Annual Report on Exchange Arrangements and Exchange Restrictions, 2007


International Monetary Fund. Monetary and Capital Markets Department
Published Date:
October 2007
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(Position as of April 30, 2007)

Status under IMF Articles of Agreement
Article VIIIDate of acceptance: April 5, 1994.
Exchange Measures
Restrictions and/or multiple currency practicesNo restrictions as reported in the latest staff report as of December 31, 2006.
International security restrictions
Other security restrictionsTransactions are not allowed with countries subject to UN sanctions.
References to legal instruments and hyperlinksn.a.
Exchange Arrangement
CurrencyThe currency of Uganda is the Uganda shilling.
Exchange rate structureUnitary.
Managed floating with no predetermined path for the exchange rateTo deal with official inflows and for monetary policy purposes, the Bank of Uganda extended its intervention policy beyond avoiding market-disruptive exchange rate fluctuations. As a result, the exchange rate arrangement has been reclassified, effective April 30, 2007, to managed floating with no predetermined path for the exchange rate from independently floating.
Exchange taxNo.
Exchange subsidyNo.
Forward exchange marketAuthorized banks may deal with customers in the forward exchange market.
References to legal instruments and hyperlinksn.a.
Arrangements for Payments and Receipts
Prescription of currency requirementsAuthorized payments, including import payments to nonresidents, may be made in Uganda shillings to the credit of a nonresident account in Uganda or in any other currency that is appropriate to the country of residence of the payee.
Payments arrangements
Bilateral payments arrangements
InoperativeTrade and payments agreements exist with Algeria, Cuba, Egypt, the Democratic People’s Republic of Korea, and Libya.
Regional arrangementsUnder the terms of the East African Cooperation Agreement, Uganda, Kenya, and Tanzania shillings are now freely convertible in the three countries. Excess holdings of Kenya and/or Tanzania shillings are repatriated to the respective CBs for immediate credit in dollars.
Clearing agreementsUganda maintains clearing arrangements with Burundi, the Democratic Republic of the Congo, and Rwanda.

The Bank of Uganda (BOU) settles accounts in dollars with COMESA member countries through the COMESA clearinghouse. Residents of member countries may use national currencies in day-to-day payments during a transaction period of two calendar months; the monetary authorities settle net balances at the end of this period in convertible currencies.
Administration of controlNo.
Payments arrearsArrears are normally paid in the currency in which the loan was denominated, although the government may negotiate a new payment arrangement with the creditor.
Controls on trade in gold (coins and/or bullion)
On domestic ownership and/or tradeResidents may hold and acquire gold coins for numismatic purposes. Only monetary authorities and licensed dealers are allowed to hold or acquire gold in any form other than jewelry.
On external tradeDealing in gold in any form other than jewelry constituting the personal effects of a traveler requires licenses issued by the Ministry of Energy and Mineral Development. On the basis of these licenses, the Ministry of Tourism, Trade, and Industry issues export and import permits.
Controls on exports and imports of banknotesNo.
References to legal instruments and hyperlinksn.a.
Resident Accounts
Foreign exchange accounts permittedResidents are free to open accounts in domestic or foreign currency locally or abroad.
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 permittedNonresidents are free to open and maintain domestic or foreign currency accounts.
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 measures
Negative listImports of firearms, pornographic materials, tires, and goods banned under international agreements to which Uganda is a signatory are prohibited.
Import taxes and/or tariffsCustoms duties on goods imported from countries outside the EAC are zero for essential goods, raw materials, and capital goods; 10% for intermediate goods; and 25% for finished goods. There is also an environmental levy of 10% on motor vehicles, excluding commercial vehicles eight years old and older.
State import monopolyNo.
References to legal instruments and hyperlinksn.a.
Exports and Export Proceeds
Repatriation requirementsNo.
Financing requirementsNo.
Documentation requirementsNo.
Export licensesNo.
Export taxes
Other export taxesThere is an export levy on unprocessed hides and skins.
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 transactionsYes.
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 transactions
Purchase locally by nonresidentsLeases on land granted to non-Ugandan persons, irrespective of their residency status, may not exceed 99 years.
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
Borrowing abroadBorrowing abroad by commercial banks is subject to reserve requirements.
Maintenance of accounts abroadAccount balances may not exceed 25% of total capital, and the financial institution should have a good credit rating.
Lending to nonresidents (financial or commercial credits)BOU approval is required for any lending (to residents or nonresidents) exceeding 25% of core capital.
Lending locally in foreign exchangeOnly short-term lending is permitted, and it may not exceed in aggregate 80% of a bank’s total foreign currency deposits.
Differential treatment of deposit accounts in foreign exchange
Reserve requirementsBanks must maintain with the BOU unremunerated cash reserves of 10% and 9% against demand and time deposits, respectively.
Liquid asset requirementsThere is a requirement of 20% against deposit liabilities. These apply to both domestic and foreign currency accounts.
Open foreign exchange position limitsCommercial banks are allowed to maintain an open position equivalent to 25% of core capital.
Provisions specific to institutional investors
Insurance companies
Limits (max.) on investment portfolio held abroadInsurance companies are not allowed to have investments abroad.
Pension funds
Limits (max.) on securities issued by nonresidentsn.a.
Limits (max.) on investment portfolio held abroadn.a.
Limits (min.) on investment portfolio held locallyn.a.
References to legal instruments and hyperlinksn.a.
Changes during 2006
No significant changes occurred in the exchange and trade system.
Changes during 2007
Exchange arrangementApril 30. The exchange rate arrangement was reclassified to the category managed floating with no predetermined path for the exchange rate from the category independently floating.

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