Annual Report on Exchange Arrangements and Exchange Restrictions, 2007
Chapter

SEYCHELLES

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: January 3, 1978.
Exchange Measures
Restrictions and/or multiple currency practicesInformation is not publicly available.
International security restrictionsNo.
References to legal instruments and hyperlinksn.a.
Exchange Arrangement
CurrencyThe currency of Seychelles is the Seychelles rupee.
Other legal tenderVarious commemorative gold coins issued on several occasions since 1976 are also legal tender.
Exchange rate structureUnitary.
Classification
Conventional pegged arrangementThe Seychelles rupee is pegged to a weighted basket of currencies of Seychelles’s main trading and tourism partners. Effective October 10, 2006, the Central Bank of Seychelles (CBS) revised the reference basket for the Seychelles rupee to reflect the three main currencies, with their new respective weights as follows: euro (59.1%), pound sterling (30.2%) and U.S. dollar (10.7%). With the revision of the basket, the appreciation limit of SR 5.50 per US$1 has been removed. Previously the basket of currencies was as follows: euro (37.7%), yen (2.7%), pound sterling (15.7%), Singapore dollar (7.7%), South African rand (10.5%), and U.S. dollar (25.7%). Effective October 9, 2006, the appreciation limit of SR5.50 per US$1 has been removed. Consequently, the exchange rate arrangement has been reclassified to the category conventional pegged arrangement against a composite from the category conventional pegged arrangement against a single currency. Exchange rates for various currencies are quoted on the basis of their New York closing rates for the U.S. dollar on the previous day, using the dollar rate for the Seychelles rupee as derived from the fixed parity to the currency basket or the appreciation limit of the rupee. The CBS circulates these rates daily to commercial banks. The CBS charges a commission of 0.125% on purchases and 0.875% on sales of euros, pounds sterling, and U.S. dollars.



Commercial banks are authorized to deal in pounds sterling and other currencies at rates based on the exchange rates circulated daily by the CBS. Effective August 15, 2006, one exchange bureau is allowed to sell foreign currency to tourists under the same controls as commercial banks. Other ADs include casinos, guesthouses, hotels, restaurants, self-catering establishments, tour operators, travel agents, car rental services, boat charters, shipping agents, and ship chandlers. These dealers are restricted to buying only in the course of their licensed activity. They must sell a certain percentage of their foreign currency proceeds to commercial banks.
Exchange taxNo.
Exchange subsidyNo.
Forward exchange marketNo.
References to legal instruments and hyperlinksn.a.
Arrangements for Payments and Receipts
Prescription of currency requirements
Controls on the use of domestic currencyNonresidents are required to pay for selected services in foreign currency.
For current transactions and paymentsYes.
For capital transactions
Transactions in derivatives and other instrumentsn.a.
Use of foreign exchange among residentsYes.
Payments arrangements
Bilateral payments arrangements
OperativeYes.
Regional arrangementsSeychelles is a participant in COMESA and the RIFF.
Administration of controlThe exchange control authority is the CBS.
Payments arrears
OfficialThere are payments arrears on external debt liabilities to multilateral, bilateral, and some commercial creditors. Estimated stock of external payments arrears as of December 2006 is 15% of gross domestic product.
PrivateEffective October 16, 2006, the existing foreign exchange queue (pipeline) has been frozen. Under the new system, all foreign exchange requests for future imports have to be handled by the commercial banks, and all true commercial arrears will be settled by the CBS over the next six months at the prevailing spot exchange rate.
Controls on trade in gold (coins and/or bullion)
On domestic ownership and/or tradeResidents may purchase, hold, and sell gold freely in any form; however, dealings in gold bullion are restricted to ADs.
On external traden.a.
Controls on exports and imports of banknotes
On exports
Domestic currencyThe maximum amount of domestic currency that travelers may take out of the country is SR 2,000.
On imports
Domestic currencyThe maximum amount of domestic currency that travelers may bring into the country is SR 2,000.
References to legal instruments and hyperlinksn.a.
Resident Accounts
Foreign exchange accounts permittedYes.
Held domesticallyThese accounts are permitted.
Approval requiredYes.
Held abroadForeign exchange earners are governed by the foreign exchange repatriation requirements.
Accounts in domestic currency held abroadn.a.
Accounts in domestic currency convertible into foreign currencyn.a.
References to legal instruments and hyperlinksn.a.
Nonresident Accounts
Foreign exchange accounts permittedYes.
Domestic currency accountsYes.
Convertible into foreign currencyNo.
Blocked accountsn.a.
References to legal instruments and hyperlinksn.a.
Imports and Import Payments
Foreign exchange budgetNo.
Financing requirements for imports
Advance import depositsUntil October 15, 2006, all requests for foreign exchange, except for those from small businesses, had to be accompanied by a rupee deposit equivalent to the value of the items to be imported. As of October 16, 2006, requests for foreign exchange are handled by commercial banks through LCs.
Documentation requirements for release of foreign exchange for importsAn import permit is required for a few restricted goods (e.g., food items and chemicals).
Import licenses and other nontariff measuresImporters of restricted items must apply to the Import Control Division of the MOF for a permit. Permits are normally not granted for used vehicles.
Import taxes and/or tariffsImports are subject to taxes of up to 200%. Effective January 1, 2006, import duty rates on most imports have been reduced to a range of zero to 10% (previously, most goods were subject to rates ranging between zero and 25%).
State import monopolyNo.
References to legal instruments and hyperlinksn.a.
Exports and Export Proceeds
Repatriation requirementsYes.
Surrender requirements
Surrender to authorized dealersAll export proceeds must be received through domestic commercial banks, which are the only authorized sellers of foreign exchange (except for one exchange bureau). Effective October 16, 2006, banks are required to transfer 15% of their total gross foreign exchange inflows to the CBS. Retention by foreign exchange earners is calculated on the remaining 85% and the rest goes to commercial banks. Previously, banks had to transfer to the CBS 45% of their foreign exchange inflows after retention by foreign exchange earners. The remainder was used by commercial banks in accordance with the priority listing.
Financing requirementsNo.
Documentation requirementsNo.
Export licensesNo.
Export taxesNo.
References to legal instruments and hyperlinksn.a.
Payments for Invisible Transactions and Current Transfers
Controls on these transfers
Payments for travel
Quantitative limitsThe limit is the equivalent of US$400 a ticket a traveler. Payments exceeding this limit are made at the discretion of banks.
References to legal instruments and hyperlinksn.a.
Proceeds from Invisible Transactions and Current Transfers
Repatriation requirementsYes.
Surrender requirements
Surrender to authorized dealersResidents must surrender the proceeds to a commercial bank within 90 days of the transaction or 21 days from the date of payment, whichever is earlier.
Restrictions on use of fundsNo.
References to legal instruments and hyperlinksn.a.
Capital Transactions
Controls on capital transactionsYes.
Repatriation requirementsn.a.
Surrender requirementsn.a.
Controls on capital and money market instrumentsNo.
Controls on derivatives and other instrumentsNo.
Controls on credit operationsNo.
Controls on direct investment
Outward direct investmentYes.
Inward direct investmentForeign investment is permitted freely, provided such investment does not involve ownership of land.
Controls on liquidation of direct investmentNo.
Controls on real estate transactions
Purchase locally by nonresidentsYes.
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
Differential treatment of deposit accounts in foreign exchange
Reserve requirementsn.a.
Liquid asset requirementsThe liquidity reserve ratio for commercial banks is 65% of their deposit liabilities (excluding foreign currency deposits). Effective October 1, 2006, the cash reserve ratio has been increased to 5% from 2.5%, including foreign currency and pipeline deposits, which were previously excluded.
Interest rate controlsn.a.
Credit controlsn.a.
Investment regulations
Abroad by banksYes.
In banks by nonresidentsYes.
Open foreign exchange position limitsn.a.
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 arrangementAugust 15. One exchange bureau was given permission to sell foreign currency to tourists under the same controls as commercial banks.



October 9. The reference basket of currencies for the rupee was revised to include only three main currencies with weights as follows: euro, 59.1% (previously, 37.7%); pound sterling, 30.2% (previously, 15.7%); and U.S. dollar, 10.7% (previously, 25.7%). The appreciation limit of SR 5.50 per US$1 was eliminated.



October 9. The exchange rate arrangement was reclassified to the category conventional pegged arrangement against a composite from the category conventional pegged arrangement against a single currency.
Arrangements for payments and receiptsOctober 16. The existing foreign exchange queue (pipeline) was frozen. Under the new system, all foreign exchange requests for future imports must be handled by the commercial banks, and all true commercial arrears must be settled by the CBS over the next six months at the prevailing spot exchange rate.
Imports and import paymentsJanuary 1. Import duty rates on most goods were reduced to a range of zero to 10%, from zero to 25%.



October 16. Requests for foreign exchange are to be handled by commercial banks through LCs.
Exports and export proceedsOctober 16. The limit on the transfer of total foreign exchange inflows by banks to the CBS was reduced to 15% of gross foreign exchange inflows (before retention by foreign exchange earners) from 45% of net foreign exchange inflows.
Provisions specific to the financial sector
Provisions specific to commercial banks and other credit institutionsOctober 1. The cash reserve ratio was increased to 5% from 2.5%, including foreign currency and pipeline deposits, which were previously excluded.

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