Annual Report on Exchange Arrangements and Exchange Restrictions, 2007
Chapter

VANUATU

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

Status under IMF Articles of Agreement
Article VIIIDate of acceptance: December 11, 1982.
Exchange Measures
Restrictions and/or multiple currency practicesNo restrictions as reported in the latest staff report as of December 31, 2006.
International security restrictions
In accordance with IMF Executive Board Decision No. 144-(52/51)n.r.
Other security restrictionsn.r.
References to legal instruments and hyperlinksn.a.
Exchange Arrangement
CurrencyThe currency of Vanuatu is the Vanuatu vatu.
Exchange rate structureUnitary.
Classification
Conventional pegged arrangementThe external value of the vatu is determined on the basis of an undisclosed transactions-weighted (trade and tourism receipts) basket of currencies of Vanuatu’s major trading partners. The Reserve Bank of Vanuatu (RBV) buys from and sells to commercial banks U.S. dollars only; however, it also deals in Australian dollars, euros, yen, New Zealand dollars, and pounds sterling with other customers. The RBV quotes rates daily for the vatu against the above currencies. Buying and selling rates of the vatu against the currencies in the basket are quoted once a day within margins ranging between 0.25% and 0.30% around the middle rate.
Exchange taxNo.
Exchange subsidyNo.
Forward exchange marketOnly commercial banks provide forward exchange rate cover facilities.
References to legal instruments and hyperlinksn.a.
Arrangements for Payments and Receipts
Prescription of currency requirementsn.r.
Payments arrangements
Bilateral payments arrangementsn.r.
Regional arrangementsVanuatu participates in the Melanesian Spearhead Group Trade Agreement and PICTA.
Clearing agreementsn.r.
Barter agreements and open accountsn.r.
Administration of controln.r.
Payments arrearsn.r.
Controls on trade in gold (coins and/or bullion)n.r.
Controls on exports and imports of banknotesn.r.
References to legal instruments and hyperlinksn.a.
Resident Accounts
Foreign exchange accounts permittedYes.
Held domesticallyYes.
Held abroadYes.
Accounts in domestic currency held abroadn.a.
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 accountsn.r.
References to legal instruments and hyperlinksn.a.
Imports and Import Payments
Foreign exchange budgetn.r.
Financing requirements for importsn.r.
Documentation requirements for release of foreign exchange for importsFor verification purposes, all appropriate documentation must accompany requests for foreign settlement by commercial banks.
Domiciliation requirementn.r.
Preshipment inspectionn.r.
Letters of creditn.r.
Import licenses used as exchange licensesn.r.
Othern.r.
Import licenses and other nontariff measuresThe importation of frozen chicken pieces, T-shirts bearing a Vanuatu motif, firearms and ammunition, animals and plants, and transistor and telephone equipment is restricted through import-licensing arrangements. A similar restriction is applied to the importation of rice, sugar, flour, canned fish, and tobacco products.
Positive listYes.
Negative listBans are in effect for health reasons on imports of animals and animal products from Europe and the United Kingdom, as well as on chicken and poultry products from Victoria and New South Wales, Australia.
Open general licensesn.r.
Licenses with quotasn.r.
Other nontariff measuresThe RBV has the authority to restrict imports to the equivalent of US$100,000 an individual.
Import taxes and/or tariffsThe import duty structure consists of eight rates, ranging from zero to 30%, and the 30% rate applies to most goods. Most basic items that were previously duty-free are subject to a 5% duty. Approved goods imported under the Melanesian Spearhead Group Trade Agreement and the PICTA and PACER trade agreements are duty-free. These goods require certificates of origin issued to exporters and importers by the member countries. Effective January 2, 2007, the import duty rates of tariff items have been revised, leading to an increase in all tariffs. Also effective that date, customs duties on goods imported or delivered from bonded houses are exempted, and some amendments have been made for goods imported under an approved development project agreement.



A 35% duty applies to certain imported products in the protected goods category, except for six items covered under the Melanesian Spearhead Group Trade Agreement, to which a 40% duty applies. In addition, a 40% duty, which decreases by 5% a year, is applied to ice cream, fruit juice, meat, and soap, and duties of VT 350 and VT 315 a liter are applied to fuel and paint, respectively. Effective January 1, 2006, the customs department began to use the harmonized system of tariffs (2002 version).
State import monopolyNo.
References to legal instruments and hyperlinksn.a.
Exports and Export Proceeds
Repatriation requirementsn.r.
Surrender requirementsn.r.
Financing requirementsn.r.
Documentation requirementsn.r.
Export licensesThe exportation of logs and flitches is banned for environmental reasons. Under special circumstances, small parcels of logs may be exported if they cannot be processed by any company in Vanuatu. Any proposal to export logs requires approval of the Council of Ministers. Export permits—the issue of which is coordinated by the Environmental Unit and the Forestry Department—are required for rare or endangered species. The export of sandalwood logs is banned, and sandalwood must be processed locally prior to exportation.
Without quotasFor conservation purposes, exports of certain products, such as trochus, green snails, bêches-de-mer, mother-of-pearl, aquarium fish, crustaceans, and coconut crabs, are subject to authorization. The annual quota of bêches-de-mer that can be exported from Vanuatu in a year is 26 tons and they must be of the required size. Exports of copra and cocoa are channeled through the Vanuatu Commodities Marketing Board. Exports of kava, declared a prescribed commodity under the Vanuatu Commodity Marketing Boards, are subject to authorization from the Quarantine Office. Exports of artifacts having a special value, either as a result of ceremonial use or because they are more than 10 years old, are subject to authorization from the Cultural Center.
Export taxesThere are taxes on exports of logs; unworked shells; and wood in the rough, whether stripped of bark and sapwood or roughly squared.
References to legal instruments and hyperlinksn.a.
Payments for Invisible Transactions and Current Transfers
Controls on these transfersn.r.
References to legal instruments and hyperlinksn.a.
Proceeds from Invisible Transactions and Current Transfers
Repatriation requirementsn.r.
Surrender requirementsn.r.
Restrictions on use of fundsn.r.
References to legal instruments and hyperlinksn.a.
Capital Transactions
Controls on capital transactionsn.r.
Repatriation requirementsNo.
Controls on capital and money market instrumentsn.r.
Controls on derivatives and other instrumentsn.r.
Controls on credit operationsn.r.
Controls on direct investment
Outward direct investmentn.r.
Inward direct investmentThe Vanuatu Investment Promotion Authority had recommended a few amendments for the control of investment in Vanuatu; however, these have not yet been implemented.
Controls on liquidation of direct investmentn.r.
Controls on real estate transactionsFollowing the last Land Summit, reports have been submitted to facilitate controls on real estate transactions. However, no action has been taken yet.
Controls on personal capital transactionsIn accordance with the Vanuatu Financial Transactions Reporting Act for the Anti–Money Laundering Exercise, all inflow and outflow transactions exceeding VT 1 million or the equivalent of US$12,000 must be reported to the Financial Intelligence Unit. Amendments are currently in progress to review the amount.
References to legal instruments and hyperlinksn.a.
Provisions Specific to the Financial Sector
Provisions specific to commercial banks and other credit institutionsn.r.
Provisions specific to institutional investorsn.r.
References to legal instruments and hyperlinksn.a.
Changes during 2006
Imports and import paymentsJanuary 1. The customs department started to use the harmonized system of tariffs (2002 version).
Changes during 2007
Imports and import paymentsJanuary 2. Tariff rates on a list of imported goods were revised. Customs duties on goods imported from bonded houses were exempted, and amendments were made for goods imported under an approved development project agreement.

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