Annual Report on Exchange Arrangements and Exchange Restrictions, 2007
Chapter

REPUBLIC OF MONTENEGRO

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

(Position as of January 31, 2007)

Status under IMF Articles of Agreement
Article VIIIDate of acceptance: January 18, 2007.
Exchange Measures
Restrictions and/or multiple currency practicesAs of December 31, 2006, Montenegro was not a member of the Fund.
International security restrictions
Other security restrictionsAs a member of the UN, Montenegro observes and implements all mandatory measures of UN resolutions.
References to legal instruments and hyperlinksn.a.
Exchange Arrangement
CurrencyThe euro is legal tender in the Republic of Montenegro.
Exchange rate structureUnitary.
Classification
Exchange arrangement with no separate legal tenderThe euro circulates as legal tender.
Exchange taxNo.
Exchange subsidyNo.
Forward exchange marketA forward exchange market does not exist in the Republic of Montenegro, but there are no restrictions on forward deals by residents abroad.
Official cover of forward operationsn.a.
References to legal instruments and hyperlinksn.a.
Arrangements for Payments and Receipts
Prescription of currency requirementsNo.
Payments arrangementsNo.
Administration of controlThe Central Bank of Montenegro (CBOM), which is not an issuing bank, prescribes prudential rules on the operations of dealers and banks in foreign exchange transactions and sets limits on their foreign exchange positions.
Payments arrearsn.a.
Controls on trade in gold (coins and/or bullion)No.
Controls on exports and imports of banknotesThe export and import of cash exceeding €2,000 must be reported to customs by residents and nonresidents.
On exportsYes.
On importsYes.
References to legal instruments and hyperlinksn.a.
Resident Accounts
Foreign exchange accounts permittedYes.
Held domesticallyGovernment agencies and organizations may hold foreign exchange accounts with the CBOM or with commercial banks.
Held abroadResidents may hold foreign exchange accounts abroad.
Accounts in domestic currency held abroadResidents may hold euro accounts abroad without approval.
Accounts in domestic currency convertible into foreign currencyAccounts denominated in euros are freely convertible into other currencies.
References to legal instruments and hyperlinksLaw on Capital and Financial Transactions (Official Gazette of the Republic of Montenegro No. 45/05).
Nonresident Accounts
Foreign exchange accounts permittedNonresident natural and juridical persons may hold foreign exchange accounts with authorized banks in the form of demand and time deposits. Deposits may be held in currencies traded on the domestic foreign exchange market. Deposits to foreign currency accounts may be made with transfers or, in certain cases, with cash.
Citizens of Montenegro who have resided abroad for more than six months are considered nonresidents.
Domestic currency accountsNonresidents may hold domestic currency in their accounts with authorized banks in the form of sight deposits and time deposits.
Nonresidents may deposit domestic currency acquired through authorized transactions in accounts with authorized banks.
Convertible into foreign currencyYes.
Blocked accountsNo.
References to legal instruments and hyperlinksLaw on Capital and Financial Transactions (Official Gazette of the Republic of Montenegro No. 45/05).
Imports and Import Payments
Foreign exchange budgetNo.
Financing requirements for imports
Minimum financing requirementsPayments for imports of goods and services are free of restrictions, provided documentary proof is submitted.
Documentation requirements for release of foreign exchange for imports
Domiciliation requirementPayments for imports may be effected through authorized banks and in cash. Residents are obligated to provide the bank with the standard import documentation.
Preshipment inspectionYes.
Import licenses and other nontariff measuresLicenses are required for armaments (including firearms, sport and hunting arms, and ammunition), explosives and raw materials used in explosives, military equipment, certain precious metals, addictive drugs, and goods that are subject to international agreements. The regime of licenses consists of 180 items, or 1.75% of the total number of items in the customs tariff (i.e., 98.25% of goods belong to the free import regime).
Licenses for export, import, and transit of goods that are subject to international agreements are issued by the appropriate government agency, a list of which is annexed to the control list. The goods include narcotics; precursors; ozone-layer-damaging substances; dangerous waste; endangered plant and animal species; and protected rare, thinned, endemic, and endangered plant and animal species.
Positive listAn estimated 97.34% of all tariff items may be imported freely. Goods not on the control list are free to be imported and exported.
Negative listImports of used vehicles that do not comply with EU standards and hazardous waste materials are prohibited. Used motor vehicles may be imported if they satisfy traffic security, human environment protection, and human health conditions. Dangerous waste material imports are prohibited.
Licenses with quotasThe government does not issue specific licenses with value or volume quotas. Certain kinds of goods originating in the former Yugoslav Republic of Macedonia are quantitatively restricted, according to the type of license; these restrictions are set out in the trade agreement signed between the two countries.
Import licensing requirements and quotas apply to specific steel products. Quotas defined for Albania, Bulgaria, Croatia, the former Yugoslav Republic of Macedonia, and Romania in the agreements on free trade signed in the Stability Pact apply in Montenegro. The quotas are not defined for contracts with Bosnia and Herzegovina and Moldova. A new agreement with the former Yugoslav Republic of Macedonia, which took effect in 2006, does not have defined quotas.
Other nontariff measuresAll export and import quotas have been eliminated in the Republic of Serbia and the Republic of Montenegro in accordance with an agreement between the two republics for harmonizing their trade, customs, and indirect tax regimes.
Import taxes and/or tariffsThe import tariff schedule has a maximum import duty of 30% and a simple average rate of under 10%. The Law on Customs Tariff defines customs duty payments for import of goods at a rate that does not exceed 30%. The average tariff rate is 6.17%.
State import monopolyNo.
References to legal instruments and hyperlinksLaw on Customs Tariff HS 2002 (Official Gazette of the Republic of Montenegro No. 75/05).
Exports and Export Proceeds
Repatriation requirementsNo.
Financing requirementsNo.
Documentation requirements
Preshipment inspectionYes.
Export licensesOf the 10,268 tariff items, the free export regime applies to 10,010 items (or 97.49%). After the new Law on Customs Tariff, which includes 10,290 items, was adopted, and according to the new control list, the license regime consists of 84 items or 0.8% of the total number of customs tariff items (i.e., 99.2% of goods belong to the free export regime).
Without quotasA new control list will be adopted. Licenses for export will be introduced when necessary for the protection of national, artistic, cultural, historical, and archeological treasures; endangered plant and animal species; national security; the environment or natural resources; and intellectual property rights; or for implementation of special rules on trade in gold and silver.
Export taxesNo.
References to legal instruments and hyperlinksn.a.
Payments for Invisible Transactions and Current Transfers
Controls on these transfersDocumentary requirements must be satisfied. Natural persons are permitted to make payments for current transactions, including imports of goods and services that are permitted by law. No limits apply, but amounts exceeding €15,000 require a declaration of source and purpose.
Foreign workers’ wagesThese transactions may be made freely after payment of the appropriate taxes.
Other payments
Indicative limits/bona fide testYes.
References to legal instruments and hyperlinksDecision on Prescribed Amount of Cash That Can Be Transferred in and out of the Republic of Montenegro without Reporting (Official Gazette of the Republic of Montenegro No. 58/05); Law on the Prevention of Money Laundering and Terrorism Financing (Official Gazette of the Republic of Montenegro Nos. 55/03, 58/03, and 17/05).
Proceeds from Invisible Transactions and Current Transfers
Repatriation requirementsNo.
Restrictions on use of fundsNo.
References to legal instruments and hyperlinksLaw on Foreign Investments (Official Gazette of the Republic of Montenegro No. 52/00).
Capital Transactions
Controls on capital transactionsYes.
Repatriation requirementsNo.
Controls on capital and money market instruments
On capital market securitiesThe Securities Commission controls the issue and supervises trading on the capital market.
Shares or other securities of a participating natureYes.
Bonds or other debt securitiesYes.
On money market instrumentsAlthough the MOF has been issuing treasury bills, and the necessary infrastructure for trading operations and clearance is in place, the secondary market is not yet developed.
Controls on derivatives and other instrumentsDerivatives are governed by the Law on Securities, which does not discriminate between resident and nonresident issuers, buyers, and sellers.
Controls on credit operationsNo.
Controls on direct investmentNo.
Controls on liquidation of direct investmentNo.
Controls on real estate transactions
Purchase locally by nonresidentsA nonresident seeking to acquire real estate must prove to the appropriate public authority that the real estate acquired is necessary for the nonresident to do business in the territory of Montenegro. Purchases of real estate determined to be restricted (such as national parks, border areas, etc.) are prohibited.
Sale locally by nonresidentsProceeds from these transactions may be transferred abroad freely, provided tax liabilities have been settled.
Controls on personal capital transactionsThere are no controls on these transactions.
References to legal instruments and hyperlinksLaw on Securities (Official Gazette of the Republic of Montenegro Nos. 59/00, 10/01); Law on Capital and Financial Transactions (Official Gazette of the Republic of Montenegro No. 45/05); Law on Foreign investments (Official Gazette of the Republic of Montenegro No. 52/00).
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 requirements for accounts denominated in euros or in other foreign currency are 19% and 5%, respectively.
Liquid asset requirementsn.a.
Credit controlsCredit controls apply only for the management of risk.
Provisions specific to institutional investors
Insurance companiesn.r.
Pension funds
Limits (max.) on securities issued by nonresidentsn.r.
Limits (max.) on investment portfolio held abroadn.r.
Limits (min.) on investment portfolio held locallyn.a.
Currency-matching regulations on assets/liabilities compositionn.a.
Investment firms and collective investment fundsn.r.
References to legal instruments and hyperlinksn.a.
Changes during 2006
No significant changes occurred in the exchange and trade system.
Changes during 2007
Status under IMF articles of agreementJanuary 18. The Republic of Montenegro became an IMF member and accepted the obligations of Article VIII Sections 2, 3, and 4, of the IMF Articles of Agreement.

    Other Resources Citing This Publication