Annual Report on Exchange Arrangements and Exchange Restrictions, 2007
Chapter

SÃO TOMÉ AND PRÍNCIPE

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 XIVYes.
Exchange Measures
Restrictions and/or multiple currency practicesThe staff report for the third review of the Three-Year Arrangement with São Tomé and Príncipe states that as of December 29, 2006, São Tomé and Príncipe maintained exchange restrictions and multiple currency practices subject to Fund approval under Article VIII. The authorities intend to remove the exchange restriction on transfers abroad of dividends with the new Investment Code. The remaining exchange restriction and multiple currency practice is related to the possibility of rationing at the auctions by the central bank, and of commercial bank rates deviating, temporarily, by more than 2 percent from the Banco Central de São Tomé and Príncipe (BCSTP) reference rate in between auctions. In 2006, the multiple currency practice related to the spread between the central bank buying and selling rate was eliminated and the spread was set at 2 percent. (Country Report No. 07/102)
International security restrictionsNo.
References to legal instruments and hyperlinkswww.bcstp.st/Legislacoes.aspx.
Exchange Arrangement
CurrencyThe currency of São Tomé and Príncipe is the São Tomé and Príncipe dobra.
Exchange rate structure
DualEffective December 29, 2006, the exchange rate structure was reclassified to dual because exchange rates applied by the commercial banks may differ by more than 2% from the BCSTP reference rate between auctions.
Classification
Managed floating with no predetermined path for the exchange rateThe official exchange rate is determined on a daily basis as 40% of commercial banks’ weighted average rate of the previous day and 60% of the central bank’s rate on the previous day. The central bank rate is the outcome of foreign exchange auctions if a foreign exchange auction is held. The intervention currency is the dollar. Rates for certain other currencies are determined on the basis of cross-rates between the dollar and the currencies concerned. In August 2006, the central bank suspended its foreign exchange auctions and reverted to direct sales, but reinstalled the auction in December 2006.
Exchange taxTax rates vary according to the type of transaction involved. On import-related exchange transactions, when an LC is opened, a stamp duty of 0.25% of the import value and a postage levy of the equivalent of $2 are payable. On foreign checks for collection, commercial banks charge a commission of $2 a transaction. For the collection of export proceeds, a commission of 0.125% (a minimum of $25 and a maximum of $300) is charged when the LC is opened, and an additional fee of 0.125% is levied when the funds are received. A postage levy of Db 39,000 is also charged. Exchange of dobras for foreign currency is not subject to any tax.
Exchange subsidyNo.
Forward exchange marketNo.
References to legal instruments and hyperlinksn.a.
Arrangements for Payments and Receipts
Prescription of currency requirementsNo.
Payments arrangements
Bilateral payments arrangements
OperativeThere is an operative payments agreement with Angola. Its resulting balance has been converted into Angolan debt with São Tomé and Príncipe, which remains outstanding.
InoperativeThere is an inoperative bilateral agreement with Angola. Its resulting debt has been converted into government debt with Angola, which remains outstanding.
Administration of controlImport and export licenses are granted freely by the Directorate of External Commerce for statistical purposes only. Importers and exporters are required to register with the Directorate of External Commerce.
Payments arrears
OfficialYes.
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 permittedYes.
Held domesticallyYes.
Held abroadYes.
Accounts in domestic currency held abroadNo.
Accounts in domestic currency convertible into foreign currencyYes.
References to legal instruments and hyperlinksn.a.
Nonresident Accounts
Foreign exchange accounts permittedThese accounts may be opened freely and credited or debited, including for transfers abroad, as long as they are demand deposit accounts.
Domestic currency accountsYes.
Convertible into foreign currencyThese accounts may be converted and credited or debited, including for transfers abroad, as long as they are demand deposit accounts.
Blocked accountsNo.
References to legal instruments and hyperlinksn.a.
Imports and Import Payments
Foreign exchange budgetThe BCSTP determines its foreign exchange budget on the basis of information obtained in collaboration with the treasury and major economic agents.
Financing requirements for imports
Advance import depositsAt the time an LC is opened, importers are required to lodge a deposit in domestic currency equivalent of up to 100% of the value of the LC (depending on the creditworthiness of the operator). The deposit is currently not remunerated.
Documentation requirements for release of foreign exchange for imports
Preshipment inspectionYes.
Import licenses and other nontariff measuresImport licenses are automatically granted by the Directorate of External Commerce. All individuals and economic entities are permitted to engage in import activities.
Import taxes and/or tariffsThe customs tariffs consist of three rates: 5%, 10%, and 20%, with no zero-rate band; specific consumer taxes are levied on refined petroleum products, motor vehicles, alcoholic beverages, beer, and tobacco.



Imports of petroleum products, alcoholic beverages, beer, cigarettes, and automobiles are subject to surcharges.
State import monopolyEffectively, all petroleum products imports are done through one quasi-state company.
References to legal instruments and hyperlinksn.a.
Exports and Export Proceeds
Repatriation requirementsAll export proceeds must be repatriated and collected through the commercial banks.
Financing requirementsNo.
Documentation requirements
Preshipment inspectionYes.
Export licensesFor statistical purposes, all exports require the completion of a registration form specifying the quantity and c.i.f. or f.o.b. value of the export.
With quotasn.a.
Export taxes
Collected through the exchange systemBanks charge a commission of 0.125% on the collection of export proceeds—with a minimum equivalent to $25 and a maximum of $300—when the LC is opened, and an additional commission of 0.125% is collected when funds are received. Banks also charge a postage levy of Db 39,000.
References to legal instruments and hyperlinksn.a.
Payments for Invisible Transactions and Current Transfers
Controls on these transfersCommercial banks charge a postage levy equivalent to $2 for clients ($4 for others) on all transactions.
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 transactionsEven though the Foreign Exchange Law requires prior authorization by the BCSTP for transfers of capital transactions, in practice the system currently permits the free movement of capital, inasmuch as both residents and nonresidents may maintain bank accounts denominated in both domestic and foreign currencies in São Tomé and Príncipe and abroad, and can freely transfer amounts from their accounts abroad.
Repatriation requirementsNo.
Controls on capital and money market instrumentsNo.
Controls on derivatives and other instruments
Purchase locally by nonresidentsn.a.
Sale or issue locally by nonresidentsn.a.
Controls on credit operationsn.a.
Controls on direct investment
Outward direct investmentn.a.
Inward direct investmentInvestments, excluding those related to the extraction of hydrocarbons and other mining industries, are permitted on the same basis as domestic investments.
Controls on liquidation of direct investmentNo.
Controls on real estate transactionsn.a.
Controls on personal capital transactionsn.a.
References to legal instruments and hyperlinksn.a.
Provisions Specific to the Financial Sector
Provisions specific to commercial banks and other credit institutions
Purchase of locally issued securities denominated in foreign exchangen.a.
Open foreign exchange position limitsEffective December 19, 2006, the BCSTP issued NAP No. 20/2006 regulating the open foreign position of commercial banks.
Provisions specific to institutional investorsn.a.
References to legal instruments and hyperlinksNAP No. 20/2006.
Changes during 2006
Exchange arrangementAugust 1. The central bank suspended its foreign exchange auctions and reverted to direct sales, but reinstalled the auction in December.



December 29. The exchange rate structure was reclassified to dual because exchange rates applied by the commercial banks may differ by more than 2% from the BCSTP reference rate between auction.
Provisions specific to the financial sector
Provisions specific to commercial banks and other credit institutionsDecember 19. The BCSTP issued NAP No. 20/2006 regulating the open foreign position of commercial banks.

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