Annual Report on Exchange Arrangements and Exchange Restrictions, 2007
Chapter

DEMOCRATIC REPUBLIC OF TIMOR-LESTE

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 23, 2002.
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 Timor-Leste is the U.S. dollar.
Other legal tenderTimorese coins also circulate; these are legally convertible to dollars at par.
Exchange rate structureUnitary.
Classification
Exchange arrangement with no separate legal tenderThe dollar is legal tender and circulates freely. Foreign exchange transactions are effected through three foreign-owned commercial banks and one licensed currency exchange bureau.
Exchange taxNo.
Exchange subsidyNo.
Forward exchange marketNo.
References to legal instruments and hyperlinksn.a.
Arrangements for Payments and Receipts
Prescription of currency requirementsAll domestic transactions and settlements must be conducted in domestic currency.
Use of foreign exchange among residentsYes.
Payments arrangementsNo.
Administration of controlOverall responsibility for the administration of exchange controls rests with the Banking and Payments Authority, which has the power to regulate the payment and settlement system for domestic and foreign currency.
Payments arrearsNo.
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 abroadYes.
Accounts in domestic currency convertible into foreign currencyYes.
References to legal instruments and hyperlinksn.a.
Nonresident Accounts
Foreign exchange accounts permittedYes.
Domestic currency accountsYes.
Convertible into foreign currencyYes.
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 importsNo.
Import licenses and other nontariff measuresNo.
Import taxes and/or tariffsWith the exception of selected items (e.g., cigarettes and alcohol—with certain limits—and the household effects of returning former residents), a uniform ad valorem tariff of 6% is levied on all imports, and excise taxes are levied on imports of selected goods at specific or ad valorem rates of 12% to 120%, depending on the types of goods. A sales tax of 6% is levied on the combined value of customs assessment, import duty, and excise tax.
State import monopolyNo.
References to legal instruments and hyperlinksn.a.
Exports and Export Proceeds
Repatriation requirementsNo.
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 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 transactionsDomestic capital and money markets have not yet been developed.
Repatriation requirementsNo.
Controls on capital and money market instrumentsNo.
Controls on derivatives and other instrumentsNo.
Controls on credit operationsNo.
Controls on direct investmentNo.
Controls on liquidation of direct investmentNo.
Controls on real estate transactionsOwnership of land by foreigners is prohibited.
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
Lending locally in foreign exchangeAll domestic transactions must be conducted in dollars.
Purchase of locally issued securities denominated in foreign exchangeAll domestic transactions must be conducted in dollars.
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
No significant changes occurred in the exchange and trade system.

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