Annual Report on Exchange Arrangements and Exchange Restrictions, 2007
Chapter

ZAMBIA

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: April 19, 2002.
Exchange Measures
Restrictions and/or multiple currency practicesInformation is not publicly available.
International security restrictionsNo.
References to legal instruments and hyperlinksn.a.
Exchange Arrangement
CurrencyThe currency of Zambia is the Zambian kwacha.
Exchange rate structureUnitary.
Classification
Managed floating with no predetermined path for the exchange rateThe official foreign exchange rate is determined in the interbank market. The market relies on primary dealers as market makers to provide two-way bid/offer prices during business hours, with the spread based on market fundamentals. Effective August 11, 2006, trades are quoted in lots of $500,000 (previously, $50,000). All foreign currency trades are required to pass through the interbank market. The Bank of Zambia (BOZ) intervenes in the market primarily through transactions with the primary dealers but may also transact with market makers (i.e., other banks). The interbank rates provide the basis for determining the BOZ exchange rates: the BOZ’s buying rate is the simple average of the primary dealers’ lowbid rates, and the BOZ’s selling rate is the simple average of the primary dealers’ high-offer rates.
Exchange taxNo.
Exchange subsidyNo.
Forward exchange marketYes.
Official cover of forward operationsYes.
References to legal instruments and hyperlinksn.a.
Arrangements for Payments and Receipts
Prescription of currency requirements
Controls on the use of domestic currencyn.a.
Payments arrangements
Regional arrangementsZambia is a member of COMESA, the COMESA Free Trade Area, the RIFF, and the SADC.
Administration of controlNo.
Payments arrears
OfficialYes.
PrivateYes.
Controls on trade in gold (coins and/or bullion)
On external tradeImports and exports of gold in any form other than jewelry require approval from the Ministry of Mines.
Controls on exports and imports of banknotesAmounts exceeding the equivalent of $5,000 must be declared for statistical purposes.
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 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 imports
Letters of creditYes.
Import licenses and other nontariff measuresTrade in petroleum products requires a license. The license is granted by the Energy Regulation Board to all oil-marketing companies that meet set criteria pertaining to fuel extraction and import, pricing, and storage. Other imports, excluding those on the negative list, do not require licenses. The Ministry of Commerce, Trade, and Industry is responsible for trade arrangements.
Negative listRestrictions apply on imports of firearms, ammunition, and ivory.
Import taxes and/or tariffsMFN tariff rates range from zero to 25%. In addition, there is a 5% import declaration fee. A number of products are subject to specific rates. Imports from COMESA countries are subject to a tariff equivalent to 60% of the MFN tariff. Some imports are exempt under the Investment Act. Imports from signatories of the COMESA Free Trade Agreement are tax exempt.
State import monopolyNo.
References to legal instruments and hyperlinksn.a.
Exports and Export Proceeds
Repatriation requirementsNo.
Financing requirementsNo.
Documentation requirementsFor statistical purposes, all exports must be declared on the prescribed export declaration form.
OtherYes.
Export licenses
Without quotasExport declarations are required for most goods (mainly for statistical purposes), and they are administered routinely by commercial banks under authority delegated by the Ministry of Commerce, Trade, and Industry. Restrictions apply on exports of firearms, ammunition, and ivory.
With quotasWhite maize and fertilizers may be subject to a quota if the domestic supply is short.
Export taxesNo.
References to legal instruments and hyperlinksn.a.
Payments for Invisible Transactions and Current Transfers
Controls on these transfersAll payments for invisibles, except official external-debt-service payments, may be effected through banks.
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 instrumentsNo.
Controls on derivatives and other instrumentsNo.
Controls on credit operations
Commercial creditsAll borrowing must be registered with the BOZ for statistical purposes.
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
Borrowing abroadInformation on borrowing abroad must be submitted to the BOZ for statistical purposes.
Open foreign exchange position limitsThe overnight overall foreign exchange and the single currency exposure limits are 15% and 10% of regulatory capital, respectively. The intraday overall foreign exchange and the single currency exposure limits may be maintained within prudential limits as established in a written policy statement by a bank’s or financial institution’s board of directors. However, these exposure limits may not exceed 30% and 20%, respectively, of regulatory capital.
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
Exchange arrangementAugust 11. The size of foreign exchange trading lots was increased to $500,000 from $50,000.

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