Annual Report on Exchange Arrangements and Exchange Restrictions, 2007
Chapter

NICARAGUA

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: July 30, 1964.
Exchange Measures
Restrictions and/or multiple currency practicesNo restrictions as reported in the latest staff report as of December 31, 2006.
International security restrictionsNo.
References to legal instruments and hyperlinksn.a.
Exchange Arrangement
CurrencyThe currency of Nicaragua is the Nicaraguan córdoba.
Exchange rate structureUnitary.
Classification
Crawling pegThe official exchange rate of the córdoba is determined and preannounced by the Central Bank of Nicaragua (CBN). The exchange rate of the córdoba against the dollar depreciates 5% a year.
Exchange taxThere is no tax, but the CBN charges a commission of 1% on sales of foreign exchange.
Exchange subsidyNo.
Forward exchange marketNo.
References to legal instruments and hyperlinksn.a.
Arrangements for Payments and Receipts
Prescription of currency requirementsInternational loans may be settled in the currency of the lender or in any other currency set by the lender.
Use of foreign exchange among residentsThere are no restrictions. However, financial institutions must report to the Bank Superintendency any individual transactions, including multiple or piecemeal transactions, with respect to deposits, withdrawals, currency exchanges, securities trading or other financial transactions, or other payments or transfers involving the exchange of currency in cash and exceeding US$10,000 or its equivalent in local currency.
Payments arrangements
Bilateral payments arrangements
OperativeYes.
Regional arrangementsNicaragua is a member of the CACM.
Administration of controlExchange operations between private agents are not restricted. The CBN allows the central government, authorized commercial banks, and exchange houses to conduct foreign exchange transactions.
Payments arrears
OfficialPayments arrears are maintained with some non–Paris Club members on debt that is subject to rescheduling or restructuring.
Privaten.a.
Controls on trade in gold (coins and/or bullion)
On domestic ownership and/or tradeThe Ministry of Development, Industry, and Commerce (MIFIC) and the National Administration of Geological Resources coordinate, manage, and supervise the mining, production, and exportation of gold. Natural and juridical persons may trade gold coins for numismatic purposes only (commemorative gold coins were issued in 1967, 1975, 1980, and 2001).
On external tradeA permit from the MIFIC is required to export gold.
Controls on exports and imports of banknotes
On exportsExports of the equivalent of US$10,000 or more require a customs declaration.
Domestic currencyOutward transfers by financial institutions must comply with the regulations issued by the Superintendency of Banks and Other Financial Institutions (SOBOFI).
Foreign currencyYes.
On importsImports of the equivalent of US$10,000 or more require a customs declaration.
Domestic currencyYes.
Foreign currencyThe CBN is the only entity authorized to import nonredeemable currencies.
References to legal instruments and hyperlinksArticle 17 of the Regulations on Preventing the Laundering of Money and Other Assets; anti–money laundering regulations; www.siboif.gob.ni.
Resident Accounts
Foreign exchange accounts permittedYes.
Held domesticallyYes.
Approval requiredThe opening of foreign exchange accounts in the national financial system must comply with the standards issued by the SOBOFI.
Held abroadYes.
Accounts in domestic currency held abroadNo.
Accounts in domestic currency convertible into foreign currencyAccounts denominated in córdobas are dollar-indexed, except for current account deposits. Conversion may be effected through foreign exchange operations with financial institutions and exchange bureaus at buy and sell market rates.
References to legal instruments and hyperlinksn.a.
Nonresident Accounts
Foreign exchange accounts permittedOnly foreigners with approved immigration status (e.g., diplomatic missions and international organizations) may open these accounts.
Domestic currency accountsOnly foreigners with approved immigration status may open these accounts.
Convertible into foreign currencyConversion may be effected through foreign exchange operations with financial institutions and exchange bureaus at buy and sell market rates.
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 importsImporters must register with the unified taxpayers’ register. Foreign exchange is obtained on the foreign exchange market (financial institutions and exchange bureaus).
Letters of creditLCs’ requirements are regulated in the contract between importers and nonresident suppliers. Some import payments are made through certified drafts, but almost all are made through LCs.
OtherYes.
Import licenses and other nontariff measuresLicenses are required for the following imports: cane sugar and sucrose, alcoholic and nonalcoholic beverages, medications for human and veterinary use, cosmetics, vegetables, agrochemicals, and bananas.
Negative listCertain categories of imports are banned.
Other nontariff measuresMeasures apply to certain imports, including those related to public health, national security, the environment, and national emergencies.
Import taxes and/or tariffsThe import tariff regime is harmonized with that of the CACM. The maximum tariff rate, which applies to chicken legs and thighs, is 170%. A 72% duty applies to rice imports from non-WTO countries. A selective consumption tax is imposed on imports of alcoholic and nonalcoholic beverages and cigarettes. An additional 35% sovereignty tax is imposed on imports from Colombia. All imports are subject to a VAT of 15%, with few exceptions.
State import monopolyNo.
References to legal instruments and hyperlinksTechnical Circular 022/2002, published by the MIFIC (CT-022-2002 Restrictions and Prohibition); www.dga.gob.ni; www.mific.gob.ni.
Exports and Export Proceeds
Repatriation requirementsNo.
Financing requirementsNo.
Documentation requirementsExporters complete an export form, for submission to customs, in the case of exports to Central American countries, and for purposes of compiling statistics on exporters.
Export licensesExport licenses are generally not required, but all exports must be registered with the MIFIC. Licenses are required for exports of wildlife and forestry products, including worked goods and taxidermic work; precious woods (excluding cedar and mahogany); shrimp and lobster; gold coffee; live animals; automobiles; personal effects; scientific or commercial samples; itinerant exhibitions; and toluene. Controls also apply on sea cucumbers, giant pink or queen conches, agrochemical and veterinary products, and ornamental fish.
With quotasQuotas apply on exports of sugar and beef to the United States and on exports of black beans, powdered milk, and cheese to Mexico. On Nicaragua’s entry into CAFTA, quotas were assigned to peanuts, peanut butter, and dairy products, among other products.
Export taxesNo.
References to legal instruments and hyperlinksCT-022-2002 Restrictions and Prohibitions; www.cetrex.com.ni; www.dga.gob.ni; www.mific.gob.ni.
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 transactionsNo.
Repatriation requirementsNo.
Controls on capital and money market instrumentsNo.
Controls on derivatives and other instrumentsNo.
Controls on credit operationsNo.
Controls on direct investmentInvestors must be registered with the MIFIC to receive benefits from the investment law.
Inward direct investmentPursuant to the foreign investment law, investors must report their investments to the CBN, directly or through commercial banks.
Controls on liquidation of direct investmentNo.
Controls on real estate transactionsn.r.
Controls on personal capital transactions
Transfer of assets
Transfer abroad by emigrantsThese transactions are subject to prior authorization of the MIFIC.
Transfer of gambling and prize earningsn.r.
References to legal instruments and hyperlinksForeign Investment Law; General Law on Securities; www.siboif.gob.ni; www.mific.gob.ni.
Provisions Specific to the Financial Sector
Provisions specific to commercial banks and other credit institutions
Borrowing abroadInstitutions may borrow abroad, subject to compliance with regulations governing foreign indebtedness. Violation of these regulations is punishable with fines under the General Law on Banks, Nonbank Financial Institutions, and Financial Groups.
Lending locally in foreign exchangeBanks may extend loans in general and collect them in the same currency in which they were granted.
Purchase of locally issued securities denominated in foreign exchangeThese instruments may be issued by the CBN, the government, or any private corporation registered on the local stock exchange.
Investment regulations
Abroad by banksThere are prudential limits established by the SOBOFI.
Open foreign exchange position limitsThere is a maturity and currency-matching standard governing open positions. Foreign exchange positions are regulated by the capital adequacy standards for financial institutions.
Provisions specific to institutional investors
Insurance companiesThe General Law on Insurance Companies, the amendment of the regulatory standards for the authorization of insurance intermediaries and the exercise of their intermediation activities, and the regulations on investment limits for insurance and reinsurance companies apply.
Currency-matching regulations on assets/liabilities compositionThere are prudential limits established by the SOBOFI.
Pension funds
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 compositionYes.
Investment firms and collective investment funds
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 compositionThe Law on the Pension Saving System applies.
References to legal instruments and hyperlinksGeneral Law on Banks (Article 53, Law 561); General Law on Banks, Nonbank Financial Institutions, and Financial Groups; Law on the Deposit Insurance System; Regulations on Investment Limits for Insurance and Reinsurance Companies; General Law on Insurance Companies; Amendment of the Regulatory Standards for the Authorization of Insurance Intermediaries and the Exercise of Their Intermediation Activities; Law on the Pension Saving System; www.siboif.gob.ni.
Changes during 2006
No significant changes occurred in the exchange and trade system.

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