions are permitted to conduct forward swaps and options, and transactions in other financial derivative instruments, subject to the supervision and control of the Superintendency of Banks.
References to legal instruments and hyperlinkshttps://www.superban.gov.ec/downloads/normativa/nueva_codificacion/titulo_VI/cap_I.pdf.
Arrangements for Payments and Receipts
Prescription of currency requirementsExchange proceeds from all countries, except LAIA member countries, must be received in convertible currencies. Whenever possible, import payments must be made in the currency stipulated in the import license.
Controls on the use of domestic currency
For current transactions and paymentsYes.
Payments arrangements
Bilateral payments arrangements
InoperativeThere are arrangements with Cuba and Hungary, which are currently inoperative.
Regional arrangementsEcuador is a member of the LAIA.
Clearing agreementsPayments between Ecuador and the other LAIA countries may be made within the framework of the multilateral clearing system of the LAIA.
Barter agreements and open accountsThere is a barter agreement with the Government of Venezuela, under which Ecuador imports diesel and exports crude oil.
Administration of controlPublic sector foreign exchange transactions are carried out exclusively through the Central Bank of Ecuador (CBE). Exports must be registered with the CBE for statistical purposes. Private sector foreign exchange transactions related to the exportation, production, transportation, and commercialization of oil and its derivatives may be carried out through the financial market. Private sector foreign exchange transactions may be effected through banks and exchange bureaus authorized by the Superintendency of Banks.
Payments arrears
OfficialOn December 31, 2006, no arrears were recorded. There are minimal, intra-annual technical arrears with multilateral agencies and governments.
PrivateThe CBE does not record all payments made by the private sector.
Controls on trade in gold (coins and/or bullion)No.
Controls on exports and imports of banknotesNo.
References to legal instruments and hyperlinksn.a.
Resident Accounts
Foreign exchange accounts permittedYes.
Held domesticallyYes.
Approval requiredApproval is required for accounts denominated in currencies other than the dollar. The CBE may open accounts in currencies other than the dollar, on behalf of public sector entities, provided said entities receive funds in the form of grants or loans.
Held abroadPublic sector entities may hold foreign exchange accounts abroad.
Approval requiredThe approval of the board of directors of the CBE is required.
Accounts in domestic currency held abroadThe dollar is used as domestic currency, and no distinction is made between accounts in dollars held domestically and those held abroad.
Accounts in domestic currency convertible into foreign currencyThe dollar is used as domestic currency, and balances may be converted into foreign currency without restriction.
References to legal instruments and hyperlinksArticle 1, Chapter II (Foreign Exchange Accounts of Public Sector Institutions), Title I (Exchange Market), Book II, Exchange Policy on the Codification of Regulations of the CBE.
Nonresident Accounts
Foreign exchange accounts permittedYes.
Approval requiredYes.
Domestic currency accountsYes.
Convertible into foreign currencyNo.
Blocked accountsNo.
References to legal instruments and hyperlinksn.a.
Imports and Import Payments
Foreign exchange budgetNo.
Financing requirements for imports
Advance payment requirementsPrepayments for imports by the private and public sectors are permitted.
Documentation requirements for release of foreign exchange for importsNo.
Import licenses and other nontariff measuresPreinspection documents are required for agricultural, medical, arms, and psychotropic imports. In addition, Petroecuador (the state oil company) may, without a license, import supplies, materials, and equipment during emergencies.
Negative listImports of psychotropics, used vehicles, used tires, and used clothes are prohibited, primarily to protect the environment and public health. Imports of certain items related to health or national security are also prohibited. Certain imports require prior authorization from government ministries or agencies for ecological, health, or national security reasons.
Other nontariff measuresMeasures include safeguards, quotas, and contingencies.
Import taxes and/or tariffsTariff rates for most goods are zero, 5%, 10%, 15%, 20%, and 35%. Automobiles are subject to a 35% rate calculated on the basis of the c.i.f. value. Variable tariffs under a price band system are applied to about 154 agricultural products. Under an agreement with the WTO, tariff rates for goods subject to price bands are bound at 45%. Discriminatory excise taxes are in place for a limited number of goods, including automobiles, beer, liquor, soft drinks, and cigarettes. In addition, there is a redeemable quota of 0.25 per million on the f.o.b. value of any import to be used for financing the activities of the Export and Investment Promotion Corporation (CORPEI).
State import monopolyNo.
References to legal instruments and hyperlinksResolution 183 of the External Trade and Investment Board (COMEXI), Article 9, published in May 2003; COMEXI Resolution 182, Official Register 57 of April 8, 2003, Annex 1.
Exports and Export Proceeds
Repatriation requirementsNo.
Financing requirementsNo.
Documentation requirements
Letters of creditYes.
Preshipment inspectionThis establishes the official value assigned to the goods.
Export licensesExports require licenses and must be registered with the CBE for statistical purposes.
Without quotasThe export prices of bananas, cocoa, coffee, fish, and semifinished cocoa products are subject to minimum reference prices.
Export taxesAll crude oil exports are subject to a tax of $0.0002 a barrel. Petroecuador is considering tariffs of $1.15766 for crude oil exported through the TransEcuadoran Pipeline and of $1.4368 for crude oil exported through the heavy crude pipeline.
Other export taxesExports are subject to a redeemable quota amounting to 1.5 a thousand of the f.o.b. value (except for petroleum and petroleum products, which are subject to a redeemable quota of 0.5 a thousand). Exporters accumulating $500 in paid-up redeemable quotas may apply to CORPEI for a certificate that may be cashed in for its nominal value after 10 years. The proceeds from the investment of redeemable quotas are used partly to finance CORPEI’s activities. Exports of coffee are subject to a contribution of 2% of their f.o.b. value, with the proceeds given to the National Coffee Board.
References to legal instruments and hyperlinksOfficial Register 657, Law on the Coffee Sector, March 20, 1995; Executive Decree 1351, published in Official Register 352 of January 5, 1994; Resolution 002 of the Foreign Trade and Investment Board published in the Official Register of March 16, 1998.
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 transactionsYes.
Repatriation requirementsNo.
Controls on capital and money market instrumentsNo.
Controls on derivatives and other instrumentsNo.
Controls on credit operationsAll foreign loans granted to or guaranteed by the government or official entities, whether or not they involve the disbursement of foreign exchange, are subject to prior approval from the CBE. A request for such approval must be submitted by the MOF to the CBE, accompanied by detailed information on the loan contract and the investment projects it is intended to finance. In examining the request, the CBE considers the effects that the loan and the related investment may have on the fiscal accounts, balance of payments, and level of public indebtedness. For public sector entities, the projects to be financed must be included in the Annual Investment Program drawn up by the National Secretariat of Planning and Development, in the pro forma budget prepared by the Ministry of Economy and Finance, and in the CBE’s macroeconomic planning.
External credits with a maturity of more than one year that are contracted by the private sector, either directly or through the domestic financial system, must be registered with the CBE within 45 days from the date of disbursement.
Commercial credits
By residents to nonresidentsCommercial credits to private enterprises are supervised by the Superintendency of Banks.
Financial credits
By residents to nonresidentsYes.
Guarantees, sureties, and financial backup facilities
By residents to nonresidentsYes.
Controls on direct investmentThere are no controls, but registration with the CBE is required for statistical purposes.
Controls on liquidation of direct investmentNo.
Controls on real estate transactionsNo.
Controls on personal capital transactionsNo.
References to legal instruments and hyperlinksn.a.
Provisions Specific to the Financial Sector
Provisions specific to commercial banks and other credit institutions
Differential treatment of deposit accounts in foreign exchange
Reserve requirementsThe reserve requirement for financial institutions’ accounts is 4%.
Provisions specific to institutional investors
Pension funds
Limits (max.) on investment portfolio held abroadThe Ecuadoran Social Security Institute may not invest abroad more than 7.5% of the total market value of its portfolio. In practice, the Institute does not invest abroad.
Limits (min.) on investment portfolio held locallyThe Ecuadoran Social Security Institute may not invest more than 50% of the total market value of its portfolio in public sector investments.
References to legal instruments and hyperlinksCodification of Resolutions of the Superintendency of Banks, Subtitle II; Operations of the Ecuadoran Social Security Institute, Chapter I; Regulations Governing the Investment of Resources Corresponding to Each Type of Insurance Included in Obligatory General Insurance and the Portfolio of the Directorate General of the Ecuadoran Social Security Institute.
Changes during 2006
No significant changes occurred in the exchange and trade system.

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