Annual Report on Exchange Arrangements and Exchange Restrictions, 2007
Chapter

RWANDA

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: December 10, 1998.
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 Rwanda is the Rwanda franc.
Exchange rate structureUnitary.
Classification
Conventional pegged arrangementThe exchange rate of Rwanda franc has remained very stable vis-à-vis the U.S. dollar. As a result, the exchange rate regime has been reclassified, effective January 1, 2006, to the category of conventional pegged arrangement from the category of managed floating with no predetermined path for the exchange rate. The exchange rate of the Rwanda franc is determined in the foreign exchange market; however, the authorities intervene to influence the rate. A foreign exchange auction system is in effect. Banks may apply a variable commission to exchange operations. The National Bank of Rwanda (NBR) does not announce official exchange rates, but for reference purposes it calculates and publishes daily the average market exchange rate.
Exchange taxNo.
Exchange subsidyNo.
Forward exchange marketA forward exchange market, in which banks may take forward positions of 1–12 months on behalf of exporters and importers, has been authorized; however, it is not yet operational.
References to legal instruments and hyperlinksn.a.
Arrangements for Payments and Receipts
Prescription of currency requirements
Use of foreign exchange among residentsBanknotes and coins issued by the National Bank of Rwanda (NBR) are the only legal tender.
Payments arrangements
Regional arrangementsThe NBR maintains agreements with the central banks of the CEPGL countries. The clearing mechanism under the agreements is not operational. Payments to and from other member countries of COMESA are made through reciprocal accounts in convertible currencies. The COMESA clearinghouse currently is being restructured because of a declining volume of transactions.
Clearing agreementsYes.
Barter agreements and open accountsAn arrangement exists with Uganda, but it is not operational.
Administration of controlForeign exchange control authority is vested in the NBR, which has delegated authority to authorized banks and foreign exchange bureaus to carry out some of the controls.
Payments arrearsNo.
Controls on trade in gold (coins and/or bullion)
On domestic ownership and/or tradeTrade is restricted to dealers approved by the relevant ministry.
On external tradeImports and exports of gold require a declaration.
Controls on exports and imports of banknotes
On exports
Domestic currencyEffective December 14, 2006, no prior approval is required for exports of domestic banknotes (previously, such prior approval was required for an amount exceeding the equivalent of $100).
Foreign currencyAn authorized bank or foreign exchange bureau may sell foreign exchange to nonresidents in exchange for domestic currency on presentation of documents confirming that the domestic currency was purchased at an authorized bank or foreign exchange bureau.
On imports
Domestic currencyEffective December 14, 2006, no prior approval is required for the import of domestic banknotes (previously, such prior approval was required for an amount exceeding the equivalent of $100).
References to legal instruments and hyperlinksn.a.
Resident Accounts
Foreign exchange accounts permittedYes.
Held domesticallyYes.
Held abroadNo.
Accounts in domestic currency held abroadn.a.
Accounts in domestic currency convertible into foreign currencyNo.
References to legal instruments and hyperlinksn.a.
Nonresident Accounts
Foreign exchange accounts permittedYes.
Domestic currency accountsYes.
Convertible into foreign currencyNo.
Approval requiredYes.
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 importsImports are generally paid for after delivery, but authorized banks may make advance payments on the presentation of supporting documentation showing that such payment is needed.
Import licenses used as exchange licensesYes.
OtherEffective December 14, 2006, a bank import declaration is required only for imports with an f.o.b. value exceeding the equivalent of $20,000. These declarations must be accompanied by a pro forma invoice stating the f.o.b. value of the merchandise. Also, effective that date, the special limits for imports of fresh foodstuffs and pharmaceutical products are removed. Previously, imports with an f.o.b. value of $5,000 or more were subject to a bank import declaration, and a limit of $3,000 applied to fresh foodstuffs and pharmaceutical products.



In addition, licensed intermediaries are authorized to finance cash imports with a c.i.f. value up to $20,000.
Import licenses and other nontariff measures
Negative listAll imports of narcotics are prohibited. Certain categories of imports, such as explosives and weapons, require prior approval from the relevant authorities, regardless of origin and value. For public health reasons, the importation of human or veterinary medicines, disinfectants, insecticides, rodent poisons, fungicides, herbicides, and other toxic or potentially toxic chemicals is subject to the approval of the relevant pro forma invoices by the Ministry of Health.
Open general licensesYes.
Import taxes and/or tariffsEffective December 31, 2006, consumption taxes of 60% on beer and 10% on powdered milk and mineral water apply. Vehicles with engines of less than 1,500 cm3, those between 1,500 cm3 and 2,500 cm3, and those of more than 2,500 cm3 are subject to consumption taxes of 5%, 10%, and 15%, respectively. The tax on juices, soft drinks, and carbonated beverages is 39%; 70% on wine, brandy, liqueur, and whisky; 120% on tobacco; and 37% on gas (except benzene), heating oil, and diesel oil. Also effective December 31, 2006, the minimum import tariff is zero for all capital goods, and the maximum import tariff is 30% of the c.i.f. value for finished goods. The intermediate rates are 5% and 15%.
State import monopolyNo.
References to legal instruments and hyperlinksn.a.
Exports and Export Proceeds
Repatriation requirementsProceeds must be repatriated within three months of the export date, and any delays must be reported to the NBR.
Financing requirementsNo.
Documentation requirementsA bank export declaration form is required only for exports with a value exceeding $10,000.
Export licenses
Without quotasYes.
Export taxesNo.
References to legal instruments and hyperlinksn.a.
Payments for Invisible Transactions and Current Transfers
Controls on these transfersEffective December 14, 2006, authorized banks are permitted to transfer foreign exchange without restriction to cover payment of standard invisible transactions, such as dividends; salaries of directors and managers and professional fees; copyrights and royalties; merchandise repair costs; interest payments on credit cards to foreign companies; reinsurance premiums; reimbursements of expenses owed to foreign airline companies; advertising costs; rental and leasing costs; maritime, road, and air transportation and transit costs; subscription fees for newspapers and periodicals and membership in trade organizations and professional associations; and costs of correspondence courses and books.
Investment-related payments
Indicative limits/bona fide testAuthorized banks must require presentation of a certificate of registration of the investment with the NBR.
Payments for travel
Quantitative limitsEffective December 14, 2006, the restrictions on payments for travel have been eliminated. However, a limit of $20,000 applies to cash payments. Previously, the maximum tourism allowance was $5,000 or the equivalent a person a trip, and in the case of business travel, the maximum amount was $10,000 or the equivalent a person a year.
Indicative limits/bona fide testLicensed intermediaries are still required to conduct bona fide tests of applications.
Personal paymentsEffective December 14, 2006, the restrictions on personal payments have been removed. Previously, payment of pensions required NBR approval.
Quantitative limitsNo limits apply effective December 14, 2006. Previously, on presentation of invoices or estimates, authorized banks could transfer foreign exchange for medical care received or to be received abroad by residents. In the case of estimates, authorized banks required their customers to present final invoices at the end of treatment. Authorized banks could sell a maximum of $5,000 or the equivalent to residents undergoing medical treatment abroad, or to any person accompanying them, to cover living expenses. In addition, authorized banks could transfer foreign exchange abroad without restriction for educational expenses of residents or persons in their charge on presentation of a letter of acceptance or certificate of attendance for the period indicated from a recognized educational institution and a detailed description of required fees—in particular for tuition, rent, or purchases of books and other supplies.



Residents could also transfer up to a maximum of $25,000 a year or the equivalent to cover accommodation and subsistence costs of a Rwandese student abroad.
Indicative limits/bona fide testLicensed intermediaries are still required to conduct bona fide tests of applications.
Foreign workers’ wages
Quantitative limitsEffective December 14, 2006, the restrictions on these payments have been removed. Previously, authorized banks could approve salary and wage transfers of expatriates working in Rwanda up to a maximum of 70% of their net remuneration after payment of taxes and social security contributions.
Indicative limits/bona fide testLicensed intermediaries are still required to conduct bona fide tests of applications.
References to legal instruments and hyperlinksn.a.
Proceeds from Invisible Transactions and Current Transfers
Repatriation requirementsProceeds must be repatriated within three months of the export date, and any delays must be reported to the NBR.
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 instrumentsCurrently, only the money market is operational. Transactions are governed by the relevant business law provisions. In addition, nonresidents may invest in public securities under conditions determined by the NBR.
On capital market securities
Shares or other securities of a participating nature
Purchase locally by nonresidentsYes.
Sale or issue locally by nonresidentsYes.
Purchase abroad by residentsNBR approval is required, except for savings institutions.
Sale or issue abroad by residentsYes.
Bonds or other debt securities
Purchase locally by nonresidentsn.a.
Sale or issue locally by nonresidentsn.a.
Purchase abroad by residentsNBR approval is required, except for savings institutions.
Sale or issue abroad by residentsYes.
On money market instrumentsNonresidents may invest in public securities under conditions determined by the NBR.
Purchase locally by nonresidentsYes.
Sale or issue locally by nonresidentsYes.
Purchase abroad by residentsNBR approval is required, except for savings institutions.
Sale or issue abroad by residentsYes.
On collective investment securities
Purchase locally by nonresidentsn.a.
Sale or issue locally by nonresidentsn.a.
Purchase abroad by residentsNBR approval is required, except for savings institutions.
Sale or issue abroad by residentsSale proceeds must be repatriated.
Controls on derivatives and other instrumentsNo.
Controls on credit operationsEffective December 14, 2006, residents may contract foreign currency loans from nonresident international banks and financial institutions for business purposes. They may also contract foreign currency loans from other nonresident operators, provided the interest rate applied is lower than LIBOR, plus a surcharge determined by the NBR. Foreign currency loans from nonresidents require a registration certificate issued by the NBR. Previously, NBR approval was required for residents to receive foreign exchange loans from nonresidents for business purposes. After approval, the NBR issued a registration certificate.



Authorized banks may effect the repayment of a foreign currency loan from a nonresident to a resident on presentation of a copy of the loan agreement and the loan registration certificate issued by the NBR.
Commercial credits
By residents to nonresidentsn.a.
To residents from nonresidentsYes.
Financial credits
By residents to nonresidentsn.a.
To residents from nonresidentsYes.
Guarantees, sureties, and financial backup facilitiesNBR approval is required.
By residents to nonresidentsn.a.
To residents from nonresidentsn.a.
Controls on direct investment
Outward direct investmentNBR approval is required for individuals and legal entities other than savings institutions.
Inward direct investmentForeign direct investment in Rwanda and the purchase of Rwandese securities by nonresident foreigners are not restricted. Securities must be registered with the NBR, which issues a registration certificate after a review of the required information.
Controls on liquidation of direct investmentSubsequent repatriation of current investment income and net proceeds from the transfer or liquidation of capital invested with foreign exchange originating abroad may be freely effected by authorized banks. Banks must require their customers to produce the registration certificate issued by the NBR, as well as all information and supporting documentation required by the NBR. Repatriation of the investment capital of nonresidents is governed by the Investment Code and must be recorded by the authorized banks.
Controls on real estate transactionsNo.
Controls on personal capital transactions
Loans
To residents from nonresidentsProof of transfer of the funds to Rwanda is required at the time of payment.
Transfer of assets
Transfer abroad by emigrantsEffective December 14, 2006, banks are allowed to sell foreign currency to residents who decide to settle in another country, provided a document attesting that the person has been granted residency in that country is presented. Previously, NBR approval was required for goods and other assets with a value exceeding $10,000.
References to legal instruments and hyperlinksInvestment Code.
Provisions Specific to the Financial Sector
Provisions specific to commercial banks and other credit institutions
Borrowing abroadCommercial bank borrowing is subject to the same provisions as borrowing by natural or legal entities, provided the prudential standards are observed.
Maintenance of accounts abroadAuthorized banks may open accounts abroad and maintain credit balances in accordance with prudential rules established by the NBR on the limits on foreign currency holdings.
Lending locally in foreign exchangeBanks are allowed to extend loans to exporters with NBR authorization.
Differential treatment of deposit accounts in foreign exchange
Reserve requirementsYes.
Investment regulations
In banks by nonresidentsYes.
Open foreign exchange position limitsLong and short positions are subject to limits of about 20% of banks’ capital and reserves.
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 arrangementJanuary 1. The exchange rate regime was reclassified to the category conventional pegged arrangement from the category managed floating with no predetermined path for the exchange rate.
Arrangements for payments and receiptsDecember 14. Prior approval is no longer required for the import of domestic banknotes (previously, such prior approval was required for an amount exceeding the equivalent of $100).



December 14. Prior approval is no longer required for exports of domestic banknotes (previously, such prior approval was required for an amount exceeding the equivalent of $100).
Imports and import paymentsDecember 14. The limit for a bank import declaration was increased to the equivalent of $20,000 from the equivalent of $5,000, and the special limits for imports of fresh foodstuffs and pharmaceutical products were eliminated.



December 31. Consumption taxes of 60% on beer and 10% on powdered milk and mineral water apply. Vehicles with engines of less than 1,500 cm3, those between 1,500 cm3 and 2,500 cm3, and those of more than 2,500 cm3 are subject to consumption taxes of 5%, 10%, and 15%, respectively. The tax on juices, soft drinks, and carbonated beverages is 39%; 70% on wine, brandy, liqueur, and whisky; 120% on tobacco; and 37% on gas (except benzene), heating oil, and diesel oil. The minimum import tariff is 0% for all capital goods, and the maximum import tariff is 30% of the c.i.f. value for finished goods. The intermediate rates are 5% and 15%.
Payments for invisible transactions and current transfersDecember 14. Authorized banks were permittted to transfer foreign exchange without restriction to cover payment of standard invisible transactions.



December 14. The restrictions on payments for travel (except for a limit of $20,000 for cash payments), personal payments, and foreign worker’s wages were eliminated.
Capital transactions
Controls on credit operationsDecember 14. Residents were permitted to contract foreign currency loans from nonresident international banks and financial institutions for business purposes.
Controls on personal capital transactionsDecember 14. Banks were allowed to sell foreign currency to residents who decide to settle in another country, provided a document attesting that the person has been granted residency in that country is presented.

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