Annual Report on Exchange Arrangements and Exchange Restrictions, 2007
Chapter

SIERRA LEONE

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 14, 1995.
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 Sierra Leone is the Sierra Leonean leone.
Exchange rate structureUnitary.
Classification
Crawling pegThe authorities have adopted a policy of gradually adjusting the central exchange rate vis-à-vis the U.S. dollar. As a result, the exchange rate regime has been reclassified, effective January 1, 2006, to the category crawling peg from the category independently floating. Within these limits, the exchange rate of the leone is determined in the interbank market. Commercial banks and licensed foreign exchange bureaus may buy and sell foreign exchange with customers and trade freely among themselves or with the Bank of Sierra Leone (BSL). The BSL determines the exchange rate to be used in official transactions, including the rate for customs valuation purposes, which is based on the weighted average mid-rate of purchases and sales made by commercial banks and foreign exchange bureaus during the past five business days and at the weekly auction. The official buying and selling rates are set within ±1% of the official mid-rate. Foreign exchange bureaus are limited to spot transactions and are not allowed to sell traveler’s checks. Sierra Leone participates in the W-ERM II of the WAMZ and maintains the spot exchange rate between the leone and the dollar within margins of ±15% around the central rate of Le 2,932.52 per $1; however, the BSL has yet to implement these measures.
Exchange taxNo.
Exchange subsidyNo.
Forward exchange marketNo.
References to legal instruments and hyperlinksn.a.
Arrangements for Payments and Receipts
Prescription of currency requirementsPayments for imports may be made in leones and credited to an external account in the currency of the exporting country, in pounds sterling or in dollars. Receipts from exports to countries other than China may be obtained in leones from an external account in the currency of the importing country or in any specified convertible currency.
Controls on the use of domestic currencyCommercial banks require prior approval of the BSL to extend commercial and financial credits to nonresident legal entities.
For capital transactionsBorrowing by nonresident legal entities in leones requires approval of the BSL.
Transactions in capital and money market instrumentsn.r.
Transactions in derivatives and other instrumentsn.r.
Credit operationsCommercial banks require prior approval of the BSL to extend commercial and financial credits to nonresident legal entities.
Use of foreign exchange among residentsYes.
Payments arrangements
Bilateral payments arrangements
OperativeBilateral payments arrangements exist with both Paris Club and non–Paris Club creditors.
Clearing agreementsThe clearing arrangements within the WAMZ have been suspended and are now being reviewed.
Administration of controlThe MOF formulates exchange control policy in consultation with the BSL, but the day-to-day administration of exchange control is implemented by the BSL with the assistance of the commercial banks.
Payments arrears
OfficialYes.
Controls on trade in gold (coins and/or bullion)
On domestic ownership and/or tradeResidents may freely purchase, hold, and sell gold coins in Sierra Leone for numismatic purposes. Also, residents and nonresidents may freely purchase, hold, or sell certain Sierra Leonean commemorative gold coins. Residents are not allowed to hold gold in the form of bars or dust without a valid miner’s or dealer’s license.
On external tradeExports of gold require a license. Imports of gold in any form, other than jewelry constituting the personal effects of a traveler, require an individual import license.
Controls on exports and imports of banknotes
On exports
Domestic currencyOn leaving Sierra Leone, travelers may take out up to Le 50,000.
Foreign currencyNonresident travelers may take out any amount of foreign currency notes they declared on arrival. Employees on official business may take out up to the amount of the per diem allowance provided for that purpose. Resident travelers may take out up to the equivalent of $5,000 without restriction. Residents should declare on departure foreign exchange in excess of $5,000 with supporting documents.
On imports
Domestic currencyThe importation of domestic banknotes is limited to Le 50,000 for each traveler.
Foreign currencyCommercial banks (ADs) are allowed to import foreign currency to meet their operational requirements.
References to legal instruments and hyperlinksn.a.
Resident Accounts
Foreign exchange accounts permittedResidents are permitted to maintain foreign currency accounts denominated in any convertible currency. These accounts, for which minimum balances vary from bank to bank, earn interest at a rate determined by the commercial banks. They may be credited with funds transferred from abroad, and balances on these accounts may be converted into leones to meet the account holder’s local expenditures. Transfers abroad of balances in foreign currency accounts are permitted for current international transactions without prior approval from the BSL, subject to fulfilling the regulations governing the transactions.
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 permittedThe regulations governing resident accounts apply. All documented inward remittances may also be transferred abroad without reference to the BSL.
Domestic currency accountsAccounts in leones held on behalf of diplomatic missions, UN agencies, and their accredited staff are designated as external accounts. Leone deposits into external accounts are vetted by the BSL, and credit balances on the accounts may be used for external payments without reference to the BSL.
Convertible into foreign currencyThese accounts may be converted into foreign currency, but approval is required for capital transactions. All documented inward remittances, however, may be retransferred abroad.
Approval requiredYes.
Blocked accountsYes.
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 importsAll applications for purchases of foreign exchange to pay for imported goods must be submitted to a commercial bank in Sierra Leone and supported by the following documents: completed exchange control form, original pro forma invoice, final invoice, original bill of lading or airway bill, and preshipment inspection certificate.
Preshipment inspectionAll goods exceeding the value of $2,000 f.o.b. imported into Sierra Leone are subject to preshipment inspection and price verification by an international company appointed by the government.
Letters of creditPayments for imports under LCs must be supported with the following documents: completed exchange control form A1 and original pro forma invoice.
Othern.a.
Import licenses and other nontariff measures
Negative listAll goods, except military goods, may be imported freely without a license.
Import taxes and/or tariffsThe customs tariff rates are 15% on rice and baby food, 20% on most food items, and 30% on other food items (e.g., soft drinks, beer, spirits, stout, and imported water); 5% on raw materials and petroleum products; and 20% on luxury consumer goods. Certain goods are subject to a sales tax of 15%.
State import monopolyNo.
References to legal instruments and hyperlinksn.a.
Exports and Export Proceeds
Repatriation requirementsExporters must repatriate export proceeds within 90 days of the date of export (approval of the BSL is required for an extension beyond 90 days). Proceeds from exports of diamonds that were prefinanced from external sources are not subject to the repatriation requirement.
Financing requirementsNo.
Documentation requirements
Guaranteesn.r.
Domiciliationn.a.
Preshipment inspectionAll exports, except those exempted by the MOF, are subject to preshipment inspection and price verification, which is undertaken by an inspection company appointed by the government. Exporters subject to inspection must pay an export inspection fee of 1% before clearing their goods through customs.
OtherAll exporters of commercial goods are required to complete export forms, which must be endorsed by the exporter’s commercial bank and supported by the following documents: original invoice and preshipment inspection certificate.
Export licensesLicenses are required only for exports of gold and diamonds; these export licenses, valid for one year, are issued by the Department of Mines.
Without quotasYes.
Export taxesLicensed exporters of diamonds are subject to an export tax of 3%, based on the value in dollars of the diamonds exported.
Other export taxesn.a.
References to legal instruments and hyperlinksn.a.
Payments for Invisible Transactions and Current Transfers
Controls on these transfersAuthority to provide foreign exchange for legitimate expenses is delegated to commercial banks.
Payments for travel
Quantitative limitsResidents and nonresidents may purchase from ADs cash, traveler’s checks, and drafts up to $5,000. Requests for purchases exceeding this limit must be supported by travel documents such as a ticket or passport.
Personal payments
Indicative limits/bona fide testPayment for medical treatment abroad must be remitted directly to the medical doctor or medical institution. Request for payment must be supported by a medical recommendation for treatment abroad and medical bill from the institution abroad.



Payments are allowed for maintenance expenses to bona fide students and dependents up to $10,000 (indicative limit). ADs are, however, allowed to remit payment for expenses to bona fide students and dependents above the indicative limit without restrictions.



Payments for educational expenses must be remitted directly to the institutions and supported by the relevant documentation.
Foreign workers’ wagesCommercial banks may make remittances in favor of nonresident employees of international institutions, agencies, or foreign nongovernmental organizations only up to the amount of the remuneration package and in favor of other nonresidents when requests for such payments are supported by a valid work permit, a remuneration package agreement, and a tax clearance certificate.
Indicative limits/bona fide testYes.
Credit card use abroadn.r.
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 transactionsThe BSL maintains controls on capital transactions. Capital inflows for investment, whether public or private, are allowed by nonresidents. The repatriation of such capital inflows for investment is also permitted through an AD. The approval of the BSL is required for outward capital investments.
Repatriation requirementsYes.
Surrender requirements
Surrender to authorized dealersYes.
Controls on capital and money market instruments
On capital market securities
Shares or other securities of a participating nature
Purchase locally by nonresidentsBSL approval is required before a security registered in or outside Sierra Leone may be transferred to or purchased by a nonresident.
Sale or issue locally by nonresidentsThese transactions are not permitted.
Purchase abroad by residentsPermission of the BSL is required both to purchase securities abroad and to transfer funds abroad to effect the purchase.



All funds accruing on such investment, as well as the capital on termination of the investment, must be repatriated to Sierra Leone.
Sale or issue abroad by residentsBSL approval is required before a security registered in Sierra Leone may be transferred to or purchased by a nonresident.
Bonds or other debt securities
Purchase locally by nonresidentsn.r.
Sale or issue locally by nonresidentsThese transactions are not permitted.
Purchase abroad by residentsn.r.
Sale or issue abroad by residentsn.r.
On money market instruments
Sale or issue locally by nonresidentsThese transactions are not permitted.
Purchase abroad by residentsPurchases funded with domestic resources are not permitted.
Sale or issue abroad by residentsThese transactions require BSL approval.
On collective investment securities
Purchase locally by nonresidentsn.r.
Sale or issue locally by nonresidentsn.r.
Purchase abroad by residentsPurchases with funds brought from abroad are allowed. BSL certification is required.
Sale or issue abroad by residentsYes.
Controls on derivatives and other instrumentsThese instruments are not yet available in Sierra Leone.
Controls on credit operations
Financial credits
By residents to nonresidentsGenerally, BSL permission is required to grant a loan in Sierra Leone, whether by way of an advance or a bank overdraft, to nonresident entities. BSL permission is also required for nonresident entities to borrow outside Sierra Leone. In addition to the above documentation, the proposed arrangement for repayment should be provided.
To residents from nonresidentsBSL approval is required for the receipt of any external loan, by way of either an advance or a bank overdraft, from nonresident entities. Permission of the BSL is also required for nonresident entities to borrow outside Sierra Leone. In addition to the above, documentation for repayment should be provided.
Guarantees, sureties, and financial backup facilities
By residents to nonresidentsPrior approval of the BSL should be obtained before giving or renewing any guarantee or similar undertaking, and the resident’s exposure must be fully covered by the nonresident.
To residents from nonresidentsPrior approval of the BSL is required for these transactions and for the transfer of funds to service the facilities.
Controls on direct investment
Outward direct investmentInvestments abroad are not allowed.
Inward direct investmentAll capital inflows for investment, whether public or private, are allowed by nonresidents. The repatriation of such capital inflows for investment is also permitted through an AD.
Controls on liquidation of direct investmentNo.
Controls on real estate transactions
Purchase abroad by residentsThese transactions are prohibited.
Purchase locally by nonresidentsNonresidents may purchase real estate with funds transferred through ADs with proper documentation.
Sale locally by nonresidentsn.a.
Controls on personal capital transactionsn.r.
References to legal instruments and hyperlinksn.a.
Provisions Specific to the Financial Sector
Provisions specific to commercial banks and other credit institutionsCommercial banks should not hold more than 25% of their deposit liabilities in foreign currency.
Borrowing abroadThese transactions are not permitted.
Maintenance of accounts abroadYes.
Lending to nonresidents (financial or commercial credits)Banks do not engage in foreign lending, and there are no regulations in this respect.
Lending locally in foreign exchangeBanks do not engage in this lending.
Purchase of locally issued securities denominated in foreign exchangen.r.
Provisions specific to institutional investors
Insurance companiesn.r.
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 crawling peg from the category independently floating.

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