Annual Report on Exchange Arrangements and Exchange Restrictions, 2007
Chapter

JAMAICA

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: February 22, 1963.
Exchange Measures
Restrictions and/or multiple currency practicesNo restrictions as reported in the latest staff report as of December 31, 2006.
International security restrictions
Other security restrictionsRepayment of the loan from Iraq has been suspended in line with UN sanctions.
References to legal instruments and hyperlinksn.a.
Exchange Arrangement
CurrencyThe currency of Jamaica is the Jamaican dollar.
Other legal tenderCommemorative gold coins in denominations of J$100 and J$500 and souvenir coins in denominations of J$5, J$10, J$25, J$50, and J$100 are legal tender but do not circulate.
Exchange rate structureUnitary.
Classification
Managed floating with no predetermined path for the exchange rateThe exchange rate of the Jamaican dollar is determined in the domestic foreign exchange market. This market is operated by ADs, cambios, bureaux de change, and the Bank of Jamaica (BOJ). The ADs include all commercial banks, selected merchant banks, and the three largest building societies. ADs engage in (1) the purchasing and selling of foreign currency in the form of cash, drafts, traveler’s checks, and other instruments; (2) the granting of loans and the taking of deposits; and (3) the making of other international payments. Cambios are allowed to purchase and sell unlimited amounts of foreign exchange in any form to any person. Their main function is the exchange of currency for hotel guests. However, unlike ADs, cambios are not permitted to grant loans or accept deposits. Excess foreign exchange may be sold without restriction to commercial banks, other ADs, and the general public.
Proceeds from official loans, divestment of government assets, and taxes on the bauxite sector payable in foreign currency are sold directly to the BOJ. The BOJ purchases foreign exchange from ADs and cambios under the following terms: (1) purchases are made in U.S. dollars, Canadian dollars, pounds sterling, and euros; (2) the minimum amount that the BOJ will purchase in a single transaction is 50,000 units of the foreign currency; and (3) the exchange rates for these currencies are negotiated by the BOJ.
Exchange taxNo.
Exchange subsidyNo.
Forward exchange marketThis market is currently inactive.
References to legal instruments and hyperlinksn.a.
Arrangements for Payments and Receipts
Prescription of currency requirementsAlthough there is no restriction on transactions in any currency, the principal foreign currencies accepted in the exchange market are the Canadian dollar, the pound sterling, and the U.S. dollar. Surrender may be made in any of these three major currencies. Surrender in Canadian dollars and pounds sterling may be made in U.S. dollars and must be covered at the cross-currency rate derived from their respective weighted-average buying rates in the local market on the day of purchase. Payments to all countries may be made by crediting Jamaican dollars to an external account or a foreign currency account. Receipts from all countries must be debited to an external account in any foreign currency.
Controls on the use of domestic currencyEconomic agents are free to settle all transactions with domestic currency. The Jamaican dollar may be used to conduct and settle all current and capital transactions.
Payments arrangements
Regional arrangementsJamaica is a member of CARICOM.
Clearing agreementsThe clearing arrangements within the framework of CARICOM have been suspended since November 1, 1990. The BOJ no longer intervenes in CARICOM private sector commercial transactions; settlements for such transactions are effected by the commercial banking sector in convertible currencies.
Administration of controlTrading in foreign exchange, other than by and through an AD, is prohibited. The MOF has the authority to issue directions to specified classes of persons regarding the acquisition of foreign assets.
Payments arrears
Privaten.a.
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 permittedThese accounts may be credited with payments by residents of Jamaica, with transfers from other external accounts, and with the proceeds from the sale of gold or foreign currencies to an AD. They may be debited for payments to residents of Jamaica, for transfers to other external accounts, and for the purchase of foreign currencies.
Held domesticallyYes.
Held abroadYes.
Accounts in domestic currency held abroadn.a.
Accounts in domestic currency convertible into foreign currencyResidents are free to convert balances in domestic currency to foreign currency at the prevailing exchange rate through ADs and cambios. Residents may maintain B accounts in domestic currency that were opened prior to September 21, 1991, using proceeds of foreign currency inflows. Balances in these accounts may be converted into foreign currency at the prevailing exchange rate. Interest on these accounts is exempt from tax, provided deposits are held as certificates of deposit with at least a one-year maturity. New B accounts have not been permitted since September 22, 1991.
References to legal instruments and hyperlinksn.a.
Nonresident Accounts
Foreign exchange accounts permittedNonresidents may hold foreign exchange accounts (A accounts) in Jamaica. These accounts are tax-free under the Income Tax Act once the statutory criteria are met. All credits to these accounts must originate directly from foreign remittances and not from local purchases of foreign exchange.
Funds from these accounts may be transferred freely between residents and nonresidents.
Domestic currency accountsThe regulations governing accounts held by residents apply.
Convertible into foreign currencyYes.
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 importsNo.
Import licenses and other nontariff measuresImport licenses are required for pharmaceutical products and items that endanger public health or security; otherwise, goods may be imported freely without a license. Import licenses, when required, are issued by the Trade Board, which functions under the direction of the Ministry of Industry and Commerce. Imports of motor vehicles require a permit for government statistical purposes. Payments for imports may be made by commercial banks without reference to the BOJ.
Negative listProhibited items include indecent and obscene prints and base or counterfeit coins of any country. Restricted items, which require a permit prior to importation, include meat, fruits, vegetables, pharmaceuticals, chemicals, herbal teas, firearms, used tires, radios (two-way), coconut derivatives, oil-producing seeds, edible oils, detergent (solid or liquid form), motor vehicles, explosives, alcohol in bulk, sugar, human remains, pesticides, and live animals. Imports of bone marrow, brains, and cows older than 2.5 years are banned. The concession granted on the importation of chicken leg quarters is discontinued.
Import taxes and/or tariffsImports are subject to customs tariffs of up to 20% for nonagricultural products and 40% for agricultural products, in compliance with the fourth phase of the CARICOM CET. Some agricultural imports are subject to additional stamp duties of up to 95%. Taxes are collected by customs agents at the port of entry. The WTO-bound tariffs on 10 categories of agricultural products (certain poultry and vegetables) are 100%. Additional stamp duties on these imported products raise the rate of total duty payable to 260%.
State import monopolyNo.
References to legal instruments and hyperlinksn.a.
Exports and Export Proceeds
Repatriation requirementsNo.
Financing requirementsNo.
Documentation requirementsNo.
Export licensesMost goods may be exported without restriction. However, specific licenses are required for exports of certain agricultural products, ammunition, explosives, firearms, antique furniture, motor vehicles, mineral and metal ores, paintings, jewelry, and petroleum products.
Without quotasn.r.
With quotasn.r.
Export taxesNo.
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 transactionsYes.
Repatriation requirementsNo.
Controls on capital and money market instruments
On capital market securitiesDeposit-taking financial institutions are prohibited from investing on behalf of clients. This business is conducted by separate corporate entities.
Shares or other securities of a participating nature
Purchase locally by nonresidentsThere are no limitations on the acquisition of shares in a company by nonresidents, with the exception of locally incorporated commercial banks and licensed deposit-taking institutions, 5% of which may be held by a foreign government or an agency of a foreign government unless the minister of finance approves otherwise.
Sale or issue locally by nonresidentsAny issuer that proposes to sell or issue instruments denominated in a foreign currency, other than an issuer designated by the minister of finance as an AD in foreign currency, must obtain from the minister prior exemption from the prohibition against engaging in such transactions.
Bonds or other debt securitiesThese transactions are subject to the Securities Act and the Securities (Commercial Papers) Regulations.
Purchase locally by nonresidentsYes.
Sale or issue locally by nonresidentsYes.
Purchase abroad by residentsADs, insurance companies, credit unions, building societies, exchange bureaus, unit trusts, and pension fund managers are prohibited from acquiring foreign assets, except in accordance with directives issued by the MOF.
Sale or issue abroad by residentsThese transactions are subject to the regulations of the issuing jurisdiction.
On money market instruments
Purchase locally by nonresidentsThese transactions are subject to the Securities (Mutual Funds) Regulations.
Sale or issue locally by nonresidentsThese transactions are subject to ministerial approval; a prospectus is required under the Companies Act.
Purchase abroad by residentsFor banks, licensed deposit-taking institutions, credit unions, building societies, cambio operators, unit trusts, and pension funds that acquire foreign assets as part of their business activities, the purchase must be in accordance with directions issued by the MOF. Jamaican residents may acquire foreign assets unless acquisition is prohibited by the foreign jurisdiction concerned.
Sale or issue abroad by residentsThe laws of the overseas jurisdiction apply.
On collective investment securitiesMOF approval is required for banks, licensed deposit-taking institutions, credit unions, building societies, cambio operators, unit trusts, and pension funds.
Sale or issue locally by nonresidentsThese transactions are subject to the Securities Act and the Unit Trusts Act.
Purchase abroad by residentsYes.
Sale or issue abroad by residentsYes.
Controls on derivatives and other instruments
Purchase locally by nonresidentsn.r.
Sale or issue locally by nonresidentsThese transactions are subject to the Securities Act and the Unit Trusts Act.
Purchase abroad by residentsn.r.
Sale or issue abroad by residentsn.r.
Controls on credit operationsNo.
Controls on direct investmentNo.
Controls on liquidation of direct investmentNo.
Controls on real estate transactionsNo.
Controls on personal capital transactionsn.r.
References to legal instruments and hyperlinksn.a.
Provisions Specific to the Financial Sector
Provisions specific to commercial banks and other credit institutionsEffective May 1, 2006, the special deposit requirement of 1% applicable to commercial banks and other institutions licensed under the Financial Institutions Act has been eliminated. Deposit-taking financial institutions are prohibited from investing on behalf of clients. This business is conducted by separate corporate entities.
Lending locally in foreign exchangeCurrently, lending in foreign currency may be carried out only by ADs. Other lenders may apply for exemptions issued by the MOF.
Purchase of locally issued securities denominated in foreign exchangeAny person may purchase instruments denominated in foreign currency. However, only ADs may carry out transactions with securities issued in foreign currency. Other specific categories of companies are allowed to acquire foreign securities only in accordance with the directions issued by the MOF. The MOF may exempt other parties from such prohibitions.
Differential treatment of deposit accounts in foreign exchange
Liquid asset requirementsThe liquid assets ratio of commercial banks and entities licensed under the Financial Institutions Act with respect to local and foreign currency liabilities is 23%, and the cash reserve ratio is 9%. All debt securities or instruments issued by the government of Jamaica, whether denominated in Jamaican dollars or in a foreign currency, irrespective of their original maturity terms, are designated as liquid assets within nine months of their maturity date.
Differential treatment of deposit accounts held by nonresidentsAll deposit accounts, whether held by residents or nonresidents, are treated alike.
Investment regulations
Abroad by banksThere are limits on investments by deposit-taking institutions that apply to all equity investments. Aggregate shareholdings may not exceed 50% of the capital base, and shareholdings in any one company may not exceed 10% of the capital base. Investments by all related parties may not exceed 20% of the capital base.
In banks by nonresidentsAll substantial ownership in banks is subject to the approval of the MOF.
Provisions specific to institutional investors
Insurance companies
Limits (max.) on investment portfolio held abroadGeneral investments, including overseas investments by commercial banks, merchant banks, and building societies, are subject to limits.
Limits (min.) on investment portfolio held locallyThe minimum to be specified by the Superintendent of Insurance must not exceed 70% of the domestic liabilities of the company.
Currency-matching regulations on assets/liabilities compositionCommercial banks and licensed deposit-taking institutions may be required to match their Jamaican dollar liabilities to their clients with Jamaican dollar assets.
Pension funds
Limits (max.) on securities issued by nonresidentsFor pension funds that acquire foreign assets as part of their business activities, the purchase must be in accordance with directions issued by the MOF. MOF approval is required for transactions with collective investment securities.
Limits (max.) on investment portfolio held abroadn.a.
Limits (min.) on investment portfolio held locallyn.a.
Currency-matching regulations on assets/liabilities compositionn.a.
Investment firms and collective investment fundsNonresident companies must be incorporated or registered in Jamaica or other CARICOM member states in order to obtain a license to deal in securities or give investment advice. Nonresident companies must be owned, controlled, or supervised by persons who are citizens of, and are actually residents in, Jamaica or other CARICOM states, as may be prescribed. Mutual fund schemes must be approved by the Securities Commission, and there are limits on investments by deposit-taking institutions.
Limits (max.) on securities issued by nonresidentsn.a.
Limits (max.) on investment portfolio held abroadn.a.
Limits (min.) on investment portfolio held locallyn.a.
Currency-matching regulations on assets/liabilities compositionn.a.
References to legal instruments and hyperlinksn.a.
Changes during 2006
Provisions specific to the financial sector
Provisions specific to commercial banks and other credit institutionsMay 1. The special deposit requirement of 1% applicable to commercial banks and other institutions licensed under the Financial Institutions Act was eliminated.

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