Annual Report on Exchange Arrangements and Exchange Restrictions, 2007
Chapter

URUGUAY

Author(s):
International Monetary Fund. Monetary and Capital Markets Department
Published Date:
October 2007
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(Position as of May 31, 2007)

Status under IMF Articles of Agreement
Article VIIIDate of acceptance: May 2, 1980.
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 Uruguay is the Uruguayan peso.
Exchange rate structureUnitary.
Classification
Managed floating with no predetermined path for the exchange rateThe exchange rate of the Uruguayan peso is determined on the basis of supply and demand, although the Central Bank of Uruguay (BCU) reserves the right to intervene to avert abrupt changes in a concentrated market with few transactors. The dollar is the intervention currency.
Exchange taxPurchases of foreign exchange by public sector institutions are subject to a tax of 2%, with the exception of those by the CBU and official banks, which are exempt from the tax.
Exchange subsidyNo.
Forward exchange marketThe CBU has established a market for forward purchases and sales of dollars; however, it has not actively participated in this market since March 2006. The CBU continues to offer forward contracts to provide a price guide for the private sector, but has not been receiving any significant bids.
Official cover of forward operationsAll open positions are covered through immediate offsetting transactions in the spot market.
References to legal instruments and hyperlinksn.a.
Arrangements for Payments and Receipts
Prescription of currency requirementsAll settlements of balances under the multilateral clearing system are made in dollars.
Use of foreign exchange among residentsYes.
Payments arrangements
Bilateral payments arrangements
InoperativeA bilateral payments arrangement with Cuba is inoperative.
Regional arrangementsPayments between Uruguay and the other LAIA countries may be made through accounts maintained with each other by the CBs within the framework of the multilateral clearing system of the LAIA.
Clearing agreementsYes.
Administration of controlOperations are carried out through banks and finance houses that have been authorized by the CBU.
Payments arrearsNo.
Controls on trade in gold (coins and/or bullion)
On domestic ownership and/or tradeResidents and nonresidents may freely purchase, hold, and sell gold with a fineness of not less than 0.9.
On external tradeResidents may freely import and export gold with a fineness of not less than 0.9. Gold for industrial purposes is subject to the general policy that governs the exportation, importation, and trading of goods.
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 abroadn.r.
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 measures
Negative listThe National Customs Office maintains a negative list.
Open general licensesAll imports are subject to registration, which is generally valid for 180 days; goods must be cleared through customs during that period.
Import taxes and/or tariffsUnder MERCOSUR, a CET exists among Argentina, Brazil, Paraguay, and Uruguay. There are 11 tariffs. The maximum rate is 15%. Uruguay imposes a 2% tariff on capital goods and computer and telecommunications equipment. On November 27, 2006, Uruguay introduced tariffs of up to 18% on certain imports from Argentina.
State import monopolyImports of oil and oil by-products are subject to a state monopoly.
References to legal instruments and hyperlinksn.a.
Exports and Export Proceeds
Repatriation requirementsNo.
Financing requirementsNo.
Documentation requirementsNo.
Export licenses
Without quotasOccasionally, and for special reasons (e.g., stock position, protection, or sanitary considerations), certain exports are prohibited or are subject to special requirements.
Export taxesExports of cured, pickled, and wet blue hides are subject to a 5% tax.
Other export taxesn.a.
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 transactionsNo.
Repatriation requirementsNo.
Controls on capital and money market instrumentsThe Capital Market Securities and Negotiable Obligations Law provides a framework in which financial markets are largely self-regulating but supervised by the CBU. In the public sector, the type of transaction authorized depends on the type of institution. Public institutions are bound by their own regulations, and the central and subdepartmental governments use their own more restrictive procedures.
On collective investment securitiesThe Investment Funds Law governs the tendering of local and foreign investment funds, and has provisions on investment policy, as well as a number of requirements regarding conflict of interest and custody of securities.
Controls on derivatives and other instrumentsn.r.
Controls on credit operationsNo.
Controls on direct investmentNo.
Controls on liquidation of direct investmentNo.
Controls on real estate transactionsNo.
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 requirementsThe mandatory minimum reserve requirements for deposits in local currency are 17%, 9%, 6%, and 4% for maturities of less than 30 days, 30 to 90 days, 91 to 180 days, and 181 to 367 days, respectively.



The mandatory reserve requirements on foreign currency interest-bearing deposits are 25% for maturities of less than 180 days and 19% for longer maturities. Certain banks have special instructions requiring higher reserve requirements. The reserve requirement position is calculated on the basis of daily deposits, including weekends, and must be held in deposits with the CBU or in notes and coins. For foreign currency deposits, at least 90% of the required reserves need to be complied with on a daily basis. For peso deposits, reserve balances are allowed to be less than the required level for up to four days a month without incurring a fine.
Differential treatment of deposit accounts held by nonresidents
Reserve requirementsForeign currency deposits of nonresidents are exempt from the foreign currency reserve requirement.
Liquid asset requirementsAt least 30% of the foreign currency deposits of nonresidents are required to be held in a high-quality asset portfolio with a minimum of 15% in liquid assets. Effective May 1, 2007, liquidity requirements apply to domestic currency and foreign currency deposits of residents at the same rates as reserve ratios, although additional placements in foreign banks for less than 30 days and foreign government securities with an “investment grade” rating (BBB+ and higher) are eligible for inclusion in the composition of required liquidity. The new instruments may not be used to meet liquidity requirements until the instruments that may make up required reserves are changed.



In addition, the 30% liquidity requirement for nonresident deposits applies only to deposits maturing in or over a year.
Open foreign exchange position limitsA ceiling is placed on foreign or local currency asset positions of 150% of the book value equity less administrative fixed assets (i.e., nonperforming loans that are two years or more overdue, fixed assets, investments, and deferred charges). The ceiling on the long or short asset-liability positions in foreign-currency-denominated “operations to be settled” (i.e., future contracts and sales of securities subject to repurchase agreements) is 150% of the book value equity less administrative fixed assets. In addition, there is a ceiling on the foreign currency position (after deduction of the operations-to-be-settled position) of 170% of the book value equity less administrative fixed assets.
Provisions specific to institutional investors
Insurance companies
Limits (max.) on securities issued by nonresidentsThe share of foreign securities may not exceed 30% of the technical provisions to cover nonpension obligations and required capital.
Limits (max.) on investment portfolio held abroadThe share of foreign securities may not exceed 30% of the technical provisions to cover nonpension obligations and required capital.
Limits (min.) on investment portfolio held locallyAt least 70% of obligations and required capital must be covered by domestic instruments.
Currency-matching regulations on assets/liabilities compositionInsurance companies must match assets with liabilities in each currency.
Pension fundsFor foreign currency, the same-day buy and sell ceiling for pension funds is 0.4% of assets or the equivalent of $2 million. However, if 0.4% of assets is less than $1 million, pension funds may trade up to that absolute amount daily. Further, there is a limit on trading the same instrument on the same day of up to 1.5% of the pension fund assets for the previous day.
Limits (max.) on investment portfolio held abroadPrivate pension funds are prohibited from investing in securities held abroad.
Limits (min.) on investment portfolio held locallyPrivate pension funds must hold a minimum of 30% and a maximum of 60% of total assets in government securities. In the public sector, the type of operation permitted depends on the type of institution. Public institutions are bound by their own by-laws, and the central government and subgovernments use their own procedures, which are more restrictive. Pension funds are authorized to hold up to 60% of their assets in foreign-currency-denominated instruments. With respect to this limit, private issue securities and personal loans to affiliates and social security beneficiaries that are not denominated in foreign currencies are calculated at 1.8% of their value.
Currency-matching regulations on assets/liabilities compositionn.a.
Investment firms and collective investment fundsRequirements and limits apply on the investment of pension funds in instruments that make up financial trusts.
Limits (max.) on securities issued by nonresidentsThe following may not exceed 20% of an investment fund’s assets: (1) deposits or securities issued or guaranteed by a single entity or economic group, (2) securities for which the management agent is a member of the economic group to which the administration company belongs, and (3) deposits and securities issued by entities represented in the country by a member of the economic group to which the administration company belongs (securities issued or guaranteed by the government of Uruguay and securities issued and guaranteed by foreign governments that are rated investor grade are the exception). Securities representing the debt of an investment fund may not exceed 50% of the corresponding amount in circulation. Investment funds may not invest more than 30% of their portfolio in shares issued by a business corporation.
Limits (max.) on investment portfolio held abroadn.a.
Limits (min.) on investment portfolio held locallyn.a.
Currency-matching regulations on assets/liabilities compositionn.a.
References to legal instruments and hyperlinksArticle 28 of the Consolidated Regulations for Insurance and Reinsurance; www.bcu.gob.uy/autoriza/sssrer/recssyr/recl1p5.htm#TituloVCapitulo111.
Changes during 2006
Imports and import paymentsNovember 27. Uruguay introduced tariffs of up to 18% on certain imports from Argentina.
Changes during 2007
Provisions specific to the financial sector
Provisions specific to commercial banks and other credit institutionsMay 1. Liquid asset requirements became applicable to domestic currency and foreign currency deposits of residents at the same rates as reserve ratios, although additional placements in foreign banks for less than 30 days and foreign government securities with an “investment grade” rating (BBB+ and higher) became eligible for inclusion in the composition of required liquidity. The new instruments may not be used to meet liquidity requirements until the instruments that may make up required reserves are changed.



In addition, the 30% liquidity requirement for nonresident deposits became applicable only to deposits maturing in or over a year.

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