Annual Report on Exchange Arrangements and Exchange Restrictions, 2007
Chapter

KUWAIT

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: April 5, 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
In accordance with IMF Executive Board Decision No. 144-(52/51)Measures have been taken to implement the relevant UN Security Council resolutions with regard to anti-money laundering operations through financial transfers involving charitable organizations and suspect accounts.
References to legal instruments and hyperlinksn.a.
Exchange Arrangement
CurrencyThe currency of Kuwait is the Kuwaiti dinar.
Exchange rate structureUnitary.
Classification
Conventional pegged arrangementThe exchange rate for the dinar is pegged to the dollar within margins of ±3.5% around a parity rate set at KD 0.29963 per $1. Effective May 11, 2006, the dinar was revalued to KD 0.28914 per $1 (from KD 0.29205 per $1), and thus reached the upper limit of its de jure band.
Exchange taxn.r.
Exchange subsidyn.r.
Forward exchange marketYes.
Official cover of forward operationsOfficial coverage is extended to forward contracts related to commercial transactions.
References to legal instruments and hyperlinksn.r.
Arrangements for Payments and Receipts
Prescription of currency requirementsn.r.
Payments arrangements
Regional arrangementsKuwait is a member of the GAFTA and the GCC Customs Union.
Barter agreements and open accountsYes.
Administration of controlThere is no exchange control, and both residents and nonresidents may freely purchase and sell foreign exchange. All trade with Israel is prohibited; payments may not be made to or received from Israel for any type of transaction.
Payments arrearsNo.
Controls on trade in gold (coins and/or bullion)
On external tradeMonetary authorities and merchants registered with the Ministry of Commerce and Industry (MCI) may import and export gold in any form if such gold is at least 18-karat fine; gold jewelry may not be imported or sold unless it is properly hallmarked. Jewelry and precious metals in any form, manufactured or unmanufactured, are subject to an import duty of 5%.
Controls on exports and imports of banknotesn.r.
References to legal instruments and hyperlinksn.a.
Resident Accounts
Foreign exchange accounts permittedYes.
Held domesticallyYes.
Held abroadYes.
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 permittedYes.
Domestic currency accountsYes.
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 all commercial imports other than fresh fruits and vegetables, wheat, and flour. Licenses are issued freely to registered Kuwaiti merchants and companies. To be registered, the importer must be either a Kuwaiti citizen, a firm in which all partners are Kuwaiti nationals, or a shareholding or limited liability company in which Kuwaiti nationals own at least 51% of the stock.
Negative listImports of the following goods are prohibited: fireworks; oxygen; gas cylinders; certain steel and asbestos pipes; pork and foodstuffs containing pork; alcoholic beverages; some types of used vehicles more than five years old; portable telephones; chewing tobacco; products, machinery, and equipment that operate with ozone-depleting materials; and fresh, chilled, frozen, or processed bovine meat and/or its derivatives. Source-specific import prohibitions apply as follows: (1) all kinds of scrap material from Iraq; (2) all kinds of bird meat (fresh, chilled, or frozen) if not heated above 70 degrees centigrade from Croatia, all eastern and southern Asian countries (the prohibition for Malaysia lifted effective August 1, 2006); Germany and India (lifted effective September 26, 2006); Kazakhstan, Mongolia, the Russian Federation, and southern African countries; effective January 8, 2006, Ukraine; effective March 4, 2006, Bulgaria, Greece, Iran, Iraq, Italy, Nigeria, and Slovenia; effective March 14, 2006, Austria, Azerbaijan, Bosnia and Herzegovina, Egypt, France, Germany, and India; effective March 25, 2006, Serbia; effective April 1, 2006, Sweden; effective April 4, 2006, Albania, Niger, Poland, Slovak Republic, and Swaziland; effective April 11, 2006, Afghanistan, Cameroon, Georgia, Myanmar, and Pakistan; effective May 1, 2006, Burkina Faso; effective May 16, 2006, United Kingdom; effective July 1, 2006, Denmark and Djibouti; (3) all kinds of horses from Syria (lifted effective April 26, 2006), Switzerland, and the United States; (4) all kinds of ruminant meat from Iraq; (5) ruminant animals imported from the EU and Turkey (lifted for sheep from Turkey on November 14, 2006); and (6) jamo tea containing lead, effective March 4, 2006.
Source-specific temporary import prohibitions apply as follows: (1) all kinds of live birds and eggs from Canada, and eastern and southern Asian countries; effective February 18, 2006, Bulgaria, Iraq, Italy, Nigeria, and Slovenia; effective February 20, 2006, Greece and Iran; effective March 13, 2006, Serbia; effective March 21, 2006, Sweden; effective March 22, 2006, Albania, Niger, Poland, Slovak Republic, and Swaziland; effective April 12, 2006, Afghanistan; effective April 3, 2006, Cameroon, Georgia, Myanmar, and Pakistan; effective April 18, 2006, Burkina Faso; effective April 26, 2006, United Kingdom; effective May 6, 2006, Côte d’Ivoire and Sudan; effective June 14, 2006, Denmark and Djibouti; (2) all kinds of live birds from Oman, Morocco, southern African countries, the Russian Federation, Mongolia, Kazakhstan, Turkey, Romania, Croatia, and Malaysia; (3) all kinds of bovine meat from Switzerland; (4) all kinds of sheep from Portugal; (5) all kinds of live animals from Tajikistan, Kazakhstan, and Turkmenistan; (6) all kinds of ruminant meat from Colombia and other Latin American countries, Iraq, and Morocco; (7) all kinds of horses from Latin American countries; (8) live cows from some states of the United States (Oklahoma, effective April 22, 2006, eliminated effective December 5, 2006; and Alabama, effective December 5, 2006); (9) fresh and frozen shrimp from República Bolivariana de Venezuela; (10) goats from Iran; (11) beef from Oklahoma, U.S.A., effective June 3, 2006; (12) chili powder from Spain and Uzbekistan; (13) salmon containing nitrate from Norway, effective March 4, 2006, eliminated effective June 3, 2006; (14) iron from Ukraine, effective March 19, 2006; (15) because of cholera, all kinds of fish from Iran and Pakistan, effective September 26, 2006; (16) because of NAG microbes, all kinds of seafood from India, effective November 1, 2006; and (17) all kinds of animals from Turkey, effective February 20, 2006. The prohibition of orange juice importation from the United States was eliminated effective April 24, 2006.
As a precautionary measure, imports of fresh, chilled, or frozen bovine, buffalo, camel, gazelle, goat, and sheep meats from countries affected by ulcerative stomatitis are temporarily prohibited; imports of the above-mentioned meats are permitted from India and Pakistan. Imports of potentially diseased or disease-carrying animals, plants, or feed from infected areas are prohibited. Effective February 8, 2006, the prohibition on the import of cows from the Netherlands, Nigeria, and Sweden was lifted.
There are also prohibitions on the importation of certain goods, or goods in certain types of packaging, for moral or religious reasons.
Trade in endangered species of wild fauna and flora or their derivatives is prohibited in accordance with CITES.
Imports of certain weapons are prohibited.
Open general licensesImports of industrial equipment and machinery, and their spare parts, require industrial licenses valid for one-time use only. Licenses are issued to registered and licensed industrial establishments with the approval of the Industrial Development Commission at the MCI. Private imports of personal objects may be permitted under individual or specific licenses. Registered importers handling a variety of commodities may obtain a general license valid for one year. Other importers must obtain specific licenses for individual commodities, which are also valid for one year.
Other nontariff measuresGovernment procurement policies grant preferences to Kuwaiti-produced goods up to a price margin of 5% over goods produced in other GCC countries, and 10% over goods produced in non-GCC countries.
Import taxes and/or tariffsIn accordance with the GCC Customs Union, a minimum tariff of 5% applies to non-GCC imports, whereas no tariffs apply to imports with at least 40% local value added from other GCC members. Imports of foodstuffs, as well as some machinery and equipment, spare parts, and raw materials, are exempt from import duties. Kuwait applies higher tariffs in industries where domestic producers cater to at least 40% of the local market. Tariff rates differ depending on the domestic value-added content of the products in question. If the domestically produced goods contain at least 20%, 30%, or 40% of domestic value added, protective duties of 15%, 20%, and 25%, respectively, may be applied to competing imports. The degree of protection given by the formula is reduced by 5% in the case of consumer goods. The maximum duty imposed on products that compete with locally manufactured goods is 100%. Duties on goods imported from member countries of the GAFTA are being gradually reduced.
State import monopolyNo.
References to legal instruments and hyperlinksn.a.
Exports and Export Proceeds
Repatriation requirementsNo.
Financing requirementsNo.
Documentation requirementsNo.
Export licensesExports of live sheep and poultry, sugar, fats, rice, meat, eggs, milk, cheese, butter, olive oil, fresh fruits, vegetables in any form, beans, lentils, chickpeas, jams, and cement may be prohibited in time of emergency or shortage in Kuwait. These items may be exported in limited quantities only under a special license issued by the MCI. Exports of arms and ammunition also require licenses. Exports of scrap iron are temporarily prohibited.
With quotasYes.
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.r.
Proceeds from Invisible Transactions and Current Transfers
Repatriation requirementsNo.
Restrictions on use of fundsNo.
References to legal instruments and hyperlinksn.r.
Capital Transactions
Controls on capital transactionsYes.
Repatriation requirementsn.a.
Surrender requirementsn.a.
Controls on capital and money market instrumentsThe listing of foreign stocks and bonds on the Kuwait Stock Exchange is subject to the approval of the Exchange Committee.
On capital market securities
Shares or other securities of a participating nature
Purchase locally by nonresidentsControls apply to banks and financial institutions subject to Central Bank of Kuwait (CBK) supervision.
Sale or issue locally by nonresidentsYes.
Bonds or other debt securities
Sale or issue locally by nonresidentsYes.
Sale or issue abroad by residentsControls apply to banks and financial institutions subject to CBK supervision.
On money market instruments
Sale or issue locally by nonresidentsYes.
On collective investment securities
Purchase locally by nonresidentsYes.
Sale or issue locally by nonresidentsYes.
Controls on derivatives and other instrumentsSome restrictions apply for Islamic financial institutions.
Purchase locally by nonresidentsYes.
Sale or issue locally by nonresidentsYes.
Controls on credit operationsNo.
Controls on direct investment
Inward direct investmentGovernment approval is necessary for the participation of nonresident capital in resident corporations in Kuwait. Foreigners are allowed to own up to 100% of Kuwaiti companies, subject to conditions determined by the Council of Ministers.
Controls on liquidation of direct investmentNo.
Controls on real estate transactions
Purchase locally by nonresidentsOnly GCC nationals may purchase real estate of up to 3,000 square meters for private residence purposes.
Sale locally by nonresidentsYes.
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
Borrowing abroadControls apply to the sale or issue of bonds or other debt securities abroad.
Lending to nonresidents (financial or commercial credits)Yes.
Differential treatment of deposit accounts in foreign exchange
Liquid asset requirementsYes.
Interest rate controlsYes.
Differential treatment of deposit accounts held by nonresidents
Liquid asset requirementsYes.
Open foreign exchange position limits
On nonresident assets and liabilitiesOpen foreign exchange position limits may not exceed 10% of a bank’s capital, and in some cases, lower limits are set.
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 arrangementMay 11. The dinar was revalued to KD 0.28914 per $1 from KD 0.29205 per $1, reaching the upper limit of its de jure band.
Imports and import paymentsJanuary 8. The importation of all kinds of bird meat, unless heated above 70 degrees centigrade, from Ukraine was prohibited.
February 8. The prohibition on the import of cows from the Netherlands, Nigeria, and Sweden was lifted.
February 18. The importation of all kinds of live birds and eggs from Bulgaria, Iraq, Italy, Nigeria, and Slovenia was temporarily prohibited.
February 20. The importation of all kinds of live birds and eggs from Iran and Greece was temporarily prohibited.
February 20. The importation of all kinds of animals from Turkey was temporarily prohibited.
March 4. The importation of salmon fish containing nitrate from Norway was temporarily prohibited.
March 4. The importation of jamo tea, which includes lead, was prohibited.
March 4. The importation of all kinds of bird meat, unless heated above 70 degrees centigrade, from Bulgaria, Greece, Iran, Iraq, Italy, Nigeria, and Slovenia was prohibited.
March 13. The importation of all kinds of live birds and eggs from Serbia was temporarily prohibited.
March 14. The importation of all kinds of bird meat, unless heated above 70 degrees centigrade, from Austria, Azerbaijan, Bosnia and Herzegovina, Egypt, France, Germany, and India was prohibited.
March 19. The importation of iron from Ukraine was temporarily prohibited.
March 21. The importation of all kinds of live birds and eggs from Sweden was temporarily prohibited.
March 22. The importation of all kinds of live birds and eggs from Albania, Niger, Poland, Slovak Republic, and Swaziland was temporarily prohibited.
March 25. The importation of all kinds of bird meat, unless heated above 70 degrees centigrade, from Serbia was prohibited.
April 1. The importation of all kinds of bird meat, unless heated above 70 degrees centigrade, from Sweden was prohibited.
April 3. The importation of all kinds of live birds and eggs from Cameroon, Georgia, Myanmar, and Pakistan was temporarily prohibited.
April 4. The importation of all kinds of bird meat, unless heated above 70 degrees centigrade, from Albania, Niger, Poland, Slovak Republic, and Swaziland was prohibited.
April 11. The importation of all kinds of bird meat, unless heated above 70 degrees centigrade, from Afghanistan, Cameroon, Georgia, Myanmar, and Pakistan was prohibited.
April 12. The importation of all kinds of live birds and eggs from Afghanistan was temporarily prohibited.
April 18. The importation of all kinds of live birds and eggs from Burkina Faso was temporarily prohibited.
April 22. The importation of live cows from Oklahoma, U.S.A., was temporarily prohibited.
April 24. The prohibition on the import of orange juice from the United States was lifted.
April 26. The importation of all kinds of live birds and eggs from the United Kingdom was temporarily prohibited.
April 26. The prohibition on the import of horses from Syria was lifted.
May 1. The importation of all kinds of bird meat, unless heated above 70 degrees centigrade, from Burkina Faso was prohibited.
May 6. The importation of all kinds of live birds and eggs from Sudan and Côte d’Ivoire was temporarily prohibited.
May 16. The importation of all kinds of bird meat from the United Kingdom unless heated above 70 degrees centigrade was prohibited.
June 3. The importation of beef from Oklahoma, U.S.A., was prohibited.
June 3. The prohibition on the import of salmon fish containing nitrate from Norway was lifted.
June 14. The importation of all kinds of live birds and eggs from Denmark and Djibouti was temporarily prohibited.
July 1. The importation of all kinds of bird meat, unless heated above 70 degrees centigrade, from Denmark and Djibouti was prohibited.
August 1. The prohibition on the import of all kinds of bird meat, unless heated above 70 degrees centigrade, from Malaysia was lifted.
September 26. The prohibition on the import of all kinds of bird meat, unless heated above 70 degrees centigrade, from Germany and India was lifted.
September 26. The importation of all kinds of fish from Iran and Pakistan was temporarily prohibited.
November 1. The importation of all kinds of seafood from India was temporarily prohibited.
November 14. The prohibition on the import of sheep from Turkey was lifted.
November 1. The importation of live cows from Alabama, U.S.A., was temporarily prohibited.

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