Chapter

Introduction

Author(s):
International Monetary Fund. Monetary and Capital Markets Department
Published Date:
January 1991
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The Report provides a detailed description of the exchange and trade systems of individual member countries, including a nonmetropolitan territory (Hong Kong), for which the United Kingdom has accepted the IMF’s Articles of Agreement, and Aruba and the Netherlands Antilles, for which the Kingdom of the Netherlands has accepted the IMF’s Articles of Agreement. The exchange and trade system of Switzerland, which has applied for membership in the IMF, is also described.

In general, the description relates to the exchange and trade systems as of the end of 1990, but in appropriate cases reference is made to significant developments that took place in early 1991.

A standardized approach has been followed, under which the description of each system is broken down into similar headings, and the coverage for each country includes a final section that lists chronologically the more significant changes during 1990.

The description of the exchange and trade system is not necessarily confined to those aspects involving exchange restrictions or exchange controls. As in previous Reports, questions of definition and jurisdiction have not been raised, and an attempt has been made to describe exchange and trade systems in their entirety, except for the tariff structure and, in most cases, direct taxes on exports and imports. Thus, the coverage extends to such features as import licensing, advance deposit requirements, import surcharges, travel taxes, export licensing, and export incentive schemes. Similarly, the section Changes During 1990 includes references to certain developments that may have a direct impact on international transactions but are not necessarily reflected in the body of the country descriptions, such as major revisions of import tariffs or developments in regional cooperation.

The description given in the section Exchange Arrangement is in line with the notification of exchange arrangements that member countries have furnished to the IMF under Article IV, Section 2(a). The structure of exchange markets is described, and the official exchange rate is given. The rates quoted are those effective on December 28 or 31, 1990, unless stated otherwise.

Under Administration of Control, some indication is given of the authorities responsible for policy and administration of the controls and of the extent to which their powers are delegated for working purposes.

The section on Prescription of Currency describes the requirements affecting the selection of the currency and method of settlement for transactions with other countries. Where a country has concluded payments agreements with other countries, the terms of these agreements often lead to prescription of the currency for specified categories of payments to and from the countries concerned. The countries with which bilateral payments agreements are in force are listed either in the text or in a footnote.

Under Nonresident Accounts, and, in some instances, External Accounts, a description is given of the manner in which the country treats accounts, if any, maintained in its currency by account holders who are not regarded as residents of that country, and the facilities and limitations attached to such accounts. Where there is more than one type of nonresident account, the nature and operation of the various types are also described.

In the section on Imports and Import Payments, import-licensing requirements are described briefly, and details are given of other requirements imposed on payments for imports and of any advance deposit requirements. The term “open general license” indicates arrangements whereby certain imports or other international transactions are exempt from the restrictive application of licensing requirements, in contrast to an “individual license,” which may be given either freely, or restrictively, according to administrative decisions.

Under Payments for Invisibles, the procedures for permitting payments abroad for current transactions in invisibles are described briefly, together with any limitations on the exportation of foreign and domestic bank notes. For some countries that do not impose limitations on payments for invisibles, this section is combined with the section on Proceeds from Invisibles (see below).

Export-licensing requirements and procedures are described under Exports and Export Proceeds, with an outline of the requirements that may be imposed on the handling of proceeds from exports. The expression “exchange receipts must be surrendered” indicates that the recipient is required by the regulations to sell any foreign exchange proceeds in return for local currency, usually at the official rate, to the central bank or to a commercial bank or exchange dealer authorized for this purpose. In some countries, there is a requirement that such exchange or part thereof be sold in a free market.

Under Proceeds from Invisibles, any regulations governing exchange derived from transactions in invisibles are given, and any limitations on the importation of foreign and domestic bank notes are described.

In the section on Capital, the special arrangements or limitations attached to international capital movements are described. Where regulations on foreign capital also cover the income thereon, they are usually dealt with in this section rather than in the sections on Payments for Invisibles and Proceeds from Invisibles.

The section on Gold gives a summary of the principal regulations that govern the holding, negotiation, importation, and exportation of gold coins and gold in other forms.

Afghanistan

(Position on December 31, 1990)

Exchange Arrangement

The currency of Afghanistan is the Afghani. Da Afghanistan Bank (the central bank) maintains an official rate that is applied to (1) a few transactions of the Central Government (mainly debt-service payments); (2) certain foreign currency income earned in Afghanistan (see section on Proceeds from Invisibles, below); and (3) some transactions in accounting units specified under bilateral payments agreements. The official exchange rate is defined in terms of the U.S. dollar. On December 31, 1990, the official exchange rate was Af 50.00 = US$1 buying and Af 51.20 = US$1 selling, respectively.

Aside from the official rate, there also exists a market-determined rate that prevails in the money bazaar, and a commercial rate set by the Government (introduced in July 1988). On December 31, 1990, the commercial rate was Af 707.5 = US$1 buying and Af 708.5 = US$1 selling, respectively.

Between May and December 1989 there was significant liberalization of the previously complex system of multiple currency practices and exchange restrictions. Different mixed rates that had applied to proceeds in convertible currencies for nine principal exports were abolished, and proceeds from exports in convertible currencies were shifted to the commercial rate. The commercial rate was not closely linked to the free rate. Since December 1, 1989, the spread between the commercial and the free rates has been kept to about 2 percent. Since December 1, 1989, most public sector transactions, with the exception of debt servicing, were moved to the commercial rate. The official exchange rate now applies to no more than 10 percent of convertible currency transactions. Exchange rates for trade under bilateral payments agreements are determined under each agreement (see section on Prescription of Currency, below).

Da Afghanistan Bank posts rates for deutsche mark, French francs, Indian rupees, Pakistan rupees, pounds sterling, and Swiss francs. It charges commissions ranging from 0.10 percent to 0.375 percent on exchange transactions. There are no arrangements for forward cover against exchange rate risk operating in the official and the commercial banking sectors.

Administration of Control

Foreign exchange transactions are controlled by the Government through Da Afghanistan Bank. No official restrictions are applied to transactions in the free market.

Prescription of Currency

Settlements with countries with which Afghanistan has bilateral payments agreements1 must be made in bilateral accounting dollars in accordance with the procedures set forth in those agreements. The proceeds from exports of karakul to all countries must be obtained in convertible currencies. There are no other prescription of currency requirements.

Imports and Import Payments

Imports are not subject to license, but import transactions must be registered before orders are placed abroad. The importation of a few items (e.g., certain drugs, liquor, arms, and ammunition) are prohibited on grounds of public policy or for security reasons; in some instances, however, special permission to import these goods may be granted. The importation of certain other goods (e.g., a few textiles and selected nonessential consumer goods) is also prohibited. There are no quantitative restrictions on other imports. Most bilateral agreements, however, specify quantities (and sometimes prices) for commodities to be traded. An annual import program is drawn up by the Ministry of Commerce, covering imports of both the public and private sectors. Adjustments in the public sector import plan are made in the light of changing circumstances. The import plan for the private sector, drawn up on the basis of proposals submitted by the Chamber of Commerce, is indicative. Importation of petroleum products is a state monopoly.

The present customs tariff structure, promulgated in June 1974, was little changed until May 1989. At that time, tariff rates on most consumer items were adjusted upward from their former range of about 20–35 percent to 30–50 percent.

Payments for imports through the banking system to payments agreement countries may usually be made only under letters of credit. Payments to other countries may be made under letters of credit, against bills for collection, or against an undertaking by the importer to import goods at least equivalent to the payment made through the banking system. Except for public sector imports under the government budget, all importers are required to lodge minimum import deposits with banks at the time of opening letters of credit; in January 1990 the deposit ratios, based on the c.i.f. value of imports, were adjusted downward from 25 percent to 20 percent for essential products and upward from a range of 20–50 percent to a range of 30–60 percent for other products.

Payments for Invisibles

The maximum amount that can be taken out of the country for tourist travel abroad is the equivalent of US$1,000 a trip except for travel to India, for which the limit is the equivalent of US$700. On application, foreign exchange is allocated for business travel and for medical treatment abroad, and the amounts are determined by the Da Afghanistan Bank; normally the limits are US$15,000 and US$2,000, respectively. Foreign exchange for other private purposes may be acquired in the bazaar market. The central bank levies a charge of Af 0.50 per US$1 for permits that approve the export of convertible currency by authorized travelers. Travelers may take out not more than Af 2,000 in domestic bank notes and Af 50 in coins.

Exports and Export Proceeds

Exports (other than gold) are not subject to license, but export transactions must be registered. The exportation of a few products (e.g., opium and museum pieces) is prohibited. Otherwise, control is exercised only over exports to bilateral agreement countries (see section on Imports and Import Payments, above). Export proceeds from bilateral accounts may be retained in bilateral clearing dollar accounts with Da Afghanistan Bank. These retained proceeds may either be used directly by the original exporter or sold to other importers. In either case, the retained proceeds are converted at the clearing rate applicable to that particular bilateral arrangement.

In the case of exports to countries trading in convertible currencies, export proceeds may be retained abroad for 3, 6, or 12 months, depending on the country of destination. During the relevant period, the exporter may use these funds to import any good other than those included in the list of prohibited goods. Alternatively, at the end of the relevant holding period limit, the foreign exchange holdings abroad must be repatriated, and held in a foreign currency account with a bank in Afghanistan, or sold at the commercial rate.

Proceeds from Invisibles

Sixty percent of the foreign currency salaries of foreign employees working in the Afghan public and private sectors must be converted into Afghanis at the official rate. Travelers entering Afghanistan are required to spend a minimum of the equivalent of US$26 a day in foreign exchange. They may bring in any amount of foreign currency but must declare it when entering the country if they intend to take out any unspent amount on departure, subject to the above minimum conversion requirement. Travelers may bring in no more than Af 2,000 in domestic bank notes and Af 50 in coins.

Capital

Foreign investment in Afghanistan requires prior approval and is administered by an Investment Committee. The Foreign and Domestic Private Investment Law of 1353 (issued on July 4, 1974), which is currently under revision, provides for a number of benefits, which include (1) income tax exemption for four years (six years outside Kabul province), beginning from the date of the first sales of products resulting from the new investment; (2) exemption from import duties on essential imports (mainly of capital goods); (3) exemption from taxes on dividends for four years after the first distribution of dividends, but not more than seven years after the approval of the investment; (4) exemption from personal income and corporate taxes on interest on foreign loans that constitute part of an approved investment; (5) exemption from export duties, provided that the products are permitted to be exported; and (6) mandatory purchases by government agencies and departments of their requirements from enterprises established under the law where prices of such products are not more than 15 percent higher than prices of foreign supplies. The law provides that foreign investment in Afghanistan can take place only through joint ventures, with foreign participation not exceeding 49 percent. It also establishes that an investment approved by the Investment Committee shall require no further license in order to operate in Afghanistan.

Payments of principal and interest on loans from abroad may be remitted freely to the extent of the legal obligation involved. Profits may be repatriated freely, and capital may be repatriated after five years at an annual rate not exceeding 20 percent of the total registered capital.

Gold

Residents may freely purchase, hold, and sell domestically gold in any form. Imports and re-exports of gold are permitted, subject to regulations. Exports of gold bullion and silver, as well as of jewelry, require permission of Da Afghanistan Bank and the Ministry of Finance. Commercial exports of gold and silver jewelry and of other articles containing minor quantities of gold or silver do not require a license and may be made freely. Customs duties are payable on imports and exports of silver in any form unless the import or export is made by or on behalf of the monetary authorities.

Changes During 1990

Imports and Import Payments

January 15. The minimum import deposit ratio was reduced from 25 percent to 20 percent in respect of essential products and was increased from a range of 25–50 percent to 30–60 percent in respect of other products.

Algeria

(Position on December 31, 1990)

Exchange Arrangement

The currency of Algeria is the Algerian Dinar. Daily buying and selling rates for the U.S. dollar, the intervention currency, and other specified currencies1 are established by the Bank of Algeria partly on the basis of a relationship between the dinar and a composite of currencies. The currencies included in the composite and their weights take into account the relative importance of payments, including capital transactions, that are made in these currencies. The Bank of Algeria frequently adjusts this rate to reflect its domestic economic objectives. A margin of DA 0.015 has been established between the buying and selling rates of the dinar in terms of the U.S. dollar. On December 31, 1990, the buying and selling rates for the U.S. dollar were DA 10.476 = US$1 and DA 10.497 = US$1, respectively.

Foreign exchange reserves are centralized in the Bank of Algeria; authorized banks must clear their foreign currency position with their foreign correspondents at the end of each day but, under certain conditions, they are permitted to hold cover for documentary credits outside Algeria. There are no arrangements for forward cover against exchange rate risk.

Administration of Control

The Bank of Algeria has general jurisdiction over exchange control. It formulates exchange legislation and regulations and is responsible for their application by the authorized banks. Authority over many exchange control procedures has been delegated to five commercial banks and the Postal Administration. Foreign trade is carried out within the framework of an indicative foreign exchange allocation system formulated by the Ministry of Economy and the Bank of Algeria, and administered by the commercial banks. Investment of foreign capital must be approved by the Council for Money and Credit, and investments in excess of DA 500,000 in Algeria must be approved by the National Investment Committee to benefit from the Investment Code.

Prescription of Currency

Settlements with countries with which no payments agreements are in force are made in convertible currencies.2 Payments under foreign supply contracts (contrats de fournitures) can be made in either the currency in use at the headquarters of the supplier or that of the country of origin of the merchandise, except that transactions with Morocco can be effected in U.S. dollars through special clearing accounts maintained at the central banks of the respective countries. Foreign holders of servicing contracts are required to open local nonresident accounts to which payments are made by the Algerian contracting party; such accounts must be closed within six months of the end of the contract, beyond which date outward transfers of the funds or their use for purposes unrelated to the contracts are not permitted. All payments in Algeria involving goods traded by concessionaries and wholesalers, except for goods sold to consumers by retailers associated with wholesalers, may be effected in convertible currencies.

Nonresident Accounts

Most nonresident accounts are Foreign Accounts in Convertible Dinars or Internal Nonresident Accounts. There are at present four types of accounts, as follows:

1. Individual Suspense Accounts may be opened without authorization and may be credited with payments from any country. Balances in such accounts opened before January 1, 1975 by nonresident physical persons of foreign nationality have been released for transfer abroad.

2. Foreign Accounts in Convertible Dinars (Cedac accounts) may be opened by individuals or juridical persons of foreign nationality, including those under supply or servicing contract arrangements. Such accounts may be credited only with deposits that, under the regulations applicable when the deposit is made, are free from any restrictions on transfer. They may not be credited with amounts that are transferable to the bilateral area. They may be debited for payments to any foreign country, for payments in Algeria, or for the provision of foreign bank notes that the account holder intends to export when he travels abroad. These accounts bear interest and may not show a net debt position.

3. Final Departure Accounts may be opened, without prior authorization, in the name of any physical person residing in Algeria, not of Algerian nationality, who intends to leave Algeria to return to the country of origin. These accounts may be credited freely with an amount equivalent to the holdings on October 20, 1963 in the account of the person concerned; with the proceeds from sales of real estate of the account holder, provided that the funds are paid directly by a ministerial officer; with the proceeds of the sale of securities through a bank; and with any other payments up to DA 2,000. These accounts may be debited without prior approval for certain payments in Algeria on behalf of the account holder. Outward transfers require individual approval.

4. Foreign Currency Accounts (comptes devises) may be opened by physical or juridical Algerian nationals resident in Algeria or by nonresident Algerian nationals who have resided for more than six months in a foreign country. Such accounts may be freely credited with (1) book transfers of convertible currencies from abroad using either postal or banking facilities, (2) imported convertible foreign currencies that have been declared at the time of the account holder’s entry into the country, and (3) domestic bank-to-bank book transfers. The accounts may be freely debited for book transfers abroad but only through the banking sytem; they may also be debited for purchases of dinars, for book transfers in dinars, and for purchases of convertible foreign currencies to be physically exported by the account holder. The interest rate payable on deposits in these accounts is fixed quarterly by the Central Bank of Algeria. Since 1990, economic entities have also been able to open foreign currency accounts for receiving and making foreign currency transfers, including the retained proportion of their export proceeds. They may transfer funds in these accounts to other foreign currency accounts, or use them to make payments in Algeria or to make foreign payments for goods and services pertaining to their business.

Imports and Import Payments

Imports from Israel and South Africa are prohibited. Certain imports are prohibited regardless of origin. In accordance with Law No. 88/29 of July 19, 1988, the Government exercises a monopoly over foreign trade by granting concessions to public economic enterprises, public agencies, and specific groups. Concessionaries and wholesalers are also eligible to import, for resale purposes, specific categories of products. In principle, all import operations using official foreign exchange are carried out within the framework of a foreign exchange allocation system, under which the Government establishes indicative allocations with respect to banks for (1) public economic enterprises for their own requirements, (2) foreign trade offices for resale, (3) concessionaries for pharmaceutical products and inputs for the agricultural sector, and (4) the National Chamber of Commerce (NCC) for the private sector as a whole to cover its needs. The NCC must approve the importation of inputs and equipment by the private sector; it grants such approval only to those engaged in priority activities. Nevertheless, in certain cases, imports may be authorized through the issuance of import authorizations to public and private enterprises that enable them to import goods and services not covered by the foreign exchange allocation. The indicative plan for foreign exchange allocation is formulated on a multiyear basis, based on an enterprise’s medium-term plan or on its economic activity. It includes (1) revenue (e.g., export receipts and external loan receipts), (2) expenditure (import payments and repayment of external loans), and (3) short- and medium-term borrowing objectives.

In priority cases, the Government may grant an enterprise the right to exchange more foreign currency than it takes in to cover necessary operations. For certain products (cereals, semolina, and coffee), the exchange right is expressed in terms of the quantities needed for consumption, while for other products, it is expressed in terms of dinar value (e.g., pharmaceuticals). An enterprise that holds a foreign exchange allocation may use it freely for its current operations and is subject to no further a priori administrative and financial control formalities. Financing arrangements for all imports financed with credits of more than 90 days must be approved in advance by the Committee for External Borrowing, chaired by the Governor of the Bank of Algeria. In general, imports valued at less than US$2 million must be paid for in cash or with credits of up to 90 days, unless covered by an existing bilateral line of credit. Imports of capital goods valued at less than US$2 million and financed with concessional medium-term bilateral credits do not require the Committee’s advance approval.

Import-supporting documents must be presented to the bank through which the payments relating to the transaction must be paid. Except as otherwise indicated by the exchange control authorities (the Bank of Algeria), down payments may not exceed 15 percent of the total value of an import operation. In accordance with Law No. 80–07 of August 3, 1980, imports must be insured by Algerian insurers. When a public agency, public enterprise, or ministry is effecting expenditures for imports deemed to be urgent or exceptional, the bank may effect payments before exchange and trade control formalities have been completed.

Special regulations apply to imports that do not require the use of official foreign exchange (importations sans paiements). Capital goods and spare parts, and personal effects with values of less than DA 10,000 may be imported without being subject to any prior formalities or any reporting requirements regarding the source of the foreign exchange used, but applicable taxes must be paid. The list of items that may be imported is prepared periodically by ministerial decree; it excludes finished consumer goods, except for personal effects.

During 1990, a new system of concessionaries and wholesalers was introduced to increase the availability and standardization of imported goods for resale, and to raise the value added in Algeria, including after-sales service and production. These entities are permitted, by the Council for Money and Credit, to import and resell items in Algeria relating to their approved activity without restrictions. They may sell their products in Algeria for convertible currencies, except in the case of retailers associated with a wholesaler, who must sell their products to consumers in domestic currency. An enterprise that obtains foreign exchange at the official rate may use its foreign exchange for such purchases. All transactions of concessionaries and wholesalers must be handled through a foreign currency account, and profits earned from foreign investment may be freely repatriated. When more than two concessionaries or wholesalers are operating in an activity, all imports must be channeled through these concessionaries or wholesalers, whether or not they use official foreign exchange. The initial list of goods eligible for importation by these entities includes motor vehicles and motorcycles, materials used in agriculture, fishing, electric and electronic household appliances, heating and air conditioning equipment, pharmaceutical and child care products, and most spare parts.

Payments for Invisibles

The Bank of Algeria must approve all payments for invisibles to all countries. When supporting documents are presented, however, approval may be granted by authorized banks, or sometimes by the Postal Administration, either freely or up to specified limits for certain payments, such as (1) those relating to approved trade transactions and maritime contracts, (2) business or official travel expenses, (3) transfers of salaries and wages, (4) educational expenses, and (5) advertising expenses. For payments for which the approval authority has not been delegated, the Central Bank or the Ministry of Economy must authorize the granting of exchange. Public enterprises may use foreign exchange allocations freely for payments for specified invisibles, including transportation and other services contracted abroad. The transfer of family remittances is suspended. The premiums for insurance on all risks arranged in Algeria by Algerian residents must be paid in Algeria. Public and private sector national exporters may open EDAC accounts (i.e., Exporters’ Convertible Dinar Accounts) denominated in convertible dinars, which can be credited with up to 10 percent of repatriated proceeds and be used for any of the following payments: business travel allowances; air travel expenditures; salaries and expenditures of foreign technicians; imports of essential spare parts and capital goods amounting to less than DA 200,000; representation costs at overseas trade fairs and exhibitions; and legal and administrative expenses.

Residents of other countries working in Algeria, under technical cooperation programs, for public enterprises and agencies or for certain mixed companies may transfer abroad a percentage of their net salaries, as follows: 50 percent for single persons and married persons whose families are in Algeria, and 70 percent for persons whose families are abroad. For other workers who have contracts with other employers and hold the necessary employment documents, the amounts that may be transferred are 35 percent for single persons and married persons whose families are in Algeria, and 55 percent for persons whose families are abroad. The payments must be transferred once a month on the basis of the previous month’s remuneration. Persons making such transfers are not entitled to allocations for other personal transfers.

Foreign exchange allocations for tourism abroad by Algerian residents were suspended in October 1988. Residents requiring medical treatment abroad are entitled to a foreign exchange allowance equal to DA 800 if the patient is over 15 years and DA 400 if the patient is under 15 years. Emigrant Algerian workers who take their vacations in Algeria may, when returning abroad, re-export foreign exchange that was freely imported and duly declared on their arrival in Algeria.

Pilgrims traveling to Saudi Arabia receive an allowance in Saudi Arabian riyals; the amount is fixed for each pilgrimage and may be furnished in the form of checks that may be cashed on arrival for those traveling by air or by sea. Resident travelers may take out Algerian dinar bank notes up to DA 50 a person. Foreign nonresident travelers may also re-export any foreign currency declared upon entry. However, on their arrival in Algeria, foreign nonresidents must convert foreign exchange equivalent to a minimum of DA 1,000. Travel tickets that are bought by nonresidents for travel abroad must be paid for with imported foreign exchange.

Exports and Export Proceeds

All exports to Israel and South Africa are prohibited. Certain exports, including used equipment and machinery, livestock, firearms, ammunition, explosives, and certain radio equipment, are prohibited regardless of destination. All proceeds from exports of crude and refined hydrocarbons, byproducts from gas, and mineral products must be surrendered. Exporters of other products may retain a specified proportion of their export earnings in a Foreign Currency Account, as follows: exporters of major services, 10 percent; Algerian tourist operators and wine exporters, 20 percent; exporters of other agricultural and fisheries products, 50 percent; and other exporters, 100 percent. Entities may use these funds for imports or other payments pertaining to their business or they may transfer the funds to another Foreign Currency Account. Non-hydrocarbon exports may take advantage of certain incentive measures granted by the Government, including, for example, (1) exemption from the tax on industrial and commercial profits and the flat-rate levy on the wage bill, and (2) export promotion assistance (Ampex).

Sales on consignment must be authorized by the Ministry of Economy and must always be registered before customs clearance. Export proceeds must be repatriated immediately after they are collected. Those petroleum companies that hold mineral rights must repatriate to Algeria the proceeds from their exports of hydrocarbons, calculated on the basis of a contractual price for each barrel, which is fixed by agreement with the companies concerned. For one petroleum company holding mineral rights, however, there are different repatriation requirements.

Proceeds from Invisibles

Proceeds from invisibles must be repatriated and surrendered. There are no restrictions on the importation of foreign bank notes, coins (except gold coins), checks, and letters of credit, but nonresidents, including those of Algerian nationality, must declare such holdings when they enter Algeria. Nonresident Algerian nationals must convert at least the equivalent of DA 3,500 a year upon entering into Algeria. Resident travelers may reimport Algerian dinar bank notes up to DA 50 a person. Nonresident travelers are not permitted to bring in Algerian bank notes.

Capital

Residents are obliged to repatriate and surrender capital assets (or the sales proceeds thereof) held or acquired outside Algeria. Capital transfers to any destination abroad are subject to individual license; residents are not normally permitted to acquire capital assets outside Algeria. The Committee for External Borrowing administered by the Bank of Algeria must approve in advance all borrowing abroad or from nonresidents.

The Law of Money and Credit of April 14, 1990 provides for state guarantees in respect of borrowing investments in accordance with the international codes and agreements ratified by Algeria in all areas except those expressly reserved for the State. Repatriation in respect of the sale or liquidation proceeds from invested foreign capital is guaranteed. The Law also provides that profit remittances on such investments will be permitted, provided that documentation requirements on tax payments are met. Tax facilities may be granted, and investments of more than DA 5 million may be given exclusive rights in a specified geographic area and may be accorded tariff protection. Remittances of profits and retransfers of capital are permitted only in respect of investments approved under the code. The law on joint ventures with foreign companies, which came into effect in April 1982, provides foreign partners with a guarantee of fair return on investment, tax exemptions of up to five years on industrial and commercial profits, reduced taxes on reinvested profits, and the repatriation of earnings and royalties in respect of transfers of technology.

Gold

Residents may purchase, hold, and sell gold coins in Algeria for numismatic purposes. Under Ordinance No. 70–6 of January 16, 1970, unworked gold for industrial and professional use is distributed by the Agence nationale pour la distribution et la transformation de l’or et des autres métaux précieux (Agenor). This agency is also authorized to purchase in Algeria, and to hold, process, and distribute any other precious metal, and, within the exchange control regulations, to import and export any precious metal, including gold. Gold for use by dentists and goldsmiths is imported by Agenor under import licenses issued by the Ministry of Economy and the Central Bank. Gold and other precious metals are included in the list of items importable by concessionaries.

Changes During 1990

Administration of Control

April 14. Under the Law of Money and Credit, the Bank of Algeria was made responsible for external debt management.

Nonresident Accounts

September 8. Under Bank of Algeria Regulation 90–02, economic entities became eligible to open foreign currency accounts in Algerian banks; previously only individuals were permitted to do so.

Imports and Import Payments

August 20. The system of concessionaries and wholesalers was introduced. For a specified range of activities, approved entities were permitted to import without restriction goods for resale in Algeria and receive payments in foreign currencies.

Exports and Export Proceeds

September 8. The retention ratios for Foreign Currency Accounts were increased as follows: 20 percent for tourism operators and wine exporters; 50 percent for exporters of other agricultural and fisheries products; and 100 percent for exporters of all other goods, except hydrocarbon and mineral products, the ratio for which remained at zero and for transport and financial services for which the ratio remained at 10 percent.

Proceeds from Invisibles

August 11. Under the Supplementary Finance Law, nonresident Algerian nationals were required to convert at least DA 3,500 a year upon entering Algeria.

Capital

April 14. The restrictions on foreign investments were liberalized, permitting investments in all areas that are not expressly reserved for the state. Repatriation of capital and profits was allowed, subject to the international agreements ratified by Algeria.

Gold

August 20. Gold and other precious metals became eligible for importation by approved concessionaries or wholesalers.

Angola

(Position on December 31, 1990)

Exchange Arrangement

The currency of Angola is the New Kwanza (plural New Kwanzas), which replaced the Kwanza at par on September 25, 1990. Since May 1976, the currency of Angola has been pegged to the U.S. dollar, and at the end of December 31, 1990, the exchange rate was at Kz 29.918 = US$1. The National Bank of Angola applies a margin of 1 percent to both its buying and selling transactions. Exchange rates for 17 other currencies1 are established using the weekly average cross rates of the currencies concerned on the New York, Frankfurt, Paris, London, Brussels, and Zurich markets on the basis of a formula that projects exchange rate changes in the following week. This formula takes into account the changes in cross rates during the preceding week. Buying and selling margins for cash transactions are set at 3–4 percent, depending on the currency. The exchange rates published each Friday in the Bulletin of the National Bank of Angola are valid for seven days beginning the following Monday. There are no taxes or subsidies on purchases or sales of foreign exchange. There are no arrangements for forward cover against exchange rate risk operating in the official or commercial banking sector.

Administration of Control

A foreign exchange budget is prepared annually by the Ministry of Planning with the assistance of the National Bank of Angola, the Ministry of Finance, and the Ministry of Energy and Petroleum. All imports and exports are subject to licensing. Foreign exchange transactions are effected through the National Bank of Angola, which serves both as the central bank and the authorized bank for foreign transactions. Arrears are maintained with respect to external payments.

Prescription of Currency

The National Bank of Angola prescribes the currencies to be used for imports, depending upon the country with which transactions are to be carried out. The currencies are usually those of the exporting countries or the U.S. dollar. Angola had a bilateral payments agreement with the German Democratic Republic, which is being renegotiated with Germany. Bilateral settlement arrangements, which do not contain bilateral payments features, are maintained with Brazil and Spain. These arrangements utilize single accounts through which monthly balances can be used without restriction for transactions with third countries.

Resident and Nonresident Accounts

With the prior authorization of the National Bank of Angola, resident enterprises in Angola may maintain foreign exchange accounts. Transactions through these accounts are subject to the prior authorization of the National Bank of Angola. Nonresidents may maintain accounts in new kwanzas, provided that the funds are transferred from abroad. Ex-residents may also hold accounts in new kwanzas, but they may withdraw funds on these accounts only to cover expenses during their stay in Angola. Nonresidents with established businesses in Angola may hold foreign exchange accounts subject to the prior authorization of the National Bank of Angola.

Imports and Import Payments

Imports from South Africa are prohibited. All other imports are subject to licensing, with limits established under the import plan and subject to the availability of foreign exchange. Licenses may be obtained only by registered enterprises of proven technical, commercial, and financial capacity. Licenses are issued on the basis of a foreign exchange allocation and are restricted to imports of goods for which the enterprise is registered. To obtain a license, enterprises must present to the sectoral ministries and the Ministry of Commerce offers of three foreign suppliers. The approved offer may be considered for an import license application, which in turn must be approved by the same ministries. Import licenses specify the importer; the supplier; the intermediary; the product by its Brussels nomenclature classification, volume, and unit price; the transport and insurance companies; the costs; the method of payments; and the currency of payment. Import licenses are valid for 180 days after issuance and may be extended once for an additional 180 days. A license fee of 0.1 percent of the import value is levied. Import licenses are also required for statistical purposes even if foreign exchange is not requested. Imports of capital goods must be financed partly by medium-term foreign financing.

Payments for Invisibles

Service contracts with nonresidents are subject to licensing. Preferential treatment is given to domestic air and sea transportation, and imports not insured domestically are approved only in exceptional cases. Exchange allowances for private travel are granted only in certain cases. A maximum daily allowance of US$200 is granted for approved business travel for up to 10 days. Up to the equivalent of Kz 50,000 may be granted for purposes of medical treatment abroad. Allowances in excess of these limits are granted on a case-by-case basis. Education travel expenses are normally expected to be covered by scholarships, but an additional Kz 8,000 a year may be allotted. An allowance for tourism purposes of US$500–US$1,000 may be made available in exceptional cases, but it is granted at most once every four years. The exportation and importation of domestic currency are prohibited.

Exports and Exports Proceeds

All exports to South Africa are prohibited as are exports of certain goods.2 Re-exports of goods other than equipment and personal belongings are also prohibited. Restrictions also apply to the exportation of products that are in short domestic supply. All other exports are subject to licensing. Licenses may be obtained by registered enterprises, and proceeds must be collected within 30 days of shipment and surrendered to the National Bank of Angola. Certain foreign enterprises (currently oil companies) are required to surrender only a proportion of export receipts and to retain the remainder to cover production costs.

Proceeds from Invisibles

Service contracts with nonresidents are subject to the approval of the National Bank of Angola. The sectoral ministries supervise the execution of contracts. All proceeds must be surrendered to the National Bank of Angola within 30 days of receipt.

Capital

All capital transfers are subject to licensing and control. The Foreign Investment Law of July 1988 prohibits foreign investment in strategic sectors3 and direct investment abroad by residents. Direct foreign investments in the oil sector are encouraged. Dividends and capital may be repatriated upon liquidation, with the prior approval of the Ministry of Finance. Transfers of personal capital, such as inheritances, dowries, savings from wages and salaries, and proceeds from sales of personal property, are permitted only on a case-by-case basis.

Gold

Imports and exports of gold are the monopoly of the National Bank of Angola. Residents are permitted to hold gold only in the form of jewelry.

Changes during 1990

Exchange Arrangement

September 25. The kwanza was replaced by the new kwanza at par.

Antigua and Barbuda

(Position on December 31, 1990)

Exchange Arrangement

The currency of Antigua and Barbuda is the Eastern Caribbean Dollar,1 which is issued by the Eastern Caribbean Central Bank (ECCB). The Eastern Caribbean dollar is pegged to the U.S. dollar, the intervention currency, at EC$2.70 per US$1. On December 31, 1990, the buying and selling rates for the U.S. dollar quoted by the ECCB in its transactions with commercial banks were EC$2.6949 and EC$2.7084, respectively, per US$1. The ECCB also quotes daily rates for the Canadian dollar and the pound sterling. There are no arrangements for forward cover against exchange risk operating in the official or the commercial banking sector.

Antigua and Barbuda formally accepted the obligations of Article VIII, Sections 2, 3, and 4 of the Fund Agreement, as from November 22, 1983.

Administration of Control

Exchange control applies to all currencies and is administered by the Ministry of Finance. Export licenses are required for a range of products, particularly those subject to export duties. Import licenses are issued by the Collector of Customs in the Ministry of Finance and by the Ministry of Trade, Industry and Commerce, depending on the type of commodity. Arrears are maintained with respect to external payments.

Prescription of Currency

Settlements with residents of member countries of the Caribbean Common Market (Caricom)2 must be made either in the currency of the Caricom country concerned or in Eastern Caribbean dollars. Settlements with residents of other countries may be made in any foreign currency or in Eastern Caribbean dollars. Settlements involving South African currency are not permitted.

Nonresident Accounts

External accounts may be opened for nonresidents with the approval of the Ministry of Finance and may be maintained in any currency. With the approval of the Ministry of Finance, such accounts may also be opened by resident individuals or firms especially in tourist-oriented industries or in export trades where most receipts are in foreign currency and a large portion of inputs are imported or are financed in foreign currency. External accounts can be credited with receipts from sales of merchandise (whether from export-oriented or local production) or from remittances. Commercial banks are required to report external accounts operations to the Ministry of Finance on a monthly basis.

Imports and Import Payments

All imports from South Africa are prohibited. Most goods may be freely imported under open general licenses granted by the Ministry of Trade. Certain other commodities require individual licenses, unless imported from Caricom countries. Antigua and Barbuda follows the Caricom rules of origin adopted in June 1981. Payments for authorized imports are permitted upon application and submission of documentary evidence.

Imports that are exempt from import duties include basic foods and agricultural imports. All other exemptions for machinery, equipment, and raw materials are granted on a case-by-case basis and generally under the Fiscal Incentives Act 1975 and the Hotel Incentives Act.

Payments for Invisibles

Payments for invisibles related to authorized imports are not restricted. Upon presentation of supporting documents, and with the authorization of the Ministry of Finance, residents may purchase foreign exchange up to the equivalent of US$750 a trip outside the ECCB area; however, this limit may be exceeded with permission from the Ministry of Finance. In terms of Caricom traveler’s checks (which are denominated in Trinidad and Tobago currency), the basic allowance is TT$500 a trip for holiday travel, TT$2,500 a trip for business, and TT$3,000 a trip for medical reasons. Official authorization is required for amounts exceeding these limits. Foreign exchange allowances for education, family maintenance, medical treatment, and remittances of earnings by foreign workers are approved on a case-by-case basis. Profits on foreign direct investment may be remitted in full, subject to confirmation by the Commission of Inland Revenue of registration for corporate income tax purposes. There are no limits on the amount of local currency that may be taken out of the country.

Exports and Export Proceeds

No export licenses are required for certain commodities to any destination. Surrender of export proceeds is not required, and re-exports are not subject to any tax if they take place within the bonded area.

Proceeds from Invisibles

Travelers to Antigua and Barbuda may freely bring in notes and coins denominated in Eastern Caribbean dollars or in any foreign currency. Foreign currency coins are not normally exchanged. Checks and drafts in U.S. and Canadian currency can be tendered up to US$1,000 without restriction; for amounts over US$1,000, Ministry of Finance approval must be obtained. Levy exemptions for transfers, especially for charity purposes, are usually granted.

Capital

There are no legislated restrictions on capital movements. Foreign investment is granted the same incentives as domestic investment under the Fiscal Incentives Law and the Hotel Incentives Act. Large transfers abroad for investment purposes can be phased over time by the Financial Secretary.

Gold

There are no restrictions on the importation of gold.

Changes During 1990

Imports and Import Payments

August 4. General agreement was reached with other members of Caricom on a new tariff schedule under the Common External Tariff (CET) of the Caribbean Common Market. The CET is expected to be implemented in the second half of 1991.

Argentina

(Position on December 31, 1990)

Exchange Arrangement

The currency of Argentina is the Austral (plural Australes). Since December 18, 1989, a unified floating exchange rate system has been in operation, and the exchange rate has been determined by market forces. On December 31, 1990, the middle rate of the austral in terms of the U.S. dollar was ₳ = 5,585 = US$1 (selling).

Transactions are allowed in certain other currencies,1 with daily quotations based on the buying and selling rates for the U.S. dollar on markets abroad. Swap transactions and forward exchange operations are permitted under a new regime introduced on December 20, 1989. The currency of the transactions and the rates may be freely negotiated.

Argentina formally accepted the obligations of Article VIII, Sections 2, 3, and 4 of the Fund Agreement, as from May 14, 1968.

Administration of Control

All exchange transactions must be carried out through entities authorized expressly for this purpose. These authorized entities include banks, exchange agencies, exchange houses, exchange offices, and financial companies; each of these types of institution is subject to separate regulations. Arrears are maintained with respect to external payments.

In accordance with the Fund’s Executive Board Decision No. 144-(52/51), adopted on August 14, 1952, Argentina notified the Fund, on November 16, 1990, that certain restrictions were imposed on the making of payments and transfers for current international transactions to the Government of Iraq and persons within the territories of Iraq and Kuwait.

Prescription of Currency

All payments between Argentina and Bolivia, Brazil, Chile, Colombia, the Dominican Republic, Ecuador, Mexico, Paraguay, Peru, Uruguay, and Venezuela are made through accounts maintained by the Central Bank of Argentina and the central banks concerned, under reciprocal credit agreements within the framework of the multilateral clearing system of the Latin American Integration Association (LAIA). Pursuant to the Presidential Declaration and Energy Integration Protocol signed with the Government of Bolivia on December 13, 1989, for the purpose of making joint use of the energy resources of both countries, a fixed proportion of Argentina’s payments for Bolivia’s natural gas exports is made into a non-interest-bearing account at the Central Bank of Argentina; it is used solely for purchases of goods and services of Argentine origin for the construction of the Río Grande-Campo Santa Cruz gas pipeline, the gas treatment plant at Naranjillos, and the Palmar Grande-Camiri highway. Argentina maintains reciprocal credit arrangements with Bulgaria, Cuba, Hungary, Poland, and the U.S.S.R. by means of special accounts in each central bank through which transactions are settled. Transactions with other countries must be settled in freely usable currencies. The Central Bank of Argentina maintains a special account with Romania under which payments for imports of equipment and capital goods from Romania are offset with receipts from exports of certain products from Argentina.

Nonresident Accounts

Authorized banks may open accounts in australes and in foreign exchange in the name of any nonresident, provided that the accounts are credited with remittances of convertible currencies only. Balances on nonresident accounts may be used freely for any purpose, in Argentina or abroad. Transfers between accounts may be effected freely, except in payment for exports.

Imports and Import Payments

Import payments may be effected in convertible currencies, except as otherwise specified in the regulations on prescription of currency. Settlement of payments for imports may be freely effected by authorized financial entities, and, since December 20, 1989, they have been carried out at the rate in the free exchange market, with no minimum financing requirement period. Imports and related payments by the public sector require the prior approval of the Central Bank. In addition to customs duties, imports are subject to a stamp duty of 0.6 percent and to selective internal taxes ranging from 5 percent to 24 percent.

The “Sworn Declaration of Need to Import” issued by the National Import Directorate, which was required for most public and private sector imports, was abolished on July 20, 1990. The requirement that private sector importers who have obtained licenses from the Industry and Foreign Trade Secretariat must lodge with a bank a deposit in australes for 3 percent of the f.o.b. value declared on the “Sworn Declaration of Need to Import” was abolished concurrently.

Consumer goods whose domestic production is sufficient and that are covered under List I of the Decree No. 4070/84 may not, in principle, be imported. (No goods, however, were placed on List I in 1989 and 1990.) The prohibition on the importation of goods on List I, when it applies, does not apply to temporary imports, goods included in the border traffic scheme, or samples and prototypes. The Secretary of Industry and Foreign Trade is empowered to grant import licenses for goods on List I when the item is considered necessary for scientific or technical reasons, or in light of the quantity or quality of domestic production.

Imports of goods on List II of Decree No. 4070/84 require the prior approval of the Secretary of Industry and Foreign Trade, who issues import licenses in consultation with an Honorary Import Advisory Committee on which both government institutions and competent commercial and industrial organizations are represented. The goods on List II include a range of consumer goods and industrial inputs for which close substitutes are available in Argentina. Goods imported under concessions granted by any instrument of the LAIA agreement are exempt from the prohibition applicable to goods on List I and the review requirement for goods on List II. Import licenses are issued automatically for goods covered under the Argentine-Uruguayan Economic Cooperation Agreement. Import licenses for certain raw materials and inputs for the pharmaceutical industry and for medical and health services (List III of Decree No. 4070/84) require the prior approval of the Ministry of Health and Social Action, and licenses for imports intended for national defense and for the security and police forces require the prior approval of the Ministries of Defense or Interior.

Import licenses are granted automatically for all goods not specifically covered by the foregoing provisions. The number of goods included on List II was further reduced during 1990.

Countertrade is permitted for firms engaging in the exportation of promoted exports. In such cases, import payments can take the form of the exportation of promoted goods.

Payments for Invisibles

Since December 20, 1989, the sale of foreign exchange at the free exchange rate has been permitted for most invisible payments. Authorized entities may carry out most types of transactions without prior authorization from the Central Bank.

Exports and Export Proceeds

Minimum export prices (reference prices) are established for many agricultural and livestock exports as a basis for the payment of duties. A number of traditional exports (soybeans, beef, and processed hides) are subject to additional export taxes. Certain nontraditional exports are eligible for rebates of estimated indirect taxes paid in the process of production. Exports shipped through certain ports are eligible for additional rebates ranging from 7 percent to 12 percent.

General export taxes levied on agricultural products have been gradually reduced to an average of 11 percent in December. General export taxes on industrial manufactured products were eliminated, and those on nontraditional products were reduced to 10 percent in June 1990.

Many exports, particularly nontraditional exports, are eligible for various other export incentives, although a number of schemes have been suspended since July 1989. The Central Bank has established prefinancing and financing regimes when credits are obtained using external funds. These regimes are applied to exporters by the participating banks to promote exports of certain goods and services. The prefinancing regime using BCRA funds has been suspended since January 1, 1990, except for operations already begun by the date, with funds from all the regimes being lent as they are collected from their own portfolios.

The financing system for promoted exports requires insurance coverage of all operations against extraordinary risks or credit risk; it is provided by the Argentine Export Credit Insurance Company, Inc. (CASCE) for the account of the National Government. These credit documents must also be endorsed by a highly rated foreign bank, or the operation must be covered by export credit insurance against commercial risk provided by the CASCE or another company. Certain products, mostly nontraditional exports, may be shipped on consignment for 360 days; if not sold within that period, the goods must be returned to Argentina.

Various export incentives are provided for promoted exports in accordance with the Export Promotion Laws of December 16, 1984. These include (1) a deduction from taxable profits, up to 10 percent of the value of certain exports; (2) the creation of export consortia and cooperatives and the granting of an incentive equal to 4 percent of the f.o.b. value of exports over a period of five years; (3) the establishment of international trading companies; (4) permission for firms to engage in countertrade when marketing promoted exports; (5) a tax drawback scheme under which rebates would be allowed for taxes of imported inputs and other taxes; (6) the elimination of the 0.5 percent stamp tax for exports from the Federal Capital Area; and (7) the funding of an Export Promotion Fund to finance participation in trade fairs and exhibitions. All these incentives have, however, been formally suspended since September 15, 1989 under the Economic Emergency Law.

Proceeds from Invisibles

Foreign currency receipts obtained from private sector invisible transactions need not be surrendered to the Central Bank, but may be sold in the exchange market. Domestic and foreign bank notes entering and leaving the country are not subject to any exchange requirement, nor are gold coins or “good-delivery” gold bars.

Capital

Since December 20, 1989, proceeds from all loans have been transacted in the free exchange market. There are no conditions, on maturity dates or interest rates, for financial loans transacted through the free market. Principal and interest payments for loans may only be effected directly through authorized entities on the maturity date without prior central bank authorization.

Since June 1981, borrowers for loans in foreign currency wishing to obtain an exchange rate guarantee or a swap agreement from the Central Bank were required, as an essential condition, to obtain an extension of the original maturities for the terms as necessary. All loans outstanding and covered by a swap agreement with the Central Bank as of December 4, 1982, and all loans for which the domestic borrower has obtained an exchange rate guarantee from the Central Bank and which fell due through the end of 1985 have been extended under minimum terms established by the Central Bank. Loans covered by swap agreements that fell due in 1985 were rescheduled either by means of insurance on U.S. dollar-denominated obligations of the Central Bank (BCRA Notes) with a ten-year maturity, or by a direct refinancing between debtor and creditor for up to five years, followed by the issuance of a BCRA Note for the remainder of the period. Financial loans that benefited from any of the above-mentioned coverages were rescheduled as of October 1987 by means of the issuance of U.S. dollar-denominated obligations with a 19-year maturity and a 7-year grace period.

The inflow of financial loans undertaken by local foreign-owned enterprises and originating from foreign enterprises that either directly or indirectly control the borrowing enterprises or are their subsidiaries requires authorization from the Central Bank. Loans endorsed or guaranteed by the State also require prior authorization from the Central Bank. Banks may accept foreign currency sight or term deposits. Foreign borrowing by the public sector is regulated by Decree-Law No. 19328 of October 29, 1971 and Decree No. 3532 of November 24, 1975. Banks may accept sight and term deposits in foreign currency.

The foreign investment regime is established by Law No. 23697—the “Economic Emergency” Law—passed on September 1, 1989 and promulgated by the National Executive Power on September 15, 1989. Chapter VI of the Law modifies the Foreign Investment Law, mainly by repealing (exclusively) the provisions of the law requiring prior approval by the National Executive Power or by the implementing authority for foreign capital investments. Decree No. 1225 of November 9, 1989 regulates the foreign investments regime. The investments may be made in freely convertible foreign currencies, in capital goods and their spare parts and accessories, in profits or capital in local currency belonging to foreign investors, in capitalization of external credits in freely convertible foreign currencies, in intangible goods (in accordance with the specific, applicable legislation), and in any other form of contribution acceptable to the implementing authority or within the scope of commercial or promotional regimes.

Foreign investors may invest in Argentina without prior approval, on the same terms as investors who are resident in Argentina, subject to the laws governing the field in which they intend to invest. Law No. 23697 has established the Register of Foreign Capital Investments, and Decree No. 1225/89 provides that investments registered before its entry into force shall automatically be recorded in the new register. Investments carried out using external public debt instruments cannot be registered unless they are redeemable.

Registered foreign investments may be repatriated after three years. The National Executive Power may suspend the right to transfer profits and to repatriate invested capital if there is an external payments crisis. When the Central Bank limits access to exchange markets by means of exchange controls, foreign investors may acquire foreign exchange for transfer abroad as profits and repatriation of capital. Without prejudice to the foregoing, enterprises that receive foreign investments may distribute the liquid profits they earn to foreign investors who have registered their investment with foreign exchange from their exports. If the National Executive Power declares an external payments crisis, the Central Bank will deliver external public debt instruments denominated in foreign currency for the amounts that registered foreign investors wish to remit as profits.

Law No. 23760 (on tax reform), passed on December 7, 1989 and promulgated on December 14, 1989, abolished the special tax on additional profits from foreign capital investments that had been imposed by Article 16 of Law No. 21382.

Local enterprises based on foreign capital may borrow domestically with the same rights and on the same terms as local enterprises based on domestic capital.

The Government, through its Ministry of Foreign Affairs and Culture, has entered into investment promotion and protection agreements with the Belgian-Luxembourg Economic Union, the governments of Germany, Italy, Switzerland, and the United Kingdom. The agreements will come into effect when the governments notify each other that their constitutional requirements for entry into force of international agreements have been met. These agreements are intended to promote, and especially to protect, investments in the signatory countries.

Since September 1984, the Central Bank has entertained applications for the capitalization into foreign direct investment of principal falling due with an exchange rate guarantee. Many of these applications were approved until the suspension of the arrangement in 1986. In addition, during the same period, certain applications for the capitalization into foreign direct investments of swap transactions that fell due were also approved, although no formal arrangement existed for such transactions.

In October 1987, a debt-conversion scheme was announced that would allow investments to be financed through conversion of external loan claims into domestic currency at the free foreign exchange market rate. The value of the loan claims would be determined through an auction system. The scheme came into effect on January 1, 1988, and the first auction was held in January 1988. Profits on investments under this scheme may not be remitted for at least four years, and capital may not be repatriated for ten years. No auctions under this scheme were held during 1990.

Gold

Residents may hold gold coins and gold in any other form in Argentina or abroad. Financial institutions, exchange houses, and exchange agencies may buy or sell gold in the form of coins or good-delivery bars among themselves and may buy such gold from their clients. Gold exports must be paid for in convertible currencies. Imports of gold by industrial users are subject to a statistical duty of 0.6 percent, and those by other users are subject in addition to a sales tax. Institutions may carry out arbitrage operations in old coins or good-delivery gold with their clients, against foreign bank notes.

Changes During 1990

Imports and Import Payments

July 20. The “Sworn Declaration of Need to Import” requirement and the 3 percent advance import deposits were eliminated.

During August–December, quantitative import restrictions were gradually reduced by eliminating goods from the list of goods subject to prior consultation with domestic producers. The proportion of goods on this list to domestic production was reduced from 18 percent in August to about 5 percent by the end of the year.

August 15. The tariff rates on food products and medical equipment, which ranged from 13 percent to 24 percent, were reduced to a uniform rate of 5 percent. The tariff rates for some 2,400 additional products not imported during 1989 and previously subject to rates from 18 percent to 24 percent were reduced to a uniform rate of 16 percent.

Exports and Export Proceeds

During the year, export taxes on agricultural goods were reduced on several occasions, to 11 percent, on average, for oleaginous products and zero percent for other grains by the end of the year.

July 1. Export taxes on industrial manufactured products were eliminated and on nontraditional products were reduced to an average of 10 percent (to decline to zero percent in 1991). In both cases, the reductions were effected on the basis of regulations in effect since 1989, which established a monthly schedule of reductions, with the objective of reaching zero percent for all products.

Aruba1

(Position on December 31, 1990)

Exchange Arrangement

The currency of Aruba is the Aruban Florin, which is pegged to the U.S. dollar at Af. 1.7900 = US$1. The Centrale Bank van Aruba (the Bank) deals with local commercial banks within margins of 0.00279 percent on either side of parity. On December 31, 1990, the official buying and selling rates for the U.S. dollar were Af. 1.77 and Af. 1.80, respectively, per US$1. (The official selling rate for drafts was Af. 1.78 = US$1.) Official buying and selling rates for other currencies2 are set daily on the basis of rates for the U.S. dollar on the international exchange markets. A foreign exchange commission of 1.3 percent is levied on all payments made by residents to nonresidents. Purchases of foreign exchange by resident companies with a nonresident status for foreign exchange control purposes are exempted from the commission.

There are no taxes or subsidies on purchases or sales of foreign exchange. There are no arrangements for forward cover against exchange rate risk operating in the official or the commercial banking sector.

Administration of Control

Foreign exchange controls are administered by the Bank. Import licenses, where required, are issued by the Department of Economic Affairs, Commerce, and Industry.

Prescription of Currency

Payments to and receipts from nonresidents may be made in any convertible currency, except in the legal tender of Aruba. For purposes of the compilation of the balance of payments, all payments made by residents to nonresidents and receipts through local banks and through banks abroad must be reported to the Bank.

Nonresident Accounts

Nonresidents may freely open accounts in any foreign currency, but they are not permitted, in principle, to hold accounts in Aruban florins.

Resident Foreign Bank Accounts

The opening and maintaining of foreign bank accounts by residents require a license from the Bank.

Imports and Import Payments

Payments for imports may be made freely. Imports of a small number of products are restricted. The restrictions, however, are administered liberally in accordance with the domestic supply situation.

Payments for Invisibles

Most payments for invisibles exceeding Af. 50,000 a quarter require a license from the Bank. Tourist travel allowances, education allowances, remittances for family maintenance, and allowances for medical treatment are granted liberally. Transfers of profits and dividends are permitted by the Bank upon application. Nonresidents may take with them on departure any foreign currency that they brought in. The exportation of Aruban bank notes is prohibited.

Exports and Export Proceeds

Exports do not require a license. Export proceeds must be converted into local currency within eight working days, credited to a foreign currency account with a local bank, or credited with a foreign bank with the approval of the Bank.

Proceeds from Invisibles

The regulations governing export proceeds also apply to proceeds from invisibles. Nonresidents may bring in any amount of checks, traveler’s checks, or bank notes denominated in foreign currency.

Capital

The following transactions require a bank license: (1) purchases from and sales to nonresidents of domestic securities; (2) purchases of officially listed foreign securities with values exceeding Af. 50,000 a year; and (3) purchases from and sales to nonresidents of foreign real estate. Proceeds from the liquidation of direct foreign investments may be repatriated without restriction.

Changes During 1990

Imports and Import Payments

During 1990, import restrictions were liberalized, and, by January 1, 1991, restrictions were removed on all products except chicken eggs.

Australia

(Position on December 31, 1990)

Exchange Arrangement

The currency of Australia is the Australian Dollar.1 The Australian authorities do not maintain margins in respect of exchange transactions; spot and forward exchange rates are determined on the basis of demand and supply conditions in the exchange market, but the Reserve Bank of Australia retains discretionary power to intervene in the foreign exchange market. On December 31, 1990, the closing buying and selling rates in terms of the U.S. dollar were $A 1.293 = US$1 and $A 1.294 = US$1, respectively. There are no taxes or subsidies on purchases or sales of foreign exchange.

Authorized foreign exchange dealers may deal among themselves and with their customers at mutually negotiated rates for both spot and forward transactions in any currency, in respect of trade and non-trade-related transactions. The Reserve Bank sets a limit for each dealer’s net open overnight foreign exchange exposure. Foreign currency futures contracts and options on futures are traded on the Sydney Futures Exchange.

The procedural requirements applying to certain transactions with residents of designated countries and to immigrants, which had previously applied for taxation-screening purposes, were abolished as of July 1, 1990.

Australia formally accepted the obligations of Article VIII, Sections 2, 3, and 4 of the Fund Agreement, as from July 1, 1965.

Administration of Control

The Reserve Bank is responsible for administering the few requirements imposed under Australia’s current foreign exchange arrangements. (Most exchange controls were abolished on December 12, 1983.)

In accordance with the Fund’s Executive Board Decision No. 144-(52/51) adopted on August 14, 1952, Australia notified the Fund, on September 10, 1990, that certain restrictions had been imposed on the making of payments and transfers for current international transactions to the Government of Iraq and persons within the territories of Iraq and Kuwait. These restrictions include prohibitions on purchases and sales of foreign currency and the taking or sending out of Australia of Australian currency by, or the payment to nonresident accounts in Australia of, the Governments of Kuwait and Iraq, their agencies, or their respective nationals without the specific approval of the Reserve Bank.

Prescription of Currency

Both outward and inward payments may be settled in Australian currency or in any foreign currency,2 but purchases and sales of foreign currency by persons in Australia in exchange for Australian currency must be undertaken with an authorized foreign exchange dealer.

Nonresident Accounts

Nonresidents may establish and operate accounts without formality; funds may also be repatriated without restriction. Accounts may be denominated in foreign currency, but purchases and sales of foreign currency in Australia must be handled through authorized dealers. Special requirements apply in the case of interest-bearing investments by foreign government monetary authorities (see section on Capital, below).

Imports and Import Payments

Import-licensing requirements, which had applied to a very small range of secondhand equipment, were abolished in 1989. Relatively few tariffs are bound under the General Agreement on Tariffs and Trade (GATT) (about 20 percent); almost all rates are subject to some tariff-reduction program. In July 1989, the simple average rate of ad valorem tariffs was 10.6 percent. Tariffs for some sectors are relatively high, especially textiles and clothing (up to 55 percent), footwear (up to 45 percent), and passenger motor vehicles (40 percent); in the latter sector, however, there are no formal or informal quantitative import restrictions (in the form of export restraints by supplier countries), and under current legislation, tariffs will be phased down to 35 percent by January 1, 1992.

Australia’s tariff-reduction program announced in May 1988 envisages that tariff rates above 15 percent will be reduced gradually to 15 percent by July 1992. Tariff rates higher than 10 percent but less than 15 percent will be phased down to 10 percent during this period. Proportional reductions are to be made to those tariff rates not expressed in ad valorem terms. The exceptions to these policies are textiles, clothing, footwear, and passenger motor vehicles. These industries are covered by sectoral plans, under which the general tariff rates will be reduced over specified periods but will remain at levels two to three times higher than those for other sectors.3

There are no quotas on imports other than tariff quotas, which apply to textiles, clothing, footwear, and cheese and curd. Australia, which is not a signatory of the Multifiber Arrangement, introduced revised tariff quota arrangements for textiles, clothing, and footwear on March 1, 1989. The scheme involves progressively reducing the base quota, allocated according to previous import performance, until it lapses on February 29, 1992. Additional tariff quotas are offered for tender and are freely transferable. They will be expanded automatically each year until they lapse on June 30, 1995, when the tariff quota system for textiles, clothing, and footwear will lapse. The tariff quota system for cheese and curd will lapse on June 30, 1992.

For many products, imports are allowed only if written authorization is obtained from the relevant authorities or if certain regulations are complied with. The range of goods subject to control include narcotic, psychotropic, and therapeutic substances, firearms and certain weapons, particular chemicals, certain primary commodities, some glazed ceramic ware, and various dangerous goods. These controls are maintained mainly to meet health and safety requirements; to meet certain requirements for labeling, packaging, or technical specifications; and to satisfy certain obligations arising from Australia’s membership in international commodity agreements.

Australia’s antidumping procedures have been simplified under the revised Customs Tariff (Antidumping) Act of 1988. They provide for stricter conditions for demonstrating the causal link between dumping and material injury to domestic industries. Industries that use imported products and other interested parties may also make submissions to the inquiry. Antidumping duties and undertakings will lapse automatically after three years, although domestic industries may renew the antidumping action. In special circumstances, antidumping actions may be introduced retrospectively or in anticipation of the arrival of dumped or subsidized goods. The Antidumping Authority was established to advise the Government on these actions, although the Australian Customs Service remains responsible for the preliminary investigation of a complaint.

Under the terms of the Australia-New Zealand Closer Economic Relations and Trade Agreement (Anzcerta), almost all goods produced in New Zealand are imported duty free, and quantitative restrictions were phased out to achieve free trade in goods from July 1, 1990. Imports of motor vehicles from New Zealand were subject to a customs tariff until January 1, 1990. Antidumping actions against imports from New Zealand will not be taken after July 1, 1990, with existing antidumping actions against New Zealand firms being terminated on this date. Actions will be taken under domestic trade practices legislation if it is considered necessary to redress unfair competition.

The South Pacific Regional Trade and Economic Cooperation Agreement (Sparteca) provides for duty-free and unrestricted access to Australian and New Zealand markets for most of the products exported by the member countries.4

Developing countries obtain tariff preferences on their exports to Australia under the Australian System of Tariff Preference. Since 1986, a uniform preferential margin of 5 percentage points on dutiable goods has been set for all developing countries; where the general tariff rate is below 5 percent, imports from developing countries enter duty free. The scheme was fully implemented during 1990.

Payments for Invisibles

Payments for invisibles are unrestricted, except for transactions involving Kuwait and Iraq. (See section on Administration of Control, above.)

Travelers may take out of Australia unlimited amounts of Australian currency and of foreign currency notes purchased from authorized dealers. Travelers who are not residents of Australia may also take out without restriction any amount in foreign currency they brought into Australia. Persons leaving Australia with Australian or foreign currency notes exceeding $A5,000 must complete a report form in terms of the Cash Transaction Reports Act; these forms are available at ports or airports from Australian Customs.

The Anzcerta also provides, through a protocol, for the liberalization of the trade in services between Australia and New Zealand, subject to the foreign investment policies of both countries. In addition, certain service activities are excluded from the agreement. Among Australia’s list of exclusions are telecommunications, banking, airport services and aviation, coastal shipping, media, and postal services. The operation of the trade-in-services protocol was reviewed in December 1990 at the technical level, and the two countries are considering the outcome of that review.

Exports and Export Proceeds

The export regime is designed to encourage the relatively unrestricted exports of Australian products. Export prohibitions and restrictions in effect are designed to ensure quality control over specified goods; administer trade embargoes and meet obligations under international arrangements; restrict the export of certain defense goods; regulate the export of goods that contain high technology and have dual civilian/military application;5 and maintain adequate measures of control over designated cultural property, resources, and flora and fauna. There are no formalities regulating the disposal of export proceeds.

The Government also exercises export controls to secure national conservation objectives and to respond to specific market distortions abroad that have an impact on the export prices of certain products. The Government abolished or amended export controls on many mineral and petroleum products in 1987–88. Remaining controls apply mainly to food and agricultural products.

In order to address distortions in the bauxite and alumina, coal, and iron sectors, the Government monitors trade in these products and retains the authority to withhold export approval for shipments at prices not in line with market conditions. Export controls apply to uranium to ensure compliance with the Government’s commercial and non-proliferation policy obligations. Restrictions also apply on the exportation of certain other nuclear and related materials. Export restrictions on copper scrap and copper alloy scrap were lifted in 1990. The exportation of crude oil and petroleum products to South Africa is banned.

Licenses are required for the exportation of unprocessed wood, including woodchip. Licensing requirements are intended to ensure compliance with the Government’s policy regarding environmental protection, elimination of market distortions, and the promotion of further processing in Australia.

Australia participates in several voluntary restraint agreements or similar restraint agreements affecting its exports. These comprise limits on exports of sheep meat and goat meat as well as high-quality “Hilton” beef to the EC, bovine meat and goat meat to Japan, and bovine meat and steel products to the United States. Australia has also entered into a voluntary export restraint with the United States on steel.

The Australian Dairy Corporation administers export control powers in relation to prescribed dairy products under the provisions of the Dairy Produce Act. All exporters of controlled dairy products must be licensed. This system allows the control of exports to markets where quantitative restrictions apply and ensures that export prices do not fall below minimum prices agreed under the GATT for these products. Exports of red meat and livestock can only be made by persons or firms licensed by the Australian Meat and Livestock Corporation (AMLC). The AMLC has the power to engage in export trading in its own right, and may introduce arrangements to control Australian exports to that market to observe quantitative restrictions in any particular market.

Proceeds from Invisibles

Earnings from invisibles in foreign currencies may be retained or sold for Australian dollars. Travelers may bring in any amount in foreign or domestic bank notes, subject to completion of a report form for amounts exceeding $A5,000. (See section on Payments for Invisibles, above.)

Capital

The vast majority of transactions involving transfers of interest-bearing capital from Australia and nonresident investments in Australia may be undertaken without formality. The only exceptions are that foreign governments, their agencies not similar to private sector commercial entities, and international organizations are not permitted to borrow in Australia. Moreover, while there are no limits on the interest-bearing investments of international organizations or of foreign central banks and other monetary authorities, the Reserve Bank may determine an amount up to which the investment of foreign government monetary institutions (which also undertake commercial investments) will be regarded as having been undertaken for official foreign reserve management purposes. All investing agencies are expected to be stable holders of Australian dollar assets and to keep the Reserve Bank advised of their Australian dollar portfolios. Income derived by a foreign government from the conduct of commercial operations is not exempt from Australian taxation. Interest-bearing investments of a foreign government’s official foreign reserves are exempt from taxation under the principle of sovereign immunity.

The Government recognizes the substantial contribution foreign investment makes to the development of Australia’s industries and resources and has framed its policy with a view to encouraging direct investment that is consistent with the needs of the community. Under Australia’s foreign investment policy, certain types of proposals by foreign investors are subject to examination. These include: (1) acquisitions of substantial interests in existing Australian businesses with total assets of $A5 million or more ($A3 million or more for rural properties); (2) proposals for the establishment of new businesses involving total investments of $A10 million or more; (3) proposals for investment in the media irrespective of size; (4) direct investment by foreign government or their agencies irrespective of size; (5) acquisitions of nonresidential commercial real estate valued at $A5 million or more; and (6) proposals to acquire residential real estate irrespective of size (unless exempt under the regulations).

In most industry sectors, the Government approves proposals for the establishment of new businesses involving total investments of $A10 million or more and proposals for the acquisition of existing businesses with total assets valued at $A5 million or more ($A3 million or more if greater than half of the assets of the business are attributable to rural land) unless judged to be contrary to the national interest.

Certain restrictions apply in respect of proposed acquisitions of real estate but approval is normally granted to: (1) acquisitions of real estate for development; (2) purchases of vacant residential land (on condition that development occurs within 12 months) and home units and townhouses that are “off the plan” or under construction (on condition that no more than half of the units in any one development are sold to foreign interests; and (3) acquisitions of developed nonresidential commercial real estate, subject to 50 percent Australian equity participation (unless not available).

In applying the policy, the authorities make every effort to avoid unnecessary interference in normal commercial processes and recognize the special characteristics and circumstances that may arise in individual cases. The policy is nondiscriminatory as to the country of origin of investors, and the Foreign Investment Review Board, which acts as an independent source of advice to the Government on foreign investment matters, stands ready to assist and advise foreign investors in formulating their proposals.

Gold

Australia has no restrictions applying to owning, buying, selling, importing, or exporting gold and gold coins, with the exception of the importing and exporting of Krugerrand. If coins in excess of $A 5,000 are exported in any 12-month period, there is a customs reporting requirement under the Cash Transaction Reports Act of 1988.

Changes During 1990

Administration of Control

July 1. The foreign exchange regulations pertaining to tax screening and the taking out of Australia, by any person, of Australian notes and coins were abolished. The only regulation remaining is the requirement that foreign exchange dealers must be authorized by the Reserve Bank of Australia.

Imports and Import Payments

June 29. Restrictions on imports of copper scrap and copper alloy scrap were lifted.

July 1. Under the terms of the Anzcerta, all quantitative restrictions on imports from New Zealand were eliminated.

July 1. Antidumping procedures on trade between Australia and New Zealand ceased to be applicable under the Anzcerta.

July 31. The ban on the importation of uncooked frozen pork from Canada, maintained for health reasons, was lifted.

Austria

(Position on December 31, 1990)

Exchange Arrangement

The currency of Austria is the Austrian Schilling. Without assuming any formal obligations, the authorities aim at maintaining a stable relationship with the currencies participating in the European Monetary System (EMS). Forward transactions are permitted. Forward premiums and discounts are left to the interplay of market forces, and the Austrian National Bank does not intervene in the forward market or provide cover for commercial banks’ forward positions. On December 31, 1990, the authorized banks’ buying and selling rates for the U.S. dollar were S 10.627 and S 10.727, respectively, per US$1. There are no exchange taxes or subsidies.

Austria formally accepted the obligations of Article VIII, Sections 2, 3, and 4 of the Fund Agreement, as from August 1, 1962.

Administration of Control

The Austrian National Bank administers exchange control and issues exchange licenses where required. Most exchange transactions are effected through Austrian banks authorized to implement the exchange control regulations.

Export and import licenses required for goods by the Foreign Trade Act 1984, as amended in 1988, have to be issued by the Federal Ministry for Economic Affairs with respect to industrial products and by the Federal Ministry of Agriculture and Forestry with respect to agricultural products. In instances where the customs authorities are authorized to issue import and export licenses on behalf of the ministries mentioned above, these are granted without delay or formal application (automatic licensing) at the time of the clearance of goods through customs.

Effective August 13, 1990, all exchange and trade transactions with the Government of Iraq and persons within the territories of Iraq and Kuwait have been subject to special authorization. In accordance with the Fund’s executive Board Decision No. 144-(52/51), adopted on August 14, 1952, Austria notified the Fund on August 22, 1990, that certain restrictions were imposed on the making of payments and transfers for current international transactions to the Government of Iraq and persons within the territories of Iraq and Kuwait.

Prescription of Currency

Settlements with all countries may be made either in foreign currencies or through Free Schilling Accounts.

Nonresident Accounts

There is only one category of nonresident account in schillings, namely, Free Schilling Accounts. These accounts may be freely opened by Austrian banks on behalf of nonresidents. They may be freely credited with proceeds from the sale of foreign currencies by a nonresident to an authorized bank, as well as with payments permitted by the National Bank on the basis of a general or individual authorization; they may be freely debited for payments to Austrian residents. Balances may be freely converted into any foreign currency. Transfers between these accounts are free.

Nonresidents may also maintain nonresident accounts in foreign currencies. These accounts may be debited for the same purposes as Free Schilling Accounts and are subject to the same conditions.

Imports and Import Payments

All commodities not included in the Annexes to the Foreign Trade Law are free of import licensing and may be imported from any country without quantitative restriction. For many goods, licenses are granted by customs at the time of clearance, irrespective of the country from which they are imported.1 Nearly all imports from General Agreement on Tariffs and Trade (GATT) countries, their associated territories, and certain other countries2 have been liberalized. Austria’s GATT liberalization is applied worldwide, except in respect of certain textiles and clothing as defined in Article XII, Section 1 of the Arrangement Regarding International Trade in Textiles. The importation of coffee is governed by the international agreement for this commodity. Non-liberalized imports may be obtained under various procedures: namely, state trading, global quotas, bilateral quotas, and discretionary licensing. State trading covers tobacco in any form, ethyl alcohol, and salt. Global quotas apply to specified imports from GATT countries; such quotas apply only to potatoes, wheat, cornstarch, preserved meat, and wine. Discretionary individual licensing is applicable to all other private imports not covered by the procedures listed above, including imports of certain textiles from specified countries. Licenses are usually granted if the imports concerned do not adversely affect domestic industries.

Grains, milk and butter, and cattle, pigs, sheep, goats, and horses for slaughter, and products from these animals for human consumption are imported in accordance with a special system of controls and regulations maintained under the Agricultural Marketing Law and the law governing livestock farming and trading, and the marketing of livestock produce (Viehwirtschaftsgesetz). Certain agricultural products are subject to import levies.

In some cases, import licenses are issued only to importers who have received export certificates from the countries of their trading partners. Import licenses are not transferable and are valid for six months, but this period may be extended for periods of three months at a time. Payments for imports from, and originating in, countries with which Austria makes settlements in convertible currencies do not require exchange licenses. Under the 1982 Customs Preference Act, which covers the second ten-year period of the Austrian Scheme of Generalized Preferences, special treatment is provided for imports from developing countries, and in particular, 31 least-developed countries as defined by the UN General Assembly; the list of products eligible for preferential treatment has also been extended under the Act.

Payments for Invisibles

Residents are permitted to conclude transactions with nonresidents involving invisible payments without restriction.

Residents traveling abroad for tourism purposes may purchase foreign exchange from authorized banks or obtain short-term advances from nonresidents without limitation; if the amount exceeds the equivalent of S 100,000, the Austrian National Bank must be informed. In addition, Austrian residents may arrange for trips abroad through travel agents and pay in schillings. The use of credit cards abroad for travel expenditures is permitted. Persons leaving Austria may take with them Austrian or foreign bank notes and coins in any amount.

Exports and Export Proceeds

Licenses for exports regulated under the Foreign Trade Law have to be obtained from the relevant ministry or, at the time of clearance, from the customs authorities. For most exports, licenses are not required. Export licenses are issued with due consideration for the provisions of relevant bilateral trade agreements and the fulfillment of quotas established in accordance with such agreements, and for the needs of the Austrian economy.

Export proceeds may be deposited in accounts with authorized banks. Such deposits in foreign currencies may be used freely for authorized payments abroad.

Proceeds from Invisibles

Proceeds from invisibles may be deposited with an authorized bank and may subsequently be used in the same way as proceeds accruing from exports. Persons entering Austria may import Austrian or foreign bank notes and coins without limit.

Capital

The acquisition by nonresidents of Austrian securities and shares and participation by nonresidents in Austrian companies are unrestricted. The acquisition of real estate is subject to approval by local authorities.

Foreign banks cannot establish branches in Austria, except through an enterprise incorporated in Austria. Nonresidents are also not permitted to invest in the auditing, mining, energy, transport, or legal sectors, nor are they permitted to acquire a share of 25 percent or more in ships registered in Austria.

Loans and credits extended by nonresidents to residents, including those in schillings from Free Schilling Accounts, require prior approval by the National Bank, except for shareholders granting to their own enterprises. Domestic banks may freely grant credits and loans to nonresidents.

The National Bank permits the transfer abroad of (1) proceeds from the liquidation of various foreign investments in Austria (shares or participations in Austrian enterprises, Austrian securities, and real estate in Austria); and (2) repayments by residents of foreign loans and credits.

The transfer of funds owned by emigrants and payments due to nonresidents on account of dowries, inheritances, and settlements under certain agreements between heirs are permitted. Residents may also grant loans to nonresidents except to foreign banks and financial institutions.

Residents are allowed to acquire participation rights in foreign companies, associations, and other enterprises, and to establish, acquire, or extend foreign agencies or individually owned firms; earnings accruing from such investment may be freely used. Residents are also permitted to acquire real estate abroad.

Residents are allowed to purchase from nonresidents, without restriction, Austrian and foreign securities; for foreign securities and Austrian external bonds, the transactions must be carried out through authorized banks, and the securities purchased must be kept with such banks, with the exception of securities listed on a domestic stock exchange. Residents may sell foreign securities and Austrian external bonds to nonresidents only through an Austrian authorized bank.

Gold

Effective January 1, 1990, all transactions in gold were liberalized. Where the Foreign Trade Law prescribes import licenses for gold imports (e.g., for gold sheets), the license is issued either by the Ministry for Economic Affairs to industrial users or by the customs office concerned, which issues licenses automatically for certain gold imports within its jurisdiction.

Changes During 1990

No significant changes occurred in the exchange and trade system.

The Bahamas

(Position on December 31, 1990)

Exchange Arrangement

The currency of the The Bahamas is the Bahamian Dollar, which is pegged to the U.S. dollar, the intervention currency, at B$1 = US$1. The U.S. dollar circulates concurrently with the Bahamian dollar. The official buying and selling rates for the U.S. dollar are B$1.0025 and B$1.0040, respectively, per US$1. Buying and selling rates for the pound sterling are also officially quoted, the buying rate being based on the New York market midrate, and the selling rate, 0.5 percent above the buying rate. The Central Bank of The Bahamas deals only with commercial banks. For transactions with the public, commercial banks are authorized to charge a commission of 0.50 percent buying and 0.75 percent selling per US$1, and 0.50 percent buying or selling per £ stg. 1. These charges are additional to the Central Bank’s charges. A stamp tax of B$0.25 is applied to all outward remittances when the amount is B$30 or less. A further tax of B$0.25 is levied on every additional B$30 or fraction thereof.

There is also a market in which “investment currency”1 may be negotiated between residents through an investment currency dealer at freely determined rates, usually attracting a premium over the official market rate.

Commercial banks may provide forward cover for residents of The Bahamas where the resident is due to receive or has to pay foreign currency under a firm contractual commitment. Commercial banks may not, however, sell foreign currency spot to be held on account in cover of future requirements unless the Central Bank’s permission has been given. Authorized dealers may deal in foreign currency forward with nonresidents without prior approval from the Central Bank. Commercial banks may deal among themselves forward at market rates and must ensure when carrying out all forward cover arrangements that their open position carried either spot or forward does not exceed the equivalent of B$500,000 long or short. There are no forward cover arrangements in the official sector.

The Bahamas formally accepted the obligations of Article VIII, Sections 2, 3, and 4 of the Fund Agreement, as from December 5, 1973.

Administration of Control

Exchange control is administered by the Central Bank, which delegates to authorized dealers the authority to approve allocations of foreign exchange for certain current payments; the approval authority for import payments, travel facilities, and cash gifts is not delegated, except in the Family Islands.2 Import and export licenses are not required except for crawfish, conch, arms and ammunition, and, in certain cases, industrial gold. The Department of Agriculture and Fisheries issues export licenses for crawfish and conch, and the Police Department issues import and export licenses for arms and ammunition.

Prescription of Currency

The exchange control system of The Bahamas makes no distinction between foreign territories. Settlements with residents of foreign countries may be made in any foreign currency3 or in Bahamian dollars through an External Account.

Nonresident Accounts

Authorized banks may freely open External Accounts denominated in Bahamian dollars for winter residents and for persons with residency permits who are not gainfully employed in The Bahamas. With the prior approval of the Central Bank, authorized banks may also open External Accounts in Bahamian dollars for nonresident companies that have local expenses in The Bahamas and for nonresident investors. External Accounts in Bahamian dollars are normally funded entirely from foreign currency originating outside The Bahamas, but income on registered investments may also be credited to these accounts with the Central Bank’s approval. Balances may be converted freely into foreign currency and transferred abroad.4

Accounts that are credited with funds that may not be placed at the free disposal of nonresidents are designated Blocked Accounts. These are held mainly by emigrants. Where the value of an emigrant’s assets exceeds B$25,000, the excess is credited to a Blocked Account. Balances on Blocked Accounts are transferable through the official exchange market after four years or through the investment currency market at any time; they may also be invested, with the Central Bank’s approval, in certain resident-held assets or be spent locally for any other purpose.

Imports and Import Payments

The importation of certain commodities is prohibited or controlled for health, social, or humanitarian reasons. All other goods may be imported without a license. The prior approval of the Central Bank is required for making payments for imports, irrespective of origin;5 this approval is normally given automatically upon submission of pro forma invoices or other relevant documents proving the existence of a purchase contract. Import duties vary from zero to 200 percent, depending on the type of good. Customs entries are subject to a stamp tax at a rate of 1.5 percent.

Payments for Invisibles

There are no restrictions on current payments. Authorized dealers can make payments to nonresidents on behalf of residents for certain services and other invisibles within specified limits. Such payments include freight, ships’ disbursements, commissions, royalties, education, and insurance payments. Residents are entitled, on application to the Central Bank, to a foreign currency travel allowance equivalent to B$1,000 a person a year for tourist travel and to B$5,000 a person a year for genuine business or professional travel. The allowance of B$1,000 for tourist travel excludes the cost of fares and travel services, which are normally obtained against payment in Bahamian dollars to a travel agent in The Bahamas. Applications for foreign exchange in excess of these amounts must be referred to the Central Bank, which approves bona fide applications. Foreign exchange facilities obtained for travel may not be retained abroad or be used abroad for purposes other than travel; any unused balance must be surrendered within a week of issue or, if the traveler is still abroad, within one week of his return to The Bahamas.

Subject to adequate documentary evidence, an education allowance of up to B$10,000 a person an academic year is normally granted upon application. Applications for facilities in excess of this amount are referred to the Central Bank. Temporary residents may, with the approval of the Central Bank, remit up to 50 percent of their wages and salaries, but where commitments outside The Bahamas are larger than 50 percent of wages and salaries, additional amounts may be remitted. Temporary residents may also repatriate all of their accumulated savings resulting from their employment in The Bahamas.

A traveler may take out Bahamian bank notes not exceeding B$70 in value; Bahamian travelers may not take out notes of any other country, except with the specific approval of the Central Bank.

Exports and Export Proceeds

Export licenses are not required except for crawfish, conch, and arms and ammunition. The proceeds of exports must be offered for sale to an authorized dealer as soon as the goods have reached their destination or within six months of shipment; alternatively, export proceeds may be used in any manner acceptable to the Central Bank.

Proceeds from Invisibles

Residents are obliged to collect without delay all amounts due to them from nonresidents and to offer the foreign currency proceeds for sale to an authorized dealer without delay, but these requirements are seldom enforced. There are no restrictions on the importation of foreign bank notes. The importation of domestic bank notes is subject to the approval of the Central Bank.

Capital

All capital transfers to countries outside The Bahamas require exchange control approval, and outflows of resident-owned capital are restricted. Inward transfers by nonresidents do not require exchange control approval, although the subsequent utilization of the funds in The Bahamas may require authorization. The permission of the Central Bank is required in respect of any action whereby nonresidents acquire control of or participate in an incorporated company controlled by residents. Resident individuals and companies require the specific permission of the Central Bank to maintain foreign currency bank accounts abroad.6

The use of official exchange for direct investment abroad is limited to B$100,000 or 30 percent of the total cost of the investment, whichever is greater, for investments from which the additional benefits expected to accrue to the balance of payments from export receipts, profits, or other earnings within 18 months of the investment will at least equal the total amount of investment and will continue thereafter. Investments abroad that do not meet the above criteria may be financed by foreign currency borrowed on suitable terms subject to individual approval by the Central Bank, the purchase of foreign currency in the investment currency market, or the use of retained profits of foreign subsidiary companies. Permission is not given for investments that are likely to have adverse effects on the balance of payments.

In principle, inward investment by nonresidents is unrestricted. However, the consent of the Central Bank is required for the issue or transfer of shares in a Bahamian company to a nonresident and for the transfer of control of a Bahamian company to a nonresident. Special procedures apply to investments in the form of purchase of real property, as specified under the Immovable Property (Acquisition by Foreign Persons) Act, 1981, which came into effect on November 1, 1983: foreigners intending to purchase land must apply to the Foreign Investments Board, a group of designated ministers of the Government. If such application is approved, payment for the purchase may be made either in Bahamian dollars from an External Account or in foreign currency.

For all investments with approved status, permission is given upon application for the transfer of profits and dividends representing earned trading profits and investment income. In the event of a sale or liquidation, nonresident investors are permitted to repatriate the proceeds, including any capital appreciation, through the official foreign exchange market.

Residents require the specific approval of the Central Bank to buy property outside The Bahamas; such purchases, if for personal use, can be made only with investment currency, and approval is limited to one property for each family. Any incidental expenses connected with the purchase of property for personal use may normally be met with investment currency; expenditures necessary for the maintenance of the property or arising directly from its ownership may, with permission, be met with foreign currency bought at the current market rate in the official foreign exchange market.

The transfer of legacies and inheritances due to nonresident beneficiaries under wills or intestacies of persons who were Bahamian residents at the time of their death is permitted. However, permission is not normally given for Bahamian residents to settle any property, other than by will, for the benefit of nonresidents, in line with the provisions of the Immovable Property (Acquisition by Foreign Persons) Act, 1981.

Residents may make cash gifts to nonresidents not exceeding a total of B$1,000 a donor each year. This amount may be exceeded, with permission, in special circumstances.

Foreign nationals domiciled in The Bahamas, even if considered residents for exchange control purposes, may be eligible for a measure of exemption from certain exchange control obligations, notably with respect to the mandatory deposit of foreign currency securities and the surrender of certain other foreign capital assets.

Nonresident buyers of Bahamian securities must pay for such purchases in Bahamian dollars from an External Account, in funds eligible for credit to an External Account, or in Bahamian dollars arising from the sale of foreign currency in the official foreign exchange market; interest, dividends, and capital payments on such securities may not be remitted outside The Bahamas unless the holdings have been properly acquired by nonresidents. Bahamian residents are not permitted to purchase foreign currency securities with official exchange or out of export proceeds or other current earnings; payment must be made with investment currency. All purchases, sales, and switches of foreign currency securities in The Bahamas and all switches in foreign currency securities by Bahamian residents, wherever the switch takes place, require permission from the Central Bank, and all transactions must take place through authorized agents.7 All foreign securities purchased by residents of The Bahamas must be held by or to the order of an authorized agent. Securities of other former Sterling Area countries are considered foreign currency securities, and sales proceeds of such securities held by residents, if registered at the Central Bank by December 31, 1972, are eligible for sale in the investment currency market; securities not so registered may be offered for sale at the official rate of exchange.

Residents leaving the country with the intention of residing permanently outside The Bahamas are redesignated upon departure as nonresidents. Under normal rules persons leaving The Bahamas to take up residence elsewhere may transfer, at the current market rate in the official foreign exchange market, up to B$25,000 of their Bahamian dollar assets to the new country of residence and may also take normal household and personal effects with them. When the total value of their Bahamian dollar assets is over B$25,000, the excess is transferable through the official exchange market after four years, or through the investment currency market at any time. After a person has been redesignated a nonresident, income accruing from his assets remaining in The Bahamas is normally remittable at the current market rate in the official foreign exchange market.

Residents other than authorized banks require permission to borrow foreign currency from nonresidents, and authorized dealers are subject to exchange control directions with regard to their lending of foreign currency to residents. Residents also require permission to pay interest on, and to repay the principal of, foreign currency loans by conversion of Bahamian dollars. When permission is granted for residents to accept foreign currency loans, such permission is normally conditional upon the currency being offered for sale without delay to an authorized dealer, unless the funds are required to meet payments to nonresidents for which permission has been specifically given.

A resident company that is wholly owned by nonresidents is not normally allowed to raise working capital in Bahamian dollars unless such funds are a small proportion of the total investment. If the company is partly owned by residents, the amount of such local currency borrowing is normally determined in relation to the resident interest in the equity of the company. Banks and other lenders resident in The Bahamas require permission before they extend loans in domestic currency to any corporate body (other than a bank) that is resident in The Bahamas and is controlled by any means, whether directly or indirectly, by nonresidents. However, companies that are set up by nonresidents primarily to import and distribute products manufactured outside The Bahamas are not normally allowed to borrow Bahamian dollars from residents either for fixed or working capital but must provide all their finance in foreign currency; borrowings in a foreign currency are normally permitted on application.

Gold

Residents of The Bahamas other than authorized dealers are not permitted to hold or deal in gold bullion. However, residents who are known users of gold for industrial purposes may, with the approval of the Central Bank, meet their current industrial requirements. Authorized dealers are not required to obtain licenses for bullion or coins. Commercial imports of gold jewelry do not require a license. There is no import duty on gold bullion or gold coins; however, an import duty of 35 percent is imposed on imports of gold jewelry from all sources. A 1.5 percent stamp tax payable to customs is also payable on commercial shipments of gold jewelry from any source. There is no restriction on residents’ acquisition or retention of gold coins. The Bahamas has issued commemorative coins in denominations of B$10, B$20, B$50, B$100, B$150, B$200, B$250, B$1,000, and B$2,500 in gold, and B$10 and B$25 in silver; these are legal tender but do not circulate.

Changes During 1990

Exchange Arrangement

December 6. The rate of the stamp tax was raised to B$0.25 from B$0.10.

Bahrain

(Position on December 31, 1990)

Exchange Arrangement

The currency of Bahrain is the Bahrain Dinar, which is pegged to the SDR at the rate of BD 0.476190 = SDR 1. The exchange rate for the Bahrain dinar in terms of the SDR may be set within margins of plus or minus 7.25 percent of this fixed relationship. In practice, however, the Bahrain dinar has maintained a relatively stable relationship with the U.S. dollar, the intervention currency, and since December 1980, the exchange rate has remained unchanged at BD 1 = US$2.6596. With the appreciation of the U.S. dollar against other major currencies in the early 1980s, the exchange rate of the dinar in terms of the SDR remained outside the 7.25 percent margin throughout the period May 1981-June 1986. The exchange rate of the dinar in terms of the SDR returned to within the 7.25 percent margin in July 1986 and remained within this margin during 1989/90. With the depreciation of the U.S. dollar against other major currencies, the exchange rate of the dinar in SDR terms has been outside the 7.25 percent margin for practically all of the second half of 1990. The middle rate of the Bahrain dinar for the U.S. dollar is quoted by the Bahrain Monetary Agency (BMA) and has remained unchanged since December 1980.

The BMA provides daily recommended rates for banks dealing with the public for amounts up to BD 1,000 in U.S. dollars, pounds sterling, and deutsche mark, based on the latest available U.S. dollar rates against those currencies. On December 31, 1990, the BMA’s buying and selling rates for the U.S. dollar were BD 0.375 and BD 0.377, respectively, per US$1. The BMA does not deal with the public. In their dealings with the public, commercial banks are required to use the BMA’s rates for U.S. dollars, pounds sterling, and deutsche mark, but they are authorized to charge an exchange commission of 2 per mill (special rates of commission apply for transactions up to BD 1,000). The banks’ rates for other currencies are based on the BMA’s U.S. dollar rates and the New York market rate for the currency concerned against the U.S. dollar.

There are no taxes or subsidies on purchases or sales of foreign exchange. There are no arrangements for forward cover against exchange rate risk operating in the official sector, while the BMA monitors forward exchange transactions of commercial banks through the open position of commercial banks’ monthly returns.

Bahrain formally accepted the obligations of Article VIII, Sections 2, 3, and 4 of the Fund Agreement, as from March 20, 1973.

Administration of Control

The Agency is the exchange control authority, but there is no exchange control legislation in Bahrain. No import or export licenses are required (except for arms and ammunition, and alcoholic beverages). However, importers and exporters must be registered with the commercial registry maintained by the Ministry of Commerce and Agriculture and must be members of the Bahrain Chamber of Commerce and Industry.

Prescription of Currency

All settlements with Israel are prohibited. Otherwise, no requirements are imposed on exchange payments or receipts.

Nonresident Accounts

A distinction is made between accounts held by residents and those held by nonresidents. Offshore banking units are not normally permitted to hold resident accounts.

Imports and Import Payments

All imports from Israel are prohibited, as are products manufactured by foreign companies that are blacklisted by the League of Arab States. Imports of a few commodities are prohibited from all sources for reasons of health, public policy, or security. Imports of cultured pearls are also prohibited. Import licenses are required for arms and ammunition and alcoholic beverages. Rice and sugar are, in practice, imported only by the Bahrain Import-Export Company. The rates of customs tariffs range between 5 percent and 10 percent on most commodities; the customs tariffs on vehicles, alcoholic beverages, and tobacco are 20 percent, 125 percent, and 50 percent, respectively. Government procurements are required to give preference to goods produced in Bahrain and within the member countries of the Cooperation Council for the Arab States of the Gulf (GCC), provided that the prices of these goods are within specified margins of the prices of imported substitutes; the margins are 10 percent for goods produced in Bahrain and 5 percent for goods produced within the member countries of the GCC. Foreign exchange for payments in respect of permitted imports may be obtained freely.

Exports and Export Proceeds

All exports to Israel are prohibited, and exports of certain refined petroleum products to South Africa have been suspended. Otherwise, all commodities may be exported freely. No requirements are attached to receipts from exports or re-exports; the proceeds need not be repatriated or surrendered, and they may be disposed of freely, regardless of the currency involved.

Payments for and Proceeds from Invisibles

Payments for and proceeds from invisibles are not restricted, except that payments must not be made to or received from Israel. Travelers may bring in or take out of Bahrain any amount in domestic or foreign bank notes.

Capital

No exchange control requirements are imposed on capital receipts or payments by residents or nonresidents, but payments may not be made to or received from Israel. Profits from foreign investments in Bahrain may be transferred abroad freely, with the exception that, under Article 72 of the Monetary Agency Law, the banks are subject to special rules regarding the payment of dividends and the remittance of their profits. Licensed offshore banking units may freely engage in transactions with nonresidents; transactions with residents are not normally permitted. The stock exchange began operations on January 2, 1989, and trading on the floor of the exchange began on June 17, 1989.

Gold

Residents may freely purchase, hold, and sell gold in any form, at home or abroad. Imports and exports of gold in any form are freely permitted and do not require a license. Imports of gold jewelry are subject to a 10 percent customs duty, but gold ingots are exempt. Brokerage business in gold (as well as other commodities) requires approval from the BMA before registering with the Ministry of Commerce and Agriculture; such business is subject to a minimum deposit requirement equivalent in the case of gold to BD 3,000 or 10 percent of the contract value, whichever is higher.

Changes During 1990

Capital

June 16. The maximum recommended interest rates for BD deposits with a maturity of six months or less were canceled and banks were allowed to offer rates of their choice.

Bangladesh

(Position on December 31, 1990)

Exchange Arrangement

The currency of Bangladesh is the Bangladesh Taka. The value of the taka in terms of the U.S. dollar, the intervention currency, is determined with reference to a weighted basket consisting of the currencies of the country’s major trading partners. On December 31, 1990, the official (spot) middle rate of the taka in terms of the U.S. dollar was Tk 35.79 = US$1, and the spot buying and selling rates of Bangladesh Bank (the central bank) for authorized dealers were Tk 35.74 and Tk 35.84, respectively, per US$1. On the same date, the spot buying and selling rates (telegraphic transfers) of authorized dealers were Tk 35.6987 and Tk 35.8813, respectively, per US$1. Exchange rates for currencies other than the U.S. dollar are based on the daily closing rates of the U.S. dollar in New York for the currencies concerned.

Different effective exchange rates arise from the operation of the Secondary Exchange Market (SEM), which comprises the Wage Earners’ Scheme (WES), and the Export Performance Benefit Scheme (XPB). Under the WES, foreign exchange earnings remitted by workers abroad, tourist receipts, and most service receipts are sold at a rate determined by a committee of authorized foreign exchange dealers (mainly banks) constituted by Bangladesh Bank. Under the XPB scheme, exporters and certain indirect exporters of nontraditional items are eligible to receive an exchange rate premium, which is set to equal the difference between the WES rate (in taka per U.S. dollar) and the official rate. Each eligible item receives a coefficient of either 40 percent, 70 percent, or 100 percent of the XPB, depending on that item’s domestic value added and the priority that the Government places on encouraging its export. At the end of 1990, 71 items were eligible for 100 percent of the XPB, covering domestic value added of 70 percent and higher. A coefficient of 70 percent was given to 40 items with a value added of between 50 percent and 69 percent. However, light engineering products, machine tools and equipment, cast-iron products, household electrical appliances, and electric cables with a value added of 60 percent and above, between 40 percent and 59 percent, and less than 40 percent were given coefficients of 100 percent, 70 percent, and 60 percent, respectively. Exports of garments and leather were subject to a schedule of coefficients. Garments received 70 percent XPB if they were made from imported raw materials, and 100 percent XPB if domestic materials were used. For leather items, the coefficients were 40 percent for products using imported raw materials and 100 percent for products using domestic materials. Seventy percent XPB was given to exports of intermediate textile products (i.e., fabric) and to domestic sales of intermediate products that were finished locally and then exported. All other nontraditional exports, except wet-blue leather, received 40 percent XPB. On December 31, 1990, the middle exchange rate in the secondary market was Tk 36.505 per US$1.

Forward facilities at authorized banks are available in all approved foreign currencies and in currencies of the member countries of the Asian Clearing Union (ACU),1 covering periods of up to six months for export proceeds and import payments and covering up to three months for remittances of surplus collection of foreign shipping companies and airlines. The authorized banks may in their turn take forward cover in the interbank market or from Bangladesh Bank against transactions for which they have entered into forward contracts with their customers. Authorized banks may also take forward cover for one month from Bangladesh Bank against sight export bills negotiated by them, and enter into forward contracts with their overseas branches/correspondents against underlying export or import transactions. Authorized banks are permitted to retain relatively small working balances with their foreign correspondents, and currency swaps are not permitted unless they are against underlying approved commercial transactions. Forward transactions of Bangladesh Bank are confined to purchases and sales of deutsche mark, French francs, Japanese yen, pounds sterling, U.S. dollars, and all currencies of the member countries of the ACU.

Administration of Control

Exchange control is administered by Bangladesh Bank in accordance with general policy formulated in consultation with the Ministry of Finance. The 7 foreign and 11 domestic commercial banks (of which 3 are nationalized), together with 3 joint-venture banks and 4 specialized financial institutions, have been appointed authorized dealers (authorized banks) in foreign exchange. The Chief Controller of Imports and Exports of the Ministry of Commerce is responsible for registering exporters and importers and for issuing the Import Policy Order (IPO). Registered importers can make their imports in terms of the IPO against letters of credit. Letters of credit authorization forms are issued by authorized dealers and do not require a separate import license. Certain trade transactions are conducted through state-trading agencies, including the Trading Corporation of Bangladesh (TCB).

In accordance with the Fund’s Executive Board Decision No. 144-(52/51), adopted on August 14, 1952, Bangladesh notified the Fund on October 29, 1990 that certain restrictions were imposed on the making of payments and transfers for current international transactions to the Government of Iraq and persons within the territories of Iraq and Kuwait.

Prescription of Currency

Settlements with all countries are subject to exchange control. Settlements with countries with which Bangladesh has commodity exchange agreements2 normally must be effected through nonconvertible U.S. dollar or pound sterling accounts for goods and services specified in the agreements up to agreed value limits; settlement with these countries can be made in convertible currencies for goods and services not specified in the agreements or beyond the value ceilings specified in the agreements. Payments to, and receipts from, the other member countries of the ACU in respect of current transactions must be effected in terms of the Asian Monetary Unit (AMU) through the Clearing Union.3 Settlements with other countries normally take place in convertible currencies and, in a few cases, through Nonresident Taka Accounts. Payments for imports may be made to the country of origin of the goods or to any other country (with the exception of those countries from which importation is prohibited); they may be made (1) in taka for credit to a nonresident bank account in Bangladesh of the country concerned; (2) in the currency of the country concerned; or (3) in any freely convertible currency. Export proceeds must be received in freely convertible foreign exchange or in taka from a Nonresident Taka Account. All settlements with Israel and South Africa are prohibited.

Nonresident Accounts

The accounts of individuals, firms, or companies resident in countries outside Bangladesh are designated Nonresident Accounts. All such accounts are regarded for exchange control purposes as accounts related to the country in which the account holder is a permanent resident.4 Nonresident Foreign Currency Accounts may be opened by authorized dealers without the prior approval of Bangladesh Bank in respect of Bangladesh nationals/foreign nationals who reside abroad and in respect of foreign firms operating abroad. Specified debits and credits to Nonresident Accounts may be made by authorized dealers without the prior approval of Bangladesh Bank during the absence of the account holder from Bangladesh. Certain other debits and credits may be made without the prior approval of Bangladesh Bank but are subject to reporting ex post.

Convertible Taka Accounts. All diplomatic missions operating in Bangladesh, their diplomatic officers, home-based members of the mission staffs, international nonprofit humanitarian organizations functioning in Bangladesh and their expatriate employees, foreign contractors and consultants engaged in specific projects, and foreign nationals residing in Bangladesh regardless of their status are allowed to maintain Convertible Taka Accounts. These accounts may be credited freely with the proceeds of inward remittances in convertible foreign exchange and may be debited freely and at any time for local disbursements in taka, as well as for remittances abroad in convertible currencies. Transfers between Convertible Taka Accounts are freely permitted. Foreign missions and embassies, their expatriate personnel, foreign airline/shipping companies, and international nonprofit organizations in Bangladesh may open interest-bearing accounts, but the interest earned thereon can be disbursed only in local currency.

Wage Earners’ Scheme. Under the WES, Bangladesh nationals and persons of Bangladesh origin who are working abroad are permitted to open Foreign Currency Accounts denominated in pounds sterling or U.S. dollars. These accounts may be credited with (1) remittances in convertible currencies received from abroad through normal banking and postal channels; (2) proceeds of convertible currencies (currency notes, traveler’s checks, drafts, etc.) brought into Bangladesh by the account holders, provided they were declared to customs upon arrival in Bangladesh; (3) transfers from other Foreign Currency Accounts opened under the WES; and (4) transfers from Nonresident Foreign Currency Deposit Accounts. The accounts may be debited, without restriction, but must be reported to the Bangladesh Bank, for the following purposes: (1) all local disbursements; (2) transfers to other Foreign Currency Accounts opened under the WES; (3) payment for imports of specified goods against letters of credit; (4) payment of bank commissions and other bank charges connected with imports; and (5) travel expenditures abroad for business or private purposes up to prescribed limits. For travel on private purposes, the upper limit is the equivalent of US$300 a person a year (regardless of the number of visits annually) for air travel to Bhutan, India, Maldives, Myanmar, Nepal, Pakistan, and Sri Lanka (but up to US$125 for overland travel to India); and US$1,200 a person a year and a maximum of US$500 a trip for travel to other countries.

Nonresident Foreign Currency Deposit Accounts. Bangladesh nationals residing abroad; foreign nationals, and foreign companies/firms registered and/or incorporated abroad; banks; and other financial institutions, including institutional investors, may open interest-bearing Nonresident Foreign Currency Deposit Accounts denominated in pounds sterling or U.S. dollars. These accounts, whose terms range from one month to one year, may be credited, in initial minimum amounts of US$1,000 or £ stg. 500 (US$25,000 for foreigners), with (1) remittances in convertible currencies, and (2) transfers from existing Foreign Currency Accounts maintained under the WES. The banks pay interest on balances in these accounts at rates which are 1 percentage point higher than Eurocurrency deposit rates. The balance, including interest earned, may be transferred in foreign exchange by the account holder to his country of residence or anywhere he chooses; the account holder, if he is not otherwise ineligible under the WES, may also transfer the balance to any Foreign Currency Account maintained under the WES. The balances in the accounts, which are freely convertible into taka at the SEM rate (the official rate for foreigners), must be reported by banks monthly to the Bangladesh Bank, and the accounts must be closed within one year or on maturity of the deposit, whichever is later, upon the taking up of permanent residence by the account holder in Bangladesh.

Imports and Import Payments

Imports are financed either from Bangladesh’s own resources or from foreign aid, loans, and barter arrangements. Imports are guided by an annual import policy (IPO) announced by the Government. The IPO for the fiscal years 1989/90 and 1990/91 (July to June) was, however, announced in July 1989. It is based on a list of controlled items described according to the Harmonized System of Nomenclature and the Import Trade Control (ITC) schedule. The controlled list contains 284 items in the 1,239 categories at the four-digit level of the Harmonized System Codes, following the announcement of liberalization of 70 categories of the list in July 1990. The importation of these items is restricted or prohibited either for social or religious reasons or because similar items are locally produced. The IPO prohibits or restricts imports of some raw materials or inputs, certain textiles, factory rejects, goods of substandard quality, used items, and materials inimical to public order or religious beliefs. Items not on these lists are freely importable through the SEM, provided that the importer has a valid import registration certificate. Imports at the official exchange rate are subject to allocation on the basis of foreign exchange availability. Imports from Israel and South Africa are prohibited.

All importers (including all government departments with the exception of the Ministry of Defense) are required to obtain letter of credit authorization forms (LCAFs) for all imports. Under the authority of the IPO issued by the Chief Controller, registered commercial importers are allowed to effect imports against LCAFs issued by authorized dealer banks without the need for an import license. For imports under the SEM scheme, an importer is required to have a valid import registration certificate either as a commercial importer or industrial consumer or under the SEM scheme. These documents are issued by a licensing office of the Chief Controller of Imports and Exports. Single-country LCAFs are issued for imports under bilateral trade or payments agreements and for imports under tied aid programs. LCAFs are otherwise valid worldwide, except that imports from Israel and South Africa and imports transported on the flag vessels of Israel and South Africa are prohibited. For shipment of imports under cash and the SEM scheme, the validity of LCAFs is as follows: (1) 11 months from the date of issuance/registration of an LCAF for commercial items and industrial raw and packing materials; and (2) 17 months from the date of issuance/registration of an LCAF for the importation of capital machinery and spare parts. If these documents lapse for reasons beyond the control of the importer, they may be revalidated by the licensing authority. Authorized dealers may effect remittances within 12 months of the date of registration of an LCAF for the importation of commercial items and industrial raw materials and packing materials and within 18 months of the date of registration of an LCAF for the importation of capital machinery and spare parts. If the importers require additional time to make remittances, then authorized dealers may allow such remittances only under the SEM scheme.

Payment against imports is generally permissible only under cover of irrevocable letters of credit. In February, 1990, a 50 percent advance deposit requirement against letters of credit issued for commercial and industrial imports under the SEM scheme was introduced. In March 1990, the deposit requirement for industrial imports was reduced to 25 percent and was eliminated in November 1990. Under the SEM scheme, a provision exists for the importation of machinery and equipment against letters of credit opened on a deferred-payment basis for up to 360 days. Raw materials may be imported under letters of credit on a deferred-payment basis up to 180 days. Recognized export-oriented ready-made garments and specialized textile and hosiery units operating under the bonded warehouse system may effect imports of their raw and packing materials by opening letters of credit on a deferred-payment basis up to 180 days against export letters of credit received by them. Public sector importers may import on a cash-against-documents basis, subject to authorization by Bangladesh Bank.

Imports of specified raw materials and packing materials by industrial consumers are governed by an entitlement system, based on the requirements for various industries during each import program period as established by the Board of Investment. Firms in the industrial sector are given an entitlement for the importation of specified raw materials and packing materials, and letter of credit authorization forms are issued on the basis of the entitlement. The entitlement system does not apply to raw materials and packing materials that are freely importable under the SEM scheme. However, for items appearing on the controlled list, the entitlement system applies even to imports under the SEM scheme. Separately, industrial consumers may be issued with LCAFs for parts and accessories of machinery. Goods imported against LCAFs issued to industrial consumers must be used in the industry concerned and must not be sold or transferred without prior approval.

Foreign exchange for authorized imports is provided automatically by authorized dealers when payments are due. Advance payments for imports require approval by the Bangladesh Bank, which is normally given only for specialized or capital goods.

Payments for Invisibles

Payments for invisibles connected with authorized trade transactions are generally not restricted. Payments for most other invisibles require prior approval and are restricted. Applications for foreign exchange for business travel, medical treatment, and education abroad are considered on an individual basis. The allowance for personal travel by resident Bangladesh nationals to countries other than Bhutan, India, Maldives, Myanmar, Nepal, Pakistan, and Sri Lanka is US$1,200 a year, subject to a maximum of US$500 a visit.

Exporters with export earnings exceeding Tk 100 million during the preceding year are entitled to a maximum business travel allowance of US$40,000 a year. Exporters with export earnings exceeding Tk 50 million but not exceeding Tk 100 million in the preceding year are entitled to the allowance equivalent to 2 percent of the f.o.b. value of their exports, subject to a maximum of US$30,000 a year. Those with export earnings exceeding Tk 2.5 million but not exceeding Tk 50 million in the preceding year are also entitled to the allowance equivalent to 2 percent of the f.o.b. value of their exports, subject to a minimum of US$6,000 and a maximum of US$20,000 a year; exporters with a performance of up to Tk 2.5 million in the preceding year are allowed up to US$6,000 a year. New exporters are allowed up to a maximum of US$4,000 a year. Export houses are entitled to business travel allowances equivalent to 2.5 percent of their preceding year’s export earnings, subject to a minimum of US$40,000 and a maximum of US$150,000. All business travel allowances must be purchased at the SEM rate. For medical treatment, the amount granted is the actual requirement, which must be purchased at the SEM rate, subject to the approval of Bangladesh Bank. A Bangladesh national flying abroad is allowed to purchase foreign exchange from a Foreign Currency Account under the WES, subject to certain limits (see section on Nonresident Accounts, above). Foreign nationals working in Bangladesh must obtain approval before making remittances abroad for family maintenance; such approval is usually granted for up to 50 percent of net salaries, if the terms of employment have been approved by the Government.

Nonresident travelers may take out the foreign currency and traveler’s checks they declared on entry less the amount sold to authorized dealers or money changers; they may also, without obtaining the approval of the Bangladesh Bank, reconvert taka notes up to Tk 6,000 into convertible foreign currencies at the time of their departure; if they made no declaration, they may reconvert up to US$150. Resident travelers may take out foreign currency and traveler’s checks up to the amount of any travel allocation they have been granted. A Bangladeshi or a foreign national may take out Tk 100 in domestic currency; otherwise, the export of Bangladesh currency notes and coins is prohibited.

Authorized dealers are allowed to remit dividends to nonresident shareholders without the prior approval of Bangladesh Bank, on receipt of applications from the companies concerned, which are supported by an audited balance sheet and profit and loss account, a Board resolution declaring dividend out of profit derived from the normal business activities of the company, and an auditor’s certificate that deduction/provision sufficient to cover tax liabilities has been made. Applications for remittance of profits to head offices of foreign firms/institutions/banks operating in Bangladesh, supported by similar documentation, are, however, subject to the prior approval of Bangladesh Bank.

Exports and Export Proceeds

Exports to Israel and South Africa are prohibited. The proceeds from exports must be received within four months of shipment. Exports of jute and jute goods must be registered with Bangladesh Bank. Since July 1, 1989, cash assistance in lieu of XPB has been granted for exports of jute goods at the following rates (based on f.o.b. value): (1) 10 percent for sacking; (2) 15 percent for hessian and yarn; and (3) 20 percent for carpet backing and other nontraditional jute goods. For shipments made during the period from July 1989 to June 1990, cash assistance was granted (1) at 5–20 percent of the net f.o.b. value of exports for frozen fish and leather products; (2) at 10 percent of gross value added of exports for nonquota items of garments; and (3) at 10–20 percent of net value added of local sales to exporters of garments for sales of locally produced yarn, hosiery, and handloom fabrics. Cash assistance on exports effected after March 5, 1990, is calculated on the basis of the exchange rate prevailing on March 4, 1990. (See section on Exchange Arrangement, above, regarding the Export Performance Benefit Scheme).

Joint ventures, other than the garment industry, located in Export Processing Zones (EPZs) are allowed to retain 70 percent of their export earnings in a foreign currency deposit account and convert the remaining 30 percent at the SEM rate and keep them in a bank account in domestic currency. Balances on domestic currency bank accounts may be converted into foreign exchange at the SEM rate for payments of imported goods. The retention rate for the garment industry is 75 percent.

Proceeds from Invisibles

All proceeds from invisibles must be surrendered, but Bangladesh nationals working abroad may retain their earnings in Foreign Currency Accounts or in Nonresident Foreign Currency Deposit Accounts. Unless specifically exempted by Bangladesh Bank, all Bangladesh nationals who are resident in Bangladesh must surrender any foreign exchange coming into their possession, whether held in Bangladesh or abroad, to an authorized dealer within one month of the date of acquisition.

Foreign nationals residing in Bangladesh continuously for more than six months are required to surrender within one month of the date of acquisition any foreign exchange representing their earnings in respect of business conducted in Bangladesh or services rendered while in Bangladesh. Foreign exchange held abroad or in Bangladesh by foreign diplomats and by foreign nationals employed in embassies and missions of foreign countries in Bangladesh is, however, exempt from this requirement.

The import of Bangladesh currency notes and coins exceeding Tk 100 is prohibited. Foreign currency traveler’s checks and foreign currency notes may be brought in by nonresident travelers without limit, provided that the total amount brought in is declared to the customs authorities upon arrival. Foreign currency notes may be brought in without limit by any person, provided that the total amount brought in is declared upon arrival. No declaration is required for the importation of foreign exchange not exceeding US$1,000 by nonresidents and US$750 by residents.

Capital

All outward transfers of capital require approval, which is not normally granted in respect of resident-owned capital. Inward capital transfers also require approval. Movable and immovable assets, including foreign exchange, owned in any country other than Bangladesh have to be declared to Bangladesh Bank by resident Bangladesh nationals. There is no restriction on the importation of securities into Bangladesh, but the transfer of securities in favor of a person resident outside Bangladesh requires approval. This requirement applies to all Bangladesh securities, whether or not held by residents, and to all foreign securities held by residents.

Authorized dealers may obtain short-term loans and overdrafts from overseas branches and correspondents for a period not exceeding seven days at a time. Borrowing abroad by resident nonbank firms of Bangladesh origin requires approval. Borrowing by non-resident-owned or non-resident-controlled enterprises from commercial banks in Bangladesh beyond specified ceilings, as well as any borrowing from abroad, requires approval, and loans by authorized dealers in local currency against overseas guarantees or collateral outside Bangladesh also require approval. They may grant, without reference to Bangladesh Bank, loans in domestic currency to foreign-owned manufacturing companies located in Bangladesh to the extent of 140 percent of their paid-up capital, reserves, undistributed profits, and unremitted dividends as disclosed by their last audited balance sheets. Authorized dealers may, however, approve loans, overdrafts, or credit facilities against goods intended for export from Bangladesh to companies controlled by persons resident outside Bangladesh. Authorized dealers must obtain approval before making any loans in foreign currencies to residents or nonresidents, whether secured or unsecured. They are not normally permitted to hold short-term foreign assets other than small working balances.

Foreign private investment is governed by the Foreign Private Investment (Promotion and Protection) Act of 1980 and is permitted in collaboration with both the Government and private entrepreneurs. The act provides, inter alia, for the protection and equitable treatment of foreign private investment, indemnification, protection against expropriation and nationalization, and guarantee for repatriation of investment. In the private sector, however, foreign participation is limited to those industries where technical know-how is not locally available, where the technology involved is very complicated, or where capital outlay is high, and to industries that are either based on local raw materials or that are wholly export oriented.

For a new investment, foreign investors are generally required to provide as equity capital the entire amount of the project’s foreign exchange component. There is no ceiling on private investment, but any investments above Tk 100 million need special approval. Tax holidays are granted for periods of up to nine years, depending on location. All investments in which the foreign equity portion exceeds 49 percent require the approval of the Investment Board. Nonresidents must also obtain the permission of Bangladesh Bank to continue to operate or to establish an office or branch in Bangladesh for the purpose of trading, or for commercial or industrial activities. Dividends on foreign capital may be remitted freely after payment of taxes, except that 10 percent of the annual remittable profits must be held in Bangladesh by sterling tea companies until the total amount held is equal to 200 percent of paid-up capital.

Gold

The importation and exportation of gold and silver in any form are prohibited without special permission, which is not normally granted. Exports of gold are allowed only in jewelry form under the Jewelry Export Scheme. There are no restrictions on the internal sale, purchase, or possession of gold or silver ornaments (including coins) and jewelry, but there is a prohibition on the holding of gold and silver in all other forms except by licensed industrialists or dentists.

Changes During 1990

Exchange Arrangement

During 1990, the buying and selling rates of Bangladesh Bank for authorized dealers were changed on six occasions, from Tk 32.23 (buying) and Tk 32.31 (selling) per US$1 on December 31, 1989 to Tk 35.74 (buying) and Tk 35.84 (selling) on December 29, 1990.

Prescription of Currency

January 13. The signing of a Special Trading Agreement dated September 10, 1989 between the Trading Corporation of Bangladesh (TCB) and Salzgitter Stahl GmbH (STH) of Germany was announced. The Agreement would remain valid until December 19, 1990 and would cover trade of goods valued at US$20 million.

January 21. The signing of a Counter Purchase Agreement dated June 1, 1989 between the TCB and Myanmar Export and Import Services was announced. The Agreement would remain valid until May 31, 1990 and would cover trade of goods valued at US$20 million.

May 23. The signing of a Barter Trade Protocol dated January 8, 1990 between Bangladesh and the People’s Republic of China was announced. The Protocol would remain valid until January 7, 1991 and would cover exchange of products valued at US$31 million.

July 9. The signing of a Barter Protocol dated March 27, 1990 between Bangladesh and the U.S.S.R was announced. The Protocol would remain valid until December 31, 1990.

Nonresident Accounts

August 22. Interest rates on balances in Nonresident Foreign Currency Deposit Accounts were raised 1 percentage point above the interest rates paid on Eurocurrency deposits with similar maturities; before this change, the interest rates had been set at the same level as those on Eurocurrency deposits.

Imports and Import Payments

February 18. A 100 percent advance deposit requirement against letters of credit issued for commercial imports under the SEM scheme was introduced.

February 26. A 50 percent advance deposit requirement for commercial and industrial imports under the SEM scheme was introduced.

March 26. The advance deposit requirement for commercial and industrial imports under the SEM scheme was reduced to 25 percent from 50 percent.

July 1. The Harmonized System Codes were introduced for reporting foreign exchange transactions effected on or after July 1, 1990, in respect of exports and imports of goods.

July 28. Seventy categories (at the four-digit level of the Harmonized System Codes) were removed from the controlled list of imports.

August 26. A change in the timing of sales of foreign exchange by Bangladesh Bank to authorized dealers for import payments under the SEM scheme was announced. Sales would be made at the time of settlement rather than at the time of opening of letters of credit, and the exchange rates prevailing on the day of foreign exchange purchase would apply.

November 5. The advance deposit requirement for industrial imports under the SEM scheme was eliminated.

Payments for Invisibles

August 20. The foreign exchange allowance for travel by Bangladesh nationals to countries other than Bhutan, India, Maldives, Myanmar, Nepal, Pakistan, and Sri Lanka was reduced to US$1,200 from US$1,500 a person a year, subject to a maximum of US$500 a visit, and the allowance for travel to the above seven countries was reduced to US$300 a person a year, with a separate limit of US$125 a person a year for travel to India by surface transportation.

Exports and Export Proceeds

March 15. It was announced that the exchange rate prevailing on March 4 would be used to calculate the subsidy on jute exports granted on or after March 5.

March 31. A system of cash assistance was introduced, retroactively for the period July 1, 1989 through June 30, 1990, in lieu of XPB for certain nontraditional exports, at the following rates: (1) 5–15 percent of the f.o.b. value for frozen fish; (2) 5–20 percent of the net value added for crust and finished leather; (3) 10 percent of the gross value added for nonquota garment items; and (4) 10–20 percent of the net value added for sales of locally produced yarn, hosiery, and handloom fabrics to exporters of garments.

May 29. The Cash Against Documents facility ceased to be provided to buyers of raw jute, and all exports of raw jute were permitted only against irrevocable letters of credit.

May 31. Exporters of ready-made garments, hosiery, specialized textile, and pure silk products using locally produced fabrics were granted cash assistance calculated at 10 percent of the value of local fabrics, in lieu of the duty drawback facility on duty-paid imported chemicals used in the production of finished fabrics.

Barbados

(Position on December 31, 1990)

Exchange Arrangement

The currency of Barbados is the Barbados Dollar, which is pegged to the U.S. dollar, the intervention currency, at BDS$2 = US$1. On December 31, 1990, the official buying and selling rates for the U.S. dollar were BDS$1.9975 and BDS$2.0400, respectively, per US$1. Buying and selling rates for the Canadian dollar, the deutsche mark, and the pound sterling are also officially quoted. These rates include commission charges of 0.125 percent buying and 2.0 percent selling, against the U.S. dollar, and 0.1875 percent buying and 2.0 percent selling, against the Canadian dollar, the deutsche mark, and the pound sterling. On December 31, 1990, the buying and selling rates of the Central Bank of Barbados for the Canadian dollar were BDS$1.6901 and BDS$1.7801, respectively, per Can$1; those for the deutsche mark were BDS$1.3109 and BDS$1.3845, respectively, per DM 1; and those for the pound sterling were BDS$3.7835 and BDS$4.0074, respectively, per £ stg. 1.

Under clearing arrangements with regional monetary authorities, the Central Bank sells currencies of the Caribbean Common Market (Caricom) countries1 at fixed rates (including a commission of 0.1875 percent) but purchases only East Caribbean dollar notes. The rate applied mutually for the purchase of currency notes is the parity rate between each pair of currencies determined on the basis of the U.S. dollar rate. The Central Bank regulates the commission that may be charged by the commercial banks in dealings with their customers in Caricom currencies. Purchases of foreign exchange for private sector remittances abroad (except for remittances for payment of imports, travel allowances, education, and nontrade payments up to BDS$500, and certain other specified items) are subject to a levy collected in the approval process by the Central Bank at the rate of 1 percent of the value of the transaction.

The Central Bank periodically obtains forward cover in the international foreign exchange market to cover or hedge its own or the Central Government’s exchange risks associated with foreign exchange loans that are not denominated in U.S. dollars. Commercial banks are allowed to obtain forward cover in the international markets. Swap transactions in U.S. dollars are entered into between the Central Bank and commercial banks, while commercial banks may freely switch between nonregional currencies.

Administration of Control

Exchange control applies to all countries and is administered by the Central Bank. The Central Bank delegates to authorized dealers the authority to approve normal import payments and the allocation of foreign exchange for certain other current payments and for cash gifts. The exchange control system stipulates that foreign exchange should normally be surrendered to an authorized dealer. The normal exchange control directives do not apply to transactions between residents and persons resident in South Africa. Trade controls are administered by the Ministry of Trade, Industry, and Commerce.

Prescription of Currency

Settlements with residents of countries outside the Caricom area other than South Africa may be made in any foreign currency,2 or through an External Account in Barbados dollars. Settlements with residents of Caricom countries, other than Jamaica, must be made either through External Accounts (in Barbados dollars) or in the currency of the Caricom country concerned, except that commercial banks may issue Caricom traveler’s checks denominated in Trinidad and Tobago dollars to Barbadian residents traveling to other Caricom countries, within the approved limits for travel allowances. With effect from November 1, 1990, the Bank of Jamaica suspended the bilateral clearing arrangements with other regional central banks. As a result, settlements with residents of Jamaica are made in U.S. dollars.

Nonresident Accounts

With the permission of the Central Bank, authorized dealers may maintain in foreign currencies Foreign Currency Accounts in the names of residents of Barbados and of other countries. Approval for opening these accounts is given on the basis of the anticipated frequency of receipts and payments in foreign currency. Certain receipts and payments may be credited and debited to Foreign Currency Accounts under the conditions of approval established at the time the account was opened. Other credits and debits require individual approval.

External Accounts may be opened for nonresidents by authorized dealers without reference to the Central Bank. These accounts are maintained in Barbados dollars. They may be credited with proceeds from the sale of foreign currencies, with transfers from other External Accounts, with bank interest (payable on External Accounts or Blocked Accounts), and with payments by residents for which the Central Bank has given general or specific permission. They may be debited for payments to residents of Barbados, for the cost of foreign exchange required for travel or business purposes, and for any other payments covered by delegated authority to authorized dealers. Other debits and any overdrafts require individual approval.

The Exchange Control Act of 1967 (as amended) empowers the Central Bank to require certain payments in favor of nonresidents that are ineligible for transfer to be credited to Blocked Accounts. Balances in Blocked Accounts may not be withdrawn without approval, other than for the purchase of approved securities.

Imports and Import Payments

All imports from South Africa are prohibited, and certain imports originating in non-Caricom countries require individual licenses. Import-licensing requirements and quantitative restrictions are the chief tools of Barbadian external commercial policy. The list of products subject to licensing is extensive. However, not all goods that are subject to import licensing are subject to quantitative restriction. Some items on the import-licensing list may be freely imported throughout the year, while some others are subject to temporary restriction (particularly agricultural products, which tend to be subject to seasonal restriction). Certain imports are prohibited; these include various foodstuffs, blue jeans, and beer not produced within the Caricom area. There is also a “negative list” for certain garments, the importation of which is totally prohibited if the product is below a minimum c.i.f. value. Individual licenses are also required for imports of commodities that are subject to the provisions of the Oils and Fats Agreement between the governments of Barbados, Dominica, Grenada, Guyana, St. Lucia, St. Vincent and the Grenadines, and Trinidad and Tobago, whether the goods are being imported from Caricom countries or from elsewhere. Special licensing arrangements have been made for the regulation of trade between Barbados and other Caricom countries in 22 agricultural commodities.

Payments for authorized imports are permitted upon application and submission of documentary evidence (invoices and customs warrants) to authorized dealers; payments for imports of crude oil and its derivatives are subject to the prior approval of the Central Bank. Authorized dealers may release foreign currency for advance payments for imports into Barbados up to the equivalent of BDS$20,000 (c.i.f.). Payments over BDS$20,000 require the prior approval of the Central Bank.

Payments for Invisibles

Payments for invisibles require exchange control approval. Except for transactions involving residents of South Africa, payments for all commercial transactions are permitted freely when the application is supported by appropriate documentary evidence.

Authority has been delegated to authorized dealers to provide basic allocations of foreign exchange for certain payments of a personal nature and for sundry payments. These include foreign travel (for which up to BDS$2,000 a person a calendar year may be allocated for private travel inside or outside the Caricom area; and BDS$500 a day, up to BDS$10,000 a person a calendar year, for business travel inside the Caricom area, and BDS$15,000 outside the Caricom area), expenses for education abroad (BDS$20,000 a person a year), remittances of cash gifts not exceeding BDS$500 a donor a year, subscriptions to newspapers and magazines (BDS$500 a person a year), income tax refunds, official payments, and life insurance premiums. Applications for additional amounts or for purposes for which there is no basic allocation are approved by the authorities, provided that no unauthorized transfer of capital appears to be involved. The cost of transportation to any destination may be settled in domestic currency and is not deducted from the travel allocation. Outward remittances of funds to overseas insurers or other pension fund administrators are subject to a tax of 6 percent.

Any person traveling to a destination outside Barbados may take out foreign currency notes and coins up to the value of BDS$500 and Barbados notes up to BDS$200. Nonresident visitors may freely export any foreign currency they previously brought in.

Exports and Export Proceeds

Exports to South Africa are prohibited. Specific licenses are required for the exportation of certain goods to any country; these include rice, cane sugar, rum, molasses, certain other food products, sewing machines, portland cement, and petroleum products. All other goods may be exported without license. The collection of export proceeds is supervised by the Central Bank to ensure that proceeds in foreign currencies are surrendered within six months of the date of shipment. Exports of sugar to the United Kingdom and the United States are subject to bilateral export quotas, as are exports of rum to the European Economic Community.

Proceeds from Invisibles

Foreign currency proceeds from invisibles must be sold to authorized dealers. Travelers to Barbados may freely bring in notes and coins denominated in Barbados dollars or in any foreign currency. Residents are required to sell their holdings of foreign currencies to an authorized dealer upon return to Barbados.

Capital

All outward capital transfers, including direct investments by residents and the purchase by residents of foreign currency securities and of real estate abroad, require exchange control approval. Certificates of title to foreign currency securities held by residents must be lodged with an authorized depository in Barbados, and earnings on these securities must be repatriated and surrendered to an authorized dealer.

Personal capital transfers, such as inheritances due to nonresidents, require exchange control approval. Transfers in respect of inheritances are restricted to BDS$20,000 a year for each nonresident beneficiary. Dowries in the form of settlements and cash gifts may be transferred to nonresidents under delegated authority, normally up to BDS$500 a donor a year. Emigrating Barbadian nationals are granted settling-in allowances from their declared assets at the rate of BDS$20,000 a family unit a year. The Central Bank also considers applications from foreign nationals who have resided in Barbados and are proceeding to take up permanent residence abroad, provided that they declare their assets held in Barbados.

Direct investment by nonresidents may be made with exchange control approval. The remittance of earnings on, and liquidation proceeds from, such investment is permitted, subject to the submission of documentary evidence as to the validity of the remittance, the discharge of any liabilities related to the investment, and the registration of the original investment with the Central Bank.

The issuance and transfer to nonresidents of securities registered in Barbados require exchange control approval, which is freely given provided that an adequate amount of foreign currency is brought in for their purchase. Proceeds from the realization of these securities may be remitted when it is established that the original investment was financed from foreign currency sources. Nonresidents may acquire real estate in Barbados for private purposes with funds from foreign currency sources; local currency financing is not ordinarily permitted. Proceeds from the realization of such investments equivalent to the amount of foreign currency brought in may be repatriated freely. Capital sums realized in excess of this amount may be repatriated freely on the basis of a calculated rate of return on the original foreign investment, as follows: for the last five years, at 8 percent a year; for the five years immediately preceding the last five years, at 5 percent; and for any period preceding the last ten years, at 4 percent. Amounts in excess of the sum so derived are restricted to the remittance of BDS$24,000 a year.

The approval of the Central Bank is required for residents to borrow abroad or for nonresidents to borrow in Barbados. Authorized dealers may assume short-term liability positions in foreign currencies for the financing of approved transfers in respect of both trade and nontrade transactions. They may also freely accept deposits from nonresidents. Any borrowing abroad by authorized dealers to finance their domestic operations requires the approval of the Central Bank.

Gold

Gold coins with face values of BDS$100, BDS$150, BDS$200, and BDS$500 are legal tender and are in limited circulation. Residents who are private persons are permitted to acquire and hold gold coins for numismatic purposes only. Otherwise, any gold acquired in Barbados must be surrendered to an authorized dealer, unless exchange control approval is obtained for its retention. Residents other than the monetary authorities, authorized dealers, and industrial users are not permitted to hold or acquire gold in any form other than jewelry or coins for numismatic purposes. The importation of gold by residents is permitted for industrial purposes and is subject to customs duties and charges. Licenses to import gold are issued by the Ministry of Trade, Industry, and Commerce; no license is required to export gold, but exchange control permission is required to do so.

Changes During 1990

Imports and Import Payments

January 12. Aluminum windows and doors, and parts thereof, were added to the list of items requiring import licenses.

July 12. Oil, air, and fuel filters for internal combustion engines were deleted from the list of items requiring import licenses.

July 20. Wheelbarrows and parts thereof were added to the list of items requiring import licenses.

September 13. Ham was added to the list of items requiring import licenses.

Belgium and Luxembourg

(Position on December 31, 1990)

Exchange Arrangement

The currency of Belgium is the Belgian Franc, and the currency of Luxembourg is the Luxembourg Franc. Belgium and Luxembourg are linked in a monetary association, and the Luxembourg franc is at par with the Belgian franc. Belgium and Luxembourg participate with Denmark, France, Germany, Ireland, Italy, the Netherlands, Spain, and the United Kingdom in the exchange rate and intervention mechanism (ERM) of the European Monetary System (EMS). In accordance with this agreement, Belgium and Luxembourg maintain the spot exchange rates between their currencies and the currencies of the other participants within margins of 2.25 percent (in the case of the pound sterling and the Spanish peseta, 6 percent) above or below the cross rates derived from the central rates expressed in European Currency Units (ECUs).

The agreement implies that the National Bank of Belgium stands ready to buy or sell the currencies of the other participating states in unlimited amounts at specified intervention rates. On December 31, 1990, these rates were as follows:

Specified Intervention

Rates per:
Belgian Francs or

Luxembourg Francs
Upper LimitLower Limit
100Danish kroner553.0000528.7000
100deutsche mark2,109.50002,016.5500
100French francs628.9700601.2950
1Irish pound56.511554.0250
100Italian lire2.81932.6953
100Netherlands guilders1,872.15001,789.8500
1pound sterling64.605057.3035
100Spanish pesetas33.693029.8850

The participants in the EMS do not maintain the exchange rates for other currencies within fixed limits. However, in order to ensure a proper functioning of the system, they intervene in concert to smooth out fluctuations in exchange rates, the intervention currencies being each other’s and the U.S. dollar.

There are no taxes or subsidies on purchases or sales of foreign exchange. On December 31, 1990, the buying and selling rates for the U.S. dollar were BF 30.8925 and BF 31.0725, respectively, per US$1.

Banks are allowed to engage in spot and forward exchange transactions in any currency, and they may deal among themselves and with residents and nonresidents in foreign notes and coins at free market rates of exchange.

Belgium and Luxembourg formally accepted the obligations of Article VIII, Sections 2, 3, and 4 of the Fund Agreement, as from February 15, 1961.

Administration of Control

There are no exchange controls. The Belgian-Luxembourg Administrative Commission has the authority to license trade transactions; it determines import and export policy, but has delegated authority to issue import and export licenses to the licensing offices of the Belgian-Luxembourg Union (BLEU), one of which is located in each country. Bank supervision in Belgium is exercised by the Banking and Finance Commission, and in Luxembourg, by the Luxembourg Monetary Institute (LMI).

For purposes of compiling balance of payments statistics, residents are required to transmit to the Belgian-Luxembourg Exchange Institute (BLEI) the following information on all of their professional transactions with foreign countries: amount, currency, economic nature, and country of residence of the foreign party in the transaction. For foreign payments executed by or received through a bank in Belgium or Luxembourg, residents provide this information to their banks; for all other professional foreign transactions, residents report to the BLEI directly, on a monthly basis.

In accordance with the Fund’s Executive Board Decision No. 144-(52/51) adopted on August 14, 1952, Belgium and Luxembourg notified the Fund, on August 7, 1990, that certain restrictions were imposed on the making of payments and transfers for current international transactions with respect to Iraq and Kuwait.

Prescription of Currency

No prescription of currency requirements are in force.

Imports and Import Payments

Payments for imports may be made freely. Individual licenses are required for (1) certain imports from Albania, Bulgaria, the People’s Republic of China, Czechoslovakia, Hong Kong, Hungary, Japan, the Democratic People’s Republic of Korea, Mongolia, Poland, Romania, the U.S.S.R., and Viet Nam;1 and (2) certain imports from all other countries outside the BLEU.2 Products for which individual licenses are required include many textile and steel products, certain agricultural products and foodstuffs, coal and petroleum products, diamonds, semiprocessed gold, and weapons. All other commodities are free of license. Many commodities subject to individual licensing are also admitted without quantitative restriction. Along with other European Community (EC) countries, the BLEU applies quotas on a number of textile products from non-EC countries; the BLEU also applies a system of minimum import prices to foreign steel products.

Imports from non-EC countries of most products covered by the Common Agricultural Policy (CAP) of the EC are subject to import levies, which have replaced all previous barriers to imports; common EC regulations are also applied to imports from non-EC countries of most other agricultural and livestock products.

Payments for Invisibles

All payments for invisibles may be made freely. Domestic and foreign bank notes and coins and other means of payment may be exported freely.

Exports and Export Proceeds

Individual licenses are required for exports of specified commodities to all countries outside the BLEU, such as weapons, strategic products, and agricultural products. Individual licenses are also required for steel products exported to the United States.3 All other exports are free of license. Foreign exchange proceeds from exports do not have to be surrendered and may be used for all payments.

Proceeds from Invisibles

There are no restrictions on the receipt of payments for services rendered to nonresidents. Domestic and foreign notes and coins and other means of payment may be imported freely.

Capital

Residents and nonresidents may export capital freely. Investments, whether direct or portfolio, may be freely made in the BLEU by nonresidents or abroad by residents. There are no restrictions on transactions in Belgian or Luxembourg franc or foreign currency securities, which may be exported or imported without formality. Banks may freely accept foreign currency deposits from residents or nonresidents.

The prior approval from the Ministry of Finance is required for issues of securities on the Belgian capital market by nonresidents and for public bids by nonresidents for the purchase or exchange of shares issued by Belgian companies.4

Franc-denominated bonds may be issued freely on the Luxembourg capital market. They are reported ex post to the Luxembourg Monetary Institute, mainly for statistical purposes.

Gold

Residents may freely purchase, hold, and sell gold in coins or bars, at home or abroad. Imports and exports of gold in these forms by residents and nonresidents are unrestricted and free of license; licenses are required for imports of semiprocessed gold. Settlements of gold may be made freely. Imports and transactions in monetary gold are subject to a value-added tax in Belgium at a rate of 1 percent.

Changes During 1990

Exchange Arrangement

March 5. The two-tier market system was eliminated, and all existing restrictions on payments and transfers were eliminated.

Administration of Control

March 5. Although exchange controls were abolished, the Belgian-Luxembourg Exchange Institute (BLEI) was maintained for purposes of compiling balance of payments statistics of the BLEU.

June 28. All restrictions on acceptance of deposits in Luxembourg francs by banks in Luxembourg were eliminated by the LMI.

Imports and Import Payments

(See Appendix for a summary of trade measures introduced and eliminated on an EEC-wide basis during 1990, page 569.)

Capital

July 1. The issuance of franc-denominated bonds on the Luxembourg capital market ceased to be regulated by the LMI.

Belize

(Position on December 31, 1990)

Exchange Arrangement

The currency of Belize is the Belize Dollar, which is pegged to the U.S. dollar, the intervention currency, at a rate of BZ$1 = US$0.50. The buying and selling rates for transactions between the Central Bank of Belize and the commercial banks are BZ$1.9937 and BZ$2.0063 per US$1, respectively. On December 31, 1990, the buying and selling rates in transactions between the banks and members of the public were BZ$1.9825 and BZ$2.0175 per US$1, respectively. The Central Bank quotes daily rates for the pound sterling, the Canadian dollar, and a number of currencies of member countries of Caricom.1 A stamp duty of 1.25 percent is levied on all conversions from the Belize dollar to a foreign currency.

Belize acccepted the obligations of Article VIII, Sections 2, 3, and 4 of the Fund Agreement on June 14, 1983.

Administration of Control

The Central Bank is responsible for the administration of exchange control, which is applicable to all countries. Authority covering a wide range of operations is delegated to the commercial banks in their capacity as authorized dealers. Only in exceptional cases or in applications involving substantial amounts is reference made directly to the Central Bank. However, all applications for foreign exchange processed by authorized dealers are regularly forwarded to the Central Bank for audit and record keeping. The Ministry of Commerce and Industry administers trade controls.

Prescription of Currency

The only prescription of currency requirement relates to a specified list of currencies2 in which authorized intermediaries are permitted to deal with the public. Payments to a Caricom member country must be made in the currency of that country.

Nonresident Accounts

The permission of the Central Bank is needed for banks to open external or foreign currency accounts. The Central Bank may direct also that sums to be credited or paid to foreign residents be credited to a blocked account.

Imports and Import Payments

Payments for imports require authorization from the Central Bank; in most cases such authorization is delegated to the commercial banks. For reasons of health, standardization, and protection of domestic industries, import licenses from the Ministry of Commerce and Industry are required for a number of goods—mostly food and agricultural products, and certain household and construction products; such licenses are liberally administered. There are no quota limits or other quantitative restrictions for balance of payments reasons. Most imports are subject to a stamp duty of 12 percent of the c.i.f. value; the rate of stamp duty on citrus is 25 percent. Imports by most of the public sector and certain nonprofit entities, imports of an emergency or humanitarian nature, and goods for re-export are exempt from import duties; goods originating from the Caricom area are also exempt.

Payments for Invisibles

There are no restrictions on payments for invisibles. Authorized dealers have the power to provide foreign exchange for such payments within certain limits. The following limits are applied to purchases of foreign exchange: (1) nonbusiness travel by residents, up to BZ$2,500 a person a calendar year; (2) business travel by residents, BZ$500 a day a person, up to BZ$10,000 a year; (3) business or nonbusiness travel by nonresidents, BZ$500 a person a year, except where payment is made from an external account or from proceeds of foreign currency; (4) educational allowance, BZ$500 a course a year (apart from a one-time allowance of BZ$1,000 for educational expenses and maintenance); and (5) gifts, BZ$100 a donor. Requests in excess of these amounts are referred to the Central Bank, which grants all bona fide requests.

Exports of foreign and domestic bank notes and currency are subject to limits as follows: each traveler may carry domestic bank notes up to BZ$100 and the equivalent of BZ$400 in foreign currency, except that a visitor may take out such notes up to the amount imported. Amounts beyond these limits require the approval of the Central Bank, which is liberally granted when justified.

Exports and Export Proceeds

Export licenses are required for most export products. Export proceeds must be surrendered to authorized dealers not later than six months after the date of shipment, unless directed otherwise by the Central Bank. A small number of items3 are subject to an ad valorem export duty of 5 percent. Re-exports and transshipments are subject to a 3 percent customs administration fee.

Proceeds from Invisibles

Foreign currency proceeds from invisibles must be sold to an authorized dealer. Travelers to Belize are free to bring in notes and coins denominated in Belize dollars up to BZ$100 a person, but there are no restrictions on imports of foreign currency. Resident travelers are required to sell their excess holdings of foreign currencies to an authorized dealer upon their return to Belize.

Capital

All capital transfers require the approval of the Central Bank, but control is liberally administered. Direct foreign investment is encouraged and investors benefit from a number of fiscal incentives.

Gold

Residents may not hold gold except by specific authorization from the Central Bank. Gold may be neither imported nor exported without the approval of the Central Bank.

Changes During 1990

Exports and Export Proceeds

March 1. Legislation establishing an export processing zone in the northern part of the country was enacted.

Capital

March 1. Legislation widening the scope and improving the system of incentives for direct foreign investment was enacted. The maximum period of exemption from import and income taxes was raised to 20 years from 15 years for firms that are in the agricultural sector, and for manufacturing firms that are engaged in the labor-intensive method of production exclusively for export. Legislation promoting foreign-owned (offshore) companies whose subsidiaries in Belize would be allowed to invest in various areas of the economy, including agriculture and financial services, was also enacted. These companies would be exempt from income, estate, and stamp taxes.

Benin

(Position on December 31, 1990)

Exchange Arrangement

The currency of Benin is the CFA Franc,1 which is pegged to the French franc, the intervention currency, at the fixed rate of CFAF 1 = F 0.02. The official buying and selling rates are CFAF 50 = F 1. Exchange rates for other currencies are derived from the rate for the currency concerned in the Paris exchange market and the fixed rate between the French franc and the CFA franc. They include a bank commission of 2.5 per mill on transfers to all non-West African Monetary Union (WAMU) countries, which must be surrendered in its entirety to the Treasury. Banks may levy a flat commission of CFAF 100 on intra-WAMU transfers, which they may retain. There are no taxes or subsidies on purchases or sales of foreign exchange. Forward exchange contracts may be arranged, with the prior authorization of the Minister of Finance, for payments for specified imports. The maturity period cannot be extended.

With the exception of those relating to gold and the repatriation of export proceeds, Benin’s exchange control measures do not apply to (1) France (and its Overseas Departments and Territories) and Monaco; and (2) all other countries whose bank of issue is linked with the French Treasury by an Operations Account (Burkina Faso, Cameroon, Central African Republic, Chad, Comoros, Congo, Côte d’Ivoire, Equatorial Guinea, Gabon, Mali, Niger, Senegal, and Togo). Hence, all payments to these countries may be made freely. All other countries are considered foreign countries but, for purposes of certain controls relating to capital flows, the countries specified in this paragraph are also regarded as foreign countries.

Administration of Control

Exchange control is administered by the Directorate of Monetary and Banking Affairs in the Ministry of Finance, in conjunction with the Directorate of External Commerce in the Ministry of Commerce, Handicrafts and Tourism. The Ministry of Finance, however, has the main responsibility for drawing up the exchange control regulations, in collaboration with the BCEAO. The BCEAO is authorized to collect, either directly or through banks, financial institutions, the Postal Administration, and notaries public, any information necessary to compile balance of payments statistics. All exchange transactions relating to foreign countries must be carried out by authorized intermediaries. Import licenses for goods from Africa, the Caribbean and Pacific (ACP) group countries, member countries of the European Community (EC), and Operations Account countries have been abolished. Only imports from countries other than the above-mentioned countries are subject to an import license issued by the Directorate in charge of External Commerce. Exports of diamonds and other precious metals require authorization by the Directorate of External Commerce, after consultation with the Minister of Finance.

Arrears are maintained with respect to external payments.

Prescription of Currency

Since Benin is linked to the French Treasury through an Operations Account, settlements with France (as defined above), Monaco, and other countries linked to the French Treasury through an Operations Account are made in CFA francs, French francs, or the currency of any other Operations Account country. Current payments to or from The Gambia, Ghana, Guinea, Guinea-Bissau, Liberia, Mauritania, Nigeria, and Sierra Leone are normally made through the West African Clearing House. Settlements with all other countries are usually effected through correspondent banks in France, in any of the currencies of those countries, or in French francs through Foreign Accounts in Francs. Certain settlements with the People’s Republic of China and specified socialist countries, however, are made through special accounts.2 All settlements with South Africa are prohibited.

Nonresident Accounts

Nonresidents may hold Foreign Accounts in Francs with authorized intermediary banks. The crediting to nonresident accounts of CFA bank notes, French bank notes, or bank notes issued by any other institute of issue that maintains an Operations Account with the French Treasury is not permitted, except for BCEAO bank notes mailed direct to the BCEAO agency in Cotonou by an authorized intermediary bank’s foreign correspondent for credit to a Foreign Account in Francs opened by the latter with an authorized intermediary bank. Foreign Accounts in Francs may be debited, without prior authorization, with the value of BCEAO bank notes mailed by authorized intermediaries direct to their foreign correspondents.

Imports and Import Payments

All imports originating in or proceeding from South Africa are prohibited. Certain imports, such as narcotics, are prohibited from all sources. Certain agencies have an import monopoly for specified commodities.

Imports of goods originating from the EC, the Operations Account countries, and countries belonging to the ACP group under the Lomé Convention are free of import-licensing requirements. All merchandise imports originating from the other countries are subject to prior authorization from the Directorate of Foreign Trade.

All imports originating in foreign countries, when valued at more than CFAF 500,000, must be domiciled with an authorized intermediary bank. The import licenses or import certificates entitle importers to purchase the necessary exchange, but not earlier than eight days before shipment if a documentary credit is opened, or on the due date of payment if the commodities have already been imported. Import licenses are subject to a tax equivalent to 0.85 percent of the c.i.f. value of corresponding imports.

Payments for Invisibles

Payments to South Africa are prohibited. Payments for invisibles to France (as defined above), Monaco, and countries linked to the French Treasury through an Operations Account are permitted freely; those to other countries are subject to the approval of the Directorate of External Commerce, but for many types of invisibles the approval authority has been delegated to authorized intermediary banks. Authorized banks and the Postal Administration have been empowered to make payments abroad freely on behalf of residents, up to CFAF 50,000 a transfer. Payments for invisibles related to trade are permitted freely when the basic trade transaction has been approved or does not require authorization. Transfers of income accruing to nonresidents in the form of profits, dividends, and royalties are also subject to prior authorization.

For tourist travel, residents traveling to countries other than France (as defined above), Monaco, and the countries linked to the French Treasury through an Operations Account may obtain an exchange allocation of an amount equivalent to CFAF 175,000 a trip for each person (CFAF 87,500 for children under 10 years) for any number of trips a year; any foreign exchange in excess of the equivalent of CFAF 5,000 remaining after return to Benin must be surrendered. For business travel, there is a special allocation of the equivalent of CFAF 20,000 a day, subject to a maximum of CFAF 400,000 a trip. However, with the special authorization of the Minister of Finance, larger allocations may be obtained up to the equivalent of CFAF 250,000 a person a trip for tourist travel and up to the equivalent of CFAF 1,500,000 for business travel.

The transfer of one half of the net salary of a foreigner working in Benin is permitted, subject to authorization by the Directorate of Monetary and Banking Affairs upon presentation of the appropriate pay voucher, provided that the transfer takes place within three months of the pay period. Residents traveling to Operations Account countries may take out any amount in BCEAO bank notes, but if proceeding to a country that is not a member of the WAMU, they must declare to customs the amount they take out if it exceeds CFAF 150,000.

Nonresident travelers may take out any unutilized foreign bank notes and coins up to the amount they declared on entry, subject to adjustment for amounts exchanged for CFA francs or obtained by exchange of foreign currency. Nonresident travelers may take out freely the equivalent of CFAF 25,000 in BCEAO bank notes, French bank notes, or bank notes issued by the countries linked to the French Treasury through an Operations Account; a maximum amount equivalent to CFAF 25,000 in foreign bank notes; and any amount in other foreign means of payment (traveler’s checks, etc.) established abroad and in their name.

Exports and Export Proceeds

All exports to South Africa are prohibited. Exports to all foreign countries, including the Operations Account Area, must be domiciled with an authorized intermediary bank when valued at more than CFAF 500,000. Exports are permitted on the basis of a simple authorization from the Directorate of Foreign Trade. Exports of gold, diamonds, and all other precious metals, however, are subject to prior authorization of the Ministry of Finance, with the exception of articles made of gold with a small gold content, travelers’ personal effects weighing less than 500 grams, and coins (less than 10 pieces, irrespective of their face value and denomination). Prior authorization for exports of these three product categories is granted by the central bank or the National Treasury. Receipts from exports must be collected within 180 days after the arrival of the shipment at destination, proceeds must be repatriated to Benin through the BCEAO, and they must be sold to authorized banks within 30 days of the contractual due date.

Proceeds from Invisibles

Proceeds from transactions in invisibles with France (as defined above), Monaco, and countries maintaining Operations Accounts with the French Treasury may be retained. All amounts due from residents of other countries in respect of services and all income earned in those countries from foreign assets must be collected and surrendered. Resident and nonresident travelers may bring in any amount of bank notes and coins issued by the BCEAO, the Bank of France, or a bank of issue maintaining an Operations Account with the French Treasury, as well as any amount of foreign bank notes and coins (except gold coins) of countries outside the Operations Account Area; residents bringing in foreign bank notes and foreign currency traveler’s checks in excess of CFAF 5,000 must declare them to customs upon entry and sell them to an authorized intermediary bank within eight days.

Capital

Transfers of capital between Benin and South Africa are prohibited. Capital movements between Benin and France (as defined above), Monaco, and countries linked to the French Treasury through an Operations Account are free of exchange control; most capital transfers to all other countries require prior approval by the Minister of Finance and are restricted, but capital receipts from such countries are permitted freely.

Special controls (additional to any exchange control requirements that may be applicable) are maintained over borrowing abroad, over inward foreign direct investment and all outward investment in foreign countries, and over the issuing, advertising, or offering for sale of foreign securities in Benin. Such operations require prior authorization by the Minister of Finance. Exempt from authorization, however, are operations in connection with (1) loans backed by a guarantee from the Beninese Government, and (2) shares that are similar to or may be substituted for securities whose issuance or sale in Benin has already been authorized. With the exception of controls over foreign securities, these measures do not apply to France (as defined above), Monaco, member countries of the WAMU, and the countries linked to the French Treasury through an Operations Account. Special controls are maintained also over imports and exports of gold, over the soliciting of funds for deposit or investment with foreign private persons and foreign firms and institutions, and over publicity aimed at placing funds abroad or at subscribing to real estate and building operations abroad; these special controls also apply to France (as defined above), Monaco, and countries maintaining Operations Accounts.

All investments abroad by residents of Benin require prior authorization by the Minister of Finance; at least 75 percent of such investments must be financed from foreign borrowing.3 Foreign direct investments in Benin4 must be declared to the Minister before they are made. The Minister may request the postponement of the operations within a period of two months. The full or partial liquidation of either type of investment also requires declaration. Both the making and the liquidation of investments, whether these are Beninese investments abroad or foreign investments in Benin, must be reported to the Minister and to the BCEAO within 20 days of each operation. Direct investments are defined as investments implying control of a company or enterprise. Mere participation is not considered as direct investment, provided that it does not exceed 20 percent of the capital of a company whose shares are quoted on a stock exchange.

Borrowing by residents from nonresidents requires prior authorization by the Minister of Finance. The following are, however, exempt from this authorization: (1) loans constituting a direct investment, which are subject to prior declaration, as indicated above; (2) loans taken up by industrial firms to finance operations abroad, by international merchanting and export-import firms (approved by the Minister of Finance) to finance transit trade, or by any type of firm to finance imports and exports; (3) loans contracted by authorized intermediary banks; and (4) subject to certain conditions, loans other than those mentioned above, when the total amount outstanding of these loans, including the new borrowing, does not exceed CFAF 50 million for any one borrower. The repayment of loans not constituting a direct investment requires the special authorization of the Minister of Finance if the loan itself was subject to such approval, but is exempt if the loan was exempt from special authorization. Lending abroad is subject to prior authorization by the Minister of Finance.

The Investment Code (Law No. 90–002 of May 9, 1990) provides for preferential status that may be granted to foreign and domestic investments in industry, mining, fisheries, agriculture, and tourism, when such investments are deemed to contribute to national development. Fiscal benefits are extended to approved investors under two regimes: the preferential and the special regimes. The preferential regime comprises three categories: A, B, and C. Category A applies to small and medium-size enterprises; Category B, to large enterprises; and Category C, to very large enterprises.

Enterprises falling under Category A must have investments valued at between CFAF 20 million and CFAF 500 million, and employ at least five permanent Beninese workers. These enterprises are entitled to customs duties and levy exemptions on equipment and materials during the investment period (excluding the local roads and statistical taxes) and exemption from income tax for five to nine years, depending on the geographic location of their investment in Benin. Enterprises qualifying for Category B must undertake investments valued in excess of CFAF 500 million (but less than CFAF 3 billion), and employ at least twenty Beninese workers. These enterprises are exempt from virtually all border taxes on imports of equipment and materials for the period the investment is being undertaken, and, for the duration of the investment, they are exempt from export taxes and from taxes on profits. Enterprises qualifying for Category C benefits must undertake investments in excess of CFAF 3 billion. They enjoy the same tax and duty privileges as Category B enterprises. In addition, enterprises in this category are guaranteed stability of tax status for the duration of the agreement.

Enterprises qualifying under the special regime are those with investments valued at between CFAF 5 million and CFAF 20 million, and engaged in the provision of services in the health, education, or public works areas. These enterprises benefit from a 75 percent reduction in the applicable border taxes (excluding the local roads and statistical taxes) on imported equipment and materials related to their operations. The modalities of implementing this legislation are set out in Decree No. 91–2 of January 4, 1991.

Gold

An authorization by the Directorate of External Commerce, issued after consultation with the Minister of Finance, is required to hold, sell, import, export, or deal in raw diamonds and precious and semiprecious materials. In practice, residents are free to hold, acquire, and dispose of gold in any form in Benin. Imports and exports of gold from or to any other country require prior authorization by the Minister of Commerce, Handicrafts, and Tourism, which is seldom granted. Exempt from this requirement are (1) imports and exports by or on behalf of the Treasury or the BCEAO; (2) imports and exports of manufactured articles containing a minor quantity of gold (such as gold-filled or gold-plated articles); and (3) imports and exports by travelers of gold articles up to a maximum weight to be determined by an Order of the Minister. Both licensed and exempt imports of gold are subject to customs declaration.

Changes During 1990

Imports and Import Payments

May 15. The import-licensing requirements for imports of goods originating from the EC, the Operations Account countries, and countries belonging to the ACP group under the Lomé Convention were abolished. All merchandise imports originating from other countries are subject to prior authorization from the Directorate of Foreign Trade.

Exports and Export Proceeds

May 15. All exports were permitted on the basis of a simple authorization from the Directorate of Foreign Trade, with the exception of gold, diamonds, and other precious metals. The Minister of Finance will grant prior authorization in respect of these products, with the exception of articles made of gold with a small gold content, travelers’ personal effects weighing less than 500 grams, and coins (fewer than ten pieces, irrespective of their face value and denomination). Prior authorization for exports of these three product categories is granted by the central bank or the National Treasury.

Capital

May 9. An Investment Code (Law No. 90–002) providing for a preferential status for foreign and domestic investments in industry, mining, fisheries, agriculture, and tourism was promulgated.

Bhutan

(Position on December 31, 1990)

Exchange Arrangement

The currency of Bhutan is the Ngultrum. Since its introduction in 1974, it has been pegged to the Indian rupee, which also circulates in Bhutan, at a rate of Nu 1 = Rs 1. The rates for currencies other than the Indian rupee are determined on the basis of the prevailing quotations by the Reserve Bank of India for those currencies. If no large transactions are involved, exchange rates for other currencies may be determined on the basis of the most recent quotations by the Reserve Bank of India. No other exchange rates apply to international transactions, and there are no subsidies or taxes on exchange transactions. On December 31, 1990, the buying and selling rates of the ngultrum for the U.S. dollar were Nu 17.85 and Nu 18.35 per US$1, respectively. There are no arrangements for forward cover against exchange rate risk operating in the official or the commercial banking sector.

Administration of Control

The Ministry of Finance controls external transactions and provides foreign exchange for most current and capital transactions. Beginning from July 26, 1985, substantial powers are delegated by the Ministry of Finance to the Royal Monetary Authority to release foreign exchange (other than Indian rupees) for current transactions. The Royal Monetary Authority is in charge of implementing the surrender requirements for proceeds from merchandise exports and approving the use of foreign exchange for imports.

Prescription of Currency

There are no regulations prescribing the use of specific currencies in external receipts and payments.

Imports and Import Payments

All import payments other than those made in Indian rupees are subject to prior permission from the Royal Monetary Authority, which has discretionary authority to deny foreign exchange for the payment of luxury imports.

Customs duties are levied on imports other than those from India.

Exports and Export Proceeds

There are no export taxes. Exports to countries other than India receive a rebate at the rate of 30 percent of the c.i.f. value and a notional 10 percent profit. Exports of antiques of Bhutanese origin require approval by the Government. Proceeds of exports in currencies other than the Indian rupee must be surrendered to the Royal Monetary Authority either directly or through the Bank of Bhutan.

Payments for and Proceeds from Invisibles

Most invisible payments other than those made in Indian rupees are subject to approval by the Royal Monetary Authority. All receipts from invisible transactions in currencies other than the Indian rupee must be surrendered to the Royal Monetary Authority.

Capital

All capital transactions must approved by the Ministry of Finance.

Gold

There are no specific regulations on transactions in gold.

Changes During 1990

No significant changes occurred in the exchange and trade system.

Bolivia

(Position on December 31, 1990)

Exchange Arrangement

The currency of Bolivia is the Boliviano (Bs). The official selling rate is determined at an auction held daily by the Central Bank of Bolivia. On December 31, 1990, the official selling rate was Bs 3.40 = US$1. The official exchange rate applies to all foreign exchange operations in Bolivia. The auctions are conducted by the Committee for Exchange and Reserves (Comité de Cambio y Reservas) in the Central Bank. Before each auction, the Committee decides on the amount of foreign exchange to be auctioned and a floor price below which the Central Bank will not accept any bids. This floor price is the official exchange rate. The Central Bank is required to offer in all auctions unitary lots of US$5,000 or multiples of this amount. The minimum allowable bid is US$5,000 or multiples of this amount. Successful bidders are charged the exchange rate specified in their bid. In general, the spreads between the maximum and minimum bids have been less than 2 percent.

Since February 1, 1989, sales of foreign exchange by the Central Bank to the public have been subject to a commission of Bs 0.01 per US$1 over its buying rate. Except for the requirement to surrender the net proceeds from the exportation of goods and services, all banks, exchange houses, companies, and individuals can buy and sell foreign exchange freely. Successful bids channeled through the banking system are voided if the banking institution submitting the bid is not complying with the legal reserve requirement on deposits at the time of the auction. However, banks must maintain a balanced spot position in foreign exchange at all times and sell to the Central Bank any excess balance at the end of each day. All public sector institutions, including the public enterprises, must purchase foreign exchange for imports of goods and services through the Central Bank auction market.

There is a parallel but tolerated exchange market, in which the exchange rate on December 31, 1990 was Bs 3.39 = US$1 buying and Bs 3.42 = US$1 selling. There are no arrangements for forward cover against exchange rate risk operating in the official or the commercial banking sector.

Bolivia formally accepted the obligations of Article VIII, Sections 2, 3, and 4 of the Fund Agreement, as from June 5, 1967.

Administration of Control

The Central Bank of Bolivia is in charge of operating the auction market for foreign exchange. It is also the enforcing agency for export surrender requirements as well as for other exchange control regulations. The Ministry of Finance, together with the Central Bank, is in charge of approving public sector purchases of foreign exchange for debt-service payments. Arrears are maintained with respect to external payments.

Prescription of Currency

There are no prescription of currency requirements. Settlements are usually made in U.S. dollars or other convertible currencies. Payments between Bolivia and Argentina, Brazil, Chile, Colombia, Ecuador, Mexico, Paraguay, Peru, Uruguay, and Venezuela must be made through accounts maintained with each other by the Central Bank of Bolivia and the central bank of the country concerned, within the framework of the multilateral clearing system of the Latin American Integration Association (LAIA).

Imports and Import Payments

All goods may be freely imported, with the exception of sugar, edible oil, and wheat flour, which are temporarily subject to licensing requirements, and those controlled for reasons of public health or national security.

Since January 11, 1990, capital goods have been subject to an import tariff of 5 percent; the tariff is expected to be in place for two years. The customs tariff rate on all other goods (except books and printed materials on which the rate of 2 percent applies) was lowered on March 28, 1990 to 16 percent from 17 percent. On August 20, 1990, it was further lowered to 10 percent. Licenses with a validity period of 120 days are required for the importation of edible oil. Importers are required to pay an inspection charge of 1.85 percent of the f.o.b. value of imports.

Payments for Invisibles

There are no restrictions on payments for invisibles. Since July 26, 1990, residents traveling by air to neighboring countries have been required to pay a travel tax of Bs 100; the travel tax on travel to other foreign destinations is Bs 150. Public sector purchases of foreign exchange for debt service must be approved by the Ministry of Finance and the Central Bank. Outward remittances of profit are governed by the provisions of Decision Nos. 24 and 80 of the Cartagena Agreement.

Exports and Export Proceeds

All goods may be freely exported. All proceeds from exports of the public and private sectors must be sold to the Central Bank at the official exchange rate within three days of receipt, with the exception of reasonable amounts deducted for foreign exchange expenditures undertaken to effect the export. Exports, other than hydrocarbons, are subject to inspection fees at the following differentiated rates: nontraditional products, 1.55 percent; traditional products, 1.60 percent. Until August 1990, exporters of nontraditional products received, at the time of the surrender of foreign exchange receipts, a customs duty rebate certificate (certificado de reintegro arancelario (CRA)) equivalent to 10 percent of the net value of exports as determined by the Central Bank of Bolivia. In August 1990 the rate of the CRA was reduced to 6 percent.1 The certificates are denominated in domestic currency but maintain their value in U.S. dollars, and they may be in multiples of US$100. Exporters may transfer the certificates or use them for income tax and customs duty payments, except for the tax on the presumed income of property owners. The Compañía Minera Boliviana (Comibol) and the medium-size mines export their own production, and the Mining Bank exports the production of the small private mines. All exports of goods and services must be effected through documentary letters of credit drawn on domestic banks.

Proceeds from Invisibles

Banks, exchange houses, hotels, and travel agencies may retain the proceeds from their foreign exchange purchases from invisible transactions, including those from tourism. They are required, however, to report daily their purchases on account of these transactions.

Capital

Foreign exchange for outward capital transfers by residents or nonresidents can be purchased only from the commercial banks or from the Central Bank. Inward capital transfers may be made freely, but government receipts of transfers and grants and all proceeds of borrowings from foreign public sector agencies must be surrendered to the Central Bank. All foreign credits, including suppliers’ credits, to government agencies and autonomous entities and credits to the private sector with official guarantees are subject to prior authorization by the Ministry of Finance and to control by the Central Bank. Under Supreme Decree No. 19732 of August 11, 1983, financial institutions in Bolivia may make loans in the form of credits denominated in foreign currency for imports of capital goods and inputs for the external sector with resources from international financial institutions, foreign government agencies, or external lines of credit. Under Supreme Decree No. 21060 of August 29, 1985, banks are authorized to conduct foreign trade operations, such as letters of credit, bonds and guarantees, advances and acceptances, loans for required financing with their correspondents abroad, and other operations generally accepted in international banking, in favor of the country’s exporters and importers.

Foreign investments in Bolivia, except those involving petroleum and mining, are governed by the provisions of the Investment Law. In August 1990, the Investment Law of December 14, 1981 was replaced by another Investment Law, under which domestic and foreign investors are treated equally. The law is administered by the National Investment Institute. Investments in petroleum and mining are governed by the General Hydrocarbons Law and Mining Code. Certain foreign investments are subject to Decision Nos. 24 and 103 of the Cartagena Agreement.

Gold

Under Supreme Decree No. 21060 of August 29, 1985, gold may be traded freely, subject to a tax of 1.5 percent.

Changes During 1990

Imports and Import Payments

January 1. Capital goods were subject to an import tariff of 5 percent.

March 28. Import tariffs on all goods other than capital goods were lowered to 16 percent from 17 percent.

August 20. Import tariff rates on all goods were unified at 10 percent, except for books and printed materials on which a reduced rate of 2 percent would apply, and for capital goods on which a temporary rate of 5 percent would apply until January 31, 1992.

Payments for Invisibles

January 11. A tax on air travel by residents of Bs 100 to neighboring countries and Bs 150 to other destinations was introduced.

Exports and Export Proceeds

August 20. The rate of customs duty rebate certificate (CRA) was reduced from 10 percent to 6 percent of the net export value.

Capital

September 17. Congress approved an Investment Law covering all sectors except mining and hydrocarbons, under which domestic and foreign investors are treated equally. A new law was also passed for the mining and hydrocarbons sector, opening up the possibility of joint ventures with foreign investors and the state-owned mining company and petroleum company. (The law came into effect, retroactively, on September 15.)

Botswana

(Position on December 31, 1990)

Exchange Arrangement

The currency of Botswana is the Botswana Pula, which is pegged to a basket of currencies consisting of a weight of approximately 65 percent for the South African rand and of approximately 35 percent for the SDR. On December 31, 1990, the closing middle rate for the U.S. dollar, the intervention currency, was P 1.8713 per US$1; on the same date, the rate for the SDR was P 2.6596 per SDR 1. Buying and selling rates for certain other dealing currencies1 are quoted on the basis of their rates against the U.S. dollar in international markets. For information only, middle rates are quoted for certain other currencies.2 There are no taxes or subsidies on purchases or sales of foreign exchange.

External borrowings by parastatals are protected from exchange rate movements under a Foreign Exchange Risk Sharing Scheme. Under the scheme, risks associated with exchange rate fluctuations up to 4 percent are fully borne by the borrower, while risk associated with fluctuations between 4 percent and 15 percent is borne by the borrower and the Government on a 50:50 and 25:75 ratio, respectively. Risk associated with exchange rate fluctuations in excess of 15 percent is fully borne by the Government. The scheme is symmetrical in that the borrower and the Government share any gains from an appreciation in the external value of the pula on the same basis. Forward exchange cover is also offered by the commercial banks. The period for which forward cover may be given in respect of the foreign currency proceeds from the exportation of goods is six months.

Administration of Control

Exchange control is applicable to transactions with all countries. The Minister of Finance and Development Planning has delegated most of the administration of exchange controls to the Bank of Botswana (the central bank). The latter, in turn, has delegated considerable powers to banks appointed as authorized dealers.

Prescription of Currency

Payments to or from residents of foreign countries must normally be made or received in a foreign currency or through a nonresident-held pula account in Botswana. Botswana does not maintain any bilateral payments agreement.

Imports and Import Payments

Botswana is a member of a customs union with Lesotho, Namibia, South Africa, and Swaziland; there are generally no import restrictions on goods moving between the four countries. Import permits are required, however, for most goods imported directly into Botswana from outside the customs union. Certain imported goods, including firearms, ammunition, fresh meat, and some agricultural and horticultural products, require permits regardless of the country of supply. There are no restrictions on payments for authorized imports. Goods of domestic origin may move freely between Botswana and Zimbabwe by virtue of a customs agreement of 1956, provided they meet certain local value-added requirements and are not intended for re-export. Import shipments of less than P 2,500 are exempt from exchange controls.

Applications in respect of forward purchases of foreign currency to cover payment for imports when the contract covers a period exceeding six months must be referred to the Bank of Botswana.

Exports and Export Proceeds

Certain exports are subject to licensing, mainly for revenue reasons. Proceeds from exports must be received in a foreign currency or from a nonresident pula account. For a few items, such as precious and semiprecious stones, permits are required before export is allowed.

Payments for and Proceeds from Invisibles

Payments to nonresidents for current transactions, while subject to control, are not restricted. Authority to approve a range of current payments within limits is delegated to commercial banks. The basic exchange allowance for tourist travel by permanent residents is the equivalent of P 12,000 a calendar year for an adult (P 6,000 for a child). The allowance for business travel by permanent residents is P 600 a day, up to a maximum of P 35,000 a calendar year. The amount of unused foreign currency for travel that a resident can retain for future travel use is the equivalent of P 1,000 in currency or traveler’s checks; any excess amount must be surrendered within two months of the date of return in the case of currency notes and coins, and six months in the case of traveler’s checks. The basic foreign study allowance for permanent residents is P 3,000 a month a person and P 5,000 a family, with a vacation travel allowance of P 2,000 a year. The annual limit on outward remittances by a temporary resident on contract is P 25,000 or 50 percent of eligible salary, whichever is greater; for a self-employed temporary resident, the limit is P 25,000. Separately, travelers may take out domestic bank notes and foreign currency in amounts of P 500 and P 1,000 respectively, and may freely bring in any amount of domestic bank notes and coins. The Bank of Botswana may authorize the maintenance by residents of foreign currency accounts with banks abroad in proven cases of commercial need for such a facility. The delegated limits up to which authorized dealers may approve transfers of dividends and profits to nonresidents without reference to the Bank of Botswana is P 75,000 a year for each company; payments in excess of this limit may be authorized by the Bank of Botswana.

Capital

Pension and life assurance funds may invest up to one half of their funds abroad. Applications for investment abroad of other funds are treated on their merits and in light of possible benefits to Botswana. Foreign inward investment in new or existing businesses is generally encouraged. Non-resident-controlled companies (including branches of foreign companies) may borrow, as part of the local financing of capital and working capital purposes, up to P 300,000. Applications for local borrowing in excess of P 300,000 by nonresident-controlled companies may be considered by the Bank of Botswana, provided that the resulting debt-equity ratio will not exceed 4:1. Equity is defined as paid-up capital, reserves, and retained earnings. The 4:1 limit may be exceeded, if there is evidence that the project will provide a specialist skill to Botswana or will create significant employment. Any external borrowing by a local business must have at least a three-month grace period. Departing temporary residents are entitled to a basic remittable terminal allowance of up to P 25,000. Permanent residents are eligible for an emigration allowance of up to P 150,000. The balance of assets may normally be remitted in equal installments over three years from the date of departure, but faster remittances may be permitted in exceptional circumstances.

Changes During 1990

Payments for Invisibles

September 1. The Bank of Botswana authorized travel agents and major hotels to purchase, from nonresident travelers, foreign traveler’s checks and foreign bank notes; to accept foreign credit cards, commercial letters of credit, and similar bills of exchange; and to sell foreign currency to such travelers against foreign currency and/or unutilized pula acquired from legally imported foreign currency.

Capital

September 1. (1) Authorized Depositors (Authorized Dealers) were permitted to effect transactions relating to purchase and sale of securities of a portfolio investment nature involving nonresidents, subject to certain conditions; and (2) the Bank of Botswana allowed immediate repatriation of the proceeds of any disinvestment by foreign investors, up to a maximum of P 50 million. Repatriation of amounts exceeding this limit were permitted on deferred terms.

Brazil

(Position on December 31, 1990)

Exchange Arrangement

The currency of Brazil is the Cruzeiro (Cr$). Since March 16, 1990, Brazil has followed a flexible exchange rate policy under which the cruzeiro floats independently with respect to the U.S. dollar in an interbank exchange market.

Exchange transactions in the exchange market are carried out by the Central Bank of Brazil and by banks and tourist agencies authorized to deal in foreign exchange; the tourist agencies deal only in bank notes and traveler’s checks in a “manual market.” On December 31, 1990, the buying and selling rates quoted by the Central Bank to the public for approved exchange transactions in the interbank exchange market were Cr$168.59 and Cr$170.06, respectively, per US$1. The same exchange rates apply to “agreement dollars” used for settlements with bilateral agreement countries. Rates for other currencies are based on the U.S. dollar rates in Brazil and the rates for the respective currencies in New York and Europe. Foreign exchange transactions for amounts exceeding US$100,000 are subject to brokerage fees. These fees, which are freely negotiated between parties, are calculated on a sliding scale and result in effective rates of up to 3/16 of 1 percent on either side of the rates.

A different effective rate arises, on the selling side, from the application of a financial transactions tax (imposto sobre operações de crédito, câmbio e seguro, e sobre operações relativas a títulos e valores mobiliarios) (IOF) of 25 percent to purchases of foreign exchange for imports of selected services. Different effective rates arise, on the buying side, from the operation of a “manual market” in which the exchange rate for receipts from tourism is freely determined by participants in the market.

Global limits are fixed for the authorized banks’ sold positions in foreign exchange up to US$5 million; there is no limit on bought positions. Banks that are authorized to operate exclusively in the manual market and tourist agencies are permitted to maintain a free bought position but may not maintain a sold position. Authorized banks are required to deposit foreign exchange at the Central Bank overnight in amounts that are needed to eliminate an overbought position exceeding US$1 million. The banks are permitted to sell foreign exchange to each other without restrictions; such transactions may be carried out either on a spot basis by cable or on a forward basis, and must be executed within 2 working days for spot transactions or not later than 180 days for forward transactions. The commercial banks are permitted to provide forward exchange facilities to exporters, usually for a period of up to 180 days. The banks provide daily forward quotations for foreign currencies, with forward premiums reflecting corresponding interest differentials between the countries concerned. Commercial banks are not subject to daily limits on bought positions in foreign exchange.

Administration of Control

The National Monetary Council (CMN) is responsible for formulating overall foreign exchange policy. In accordance with the guidelines established by the Council, exchange controls, regulations affecting foreign capital, and the management of international reserves are under the jurisdiction of the Central Bank. The Ministry of Economy, Finance, and Planning enforces limits on foreign borrowing by the public sector.

The National Council of Foreign Trade (Concex), a board headed by the Minister of Economy, Finance, and Planning, formulates foreign trade policy. The Ministry of Foreign Affairs is the Council’s executive arm for dealing with foreign countries, while the Department of Foreign Trade of the Ministry of Economy, Finance, and Planning (Decex) implements the Council’s decisions within Brazil. The Decex issues export and import certificates (guias de exportação or declaraçãos de exportação and guias de importação).

The Customs Policy Commission (CPA), established within the Ministry of Economy, Finance, and Planning, is responsible for formulating guidelines for tariff policy. The CPA also decides on changes in customs duties under the provisions of existing legislation. The Ministry of Economy, Finance, and Planning coordinates public sector import policy.

In accordance with Fund’s Executive Board Decision No. 144-(52/51), adopted on August 14, 1952, Brazil notified the Fund, on October 3, 1990, that certain restrictions were imposed on the making of payments and transfers for current international transactions to the Government of Iraq and persons within the territories of Iraq and Kuwait.

Prescription of Currency

In principle, prescription of currency is related to the country of origin of imports or the country of final destination of exports, unless otherwise prescribed or authorized. Settlements with bilateral payments agreement countries1 are made in clearing dollars through the relevant agreement account. Payments between Brazil and Argentina, Bolivia, Chile, Colombia, the Dominican Republic, Ecuador, Mexico, Paraguay, Peru, Uruguay, and Venezuela must be made through accounts maintained with each other by the Central Bank of Brazil and the other central banks concerned, within the framework of the multilateral clearing system of the Latin American Integration Association (LAIA). Settlements with countries with which Brazil has no payments agreements or special payments arrangements are made in U.S. dollars or other freely usable currencies.

Foreign Exchange Accounts

Since October 30, 1986, exporters, importers, national companies with foreign capital participation, and official institutions in the field of education and technological research have been authorized to open foreign exchange accounts in U.S. dollars at the Central Bank. On June 29, 1988, foreign exchange accounts held by exporters and importers began to be gradually abolished, and were abolished in February 1989; however, effective November 16, 1989, they have been allowed to operate such accounts again, although funds on these accounts must be transferred to the Central Bank. The Central Bank is permitted to receive foreign currency deposits from abroad, provided that the holders of such deposits are national or foreign financial institutions. Companies whose foreign capital participation is registered at the Central Bank continue to be authorized to open foreign exchange accounts. These accounts can be credited with funds from new foreign direct investments and reinvestments, reserve profits, consolidated surplus, profit remittances, and returns and gains from capital remittances. Deposits are remunerated at the LIBO rate, and withdrawals require 90 days’ prior notice, or 30 days in cases of deposits from profits or dividends and sales of investments and participating capital stocks.

Imports and Import Payments

All importers must be registered with Decex, and goods can be imported only by registered firms or persons. Imports may be grouped into the following three broad categories: (1) imports that are free of requirements to secure prior administrative documentation, including samples without commercial value and certain educational materials; (2) imports that require an import certificate, which is issued by Decex; and (3) imports that are prohibited (luxury boats with an original sale price of US$3,500 or more, agrochemical products not authorized under Brazilian regulations, certain drugs that are not licensed for reasons of security, health, or moral reasons, as well as for reasons of industrial policy).

There is also a limitation on the direct importation of consumer goods (and on the purchase on the domestic market of any imported consumer goods) by the public sector (the Government, autonomous agencies, and public enterprises).2

Most imports require the prior approval of Decex, which is given automatically to registered importers of nonprohibited items.3 Decex is authorized to levy a processing fee of up to 0.9 percent on the value of import certificates; as a rule, certificates are valid for 60 days, 90 days, or 180 days, depending on the product. For special bonded warehouse importers, Decex issues clearance certificates for certain groups of commodities. For a number of specified imports, the import certificate may be obtained after the commodity has been landed but before customs clearance.

It is a prior condition for the granting of import certificates that importers arrange external financing with specified minimum maturities.4 The limit on cash imports is US$200,000 an importer, with an additional allowance of US$200,000 for capital goods imports. Minimum financing requirements are as follows: 2 years for capital goods imports; 180 days for parts and components; and 90 days for all other import categories. Decex is entitled to authorize in exceptional cases imports that do not satisfy minimum financing requirements.

Certain products require the approval of the Special Secretariat for Information. For some commodities, eligibility for exemption from import duties may be precluded by the existence of satisfactory domestic equivalents (similares nacionais).

Goods imported into the Manaus and Tabatinga free trade zones are subject to an annual quota, which was set at US$1.27 billion and US$15 million, respectively, for 1990. Foreign goods imported into the Manaus free trade zone up to the equivalent of US$600 can be transferred to other parts of Brazil (as a passenger’s baggage) free of import taxes.

As a general rule, imports may be cleared through customs before an exchange contract is closed. Decex may approve applications for the payment of imports of any goods at terms of up to 360 days from the date of shipment without authorization from the Central Bank. External financing at terms in excess of 360 days for imports must be authorized by the Central Bank, which will evaluate them in the light of foreign debt policy. Payment of the amount financed, and the interest thereon, may be made only upon presentation of a certificate of authorization and of the related scheme of payments issued by the Department of Foreign Capital (Firce) of the Central Bank. Before shipment of the goods, total payments to suppliers for the nonfinanced amount may not exceed 15 percent of the import value.

Spot exchange contracts can be closed if the contract is intended to settle drafts, at sight or on maturity, and once the appropriate shipping documents are presented. Spot exchange contracts must be settled on maturity of the draft; settlement may take place two working days before the maturity date. Exchange contracts for imports financed under letters of credit must be closed on the date of settlement or two working days before the maturity date of the letters of credit.

Payments for Invisibles

Payments for current invisibles related to income from foreign capital, royalties, and technical assistance are governed by the provisions of the Foreign Investment Law. In addition to certain restrictions on remittances stipulated in that law, limits are placed on remittances of all royalties and technical assistance fees (see below). Brazilian residents temporarily staying abroad for educational or health purposes may purchase foreign exchange up to the equivalent of US$1,000 a month in the foreign exchange market. Payments for other current invisibles require the approval of the Central Bank’s Exchange Departments (Decam) or Firce, which authorize remittances freely, subject to the presentation of supporting documents as evidence that a bona fide current transaction is involved.

Personal expenses connected with travel abroad may be obtained up to US$4,000 a person, irrespective of age or destination, in the foreign exchange market, of which US$100 is available in cash and the remainder in traveler’s checks. The basic allowances are one half of the preceding amounts for minors between the ages of 2 and 12 years; no allowances are available for infants up to the age of 2 years. A special daily allowance, ranging from US$250 to US$400, is available for business travel and representation expenses abroad. Applications for purchases of foreign exchange for travel in excess of these limits must be submitted to the Central Bank, which considers each case on its merits. Brazilian officials traveling abroad in the interest of the Government are granted allowances at a rate determined by the Central Bank.

Remittances abroad of income from foreign direct investments and reinvestments and remittances in respect of royalties and technical assistance are governed by Decree No. 55762 of February 17, 1965, which contains the regulations implementing the Foreign Investment Law. Remittances are allowed only when the foreign capital concerned, including reinvestments, and the contracts for patents and trademarks, and for technical, scientific, and administrative assistance are registered at Firce in accordance with the established rules (see section on Capital, below). The registration of contracts or deeds for technical assistance or the use of patents or trademarks is subject to approval by the National Institute of Industrial Property. Remittances are normally authorized in the currency of the country of domicile or of the head office of the beneficiaries. Remittances of interest on loans and credits and of related amortization payments are permitted freely in accordance with the terms stipulated in the respective contract and recorded in the certificate of registration. Profit remittances are subject to withholding tax on income at a rate of 25 percent or other rate determined under agreements between Brazil and other countries for the purpose of avoiding double taxation. A supplementary income tax applies when profits paid to a foreign investor during a three-year period exceed an average of 12 percent of the foreign currency value of registered capital, at the rates of 40 percent, 50 percent, and 60 percent if the average profit paid is in the ranges of 12–15 percent, 16–25 percent, and above 25 percent, respectively. Effective July 3, 1989, remittances of profits and dividends became subject to retention at the Central Bank; the remittance of dividends was resumed in October, but dividends had to be retained at the Central Bank for 60 days. Since June 26, 1990, remittances of blocked profits, dividends, royalties, and capital have been allowed gradually by the end of December 1990.

Remittances of royalties by a branch or subsidiary established in Brazil to its head office abroad are not permitted when 50 percent or more of the local firm’s voting capital is directly or indirectly held by the foreign principal firm or when the majority of the firm’s capital in Brazil belongs to the recipients of the royalties abroad. Amounts due as royalties for patents or for the use of trademarks, as well as for technical, scientific, and administrative assistance, and the like, may be deducted from the income tax liability to determine the taxable income, up to the limit of 5 percent of gross receipts; amounts exceeding this limit are considered as profits. The percentages are the same as those established in Brazil’s tax laws for determining the maximum permissible deductions for such expenses.

Purchasers of foreign exchange for a number of current invisibles are subject to the financial transactions tax (IOF) of 25 percent.

Travelers may freely take out domestic and foreign bank notes. Repurchases of foreign exchange by a foreign traveler are limited to US$100 a trip or to the U.S. dollar equivalent of the amount exchanged into domestic currency during the visit, whichever is smaller.

Exports and Export Proceeds

Exports are free of licensing requirements but require an export certificate (guia de exportação or declaração de exportação) issued by Decex to ensure compliance with exchange and trade regulations. Some exports are free of controls, but exports of several commodities require the prior approval of Decex, while exports of specified commodities are suspended. Exports requiring approval include those effected through bilateral accounts, exports without exchange cover, exports on consignment, re-exports, commodities for which minimum export prices are fixed by Decex, and exports requiring prior authorization by government agencies.

The foreign exchange proceeds from all exports may be sold in the foreign exchange market. Foreign exchange contracts covering transactions may be closed either before the shipment of goods or within 10 working days of shipment. Export proceeds must be surrendered to the Central Bank within 45 days of shipment. The export of hides of wild animals in any form is suspended.

Proceeds from Invisibles

Exchange proceeds from current invisibles must be sold through the authorized banks at the prevailing market rate. Traveler’s checks and foreign bank notes are sold in the manual market. Travelers may freely bring in domestic and foreign currency notes.

Capital

Capital inflows in the form of financial loans under National Monetary Council Resolution No. 63, as amended, or under the provision of the Foreign Investment Law (Law No. 4131) require prior approval from the Central Bank. Prior approval from the Central Bank is required for borrowing by the private or public sector when the foreign funds originate from official financial institutions abroad, when the transaction is to be guaranteed by the National Treasury or, on its behalf, by any official credit institution, and for other foreign borrowing by the public sector (i.e., the Government, autonomous agencies, and public enterprises). In addition, prior approval from the Central Bank is required for borrowing by the private sector when the foreign funds originate from financial institutions abroad. Otherwise, inward transfers are unrestricted and free of control, although the subsequent utilization of the proceeds for the acquisition of certain domestic assets may be subject to control. There is a separate regime for inward portfolio investment. For the purposes of repatriation and the remittance of income, however, inward transfers of foreign capital and the reinvestment of profits on foreign capital must be registered with Firce. Foreign capital is defined for this purpose as (1) goods, machinery, and equipment to be used to produce goods or to render services that have entered the country without an initial corresponding expenditure of foreign exchange; and (2) financial and monetary resources brought into the country for investment in economic pursuits, provided that, in either case, the owner is a person or firm resident or domiciled abroad or with headquarters abroad.

Foreign capital other than capital invested in Brazilian securities is classified, for purposes of registration, as direct investments or loans, whether imported in the form of money or of goods, and it includes reinvested profits from foreign capital. Direct investment is defined as that foreign capital that constitutes part of the corporate capital and participates directly in the risk inherent in an economic undertaking. Foreign capital that is not part of the corporate capital of any enterprise is considered to be a loan. Any loan obtained to purchase capital goods abroad, whether contracted by the manufacturer himself or by a third party, is considered to be financing (mostly suppliers’ credit).

Persons resident abroad may make portfolio investments in Brazilian commercial and industrial securities indirectly by acquiring shares in a Brazilian “investment company” quoted on Brazilian stock exchanges. Such capital is subject to registration with the Central Bank and must remain in the country for at least three months. The minimum participation in investment companies by foreign firms or individuals is US$1,000. Portfolio investments are exempt from the capital gains tax. Portfolio investments may also be made through the purchase of quotas of the “Investment Fund—Foreign Capital.” The minimum participation in this fund is US$5,000, and the money must stay in the country for at least three months. Funds and other collective investment entities established abroad may maintain, in Brazil, portfolios of bonds and other securities, once their constitution and administration have been previously approved by the Central Bank and the securities and exchange commission.

For financial imports and for investments made in the form of goods, the registration is in the currency of the country of domicile of the creditor or investor (or of its head office) or, in special circumstances, in the currency of the country of origin of the goods or of the credit. To register loans that are made in foreign currency, it is necessary to certify that the interest rate corresponds to that prevailing in the original market of the loan, that the amortization schedule is not disproportionately heavy in the early stages of repayment, and, in the case of import-financing loans, that the prices of the imported goods correspond to the prices of comparable goods in the country of origin.

Capital entering Brazil is registered in foreign currency. Reinvestments are defined as profits of companies established in Brazil and accruing to persons or companies resident abroad when they have been reinvested in the same companies that produced them or in another sector of the Brazilian economy. The registration of reinvested profits is made simultaneously in Brazilian currency and in the currency of the country to which the profits could have been remitted. The conversion is calculated at the average exchange rate prevailing between the date on which the profits appeared on the balance sheet of a company and the date of their reinvestment. A progressive supplementary income tax is levied on distributions of profits and dividends to nonresidents in excess of 12 percent of registered capital and reinvestments over a three-year period; the tax is applied whether or not the profits are remitted abroad, but reinvested earnings are exempt.

Special regulations govern borrowing abroad. Under National Monetary Council Resolution No. 63, as amended, private, commercial, investment, and development banks, and the Banco Nacional de Desenvolvimento Econômico e Social may be authorized to take up foreign currency credits abroad for domestic relending for purposes of financing working capital. Safeguards against excessive use of such credits include limitations on the foreign obligations that each bank may assume (related to the terms of the credit and the size of the bank) and the provision that the ultimate borrower must agree to bear the exchange risk. Effective July 31, 1990, certain financial institutions are authorized to obtain resources from abroad through the issue of commercial papers. All other financial loans in foreign currency are effected under the general provisions of the Foreign Investment Law (Law No. 4131). Loans under this law also require prior central bank authorization, but the Central Bank does not undertake to provide specific exchange cover for them. Loans under Resolution No. 63, as well as those under Law No. 4131, must have a minimum term of one year, but no maximum term is set. Foreign loans are subject to mandatory deposit at the Central Bank. In the case of private enterprises, the deposit applies to 75 percent of the loan proceeds converted into cruzeiros, and it is released as follows: one third after 60 days from the deposit date, one third after 90 days, and the balance after 120 days; for public enterprises, the deposit applies to 100 percent of the loan proceeds converted into cruzeiros and is released as follows: 20 percent after 150 days from the deposit date, 40 percent after 180 days, and the balance after 210 days.

In addition to these mandatory deposit regulations, on June 23, 1977, the Central Bank authorized voluntary deposits at the Central Bank by financial and nonfinancial institutions of the outstanding balances of their foreign loans; these deposits may be released only on the maturity dates for payment of principal, interest, and commissions. For as long as the deposit remains with the Central Bank, the Central Bank covers all costs on these loans, including the exchange cost.

Under a program for the management of external debt, the National Monetary Council imposes quantitative limits on the amount of financial loans for which authorization may be given by the Central Bank. Loans are authorized only if maturities conform to minimum requirements established from time to time by the Central Bank, which permits the total of loans outstanding to rise only to the extent that the servicing commitments on Brazil’s total external indebtedness do not depart from the guidelines set by the National Monetary Council. As of the end of 1989, the Central Bank’s minimum acceptable maturity was set at seven years. However, provided that the full amount of the foreign exchange remains committed to Brazil for the minimum specified maturity, loans to the final borrower in Brazil, as well as loans to banks under Resolution No. 63, may be made on terms shorter than the final maturity of the debt abroad, and these funds may subsequently be re-lent to the same or to a second borrower. Under the provisions of debt-rescheduling agreements, a similar mechanism applies to the foreign exchange equivalent of affected principal rescheduled with foreign commercial banks in 1989, subject to yearly quantitative limits.

Transfers of proceeds from sales of property and inheritance are permitted up to the limit of US$300,000 or its equivalent in other currencies, provided that they are made through authorized dealers with supporting documentation.

Outward capital transfers not mentioned above require authorization by Decam and Firce, which consider applications on their merits. Approved exchange transactions involving outward transfers of private capital are effected through authorized banks at the prevailing official market rate.

Gold

Firms authorized by the Government may freely purchase, hold, and sell gold in Brazil under Decree No. 1,038 of October 21, 1969. Gold mining is conducted under Law No. 4425 of October 8, 1964. The first domestic negotiation of newly mined gold is subject to a mining tax of 1 percent, plus Finsocial fees (an income tax surcharge and a sales tax) (0.6 percent) and PIS/PASEP (Programa de Integração Assistencia Social de Empregados Publicos) contributions (a levy on the wage bill payable by employers) (0.75 percent), due on each transaction, unless the operation takes place in the financial market when the Finsocial fees are due on the profits of the firm. The Central Bank is empowered to buy and sell gold on the domestic market at domestic prices (CMN Resolution 1182 of April 4, 1986). Purchases of gold are made at current domestic prices; the international price is considered as a target price. Imports of gold are subject to the issuance of an import certificate by Decex and authorization by the Central Bank. Exports of gold are subject to the same procedures as those that are applied through Decex in respect of other products, but the Central Bank is always the alternative buyer.

Changes During 1990

Exchange Arrangement

March 15. The new cruzado (NCz$) was replaced by a new monetary unit, the cruzeiro (Cr$) at the rate of NCz$1 = Cr$1.

March 16. The Central Bank introduced an official foreign exchange interbank market. The following transactions would take place in this market where the exchange rate is to be determined freely: import and export transactions; profit and divided remittances; capital repatriation; debt-service payments; and approved foreign investments.

Imports and Import Payments

March 16. Annual import programming and the negative import list (Anexo C) were largely eliminated. The monopoly of federal government agencies over importing products for reasons other than health, national security, and other specified public interests was eliminated.

March 29. The conditions for exemptions from duties, VAT, and other taxes on imports of equipment for scientific and industrial research were announced.

April 12. Exemptions from duties and IPI on all imports (including public enterprises) were rescinded, with the following exceptions: (1) imports by government administrations, political parties, educational, social, and scientific institutions, diplomatic missions, and international organizations; (2) imports under international agreements; (3) imports of the national petroleum company (Petrobras); (4) books, newspapers, and periodicals; (5) basic foodstuffs; (6) fertilizer; (7) spare parts and components for the repair and maintenance of ships and airplanes; and (8) goods for processing in duty-free zones.

In addition, the tax rate of the “Adicional ao Frete para a Renovacao da Marina Mercante” (Afrmm) was reduced by 50 percent.

May 3. Some one thousand two hundred products on the prohibited import list (Anexo C) were liberalized. The tariff rates on some three hundred products (in the categories of chemicals, electrical and electronic goods, motor vehicles, watches, and toys) were raised.

June 26. The local content requirement for firms that enjoy certain fiscal incentives, public financing, or public procurement was reduced to 70 percent.

August 21. The tariff rate on beef was reduced to zero.

August 27. The limits on imports through the Manaus and Tabatinga free trade zones for 1990 were set at US$1.27 billion and US$15 million, respectively.

September 21. External financing requirements on certain imports were eliminated.

September 24. The tariff rates on 100 items (including petrochemicals, steel, and car parts) were reduced, on average, by 50 percent.

Payments for Invisibles

June 26. It was announced that remittances of profits, dividends, and royalties would be freed gradually.

Exports and Export Proceeds

May 7. The Brazilian Coffee Institute, which regulated exports of coffee, was abolished.

April 12. Income tax incentives on manufactured exports and a number of sectoral and regional fiscal incentives for exporters were eliminated.

October 31. Exports of coffee were subject to the same regulations as those governing other exports.

Capital

June 26. It was announced that repatriation of capital would be freed gradually.

July 31. Certain financial institutions were allowed to obtain resources from abroad by issuing commercial papers.

Republic of Bulgaria1

(Position on March 31, 1991)

Exchange Arrangement2

The currency of Bulgaria is the Lev. The Bulgarian National Bank (formerly National Bank of Bulgaria) quotes daily the exchange rate of the lev in terms of the U.S. dollar based on developments in the domestic interbank exchange market. This rate is called the central exchange rate. Exchange rates for other currencies are determined by their cross rate relationships with the U.S. dollar in the international exchange market. On March 1, 1991, the exchange rate quoted by the Bulgarian National Bank in terms of the U.S. dollar was leva 19.796 per US$1. There are no taxes or subsidies on purchases or sales of foreign exchange. There are no arrangements for forward cover against exchange rate risk operating in the official or the commercial banking sector.

Administration of Control

Exchange controls are administered by the Ministry of Finance and the Bulgarian National Bank. The Bulgarian National Bank is responsible for implementing the exchange rate policy. Eleven commercial banks and one financial institution conduct foreign exchange (forex) transactions. In 1990, 59 new commercial banks were established on the basis of the previous branches of the Bulgarian National Bank, and 14 banks were licensed in early 1991 to operate as commercial banks, of which only 2 banks are currently in operation. One of the 59 banks, the Vuzrajdane Bank (a joint stock company), is licensed to conduct forex transactions abroad. New banks are authorized to open foreign currency accounts for residents, and some are permitted to have foreign banks as correspondents or to borrow directly abroad provided that they do not request a guarantee from the Government.

Arrears are maintained with respect to certain external payments.

In accordance with the Fund’s Executive Board Decision No. 144-(52/51), adopted on August 14, 1952, Bulgaria notified the Fund, on December 21, 1990, that certain restrictions were imposed on the making of payments and transfers for current international transactions to the Government of Iraq and persons within the territories of Iraq and Kuwait.

Prescription of Currency

Payments to and from countries with which Bulgaria has bilateral agreements are made in the currencies and in accordance with the procedures set forth in those agreements.3 Transactions are generally settled through clearing accounts. Balances in these accounts are generally to be settled in goods (annual and multiyear) during the six months after the termination of the agreement; thereafter, they are settled in convertible currencies.

Resident and Nonresident Accounts

Residents may maintain foreign currency deposit accounts, which may be credited without restriction, and from which transfers may be made freely for transactions that are permitted under the existing exchange control regulations. Balances on these accounts earn interest at international market rates. Nonresidents may maintain accounts in foreign currencies without any specific requirement on authorization, limitation, or restriction. The crediting and debiting of these accounts are not subject to any regulations, and transfers abroad from these accounts are free of restriction.

Imports and Exports

There are no import quotas, and most imports are subject only to declaration and registration at the Ministry of Foreign Economic Relations for statistical purposes.4 The import customs tariff system is based on the harmonized system of nomenclature. There are separate tariffs for imports from 42 low-income countries (total exemptions), for imports from other developing countries (preferential rates), for imports from developed countries that grant most-favored-nation (MFN) treatment to Bulgaria, and for imports from countries that do not grant MFN treatment to Bulgaria. Tariffs on industrial goods generally do not exceed 10 percent (the maximum is 13.8 percent); tariffs on agricultural products range from zero to 90 percent. However, the MFN clauses apply to most of these duties. A temporary import tax of 15 percent is applied to a range of products, mostly consumer goods. Tariffs are calculated on the transaction values (actual invoice price paid) in foreign currency and converted to leva.

Proceeds from exports must be repatriated within one month but do not have to be surrendered; they may be retained in foreign currencies or sold in the interbank exchange market. Under Government Decree No. 13 (February 8, 1991), as amended by Decree No. 73 (April 22, 1991), export taxes are levied on a variety of products. The range of rates is as follows: (1) 30 percent on the lev equivalent of the forex proceeds from exports of wheat, animal livestock, meat and meat products, and cheese; and (2) 20 percent on the lev equivalent of proceeds from exports of 26 items, including gasoline, diesel fuel, synthetic textile fibers, ferrous and nonferrous metals and their shaped products, steel tubes, zinc and lead ingots (spelter), electrolytic copper, soda ash, timber, all sorts of packing and wrapping material, soaps and detergents, textiles, garments and clothing, electric batteries, and medicines and pharmaceuticals. Taxes on the above-mentioned items are exempt when they are exported under barter operations approved by the Government or similar arrangements.

Exports of 26 products are banned, including phosphate fertilizers, PVC, unprocessed leather and furs, wool, cotton, linen, silk, fodder, beans, rice, powdered milk, sugar, edible fats and oils, and ferrous and nonferrous metal scrap. However, the Government may lift the ban on a case-by-case basis. Exports of meat and meat products to the European Community (EC) are subject to EC quotas.

Special licenses are required for exports and imports of tobacco leaves and products; liquors, wines, and beer; essential oils; military hardware and related technologies; endangered flora and fauna; radioactive materials; crafts and antiques; intellectual property; jewelry; and rare and precious metals.

Payments for and Proceeds from Invisibles

Foreign exchange allowances for business travel are granted without restriction. Allowances for tourist travel are limited to the equivalent of up to US$50 a person a year for people without foreign currency deposits. Resident holders of forex deposits receive unlimited tourist travel allowances.

Proceeds from invisibles do not have to be surrendered and may be retained in foreign currencies or sold in the interbank exchange market. Commercial banks may sell foreign exchange freely to resident individuals or resident legal persons if proper documentation certifies that foreign exchange is needed for education or medical treatment abroad. Remittances of earnings by foreign workers and remittances for family maintenance are not explicitly mentioned in Decree No. 15 (of February 8, 1991), governing foreign exchange control, but they have been treated implicitly as transfers abroad that are not related to merchandise imports. The latter require prior permission from the Bulgarian National Bank as stipulated by the decree.

The exportation and importation of domestic bank notes are prohibited.

Capital

Residents may borrow abroad without the authorization of the Bulgarian National Bank. The forex licensed commercial banks, however, may borrow abroad only if they do not request a guarantee of the Government of Bulgaria and if their borrowing complies with the prudential regulations set up by the Bulgarian National Bank. They may also extend foreign currency and leva loans to residents and nonresidents.

Foreign direct investments in Bulgaria are governed by Decree No. 56 of 1989, as amended in 1990 and 1991. Nonresidents may own domestic enterprises partly or fully, or may enter into joint-venture arrangements, subject to authorization, when the foreign share exceeds 49 percent in limited liability firms and 20 percent in joint-stock firms. Foreign direct investments must be registered but require authorization only if they are undertaken in sectors that are considered sensitive. Foreign direct investments are guaranteed against expropriation, except for nationalization through legal process. Foreign firms are granted the same status as domestic firms; they may, under certain conditions, benefit from preferential treatment, including reduced taxation and access to judicial appeal outside the system of state arbitration. In general, fully owned foreign firms are subject to a profit tax of 40 percent, and joint ventures are subject to a profit tax of 30 percent; all other firms with foreign participation are subject to the same profit tax as domestic firms (40 percent). Repatriation of liquidated capital and after-tax profits is not restricted; however, transfers of profits in domestic currency require a special authorization.

Gold

The Ministry of Finance controls the acquisition, possession, manufacture, and disposal of gold and all precious metals. The Bulgarian National Bank is the only institution entitled to purchase, sell, hold, import, or export gold for monetary and nonmonetary purposes. All domestic transactions for industrial purposes must be conducted at current prices through the Bulgarian National Bank. Commercial banks are not authorized to deal or speculate (on their own or on their customers’ behalf) in precious metals, with the exception that the Bulgarian Foreign Trade Bank is licensed to deal in silver. Resident individuals may hold gold but may not trade or deal in it. The amount of gold and jewelry products they may import is limited. Nonresidents are permitted to bring in and take out their jewelry but may not trade. Nonresidents must have permission from the Ministry of Finance to buy gold and silver products.

Changes During 1990

Exchange Arrangement

May 2. The exchange rate system applicable to convertible currencies was changed (Decree No. 32). The exchange rate system would consist of three rates: (1) a basic rate pegged to a basket of currencies that would apply to official transfers and imports of essential products; (2) a market rate to be determined at periodic foreign exchange auctions that would be used for most commercial transactions; and (3) a cash rate based on prevailing conditions in the market that would apply to transactions by individuals in bank notes and traveler’s checks. The basic rate and the cash rate were initially set at leva 2.97 per US$1 and leva 7.17 (middle rate) per US$1, respectively.

May 7. A foreign exchange auction in the amount of US$30 million was conducted; the average exchange rate was leva 10.03 per US$1.

June 4. A foreign exchange auction in the amount of US$30 million was conducted; the average exchange rate was leva 7.13 per US$1.

June 11. The cash rate (middle rate) was adjusted to leva 7.06 per US$1.

November 20. The exchange rate of the lev for transferable rubles was adjusted from leva 1.05 per TR 1 to leva 3.50 per TR 1 for exports to the U.S.S.R. under the trade protocol covering imports of crude oil and natural gas.

November 27. The cash rate (middle rate) was adjusted to leva 9.70 per US$1.

December 31. The transferable ruble ceased to be the exchange rate at which trade with CMEA member countries would be settled. From January 1, 1991, settlements would be made in convertible currencies.

Imports and Exports

April 10. In conjunction with the reform of the exchange system introduced under Decree No. 32, quotas were introduced on exports of 42 items to the convertible currency area. These items included foodstuffs and industrial materials.

May 9. Exports of 57 categories of products, including most foodstuffs, were restricted or prohibited until the end of 1990.

May 28. Licenses were required for the following transactions: (1) exports to CMEA member countries above the levels set under intergovernmental trade protocols; (2) imports from CMEA member countries; (3) imports under project and technical assistance; (4) exports and imports under barter deals; (5) exports and imports of precious metals; and (6) exports of goods subject to voluntary restraint agreements.

September 13. Under Decree No. 99, exports of selected foodstuffs (meat, grain, beans, milk, and dairy products) were prohibited until the end of March 1991. These bans covered most of the product items that were covered by Decree No. 32 (see April 10 change, above).

October 26. A trade cooperation agreement with the European Community came into effect. It provided for reciprocal granting of most-favored-nation treatment, progressive elimination of quantitative restrictions, and other liberalization of trade regimes.

November 14. Exports of foodstuffs that take place under barter deals in exchange for energy products and certain foodstuffs (particularly sugar) were allowed.

Changes During 1991

Exchange Arrangement

February 1. The cash rate was adjusted to leva 15 (middle rate) per US$1.

February 8. Decree No. 15 introduced a major reform of the exchange system, under which authorized dealers (commercial banks and foreign exchange bureaus) were permitted to sell foreign currencies to residents and to each other at freely negotiated exchange rates. The Bulgarian National Bank quotes daily exchange rates in terms of the U.S. dollar on the basis of developments in the domestic interbank exchange market. Residents may freely purchase foreign exchange for most current account payments, except for tourism, for which specific limits were established. Proceeds from exports must be repatriated within one month but are not required to be surrendered.

Imports and Exports

February 8 and 15. Decrees Nos. 4 and 13, removing all licensing requirements except for exports subject to quotas, exports under state protocols, and exports and imports under governmental credits, were announced. Export restrictions were imposed on 21 products, export prohibitions were imposed on 12 products, and export taxes (ranging from 20 percent to 30 percent) were imposed on 16 products, including wheat, animal livestock, meat, gasoline, other fuels, fibers, metals, textiles, and medicines. An import tax of 16 percent was levied on most imports.

April 22. Under Decree No. 73, export taxes of 20 percent and 30 percent were imposed on 21 essential items, and the import tax of 15 percent was exempted on some 200 items, mainly foodstuffs and industrial inputs and spare parts.

May 9. The Government decided to abolish all export taxes on livestock, meat, meat products, poultry meat, and cheese.

Burkina Faso

(Position on December 31, 1990)

Exchange Arrangement

The currency of Burkina Faso is the CFA Franc,1 which is pegged to the French franc, the intervention currency, at the fixed rate of CFAF 1 = F 0.02. The official buying and selling rate is CFAF 50 = F1. Exchange rates for other currencies are derived from the rate for the currency concerned in the Paris exchange market and the fixed rate between the French franc and the CFA franc. Banks levy a commission of 2.5 per mill on transfers to all countries outside the West African Monetary Union (WAMU), all of which must be surrendered to the Treasury.2 There are no taxes or subsidies on purchases or sales of foreign exchange.

In the official and commercial banking sectors, forward exchange cover may only be arranged by residents for settlements with respect to imports of goods on specified lists. All contracts for forward exchange cover must be denominated in the currency of payments stipulated in the contract, and they are subject to the prior authorization of the Minister of Finance. Forward exchange contracts may be concluded for a period of one month and may not be renewed; for certain products, the maturity period of forward exchange cover may be renewed once for a period of three months.

With the exception of measures relating to gold and to the repatriation of export proceeds, Burkina Faso’s exchange controls do not apply to (1) France (and its Overseas Departments and Territories) and Monaco; and (2) all other countries whose bank of issue is linked with the French Treasury by an Operations Account (Benin, Cameroon, the Central African Republic, Chad, Comoros, Congo, Côte d’Ivoire, Equatorial Guinea, Gabon, Mali, Niger, Senegal, and Togo). Hence, all payments to these countries may be made freely. All other countries are considered foreign countries.

Administration of Control

Exchange control is administered by the Directorate of the Treasury in the Ministry of Finance. The approval authority in respect of exchange control (except for imports and exports of gold, forward exchange cover, opening of external accounts in foreign currency, and business travel allocations in excess of CFAF 400,000) has been delegated to the BCEAO and, within limits specified in the exchange control regulations, to authorized intermediaries. The BCEAO is also authorized to collect, either directly or through banks, financial institutions, the Postal Administration, and judicial agents, any information necessary to compile balance of payments statistics. All exchange transactions relating to foreign countries must be effected through authorized banks, the Postal Administration, or the BCEAO. Import and export licenses are issued by the Directorate-General of Foreign Trade in the Ministry of Commerce and Supply. Import certificates for liberalized commodities and export attestations are made out by the importer or exporter himself and, when settlement takes place with a country outside the Operations Account Area, are visaed by the Customs Administration.

Arrears are maintained with respect to external payments.

Prescription of Currency

Since Burkina Faso is an Operations Account country, settlements with France (as defined above), Monaco, and the other Operations Account countries are made in CFA francs, French francs, or the currency of any Operations Account country. Current transactions with The Gambia, Ghana, Guinea, Guinea-Bissau, Liberia, Mauritania, Nigeria, and Sierra Leone are normally settled through the West African Clearing House. Certain settlements with the People’s Republic of China, Germany, and Ghana3 are channeled through special accounts. Settlements with all other countries are usually effected either through correspondent banks in France, or the country concerned, in any of the currencies of those countries, or in French francs (or in other currencies of the Operations Account Area) through Foreign Accounts in Francs. All settlements with South Africa are prohibited.

Nonresident Accounts

BCEAO bank notes may be credited to Foreign Accounts in Francs when they have been mailed to the BCEAO agency in Ouagadougou by an authorized bank’s foreign correspondent. Otherwise, the crediting to nonresident accounts of BCEAO bank notes, French bank notes, or bank notes issued by any other institute of issue that maintains an Operations Account with the French Treasury is prohibited. Foreign Accounts in Francs may be debited, without prior authorization, with the value of BCEAO bank notes mailed directly by authorized intermediaries to their foreign correspondents.

Imports and Import Payments

Imports of goods originating in or shipped from any country for commercial purposes and under any customs regulations may be made freely; prior acquisition of an official import document is necessary for imports exceeding values of CFAF 250,000. A special import authorization is required for the following products, subject to quota: sugar; paddy and milled rice; wheat and cereal flour; cement; edible oils; soap; concrete-reinforcing bars; sheet metal; batteries; tires and inner tubes for motorcycles and mopeds originating from outside the WAMU; tire-vulcanization products; foam rubber for mattresses; tiles; furniture; bicycle spare parts; polythene bags; cloth; mats and bags made of polypropylene; printed fabric; bleached and tinted threads; tomato purée; frozen sea fish; PVC tubes; audio and video tapes; oil-carrying tank trucks; used buses; used shoes; small fishing nets; plastic shoes; training shoes originating from outside the WAMU; “DAN FANI” fabrics; and automated teller machines.

In August 1990, the notices concerning imports associated with the lifting of quotas for commercial companies and establishments were repealed. The products concerned, however, remain subject to a special import authorization (ASI); these include PVC tubes, toilet soap, fatty substances used in manufacturing soap, and foam for mattresses. Imports of shoes of injected or molded plastic and training shoes have been freely permitted since November 22, 1990.

A prior import authorization is required for the following products: tomato purée; tobacco; mineral fuels; some organic chemical products; some cardboard products; fishing nets; cast steel and steel products; aluminum; electric devices and appliances; electrotechnical objects; cars; tractors; motorcycles; mopeds; bicycles; and other vehicles. A technical import visa is required for the following products: plants; plant extracts; seeds and fruits used in perfumery or medicine or used as insecticides or for any similar purpose; plant extracts and juices; alcoholic beverages; tobacco; inorganic chemical products; organic or inorganic precious metal compounds; organic chemical compounds; pharmaceutical products; fertilizers; explosives and similar flammable materials; various chemical products; military uniforms and any men’s khaki or olive green clothes; military or police helmets; kepis and bonnets; audio and video tapes; and arms and ammunition. Imports of certain other products, a list of which is established by decree, may be exempted from the import document requirement. The Minister of Commerce and Supply may, on the basis of criteria established by his Ministry, waive the prescribed formalities for imports from countries with which Burkina Faso has concluded a customs union or free trade area agreement. Most imports are subject to a customs stamp tax of 6 percent, an import surcharge of 6 percent, and a statistical tax of 4 percent.

All import transactions relating to foreign countries must be domiciled with an authorized bank when their value exceeds CFAF 500,000. Import licenses or prior import authorizations entitle importers to purchase the necessary exchange not earlier than eight days before shipment if a documentary credit is opened, on the due date for payment if the commodities have already been imported, or at the time of the payment on account if such a payment has to be made before importation.

Payments for Invisibles

All payments to South Africa are prohibited. Payments for invisibles to France (as defined above), Monaco, and other Operations Account countries are permitted freely; those to other countries are subject to exchange control approval, which for many invisibles has been delegated to authorized intermediaries. Authorized intermediary banks and the Postal Administration are empowered to make payments up to CFAF 50,000 a transfer to foreign countries on behalf of residents without requiring justification. Payments for invisibles related to trade are permitted freely when the basic trade transaction has been approved or does not require authorization. Transfers of income accruing to nonresidents in the form of profits, dividends, and royalties are also permitted.

Residents traveling for tourism to countries other than France (as defined above), Monaco, and other Operations Account countries may purchase exchange equivalent to CFAF 175,000 a person a trip (CFAF 87,500 for children under 10 years) for any number of trips a year; any foreign exchange in excess of CFAF 5,000 remaining after return to Burkina Faso must be surrendered. The basic allocation for travel abroad for business purposes is the equivalent of CFAF 20,000 a day, with a maximum of CFAF 400,000 a trip. Larger allocations are granted, however, for bona fide reasons. Residents traveling to foreign countries may take out up to a maximum of CFAF 25,000 in BCEAO bank notes or the equivalent in French bank notes or bank notes of other Operations Account countries. Residents traveling to other countries of the Operations Account Area may take out any amount in BCEAO bank notes, but if proceeding to a country that is not a member of the WAMU, they must declare to customs the amount taken out if it exceeds CFAF 150,000.

Nonresident travelers may freely take out foreign bank notes up to the equivalent of CFAF 175,000, or any larger amount, if declared upon entry or acquired by drawing on a Foreign Account in Francs, or an Account in Foreign Currency, or by exchange of foreign traveler’s checks. They may take out any foreign means of payment other than bank notes acquired in Burkina Faso by debit to a Foreign Account in Francs or an Account in Foreign Currency, subject to submission of documentation. They may also take out freely up to CFAF 25,000 in BCEAO bank notes or the equivalent in French bank notes or bank notes of other Operations Account countries.

Exports and Export Proceeds

Exports and re-exports from Burkina Faso may be made freely. However, for the purpose of monitoring, exports or re-exports of certain products may require prior official authorization by the competent services of the Ministry of Commerce and Supply, except in the case of certain goods, a list of which is established by decree. In accordance with criteria defined by the Minister of Commerce and Supply, exports of certain products may be subject to special regulations. Exports of any product may require prior special authorization from the competent services of the Ministry of Commerce and Supply, depending on circumstances. Exports to Ghana are subject to special regulations. Export proceeds must be surrendered within one month of the date on which the payment falls due (the due date stipulated in the commercial contract, which must not, in principle, be later than 180 days after arrival of the goods at their destination). All export transactions relating to foreign countries, including countries in the Operations Account Area, must be domiciled with an authorized bank when their value exceeds CFAF 500,000, and the exporter must sign a foreign exchange commitment and submit an export attestation form. Most exports are subject to a customs stamp tax of 6 percent and a statistical duty of 3 percent.

Proceeds from Invisibles

Proceeds from transactions in invisibles with France (as defined above), Monaco, and the Operations Account countries may be retained. All amounts due from residents of other countries in respect of services and all income earned in those countries from foreign assets must be collected and surrendered within two months of the due date. Such proceeds and earnings may not be received in or from South Africa. Resident and nonresident travelers may bring in any amount of bank notes and coins issued by the BCEAO, the Bank of France, or any bank of issue maintaining an Operations Account with the French Treasury, as well as any amount of foreign bank notes and coins (except gold coins) of countries outside the Operations Account Area. Resident travelers must declare to customs any foreign means of payment in excess of CFAF 5,000 that they bring in and must surrender these to an authorized bank within eight days after return.

Capital

All capital movements between Burkina Faso and South Africa are prohibited. Capital movements between Burkina Faso and France (as defined above), Monaco, and the Operations Account countries are free of exchange control; capital transfers to all other countries require exchange control approval and are restricted, but capital receipts from such countries are permitted freely.

Special controls (additional to any exchange control requirements that may be applicable) are maintained over borrowing abroad, over inward direct investment and all outward investment, and over the issuing, advertising, or offering for sale of foreign securities in Burkina Faso. Such operations require prior authorization by the Minister of Finance. Exempt from authorization, however, are operations in connection with (1) loans backed by a guarantee from the Burkinabe Government, and (2) shares that are similar to or may be substituted for securities whose issue, advertising, or sale in Burkina Faso has already been authorized. With the exception of controls over foreign securities, these measures do not apply to France (as defined above), Monaco, member countries of the WAMU, and the Operations Account countries. Special controls are maintained also over imports and exports of gold, over the soliciting of funds for deposit with foreign private persons and foreign firms and institutions, and over publicity aimed at placing funds abroad or at subscribing to real estate and building operations abroad; these special controls also apply to France, Monaco, and the Operations Account countries. All the special provisions described in this paragraph apply only to transactions and not to the associated payments or collections.

All investments abroad by residents of Burkina Faso require prior authorization by the Minister of Finance4 and, unless specifically exempted by the Minister of Finance, 75 percent of such investments must be financed from borrowings abroad. Foreign direct investments in Burkina Faso5 must be declared to the Minister of Finance before they are made. The Minister has a period of two months from receipt of the declaration during which he may request postponement of the project. The full or partial liquidation of either type of investment also requires prior declaration to the Minister. Both the making and the liquidation of investments, whether these are Burkinabe investments abroad or foreign investments in Burkina Faso, must be reported to the Minister of Finance. Direct investments constitute investments implying control of a company or enterprise. Mere participation is not considered as direct investment, provided that it does not exceed 20 percent of the capital of a company whose shares are quoted on a stock exchange. Foreign firms operating in Burkina Faso in vital or priority sectors are required to have Burkinabe participation in their capital of at least 51 percent and of at least 35 percent in all other sectors. The sale to residents of Burkina Faso of securities of foreign companies operating in Burkina Faso requires prior authorization by the Minister of Finance, who establishes the sale value.

Borrowing by residents from nonresidents requires prior authorization by the Minister of Finance. The following are, however, exempt from this authorization: (1) loans constituting a direct investment, which are subject to prior declaration, as indicated above; (2) loans taken up by industrial firms to finance operations abroad, by any type of firm to finance imports into or exports from Burkina Faso, or by international trading houses previously approved by the Minister of Finance to finance international merchanting transactions; (3) loans contracted by authorized banks; and (4) loans other than those mentioned above, when the total amount outstanding of these loans, including the new borrowing, does not exceed CFAF 100 million for any one borrower, provided that the annual interest rate does not exceed the normal market rate and that the proceeds are immediately surrendered by the sale of foreign currency on the exchange market or debited to a Foreign Account in Francs. The repayment of loans not constituting a direct investment requires the special authorization of the Minister if the loan itself was subject to such approval but is exempt if the loan was exempt from special authorization. Lending abroad is subject only to exchange control authorization by the BCEAO acting on behalf of the Minister of Finance.

The Investment Code provides preferential treatment for foreign investment in Burkina Faso, except for enterprises whose capital stock belongs entirely to foreigners. Three preferential categories (A, B, and C) are established, in accordance with which special guarantees and tax and customs incentives may be granted for up to eight years to any enterprise that undertakes to create or considerably expand activities likely to contribute to the country’s economic and social development. Enterprises that the Government deems to be of a priority nature may also be given privileged treatment.

Gold

Residents are free to hold, acquire, and dispose of gold in any form in Burkina Faso. Imports and exports of gold from or to any other country require prior authorization by the Minister of Finance. Exempt from this requirement are: (1) imports and exports by or on behalf of the Treasury or the BCEAO; (2) imports and exports of manufactured articles containing a minor quantity of gold (such as gold-lined or gold-plated articles); and (3) imports and exports by travelers of gold objects up to a combined weight of 500 grams. Both licensed and exempt imports of gold are subject to customs declaration.

The Comptoir burkinabé des métaux précieux (CBMP) has a monopoly on exports of gold from Burkina Faso.

Changes During 1990

Imports and Import Payments

August 21. Under Notice No. AN-VIII-063/FP/CAPRO/SG/DGCE/DEC, the provisions of the notices concerning imports associated with the lifting of quotas for commercial establishments and industries were repealed.

December 22. Under Notice No. AN-VIII-0433/FP/CAPRO/DGCE/DEC, imports of new training shoes were freely permitted.

Burundi

(Position on December 31, 1990)

Exchange Arrangement

The currency of Burundi is the Burundi Franc, which is pegged to the SDR. In August 1986, Burundi introduced a flexible exchange rate system under which the exchange rate was to be adjusted periodically to reflect underlying economic conditions. On December 28, 1990, the exchange rate was FBu 232.14 = SDR 1, and the official buying and selling rates for the U.S. dollar were FBu 164.52 and FBu 166.18, respectively, per US$1. Exchange rates for 19 currencies1 and for two units of accounts (European Currency Units (ECUs) and Units of Accounts of the Preferential Trade Area (UAPTAs)) are quoted by the Bank of the Republic of Burundi (central bank) on the basis of the Burundi franc/SDR rate and the transaction value of these currencies and units in terms of the SDR. Authorized banks must carry out permitted exchange transactions at the buying and selling rates established by the central bank for currencies quoted by that bank. An exchange fee of 3 per mill is collected on purchases or sales of foreign exchange. There are no arrangements for forward cover against exchange rate risk operating in the official or the commercial banking sector.

Administration of Control

Control over foreign exchange transactions and foreign trade is vested in the central bank; authority to carry out some transactions is delegated to four authorized banks (Bancobu, BCB, Arab Burundi Bank for Commerce and Investment, and Meridien Bank).

Prescription of Currency

Settlements relating to trade with Rwanda and Zaïre in products specified in the commercial agreements between these countries are effected through convertible currency accounts maintained with the central bank and authorized banks of each signatory country. With these exceptions, outgoing payments may be made and receipts may be obtained in any currency quoted by the central bank.

Nonresident Accounts

Nonresident Accounts in convertible Burundi francs may be maintained, subject to the approval of the central bank, by (1) physical persons of foreign nationality, such as diplomats, who are temporarily established in Burundi and are not considered as residents; (2) juridical persons of foreign nationality with special status, such as foreign embassies and international organizations; and (3) any other physical or juridical persons authorized by the central bank. These accounts may be credited freely with the proceeds of foreign currencies quoted by the central bank, and they may be debited freely for withdrawals of Burundi francs for any normal current payments in Burundi and for conversion into foreign exchange. Up to FBu 20,000 may be withdrawn in bank notes upon presentation of travel documents (a passport and an airline ticket). Withdrawals in excess of this amount are subject to the prior authorization of the central bank These accounts may bear interest freely and must not be overdrawn. Interest earned must be credited to an ordinary Burundi franc account.

Certain nonresidents whose main activities are outside Burundi may maintain Nonresident Accounts in Foreign Currencies with an authorized bank. The opening of such accounts requires the approval of the central bank and is restricted to (1) physical and juridical persons of foreign nationality who are resident abroad, and (2) any other physical or juridical persons authorized by the central bank. These accounts may be credited freely with any foreign currency quoted by the central bank that is received from abroad. They may be debited freely for (1) conversion into Burundi francs for any payments in Burundi; (2) payments abroad for travel and representation or for the purchase of foreign goods, except for bank notes. These accounts must not be overdrawn. However, they may bear interest with prior authorization from the central bank. The related bank charges and commissions must be settled in foreign exchange; and (3) as in the case of accounts in convertible Burundi francs, up to FBu 20,000 may be withdrawn upon presentation of travel documents (a passport and an airline ticket). Withdrawals in excess of this amount are subject to the prior authorization of the central bank.

Imports and Import Payments

All imports originating in or shipped from South Africa are prohibited. All imports require licenses, except (1) trade samples without commercial value; (2) merchandise not intended for sale whose declared consumer value c. & f. Bujumbura is FBu 50,000 or less; (3) travelers’ personal effects; and (4) gifts and supplies for diplomatic missions and UN agencies. These licenses, used for purposes of payment and statistical control, are automatically granted.

Applications for licenses exceeding FBu 25 million must be submitted to the Bank of the Republic of Burundi through an authorized bank. The approval of such an application also constitutes an authorization to obtain foreign exchange. With specified exceptions, authorized banks approve applications for licenses with a value not exceeding FBu 25 million (c. & f. point of landing); applications for amounts in excess of FBu 25 million require the approval of the central bank. An administrative fee amounting to 1 percent of the f.o.b. value of the goods is collected at the time of validation of the license. All goods imported into Burundi must be insured by approved Burundi insurers, and premiums must be paid in Burundi francs. All consignments of imports exceeding FBu 1 million in value (f.o.b.) may be subject to preshipment inspection with regard to quality, quantity, packaging, and price by international private agencies acting on behalf of the Burundi authorities.

In principle, foreign exchange is made available at the time of shipment of the goods. For goods under global licenses, foreign exchange is not made available until after customs clearance. All imports are subject to a service tax of 4 percent ad valorem, in addition to any applicable customs duties and fiscal duties.

Payments for Invisibles

All payments for invisibles require approval. Shipping insurance on coffee exports normally must be taken out in Burundi francs with a Burundi insurer. Upon presentation of evidence of payment of taxes, foreign nationals residing and working in Burundi are permitted to transfer freely up to 50 percent of their net annual income; the proportion for those working in firms that export at least 50 percent of their production is 70 percent. The permitted annual transfer is 60 percent of income for experts working for the Government under individual employment contracts containing a transfer clause and receiving remuneration entirely in Burundi francs.

Private joint-stock companies may freely and immediately transfer a portion of the return on foreign capital and of the share allocated to foreign directors, as follows: up to 60 percent of distributed profits (net of corporation tax and the tax on capital income) for industrial and agricultural enterprises; up to 50 percent for commercial and service enterprises; and up to 80 percent for enterprises that export at least 50 percent of their production. Up to 50 percent of emoluments and dividends paid to foreign directors and auditors are transferable if the recipients are residents, and up to 100 percent if they are nonresidents. Requests for transfer of the balance of the profits are authorized subsequently as follows: 50 percent after two years of saving, and 100 percent after three years. Profits awaiting remittance are required to be invested or saved at the Treasury, public agencies, public authorities, or financial institutions that manage savings; and interest earned on such deposits is eligible for transfer. However, these provisions are without prejudice to any larger transfer guarantees granted by the Investment Code to enterprises that have been accorded special preferential status.

Persons leaving Burundi permanently are authorized to transfer abroad their holdings of Burundi francs that consist of unremitted savings or the sale proceeds of their personal effects. Transfer of rental income from foreign owners of new commercial, industrial, and office buildings is permitted up to 50 percent of net rental income (after payment of taxes and deduction of 20 percent for maintenance expenses); the remainder, plus any accrued interest, may be transferred later, provided that the funds have been held on deposit with a domestic financial institution for two years. Transfer of up to 50 percent is permitted after at least three years of placement in investment or savings bonds.

Residents may apply for exchange needed for foreign travel. The foreign exchange allowance for business travel purposes is US$200 a person a day or its equivalent, subject to a maximum limit of 15 days a year; the daily foreign exchange allowance for travel in Africa is US$125 a person. These limits may be increased for travel requiring a longer stay abroad. All travelers may take out up to FBu 5,000 in Burundi bank notes.

Exports and Export Proceeds

All exports to South Africa are prohibited. All exports valued above FBu 10,000 require a prior declaration, which must be presented for certification by the central bank through an authorized bank. Declarations are valid for six months, but extensions may be granted by the central bank. Payments must be collected within 90 days of the date of export declaration at customs. All exchange proceeds from exports must be surrendered to an authorized bank within 8 days of their collection. Exports of arabica and robusta coffee from the Rumonge region are the monopoly of the Burundi Coffee Company. Most exports, including coffee, are subject to export taxes. However, under certain circumstances, approved exporters may be exempted from paying these taxes. Exports of manufactured goods may receive a refund of duties paid, provided that they incorporate raw materials on which import duty has been paid.

Proceeds from Invisibles

Exchange receipts from invisibles must be surrendered to authorized banks. Travelers may bring in any amount of foreign bank notes and up to FBu 5,000 in Burundi bank notes.

Nonresidents staying in a hotel or guest house in Burundi must pay their hotel bills by selling foreign currencies quoted by the Bank of the Republic of Burundi or by using a credit card. Payment in Burundi francs is, however, acceptable in the case of guests for whom a resident company or individual has assumed responsibility with prior authorization by the central bank, and in the case of nationals of Zaïre or Rwanda who produce declarations of means of payment issued under the auspices of the Economic Community of the Great Lakes Countries (CEPGL).

Capital

Under the Investment Code introduced on July 10, 1986, new investments that fulfill specified conditions as to amount and economic importance may be granted priority status to which specified privileges are attached, mainly in the form of exemptions from import duties and from taxes on income from the investment. Import duties and taxes may be reduced or suspended for goods and equipment needed for starting a particular project and, during a period of five years, for other merchandise needed for the manufacturing process or for the upkeep of the original investment. Taxes on profits and real estate may likewise be reduced or suspended for up to eight years. Enterprises accorded priority status may be granted a reduction or suspension of export taxes and import taxes on equipment and raw materials for renewable periods of five years. In addition to these privileges, companies undertaking investments that are considered to be of prime importance to Burundi’s economic development may be granted, under a separate agreement, a guarantee that direct taxes on their activities will not be increased for ten years. An investment commission under the Planning Secretariat is responsible for examining requests for priority status and granting the necessary authorization. In addition, Burundi guarantees each foreign investor the right to move into the country; foreign investors are also assured an allocation of foreign exchange for the purchase of raw materials abroad as well as for the repayment of loans taken out under the investment agreement.

Capital transfers by residents and transfers of foreign capital on which a repatriation guarantee has been granted require individual authorization. The guarantee is furnished for foreign exchange imported by resident enterprises to provide working capital in foreign exchange; it applies to any of the currencies quoted by the central bank, is valid for one year, and may be renewed. The guarantee provides for the transfer of the original amount surrendered at the official rate prevailing on the day of transfer. The repatriation of invested capital in the event of sale or shutdown of the business is also guaranteed.

Gold

All physical or juridical persons holding gold mining permits issued by the Ministers responsible for Mining and Customs may open purchasing houses for gold mined by artisans in Burundi. Gold produced by artisans may be sold only to approved houses. Exports of gold must be declared in Burundi francs at the average monthly rates communicated by the central bank. Gold exports are authorized jointly by the Mining and Customs Departments.

Changes During 1990

Imports and Import Payments

August 7. The remaining quantitative restrictions on imports of flour, glass bottles, cotton fabric, and pharmaceuticals were removed.

October 4. The limit on import licenses that the commercial banks are permitted to approve was increased to FBu 25 million.

Payments for Invisibles

May 1. The limit on domestic currency that a traveler may take out of Burundi was increased to FBu 5,000 from FBu 2,000, while the daily foreign exchange allowance for a business traveler was increased to US$200 from US$165 a trip.

May 1. The proportion of net annual income permitted to be transferred freely by foreign nationals residing and working in firms that export at least 50 percent of their production was raised to 70 percent.

Capital

May 1. The share of the return on foreign capital and the share allocated to foreign directors that was permitted to be transferred freely was increased to 60 percent of distributed profits for agricultural and industrial enterprises, and to 80 percent for firms that export at least 50 percent of their production.

Cameroon

(Position on December 31, 1990)

Exchange Arrangement

The currency of Cameroon is the CFA Franc,1 which is pegged to the French franc, the intervention currency, at the fixed rate of CFAF 1 = F 0.02. Exchange transactions in French francs between the BEAC and commercial banks take place at the same rate. Buying and selling rates for certain other foreign currencies are also officially posted, with quotations based on the fixed rate for the French franc and the rate for the currency concerned in the Paris exchange market. A commission of 0.50 percent is levied on transfers to countries that are not members of the BEAC, except transfers in respect of central and local government operations, payments for imports covered by a duly issued license domiciled with a bank, scheduled repayments on loans properly obtained abroad, travel allowances and official representation expenses paid by the Government and its agencies for official missions, and payments of reinsurance premiums. There are no taxes or subsidies on purchases or sales of foreign exchange.

With the exception of those relating to gold, Cameroon’s exchange control measures generally do not apply to (1) France (and its Overseas Departments and Territories) and Monaco; and (2) all other countries whose bank of issue is linked with the French Treasury by an Operations Account (Benin, Burkina Faso, Central African Republic, Chad, Comoros, Congo, Côte d’Ivoire, Equatorial Guinea, Gabon, Mali, Niger, Senegal, and Togo). Hence, all payments to these countries may be made freely, but all financial transfers in excess of CFAF 500,000 to the Operations Account countries must be declared to the authorities for statistical purposes.

Forward exchange cover requires the prior authorization of the exchange control authorities. It must be denominated in the currency of settlement prescribed in the contract, and the maturity period must not be less than three months or exceed nine months. Settlements must be effected within eight days of the maturity date of forward contract.

Administration of Control

Exchange control is administered by the Directorate of Economic Controls and External Finance in the Ministry of Finance. Exchange transactions relating to all countries must be effected through authorized intermediaries—that is, the Postal Administration and authorized banks. Import licenses for goods other than gold are issued by the Ministry of Commerce and Industry, and those for gold by the Ministry of Mines, Water, and Energy. Export licenses are issued by the Ministry of Finance. Arrears are maintained with respect to external payments.

Prescription of Currency

Since Cameroon is an Operations Account country, settlements with France (as defined above), Monaco, and the Operations Account countries are made in CFA francs, French francs, or the currency of any other Operations Account country. Settlements with all other countries are usually made through correspondent banks in France in any of the currencies of those countries or in French francs through Foreign Accounts in Francs. All settlements between Cameroon and South Africa are prohibited.

Resident and Nonresident Accounts

The regulations pertaining to nonresident accounts are based on those applied in France. BEAC bank notes may be credited to Foreign Accounts in Francs when mailed to the National Directorate of the BEAC in Yaoundé by the foreign correspondents of authorized banks. Transactions of accounts in CFAF by nonresidents are permitted freely; accounts of nonresidents in foreign currency are not permitted to be credited or debited in CFAF. Residents are not permitted to maintain accounts in foreign currency in Cameroon or abroad, and residents and nonresidents are not permitted to maintain accounts in CFAF abroad.

Imports and Import Payments

All imports from South Africa and imports of tobacco from Malawi are prohibited. Some imports from countries outside the Central African Customs and Economic Union (UDEAC) are subject to quantitative restrictions. Certain other imports require technical licenses, proving that they are for use by professionals. Certain other imports are prohibited for political, ecological, health, or safety reasons. Surcharges apply to imports from non-UDEAC countries.

All import transactions valued at more than CFAF 50,000 must be domiciled with an authorized bank if the goods are not considered in transit. Transactions involving transit goods must be domiciled with a foreign bank. Advance import deposits are permitted if underlying contracts stipulate them.

Payments for Invisibles

Payments in excess of CFAF 500,000 for invisibles to France (as defined above), Monaco, and the Operations Account countries require prior declaration but are permitted freely; those to other countries are subject to the approval of the Ministry of Finance. Payments for invisibles related to trade are permitted freely when the basic trade transaction has been approved or does not require authorization. Transfers of income accruing to nonresidents in the form of profits, dividends, and royalties are also permitted freely, subject to declaration. For tourist travel, residents traveling to countries other than France (as defined above), Monaco, and the Operations Account countries may obtain an exchange allocation of an amount equivalent to CFAF 200,000 a person a year; any foreign exchange remaining after return to Cameroon must be surrendered. For business travel, the corresponding allocation is the equivalent of CFAF 15,000 a day, subject to a maximum of CFAF 450,000 a trip. In practice, additional allocations are granted.

The transfer of rent from real property owned in Cameroon by foreign nationals, is limited in principle, to up to 50 percent of the income declared for taxation purposes, net of repair costs and payments of tax. Remittances for current repair and management of real property abroad are normally limited to the equivalent of CFAF 200,000 every two or three years. Depending on the number of dependents abroad, the transfer of 20 percent or 50 percent of the salary of a foreigner working in Cameroon is permitted upon presentation of the appropriate pay voucher, provided that the transfer takes place within one month of the pay period concerned. Except in the case of foreigners working in Cameroon temporarily and insured previously, payments of insurance premiums to foreign countries are not permitted if the same type of insurance is available in Cameroon. Resident and nonresident travelers to countries outside the Operations Account may take out up to CFAF 20,000 in BEAC bank notes. Travelers to other countries of the French Franc Area may, subject to prior declaration, take out any amount in BEAC bank notes.

Nonresident travelers may take out foreign bank notes and coins up to the amount they declared on entry, or up to CFAF 50,000 if no declaration was made.

Exports and Export Proceeds

All exports to South Africa are prohibited. Export transactions valued at CFAF 50,000 or more must be domiciled with an authorized bank. Exports to all countries are subject to domiciliation requirements for the appropriate documents. Proceeds from exports to all countries must be repatriated within 60 days of the payment date stipulated in the sales contract, and proceeds received in currencies other than those of France or an Operations Account country must be surrendered within a month of collection.

Proceeds from Invisibles

Proceeds from transactions in invisibles with France (as defined above), Monaco, and the Operations Account countries may be retained. All amounts due from residents of other countries in respect of services, and all income earned in those countries from foreign assets, must be collected within a month of the due date and surrendered within a month of collection if received in foreign currency. Resident and nonresident travelers may bring in any amount of bank notes and coins issued by the BEAC, the Bank of France, or a bank of issue maintaining an Operations Account with the French Treasury, as well as any amount of foreign bank notes and coins (except gold coins) of countries outside the Operations Account Area.

Capital

Capital movements between Cameroon and France (as defined above), Monaco, and the Operations Account countries are free of exchange control. Capital transfers to all other countries require exchange control approval and are restricted, but capital receipts from such countries are permitted freely. Emigrants to countries outside the Operations Account Area may transfer abroad their full savings, provided that they have met their tax obligations.

With the exception of controls over the sale or introduction of foreign securities in Cameroon, the controls on capital movements do not apply to relations with France (as defined above), Monaco, and the Operations Account countries. All foreign securities and titles embodying claims on nonresidents must be deposited with an authorized intermediary and be classified as foreign, whether they belong to residents or nonresidents.

Direct investments abroad2 require the prior approval of the Ministry of Finance, unless they take the form of a capital increase resulting from reinvestment of undistributed profits or they do not exceed 20 percent of the fair market value of the company being purchased. The full or partial liquidation of such investments requires only a report after the fact to the Minister of Finance, unless the operation involves the relinquishing of a participation that had previously been approved as constituting a direct investment abroad. Foreign direct investments in Cameroon3 require prior declaration to the Minister of Finance, unless they take the form of a capital increase resulting from reinvestment of undistributed profits; the Minister has a period of two months from receipt of the declaration during which he may request postponement. The full or partial liquidation of direct investments in Cameroon requires only reporting to the Minister of Finance, unless the operation involves the relinquishing of a participation that had previously been approved as constituting a direct investment in Cameroon. Both the making and the liquidation of direct investments, whether these are Cameroonian investments abroad or foreign investments in Cameroon, must be reported to the Minister of Finance within 20 days following each operation. Direct investments are defined as investments implying control of a company or enterprise. Mere participation is not considered as direct investment, provided that it does not exceed 20 percent of the capital of a company whose shares are quoted on a stock exchange.

The issuing, advertising, or offering for sale of foreign securities in Cameroon requires prior authorization by the Minister of Finance and must subsequently be reported to him. Exempt from authorization, however, and subject only to a report after the fact are operations in connection with (1) loans backed by a guarantee from the Cameroonian Government, and (2) shares similar to securities whose issuing, advertising, or offering for sale in Cameroon has already been authorized.

Borrowing abroad by physical or juridical persons, whether public or private, whose normal residence or registered office is in Cameroon, or by branches or subsidiaries in Cameroon of juridical persons whose registered office is abroad, requires prior authorization by the Minister of Finance and must subsequently be reported to him. The following are, however, exempt from this authorization and require only a report: (1) loans directly connected with the rendering of services abroad by the persons or firms mentioned above, or with the financing of commercial transactions either between Cameroon and countries abroad or between foreign countries, in which these persons or firms take part; and (2) loans contracted by registered banks and credit institutions.

Lending abroad by physical and juridical persons, whether public or private, whose normal residence or registered office is in Cameroon, or by branches or subsidiaries in Cameroon of juridical persons whose registered office is abroad, requires prior authorization by the Minister of Finance and must subsequently be reported to him. The following are, however, exempt from prior authorization and require only a report: (1) loans constituting a direct investment abroad for which prior approval has been obtained, as indicated above; (2) loans directly connected with the rendering of services abroad by the persons or firms mentioned above, or with the financing of commercial transactions either between Cameroon and countries abroad or between foreign countries, in which these persons or firms take part; and (3) loans not exceeding CFAF 500,000, provided the maturity does not exceed two years and the rate of interest does not exceed 6 percent a year.

The Investment Code of November 1990 aims to promote the development of natural resources, job creation, production and exportation, especially of manufactures, and the transfer of appropriate technology. Under the Code, generalized fiscal benefits are provided to encourage exports and the development of natural resources and further benefits are provided to enterprises qualifying for inclusion in one of five regimes.

The generalized fiscal benefits include an exemption of export duties and taxes on insurance and transportation for exports and a deduction of 5 percent of the value of exports from the exporter’s taxable income. In addition, firms are exempted under certain conditions from all duties and purchase taxes on raw materials or intermediate inputs produced in Cameroon or in the UDEAC region. The new code grants fiscal benefits to domestic and foreign firms undertaking new projects in the raw material processing, mining, forestry, agriculture, fishing, food, construction, equipment maintenance, industrial research, and tourism sectors. These benefits are provided under five regimes, as follows: (1) The basic regime applies to firms whose investment is labor intensive (defined as one job per CFAF 10 million investment), that are export-oriented, or that use domestic natural resources. During a three-year installation phase, firms under this regime are entitled to a reduced tax rate of 15 percent, including their fiscal and customs duties, internal turnover tax and all other import taxes relating to imported inputs; in addition, they are entitled to certain fiscal exemptions. During a five-year exploitation phase certain tax exemptions are maintained. (2) The small and medium-size enterprise regime applies to firms that are labor intensive (defined as one job per CFAF 5 million investment), whose investment is of modest size (less than CFAF 1.5 billion), and where Cameroonian participation is at least 35 percent of capital. The benefits under this regime are the same as those under the basic regime, except that during the exploitation phase of seven years, firms may deduct from taxable income 25 percent of salaries paid to Cameroonian nationals. (3) The strategic regime applies to enterprises declared strategic by the Cameroonian authorities and fulfilling certain other conditions. The installation phase is 5 years and receives the same benefits as those under the basic regime. The exploitation phase is 12 years, and receives the same benefits as under the small and medium-size enterprise regime. (4) The free trade zone regime is available to enterprises that are devoted exclusively to exporting; terms are fixed by individual agreements. (5) Firms that expand by more than 20 percent or satisfy certain other conditions are eligible for benefits under the reinvestment regime. For a period of three years, firms are subject to a reduced tax rate of 15 percent, which includes their fiscal and customs duties, internal turnover tax and all other import taxes relating to imported inputs; in addition, they are entitled to certain fiscal exemptions.

Law No. 90/19 of August 10, 1990 provides that Cameroonian interest should hold at least one third of the share capital of each banking institution. This law also requires banks with foreign majority participation to submit to the monetary authorities information on all their current transactions abroad and to obtain prior approval for any changes in the structure of their equity holdings. Foreign managers must be approved by the monetary authorities and reside in Cameroon.

Gold

Residents are free to hold, acquire, and dispose of gold jewelry in Cameroon. They require the approval of the Ministry of Mines, Water, and Energy to hold gold in any other form. Such approval is normally given only to industrial users, including jewelers. Newly mined gold must be declared to the Ministry of Mines, Water, and Energy, which authorizes either its exportation or its sale to domestic industrial users; exports are made only to France. Imports and exports of gold require prior authorization by the Ministry of Mines, Water, and Energy and by the Minister of Finance, which is seldom granted for imports. Exempt from this requirement are (1) imports and exports by or on behalf of the monetary authorities, and (2) imports and exports of manufactured articles containing a minor quantity of gold (such as gold-filled or gold-plated articles). Both licensed and exempt imports of gold are subject to customs declaration.

Changes During 1990

Capital

August 10. Law No. 90/19 was promulgated. The main provisions of the law were as follows: (1) Cameroon interest in the share capital of each banking institution must be at least 33 percent; (2) banking institutions with foreign majority participation must submit to the monetary authorities information on all of their current transactions abroad and obtain prior approval for any changes in the structure of their equity holdings; and (3) foreign managers must be approved by the monetary authorities and reside in Cameroon.

November 8. The investment code of July 1984 was replaced by a new code, under which generalized fiscal benefits were provided to promote exports and the development of natural resources and further benefits were provided to enterprises qualifying for inclusion in one of five regimes. The code aims to promote the development of natural resources, job creation, production and exportation, especially of manufactures, and the transfer of appropriate technology.

The generalized fiscal benefits include an exemption of export duties and taxes on insurance and transportation for exports and a deduction of 5 percent of the value of exports from the exporter’s taxable income. In addition, firms are exempted under certain conditions from all duties and purchase taxes on raw materials or intermediate inputs produced in Cameroon or in the UDEAC region. The new code grants fiscal benefits to domestic and foreign firms undertaking new projects in the raw materials processing, mining, forestry, agriculture, fishing, food, construction, equipment maintenance, industrial research, and tourism sectors. These benefits are provided under five regimes as follows: (1) The basic regime applies to firms whose investment is labor intensive (defined as one job per CFAF 10 million investment), that are export-oriented, or that use domestic natural resources.

During a three-year installation phase, firms under this regime are entitled to a reduced tax rate of 15 percent, including their fiscal and customs duties, internal turnover tax and all other import taxes relating to imported inputs; in addition, they are entitled to certain fiscal exemptions. During a five-year exploitation phase certain tax exemptions are maintained. (2) The small and medium-size enterprise regime applies to firms that are labor intensive (defined as one job per CFAF 5 million investment), investment is of modest size (less than CFAF 1.5 billion), and where Cameroonian participation is at least 35 percent of capital. The benefits under this regime are the same as those under the basic regime, except that during the exploitation phase of seven years, firms may deduct from taxable income 25 percent of salaries paid to Cameroonian nationals. (3) The strategic regime applies to enterprises declared strategic by the Cameroonian authorities and fulfilling certain other conditions. The installation phase is 5 years and receives the same benefits as those under the basic regime. The exploitation phase is 12 years, and receives the same benefits as those under the small and medium-size enterprise regime. (4) The free trade zone regime is available to enterprises that are devoted exclusively to exporting; terms are fixed by individual agreements. (5) Firms that expand by more than 20 percent or satisfy certain other conditions are eligible for benefits under the reinvestment regime. For a period of three years, firms are subject to a reduced tax rate of 15 percent, which includes their fiscal and customs duties, internal turnover tax, and all other import taxes relating to imported inputs; in addition, they are entitled to certain fiscal exemptions.

Canada

(Position on December 31, 1990)

Exchange Arrangement

The currency of Canada is the Canadian Dollar. The Canadian authorities do not maintain margins in respect of exchange transactions, and exchange rates are determined on the basis of demand and supply conditions in the exchange market; however, the authorities intervene from time to time to maintain orderly conditions in that market. The principal intervention currency is the U.S. dollar. The closing exchange rate (midpoint) for the U.S. dollar on December 31, 1990 was Can$0.86 per US$1. Forward exchange rates are similarly determined in the market, and it is not the practice of the authorities to intervene. There are no taxes or subsidies on purchases or sales of foreign exchange.

On March 25, 1952, Canada notified the Fund that it was prepared to accept the obligations of Article VIII, Sections 2, 3, and 4 of the Fund Agreement.

Administration of Control

There are no exchange controls.

In accordance with the Fund’s Executive Board Decision No. 144-(52/51), adopted on August 14, 1952, Canada notified the Fund, on September 4, 1990, that certain restrictions were imposed on the making of payments and transfers for current international transactions to the Government of Iraq and persons within the territories of Iraq and Kuwait.

Prescription of Currency

No prescription of currency requirements are in force.

Imports and Import Payments

Import permits are required only for drugs, a few agricultural items, certain textile products and clothing, certain endangered species of fauna and flora, natural gas, and material and equipment for the production or use of atomic energy. Import permits are required for carbon and specialty steel products for monitoring purposes only. For some agricultural items, such as butter and milk, permits are rarely issued, while others may be subject to a quota. Commercial imports of certain products from any source are tightly controlled or prohibited; the main products affected are margarine and used automobiles. Pursuant to the Canada-United States Free Trade Agreement, the prohibition on imports of used vehicles from the United States is being phased out over a 5-year period starting in 1989. Imports of clothing and certain textile products from low-cost sources are subject to bilateral agreements concluded under the Multifiber Arrangement that was negotiated within the framework of the General Agreement on Tariffs and Trade.

Exports and Export Proceeds

The surrender of the proceeds from exports is not required, and exchange receipts are freely disposable. The principal legal instrument governing export controls is the Export and Import Permits Act, which controls trade through the establishment of an Export Control List and an Area Control List. The Export Control List identifies all goods that are controlled for reasons of security, supply considerations, resource upgrading and implementing intergovernmental arrangements. This list includes all items identified in the Coordinating Committee for Multilateral Export Controls munitions list, industrial list of strategic goods, and Atomic Energy List. Permits are required for the export of all goods listed to all countries except the United States. Items on the Atomic Energy List require permits regardless of destination. The Area Control List includes a limited number of countries to which all exports are controlled unless they are specifically exempted by a general permit. At present, two countries are on the Area Control List: the Libyan Arab Jamahiriya and South Africa. All exporters are eligible for certain financial facilities operated by the Export Development Corporation, including political risk insurance.

Payments for and Proceeds from Invisibles

No exchange control requirements are imposed on exchange payments for, or exchange receipts from, invisibles.

Capital

No exchange control requirements are imposed on capital receipts or payments by residents or nonresidents. Apart from specific restrictions in the financial, broadcasting, transportation, and uranium sectors, inward direct investment is governed by the Investment Canada Act. Under the provisions of this Act, new foreign investments are in general subject to notification requirements but not to review, and direct acquisition of businesses with assets exceeding Can$5 million and indirect acquisitions involving assets exceeding Can$50 million are subject to review. In addition, acquisitions below these limits and investments to establish new businesses in culturally sensitive sectors may be reviewed. Investments that are subject to review are required only to pass a test of yielding net benefit to Canada. There are no controls over outward direct investment, nor over inward or outward portfolio investment. Although higher ratios may be authorized on a case-by-case basis, in general the domestic assets of a foreign-owned bank operating in Canada must not exceed 20 times its authorized capital; the total domestic assets of all non-U.S. banks must not exceed 12 percent of the total domestic assets of all banks operating in Canada.1

Gold

Residents may freely purchase, hold, and sell gold in any form, at home or abroad. However, exports of gold and all other products containing gold to countries named in the Area Control List require an export permit from the Minister of External Affairs, under the authority of the Export and Import Permits Act. Gold of U.S. origin requires a permit when re-exported to all countries except the United States. Commercial imports of articles containing minor quantities of gold, such as watches, are unrestricted and free of license. Legal tender gold coins with a face value of Can$100 have been issued annually since 1976, and Can$50 “bullion” coins, containing one ounce of gold, have also been issued since 1979. In 1982, Can$5 and Can$10 coins containing 1/10 and ¼ an ounce of gold, respectively, were issued; in 1986, a coin containing ½ an ounce of gold with a face value of Can$50 was issued.

Changes During 1990

Imports and Import Payments

January 4. The Revenue Canada Customs and Excise (RCCE) determined that imports of textured polyester yarn from Mexico involved minimal dumping and had not caused injury to domestic producers.

May 3. Following a finding of injury by the Canadian International Trade Tribunal (CITT), definitive antidumping duties were imposed on imports of leather and nonleather boots and shoes (excluding sandals, slippers, sports footwear, and canvas, plastic, and rubber waterproof footwear) from the People’s Republic of China and Taiwan Province of China; definitive antidumping duties were imposed on imports of leather boots and shoes from Brazil, Poland, Romania, and Yugoslavia; and definitive countervailing duties were imposed on imports of leather boots and shoes from Brazil.

June 25. The RCCE determined that imports of dry extruded dog food from the United States did not involve dumping.

July 6. Following a finding of injury by the CITT, definitive antidumping and countervailing duties were imposed on imports of refill paper from Brazil.

October 17. The CITT determined that dumped imports of articulated four-wheel-drive tractors from Germany had not caused injury to domestic producers.

November 13. The CITT determined that dumped imports of stainless steel bars from India had not caused injury to domestic producers.

Cape Verde

(Position on December 31, 1990)

Exchange Arrangement

The currency of Cape Verde is the Cape Verde Escudo, which is pegged to a weighted basket of currencies representing nine important trading partners. The exchange rate of the Cape Verde escudo in terms of the U.S. dollar, the intervention currency, is fixed daily on the basis of quotations for the U.S. dollar and the other currencies included in the basket. On December 31, 1990, the buying and selling rates for the U.S. dollar were C.V. Esc 65.78 and C.V. Esc 66.37, respectively, per US$1. There are no taxes or subsidies on purchases or sales of foreign exchange. There are no arrangements for forward cover against exchange rate risk operating in the official or the commercial banking sector.

Administration of Control

All foreign exchange transactions are under the control of the Department of Foreign Relations and Exchange Control (DRE), which is a department of the Bank of Cape Verde (the central bank). All imports, exports, and re-exports are subject to licensing, except for transactions not exceeding C.V. Esc 50,000. Foreign exchange transactions, including the surrender of foreign exchange proceeds, are effected through the central bank.

Arrears are maintained with respect to external payments.

Prescription of Currency

The central bank determines the currency in which export proceeds should be repatriated. Cape Verde has bilateral payments agreements with Angola and Sao Tome and Principe.

Nonresident Accounts

Nonresidents may open demand deposit accounts in local currency. These accounts may be credited only with the proceeds from the sale or surrender of receipts of convertible currencies and may be debited for payment of any obligations in Cape Verde. Outward transfers of balances from such accounts may be made freely. Embassies and foreign officials of embassies are required to open special accounts in foreign currency and in local currency; such accounts must be replenished exclusively with foreign exchange. Foreign enterprises may maintain accounts in foreign currency.

Special Accounts (Emigrants)

Three types of special interest-bearing deposit accounts are available for emigrants: (1) foreign exchange deposit accounts; (2) savings-credit deposit accounts; and (3) special accounts in Cape Verde escudos. These accounts can be credited only with convertible foreign currencies. Holders of savings-credit deposit accounts can benefit from loans on special terms for financing small-scale projects.

Imports and Import Payments

All imports are subject to licensing, except for transactions not exceeding C.V. Esc 50,000. Licenses, which are issued by the General Directorate of Commerce in the Ministry of Transportation, Trade, and Tourism, require the visa of the central bank and are generally valid for 90 days; they are renewable. The provision of foreign exchange is guaranteed when the license has been previously certified by the central bank. Licenses are in general granted liberally for imports of medicines, capital goods, and other development-related equipment. Imports of nonessentials are restricted.

Payments for Invisibles

All payments for invisibles require prior authorization. Any person traveling abroad may take out foreign currency equivalent to C.V. Esc 20,000. Cape Verdean nationals traveling abroad as tourists are required to buy round-trip tickets in advance and make a deposit equivalent to a one-way ticket to the country of destination; this deposit is refunded upon return to Cape Verde. Cape Verdean nationals studying abroad are allowed up to a maximum of C.V. Esc 20,000 on leaving the country; students who do not hold scholarships are, in addition, entitled to a monthly allowance that varies according to the country of destination. Persons traveling abroad on business may take an amount of foreign currency that varies according to the country of destination and the duration of each business trip. Persons traveling abroad for medical treatment may take out an amount of foreign currency that varies according to medical needs. Applications for these allowances must be accompanied by medical certification before the trip, and medical bills must be presented on return to Cape Verde.

Transfers by foreign technical assistance personnel working in Cape Verde are authorized within the limits specified in the individual contracts. These contracts, as well as other contracts involving foreign exchange expenditures, are subject to prior screening by the central bank. Requests by other foreigners are examined on a case-by-case basis. The exportation of domestic currency by travelers is prohibited. Foreign travelers may bring in any amount of foreign currency, but may re-export only up to the amount of currency declared upon entry.

Exports and Export Proceeds

All exports are subject to licensing and to approval by the central bank, except for transactions not exceeding C.V. Esc 10,000. Export proceeds must be repatriated within three months from the date of issuance of the license, but this period may be extended.

Proceeds from Invisibles

Receipts from invisibles must be surrendered to the central bank. The import of domestic currency is prohibited.

Capital

Any private capital transaction must be approved in advance by the central bank, but legally imported capital may be re-exported without limitation. The export of resident-owned capital is not normally permitted. Capital in certain foreign investments is allowed to be repatriated in equal installments within a period of less than two years.

Gold

Imports, exports, or re-exports of gold in either coins or bars require prior licensing by the monetary authorities.

Changes During 1990

No significant changes occurred in the exchange and trade system.

Central African Republic

(Position on December 31, 1990)

Exchange Arrangement

The currency of the Central African Republic is the CFA Franc,1 which is pegged to the French franc, the intervention currency, at the fixed rate of CFAF 1 = F 0.02. Exchange transactions in French francs between the BEAC and commercial banks take place at the rate of CFAF 50 = F 1, free of commission. Buying and selling rates for certain other foreign currencies are also officially posted, with quotations based on the fixed rate for the French franc and the rates for the currencies concerned in the Paris exchange market. A commission of 0.25 percent is levied on all capital transfers to countries that are not members of the BEAC, except those made for the account of the Treasury and for the expenses of students. There are are no taxes or subsidies on purchases or sales of foreign exchange.

With the exception of those relating to gold, the exchange control measures of the Central African Republic do not apply to (1) France (and its Overseas Departments and Territories) and Monaco; and (2) All other countries whose bank of issue is linked with the French Treasury by an Operations Account (Benin, Burkina Faso, Cameroon, Chad, Comoros, Congo, Côte d’Ivoire, Gabon, Equatorial Guinea, Mali, Niger, Senegal, and Togo). Hence, all payments to these countries may be made freely. All other countries are considered foreign countries.

Administration of Control

All draft legislation, directives, correspondence, and contracts having a direct or indirect bearing on the finances of the State require the prior approval of the Minister of Finance, who has delegated his approval authority to the Director of the Budget. The Autonomous Amortization Fund (CAADE) in the Ministry of Finance supervises borrowing abroad, and the Office of Foreign Financial Relations in the same ministry supervises lending abroad, issuing, advertising, or offering for sale foreign securities in the Central African Republic, and inward and outward direct investment. Exchange control is administered by the Minister of Finance, who has delegated some of his approval authority to the BEAC,2 to the authorized banks, and to the Postal Administration. All exchange transactions relating to foreign countries must be effected through authorized banks. Export declarations are to be made through the Directorate of Foreign Trade in the Ministry of Commerce and Industry, except those for gold, which are to be made through the BEAC.

Arrears are maintained with respect to external payments.

Prescription of Currency

Since the Central African Republic is an Operations Account country, settlements with France (as defined above), Monaco, and the Operations Account countries are made in CFA francs, French francs, or the currency of any other institute of issue that maintains an Operations Account with the French Treasury. Settlements with all other countries are usually made in any of the currencies of those countries or in French francs through Foreign Accounts in Francs.

Nonresident Accounts

The regulations pertaining to nonresident accounts are based on those applied in France. The principal nonresident accounts are Foreign Accounts in Francs. BEAC bank notes received by the foreign correspondents of authorized banks and mailed to the BEAC agency in Bangui by the Bank of France or the Banque centrale des Etats de l’Afrique de l’Ouest (BCEAO) may be credited freely to Foreign Accounts in Francs.

Imports and Import Payments

All imports from South Africa are suspended. Imports from all other countries are not subject to licensing requirements or quotas. Imports of firearms are prohibited irrespective of origin. Import declarations are required for all imports, and all import transactions relating to foreign countries must be domiciled with an authorized bank. The import license entitles importers to purchase the necessary exchange, provided that the shipping documents are submitted to the authorized bank.

Payments for Invisibles

Payments for invisibles to France (as defined above), Monaco, and the Operations Account countries are permitted freely; those to other countries are subject to approval. For many types of payment the approval authority has been delegated to authorized banks. Payments for invisibles related to trade are permitted freely when the basic trade transaction has been approved or does not require authorization. Transfers of income accruing to nonresidents in the form of profits, dividends, and royalties are also permitted freely when the basic transaction has been approved.

There are no limits on foreign exchange allocations for tourist and business travel, and residents may obtain foreign bank notes and traveler’s checks in foreign currencies or make payments through commercial banks without restriction. Residents traveling as tourists may take with them a maximum of CFAF 50,000 in domestic bank notes a year a person. For business travel, the maximum limit on domestic bank notes that can be exported is CFAF 10,000 a person a day.

Foreigners working in the Central African Republic are permitted to transfer their entire net salary upon presentation of the appropriate pay voucher, provided that the transfer takes place within three months of the pay period.

Nonresident travelers may take out foreign currency and other foreign means of payment up to the amount they declared on entry; they may reconvert up to CFAF 50,000 in BEAC bank notes into foreign currency.

Exports and Export Proceeds

All exports to South Africa are suspended. All exports require a declaration. Proceeds from exports to foreign countries must be collected and repatriated within 1 month of the due date; the latter must not be later than 90 days after the arrival of the goods at their destination, unless special authorization is obtained. Export proceeds received in currencies other than those of France or an Operations Account country must be surrendered. All export transactions must be domiciled with an authorized bank.

Proceeds from Invisibles

Proceeds from transactions in invisibles with France (as defined above), Monaco, and the Operations Account countries may be retained. All amounts due from residents of other countries in respect of services, and all income earned in those countries from foreign assets, must be collected within one month of the due date and, if received in foreign currency, surrendered within one month of the date of receipt. Resident and nonresident travelers may bring in any amount of bank notes and coins issued by the BEAC, the Bank of France, or any other bank of issue maintaining an Operations Account with the French Treasury, as well as any amount of foreign bank notes and coins (except gold coins) of countries outside the Operations Account area.

Capital

Capital movements between the Central African Republic and France (as defined above), Monaco, and the Operations Account countries are free of exchange control; capital transfers to all other countries require exchange control approval and are restricted, but capital receipts from such countries are permitted freely. All foreign borrowing by the Government or its public and semipublic enterprises, as well as all foreign borrowing with a government guarantee, requires the prior approval of the Director of the Budget.

Special controls (additional to any exchange control requirements that may apply) are maintained over borrowing and lending abroad, over inward and outward direct investment, and over the issuing, advertising, or offering for sale of foreign securities in the Central African Republic; these controls relate to the transactions themselves, not to payments or receipts. With the exception of those controls over the sale or introduction of foreign securities in the Central African Republic, the measures do not apply to France (as defined above), Monaco, and the Operations Account countries.

Direct investments abroad3 require the prior approval of the Ministry of Finance, unless they take the form of a capital increase resulting from reinvestment of undistributed profits; the full or partial liquidation of such investments also requires prior approval from the Ministry of Finance, unless the operation involves the relinquishing of a participation that had previously been approved as constituting a direct investment abroad. Foreign direct investments in the Central African Republic4 must be declared to the Minister of Finance, unless they take the form of a capital increase resulting from reinvestment of undistributed profits; the Minister has a period of two months from receipt of the declaration during which he may request postponement. The full or partial liquidation of direct investments in the Central African Republic must also be declared to the Minister, unless the operation involves the relinquishing of a participation that had previously been approved as constituting a direct investment in the Central African Republic. Both the making and the liquidation of direct investments, whether these are Central African Republic investments abroad or foreign investments in the Central African Republic, must be reported to the Minister within 20 days of each operation. Direct investments are defined as those that imply control of a company or an enterprise. Mere participation is not considered as direct investment, provided that it does not exceed 20 percent of the capital of a company whose shares are quoted on a stock exchange.

The issuing, advertising, or offering for sale of foreign securities in the Central African Republic requires prior authorization from the Minister of Finance. Exempt from authorization, however, are operations in connection with (1) loans backed by a guarantee from the Government, and (2) shares similar to securities whose issuing, advertising, or offering for sale in the Central African Republic has previously been authorized.

Borrowing abroad by natural or juridical persons, whether public or private, whose normal residence or registered office is in the Central African Republic, or by branches or subsidiaries in the Central African Republic of juridical persons whose registered office is abroad, requires prior authorization from the Minister of Finance. The following are, however, exempt from this authorization: (1) loans constituting a direct investment abroad for which prior approval has been obtained, as indicated above; (2) loans directly connected with the rendering of services abroad by the persons or firms mentioned above, or with the financing of commercial transactions either between the Central African Republic and countries abroad or between foreign countries, in which those persons or firms take part; (3) loans contracted by registered banks; and (4) loans other than those mentioned above, when the total amount outstanding of the loans does not exceed CFAF 50 million for any one borrower. The contracting of loans referred to under (4) that are free of authorization, and each repayment thereon, must be reported to the Office of Foreign Financial Relations within 20 days of the operation, unless the total outstanding amount of all loans contracted abroad by the borrower is less than CFAF 500,000.

Lending abroad by physical or juridical persons, whether public or private, whose normal residence or registered office is in the Central African Republic, or by branches or subsidiaries in the Central African Republic of juridical persons whose registered office is abroad, requires prior authorization from the Minister of Finance. The following are, however, exempt from this authorization: (1) loans granted by registered banks, and (2) other loans when the total amount outstanding of the loans does not exceed CFAF 50 million for any one lender. Making loans that are free of authorization, and each repayment thereon, must be reported to the Office of Foreign Financial Relations within 20 days of the operation, except when the amount of the loan granted abroad by the lender is less than CFAF 500,000.

Under Law No. 62/355 of February 19, 1963 (as amended by Ordinance No. 69/47 of September 2, 1969) and UDEAC Decision No. 18/65 of December 14, 1965, industrial, tourist, agricultural, and mining enterprises (both foreign and domestic) established in the Central African Republic are granted, under certain conditions, a reduction in duties and taxes on the import of specified equipment; in addition, certain enterprises receive exemption from direct taxes on specified income.

The law also provides for three categories of preferential treatment (A, B, and C), in accordance with which fiscal and other privileges may be accorded to firms investing in new enterprises or in the expansion of existing ones in most sectors of the economy, except the commercial sector. Requests for approval for preferential treatment must be submitted to the Minister of Industry, who is the Chairman of the Investment Commission, which considers the application. If a positive decision is given by the Commission, the proposed authorization is submitted to the Council of Ministers. Preferential treatments A and C are granted by decree issued by the Council of Ministers. Preferential treatment B is granted by an Act of the Board of Directors of the Equatorial Customs Union upon the recommendation of the Council of Ministers.

Gold

Residents are free to hold, acquire, and dispose of gold in any form in the Central African Republic. Imports and exports of gold from or to any other country require a license, which is seldom granted; in practice, imports and exports are made by an authorized purchasing office. Exempt from prior authorization are (1) imports and exports by or on behalf of the Treasury, and (2) imports and exports of manufactured articles containing a minor quantity of gold (such as gold-filled or gold-plated articles). Both licensed and exempt imports of gold are subject to customs declaration. Certain companies have been officially appointed as Offices for the Purchase, Import, and Export of Gold and Raw Diamonds.

Changes During 1990

No significant changes occurred in the exchange and trade system.

Chad

(Position on December 31, 1990)

Exchange Arrangement

The currency of Chad is the CFA Franc,1 which is pegged to the French franc, the intervention currency, at the fixed rate of CFAF 1 = F 0.02. Exchange transactions in French francs between the BEAC and commercial banks take place at the same rate. Buying and selling rates for certain other foreign currencies are also officially posted, with quotations based on the fixed rate for the French franc and the rates for the currencies concerned in the Paris exchange market. A commission of 0.25 percent is levied on all capital transfers abroad by the banks for their own account, except those made for the account of the Treasury, for students’ bursaries, and to the member countries of the BEAC. There are no taxes or subsidies on the purchase or sale of foreign exchange.

With the exception of those relating to gold, Chad’s exchange control measures do not apply to (1) France (and its Overseas Departments and Territories) and Monaco; and (2) all other countries whose bank of issue is linked with the French Treasury by an Operations Account (Benin, Burkina Faso, Cameroon, Central African Republic, Comoros, Congo, Côte d’Ivoire, Gabon, Mali, Niger, Senegal, and Togo). Hence, all payments to these countries may be made freely. However, they must be declared and be made only through authorized banks and with bank checks. Payments to all other countries are subject to exchange control.

Forward cover for imports is permitted only for specified commodities and requires the prior approval of the Office of the Minister of Economy and Commerce.

Administration of Control

The Ministry of Finance supervises borrowing and lending abroad, the issuing, advertising, or offering for sale of foreign securities in Chad, and inward and outward direct investment; it also issues import and export authorizations for gold. Exchange control is administered by the Minister of Finance, who has delegated his approval authority in part to the External Finance and Exchange Control Subdirectorate, which issues instructions to the authorized intermediaries. All exchange transactions relating to countries outside the Operations Account Area must be effected through authorized banks. Import and export licenses are issued by the Foreign Trade Office in the Ministry of Commerce and Industry.

Arrears are maintained with respect to external payments.

Prescription of Currency

Since Chad is an Operations Account country, settlements with France (as defined above), Monaco, and the Operations Account countries are made in CFA francs, French francs, or the currency of any other institute of issue that maintains an Operations Account with the French Treasury. Settlements with all other countries are usually made through correspondent banks in France in any of the currencies of those countries or in French francs through Foreign Accounts in Francs.

Nonresident Accounts

The regulations pertaining to nonresident accounts are based on those applied in France. BEAC bank notes may be credited freely to Foreign Accounts in Francs maintained by the foreign correspondent of an authorized bank, provided that the notes are repatriated to the BEAC agency in Chad by the correspondent bank concerned.

Imports and Import Payments

Imports from South Africa are prohibited. Imports of wheat, wheat flour, and sugar from all sources require licenses. All other imports from countries in the French Franc Area and from European Community (EC) countries (the original member states), other than France, may be made freely. All imports from non-EC countries outside the Operations Account Area are subject to licensing in accordance with an annual import program. This program and the amount of foreign exchange required to implement it are determined by the Ministry of Commerce and Industry on the basis of proposals drawn up by the Committee on Imports.

The import program contains global quotas for imports from non-EC countries outside the Operations Account Area and a special quota for imports of cotton textiles from countries judged to have abnormal competitive advantages. In addition, the program contains global quotas for imports of wheat, wheat flour, and sugar from EC countries, countries in the Operations Account Area, as well as other countries. Specified goods from certain neighboring countries not belonging to the Operations Account Area, up to a value of CFAF 3 million a year in each direction for a single importer, may be imported through compensation transactions. The issuance of import licenses for sugar and a specified brand of cigarettes has been suspended until further notice.

All import transactions valued at CFAF 100,000 or more and relating to foreign countries must be domiciled with an authorized bank. Import licenses entitle importers to purchase the necessary exchange, provided that the shipping documents are submitted to the authorized bank.

Payments for Invisibles

Payments for invisibles to France (as defined above), Monaco, and the Operations Account countries are permitted freely; those to other countries are subject to approval. For many types of payment, the approval authority has been delegated to authorized banks. Payments for invisibles related to trade are permitted freely when the basic trade transaction has been approved or does not require authorization. Transfers of bona fide income accruing to nonresidents in the form of profits, dividends, and royalties are also permitted freely. Some current payments, however, may be subject to delay.

Insurance on all imports shipped to Chad of values exceeding CFA 500,000 on f.o.b. terms must be arranged with local insurance companies by the importer.

For tourist travel, residents traveling to countries other than France (as defined above), Monaco, and the Operations Account countries may obtain an exchange allocation of an amount equivalent to CFAF 200,000 a person a trip, for any number of trips a year. This allocation is increased by the equivalent of CFAF 50,000 for each child under 10 years of age. For pilgrimages to Mecca, an additional allocation of the equivalent of CFAF 200,000 may be granted. Business travelers to foreign countries receive a daily allocation of the equivalent of CFAF 60,000, with a maximum allocation of the equivalent of up to CFAF 500,000 a person a trip; the External Finance and Exchange Control Subdirectorate may approve additional amounts. Travelers to foreign countries may take out a maximum of CFAF 30,000 in BEAC bank notes; the limit for children under 10 is CFAF 5,000.

Nonresident travelers may take out foreign bank notes and coins up to the amount they declared on entry, in addition to amounts they remitted from foreign bank accounts. If they made no declaration, they may take out up to the equivalent of CFAF 150,000, in addition to a maximum of CFAF 30,000 in BEAC bank notes.

Exports and Export Proceeds

Exports to South Africa are prohibited. All exports to non-EC countries outside the Operations Account Area require licenses. Specified exports to certain neighboring countries, including Nigeria and Sudan, may be made through compensation transactions. Exports of cotton are the monopoly of Cotontchad.

Export transactions relating to foreign countries must be domiciled with an authorized bank when their value exceeds CFAF 50,000. Export proceeds received in currencies other than those of France or an Operations Account country must be surrendered. Export proceeds normally must be received within 180 days of the arrival of the commodities at their destination. The proceeds must be collected, and be surrendered if received in a foreign currency, within one month of the due date.

Proceeds from Invisibles

Proceeds from transactions in invisibles with France (as defined above), Monaco, and Operations Account countries may be retained. All amounts due from residents of other countries in respect of services, and all income earned in those countries from foreign assets, must be collected and, if received in foreign currency, be surrendered within two months of the due date. Resident and nonresident travelers may bring in any amount of bank notes and coins issued by the BEAC, the Bank of France, or any other bank of issue maintaining an Operations Account with the French Treasury, as well as any amount of foreign bank notes and coins (except gold coins) and other foreign means of payment. Residents bringing in foreign bank notes and coins in excess of the equivalent of CFAF 20,000 must exchange them for CFA francs within eight days of their return.

Capital

Capital movements between Chad and France (as defined above), Monaco, and the Operations Account countries are free of exchange control; capital transfers to all other countries require exchange control approval and are restricted, but capital receipts from such countries are permitted freely. All foreign securities, foreign currencies, and titles embodying claims on foreign countries or nonresidents that are held in Chad by residents or nonresidents must be deposited with authorized banks in Chad.

Special controls (additional to any exchange control requirements that may be applicable or suspended insofar as they would be contrary to the exchange control regulations) are maintained over borrowing and lending abroad, over inward and outward direct investment, and over the issuing, advertising, or offering for sale of foreign securities in Chad; these controls relate to the transactions themselves, not to payments or receipts. With the exception of those controls over the sale or introduction of foreign securities in Chad, the measures do not apply to France (as defined above), Monaco, and the Operations Account countries.

Direct investments abroad2 require the prior approval of the Minister of Finance, irrespective of the method of financing; the full or partial liquidation of such investments also requires the prior approval of the Minister. Foreign direct investments in Chad3 require the prior approval of the Minister of Finance unless they take the form of a mixed-economy enterprise. The full or partial liquidation of direct investments in Chad must also be declared to the Minister. Both the making and the liquidation of direct investments, whether these are Chadian investments abroad or foreign investments in Chad, must be reported to the Minister within 30 days of each operation. Direct investments are defined as investments implying control of a company or enterprise.

The issuing, advertising, or offering for sale of foreign securities in Chad requires prior authorization from the Minister of Finance. Exempt from authorization, however, are operations in connection with (1) loans backed by a guarantee from the Chadian Government, and (2) shares similar to securities whose issuing, advertising, or offering for sale in Chad has previously been authorized.

Borrowing abroad by physical or juridical persons, whether public or private, whose normal residence or registered office is in Chad, or by branches or subsidiaries in Chad of juridical persons whose registered office is abroad, requires prior authorization from the Minister of Finance. The following are, however, exempt from this authorization: (1) loans constituting a direct investment abroad for which prior approval has been obtained, as indicated above; (2) loans directly connected with the rendering of services abroad by the persons or firms mentioned above, or with the financing of commercial transactions either between Chad and countries abroad or between foreign countries in which these persons or firms take part; and (3) loans other than those mentioned above, when the total amount outstanding of the loan does not exceed CFAF 10 million for any one borrower, with an interest rate no higher than 7 percent and a maturity of two years or less. The contracting of loans referred to under (3) that are free of authorization, and each repayment thereon, must be declared to the Minister within 30 days of the operation.

Lending abroad by physical or juridical persons, whether public or private, whose normal residence or registered office is in Chad, or by branches or subsidiaries in Chad of juridical persons whose registered office is abroad requires prior authorization from the Minister of Finance. The following are, however, exempt from this authorization: (1) loans directly connected with the rendering of services abroad by the persons or firms mentioned above, or with the financing of commercial transactions either between Chad and countries abroad or between foreign countries in which these persons or firms take part; and (2) other loans, when the total amount outstanding of these loans does not exceed CFAF 5 million for any one lender. The making of loans referred to under (2) that are free of authorization, and each repayment thereon, must be declared to the Minister within 30 days of the operation. Commercial banks must maintain a specified minimum proportion of their assets in Chad.

Under the Investment Code published on December 9, 1987, any enterprise established in Chad, whether domestic or foreign, is granted, under certain conditions, reduced duties and taxes on specified imports, as well as exemption from direct taxes on specified income. The Code provides for four categories of enterprises that would receive various forms of preferential treatment, including certain tax and other privileges. Requests for preferential treatment must be submitted to the Minister of Finance who, after examining the documents, transmits them to the Investment Commission. With the recommendation of this Commission, the project is submitted to the Council of Ministers for approval.

Gold

Chad has issued gold coins with face values of CFAF 1,000, CFAF 3,000, CFAF 5,000, CFAF 10,000, and CFAF 20,000, which are legal tender. Residents who are not producers of gold may not hold unworked gold unless specifically authorized. Imports and exports of gold, whether unworked or refined, require prior authorization from the Ministry of Finance and from the Directorate of Energy, Mines, and Geology, as well as a visa from the External Finance Department. Exempt from this requirement are (1) imports and exports by or on behalf of the monetary authorities, and (2) imports and exports of manufactured articles containing a minor quantity of gold (such as gold-filled or gold-plated articles). Exports of unworked gold and of raw diamonds (as well as domestic purchases and sales of both) are the monopoly of the Office for Purchases, Sales, Imports, and Exports, which is an approved private company. Unworked gold may be exported only to France. Both licensed and exempt imports of gold are subject to customs declaration.

Changes During 1990

No significant changes occurred in the exchange and trade system.

Chile

(Position on December 31, 1990)

Exchange Arrangement

The currency of Chile is the Chilean Peso (Ch$). The official exchange rate of the Chilean peso is pegged to the U.S. dollar, at a rate adjusted at daily intervals according to a schedule established on the basis of the domestic rate of inflation during the previous month, less the estimated world rate of inflation. On December 31, 1990, the official exchange rate was Ch$353.84 per US$1. The official foreign exchange market (formal exchange market) consists of commercial banks, exchange houses, and other entities that are authorized by the Central Bank. Proceeds from exports of goods and services, payments for imports of goods and services, debt-service payments, remittances of dividends and profits, and authorized capital transactions, including loan receipts, must be transacted through this market. In addition, there is an informal exchange market through which all transactions not required to be channeled through the official foreign exchange market take place. In both markets, private parties are free to negotiate exchange rates.

The Central Bank conducts foreign exchange transactions vis-à-vis the official exchange market entities within margins of 5 percent above and below the official exchange rate.

Commercial banks are permitted to provide a forward market for foreign exchange with a maturity of up to 180 days. On maturity, contracts are settled in pesos on the basis of the difference between the market rate and the contract rate. Contract rates are determined freely without intervention by the Central Bank. The regulations impose limits on banks’ gross forward purchases and on their net exposure, both overall and in individual currencies. The Central Bank provides forward cover against exchange risk in the form of currency swaps. The maturity periods of forward transactions range from 5 days to 720 days. Commissions on exchange transactions are subject to an 18 percent value-added tax. The exchange rates of the Chilean peso with other currencies are determined on the basis of the peso exchange rate with respect to the U.S. dollar and of the U.S. dollar exchange rate with respect to other currencies quoted in foreign markets.

The Central Bank has provided an exchange subsidy on the following service payments on some debts contracted prior to August 6, 1982 (the original amount of the debt was about US$8 billion): (1) debtors to Chilean banks or financial companies whose debt is indexed to the official exchange rate; and (2) debtors with direct obligations abroad whose obligations were registered with the Central Bank. The subsidy is paid by means of notes indexed to inflation with a minimum maturity of six years, and carrying a 3 percent rate of interest. On December 31, 1990, the difference between the official rate and the subsidized rate was Ch$72.8 per US$1. As of this date, only those debtors whose obligations were equal to or less than US$50,000 on June 30, 1985 had access to this subsidized rate. The stock of debt eligible in principle for the preferential exchange rate is estimated at less than US$70 million. However, the actual amount for which this exchange rate will apply is expected to be negligible due, inter alia, to the bankruptcy of many of the affected debtors, and the subsidy operations are expected to stop soon.

Administration of Control

The Council of the Central Bank is responsible for carrying out exchange control policy. The Chilean Copper Commission is responsible for the supervision of copper exports and all imports of the copper industry; this supervision has to be exercised in accordance with general rules enacted by the Central Bank.

In accordance with the Fund’s Executive Board Decision No. 144-(52/51), adopted on August 14, 1952, Chile notified the Fund, on December 6, 1990, that certain restrictions were imposed on the making of payments and transfers for current international transactions to the Government of Iraq and persons within the territories of Iraq and Kuwait.

Prescription of Currency

Settlements with Argentina, Bolivia, Brazil, Colombia, Dominican Republic, Ecuador, Mexico, Paraguay, Peru, Uruguay, and Venezuela must be made through accounts maintained with each other by the Central Bank of Chile and the central banks of each of the countries concerned, within the framework of the multilateral clearing system of the Latin American Integration Association (LAIA). Net balances under the clearing system are settled in U.S. dollars.

Imports and Import Payments

Most imports are free of controls, with the exception of used motor vehicles. Most imports require a document (known as Informe de Importación) issued by the Central Bank, which must be obtained and processed through the intermediary local commercial bank. Payment for visible trade transactions, through the official foreign exchange market, is not permitted unless an Informe de Importación has been issued.

Importers who meet the documentary requirements are granted access to the official foreign exchange market regardless of the terms of the obligation involved, provided that the supplier’s interest continues to accrue until the date on which the foreign currency is sold.

Tariffs are bound under the General Agreement on Tariffs and Trade (GATT) at 35 percent. At present, imports are subject to a uniform tariff rate of 15 percent. A few items are exempted from the general tariff regime. Exemptions include tariffs negotiated with LAIA countries. Imports of wheat, edible oil, and sugar are subject to a special regime involving price margins within which the after-duty price has to remain. In addition, tariff duties or surcharges are applied, on a temporary basis, to imports of certain products that are subsidized in the country of origin or dumped in Chile.

Payments for Invisibles

Specified allowances exist for certain transactions; central bank authorization is required for others. The authorization is provided upon presentation of appropriate documentation. The established limit for tourist travel (in addition to the fares) is the equivalent of US$1,000 a trip for travel to Latin American and Caribbean countries and US$3,000 a trip to other countries. For travel by land to neighboring destinations, 20 percent of the allowance is provided in the form of foreign exchange, and the rest, in money orders. Higher amounts for travel other than tourism may be authorized by the Central Bank, upon presentation of adequate justification. Travelers may also obtain additional foreign currency in the informal exchange market.

Residents may purchase from commercial banks foreign exchange up to US$200 a month for study abroad, subscriptions to magazines, book purchases, registration in seminars, social security payments, medical treatment payments, and remittances of rents earned by real estate owners living abroad. Purchases over US$200 a month require prior approval from the Central Bank. All of these transactions are subject to presentation of appropriate documents. Remittances of earnings by foreign workers must be channeled through the informal exchange market. Remittances of profits and dividends earned from foreign direct investments require prior approval from the Central Bank.

There are no special provisions for exports of domestic bank notes.

Insurance activities within the country are limited to Chilean companies or to authorized foreign companies.

Exports and Export Proceeds

All products may be freely exported. All foreign exchange proceeds from exports in excess of US$1,000 must be surrendered through commercial banks, which are required to advise the Central Bank. Commercial banks are authorized to purchase all foreign exchange proceeds spot from exporters. Exporters are allowed to retain up to 5 percent of export proceeds in a special Foreign Exchange Account, which may be drawn upon to cover travel expenses and consultants’ fees, bank costs and/or commissions, and other expenses involved in export schemes, but the cumulative deposits in any such account during a 12–month period may not exceed US$500,000. Receipts from exports of Codelco (the state copper mines) must be deposited in a special foreign currency account at the Central Bank.

Export proceeds subject to surrender requirements must be repatriated within 120 days of the date of shipment and surrendered within 10 days. However, export proceeds may be surrendered within 210 days of the date of shipment if they are held as foreign exchange deposits with resident banks. Extension of repatriation periods may be granted for certain products.

As a means of expediting the operation of the drawback system in respect of small export values, exporters of eligible products (approximately 6 percent of the country’s annual exports) have an option of taking a tax reimbursement in lieu of benefits under the existing import duty drawback scheme; alternatively, such exporters may avail themselves of the provisions of Decree No. 409, under which they may draw back their payments of duties on imported inputs. Eligible products were defined initially as those whose average annual export values in 1983 and 1984 were equal to or less than US$2.5 million. The list of eligible products is reviewed annually in the light of their export value during the previous year. Annual export values are also subject to adjustment. As of July 16, 1990, this tax refund was equal to 10 percent of the net export value of sales for those exporters of products whose annual export value was less than or equal to US$10 million and 5 percent for those exporters of products whose annual export value was between US$10 million and US$15 million.

Proceeds from Invisibles

In general, foreign exchange proceeds from invisibles must be surrendered only when required by a legal provision. The same rule applies to royalties and copyright fees, commissions, proceeds from insurance, and other benefits related to foreign trade. There are no similar rules governing the proceeds from family remittances, and the surplus foreign exchange from travel allocations.

There are no special provisions for imports of domestic bank notes.

Capital

Capital inflows are generally free, but most outflows are restricted. All new foreign borrowing or refinancing of existing credits by commercial banks requires prior registration or approval from the Central Bank; the exceptions to this regulation are lines of credit of up to one-year maturity with foreign correspondents, and short-term loans for domestic re-lending. Short-term loans are subject to a limit determined mainly by a bank’s capital and reserves. However, the Central Bank must still be notified of foreign borrowings even if they do not require central bank approval. Foreign capital may enter Chile under one of the following arrangements, depending on the purpose and type of the investment.

(1) Title I, Chapter XIV of the Compendium of Rules on International Exchange stipulates, inter alia, that capital brought into the country in the form of foreign borrowing (créditos externos) must be sold through authorized banks when the investor (individual or corporate, national or foreign) has registered the transaction with the Central Bank. There is no minimum term on the maturity of foreign borrowing. Repatriation normally is allowed only in accordance with the amortization schedule established at the time of registration. Accelerated payments or extensions of payment are subject to special authorization. Since June 1990, under Chapter XXVI of Title I, individuals and legal entities, domiciled and resident abroad, and meeting certain conditions, have been permitted to remit abroad proceeds from the sale of stocks of registered corporations domiciled in Chile that were purchased with funds abroad through the official exchange market. The remittance of dividends and profits accruing from such stocks is also allowed through the official exchange market.

(2) Chapter XIV of Title I of the Compendium of Rules authorizes the Central Bank to make exemptions to the general rules enacted by it concerning the inflow and outflow of capital or credits.

(3) Decree-Law No. 600 of July 7, 1974 (amended by Decree-Law No. 1748 of March 18, 1977), the Foreign Investment Statute, establishes a regime for long-term capital investment. Authorization to make a foreign exchange investment in Chile is granted by the Foreign Investment Committee through a contract containing undertakings that the investment program will normally not exceed eight years for mining and three years for other projects. Investments of less than US$5 million may be approved by the Executive Secretary of the Committee, with a few exceptions. There are no general limitations on profit remittances, but specific agreements in this regard may be included in the above-mentioned investment contract. Capital may be repatriated after three years unless specified otherwise in the investment contract. Foreign investors can opt for a guaranteed annual corporate income tax at the rate of 49.5 percent over a period of ten years, or may subject themselves to a tax system similar to that which is applied to domestic corporations. (According to this system, foreign investors are subject to an effective tax rate of 32.5 percent.) Any foreign credits involved must be on terms authorized by the Central Bank. Foreign capital that entered Chile prior to the promulgation of Decree-Law No. 600 and is not subject to that law continues to be subject to the regulations prevailing on the date of entry. Contract awards in the oil sector are decided by the Government under Presidential Decree; rights and responsibilities under such a Decree may be vested in the Empresa Nacional de Petróleo (ENAP) by the Ministry of Mines.

(4) Chapters XVIII and XIX of the Chilean Compendium of Rules on International Exchange, introduced in May 1985 and amended several times since, regulate the purchase of selected Chilean foreign debt instruments abroad at a discount as well as their repatriation. Eligible instruments are defined as external debt payable in foreign currency outside Chile with a maturity of more than one year, the debtor of which may be either the Treasury, the Central Bank, a public sector entity, the Development Corporation (Corfo), a financial institution, or a private sector resident having a guarantee from a financial institution. Chapter XIX governs the use of Chilean debt instruments by foreign residents for direct investment in Chile with remittance rights. Upon approval from the Central Bank, the foreign currency obligation is exchanged into a domestic currency obligation, the proceeds of which must be used for direct investment purposes, with the intermediation of a financial institution; special regulations apply to repatriation of such capital as well as to dividend payments. Chapter XVIII specifies the regulations for the conversion into peso assets (without remittance rights) by residents and nonresidents of debt purchased at a discount abroad with foreign exchange not obtained in the official market and of private sector external debt not guaranteed by the Government. Transactions under Chapter XVIII are also channeled through financial institutions, subject to an overall quota assigned on the basis of an auction system.

(5) Chapter XXVII of Title I of the Chilean Compendium of Rules on International Exchange, introduced in August 1990, provides that foreign capital investment funds may have access to the official exchange market for repatriation abroad of imported capital, profits earned on such capital, and payments of expenses involved in foreign investment activities under certain conditions.

Gold

Chile has issued three gold coins, which are not legal tender. Monetary gold may be traded only by authorized houses, but ordinary transactions in gold between private individuals may be freely undertaken. Imports and exports of gold are unrestricted, subject to compliance with the normal formalities for import and export transactions, including registration with the Central Bank.

Changes During 1990

Exchange Arrangement

April 19. New regulations liberalizing foreign exchange market operations and allowing any person to conduct freely foreign exchange transactions were introduced. Previously, all foreign exchange transactions were prohibited unless specifically authorized by the Central Bank. Under the new regulations, all transactions were permitted unless specifically restricted by the Central Bank, and the parallel market thus became an informal but legal foreign exchange market. Proceeds from exports of goods and services, payments for imports of goods and services, debt-service payments, remittances of dividends and profits, and authorized capital transactions, including loan receipts, would be transacted through the official exchange market. All other transactions not required to be effected through the official exchange market would take place in the informal exchange market in which the exchange rate is freely determined.

June 25. A new chapter (Chapter XXVI) was added to Title I of the Compendium of Rules on International Exchange. It provided that individuals and legal entities, domiciled and resident abroad, and meeting specific conditions, may have access to the official exchange market to remit abroad proceeds from the sale of stocks of registered corporations domiciled in Chile that were purchased with funds from abroad. The remittance of dividends and profits accruing from such stocks was also permitted through the official exchange market.

Imports and Import Payments

January 5. The minimum import financing requirement (120 days) was abolished (Resolution 5-11-900105).

Payments for Invisibles

October 18. The requirement that foreign exchange for travel allowances must be obtained no earlier than 20 days before the date of departure was abolished.

Exports and Export Proceeds

July 9. The repatriation period for proceeds from exports was extended to 120 days from 90 days (Resolution 64-11-901018).

Capital

August 30. A new chapter (Chapter XXVII) was added to Title I of the Chilean Compendium of Rules on International Exchange. It specified the procedures under which foreign capital investment funds may have access to the official exchange market for repatriation abroad of imported capital, profits earned on such capital, and payments of expenses involved in foreign investment activities.

People’s Republic of China

(Position on December 31, 1990)

Exchange Arrangement

The currency of the People’s Republic of China is the Renminbi, and its unit is the Yuan. Since January 1, 1986, China has followed an exchange arrangement whereby the exchange rate for the renminbi is based on developments in the balance of payments and in costs and exchange rates of China’s major competitors. From July 5, 1986 until December 15, 1989, the exchange rate for the renminbi remained unchanged at Y 3.72 per US$1. On December 15, 1989, it was announced that the renminbi would be depreciated by 21.2 percent, effective December 16, to Y 4.72 per US$1. On November 17, 1990, the renminbi was depreciated by a further 9.6 percent. The exchange rates for the U.S. dollar and 20 other currencies are published on a daily basis by the State Administration of Exchange Control;1 on December 31, 1990, the buying and selling rates for the U.S. dollar were Y 5.22 and Y 5.24, respectively, per US$1.

Published rates for currencies other than those that are important in China’s international transactions are changed whenever the calculated rate diverges from the previously published rate by between 0.5 percent and 1 percent. Since November 1986, Chinese enterprises in the four economic zones of Shantou, Shenzhen, Xiamen, and Zhuhai, and foreign investment corporations have been permitted to transact rights to foreign exchange earnings in foreign exchange swap centers at rates mutually agreed upon between buyers and sellers under the supervision of the State Administration of Exchange Control (SAEC). In early 1988, all domestic entities that were allowed to retain foreign exchange earnings were granted permission to trade in the swap centers, and at present 100 such centers have been established. Initially, a relatively small volume of transactions took place in these markets, but the volume has increased substantially since access to the centers was expanded. The renminbi depreciated in these markets from an average of Y 5.25 per US$1 in the first quarter of 1987 to Y 6.7 per US$1 in the first half of 1989, but subsequently appreciated to Y 5.9 per US$1 in the latter part of 1989 and Y 5.7 per US$1 by December 1990.

The SAEC must approve the use of foreign exchange purchased in the swap centers, and in February 1989, regulations were issued specifying the priority uses of foreign exchange. Imports of inputs for the agricultural sector, textiles, and technologically advanced and light industries were given priority, while purchases of foreign exchange for imports of a wide range of consumer goods, including clothing and electronic products, were prohibited.

Forward exchange rates are published for 15 currencies.2 China does not apply a system of forward premiums and discounts but instead uses the spot rate plus a forward charge. Forward transactions are permitted only in connection with an underlying trade transaction. When banks sell renminbi forward, a charge is levied; when they buy, no charge is levied except on the deutsche mark, Netherlands guilder, Japanese yen, and Swiss franc. Rates are given for one to six months; transactions can be renewed for a further six months, but not for longer than one year. Forward charges reflect interest rates and trends in international markets in the currencies concerned.

Administration of Control

The People’s Bank of China (PBC) exercises central bank functions and control over foreign exchange; and the SAEC, as a government institution under the leadership of the PBC, is responsible for implementing exchange regulations and for controlling all foreign exchange transactions in accordance with state policy. There are a number of SAEC sub-bureaus in the provinces, main municipalities, autonomous regions, and special economic zones. The Bank of China (BOC) is China’s specialized foreign exchange bank. Other banks and financial institutions, including affiliates of nonresident banks, may handle designated transactions with the approval of the SAEC. Currently, more than one hundred institutions are authorized to handle foreign exchange transactions. The China International Trust and Investment Corporation (CITIC) is authorized to conduct transactions connected with investments of foreign capital in China. Individuals and financial institutions may hold foreign exchange but generally may not deal in it or conduct arbitrage operations. Special exchange control measures are applied to special economic zones, the 14 designated coastal cities, and border regions.

Foreign exchange transactions at the more appreciated administered exchange rate are generally conducted in accordance with a foreign exchange plan. The PBC has responsibility for foreign exchange reserves and external borrowing. Within guidelines recommended to the State Council by the PBC on balance of payments management and total external borrowing, the Ministry of Foreign Economic Relations and Trade (Mofert) prepares estimates for those parts of the foreign exchange plan dealing with foreign trade, foreign loans, and China’s external assistance program; the Ministry of Finance prepares the foreign exchange budgets of other government departments. The SAEC draws up the section of the plan covering local and provincial nontrade transactions, receipts from overseas Chinese, and individual receipts. The State Planning Commission (SPC) coordinates and balances the overall foreign exchange plan and submits it to the State Council for approval. Following approval, the plan is sent back to the various localities and ministries for implementation. The SAEC is responsible for supervising the implementation of the foreign exchange plan.

The foreign exchange plan includes transactions with countries with which China maintains bilateral payments agreements.3 The annual plan is divided into quarterly plans, and at the end of each quarter, the SAEC and SPC review the implementation of the plan and determine whether corrections are necessary. That part of the foreign exchange plan dealing with trade is broken down by commodity. Unexpected events, such as changes in foreign trade policies, might necessitate a revision of the plan.

Prescription of Currency

Under bilateral payments agreements in place at the end of 1990, trade transactions with Bulgaria, Czechoslovakia, Hungary, the Democratic People’s Republic of Korea, Mongolia, Poland, Romania, and the U.S.S.R. were expressed in Swiss francs, and those with Albania and Cuba, in U.S. dollars at the official exchange rate. In normal circumstances, imbalances emerging toward the end of each year are covered by increased deliveries of goods. Noncommercial transactions are settled on a current basis in convertible currencies, except for part of such transactions with the Democratic People’s Republic of Korea and Romania and all transactions with Cuba, which pass through the clearing account. Payments to and from countries with which China has bilateral payments agreements are made in the currencies of these countries and in accordance with the procedures set forth in those agreements. In other cases, where there are no specific regulations prescribing the currencies to be used in transactions, they are determined by terms agreed under the respective contracts.

Except for the arrangement with the Islamic Republic of Iran, the agreements are designed to ensure balanced trade and include, for each good itemized, quantitative commodity lists or foreign exchange quota lists for those commodities that cannot be expressed in quantitative terms; these lists are binding on both parties. The agreement with the Islamic Republic of Iran provides such binding itemized lists only for the principal goods traded by the parties and also includes nonbinding lists of secondary goods.

Nonresident and Foreign Currency Accounts

Nonresidents4 in China for a short period may open nonresident accounts with the BOC and other authorized banks and financial institutions. Joint ventures may also open foreign exchange accounts and use them to make payments abroad. Foreign banks may hold convertible renminbi accounts in connection with commercial or noncommercial transactions. Renminbi may be purchased for such an account only on presentation of documentary evidence that the money will be used in the designated transaction. The BOC and other authorized banks and financial institutions may check any use made of renminbi in such accounts. Foreign banks in the special economic zones may lend in foreign exchange and accept foreign currency deposits from joint-venture companies.

Individuals may open resident foreign currency accounts at the BOC and may withdraw funds from such accounts in the form of foreign currency.

Imports and Exports

All trade, both direct and indirect, with South Africa is prohibited.

The primary responsibility for formulating foreign trade policies and ensuring the implementation of regulations and policy measures rests with Mofert, which also issues the licenses required for restricted imports and a large number of exports;5 following the reform in the exchange and trade system effected in early 1985, Mofert no longer engages in direct foreign trade transactions and is no longer involved in the daily enterprise management of trading corporations. Foreign trade is conducted by foreign trade corporations (FTCs) and other entities licensed by Mofert to conduct foreign trade.

In early 1988, control over FTCs was decentralized when local branches of most of these corporations were made independent entities accountable to local government authorities and responsible for their own profits and losses under the contract responsibility system. Application of the agency system, under which companies conduct foreign trade as agents on a commission basis, was also expanded; a larger number of domestic enterprises were given the authority to export their products directly or to import needed materials directly. A limited number of essential import commodities continue to be handled by 1 of the 13 national foreign trade corporations.

All enterprises, other than registered foreign trade corporations, need approval from the local foreign trade bureau in accordance with the authorization of Mofert and a license from the local bureau for industry and commerce to engage in foreign trade. Proceeds of certain exports (joint-venture companies and 100 percent foreign-owned companies) may be retained in a foreign exchange account with the BOC or an authorized bank. All other foreign exchange earnings from exports must be repatriated and surrendered to the BOC, unless specific exception is granted by the SAEC, and may not be used directly to offset import payments.

Part of the proceeds of exports (including foreign exchange earned in compensation trade) may be held as foreign exchange retention quotas6 in the SAEC or its sub-bureaus by localities and enterprises in accordance with state regulations. The percentage of export earnings that can be retained varies with the enterprise. Typically, domestic enterprises are allowed to retain 25 percent of their foreign exchange earnings up to a target amount of such earnings established for each enterprise in negotiations with the Central Government; the remainder is remitted to the Central Government. In turn, a portion of the foreign exchange retained by the enterprises has to be shared with local governments. This portion is usually 12½ percent but can vary depending on agreements between the local authorities and individual enterprises. Enterprises are generally allowed to retain a major share of foreign exchange earnings in excess of targeted amounts. Foreign direct investment enterprises retain all of their foreign exchange earnings.

The number of trading companies and other enterprises engaged in foreign trade expanded rapidly in 1988. Many of the new firms lacked the necessary expertise to engage in foreign trade, and in February 1989, the State Council established guidelines for the rationalization of foreign trade companies. Trade in certain products was to be limited to government-designated trade corporations; provincial and local government regulation of local FTCs was to be improved; and companies with poor operating results or engaged in disorderly operations were to be closed or merged with other trading companies. As a result of the rationalization, the number of FTCs was reduced from 5,000 to 4,000.

In early 1988, retention quotas for domestic enterprises in several industrial sectors (light industry, arts and crafts, clothing, and machinery) and in some regions (Hainan Island and the special economic zones) were raised. Retention quotas for these enterprises vary with the degree of processing of the goods exported up to 100 percent. Retention quotas can be traded in the foreign exchange swap centers or used for imports. The BOC provides foreign exchange for imports on the basis of import licenses and approval by the SAEC. Residents may not pay for imports with local currency.

Imports consist of those included in the annual import plan and those outside the plan. The foreign trade plan is drawn up by Mofert in conjunction with the SPC. The former sends directives on the preparation of the plan to all foreign trade corporations and to the foreign trade bureaus in the provinces, municipalities, and autonomous regions, which, in turn, meet with other interested entities and prepare lists of needed imports and goods available for export. The plans prepared at the local level are coordinated and balanced by Mofert and the SPC at national foreign trade planning conferences. The State Council grants final approval to the foreign trade plan.

Goods that can be produced domestically or for which adequate domestic substitutes are available are not included in the import plan. Priority is given in the import plan to goods that cannot be produced domestically in adequate quantities and those that are urgently needed by the State, especially for key projects. In the case of some goods that are not produced in adequate quantities but for which a strong demand exists in the foreign market, part of the production may be allocated to export.

Imports into China are also classified into two other categories—restricted imports and unrestricted imports.7 A number of restricted imports overlap with those included in the annual import plan.8 Import licensing serves to limit, and in some cases, prohibit imports of restricted goods that are included in the annual plan. Imports of seven assembly lines on the restricted list (for television sets, household refrigerators, household washing machines, radio-cassette recorders, room air conditioners, motorcycles, and light motor vehicles) are effectively banned through the licensing system; imports of these lines require approval by the State Economic Commission, which currently does not grant approval.

Apart from imports that are restricted through the licensing system, a few types of imports, such as all secondhand garments, are explicitly banned. Imports of poisons, narcotic drugs, diseased animals, and plants are prohibited, as are exports of valuable cultural relics and rare books, rare animals, seeds and plants, and precious metals, and artifacts made from these metals. In addition, the import and export of weapons, ammunition and explosives, radio receivers and transmitters, Chinese currency, manuscripts, printed and recorded materials, and films that are deemed to be detrimental to Chinese political, economic, cultural, and moral interests are prohibited. All imports and exports require prior inspection before release by customs at the port of entry or exit. Exports of specified machine tools require a license from the State Administration for the Inspection of Import and Export Commodities, as a means of quality control.

The customs regulations in force are the Provisional Customs Law of the People’s Republic of China and the Customs Import and Export Tariff of the People’s Republic of China. The tariff rates for imports fall into two categories: minimum and general. The minimum tariff rates apply to imports originating in the countries with which China has concluded trade treaties or agreements with reciprocal favorable tariff clauses therein;9 the general tariff rates apply to imports originating in the countries with which China has not concluded trade treaties or agreements with reciprocal favorable tariff clauses. The duties are calculated on the basis of the c.i.f. value of imported goods. Excluding goods that are exempt from duties, goods in the general tariff rate category are subject to 17 rates ranging from 8 percent to 180 percent, and goods in the minimum tariff rate category are subject to 17 rates ranging from 3 percent to 150 percent. In addition to the import duties mentioned above, a regulatory tax on imports is applied to 24 selected products; the regulatory tax rates range from 20 percent to 80 percent.

Imports into Tibet through border trade with the neighboring countries are subject to a separate system of customs duties established by the People’s Government of the Tibet Autonomous Region. The tariff, however, applies only to goods imported directly for use in Tibet. It does not apply to imports of other provinces, municipalities, and autonomous regions through Tibet, or to imports through Tibet by mail or brought in as part of the luggage carried by travelers; such imports are subject to the regular Chinese tariff.

In addition to customs duties, a consolidated industrial and commercial tax (a turnover tax also applies to other commodities) is levied on imports in accordance with the list contained in the Draft Regulations of the Consolidated Industrial and Commercial Tax of the People’s Republic of China. Raw materials imported for further processing are exempted from both customs duties and commercial taxes, provided that the products are exported within a specified period. Most imports and exports by joint ventures are exempt from customs duties.

Special economic zones have been set up in Shantou, Shenzhen, Xiamen, and Zhuhai. Economic and technological development areas have been established in 14 designated coastal cities. Foreigners, overseas Chinese, and Chinese from the Hong Kong and Macao regions are permitted to invest in and open factories in these zones and areas. Raw materials, equipment, and machinery or parts and components thereof, means of transportation, and other means of production imported by and intended to be used in the production of the enterprises in the zones are exempt from import duties and the consolidated industrial and commercial tax.

A number of restrictions are imposed on exports. Certain products (primarily raw materials and food products) are subject to export licensing. The number of items subject to export-licensing requirements was reduced from 221 to 159 in July 1988, but subsequently was raised to 189 in May 1990. Exports of some products are prohibited. In December 1988, the number of items whose exportation is banned was raised from 4 to 10. In addition, exports of 58 products are subject to duties.

Payments for and Proceeds from Invisibles

Enterprises must sell their foreign exchange earnings from invisible transactions to the BOC and other authorized banks, except for enterprises with foreign investment and some foreign trade sectors designated as experimental areas for trade reforms. Foreign exchange remitted from abroad or from the Hong Kong and Macao regions to Chinese residents may be retained and used to open an account in the BOC or an authorized bank. Similarly, foreign exchange owned by immigrants or returning Chinese before becoming residents may be retained. Such retained foreign exchange may be sold to or remitted through the BOC, or taken out of China against certification by the BOC.

All foreign exchange earned by Chinese residents when working abroad, or in the Hong Kong or Macao regions, or earned from publication fees, copyright fees, awards, subsidies, honoraria, or other premiums must be repatriated and may not be deposited abroad; but individuals may retain such earnings according to prevailing regulations. The surrendered portion of foreign exchange remittances is accorded the privileged treatment given to remittances by overseas Chinese.

Foreign staff members and employees of foreign joint ventures, as well as those from the Hong Kong and Macao regions,10 may remit their salaries and other income earned in China, after payment of taxes and deduction of their living expenses in China and approval by the relevant local authorities. Profits of joint ventures may be remitted after taxation, in accordance with foreign exchange regulations; such remittances are subject to the approval of the local branch of the SAEC and should be paid through the foreign exchange account of the joint venture. Remitted profits are subject to an additional tax of 10 percent, but only if the profits have been generated in areas other than the special economic zones and the economic and technological development areas in the 14 selected coastal cities.

If a Chinese resident wishes to spend money on travel abroad, receive his pension abroad, or remit money abroad, he must apply to the local SAEC bureau for approval. Such factors as the individual’s normal income and expenditure are examined to determine if approval is to be granted for remittances. In cases of serious illness, death, or injury affecting a Chinese resident’s parents, spouse, or children outside China, he may apply for foreign exchange up to a specified limit on presentation of documentary verification. If permission is granted to travel abroad, a Chinese resident is normally allowed to take a reasonable amount of foreign exchange to cover expenses for transport and subsistence; any surplus must be repatriated and surrendered to the BOC. There is no tax on travel. A Chinese resident who retires and emigrates is normally permitted to receive his pension abroad, but the amount of proceeds from the sale of assets in China that may be remitted is limited.

Foreign exchange remitted or brought in by nonresidents may be converted into either renminbi or foreign exchange certificates (FECs) denominated in renminbi. Foreign exchange certificates can be used by nonresidents in hotels, restaurants, and shops serving nonresidents, for purchasing airline tickets and train or ship fares to Hong Kong and Macao, and for international telecommunications and parcel post charges. Special regulations apply in Guangdong province. Persons entering China must declare their holdings of foreign currency and may take out of China any unused foreign currency on presentation of the import declaration form issued by customs. The importation and exportation of Chinese bank notes are prohibited. Foreign exchange certificates may be imported, but their export is subject to the provision of documentation showing that they have been acquired legitimately. Chinese residents must show their authorization to export foreign currency at the border. Foreign organizations resident in China are not allowed to reconvert FECs into foreign currency. Nonresidents and resident foreigners in China are permitted to reconvert only up to 50 percent of original purchases of FECs when they leave China upon presentation of documented FEC purchases.

Income from royalties, dividends, interest, and rentals earned by foreign businesses without establishments in China is subject to a 20 percent withholding tax; a preferential rate of 10 percent is applied for foreign and overseas Chinese partners in joint ventures set up in the special economic zones and the economic and technological development areas in the old urban areas of the 14 coastal cities.

Joint ventures are required to be insured with Chinese insurance companies.

Capital

Foreign borrowing is classified either as “plan” or “nonplan” borrowing.11 Plan borrowing includes borrowing by the Central Government (through the PBC, the Ministry of Finance, the Ministry of Agriculture, Animal Husbandry and Forestry, and Mofert and enterprises under the control of Mofert) from international organizations and bilateral sources; borrowing by CITIC and other investment and trust companies (ITICS) (mostly in the form of bond issues and bond borrowing abroad) to finance plan projects; borrowing by the BOC from foreign commercial banks to finance plan projects; and borrowing by provincial governments (either directly or through the BOC) for large projects included in provincial governments’ annual plans. Nonplan borrowing includes borrowing by the BOC for purposes other than projects included in the annual plan (this includes interbank loans and foreign exchange deposits held in BOC headquarters and abroad); foreign exchange deposit taking by other financial institutions; short-term trade credits; borrowing by joint-venture companies and 100 percent foreign-owned companies; all borrowing at the provincial level to finance small projects; lease financing; and borrowing from offshore Chinese enterprises (mainly in Hong Kong).

The total amount of external borrowing for a specified future period and its split between concessional and nonconcessional sources is approved by the SPC. Within these limits, the SPC coordinates foreign borrowing for projects included in the annual and five-year plans. Under this procedure, the project-executing agencies (the Ministry of Finance, Mofert, foreign trade corporations, and provincial governments) propose projects to the SPC. Proposals indicate the total amount of foreign exchange needed, how much of it will be earned and how much will be borrowed from abroad, and the kinds of imports for which loans are intended. The SPC reviews these plans and, in cooperation with the SAEC, the Ministry of Finance, and Mofert, recommends to the State Council the overall number of projects and their associated financing. Loans for vital projects or projects that have a rapid rate of return are given priority approval. If the imports are for new construction, the State Economic Commission also reviews the plans.

Within these guidelines, loans from international financial institutions and foreign governments require the sanction of the SPC and the approval of the State Council. Loans from international development agencies are generally the responsibility of the Ministry of Finance or the China Investment Bank (an organization under the direction of the Ministry); intergovernmental loans are the responsibility of Mofert, and loans from international financial institutions are the responsibility of the PBC. Government departments, local governments, and enterprises usually borrow through the BOC (or with its guarantee) or through specialized agencies such as ITICS, rather than borrowing directly abroad themselves. The SPC sets an annual limit on such borrowing. Foreign borrowing in the form of deferred payments requires the approval of Mofert. Resident organizations may not issue securities for foreign exchange unless approved by the PBC.

According to regulations issued in February 1989, all commercial borrowing abroad (including bond issues) for nonplan purposes requires prior PBC approval. Commercial borrowing can be channeled through one of ten domestic entities—the Bank of China, the Communication’s Bank of China, the China Investment Bank, the China International Trust and Investment Corporation, and the six regional international trust and investment companies—which are allocated borrowing quotas under the annual plan. The short-term external debt of each institution is to be used only for working capital purposes.

All foreign direct investment projects are in principle subject to the approval of Mofert. However, a number of provincial and local authorities have been granted the authority to approve foreign direct investment projects up to specified amounts. The policy with respect to foreign capital is designed both to make up the insufficiency of domestic capital and to facilitate the introduction of modern technology and management.

Joint-venture enterprises and 100 percent foreign-owned companies are required to balance their foreign exchange receipts and payments, and foreign borrowing must be reported to the SAEC.12 Most foreign exchange earned by joint ventures and other enterprises involving nonresident capital must be deposited with the BOC or an authorized bank; outward transfers of capital generally require SAEC approval. Enterprises involved in the exploitation of offshore petroleum reserves may also hold foreign exchange abroad or in the Hong Kong or Macao regions. When a joint venture is wound up, the net claims belonging to the foreign investor may be remitted with SAEC approval through the foreign exchange account of the joint venture. Alternatively, the foreign investor may apply for repayment of his paid-in capital.

Profits of joint ventures, with the exception of firms in special economic zones and the 14 coastal cities and those exploiting petroleum, natural gas, and other specified resources,13 are subject to tax at 33 percent (30 percent basic rate plus a 10 percent surcharge on the assessed tax). As mentioned above, remitted profits are subject to an additional tax of 10 percent, which is waived for joint ventures in the special economic zones and the economic and technological development areas of the 14 coastal cities. A joint venture scheduled to operate for ten years or more may be exempted from income tax in the first one or two profit-making years and be allowed reductions of 50 percent for the following three years. Joint ventures in low-profit operations, such as farming and forestry, or located in areas considered to be economically underdeveloped may, upon the approval of the Ministry of Finance, be allowed a further 15–30 percent reduction in income tax for another ten years. A participant in a joint venture that reinvests its share of profit in China for a period of not less than five years may obtain a refund of 40 percent of the tax paid on the reinvested profit. Certain joint ventures established before the passing of tax regulations in August 1980 are subject to taxes at different rates.

Foreign companies, enterprises, and other economic organizations that have establishments in China engaged in independent business operations, cooperative production, or joint business operations with Chinese enterprises are subject to tax on their net income. There are five levels of tax rates, ranging from 20 percent for the first Y 250,000 of profits to 40 percent for profits exceeding Y 1 million. In addition, a local income tax of 10 percent of the same taxable income is levied. Income from interest on deposits of foreign banks in China’s state banks and on loans from foreign banks to China’s state banks with a normal interest rate is subject to a 20 percent withholding tax. Foreign state banks located in countries where income from interest on the deposits and loans of China’s state banks is exempted from income tax are correspondingly exempt from this Chinese tax. For interest income or leasing fees (less than the value of equipment) earned under credit agreements by foreign businesses without establishments in China, under trade agreements, and under leasing agreements signed by them with Chinese companies and enterprises during the period 1983–85, income tax is to be levied at the reduced rate of 10 percent (half the normal rate) during the validity of the aforesaid agreements; interest earnings from export credits are entitled to income tax exemption. For fees collected by foreign businessmen for the use of special technology provided by them in such fields as agriculture, animal husbandry, research, energy, communications, transport, environmental protection, and the development of important techniques, income tax may, with the approval of the tax authorities, be levied at the reduced rate of 10 percent, or be waived if the technology is advanced and is provided on favorable terms.

Foreign investment by Chinese enterprises is subject to approval; profits earned thereby must be sold to the BOC, except for a portion that may be retained locally as a working balance. Chinese diplomatic and commercial organizations abroad, as well as businesses abroad and in the Hong Kong and Macao regions, are required to draw up annual foreign exchange plans.

Gold

The PBC buys and sells gold and has central control over dealings in gold and silver. Sales of gold and silver are restricted to pharmaceutical, industrial, and other approved uses. Private persons may hold gold but may not trade or deal in it. The amount of gold, gold products, silver, and silver products that may be imported is unlimited but must be declared on entry. When exporting gold or silver, the exporter must present an import document from customs or a PBC export permit. Nonresidents may buy gold and silver and gold and silver products at special stores but must present the invoice when exporting them.

Changes During 1990

Exchange Arrangement

November 17. The administered rate of the renminbi was adjusted to Y 5.22 per US$1 from Y 4.72 per US$1.

Imports and Exports

January 25. The import duty rates on certain kinds of cattle hide were reduced to 12–17 percent, from 25–35 percent, and the duty rates on certain kinds of raw materials for tire production were reduced to 30–40 percent from 100–130 percent. The 50 percent import regulatory tax on television tubes was eliminated.

May 1. The number of products subject to export licensing was increased from 173 to 185. The additional products included canned broad beans and asparagus, walnuts, sorghum, rabbit meat, cotton linters, silicon-maganese alloys, and certain pharmaceuticals.

June 1. The import duty rates on certain chemicals for developing film were raised to 80–100 percent from 25–35 percent. The export tax on certain iron alloys was reduced to 20 percent from 50 percent.

September 1. The import duty rates on insecticides and herbicides were raised to 25–35 percent from a range of 9–20 percent. The import duty rates on metal containers for compressed or liquified gas were raised to 50–70 percent from 12–17 percent, and the import duty rates on ultrasonic equipment were raised to 25–35 percent from 12–17 percent. The import duty rates on certain optical lenses were reduced to 12–17 percent from 30–40 percent.

November 20. The import duty rates on most edible oils other than linseed oil were raised to 15–40 percent from 6–30 percent. The import duty rates on linseed oil were reduced to 20–30 percent from 50–70 percent.

December 30. The Customs Tariff Commission announced that effective January 10, 1991, import tariffs on 40 product items comprising about 16.5 percent of total imports would be reduced. The tariff on items used in agricultural production, such as urea and herbicide, would be reduced to 5 percent from 6 percent, while the tariff on raw materials used in the chemical industry, such as toluene, alcohol, and nonylphenol, would be reduced to 17.5 percent from 20 percent. The tax rate on terminals used for optical fiber telecommunications or digital telecommunications, and pulse code modulation equipment would be reduced to 12 percent from 20 percent. In addition, the tariff rate for entire parts packages or spare parts for terminals and equipment would be reduced to 9 percent from 20 percent. Tariffs on seven products (100,000 kilowatt air conditioners, fax machines, carrier-current line systems, teleprinters, BP telephones, walkie talkies and components, and radio phones and components) would be increased to 20 percent from 3 percent. Molybdenum would be exempted from the export duty.

Payments for and Proceeds from Invisibles

September 7. The National People’s Congress adopted the copyright law of the People’s Republic of China to protect the copyrights of authors of literary, artistic, and scientific works. The law, which is to come into effect in June 1991, applies to works of Chinese citizens, works by foreigners first published in China, and works by foreigners of countries with which China has bilateral copyright agreements or which adhere to international treaties to which both countries are signatories. The copyright protection applies to written, musical, dramatic, and photographic works; oral accounts; film production; and computer software.

Capital

April 4. The National People’s Congress adopted an amendment to the law on Chinese foreign equity joint ventures. The amendment stipulated that the State would not nationalize joint ventures, simplified the approval procedures for new foreign investment enterprises (requiring a decision by the competent government authority within three months), and extended the management rights of foreigners (including permitting foreigners to assume the chairmanship of the board of directors of joint ventures).

May 14. The Shanghai City Government announced plans for the development of the Pudong New Area. The area is adjacent to Shanghai and covers 135 square miles. It is envisaged that the multibillion dollar project will take 30–40 years to complete. To attract foreign capital into the area, Chinese foreign joint ventures are to be offered tax incentives similar to those available in the special economic zones, and overseas businesses will be permitted to invest in the construction of airports, ports, railways, highways, and utilities, as well as to open foreign bank branches in Shanghai. Detailed regulations were announced in October 1990.

May 19. The State Council issued regulations for the sale and transfer of land use rights in cities and towns to encourage foreign investors to plan long-term investment. Under these regulations, companies, enterprises, other organizations, and individuals within and outside of China would be permitted to obtain land use rights and undertake land development. The maximum period for land use rights ranges from 40 years for commercial, tourism, or recreational uses to 50 years for industrial use and 70 years for residential use.

The State Council issued provisional regulations for investment in large tracts of land to attract foreign firms’ investment in tract development. Under these regulations, tract development refers to the obtaining of land use rights for state land and the development of infrastructure and other investments.

Colombia

(Position on December 31, 1990)

Exchange Arrangement

The currency of Colombia is the Colombian Peso. The Colombian authorities follow a policy of adjusting the peso in small amounts at relatively short intervals, taking into account (1) the movements of prices in Colombia relative to those in its major trading partners; (2) the level of Colombia’s foreign exchange reserves; and (3) Colombia’s overall balance of payments performance. Exchange surrender and foreign payments are generally effected through the medium of exchange certificates, which are traded in the official market and in the stock exchange. In the case of export proceeds, exporters have the option of either immediate conversion or acquisition of exchange certificates with a maturity of 90 days that are redeemable at the Bank of the Republic anytime within this period. In the case of proceeds from exports of services (except from tourism and from expenditures of diplomatic missions), the Bank of the Republic does not redeem, within a period of 80 days, exchange certificates that were issued from November 21, 1990 to March 31, 1991.1 On December 31, 1990, the official rate (middle) for the U.S. dollar, the intervention currency, was Col$568.73 per US$1. Buying and selling rates for certain other currencies2 are also officially quoted, with daily quotations based on the buying and selling rates for the U.S. dollar in markets abroad. All exchange transactions are effected through the Bank of the Republic (the central bank) or authorized banks.

Other effective exchange rates result from (1) a 6.5 percent tax on coffee export proceeds;3 (2) tax credit certificates (certificados de reembolso tributario or CERTs) granted at three different percentage rates for most export proceeds; (3) the imposition of a remittance tax at two different rates on certain service payments; and (4) an 85 percent advance exchange license deposit for import payments.4 The peso equivalent of the Government’s exchange receipts from the export tax on coffee is credited to the Treasury at an accounting rate applied by the Bank of the Republic; the Government purchases exchange for all public debt payments and other expenditures included in the national budget at the same exchange rate.

The Bank of the Republic stands ready to sell foreign exchange warrants (títulos canjeables por certificados de cambio) to government enterprises in the oil sector and to public sector recipients of external loans in accordance with the terms of Resolution 20/1986 of the Monetary Board. These warrants, which are usually expressed in U.S. dollars, have a maturity of 24 months, and in some cases may also be exchanged for exchange certificates, provided that the holder presents an exchange license. Within their period of validity, warrants may also be sold to the Bank of the Republic for pesos at the certificate market buying rate on the date of repurchase. Warrants expressed in U.S. dollars bear interest at an interest rate equal to that of the external loan, but never higher than the average 30-day rate on primary certificates of deposit at the close of operations in the New York market for the day before the certificate is issued if held by public sector recipients of external loans. Warrants held longer than 24 months cannot be converted into exchange certificates but may be resold to the Bank of the Republic at the certificate market rate on the last day of the twenty-fourth month.

All foreign exchange debts registered in the Exchange Office in accordance with Decree No. 444 of 1967, Articles 128, 131, 132, and 139 are permitted to buy forward cover against exchange risks. (Resolutions 5/88 and 11/89 of the Monetary Board.) All future contracts of foreign exchange must be registered in the Exchange Office, and exchange rate guarantees are allowed to be provided only for the U.S. dollar against most of the other convertible currencies.

Administration of Control

All imports and exports require registration at the Colombian Institute of Foreign Trade (Incomex). Exchange for payments must be purchased through the Bank of the Republic or the commercial banks, with an approved exchange license issued by the Exchange Office of the Bank of the Republic; however, payments for specified current transactions, when made through credit institutions, do not require prior exchange licenses but must be submitted to the Bank of the Republic for ex post authentication.

The Monetary Board is authorized periodically to draw up a foreign exchange budget. It can also establish priorities within that budget for the delivery of exchange, after setting aside the amounts necessary to cover the obligations of the Bank of the Republic and to service the external debt of the public agencies and the National Federation of Coffee Growers. Imports of goods not requiring a prior import license are not covered by the foreign exchange budget.

The Foreign Trade Council (FTC), which includes representatives of the Ministry of Finance, Incomex, other public entities, and two officers of the FTC, determines overall import and export policy. Incomex, through its Import Board, controls those imports that are subject to prior licensing, and administers Plan Vallejo, which is a special import-export arrangement concerning a rebate of taxes paid on imported inputs used in the production of exported goods. Incomex, together with the Committee on Commercial Practices, administers antidumping cases. The National Council for Economic and Social Policy issues directives to the Exchange Office and the National Planning Department concerning direct investment in Colombia. The Exchange Office keeps an accounting record both of foreign investment in Colombia and of debts abroad and controls the movement of foreign capital as well as the transfer of profits, dividends, commissions, and royalties for trademarks, patents, etc. The sale of proceeds from certain current invisibles is also subject to prior registration with the Exchange Office. The Superintendency of Exchange Control, an autonomous agency reporting to the Ministry of Finance, enforces the control and supervision over exchange transactions and is responsible for applying penalties for any violation of the exchange regulations.

Prescription of Currency

The Monetary Board establishes the list of currencies that it accepts for exchange surrender and provides for import payments. Payments and receipts are normally effected in U.S. dollars, but importers and exporters are also free to use quoted currencies (see footnote 2). Settlements for commercial transactions with countries with which Colombia has reciprocal credit agreements must be made through special accounts in accordance with the provisions of such agreements. Settlements between Colombia and Argentina, Bolivia, Brazil, Chile, Ecuador, Mexico, Paraguay, Peru, Uruguay, and Venezuela are made through accounts maintained within the framework of the multilateral clearing system of the Latin American Integration Association (LAIA). There are also reciprocal credit agreements with the People’s Republic of China, Cuba, Dominican Republic, Hungary, Spain, the U.S.S.R., and Yugoslavia.

Nonresident Accounts

Credit institutions are authorized to receive short-term deposits in foreign currency from physical or juridical persons not resident in Colombia; these deposits are freely available to the holders, but any foreign currency deposits that they may wish to convert into Colombian currency must be sold to the Bank of the Republic. Banks must report transactions through these accounts to the Bank of the Republic and the Exchange Office.

Imports and Import Payments

Imports are subject to one of the following two regimes: (1) freely importable goods, requiring only registration with Incomex; and (2) goods subject to prior approval and requiring an import license. In the free-import regime, there is a global free list applicable to all countries, a national list applicable only to member countries of the LAIA, and special lists applicable only to member countries of the LAIA and to members of the Andean Pact. Imports subject to a prior licensing requirement consist of certain agricultural products (94 tariff positions), medicines (15 tariff positions), and weapons (59 tariff positions).

A distinction is drawn between reimbursable and nonreimbursable imports. Reimbursable imports involve purchase of official foreign exchange, including imports of machinery and equipment, financed by international credit institutions. Nonreimbursable imports consist mainly of aid imports under grants and commodities constituting part of a direct investment.

All import registrations by public sector agencies are screened by Incomex to determine whether local substitutes are available. Both import licenses and registrations are valid for six months, except those for agricultural and livestock products, which are valid for three months. Import licenses can be extended for successive three-month periods, whereas registrations of free imports can be extended for only two successive three-month periods. All imports other than those classified as “minor imports” or shipments with an f.o.b. value of less than US$500 are subject to registration with Incomex. Urgently needed spare parts not exceeding US$10,000 are not subject to prior registration. The charge for import registration is Col$8,500. An advance exchange license deposit (consignación) has to be lodged at the official rate for exchange certificates at least 21 calendar days prior to an application for an exchange license.5 The rate of deposit is 85 percent of the value of the exchange license. Imports of crude oil and petroleum products are subject to the prior approval of Empresa Colombiana de Petroleo (Ecopetrol).

Import duties are calculated at the average selling rate for exchange certificates during the previous month, as determined by the Ministry of Finance. In addition to customs duties, there is a surtax of 13 percent. Exempted from this tax are temporary imports; imports by public entities; goods of LAIA origin; imports under the Vallejo Plan; diplomatic, consular, and similar imports; gifts; and imports destined for the International Commerce Fair of Bogotá, for the free port of San Andrés y Providencia, or effected through the Port of Leticia.

Payments for Invisibles

Payments for invisibles are made at the exchange certificate rate. To obtain exchange licenses for freight payments, a freight company must, either directly or through agents in Colombia, lodge a deposit amounting to 85 percent of payment value. Services may be imported through special import-export arrangements.

Most payments for invisibles, including banking commissions, international air travel, and expenses incurred in the exportation of noncoffee products, are subject to exchange licenses. Banks may transfer payments for certain other current invisibles without prior approval, including medical expenses, support of technical staff abroad, and the monthly allowances of students studying abroad with government support, and for the service of registered foreign loans taken up by the financial sector. Foreign exchange purchases for travel are limited to the equivalent of US$10,000 a person a year; the limit for “special” travelers (defined as those traveling for purposes that have particular usefulness in the economic and social development of the country) is the equivalent of US$25,000 a person a year. Applications for foreign exchange in excess of these limits to meet bona fide expenses may be approved by the Bank of the Republic. Registration fees for courses approved by Icetex, as well as health and accident insurance for students, are not subject to limits.

The transfer of profits accruing to foreign investors is normally limited to 25 percent of the registered direct investment a year.6 Profits beyond such a limit may be counted toward increasing the capital base.

Foreign tourists who have stayed in Colombia for a period of not more than three months may, on leaving the country, purchase foreign currency on presentation of their passports. A remittance tax of 12 percent is applicable to a number of current payments; for profits transferred by branches of foreign companies, the tax is 20 percent.

Colombian nationals and resident foreigners are required to pay a tax of US$15 when they leave the country.

Exports and Export Proceeds

Export licenses are not required. Incomex may impose temporary restrictions on exports of certain products in case of domestic supply shortages. For purposes of export registration, exporters are required to submit an export declaration (declaración de embarque) to Incomex through the customs administration. The periods for surrendering export proceeds are normally as follows: (1) for coffee, within 20 days of the date of registration of the export (180 days for instant coffee); and (2) for other goods, 3 months after the payment date as specified by the exporter.

All exchange proceeds from exports must be surrendered to the Bank of the Republic, with the exception of export proceeds of Ecopetrol, Federación National de Cafeteros, and exports of minerals associated with state enterprises, which are permitted to retain part of their export proceeds abroad for the settlement of their import costs. On surrendering their export proceeds to the Bank of the Republic, exporters of commodities other than coffee, petroleum and petroleum products, and certain number of other products may receive tax credit certificates in an amount corresponding to a specified percentage of the f.o.b. value surrendered, converted at the average selling rate for the exchange certificates during the previous month as determined by the Ministry of Finance. Three rates—5 percent, 9 percent, and 12 percent—are applied, depending on the product and the country of destination; for the export proceeds of Plan Vallejo or goods produced in the free zones of the country, the rates are calculated on domestic value added for specified assembly operations. These certificates, which are freely negotiable and are quoted on the stock exchange, are accepted at par by tax offices for the payment of income tax, customs duties, and certain other taxes. The surrender of foreign currency earned by exporters can, as an option, be effected by exchanging the foreign currency for exchange certificates (of 90 days’ maturity), which are negotiable on the stock exchange.

Exports of coffee are subject to the following regulations: (1) a minimum surrender price (reintegro) is fixed on the basis of the international market prices; (2) exporters pay a tax in foreign exchange at the rate of 6.5 percent ad valorem, of which 4.0 percent is paid to the National Coffee Fund, and the remainder provides revenue for the Treasury;7 (3) exporters must either surrender without payment (in the form of untreated coffee) the equivalent of 5 percent of the volume of excelso coffee that they wish to export (retención cafetera) or pay the National Federation of Coffee Growers the peso equivalent; (4) exports of coffee are subject to an additional tax of 6 percent ad valorem (pasilla y ripio tax), which must be paid to the Federation either in kind or in pesos; and (5) a committee composed of the Ministers of Finance and Agriculture and the Managing Director of the Federation establishes a domestic buying price for export-type coffee, expressed in pesos per carga of 125 kilograms.

Proceeds from Invisibles

All exchange receipts from invisibles must be surrendered;8 they are converted against exchange certificates, which can be sold on the stock exchange. There is no restriction on the amount of foreign exchange travelers may bring into the country.

Capital

All inward and outward capital transfers are effected at the certificate market rate. There is an 85 percent advance deposit on all outflows, which must be lodged before application can be made for an exchange license.9

All foreign investment in Colombia, all new foreign loans, direct lines of foreign credit obtained by nonbank residents,10 and the movement of capital previously imported (except loans previously registered under Decree No. 2322 of September 2, 1965) must be registered with the Exchange Office.

Direct foreign investment regulations in Colombia are governed by Decree No. 444 of 1967, Decree No. 1265 of July 10, 1987, and are in accordance with the provisions of Decision No. 220 of the Cartagena Agreement, which governs foreign investment within the member countries of the Andean Pact. Foreign capital participation in the financial sector up to 49 percent is permitted under Law No. 74 of December 1989. Foreign capital participation exceeding 50 percent is permitted in the institutions that receive support from the Guarantee Fund (Fondo de Garantías) also under Law No. 74. The National Council for Economic and Social Planning (Conpes) can legislate special conditions affecting foreign investment so as to overrule the above-mentioned provisions, including Resolutions 29 and 44 of Conpes. Foreign investment can amount to 100 percent of ownership. If the enterprise is entitled to the benefits under the provisions of the Cartagena Agreement, however, foreign investment is required to become 51 percent Colombian-owned by the thirtieth year after its registration, with the exception of investment in enterprises that satisfy one of the following conditions: (1) at least 25 percent of their production is exported; or (2) at least 50 percent of their material inputs are of Colombian origin. Member countries of the Andean Pact are treated as Colombian investors for purposes of fulfilling the Colombian ownership requirement, provided that profit and capital remittances remain within the country of origin and shares are not sold outside the area.

Capital imports require the prior approval of the National Planning Department,11 with the exception of capital for the petroleum industry, which requires the approval of the Ministry of Mines and Energy, and capital for mineral exploration other than petroleum, which requires the approval of the National Planning Department and the recommendation of the Ministry of Mines and Energy. Foreign direct investment is prohibited in public services, all branches of communication, television, film distribution and showing, internal passenger transport (except tourism), and residential construction.12 All foreign banks and their branches must have Colombian majority participation, unless (1) they have received support from the Guaranteed Fund (Fondos de Garantías); (2) the subscription of new shares or contracting of debt instruments among national investors is not possible; (3) foreigners would thereby be deprived of their present property share in any financial institution; or (4) local authorities consider that the potential contribution in terms of capital, technology, and competitiveness for the sector justifies a majority foreign participation. New foreign direct investment in banks, insurance companies, and other financial institutions is permitted to investors from member countries of the Andean Pact on the basis of reciprocal treatment. The purchase of 10 percent or more of the shares of a Colombian financial institution requires the prior approval of the Banking Superintendent.

Capital registration with the Exchange Office entitles the investor to export profits and to repatriate capital under specified conditions. The transfer of profits is limited to 25 percent of registered direct investment with certain exceptions.13 Profit remittances from direct investment in internal exploration may be limited to a percentage of dollar-denominated capital determined by adding 25 points to the average New York prime interest rate prevailing in the year of registration of the foreign investment transaction, as estimated by the Bank of the Republic. Other special regimes are applicable to (1) the earthquake-hit area of Popayán, which allow profit remittances up to 1996 on invested capital in a percentage equivalent to 25 percent above the average New York prime interest rate; and (2) bordering regions, which allow transfer of profits up to 29 percent of the dollar-denominated investment.

Foreign loans contracted by private Colombian individuals or firms are generally subject to a minimum maturity of five years with two years of grace and an interest rate ceiling of 2.5 percent over the New York prime rate or LIBOR. Such loans are normally permitted only for financing working capital or fixed investment. Special regulations govern the periods for which resident banks may provide import financing from foreign currency borrowed abroad. Foreign loans for governmental entities in excess of specified amounts require prior authorization by the Ministry of Finance and the National Planning Department. For loans to the Government, or guaranteed by the Government, the following are also required: prior authorization from the National Council for Economic and Social Policy and from the Monetary Board; prior consultation with the Interparliamentary Committee on Public Credit; and ex post approval from the President of the Republic. Such loans are also subject to the executive decree that authorizes the initiation of negotiations.

Foreign investments in the form of a placement of shares in a fund established to make investments in the stock exchange and in debt papers issued by the financial sector are permitted with the approval of the National Planning Board. Foreign capital invested in these funds can be repatriated only five years after registration with the Exchange Office, and following the third year of their creation, at least 60 percent of the assets of the funds must be invested in stock or in convertible debt instruments.

Contracts involving royalties, commissions, trademarks or patents, and similar arrangements must be registered with the Exchange Office to enable the beneficiary to make transfers abroad; they also require approval from the Royalties Committee before they can be registered.

Colombian nationals who have invested abroad must surrender to the Bank of the Republic, against exchange certificates, not only the interest, profits, commissions, and royalties, but also the proceeds of the sale or liquidation of the investment. Exports of capital by residents are restricted and require the prior authorization of the National Planning Board and the Exchange Office.14

Current deposit accounts in foreign currency may be held by export firms, transportation companies, and other specified entities, upon prior authorization of the Exchange Office. A ceiling equivalent to 15 percent of their total foreign liabilities is applied on the foreign currency deposits that may be held by domestic financial institutions.

Gold

Natural and juridical persons may trade in Colombia in gold coins for numismatic purposes only. With this exception, only the Bank of the Republic is entitled to purchase, sell, hold, import, or export gold.15 Imports of nonmonetary gold are not normally undertaken. The Bank of the Republic purchases locally produced gold at the average price prevailing in the London, Zurich, and New York markets on the day preceding the domestic gold purchase plus 3 percent. The Bank of the Republic levies an ad valorem tax of 3 percent on the total payment received by the miner.

The Bank of the Republic makes domestic sales of gold for industrial use directly at a price equivalent to the average quotation in gold markets abroad during the previous day; this price is converted into pesos at the prevailing rate of exchange certificates on the date of sale.

The assay and refining houses and the mining companies producing gold are under the supervision of the Superintendency of Exchange Control. In addition, the mining companies and traders must obtain a license from the Superintendency in order to carry on their operations.

The Bank of the Republic from time to time issues commemorative gold coins, which are legal tender. Residents and nonresidents may freely buy such coins, but export licenses are not normally granted.

Changes During 1990

Administration of Control

January 1. Imports of goods not subject to a prior import license would not be covered by the foreign exchange budget authorized by the Monetary Board.

Imports and Import Payments

February 1–March 28. Eight hundred sixty-one tariff positions were transferred from the category of goods requiring prior import license to the category of freely importable goods. Within the category of imports subject to prior license, 781 tariff positions were classified in a subcategory under which the license would be granted almost automatically (previa-libre). For 744 tariff positions, an auction system was introduced, permitting the allocation of specific foreign exchange budgets (previa-encuesta). The right to import would be auctioned, subject to a maximum for each tariff position and for each person, in the form of a premium over the applicable import tariff rate. Potential importers were required to lodge a deposit equivalent to the premium they are offering at the time they submit their bid for the import license. The level of the additional tariff, which applies to a tariff position included in this subcategory, would be equal to the marginal bid that exhausts the foreign exchange for the particular tariff position, or the lowest bid accepted in the event that the foreign exchange budget for that tariff position was not exhausted. A third subcategory (previa-cupo) was established with 350 tariff positions for which imports would be allowed, subject to a foreign exchange budget, and for which the allocation would be made at the discretion of the Incomex. For another 356 tariff positions (previa-previa), the existing system would be applied, under which the approval of licenses would be conditional on meeting certain domestic production criteria.

March 28. The tariff rates on nearly one half of the tariff positions were modified, bringing a reduction in the average (unweighted) tariff rates to 24 percent from 27 percent. The maximum tariff rate was reduced to 100 percent from 200 percent, and with the exception of two tariff positions, the maximum tariff rate was reduced to 50 percent from 100 percent.

April 6. The import surcharge rate was reduced to 16 percent from 18 percent.

July 11. An antidumping law was approved, under which compensatory duties could be imposed during the period of the investigation.

May 8. Thirteen tariff positions were transferred to the category of freely importable goods. A total of 18 tariff positions were transferred from previa-cupo to previa-libre, but tires were transferred to a more restricted category.

June 12. The requirement of prior import licenses was eliminated in respect of 113 tariff positions, as a result of their transfer to the category of freely importable goods.

July 24. Four hundred eighty-nine tariff positions were transferred from the category of imports subject to prior import license to the category of freely importable goods. The number of tariff positions in the subcategories of previa-libre, previa-encuesta, and previa-cupo were reduced to 541, 552, and 236, respectively. All 54 tariff positions, whose importation was prohibited, were moved to the category requiring a prior import license.

September 17. The import surcharge rate was reduced to 13 percent from 16 percent. The tariff rates on nearly one thousand tariff positions were changed, with reductions affecting mostly capital and intermediary goods; as a result, the average (unweighted) tariff rate declined to 22 percent from 24 percent.

September 19. Four hundred sixty-five tariff positions were transferred from the previa-libre subcategory of goods subject to a prior import license to the category of freely importable goods.

October 5. Until December 31, 1990, exchange licenses would be approved for the prepayment of imports before the date that the importer had indicated on the registration forms or prior import licenses.

October 24. The presentation of the declaration to customs (manifiesto de importación) was eliminated as a requirement for obtaining approval of an exchange license for import payments.

October 24. Until February 28, 1991, exchange licenses would be approved for the prepayment or the repurchase of private sector external credits, which were refinanced in 1984, provided that a discount was obtained. These debt-service obligations were exempted from the prior advance deposit requirement.

October 31. Until December 31, 1990, the advance deposits lodged against imports of goods would be converted into foreign exchange at the exchange rate of the day of deposit.

November 6. The prior import license requirement was eliminated with respect to all imports, except those falling under 168 tariff positions. The 168 positions included certain agricultural products (94 tariff positions), medicines (15 tariff positions), and weapons (59 tariff positions).

November 14. Tariff rates affecting primarily capital and intermediate goods were modified; as a result, the average tariff rate declined by 1 percentage point to 21 percent, and the number of tariff levels was reduced to 10 from 14.

Payments for Invisibles

October 5. A limit of 80 percent for payment of freight on imports and exports was eliminated, permitting the payment of 100 percent of the cost of freight. The limits on foreign exchange purchases for travel abroad were increased, now granting up to a total of US$10,000 a person a calendar year, and up to US$25,000 a person a calendar year for “special” travelers (defined as those traveling for purposes having particular usefulness in the economic and social development of the country). The prior authorization by Icetex for purchases of foreign exchange for study purposes was eliminated, except for those cases when the Government considers a request to be necessary. All bona fide applications for foreign exchange in excess of the prescribed limits would be granted with the approval from the Exchange Office of the Bank of the Republic.

Exports and Export Proceeds

May 31. It was announced, with effect from August 1, 1990, that the prior registration with Incomex for all exports, except samples and those exported in noncommercial quantities, would be replaced by the use of export declarations (declaración de embarque) which exporters are required to prepare for customs purposes, and a copy of declarations would be sent to Incomex for the purpose of export registration.

July 25. The period for surrendering proceeds from exports, other than coffee, was changed to three months after the date of receipt of payment as declared by the exporter, from a system under which the surrender was required within six months of registration. The personal or bank guarantees that were required for exports of goods were eliminated.

July 25. The system by which the Bank of the Republic retained a portion of exchange proceeds surrendered by the exporter of any product to repay debts on imports under the Vallejo Plan was eliminated. The purchases of foreign exchange for imports under the Vallejo Plan would, henceforth, be subject to the normal procedures.

September 19. The formula by which the minimum surrender price (reintegro) of coffee is established was modified, whereby the daily price would be equal to the selling price of coffee from the National Federation of Coffee Growers to the National Coffee Fund.

Proceeds from Invisibles

November 21. The Bank of the Republic stopped redeeming, within a period of 80 days, all exchange certificates in respect of receipts from services (except for those from tourism and expenditures of diplomatic missions), which would be issued from November 21, 1990 to March 31, 1991.

Capital

June 6. The ceiling applicable to foreign currency deposits that domestic commercial banks and financial corporations could hold was increased to 15 percent from 8 percent of their total foreign exchange liabilities.

Comoros

(Position on December 31, 1990)

Exchange Arrangement

The currency of the Comoros is the Comorian Franc, which is pegged to the French franc, the intervention currency, at the fixed rate of CF 1 = F 0.02. The current buying and selling rates for the French franc are CF 50 = F 1. Exchange rates for other currencies1 are also officially quoted on the basis of the fixed rate of the Comorian franc for the French franc and the Paris exchange market rate for the respective currencies in terms of the French franc. There are no taxes or subsidies on purchases or sales of foreign exchange.

With the exception of those relating to gold, the exchange control measures of the Comoros do not apply to (1) France (and its Overseas Departments and Territories) and Monaco; and (2) all other countries whose institute of issue is linked with the French Treasury by an Operations Account (Benin, Burkina Faso, Cameroon, Central African Republic, Chad, Congo, Côte d’Ivoire, Equatorial Guinea, Gabon, Mali, Niger, Senegal, and Togo). Hence, all payments to these countries may be made freely. All other countries are considered foreign countries. Forward cover against exchange rate risk is authorized by the Central Bank of the Comoros and is provided to traders by the commercial banks for up to three months.

Administration of Control

Exchange control is administered by the Central Bank of the Comoros. The Ministry of Finance and Budget supervises borrowing and lending abroad, inward direct investment, and all outward investments. Part of the approval authority in respect of exchange control has been delegated to an authorized bank—the sole commercial bank—and to the Postal Administration. All exchange transactions relating to foreign countries must be effected through the authorized bank or the Postal Administration. Import and export licenses are issued by the Directorate-General of Economic Affairs in the Ministry of Economy and Trade. Arrears are maintained with respect to external payments.

Prescription of Currency

The Central Bank of the Comoros maintains an Operations Account with the French Treasury; settlements with France (as defined above), Monaco, and the Operations Account countries are made in Comorian francs, French francs, or the currency of any other Operations Account country. Settlements with all other countries are usually made through correspondent banks in France, in any of the currencies of those countries, or in French francs through Foreign Accounts in Francs. All settlements with South Africa are prohibited.

Imports and Import Payments

Imports of South African origin are prohibited, and the importation of certain other goods is prohibited from all countries. The importation from any source of certain other commodities is subject to individual licensing. All import transactions relating to foreign countries must be domiciled with the authorized bank if the value is CF 500,000 or more.

Payments for Invisibles

All payments to South Africa are prohibited. Payments for invisibles to France (as defined above), Monaco, and the Operations Account countries are permitted freely. Payments for invisibles related to authorized imports are not restricted. Invisible payments to other countries are subject to approval, which is granted on production of supporting documents, in accordance with Article 3 of Instruction No. 2 of the Exchange Regulations. These regulations apply to allowances for education, family maintenance, and medical treatment, and remittances by foreign workers of savings from their earnings.

For tourist travel, residents traveling to France (as defined above), Monaco, and the other Operations Account countries may take out the equivalent of CF 500,000 in bank notes and any amount in other means of payment. Residents traveling to countries other than France (as defined above), Monaco, and the other Operations Account countries may take out in any means of payment up to the equivalent of CF 500,000 a person a trip. For business travel, the Central Bank of the Comoros may authorize a special allowance upon request of the authorized bank.

Nonresident travelers may export the equivalent of CF 500,000 in bank notes and any means of payment issued abroad in their name without providing documentary justification. Other cases are authorized pursuant to the Exchange Regulations upon production of supporting documents.

Repatriations of dividends and other earnings from nonresidents’ direct investment are authorized and guaranteed under the Investment Code.

Exports and Export Proceeds

All exports to South Africa are prohibited. With a few exceptions, exports to France (as defined above), Monaco, and the Operations Account countries are free of license. Most exports to other countries require licenses. Proceeds from exports to foreign countries must normally be collected, and the receipts repatriated within 30 days of the expiration of the commercial contract and sold immediately to the authorized bank. All export transactions relating to foreign countries must be domiciled with the authorized bank if the value is CF 500,000 or more.

Proceeds from Invisibles

Proceeds from transactions in invisibles with France (as defined above), Monaco, and the Operations Account countries may be retained. All amounts due from residents of other countries in respect of services and all income earned in those countries from foreign assets must be collected and, if received in foreign currency, must be surrendered within one month of the due date or the date of receipt. Resident and nonresident travelers may bring in any amount of domestic and foreign bank notes and coins.

Capital

All settlements between the Comoros and South Africa are prohibited. Capital movements between the Comoros and France (as defined above), Monaco, and the Operations Account countries are, in principle, free of exchange control; capital transfers to all other countries require exchange control approval, but capital receipts from such countries are normally permitted freely.

Special controls (additional to any exchange control requirements that may be applicable) are maintained over borrowing abroad, inward direct investment, and all outward investment; these controls relate to the transactions themselves, not to payments or receipts.

Gold

Imports and exports of monetary gold require prior authorization. Imports and exports of articles containing gold are subject to declaration, but transfers of personal jewelry within the limit of 500 grams a person are exempt from such declaration.

Changes During 1990

No significant changes occurred in the exchange and trade system.

People’s Republic of the Congo

(Position on December 31, 1990)

Exchange Arrangement

The currency of the People’s Republic of the Congo is the CFA Franc,1 which is pegged to the French franc, the intervention currency, at the fixed rate of CFAF 1 = F 0.02. Exchange transactions in French francs between the BEAC and commercial banks take place at the same rate. Buying and selling rates for certain other foreign currencies are also officially posted, with quotations based on the fixed rate for the French franc and the rates for the currencies concerned in the Paris exchange market.

Payments to France and its Overseas Departments and Territories, Monaco, and the Operations Account countries (see section on Administration of Control, below), as well as the purchase of these countries’ bank notes and traveler’s checks, are subject to a commission of 0.75 percent, with a minimum charge of CFAF 75; exempt from this commission are payments of the state, the Postal Administration, and the BEAC, salaries of Congolese diplomats abroad, expenditures of official missions abroad, scholarships of persons studying or training abroad, and debt-service payments due from companies that have entered into an agreement with the Congo. Most payments to other foreign countries and credits to Foreign Accounts in Francs are subject to a commission of 1 percent, and foreign exchange purchased by the Diamond Purchase Office is subject to a commission of 0.50 percent, with a minimum of CFAF 100. A commission of 0.25 percent is levied on all capital transfers to countries that are not members of the BEAC. There are no taxes or subsidies on purchases or sales of foreign exchange.

Administration of Control

Payments to the following countries, although subject to declaration, are unrestricted: (1) France (and its Overseas Departments and Territories) and Monaco; and (2) all other countries whose bank of issue is linked with the French Treasury by an Operations Account (Benin, Burkina Faso, Cameroon, Central African Republic, Chad, Comoros, Côte d’Ivoire, Equatorial Guinea, Gabon, Mali, Niger, Senegal, and Togo). Settlements and investment transactions with all foreign countries, however, are subject to control. Foreign countries are defined as all countries other than the Congo.

The General Directorate of Credit and Financial Relations in the Ministry of Finance and the Budget supervises borrowing and lending abroad. Exchange control is administered by the Minister of Finance and the Budget, who has delegated his approval authority to the General Directorate. All exchange transactions must be effected through authorized banks or the Postal Administration. Import and export licenses are issued by the Foreign Trade Directorate in the Ministry of Commerce. With the exception of 13 products, the system of import licenses has been replaced by a system of ex post declarations (Decree No. 88/414, May 28, 1988).

Arrears are maintained with respect to external payments.

Prescription of Currency

Since the Congo is an Operations Account country, settlements with France (as defined above), Monaco, and the Operations Account countries are made in CFA francs, French francs, or the currency of any other institute of issue that maintains an Operations Account with the French Treasury. Settlements with all other countries are usually made in any of the currencies of those countries or in French francs through Foreign Accounts in Francs.

Nonresident Accounts

The regulations pertaining to nonresident accounts are based on those applied in France. The crediting of BEAC bank notes to Foreign Accounts in Francs is permitted when they have been mailed to the BEAC agency in Brazzaville by the foreign correspondent of an authorized bank.

Imports and Import Payments

Imports from all sources require a declaration or a license. An indicative annual import program distinguishes five zones: (1) the countries of the Central African Customs and Economic Union (UDEAC); (2) France; (3) other Operations Account countries; (4) European Community (EC) countries other than France; and (5) all remaining countries. Thirteen product items under this program require licenses, and others are subject to ex post declaration. The quotas for non-EC countries may be used to import goods originating in any non-Operations Account country.

All import transactions relating to countries other than France (as defined above), Monaco, and the Operations Account countries must be domiciled with an authorized bank. Licenses for imports from countries other than France (as defined above), Monaco, and the Operations Account countries must be domiciled with an authorized bank, and they require a visa from the Foreign Trade Directorate and the General Directorate of Credit and Financial Relations. The approved import license entitles importers to purchase the necessary exchange, provided that the shipping documents are submitted to an authorized bank.

All imports must be insured with the state insurance company, Société d’assurances et de réassurances du Congo (SARC). To implement this measure, the Congolese Customs Service releases imports only after an insurance certificate issued by the SARC has been produced.

Payments for Invisibles

Payments for invisibles to France (as defined above), Monaco, and the Operations Account countries are permitted freely, provided they have been declared and are made through an authorized intermediary; those to other foreign countries are subject to approval. Payments for invisibles related to trade are permitted freely when the basic trade transaction has been approved or does not require authorization. Transfers of income accruing to nonresidents in the form of profits, dividends, and royalties are permitted with the authorization of the General Directorate of Credit and Financial Relations.

Residents traveling as tourists to countries other than France (as defined above), Monaco, the Operations Account countries, or Zaïre may obtain an exchange allocation of an amount equivalent to CFAF 175,000 a person a trip (CFAF 87,500 for children under 10 years) or CFAF 10,000 if the duration of the trip is less than 24 hours, for any number of trips a year; they must surrender any foreign exchange in excess of CFAF 5,000 remaining after their return to the Congo.

Business travelers receive a special allocation of the equivalent of CFAF 20,000 a person a day, subject to a maximum of CFAF 400,000 a trip; additional amounts may be authorized in appropriate cases. The use of credit cards abroad by residents is prohibited. There are special facilities for travelers to Kinshasa who request no foreign means of payment other than Zaïrian bank notes. Residents traveling to France (as defined above), Monaco, or an Operations Account country may take out CFAF 25,000 (CFAF 12,500 for children under 10 years) in BEAC bank notes. Residents and nonresidents traveling to foreign countries other than France (as defined above), Monaco, the Operations Account countries, or Zaïre may freely take out up to a maximum of CFAF 10,000 in BEAC bank notes, French bank notes, and bank notes issued by any other institute of issue maintaining an Operations Account with the French Treasury.

The transfer of the entire net salary of a foreigner working in the Congo is permitted upon presentation of the appropriate pay voucher, provided that the transfer takes place within three months of the pay period.

Exports and Export Proceeds

In principle, all exports require prior authorization, but most exports to France (as defined above), Monaco, and the Operations Account countries may be made freely; among the exceptions are commodities exported by the National Marketing Office for Agricultural Products (Office du café et du cacao and Office des cultures vivrières) and by the Congolese Marketing Office for Timber (Office congolais du bois).

Proceeds from exports to foreign countries must be collected and repatriated, generally within 180 days of arrival of the commodities at their destination. Export proceeds must be surrendered within a month of the due date. All export transactions relating to countries other than France (as defined above), Monaco, and the Operations Account countries must be domiciled with an authorized bank.

Proceeds from Invisibles

All amounts due from residents of foreign countries in respect of services and all income earned in those countries from foreign assets must be collected when due and surrendered within a month of the due date. Resident and nonresident travelers may bring in any amount of bank notes and coins issued by the BEAC, the Bank of France, or any other bank of issue maintaining an Operations Account with the French Treasury, as well as any amount of foreign bank notes and coins (except gold coins).

Capital

Capital movements between the Congo and France (as defined above), Monaco, and the Operations Account countries are free, although ex post declarations are required. Such movements to countries that are not members of the BEAC are subject to a commission of 0.25 percent. Most international capital transactions are subject to prior authorization. Capital transfers abroad require exchange control approval and are restricted, but capital receipts from abroad are generally permitted freely. All foreign securities, foreign currency, and titles embodying claims on foreign countries or nonresidents that are held in the Congo by residents or nonresidents must be deposited with authorized banks in the Congo.

Special controls (additional to any exchange control requirements that may apply) are maintained over borrowing and lending abroad, over inward and outward direct investment, and over the issuing, advertising, and offering for sale of foreign securities in the Congo; these controls relate to the transactions themselves, not to payments or receipts.

Direct investments abroad2 require the prior approval of the Minister of Finance and the Budget; the full or partial liquidation of such investments also requires the prior approval of the Minister. Foreign direct investments in the Congo3 require the prior approval of the Minister of Finance and the Budget, unless they involve the creation of a mixed-economy enterprise. The full or partial liquidation of direct investments in the Congo must be declared to the Minister. Both the making and the liquidation of direct investments, whether these are Congolese investments abroad or foreign investments in the Congo, must be reported to the Minister within 20 days. Direct investments are defined as investments implying control of a company or enterprise.

The issuing, advertising, or offering for sale of foreign securities in the Congo requires prior authorization from the Minister of Finance and the Budget. Exempt from authorization, however, are operations in connection with (1) borrowing backed by a guarantee from the Congolese Government, and (2) shares similar to securities whose issuing, advertising, or offering for sale in the Congo has already been authorized.

Borrowing by residents from nonresidents requires prior authorization from the Minister of Finance and the Budget. However, loans contracted by registered banks and small loans, where the total amount outstanding does not exceed CFAF 10 million for any one borrower, are exempt from this requirement. The contracting of loans that are free of authorization, and each repayment thereon, must be reported to the General Directorate of Credit and Financial Relations within 20 days of the operation.

Lending by residents to nonresidents is subject to exchange control, and all lending in CFA francs to nonresidents is prohibited, unless special authorization is obtained from the Minister of Finance and the Budget. The following are, however, exempt from this authorization: (1) loans in foreign currencies granted by registered banks; (2) other loans in foreign currencies when the total amount outstanding of these loans does not exceed the equivalent of CFAF 5 million for any one lender; and (3) foreign currency loans whose interest rate does not exceed 5 percent a year and whose maturity is two years or less. The making of loans that are free of authorization, and each repayment thereon, must be reported to the General Directorate of Credit and Financial Relations within 20 days.

Under the Investment Code of April 26, 1973, a number of privileges may be granted to approved foreign investments. The Code provides for four categories of preferential treatment.

Gold

By virtue of Decree No. 66/236 of July 29, 1966, as amended by Decree No. 66/265 of August 29, 1966, residents are free to hold gold in the form of coins, art objects, or jewelry; however, to hold gold in any other form or to import or export gold in any form, from or to any other country, the prior authorization of the Minister of Finance and the Budget is required. Exempt from the latter requirement are (1) imports and exports by or on behalf of the Treasury or the BEAC, and (2) imports and exports of manufactured articles containing a minor quantity of gold (such as gold-filled or gold-plated articles). Both licensed and exempt imports of gold are subject to customs declaration. There are no official exports of gold.

Changes During 1990

No significant changes occurred in the exchange and trade system.

Costa Rica

(Position on December 31, 1990)

Exchange Arrangement

The currency of Costa Rica is the Costa Rican Colón. Costa Rica follows a flexible exchange rate system under which the exchange rate is adjusted from time to time, taking into account relative rates of inflation between Costa Rica and its trading partners and balance of payments developments. All transactions, with the exception of allowances for studies abroad (see below), take place at the unified exchange rate. On December 31, 1990, the buying and selling banking rates were Ȼ 102.55 and Ȼ 104.55 per US$1, respectively. The official exchange rate of Ȼ 20.0 = US$1 is used exclusively for granting foreign exchange to students in foreign countries who registered with the Central Bank prior to 1981. The spread between the buying and selling rates in the banking exchange market is legally set at Ȼ 2.00. Purchases and sales of other Central American currencies are effected on the basis of quotations in colones, taking into account the value of those currencies in terms of U.S. dollars in the parallel exchange markets of the respective countries. There are no arrangements for forward cover against exchange rate risks operating in the official or the commercial banking sector.

Costa Rica formally accepted the obligations of Article VIII, Sections 2, 3, and 4 of the Fund Agreement, as from February 1, 1965.

Costa Rica became a contracting party to the General Agreement on Tariffs and Trade, as from October 17.

Administration of Control

Exchange controls are operated by the Central Bank. The only institutions authorized to deal with foreign exchange transactions are the Central Bank of Costa Rica, the state commercial banks, and certain private banks authorized by the Central Bank.

Arrears are maintained with respect to external payments.

Prescription of Currency

Nearly all payments for exchange transactions are made in U.S. dollars. Payments to Central America in respect of trade may be made in U.S. dollars or in local currencies through the Central American Clearing System.

Imports and Import Payments

There is no import licensing, and all import payments may be made freely. All imports must be registered in the Central Bank before removal from customs or before the submission of requests for foreign exchange, with the following exceptions: (1) temporary imports; (2) domestically produced goods reimported into Costa Rica; (3) imports by diplomatic and foreign missions and international organizations; and (4) household items. Imports made on a barter basis require a barter license (licencia de trueque), issued by the Ministry of Economy and Commerce. Imports from South Africa are prohibited.

Customs tariff rates range from zero to 56 percent, although a minimum tariff of 10 percent is applied temporarily to almost all imports. In addition to any applicable customs tariff, the following taxes are levied on imports: (1) a tax of 1 percent on import value; (2) a sales tax of 10 percent ad valorem, from which certain essential items are exempt; and (3) a selective consumption tax at rates varying from zero to 75 percent, depending on how essential the item is considered to be. Surcharges on imports from Central America are levied at a maximum rate of 2 percent, except for capital goods and samples, which are exempt.

Vehicles used in paid (public service) transportation, trucks, ambulances, and hearses, and chassis with single or dual cab are exempt from the surcharge. Other vehicles with an import value of up to US$6,000 are subject to a surcharge of 17 percent, and those with a larger import value are subject to a surcharge of 152 percent. Pickup trucks with a weight capacity of up to 1 ton are subject to a surcharge of 17 percent, and those with a weight exceeding 1 ton are exempt.

Minibuses for collective transportation and vehicles with displacement of up to 1,500 cubic centimeters or with a customs value of up to US$7,000 are subject to a selective consumption tax of 12 percent. Those with a displacement of up to 1,500 cubic centimeters and a customs value exceeding US$7,000 are subject to a selective consumption tax of 20 percent, and those with a displacement of more than 1,500 centimeters and a customs value exceeding US$7,000 are subject to a selective consumption tax of 30 percent. Other vehicles are subject to a selective consumption tax of up to 75 percent, depending on value, displacement, and accessories. Pickup trucks with a standard weight of up to 1 ton are also subject to a selective consumption tax of 25 percent; those with a weight of over 1 ton are exempt.

An advance deposit equivalent to 30 percent of the value of imports is required at the time of submission of applications for foreign exchange to authorized dealers.

Payments for Invisibles

Withholding taxes of 15 percent or 5 percent are levied on remittances of dividends. The 5 percent withholding tax is levied on dividends distributed by stock companies whose shares were acquired at the stock exchange and are registered at an officially acknowledged stock exchange. Remittances abroad of interest are subject to a 15 percent withholding tax, except for remittances to foreign banks or to their financial entities recognized by the Central Bank as institutions normally engaged in international transactions, including payments to foreign suppliers for commodity imports. Interest on loans from foreign institutions recognized by the Central Bank as first-rate institutions is not taxed if the funds are used by resident firms for industrial or agricultural/livestock activities. Interest on government borrowing abroad is exempt. Costa Rican nationals and resident foreigners traveling abroad by air, land, or sea must pay a travel exit tax in colones equivalent to US$30; Costa Rican nationals who reside abroad must pay, in addition, a consular fee of US$20 upon renewal of their passports abroad. For residents covered by Law No. 4812 (pensionados rentistas) and residents not so covered, the payment differs from the national one. Costa Rican diplomats and certain Peace Corps officials pay an exit fee of only Ȼ 117, provided their passport states that they are exempt from the above charges. Civil servants and students are not exempt from these payments, unless so determined by the Ministry of Finance or the Migration Council. Costa Rican minors are subject to all of the above payments, except for dependents of diplomatic parents, who pay only the Ȼ 117 exit fee.

Commercial banks dealing in the unified market may sell foreign exchange—without the prior authorization of the Central Bank—in the following amounts: (1) for foreign travel to destinations outside Central America, a limit of US$125 a day up to US$2,000 a traveler (upon presentation of passport and travel tickets, commercial banks are authorized to sell the equivalent of this amount) and for travel within Central America, US$75 a day up to US$750 a traveler; (2) for family remittances, up to US$500 a person a month to a maximum of US$1,000 a family; and (3) for registered students, a maximum of US$500 a month for living expenses, in addition to tuition, textbooks, and insurance, upon presentation of documents. Subject to approval by the Central Bank, these limits may be exceeded where justified by evidence of bona fide current expenditures for the specified purpose. Prior authorization by the Central Bank is also required for any foreign exchange purchases for the servicing of private foreign debt, foreign payment of dividends, royalties, patent rights, and professional services.

Exports and Export Proceeds

The Central Bank supervises exports to ensure that exchange proceeds are surrendered to the banking system; the latter sell to the Central Bank all of their purchases. Exporters of nontraditional commodities to markets outside Central America are entitled to receive tax credit certificates (CATs, which are freely negotiable) for 15 percent of the f.o.b. value in the case of exports to the United States and Puerto Rico, and for 15 percent or 20 percent in the case of exports to markets outside Central America.

Exports are subject to a license issued by the Central Bank. In addition to this license, other export licenses are required for the following: strategic materials, such as armaments, munitions, scrap iron, and scrap of nonferrous base metals (from the Ministry of Economy and Commerce); sugar (from the Agricultural Industrial Board for Sugarcane); beans, rice, root of ipecacuanha, onions, cotton, meat, and pure-bred cattle (from the National Council of Production); airplanes (from the Civil Aviation Board and the Ministry of Economy and Commerce); Indian art objects made of gold, stone, or clay (from the National Museum); tobacco (from the Tobacco Defense Board); lumber, certain livestock, and animals and plants of forest origin (from the Ministry of Agriculture and Livestock); and coffee (from the Coffee Institute); in addition, when there is a lien on coffee in favor of a bank, that bank’s approval is required before the Central Bank grants an export license. Exports to South Africa are prohibited. Exports to Central America must be made through the Central American Clearing System.

Exchange proceeds from exports of coffee, bananas, sugar, beef, and bovine cattle must be surrendered within 30 days of shipment; those from exports of other perishable items, within 60 days of shipment; those from exports of industrial products except for capital goods, within 120 days of shipment; and those from exports of capital goods, within 360 days of shipment. There are no taxes on nontraditional exports to countries outside the Central American area and Panama; taxes are levied on traditional exports, in some cases, graduated in line with the international prices.

Proceeds from Invisibles

Proceeds from invisibles are free from controls or restrictions, but receipts from invisibles may be exchanged into colones only at the Central Bank or other authorized institutions.

Capital

All capital transfers between residents and nonresidents may be made, subject to prior authorization by the Central Bank. Capital received by the private sector may be registered at the Central Bank of Costa Rica, provided that it meets various requirements, including the requirements that (1) the project financed with the funds has (or will eventually have), directly or indirectly, a positive effect on Costa Rica’s balance of payments; (2) the amount of the capital is not less than US$5,000; and (3) the individual concerned sells the foreign exchange to the Central Bank or to any other bank in the national banking system. The registration guarantees the individual that the Central Bank will sell to him the exchange required to service the debt at the exchange rate in force at the time the servicing is effected. An annual limit of 6.25 percent of the face value of the debt converted is imposed on dividend remittances associated with debt/equity conversions.

The National Budget Authority1 is in charge of authorizing the negotiation of new external credits contemplated by the Central Government, decentralized agencies, and state enterprises. Foreign and domestic capital transferred from abroad may be deposited as time deposits in U.S. dollars with agent banks in the form of specified foreign currencies or be invested in certificates of deposit denominated in colones; such funds, when they mature, are repaid in the currency in which the deposits were made.

Gold

The Central Bank may purchase, sell, or hold gold coins or bars as part of the monetary reserves in accordance with regulations established by its Board. Natural and juridical persons may negotiate, subject to the approval of the Central Bank, at home or abroad, domestically produced gold (except national archaeological treasures, pursuant to Law No. 6703 of December 18, 1981), provided there is no infraction of international agreements. As in the case of other exports, licenses from the Central Bank are required for exports of gold. Gold may also be held in any form in Costa Rica. The Central Bank may sell unrefined gold to artistic or professional users or to enterprises that export jewelry.

Changes During 1990

Exchange Arrangement

May 31. The spread between the buying and selling rates in the banking exchange market was increased from Ȼ 1.00 to Ȼ 1.75.

December 13. The spread between the buying and selling rates in the banking exchange market was increased from Ȼ 1.75 to Ȼ 2.00.

Imports and Import Payments

July 9. The minimum import duty on most raw materials, intermediate goods, and capital goods was increased to 10 percent.

December 12. The ratio of the import deposit requirement, which was 1 percent up to December 12, was raised to 30 percent.

December 16. The maximum tariff rate was reduced to 56 percent as part of a trade reform aimed at reducing the maximum tariff rate to 40 percent over three to five years in accordance with the reform which began in 1987.

(On January 7, 1991, a temporary import surcharge of 10 percent was imposed.)

Côte d’Ivoire

(Position on December 31, 1990)

Exchange Arrangement

The currency of Côte d’Ivoire is the CFA Franc,1 which is pegged to the French franc, the intervention currency, at the fixed rate of CFAF 1 = F 0.02. The official buying and selling rates are CFAF 50 = F1. Exchange rates for other currencies are derived from the rate for the currency concerned in the Paris exchange market and the fixed rate between the French franc and the CFA franc. The BCEAO levies no commission on transfers to or from countries outside the West African Monetary Union (WAMU).2 Banks and the postal system levy a commission on transfers to all countries outside the WAMU, all of which must be surrendered to the Treasury. There are no taxes or subsidies on purchases or sales of foreign exchange.

With the exception of measures relating to gold and the repatriation of export proceeds, the exchange control measures of Côte d’Ivoire do not apply to (1) France (and its Overseas Departments and Territories) and Monaco; and (2) all other countries whose bank of issue is linked with the French Treasury by an Operations Account (Benin, Burkina Faso, Cameroon, Central African Republic, Chad, Comoros, Congo, Equatorial Guinea, Gabon, Mali, Niger, Senegal, and Togo). Hence, all payments to these countries may be made freely. All other countries are considered foreign countries.

Spot foreign exchange cover is limited to imports effected by means of documentary credits; the transaction must be domiciled with an authorized intermediary, and goods must be shipped within eight days of the exchange operation. Forward exchange cover for eligible imports must not extend beyond one month for certain specified goods and three months for goods designated as essential commodities; no renewal of cover is possible. Forward cover against exchange rate risk is permitted, with prior authorization from the Directorate of External Finance and Credit, only in respect of payments for imports of goods and only for the currency stipulated in the commercial contract. There are no official schemes for currency swaps or guaranteed exchange rates for debt servicing.

Administration of Control

Exchange control is administered by the Directorate of External Finance and Credit in the Ministry of Economy and Finance. The BCEAO is authorized to collect any information necessary to compile the balance of payments statistics, either directly or through the banks, other financial institutions, the Postal Administration, and notaries public. All exchange transactions relating to foreign countries must be effected through authorized banks or the Postal Administration. Import and export licenses are issued by the Directorate of External Trade in the Ministry of Commerce.

Arrears are maintained with respect to external payments.

Prescription of Currency

Since Côte d’Ivoire is an Operations Account country, settlements with France (as defined above), Monaco, and the Operations Account countries are made in CFA francs, French francs, or the currency of any other Operations Account country. Current payments to or from The Gambia, Ghana, Guinea, Guinea-Bissau, Liberia, Mauritania, Nigeria, and Sierra Leone are normally made through the West African Clearing House. Settlements with all other countries are usually effected through correspondent banks in France, in any of the currencies of those countries, or in French francs through Foreign Accounts in Francs.

Nonresident Accounts

The regulations pertaining to nonresident accounts are based on those applied in France. BCEAO bank notes may be credited to Foreign Accounts in Francs when they have been mailed to the BCEAO agency in Abidjan by authorized banks’ foreign correspondents. Otherwise, the crediting to nonresident accounts of BCEAO bank notes, French bank notes, or bank notes issued by any other institute of issue that maintains an Operations Account with the French Treasury is prohibited. Foreign Accounts in Francs may be debited, without prior authorization, with the value of BCEAO bank notes that are mailed by authorized intermediaries to their foreign correspondents.

Imports and Import Payments

Imports from South Africa are prohibited. Under the current regulations, all imports are classified into four categories, as follows: (1) prohibited imports (e.g., wheat flour and used garments); (2) import items (e.g., paints, matches, and detergents) for which import licenses are obligatory for each import transaction equal to or exceeding CFAF 25,000, f.o.b.; (3) import items requiring a declaration of intent to import; and (4) import items requiring both prior authorization and a declaration of intent to import. In the last two cases, (3) and (4), the requirements apply only to individual transactions equal to or exceeding CFAF 100,000, f.o.b.

As noted below, certain other import items are subject to annual volume or value quotas. Thus, imports of rice depend on domestic production, since they are intended as a supplementary means of satisfying domestic demand; such imports take place on the basis of an international invitation to bid or a government-to-government contract. All other imports may be made freely from any country; however, as mentioned above, imports made freely are subject to submission of an import declaration when their f.o.b. value is CFAF 100,000 or more, and, in some instances, authorization is also required. Unless specifically exempted, when the f.o.b. value exceeds CFAF 1.5 million, they are subject to preshipment inspection by international agencies to control their price, quantity, and quality. A special import duty of 10 percent is levied on all imports with only a few exceptions; exempted from the duty are live animals, fish, dairy products, petroleum products, pharmaceuticals, books, and products imported under the investment code. A statistical tax of 2.5 percent is levied on the c.i.f. value of all imports, except petroleum. During 1989, tariffs were raised with a view to harmonizing effective protection of local production; in the case of some goods, quotas were replaced by temporary surcharges scheduled to decline progressively during a five-year period that began in 1988. Imports from member countries of the West African Economic Community (WAEC) and the Economic Community of West African States (Ecowas) are exempt from the surcharges.

All import operations relating to foreign countries must be domiciled with an authorized bank when their value exceeds CFAF 500,000; transactions of lower value must also be domiciled with an authorized bank if a financial transaction is to be undertaken before customs clearance. The import licenses or import attestations entitle importers to purchase the necessary foreign exchange, but not earlier than eight days before shipment, if a documentary credit is opened, or only on the due date of payment if the commodities have already been imported. Since June 15, 1981, foreign exchange for import payments must be purchased either on the settlement date specified in the commercial contract or when the required down payment is made.

Payments for Invisibles

Payments for invisibles to France (as defined above), Monaco, and the Operations Account countries are permitted freely; those to other countries must be approved. Payments for invisibles related to trade are permitted freely when the basic trade transaction has been approved or does not require authorization. Transfers of income accruing to nonresidents in the form of profits, dividends, and royalties are also permitted freely when the basic transaction has been approved. Any resident may make payments abroad freely at any time through an authorized bank, up to the equivalent of CFAF 50,000 a month without submitting any documentation.

Residents traveling to countries other than France (as defined above), Monaco, and the Operations Account countries may obtain an exchange allocation for tourism of an amount equivalent to CFAF 175,000 a person a year (CFAF 87,500 for children under 10 years). For business travel, a special foreign exchange allocation is authorized up to a maximum of CFAF 20,000 a day and CFAF 400,000 a trip. Any foreign exchange remaining in excess of CFAF 5,000 after return to Côte d’Ivoire must be surrendered. The transfer of the full basic salary of a foreigner working in Côte d’Ivoire is permitted upon presentation of the appropriate pay voucher, provided that the transfer takes place within three months of the pay period. Resident and nonresident travelers to foreign countries may take out BCEAO bank notes up to CFAF 25,000. Travelers to other countries of the Operations Account Area may take out any amount in BCEAO bank notes; however, if they travel to a country that is not a member of the WAMU, the amount taken out must be declared to customs if it exceeds CFAF 150,000.

Nonresident travelers to foreign countries may freely take out foreign bank notes and coins up to the equivalent of CFAF 175,000, as well as any traveler’s checks, issued abroad. Subject to documentation, they may also take out any amount of traveler’s checks, in foreign currency established in their name after conversion of foreign currency into CFA francs, or drawn against a Foreign Account in Francs, or in a foreign currency in Côte d’Ivoire. Nonresidents who have made a currency declaration upon entry or are able to show the proper banking notices may take out larger amounts.

Exports and Export Proceeds

All exports to South Africa are prohibited. Most exports are free of license and require a declaration only. Exports of certain processed and unprocessed agricultural commodities, however, require an export license issued by the Directorate of External Trade. An export premium is applied on the basis of the domestic value added in locally manufactured products and agricultural products, excluding coffee, cocoa, cotton, and pineapples. Export taxes are waived for products receiving the premium, and products covered by taxation agreements under the WAEC are not eligible for the premium. The due date for payment in respect of exports to foreign countries, including those in the Operations Account Area, must not be later than 180 days after the arrival of the goods at their destination. Regardless of the currency of settlement and the buying country, export receipts must be collected and repatriated through authorized intermediary banks within one month of the due date. Regardless of destination, all export transactions must be domiciled with an authorized bank when valued at more than CFAF 500,000.

Proceeds from Invisibles

Proceeds from transactions in invisibles with France (as defined above), Monaco, and the Operations Account countries may be retained. All amounts due from residents of other countries in respect of services, and all income earned in those countries from foreign assets must be collected and surrendered within two months of the due date or the date of receipt. Resident and nonresident travelers may import any amount of bank notes and coins issued by the BCEAO, the Bank of France, or any bank of issue maintaining an Operations Account with the French Treasury, as well as any amount of foreign bank notes and coins (except gold coins) of countries outside the Operations Account Area; residents bringing in foreign bank notes or other foreign means of payment must surrender any amount in excess of CFAF 5,000 to an authorized bank within eight days and must make a declaration to customs upon entry.

Capital

Capital movements between Côte d’Ivoire and France (as defined above), Monaco, and the Operations Account countries are free of exchange control; capital transfers to all other countries require exchange control approval, but capital receipts from such countries are permitted freely.

Special controls (additional to any exchange control requirements that may apply) are maintained over borrowing abroad, over foreign inward direct investment, over all outward investment in foreign countries, and over the issuing, advertising, or offering for sale of foreign securities in Côte d’Ivoire. Such operations require prior authorization from the Ministry of Economy and Finance, as do issues by Côte d’Ivoire companies. Exempt from authorization, however, are operations in connection with (1) loans backed by a guarantee from the Government of Côte d’Ivoire, and (2) shares similar to securities whose issuing, advertising, or offering for sale in Côte d’Ivoire has already been authorized. With the exception of controls relating to foreign securities, these measures do not apply to relations with France (as defined above), Monaco, member countries of the WAMU, and the Operations Account countries. Special controls are maintained also over the soliciting of funds for deposit with foreign private persons and foreign firms and institutions, and over publicity aimed at placing funds abroad or at subscribing to real estate and building operations abroad; these special controls also apply to France (as defined above), Monaco, and the Operations Account countries.

All investments abroad by residents of Côte d’Ivoire require prior authorization from the Minister of Economy and Finance.3 Foreign direct investments in Côte d’Ivoire4 must be authorized in advance by the Minister of Economy and Finance. Effective June 15, 1981, at least 75 percent of investments abroad by residents of Côte d’Ivoire must be financed by borrowing abroad. The liquidation of investments, whether direct investments or not, in Côte d’Ivoire or abroad must similarly be reported in advance to the Minister. Both the making and the liquidation of investments, whether these are Côte d’Ivoire investments abroad or foreign investments in Côte d’Ivoire, must be reported to the Minister within 20 days following each operation. Direct investments are defined as investments implying control of a company or an enterprise. Mere participation is not considered as direct investment, provided that it does not exceed 20 percent of the capital of a company whose shares are quoted on a stock exchange.

Borrowing by residents from nonresidents must be authorized in advance by the Minister of Economy and Finance. The following are, however, exempt from this authorization: (1) loans taken up by industrial firms to finance transactions abroad, to finance imports into or exports from Côte d’Ivoire, or by approved international trading houses to finance international merchanting transactions; (2) loans contracted by authorized banks; and (3) loans other than those mentioned above, when the total amount outstanding of these loans, including the new borrowing, does not exceed CFAF 50 million for any one borrower, and provided that the annual interest rate does not exceed the normal market rate. The repayment of loans constituting a direct investment is subject to the formalities prescribed for the liquidation of direct investments. The repayment of other loans requires authorization only if the loan itself was subject to prior approval. Lending abroad is subject to exchange control authorization.

Under the investment code introduced in 1984, special incentives are provided for foreign and domestic investments in certain priority sectors and priority geographical areas. The incentives include exemption from customs duties and tariffs on all imported capital equipment and spare parts for investment projects, provided that no equivalent item is produced in Côte d’Ivoire. In addition, all such investments are exempted for a specified period, depending on the investment sector or area, from corporate profit taxes, patent contributions, and capital assets taxes. In general, the exemption covers 100 percent of applicable tax up to the third-to-last year of the exemption period, and is reduced progressively to 75 percent of the tax in the second-to-last year of the exemption period, 50 percent in the second-to-last year, and 25 percent in the last year of the exemption period. Imports of intermediate goods or raw materials for which no equivalents are produced locally are not exempt from import duties and taxes.

Gold

Residents are free to hold, acquire, and dispose of gold in any form in Côte d’Ivoire. Imports and exports of gold to or from any other country require prior authorization from the Minister of Economy and Finance, which is rarely granted. Exempt from this requirement are (1) imports and exports by the Treasury or the BCEAO, (2) imports and exports of manufactured articles containing a minor quantity of gold (such as gold-filled or gold-plated articles), and (3) imports and exports by travelers of gold articles up to a weight of 250 grams. Both licensed and exempt imports and exports of gold are subject to customs declaration.

Changes During 1990

Imports and Import Payments

May 29. A compensatory import duty was introduced on all meat products. The rate of duty varies according to the difference between the cost of imported meat and the price of domestic substitute. The maximum duty ranges from CFAF 300 to CFAF 600.

A 2.5 percent statistical tax was introduced on all imports, excluding petroleum products, replacing the 2 percent statistical tax that had been introduced on July 28, 1989. The tax would be calculated on the c.i.f. value of imports.

Cyprus

(Position on December 31, 1990)

Exchange Arrangement

The currency of Cyprus is the Cyprus Pound. The exchange rate of the Cyprus pound is adjusted daily, with the aim of maintaining its effective relationship with the currencies of its main trading partners. On December 31, 1990, the official buying and selling rates for the U.S. dollar, the intervention currency, were £C 0.4342 and £C 0.4359 respectively, per US$1. The Central Bank of Cyprus also quotes daily buying and selling rates for the deutsche mark, the Greek drachma, and the pound sterling. These rates are subject to change throughout the day. It also quotes indicative rates for other foreign currencies1 on the basis of market rates in international money market centers. Subject to certain limitations, including a limit on spreads between the buying and selling rates, authorized dealers (banks) are free to determine and quote their own buying and selling rates. There are no taxes or subsidies on purchases or sales of foreign exchange.

Authorized dealers are allowed to trade in the forward market at rates that may be freely negotiated with their customers. For U.S. dollars and pounds sterling, however, these rates may not differ by more than the premiums or discounts that are applied by the Central Bank for cover for a similar period. Authorized dealers are allowed to purchase forward cover from the Central Bank at prevailing rates or to conduct forward operations between two foreign currencies for cover in one of the two currencies. The Central Bank offers authorized dealers facilities for forward purchases of U.S. dollars and pounds sterling for exports, for periods of up to 24 months. Cover for imports is normally provided for up to 6 months. When justified (e.g., payments for imports of raw materials for exports or capital goods), rates are quoted for up to 15 months. Forward contracts must be based on genuine commercial commitments. Forward cover may also be provided for periods up to 12 months to residents for specific financial commitments.

Cyprus formally accepted the obligations of Article VIII, Sections 2, 3, and 4 of the Fund Agreement, as from January 9, 1991.

Administration of Control

Exchange controls are administered by the Central Bank in cooperation with authorized dealers. Authority to approve applications for the allocation of foreign exchange for a number of purposes has been delegated to authorized dealers.

Prescription of Currency

Payments may be made by crediting Cyprus pounds to an External Account, or in any foreign currency;2 the proceeds of exports to all countries may be received in Cyprus pounds from an External Account, or in any foreign currency.

Nonresident Accounts

Residents of countries outside Cyprus may open and maintain with authorized dealers Nonresident Accounts in Cyprus Pounds, designated External Accounts, or Foreign Currency Accounts. These accounts may be credited freely with payments from nonresidents of Cyprus (such as transfers from other External Accounts or Foreign Currency Accounts), proceeds from sales of any foreign currency by nonresidents (including declared bank notes), and the entire proceeds, including capital appreciation, from the sale of an investment made by a nonresident in Cyprus with the approval of the Central Bank and with authorized payments in Cyprus pounds. External Accounts and Foreign Currency Accounts may be debited for payments to residents and nonresidents, for remittances abroad, for transfers to other External Accounts or Foreign Currency Accounts, and for payments in cash (Cyprus pounds) in Cyprus. Companies registered or incorporated in Cyprus that are accorded nonresident status by the Central Bank as well as their nonresident employees may maintain External Accounts and Foreign Currency Accounts in Cyprus or abroad, as well as local disbursement accounts for meeting their payments in Cyprus.

Blocked Accounts are maintained in the name of nonresidents for funds that may not immediately and in their entirety be transferred outside Cyprus under the existing exchange control regulations. Blocked funds may either be held as deposits or be invested in government securities or government guaranteed securities. Income earned on blocked funds is freely transferable to the nonresident beneficiary or it may be credited to an External Account or Foreign Currency Account. In addition to income, the principal that may be released annually from blocked funds for transfer outside Cyprus is up to £C 5,000. Funds can also be released from Blocked Accounts to meet reasonable expenses in Cyprus of the account holder and his family, including educational expenses, donations to charitable institutions in Cyprus, payments for the acquisition of immovable property in Cyprus, and any other amounts authorized by the Central Bank.

Imports and Import Payments

Imports of fresh fruits, fresh vegetables, and fresh meat are prohibited. Most other imports are free of licensing requirements. Only imports of certain commodities require an import license, including goods produced or manufactured locally, all machinery, plant and equipment, and spare parts and accessories.

The Minister of Commerce and Industry may take measures whenever required to regulate the importation of goods for the encouragement of local production and manufacture. Exchange is allocated freely and without restriction through authorized dealers to pay for imports, provided that documentary evidence of shipment or actual importation of goods is available.

Advance payments before shipment require the prior approval of the Central Bank, except for imports whose value does not exceed £C 2,000. Since October 1989, authorized dealers have been allowed to issue to departing residents of Cyprus foreign exchange up to £C 20,000 for the purchase and importation of goods to Cyprus. Foreign exchange in excess of £C 20,000 may be issued with the approval of the Central Bank. Payments for imports requiring a license are expected to be made within the time limits specified on the license. An import surcharge of 6 percent (3.9 percent for imports from European Community (EC) countries) ad valorem is levied on all imports except food, feedstuff, pharmaceuticals, and goods imported by the Government.

Payments for Invisibles

Payments for invisibles abroad require the approval of the Central Bank, but approval authority for certain types of payments has been delegated to authorized dealers. Profits, dividends, and interest from approved foreign investments are transferable abroad without limitation, after payment of any due charges and taxes. Insurance premiums owed to foreign insurance companies are remittable after deduction of all contingencies.

Allowances are granted for study abroad at colleges, universities, or other institutions of higher education, and certain lower-level institutions of learning. Exchange allowances are based on the cost of living and cover the full amount of tuition fees plus living expenses for the student. The maximum annual allowance for living expenses for studies in Western European countries, excluding Greece, is £C 4,000; for Greece £C 2,500; for Canada and the United States, £C 5,000; for Eastern European and Middle Eastern countries, £C 2,200; and for all other countries, £C 3,000. There is no limit on the remittance of foreign exchange for payment of tuition fees. Any amount of foreign exchange may be allocated for tourist travel abroad. The maximum ceiling of foreign exchange for tourist travel was lifted on November 1, 1990, in the context of the liberalization measures taken by the Central Bank. Authorized dealers have been allowed, without any reference to the Central Bank, to provide foreign exchange up to £C 750 a person a trip. In addition, the Central Bank approves applications for allocations of additional foreign exchange without limitation to cover genuine travel expenses for tourism purposes. The allowance for business travel is not fixed, but depends on the length of stay abroad, the country or countries to be visited, and the purpose. Authorized dealers are empowered to provide up to £C 100 a day with a maximum of £C 1,000. Company credit cards valid abroad are issued to businessmen and professionals traveling abroad on business. Credit cards entitle the holders to cover their expenses for hotel and restaurant bills and transportation expenses without limit and personal expenses not exceeding £C 400 a trip. If the traveler holds an international card, the foreign exchange that may be issued by authorized dealers is up to £C 60 a day. As of July 22, 1989, authorized dealers have also been allowed to issue personal credit cards to certain categories of persons. In addition to settlements of hotel, restaurant, and transportation expenses, credit cards may be used to obtain advances from an authorized dealer of up to £C 100 a trip for car rentals and up to £C 300 a trip for any other purpose. Credit cards may also be used for payments of up to £C 300 for mail orders of books or other items by enterprises. Additional amounts for business travel in general may be provided with the approval of the Central Bank. Authorized dealers are empowered to issue allowances of up to £C 3,000 for medical expenses.

On leaving Cyprus, travelers may take out with them up to £C 50 in currency notes. There is no limit on the amount of foreign currency notes that departing residents may take out of the country as part of any of their foreign exchange allowances. Nonresident travelers may take out any amount of foreign currency notes they declared on arrival. Foreign currency notes equivalent to up to US$1,000 need not be declared, except when they are to be deposited with an authorized dealer. In addition, authorized dealers may convert up to £C 100 into foreign currency for departing nonresidents. Furthermore, authorized dealers are permitted to issue to nonresidents as well as to resident employees of offshore companies any amount of foreign currency notes against external funds.

Exports and Export Proceeds

Exports of potatoes and carrots are subject to control by the respective marketing boards, and those of wheat, barley, and maize to control by the Cyprus Grain Commission. Exports of cement require a license to ensure adequate domestic supply. All exports are subject to licensing when their f.o.b. value exceeds £C 100, to ensure the repatriation of the sale proceeds. Export proceeds must be surrendered without delay.

Proceeds from Invisibles

Receipts from invisibles must be sold to an authorized dealer. Persons entering Cyprus may bring in any amount in foreign currency notes and up to £C 50 in Cyprus currency notes.

Capital

Transfers abroad of a capital nature are not normally permitted. Applications for direct investment abroad by residents are approved only if the proposed investments will promote exports of goods and services and if the amount required is small.

Investments in Cyprus by nonresidents require the prior approval of the Central Bank, which, in considering applications, gives due regard to the purpose of the investment, the extent of possible foreign exchange savings or earnings, the introduction of know-how, and, in general, the benefits accruing to the national economy. Foreign direct investment is normally permitted in selected fields of production, such as export-oriented industries and new products. Annual profits and proceeds from the liquidation of approved foreign investments, including capital gains, may be repatriated in full at any time, after payment of any charges and taxes.

With the permission of the Council of Ministers, alien nonresidents may acquire in Cyprus immovable property for use as a residence or holiday home; they are required to pay the value of such property in foreign exchange. The sales proceeds of such property are transferable abroad up to the amount originally paid for the purchase of the property; the balance, if any, is transferable at the yearly rate of £C 5,000, plus interest. The same treatment is accorded to nonresident Cypriots purchasing a holiday home in Cyprus.

Residents of Cyprus (Cypriots or foreign nationals) who take up residence outside Cyprus may immediately transfer abroad up to £C 10,000; any excess amount is deposited in a Blocked Account and released at the rate of £C 5,000 a year. The transfer abroad of funds resulting from estates and intestacies and from the sale of real estate, other than that referred to in the preceding paragraph, is limited to £C 5,000, with any excess amount to be credited to a Blocked Account and also released at the rate of £C 5,000 a year. Interest earned on a Blocked Account is freely transferable abroad.

Transactions in foreign securities owned by residents require prior permission from the Central Bank. In principle, all securities held abroad by residents are subject to registration.

Gold

Residents may hold and acquire gold coins in Cyprus for numismatic purposes. With this exception, residents other than the monetary authorities, authorized dealers in gold, and industrial users are not allowed to hold or acquire gold in any form other than jewelry, at home or abroad. Authorized dealers in gold are permitted to import gold only for the purpose of disposing of it to industrial users. The exportation of gold requires the permission of the exchange control authorities.

Changes During 1990

Exchange Arrangement

February 1. Forward exchange market operations were liberalized. Authorized dealers (banks) were allowed to trade in the forward market with each other, their clients, foreign correspondents, and offshore banks at freely negotiated rates. For U.S. dollars and pounds sterling, the Central Bank would continue to quote its own forward rates, which might vary in line with spot rates. Forward rates applied by authorized dealers to their clients for these two currencies may not differ by more than the premiums or discounts that are applied by the Central Bank for cover for a similar period. Authorized dealers were entitled to charge their clients a commission plus expenses related to these transactions. For currencies other than U.S. dollars and pounds sterling, authorized dealers would apply the cross rates against the U.S. dollar.

Authorized dealers would be allowed to purchase cover from the Central Bank at prevailing rates against transactions with their clients, individually or collectively, or to engage in other operations within the prescribed limits. They would also be allowed to conduct forward operations between two foreign currencies, for cover in one of the two currencies, on account of their customers. The forward cover facility that had been hitherto provided for trade transactions and for tourism receipts was extended to other transactions conducted by residents, such as approved foreign loans, for up to 12 months.

February 1. The spot exchange market operations were liberalized. The Central Bank would continue to quote spot rates for four major currencies (deutsche mark, Greek drachma, pounds sterling, and U.S. dollars) but they could be subject to change. Subject to certain limitations, including a limit on spreads between buying and selling rates, authorized dealers would henceforth be free to determine and quote their own buying and selling rates.

Payments for Invisibles

April 17. The use of credit cards for business travel was liberalized. In addition to settlements of hotel, restaurant, and transportation expenses, credit cards may be used to obtain from an authorized dealer up to £C 100 a trip for car rentals and up to £C 300 a trip for any other purpose. Credit cards may also be used for payments of up to £C 300 for mail orders of books or other items by enterprises.

September 24. The maximum allowances for subsistence purposes granted to residents studying abroad were increased, as follows: Western European countries (excluding Greece), to £C 4,000; Greece, to £C 2,500; and Eastern European and Middle Eastern countries, to £C 2,200.

November 1. The maximum ceiling of foreign exchange for tourist travel was lifted, and the following new arrangements were introduced: (1) authorized dealers were allowed, without any reference to the Central Bank, to issue foreign exchange up to £C 750 a person a trip; and (2) the Central Bank would approve applications for allocations of additional foreign exchange without limit to cover genuine travel expenses for tourism purposes.

Capital

February 1. Authorized dealers were allowed to extend credit facilities in foreign currency, up to a total of 30 percent of their deposit liabilities in foreign currency, to Cypriot exporters in the form of short-term trade financing to industries in the Industrial Free Zone, to oil companies, and to Cyprus Airways. Also, a credit of up to 5 percentage points of the 30 percent limit may be extended to offshore companies.

Czech and Slovak Federal Republic1

(Position on January 1, 1991)

Exchange Arrangement

The currency of Czechoslovakia is the Koruna (100 hallers = 1 koruna). The exchange rate of the koruna is determined on the basis of a weighted basket of the convertible currencies that have the greatest share in the external transactions of Czechoslovakia, namely, those of Austria, Germany, Switzerland, the United Kingdom, and the United States; the weights for these currencies are adjusted annually. On January 15, 1991, the buying and selling rates for the U.S. dollar were Kcs 27.81 and Kcs 28.37, respectively, per US$1. The State Bank of Czechoslovakia quotes exchange rates daily for 21 convertible currencies2 and for the European Currency Unit (ECU) and the SDR. The buying and selling rates for these currencies are based on their cross rates in relation to the U.S. dollar in international markets. The spread between the buying and selling rates quoted by commercial banks for commercial transactions is subject to a maximum limit of 2 percent, except for bank notes, which may have larger spreads (normally 3–5 percent). There are no arrangements for forward cover against exchange rate risk operating in the official or commercial banking sector.

Administration of Control

Foreign exchange controls and regulations are stipulated in the revised Foreign Exchange Law, which came into effect on January 1, 1991. This law introduced a system of internal convertibility of the Czechoslovak currency. Annual foreign exchange plans, under which foreign exchange was centrally allocated, have been abolished, and restrictions on payments and transfers related to current account transactions by enterprises have been eliminated. Commercial banks are authorized to effect payments that have been properly documented. A partial export proceeds retention scheme, which was introduced in early 1989 as a transitional measure, has been abolished, and resident enterprises (not individuals) are required to fully repatriate export proceeds and convert them into Czechoslovak currency. The State Bank is responsible for carrying out exchange controls and regulations in coordination with the federal and republic ministries of finance. In general, the Federal Ministry of Finance has authority over governmental credits and over budgetary and subsidized organizations, civic associations, churches, foundations, and other juridical persons that fall within federal jurisdiction and are not engaged in entrepreneurial activities. The republic ministries of finance have authority over budgetary and subsidized organizations, civic associations operating within the jurisdiction of the respective republics, churches, foundations, and other juridical persons that fall within the jurisdiction of the respective republics and are not engaged in entrepreneurial activities, as well as over natural persons resident in the territory of the respective republics. The State Bank has authority over the activities of all registered enterprises and entrepreneurs.

Special approval is required only for joint ventures in which at least one of the equity participants is a state-owned enterprise and in the banking field; approval is granted by the Federal Ministry of Finance for direct investments or by the State Bank for banking transactions.

In accordance with the Fund’s Executive Board Decision No. 144-(52/51) adopted on August 14, 1952, the Czech and Slovak Federal Republic notified the IMF, on November 19, 1990, that certain restrictions had been imposed on the making of payments and transfers for current international transactions to the Government of Iraq and persons within the territories of Iraq and Kuwait.

Prescription of Currency

Payments to and receipts from countries with which Czechoslovakia has multilateral and bilateral agreements may be effected in the currencies stipulated or in accordance with the procedures as set forth in these agreements. At the end of 1990, Czechoslovakia had bilateral payments agreements with Afghanistan, Albania, Bangladesh, the People’s Republic of China, India, the Islamic Republic of Iran, Democratic Kampuchea, the Democratic People’s Republic of Korea, the Lao People’s Democratic Republic, Pakistan, and Yugoslavia, and a multilateral agreement within the framework of the Council for Mutual Economic Assistance (CMEA) trade agreement. Since January 1, 1991, most of these bilateral agreements have been abolished, and they are still in operation only with Afghanistan, Albania, India, and the Islamic Republic of Iran; the multilateral CMEA agreement has been terminated. In cases where specific agreements do not exist or trade takes place outside the framework of the agreements, settlements are effected in a convertible currency.

Resident and Nonresident Accounts

Resident Accounts

Czechoslovak resident individuals (including unregistered entrepreneurs) may open interest-bearing foreign exchange accounts at any resident commercial bank without revealing the source of foreign exchange. Balances on these accounts may be used by the account holder without any restriction. Resident enterprises that had outstanding foreign exchange accounts on December 31, 1990 have been allowed to maintain such accounts; new foreign exchange accounts, however, may be opened by enterprises after December 31, 1990 only with a prior permit which exempts enterprises from the 100 percent surrender requirement. Balances on these accounts may be freely used to finance enterprises’ activities.

Nonresident Accounts

Nonresidents (natural and juridical persons) may maintain two types of interest-bearing account in Czechoslovakia:

(1) Domestic Currency Accounts may be opened with Czechoslovak banks in Czechoslovak currency. Balances on these accounts may be used freely to make payments in Czechoslovakia. All payments abroad from these accounts, except transfers relating to inheritance and alimony, require a permit from the State Bank.

(2) Foreign Currency Accounts may be opened by nonresidents. Foreign exchange may be deposited freely in these accounts, and payments may be made from these accounts, in Czechoslovakia or abroad, without restriction.

Imports and Exports

Imports and exports may be undertaken by any registered enterprise or private entrepreneur. Import licenses are required for a few strategic items, namely, crude oil, natural gas, firearms and ammunition, and narcotics. A temporary 20 percent import surcharge has been imposed on most consumer goods.3 All commercial imports are subject to an ad valorem import tariff, ranging from zero to 35 percent. Imports from developing countries are granted preferential treatment under the Generalized System of Preferences (GSP). Under the GSP, 42 developing countries benefit from a duty exemption, and 80 others are granted a 75 percent reduction from the applicable customs duties. Imports of tropical products are exempted from 85 percent of applicable customs duties.

A resident individual is required to repatriate foreign exchange acquired abroad, and is required to sell to a bank or deposit in a private foreign exchange account foreign exchange (including gold, with the exception of gold coins) exceeding the equivalent of Kcs 5,000; he may freely withdraw funds from this account. Resident enterprises are required to repatriate, within 90 days, foreign exchange receipts from exports and surrender them; with permission, they may maintain foreign exchange receipts in foreign exchange accounts and may freely use funds on these accounts to finance enterprises’ activities.

A limited number of products require export licenses for purposes of health control (including livestock and plants); to facilitate voluntary restraints on products on which partner countries have imposed import quotas (such as textiles and steel products); or to preserve for the internal market finite natural resources or imported raw materials (such as energy, metallurgical materials, wood, foodstuffs, pharmaceutical products, and construction materials). For the two latter groups of products, either quantitative or value limits are in force.

Payments for and Proceeds from Invisibles

Czechoslovak resident individuals may withdraw an unlimited amount of foreign exchange from their foreign currency accounts to make invisible payments. They may also use, without limitation, the equivalent of Kcs 5,000 in foreign exchange receipts, which they are allowed to keep (see section on Imports and Exports, above). In addition, residents are entitled to buy foreign exchange for traveling abroad, up to a maximum amount specified by the State Bank (currently, the equivalent of Kcs 2,000 a year).4

Official travel by employees of budgetary and subsidized organizations is subject to different allowances, depending on the country of destination. Transfers of alimony may be made to a country with which a reciprocal agreement has been concluded. In case a resident individual does not have sufficient foreign exchange, a special permit is required in most instances for remittances relating to family maintenance, education, and medical treatment. Obligatory conversion of a minimum amount of foreign exchange for tourists was abolished on January 1, 1991.

Repatriation of wage savings by nonresident workers is subject to permission from the State Bank. With certain exceptions related to tourism, exports and imports of Czechoslovak currency notes and their transfer abroad are permitted only with a foreign exchange license issued by the State Bank. Licenses are not required for the importation of foreign exchange assets or the exportation of foreign currencies or their transfer abroad by nonresidents.

Capital

Registered enterprises may freely obtain suppliers’ credits and credits not related to trade abroad, although they are required to register such borrowings with the State Bank. They may extend trade credits, but require a special permit from the State Bank in instances where a country is considered to be high risk. Portfolio investments abroad are subject to the approval of the State Bank; approval is normally granted if such investments are considered to facilitate Czechoslovak exports.

The Foreign Exchange Act5 regulates foreign exchange transactions of joint ventures and enterprises with 100 percent foreign ownership. There is no limit on equity participation by nonresidents. Credits may be obtained from foreign banks with the approval of the State Bank. Foreign exchange equity participation of foreign investors can be deposited in a foreign exchange account with a resident commercial bank. Foreign investors may freely transfer abroad their dividends, profits, capital gains, and interest earnings. In accordance with the Foreign Exchange Act, they are allowed, in the event of liquidation of the enterprise, to repatriate freely the full value of their capital participation and capital gains in the original currency.

Transfers of inherited assets abroad are allowed to all countries on a reciprocal basis.

Gold

Residents are required to sell gold (with the exception of gold coins) to financial institutions dealing in foreign exchange within 30 days of acquisition. Without a foreign exchange license, nonresidents may export inherited gold coins, provided that they submit a certificate confirming that the coins are of no historical value, and they may export gold that they have imported into the country. To export any other gold, nonresidents must have a foreign exchange license.

Denmark

(Position on December 31, 1990)

Exchange Arrangement

The currency of Denmark is the Danish Krone. Denmark participates with Belgium, France, Germany, Ireland, Italy, Luxembourg, the Netherlands, Spain, and the United Kingdom in the exchange rate mechanism (ERM) of the European Monetary System (EMS). In accordance with this agreement, Denmark maintains the spot exchange rates between the Danish krone and the currencies of the other participants within margins of 2.25 percent (in the case of the pound sterling and the Spanish peseta, 6 percent) above or below the cross rates based on the central rates expressed in European Currency Units (ECUs).

The agreement implies that the Danmarks Nationalbank (the central bank) stands ready to buy or sell the currencies of the other countries participating in the EMS in unlimited amounts at specified intervention rates. On December 31, 1990, these rates were as follows:

Specified Intervention

Rates per:
Danish Kroner
Upper LimitLower Limit
100Belgian or Luxembourg francs18.914318.0831
100deutsche mark390.16373.00
100French francs116.32111.20
1Irish pound10.45119.9913
1,000Italian lire5.2144.985
100Netherlands guilders346.24331.02
1Pound sterling11.947910.5976
100Spanish pesetas6.2315.526

The participants in the EMS do not maintain the exchange rates for other currencies within fixed limits. Danmarks Nationalbank, however, does intervene in other situations for the purpose of smoothing out fluctuations in exchange rates. This smoothing out takes place only with respect to movements of the EMS currencies, that is, predominantly the deutsche mark. Interventions may technically be executed in any currency included in the official fixing of exchange rates, and the U.S. dollar is often used as the intervention currency. Danmarks Nationalbank has an obligation to intervene on the Danish foreign exchange market only at the intervention rates agreed within the EMS. Middle rates (average of buying and selling rates) for 20 foreign currencies (including the ECU);1 are officially fixed daily and reflect the going rates at the time of the fixing. On December 31, 1990, the official rates for the deutsche mark and the U.S. dollar were DKr 386.04 and DKr 577.60, respectively, per 100 units.

All remaining foreign exchange regulations were lifted with effect from October 1, 1988. Residents may hold positions in foreign currencies without any limitations with respect to the amounts, currencies, or instruments involved. Foreign exchange dealers (banks) must, however, keep their net foreign exchange position (spot plus forward) against the Danish krone within a range equal to ± 10 percent of their capital.

There are no restrictions on foreign exchange dealing. The Executive Order on Foreign Exchange Regulations, issued by the Ministry of Industry with effect from October 1, 1988, contains rules concerning payments between residents and nonresidents, which—for statistical purposes—must be reported to Danmarks Nationalbank when payments exceed DKr 60,000.

Residents (with certain exceptions) must deposit foreign securities and Danish bonds issued abroad either with a Danish or a foreign bank or with the issuer. Residents who are holding accounts with foreign banking institutions, have deposited securities abroad, or have entered into contracts with foreign life insurance companies are required to provide the Danish tax authorities with relevant information concerning these transactions.

Denmark formally accepted the obligations of Article VIII, Sections 2, 3, and 4 of the Fund Agreement, as from May 1, 1967.

Exchange Control Territory

The Danish Monetary Area comprises Denmark, Greenland, and the Faeroe Islands. The Faeroe Islands are still subject to the regulations in force before October 1, 1988.

Administration of Control

No exchange control requirements are imposed on capital receipts or payments by residents or nonresidents. Exchange control rules on reporting requirements for statistical purposes, on depositing of foreign securities, and on holding of accounts abroad for tax purposes are administered by the Danmarks Nationalbank and foreign exchange dealers. Foreign exchange dealers are commercial banks, savings banks, and stockbrokerage companies or other financial institutes, as defined in the Executive Order, provided that they settle payments between residents and nonresidents on a commercial basis through accounts held in or on behalf of foreign banking institutions (correspondent banks). Danmarks Nationalbank has drawn up a list of foreign exchange dealers.

Licenses for imports and exports, where required, are issued by the Ministry of Industry, the Ministry of Agriculture, or the Ministry of Fisheries.

In accordance with the Fund’s Executive Board Decision No. 144-(52/51), adopted on August 14, 1952, Denmark notified the Fund on September 10, 1990 that certain restrictions were imposed on the making of payments and transfers for current international transactions to the Government of Iraq and persons within the territories of Iraq and Kuwait.

Prescription of Currency

There are no prescription of currency requirements.

Imports and Import Payments

Imports of most products, except for textiles, are free of licensing from all sources. For textiles, a common European Community (EC) system of export-import licenses has now been established for almost all countries exporting low-priced textiles. A few items require a license when originating in Japan, the Republic of Korea, or any other non-state-trading, non-EC country. A larger number of items require a license when originating in or purchased from Albania, Bulgaria, the People’s Republic of China, Czechoslovakia, Hungary, the Democratic People’s Republic of Korea, Mongolia, Poland, Romania, the U.S.S.R., and Viet Nam.

No exchange control requirements are imposed on payments for imports.

Exports and Export Proceeds

Except for certain items subject to strategic controls, licenses for exports are required only for waste and scrap of certain metals. Nearly all exports of goods and services to South Africa are prohibited.

No exchange control requirements are imposed on receipts from exports.

Payments for and Proceeds from Invisibles

No exchange control requirements are imposed on payments for or receipts from invisibles.

Capital

There are no restrictions on inward or outward capital transfers. The general rules on exchange control issued by the Ministry of Industry are based on EC directives on capital movements and the Organization for Economic Cooperation and Development Capital Code; no distinction is made in these rules between residents of member countries of the EC and those of the rest of the world.

No special permission is required for residents to make transfers abroad in connection with direct investments or with private acquisitions of real estate abroad. Private acquisition of real estate for noncommercial purposes and expenses related to building and construction work on such property can be made without limitations. Exchange dealers do not need special permission to grant loans to nonresidents for the financing of payments to residents for purchases of Danish goods and services.

Inward direct investment in the form of equity capital may be made without prior license.

The sale to nonresidents of Danish bonds listed on a stock exchange does not require a special license. Nonresidents may freely purchase or subscribe to all types of Danish shares, including shares of joint stock and private companies; they may also acquire private mortgage deeds.

Residents may take up loans from nonresidents to finance imports of goods and services; they may also take up such loans to finance the granting of credits for exports of commodities and services. Business enterprises may borrow abroad without permission.

Transfers of proceeds from the sale or liquidation of all types of investments and transfers of all other liquid funds in Denmark owned by nonresidents are permitted freely, irrespective of the manner in which the original investment was acquired. Interest and repayment of principal on authorized loans, credits, and deposits received from persons and firms who are nonresidents at the time of receipt may be paid without restriction.

Inheritances and gifts to relatives may be transferred to any country without limitation. Gift remittances to other persons may also be made without limitation.

Imports and exports of securities are permitted. Danish securities held in Denmark and belonging to nonresidents may be sold freely to residents. Foreign securities held in Denmark may be negotiated freely between residents.

Gold

Residents may freely buy, hold, and sell gold in bars or coins in Denmark; they may also import gold in bars or coins. Imports of gold in bars or coins, unless made by or on behalf of the monetary authorities, are subject to a value-added tax at the rate of 22 percent; domestic transactions in gold are also taxed at the rate of 22 percent. There is no customs duty on imports of gold in bars or coins.

Changes During 1990

Exchange Arrangement

August 10. Following the decision of the United Kingdom to join the Exchange Rate Mechanism of the European Monetary System, the compulsory intervention limits between the Danish krone and the pound sterling were established as follows: buying rate, DKr 10.5976 per pound sterling; and selling rate, DKr 11.9479 per pound sterling.

Imports and Import Payments

(See Appendix for a summary of trade measures introduced and eliminated on an EEC-wide basis during 1990, page 569.)

Djibouti

(Position on December 31, 1990)

Exchange Arrangement

The currency of Djibouti is the Djibouti Franc, which is freely convertible into U.S. dollars, the intervention currency, at the fixed rate of DF 177.721 = US$1. Buying and selling rates for other currencies are set by local banks on the basis of cross rates for the U.S. dollar in international markets. The posted rates are subject to commission charges of 0.5–3.0 percent set by the commercial banks, depending on the currency concerned. There is a fixed commission of about DF 1,000 (or US$6.00) for transfers in foreign currencies. There are no taxes or subsidies on purchases or sales of foreign exchange. Commercial enterprises are free to negotiate forward exchange contracts in respect of commercial and financial transactions through local banks or banks abroad. All transactions are negotiated at free market rates. There are no arrangements for forward cover against exchange rate risk operating in the official or the commercial banking sector.

On September 19, 1980, Djibouti formally accepted the obligations of Article VIII, Sections 2, 3, and 4 of the Fund Agreement.

Administration of Control

There is no exchange control. The Djibouti franc is issued in notes and coins by the National Bank of Djibouti, which issues and redeems the currency against U.S. dollars. Deposits in U.S. dollars constitute the cover for the notes issued.

Prescription of Currency

All settlements with Israel and South Africa are prohibited. Otherwise, no prescription of currency requirements are in force.

Imports and Import Payments

Imports from Israel and South Africa are prohibited. Djibouti has a free trade zone in the port of Djibouti, but the territory as a whole does not constitute a free zone. Formally, customs duties are not charged on imports, but, in practice, fiscal duties are levied by means of the general consumption tax, at the rate of 30 percent for luxury goods and 20 percent for all other goods. Certain commodities, including alcoholic beverages, noncarbonated mineral water, petroleum products, khat, and tobacco, are subject to a surtax at various rates. Additional taxes are levied on imported milk products and fruit juice.

Exports and Export Proceeds

Exports to Israel and South Africa are prohibited. Otherwise, there are virtually no restrictions. Export proceeds may be retained.

Payments for and Proceeds from Invisibles

No restrictions are imposed on payments for or proceeds from invisibles, except that payments must not be made to or received from Israel or South Africa. A tax of 20 percent applies to fees and salaries paid to individuals and legal entities who are not permanent residents of Djibouti for professional purposes.

Capital

No restrictions are imposed on inward or outward capital transfers, but payments may not be made to or received from Israel or South Africa. Under the Investment Code of February 13, 1984, enterprises established or expanded to undertake certain specific economic activities are eligible for various tax exemptions.

Changes During 1990

No significant changes occurred in the exchange and trade system.

Dominica

(Position on December 31, 1990)

Exchange Arrangement

The currency of Dominica is the Eastern Caribbean Dollar,1 which is issued by the Eastern Caribbean Central Bank (ECCB). The Eastern Caribbean dollar is pegged to the U.S. dollar, the intervention currency, at EC$2.70 = US$1. On December 31, 1990, the buying and selling rates for the U.S. dollar were EC$2.6949 and EC$2.7084, respectively, per US$1. The ECCB also quotes daily rates for the Canadian dollar and the pound sterling.

There are no arrangements for forward cover against exchange rate risk operating in the official or the commercial banking sector.

Dominica informed the Fund on December 13, 1979 that it formally accepted the obligations of Article VIII, Sections 2, 3, and 4 of the Fund Agreement.

Administration of Control

Exchange control is administered by the Ministry of Finance and applies to all countries outside the ECCB area. The Ministry of Finance has delegated to commercial banks certain of its powers to approve sales of foreign currencies within specified limits. The Ministry of Trade administers import and export arrangements and controls.

Prescription of Currency

Settlements with residents of territories participating in the ECCB Agreement must be made in Eastern Caribbean dollars; those with member countries of the Caribbean Common Market (Caricom)2 must be made in the currency of the Caricom country concerned. Settlements with residents of other countries must be made in the foreign currency that is legal tender in the country where the settlement is being made.3

Foreign Currency Accounts

Foreign Currency Accounts may be operated only with the permission of the Ministry of Finance; such permission is normally confined to major exporters and foreign nationals not ordinarily resident in Dominica. The accounts can only be credited with foreign currencies obtained outside Dominica. Payments from these accounts do not require approval.

Imports and Import Payments

All imports from South Africa are prohibited, and all imports originating from the member countries of the Council for Mutual Economic Assistance, Albania, the People’s Republic of China, the Democratic People’s Republic of Korea, and Democratic Kampuchea require a license. All other goods except those on the negative list may be imported without a license. Goods on the negative list may, however, be imported from the member countries of the Organization of Eastern Caribbean States (OECS)4 and Caricom without a license.

Payments for authorized imports are permitted upon presentation to a commercial bank of documentary evidence of purchase. Advance payments for imports require prior approval from the Ministry of Finance.

Payments for Invisibles

All settlements overseas require exchange control approval. However, commercial banks have been delegated authority to sell foreign currency to local residents, as specified below: (1) for incidentals, EC$100, subject to a limit of EC$500 a person a year; (2) for each trip outside the area served by the ECCB, EC$3,000, subject to a maximum of two trips in any 12-month period and upon presentation of travel documents; (3) for bona fide business travelers, EC$1,000 for each day outside Dominica, provided the total does not exceed EC$30,000 in any 12-month period and upon presentation of travel documents; (4) for overseas travel for medical treatment, EC$1,000 a day up to a maximum of EC$30,000 in any 12-month period, subject to the presentation of a medical certificate stating that the journey is necessary and upon presentation of travel documents; (5) for educational expenses, including accommodation, up to EC$15,000 a student in each academic year; and (6) for dependents residing abroad, EC$2,400 in any 12-month period (EC$3,600 for minor or incapacitated dependents).

Amounts in excess of specified limits may be obtained with approval from the Ministry of Finance. Specific approval of the Ministry of Finance may also be obtained for outward remittances of cash gifts up to EC$1,000 a year to each recipient. Earnings of foreign workers and profits/dividends from foreign direct investment may be remitted after settlement of all tax or other public liabilities.

The exportation of East Caribbean bank notes and coins (other than numismatic coins) by residents and nonresidents traveling to destinations outside the ECCB area is limited to amounts prescribed by the central bank.

Exports and Export Proceeds

Exports to South Africa are prohibited, and specific licenses are required for the export of certain goods to any destination. The conversion of export proceeds to an ECCB currency account is mandatory, except when the exporter has a foreign currency account into which the proceeds may be paid. Exports of bananas are subject to a levy when the export price exceeds a minimum level.

Proceeds from Invisibles

Foreign currency proceeds from transactions in invisibles must be sold to a bank or paid into a foreign currency account. There is no restriction on the importation of foreign bank notes and coins.

Capital

All outward transfers of capital or profits require exchange control approval. The purchase by residents of foreign currency securities and of real estate located abroad is not normally permitted. Capital transfers, such as inheritances, to nonresidents require approval, which is normally granted, subject to the payment of any taxes due. Emigrants leaving Dominica to take up residence outside the ECCB area may transfer up to EC$30,000 from their assets for each family, subject to income tax clearance.

Direct investment in Dominica by nonresidents may be made with exchange control approval. The remittance of earnings on, and liquidation proceeds from, such investment is permitted, subject to the discharge of any liabilities related to the investment. The approval of the Ministry of Finance is required for nonresidents to borrow in Dominica.

Gold

Residents are permitted to acquire and hold gold coins for numismatic purposes only. Small quantities of gold may be imported with the approval of the Ministry of Finance, for industrial purposes only.

Changes During 1990

Imports and Import Payments

May 1. Imports from the member countries of Caricom of some 18 products items on the negative list were no longer subject to a license.

Exports and Export Proceeds

July 1. A levy on exports of bananas was imposed (this levy was suspended in September 1990).

Dominican Republic

(Position on December 31, 1990)

Exchange Arrangement

The currency of the Dominican Republic is the Dominican Peso, which is pegged to the U.S. dollar, the intervention currency, at RD$11.50 = US$1. The Central Bank administers all foreign exchange transactions; all exchange receipts must be surrendered, and most payments require the prior approval of the Central Bank. Only foreign exchange purchases by private individuals for specified current invisibles up to US$5,000 for each transaction and up to a limit of US$10,000 a year do not require prior approval. On December 31, 1990, the buying and selling rates of the Central Bank in terms of the U.S. dollar were RD$11.20 and RD$11.50, respectively, per US$1. A parallel foreign exchange market exists. On December 31, 1990, the difference between the official exchange rate and the parallel exchange rate was about 15 percent.1

A commission equivalent to 15 percent of the f.o.b. value of imports is collected by the Customs Office, and the proceeds are deposited in the Central Bank for the servicing of external debt.2 Other exchange transactions in U.S. dollars between the Central Bank and other banks carry a commission of 1/32 of 1 percent. Commercial banks charge their customers commissions of ¼ of 1 percent (buying) and ½ of 1 percent (selling); an additional commission of 1 percent is levied on payments by letter of credit.

There are no arrangements for forward cover against exchange rate risk operating in the official or the commercial banking sector.

Administration of Control

Exchange control policy is determined by the Monetary Board and is administered by the Central Bank. A commission, composed of representatives of the Central Bank, the Ministry of Finance, and the Office of the President, determines priorities for the servicing of public sector external debt. Commercial banks transact in foreign exchange under central bank supervision and at exchange rates set by the Central Bank. Payments abroad are subject to documentation and limited to transactions via commercial banks. At the end of 1990, there were 20 commercial banks (including the state-owned Reserve Bank) operating in the foreign exchange market in the Dominican Republic. The commercial banks may open foreign exchange facilities, except where the Banco de Reserva is authorized as the sole dealer.

Arrears are maintained with respect to external payments.

Prescription of Currency

Imports from the United States that are financed by the U.S. Agency for International Development must be made under special letters of credit. Settlements with Argentina, Bolivia, Brazil, Chile, Colombia, Ecuador, Mexico, Paraguay, Peru, Uruguay, and Venezuela may be made through special accounts established under reciprocal credit agreements within the framework of the Latin American Integration Association (LAIA). Import payments in currencies other than the U.S. dollar must be made through letters of credit. Otherwise, no obligations are imposed on importers, exporters, or other residents regarding the currency to be used for payments to or from nonresidents.

Imports and Import Payments

Most imports are effected at the official exchange rate determined by the Central Bank. In October 1989, the commercial banks were allowed, on a temporary basis, to obtain foreign exchange outside the official system to cover payments for imports that had previously been authorized by the Central Bank. This authority was suspended in April 1990. Import settlements against collection or by draft must be denominated in U.S. dollars. Imported merchandise requires a central bank certification of the use of foreign currency for customs clearance. A written order from the Office of the President of the Republic is required to import any goods that are not covered by a written authorization from the Central Bank, except for a few items purchased by hotels for their exclusive use. Most imports are subject to an exchange commission equivalent to 15 percent of the f.o.b. value.

In principle, import duty rates range from a minimum of 40 percent to nearly 900 percent for malted beverages. Most of the duty rates at the three- and four-digit level of the tariff schedule range from 40 percent to 75 percent. Certain medicines and medical products are exempt from import duties. An internal consumption tax, ranging from 15 percent to 90 percent, and a 4 percent surcharge on the total value of imports, inclusive of all customs charges, are applied to imports that are subject to the minimum duty of 20 percent; exempt from the tax and the surcharge are agricultural and industrial machinery, and inputs for the manufacture of agrochemical products, which are subject to a 5 percent duty. In September 1990, the Government established a provisional tariff system, under which most rates range from 15 percent to 30 percent; the rates on jewelry, firearms, and certain motor vehicles range from 60 percent to 80 percent. The internal consumption tax now ranges from 15 percent to 90 percent.

Payments for Invisibles

All categories of invisible payments, with the exception of profit remittances and royalty payments, may be made freely through commercial banks, subject to documentation requirements. Annual profit remittances cannot exceed the equivalent of 25 percent of the net value of original and additional investment plus reinvestment minus repatriation, duly registered in the Foreign Department of the Central Bank.

Nonresident tourists who surrender foreign exchange to commercial banks upon arrival may reconvert up to 30 percent of the total amount surrendered (maximum of up to the equivalent of US$5,000) upon departure.

Exports and Export Proceeds

Certain exports are temporarily prohibited, including some food products and animal species, unprocessed wood (for environmental protection purposes), and blood (for public health reasons). In addition, products imported under specified bilateral trade agreements are prohibited from being exported under the terms of such agreements. A number of products (such as sugar, molasses, coffee, and cocoa) are subject to prior authorization. Export licenses, issued by the Dominican Center for Export Promotion (Cedopex), are required for all products.

With specified exceptions, exporters must, within two working days of receiving payments, surrender to the Central Bank, through the commercial banks, foreign exchange equal to 100 percent of the value of their exports. For the purposes of exchange surrender, declared export prices must equal or exceed the minimum export prices established by Cedopex for certain exports.

Firms operating in industrial free zones and dealing in ferro-nickel exports are exempt from the exchange surrender requirements and are required to convert only the foreign exchange needed by them to cover local costs and taxes. Excess proceeds from coffee exports are subject to a graduated tax at a maximum rate of 40 percent when the export proceeds calculated at the exchange rate in force at the time of sales registration with the Coffee Department of the Secretariat of State for Agriculture exceed RD$400 per 100 pounds.

Law No. 69 provides for the issuance of tax credit certificates (certificados de abono tributario—CATs) for a value not exceeding 15 percent of the f.o.b. or c.i.f. value of exports; the percentage can be up to 25 percent when exports contain a high degree of domestic agricultural inputs. The CATs are, in principle, fully negotiable and can be used for the payment of taxes or other obligations to the Government. However, only a limited number of CATs have been issued. Law No. 69 also regulates the system of temporary admission for imports, under which duties are waived for any imports used in the manufacture of nontraditional products to be exported within a year.

Nontraditional exports are entitled to a refund of a percentage of the import duties paid on raw materials or component parts used in the manufacture of goods subsequently exported; the refund is 90 percent on exports containing only imported inputs, 95 percent on exports containing domestic inputs, and 100 percent on exports produced in the industrial free trade zone.3 Exporters are also eligible for a refund of 95 percent of any internal tax levied on locally manufactured goods that are exported. Exporters may not extend credit to foreign buyers for more than 90 days from the date of shipment without authorization from the Central Bank.

Proceeds from Invisibles

Foreign exchange proceeds from all invisibles must be surrendered to the Central Bank through the commercial banks. Proceeds originating in transactions with foreigners using international credit cards are also subject to the same surrender requirements as those applicable to exports. The import of Dominican bank notes and coins is prohibited.

Capital

There are no restrictions on the inward movement of capital by either residents or nonresidents. However, direct foreign investment is regulated by Law No. 861 of July 19, 1978, which created a Directorate of Foreign Investment to approve direct investment requests. Such investments must be registered with the Central Bank. Outward remittances related to investments require the approval of the Central Bank.

Foreign debt can be contracted directly by the Central Government, subject to congressional authorization. According to Law No. 251 of 1964, new loans by other public and private entities require Monetary Board authorization. According to a set of criteria established by the Monetary Board on November 19, 1981, priority in the approval of new loans is given to foreign borrowing for export, import substitution, and social projects such as housing and education. Total financial charges on foreign loans are not allowed to exceed the principal international interest rate by more than 3 percent. There are also minimum maturity requirements according to the type of financing.

Since January 23, 1985, the Central Bank has provided foreign exchange for the servicing of public external debt at the market rate; the servicing of private external debt is effected through the market.

Gold

Residents may purchase, hold, and sell gold coins in the Dominican Republic for numismatic purposes. With this exception, residents other than the monetary authorities and authorized industrial users are not allowed to hold or acquire gold in any form other than jewelry, in the Dominican Republic or abroad. Imports and exports of gold in any form other than jewelry constituting the personal effects of a traveler require licenses issued by the Central Bank; such licenses are not normally granted except for imports and exports by or on behalf of the monetary authorities and industrial users.

Changes During 1990

Exchange Arrangement

April 9. The official exchange rate was adjusted to RD$7.30 (buying) and RD$7.60 (selling) per US$1. Authorization, which was granted in October 1989 to commercial banks to use foreign exchange surrendered to them to make import payments authorized by the Central Bank, was suspended.

May 3. Commercial banks were authorized to purchase foreign exchange from the public and surrender it to the Central Bank.

August 7. The official exchange rate was adjusted to RD$10.20 (buying) and RD$10.50 (selling) per US$1. The foreign exchange system previously established in August 1988 (Sistema de Reintegro de Divisas) was reintroduced. Under this system, the Central Bank would administer all foreign exchange transactions, all receipts would be subject to surrender, and most payments would require prior approval from the Central Bank.

October 4. The official exchange rate was adjusted to RD$11.20 (buying) and RD$11.50 (selling) per US$1.

Administration of Control

August 15. Regulations governing dealings in foreign exchange by tourism agencies residing in the Dominican Republic were introduced.

November 5. The policy governing remittances of foreign exchange abroad was modified, whereby remittances were permitted to be made only through the commercial banks in the Dominican Republic.

Imports and Import Payments

March 19. The importation of essential and patented medicines and medical products was exempted from all import duties.

September 1. A tariff reform establishing a single c.i.f. ad valorem tax for all products included in the Temporary Customs Tariff was implemented.

Payments for Invisibles

June 15. All travelers arriving in the Dominican Republic were required to convert the equivalent of US$100 into domestic currency.

July 13. The requirement that all travelers arriving in the Dominican Republic must convert the equivalent of US$100 into domestic currency was suspended.

Exports and Export Proceeds

August 30. The system of surrender of foreign exchange to the Central Bank by the exporters of goods and services was modified.

Ecuador

(Position on December 31, 1990)

Exchange Arrangement

The currency of Ecuador is the Ecuadoran Sucre. At present, there are three exchange rates: the official rate of S/. 390 per US$1, which is used for the accounting purposes of the Central Bank of Ecuador only; the intervention market rate of the Central Bank; and the free market rate. As of August 31, 1988, all foreign trade transactions of the private sector, as well as some other private sector foreign exchange transactions (mainly those of the national press and of eligible students abroad) take place on the intervention market of the Central Bank. This market has a single rate but operationally has two segments—one for the public sector (where all public sector transactions take place) and the other for the private sector (where a foreign exchange allocation system governs private sector transactions). Private sector transactions that do not take place in the intervention market take place in the free market. The intervention rate of the Central Bank is adjusted weekly, on the basis of a preannounced peg rate (a weekly depreciation of S/. 3.00 during May 15, 1989–March 5, 1990, and since March 6, 1990, S/. 3.50, against the U.S. dollar); the selling rate is set at 2 percent above the buying rate. On December 31, 1990, the exchange rate (averages of buying and selling rates) was S/. 878.20 per US$1 in the intervention market of the Central Bank, and S/. 890.90 per US$1 in the free market.

In the public sector segment of the intervention market, the Central Bank is authorized to purchase the foreign exchange proceeds relating to the following transactions: the f.o.b. value of all public sector exports; all public sector income in foreign currency, including foreign loan disbursements; foreign exchange balances on public sector deposits in foreign currency at the Central Bank (when considered in excess of the normal requirements of each entity); and all other transactions of the Central Bank. The Central Bank is authorized to sell foreign exchange relating to payments of the following operations in the public sector segment of the intervention market: the c. & f. value of public sector imports; purchases of services abroad by the public sector; interest payments and principal amortization in foreign currency of the public sector; transfer of surpluses of foreign oil companies operating in Ecuador; and all other transactions of the Central Bank.

In the intervention market for the private sector, the Central Bank is authorized to buy 100 percent of the f.o.b. value of all private sector export proceeds and 100 percent of the proceeds from credits granted by multilateral agencies and foreign governments to the private sector previously authorized by the Monetary Board. The Central Bank determines twice a week the maximum amount of foreign exchange available (the limit of 90 percent of export proceeds from the private sector was raised to 100 percent in December 1989). It sells this amount for the payment of the c. and f. value of private sector imports; for the foreign exchange required by the national press and by students abroad who have obtained financing from the Ecuadoran Institute for Education Loans; and for the servicing of loans granted by multilateral agencies, and governments or their agencies to Ecuadoran financial institutions to finance private investment projects. Requests for foreign exchange have to be submitted to the Committee for Foreign Exchange Sales (Comtié de Venta de Divisas) through authorized banks, financial companies, or professional organizations (Federaciones Nacionales de Cámaras), none of which can submit requests for more than 20 percent of the total amount offered at each biweekly session. Requests for foreign exchange for import payments can be presented only on the basis of import permits granted at least 60 days before the session. Requests are satisfied according to the chronological order of the date of issuance of the import permits. The amount of foreign exchange received by each participating institution is determined on a pro rata basis, given by the ratio of the total amount offered to the total amount requested multiplied by the amount requested by the institution in question. The Central Bank is authorized to purchase foreign exchange in anticipation of future exports, within a maximum period of 150 days, with exception made for exports of coffee grain, shrimp, fish in natural form, and fish products, which can be exported within a maximum period of 210 days.

Under transitional arrangements, the Central Bank is obliged to provide foreign exchange at the intervention market rate for the following payments: imports for which permits were granted up to August 11, 1986; the redemption of foreign currency stabilization bonds; the servicing of the private sector external debt for which the foreign exchange was sold to the Central Bank up to August 11, 1986; profit remittances and capital repatriation generated by foreign investments for which the foreign currency was sold to the Central Bank up to August 11, 1986; and expenses incurred abroad by students and handicapped persons for which a contract was approved by the Central Bank up to August 11, 1986. To meet obligations arising from import permits granted up to August 11, 1986, the Central Bank is authorized to issue foreign currency stabilization bonds, provided the counter-value in sucres has been deposited with the Central Bank and all the requirements for payment abroad have been fulfilled. The maturity of the bonds runs from the date of issue. The Central Bank issued four stabilization bonds, each amounting to 25 percent of its obligation, with maturities every six months. The bonds carry an interest rate equal to the three-month LIBOR (or equivalent rate in non-U.S. dollar currencies). The final deadline for submitting applications for foreign currency stabilization bonds was extended in October 1989 to January 17, 1990.

Most borrowings abroad by the private sector are subject to an exchange tax ranging from 0.5 percent to 2 percent.

There are no arrangements for forward cover against exchange rate risk operating in the official or the commercial banking sector.

Ecuador formally accepted the obligations of Article VIII, Sections 2, 3, and 4 of the Fund Agreement, with effect from August 31, 1970.

Administration of Control

Exchange controls are administered by the Central Bank.

Prescription of Currency

Most settlements with Hungary, Poland, and the U.S.S.R. take place through bilateral accounts. Payments between Ecuador and Argentina, Bolivia, Brazil, Chile, Colombia, the Dominican Republic, Mexico, Paraguay, Peru, Uruguay, and Venezuela must be made within the framework of the multilateral clearing system of the Latin American Integration Association (LAIA). Exchange proceeds from other countries must be received in convertible currencies. Whenever possible, import payments must be made in the currency stipulated in the import license.

Imports and Import Payments

Permitted imports are divided into two categories: List I, consisting of priority goods (“Special” Group); essential goods (Group A, consisting of capital goods, inputs for agriculture and industry, and consumer goods with no local substitutes); and semi-essential goods (Group B, consisting of products with some local equivalent, except luxury goods); and List II, consisting of luxury goods. All goods not included on these two lists are prohibited. Mainly for reasons of industrial protection, certain imports require prior authorization from government ministries or agencies. As of August 30, 1988, imports of motor vehicles remain prohibited, while the prohibition on imports of heavy vehicles has been lifted.

A prior import deposit scheme, in effect since October 1987, was abolished with effect from July 6, 1990. Before this abolition, the scheme required both private and public sector importers to lodge at the Central Bank a non-interest-bearing 120-day deposit in domestic currency.

With specified exceptions, prior import licenses are required for all permitted imports. Books, newspapers, periodicals, and printed music may be imported with or without prior import licenses. Medicines and spare parts for machinery and automotive vehicles are free of license when valued at US$1,500 f.o.b. or less, but all applicable charges and taxes must be paid on them. In addition, the State Petroleum Corporation (Petroecuador) may import supplies, materials, and equipment necessary for the conduct of its business during emergencies without obtaining a prior import license. With specified exceptions, requests for import licenses for goods included under List I have to be accompanied by a foreign exchange guarantee from an authorized bank or financial company for the c. & f. value of the imported goods. Import licenses are issued freely irrespective of the origin of goods, provided that 80 percent of the import taxes (including import surcharges) has been paid, prior ministerial authorization (where applicable) has been obtained, and a certificate has been submitted showing that insurance has been arranged in Ecuador. Upon arrival of the merchandise, the importer must settle the remaining 20 percent of total import taxes (including import surcharges).

All private sector imports are subject to a tax of 10 percent levied on commercial transactions. Furthermore, all public and private sector imports are subject to a service charge of 1 percent of the c. & f. value. There is a temporary duty-free import scheme for inputs used in export production. Under an export-processing zone arrangement known as “Maquila,” eligible enterprises are allowed to administer certain special labor contract and wage policies.

Payments for Invisibles

All public sector payments for invisibles, including interest on public debt, are transacted in the intervention market of the Central Bank. Other payments for current invisibles must be settled in the free market and are unrestricted. There are no limitations on the amounts of domestic and foreign bank notes that travelers may take out. The arrangement for the refinancing of private external debt involves different implicit exchange rates arising from the imposition of charges on the official rate to compensate for possible exchange losses. These rates apply to the refinancing of private external credits contracted or endorsed by the domestic financial system or directly by the private sector. They also apply to the payment of interest on loan proceeds sold to the Central Bank before refinancing or sold in the same way at any time under Resolution No. 1202, or those sold at the free market beginning from July 1, 1982, up to a day before short- or long-term financing. With respect to foreign loans to petroleum companies, interest, commissions, and other financial charges on foreign loans may not exceed the equivalent of 2 percentage points above the interest rates in the creditor country.

Residents and nonresidents traveling abroad by air must pay a tax of US$25 for each exit visa. Airline tickets for foreign travel are taxed at 10 percent, and tickets for travel by ship are subject to tax at the rate of 8 percent for departure from Ecuador and 4 percent for the return trip.

Exports and Export Proceeds

All exports require licenses; licenses are issued freely, subject to guarantee and may be provisional (with a validity of 30 days) or definitive (with a validity of 90 days). There is a list of prohibited exports and a list of exports subject to quota (“exportable surplus”), reviewed quarterly by the competent ministries. All goods not on these lists are freely exportable. All export proceeds must be surrendered in the intervention market of the Central Bank not later than: (1) 15 days from the date of shipment for exports against cash payment, and exports of bananas; (2) 45 days from the date of shipment for coffee beans, cocoa beans, shrimp in any marketable form, and other unprocessed seafood products, provided that the sale was made on an installment basis or on consignment; (3) 60 days from the date of shipment for other primary products, provided that the sale was made on an installment basis; and (4) 150 days from the date of shipment for products not covered in (1)–(3) above, provided that the sale was made on an installment basis. Nonobservance of the above surrender requirements is subject to penalty, and the Central Bank is authorized to carry out the inspections it considers necessary to verify the proper surrender of export proceeds. The surrender requirement does not apply to exports effected under authorized barter transactions. However, barter transactions require the prior approval of the Ministry of Industry, Commerce, Integration, and Fisheries; they must be registered with the Central Bank and are subject to specific limitations. Minimum reference prices are established for exports of bananas, coffee, fish products, cocoa, and semifinished products of cocoa to help ensure that exchange proceeds are fully surrendered. Payment of foreign exchange for petroleum exports will be made on the basis of the sale prices stated in the sale contracts and must be surrendered within 20 days of the date of shipment.

Proceeds from Invisibles

All receipts from invisibles must be sold in the free market, except for interest income on foreign reserves of the Central Bank and all invisible receipts of the public sector, which are transacted in the intervention market. Travelers may bring in any amount of foreign or domestic bank notes.

Capital

Capital may freely enter or leave the country through the free market, except capital in the petroleum sector, which must be transacted through the intervention market. Most borrowings abroad by the private sector are subject to an exchange tax ranging from 0.5 percent to 2 percent.

With specified exceptions, new investment requires the prior authorization of the Ministry of Industry, Commerce, Integration, and Fisheries. The Ministry does not authorize direct foreign investment for the purpose of establishing advertising firms, commercial broadcasting stations, television stations, newspapers, or magazines. All foreign direct investment in Ecuador must be registered with the Central Bank.

Repatriations of capital and remittances of profits on foreign investments are handled through the free exchange market in respect of those investments that have been effected through this market. There are no time limits on the remittance of profits. The limit on the repatriation of profit remittances is 30 percent a year, or 40 percent for firms that export at least 40 percent of their production. Annual amortization may not exceed the sum of undistributed profits, depreciation of fixed assets and liquidated assets, and any variation in working capital. There are no limits on repatriation of capital and profit for the tourism sector and for enterprises that export more than 80 percent of their production.

All foreign loans granted to the Government or to official entities, or guaranteed by them, whether or not they involve the disbursement of foreign exchange, are subject to prior approval by the Monetary Board. Suppliers’ credits of up to one year’s maturity are exempt from this requirement. The request for such authorization, to be submitted to the Minister of Finance and the Monetary Board, must be accompanied by detailed information of the loan contract and of the investment projects it is intended to finance. In examining the request, the Monetary Board considers the effects that the loan and the related investment may have on the balance of payments in general, and on monetary policy in particular. For public sector entities, the projects to be financed must be included in the General Development Plan or receive a favorable opinion of the National Council for Development (Conade), and at least 20 percent of the total cost of the project must be covered by domestic funds. This requirement does not apply to loans granted by international organizations or national development agencies. New external credits with a maturity of over one year contracted by the private sector, either directly or through the domestic financial system, must be authorized and registered by the Central Bank of Ecuador.

Gold

The Central Bank of Ecuador is authorized to import and export gold, and buy and sell gold in the domestic market.

Changes During 1990

Exchange Arrangement

March 5. The average rate in the intervention market of the Central Bank was devalued by 3.5 percent, and the weekly rate of depreciation against the U.S. dollar was increased from S/. 3.00 to S/. 3.50. The spread between buying and selling rates remained at 2 percent.

March 9. The Central Bank would purchase 100 percent of foreign exchange derived from loans obtained by private sector agencies from multilateral institutions, development banks, and foreign governments and whose maturity exceeds four years. The Central Bank would also sell foreign exchange for the servicing of these debts.

June 1. The Central Bank was authorized to issue checks or money orders for all foreign exchange sold to private sector importers, in favor of the banks or financial institutions involved.

July 16. The average rate in the intervention market of the Central Bank was devalued by 4 percent in addition to the usual weekly S/. 3.50 adjustment.

Imports and Import Payments

January 18. Imports of caustic soda were subject to prior authorization from the Ministry of Industry, Commerce, Integration, and Fisheries, and imports of sand, silica, and quartz were subject to prior authorization from the Ministry of Mining and Energy.

January 18. Importers were required to confirm the use of foreign exchange obtained for temporary imports of raw materials and inputs of production within 180 days. This requirement would also apply to importers who have effected imports under an import permit but have not presented bank guarantees or made prior deposits.

January 19. When an importer has notified the Central Bank of the arrival of an import shipment within 60 days of the expiry of the relevant import permit, the Central Bank was authorized to supply foreign exchange at the rate of exchange in force at the time of the foreign exchange transaction.

February 14. Public sector imports for which the terms of payment would involve a maturity of longer than one year were required to have prior authorization from the Central Bank.

March 9. Imports of goods on List 1(b) covering products originating in or proceeding from the Andean Group (such as fish oil, clothing materials, and reflecting bricks) were exempted from the requirement of prior authorization from the Ministry of Industry, Commerce, Integration, and Fisheries.

June 12. Stage I of a tariff reform was put into effect. It involved: (1) a new tariff nomenclature, consistent with the Cartagena Agreement and the GATT; (2) a revision in the range of tariffs, from 0–250 percent to 5–60 percent; (3) a reduction in the number of tariff levels to 12; and (4) the abolition of the 30 percent tariff surcharge on luxury items.

July 6. Requests for foreign exchange for import payments for which permits were granted after July 9, 1990 were required to be made 60 days in advance of the foreign exchange sale.

The prior import deposit scheme was abolished.

November 15. The Central Bank would issue letters of credit for the public sector up to 100 percent of the value of imports (c.i.f.) that are financed with loans from multilateral institutions or guaranteed by deposits at the Central Bank.

Exports and Export Proceeds

January 18. The Central Bank was authorized to purchase forward up to 90 days foreign exchange proceeds from exports, before actual export shipment takes place, except for proceeds from exports of processed and grain coffee, shrimp, fish, fishmeal, and other marine products for which the forward period was set at 150 days.

March 2. The Central Bank was authorized to purchase forward up to 90 days foreign exchange proceeds from exports, except for proceeds from fish and fishmeal, for which the maximum forward period was set at 150 days, and coffee and shrimp, for which the maximum forward period was set at 210 days.

June 1. The Central Bank was authorized to purchase forward up to 90 days foreign exchange proceeds from all exports, except for proceeds from fish, fishmeal, coffee, and shrimp, for which the maximum forward period was set at 210 days.

August 3. A law establishing an export-processing zone, “Maquila,” was enacted, under which certain exporting enterprises would be allowed to administer special labor contract and wage policies.

September 18. The period of surrender requirements for foreign exchange proceeds from exports was revised, as follows: (1) exports of coffee, cocoa beans, shrimp, and fish, to 45 days from 15 days; (2) exports of other perishable products, to 60 days from 30 days; and (3) exports of other goods, to 150 days from 90 days.

Egypt

(Position on December 31, 1990)

Exchange Arrangement

The currency of Egypt is the Egyptian Pound; the U.S. dollar is used as the intervention currency. The exchange rate system consists of the central bank pool rate (of the Central Bank of Egypt), the commercial bank rate, and the rate outside banks.1 From 1979 until August 14, 1989, the buying and selling rates of the central bank pool were LE 0.700 and LE 0.707, respectively, per US$1, after which the Government began a process of unifying the central bank pool rate with the commercial bank rate. The quoted central bank buying and selling rates were thus adjusted respectively to LE 1.10 = US$1 and LE 1.11 = US$1 (see below). On July 1, 1990, the central bank pool exchange rate was adjusted further to LE 2.0 = US$1, and at the same time the Ministry of Finance changed its accounting exchange rate for budgetary purposes to LE 2.0 = US$1 from LE 0.7 = US$1. On December 31, 1990, the central bank pool buying and selling rates for the U.S. dollar were LE 2.00 and LE 2.02, respectively, per US$1. The exchange rates for 16 other convertible currencies are based on the rates of these currencies against the U.S. dollar quoted in New York.2

A new commercial bank market was introduced on May 11, 1987, in which the 3 travel agencies and all 38 commercial banks authorized to carry out business in both foreign and domestic currencies were permitted to operate. The exchange rate in this market is set by a committee of eight members (four representatives of the public sector banks, two from the joint-venture banks, and two from the private sector banks). Two observers, one from the Central Bank of Egypt and one from the Ministry of Economy and Foreign Trade, attend the committee meetings. The committee meets at the end of each business day to fix the commercial bank rate, which is binding for all transactions effected in the market the following business day. Cross rates are established on the basis of the London exchange market rates. In setting the rates, the committee uses four indicators (supply, demand, working balances of the banks, and assessment of general market trends). The rate was initially set at LE 2.165 = US$1 on May 11, 1987. During 1990, the commercial bank rate fluctuated between LE 2.56 and LE 2.88 and, on December 31, 1990, it stood at LE 2.87 = US$1. The selling rate is set by the addition of ¼ of 1 percent to the buying rate set by the committee, with half of this difference (⅛ of 1 percent) accruing to an account of the Ministry of Finance with the Central Bank. The authorized banks may buy and sell foreign exchange among themselves at the exchange rate determined by the committee plus an additional 1/16 of 1 percent. The commercial bank market rate with a 12 percent discount applies to transfers by foreign aviation companies relating to operations transacted before March 15, 1988. Surpluses realized after that date are transferred at the prevailing commercial bank rate.

The Central Bank has determined maximum operating balances in foreign exchange for each authorized commercial bank. Any excess over this amount must be sold twice a week to a special account in the name of the Central Bank at the rate set on the day the operation takes place plus 1/16 of 1 percent. The Central Bank has also set a limit on banks’ net liabilities (equal to 6 percent of each bank’s foreign currency deposits) on which it will cover any exchange loss resulting from a depreciation of the rate. This percentage was raised to 10 percent in June 1990.

The following transactions take place in the commercial bank market. On the receipts side: (1) workers’ remittances; (2) tourism receipts; (3) bank purchases from all types of foreign exchange accounts and of foreign bank notes or other means of payment; (4) commissions and bank interest receipts; (5) retained private sector export receipts; (6) surrendered private sector receipts from all exports; (7) all public sector visible and invisible receipts except for cotton, petroleum, rice, and Suez Canal and Sumed Pipe Line dues; and (8) profits of Egyptian companies and banks. On the payments side: (1) public sector visible and invisible payments within the limits established by the foreign exchange budget; (2) some private sector invisible payments permitted under current regulations;3 (3) private sector imports, including those of Law No. 230 companies; and (4) settlements of letters of credit opened by the private sector before May 11, 1987, provided that documents are negotiated after this date.

A number of special exchange rates are also in effect. At the end of December 1990, a rate of LE 0.70 = £1 applied to visible and invisible trade transactions within the framework of the bilateral payments agreement with the Democratic People’s Republic of Korea, and a rate of LE 3.0 = £1 applied to those visible trade transactions effected under the bilateral payments agreement with the U.S.S.R. A rate of LE 1.30 = US$1 applied to transactions effected under the bilateral payments agreement with Sudan. In addition, a rate of LE 0.3913 = US$1 is used for the liquidation of accounts related to past bilateral payments agreements.

Private sector payments not authorized through the commercial bank market may be effected through free accounts held with domestic banks (“own exchange”) at a rate agreed between the parties. These payments include some invisibles.

Forward transactions are authorized for purchases and sales of foreign currencies through the central bank pool. Three percentage points are applied to the spot buying and selling rates to determine the corresponding forward rates. Forward transactions, subject to the approval of the Central Bank, may be conducted with respect to merchandise export and import transactions.

Administration of Control

A foreign exchange budget for public sector foreign exchange transactions is established annually. Banks are authorized to execute foreign exchange transactions, within the framework of a general authorization, without obtaining specific exchange control approval. The Ministry of Economy and Foreign Trade supervises imports and exports by the public sector. Certain imports and exports are reserved for public sector entities. Port Said City is accorded the status of a free zone. Arrears are maintained with respect to external payments.

Prescription of Currency

Payments to and from countries with which Egypt does not have bilateral payments agreements may be made in any convertible currency, in Egyptian pounds, or in a convertible currency to the debit or credit of the appropriate Free Account (see section on Nonresident Accounts, below), or in any other manner prescribed or permitted by the foreign exchange regulations. However, the proceeds from raw cotton exports to all countries during the September 1989–August 1990 season must be received in U.S. dollars, with the exception of the Federal Republic of Germany, Japan, and Switzerland, from which such proceeds can be received in their respective currencies or in U.S. dollars.

Settlements with countries with which Egypt has bilateral payments agreements are made according to the terms of these agreements.4 However, payments to such countries for imports and various other purposes not covered by these agreements may be made in convertible currency. Certain settlements with countries with which indemnity agreements concerning compensation for nationalized property are in force are made through special accounts in Egyptian pounds with the Central Bank of Egypt. Suez Canal dues are expressed in SDRs and may be paid by debiting Canal Dues Accounts, Advance Payment Canal Dues Accounts, or Free Accounts in Foreign Currency. Canal Dues Accounts must be opened in foreign currency, and balances are transferable abroad.

Nonresident Accounts

In addition to the special accounts related to Egypt’s bilateral payments agreements and the indemnity agreements concluded with certain countries and Canal Dues Accounts, there are three types of accounts: Free Accounts, D Accounts, and Nonconvertible Capital Accounts.

Free Accounts may be opened in the name of any entity other than the Egyptian Government, public authorities, and public sector entities. They may be opened in either foreign currency or Egyptian pounds; the latter are freely convertible. Free Accounts in Foreign Currency may be credited with transfers of convertible currencies from abroad, transfers from other similar accounts, foreign bank notes registered in a customs declaration form, the equivalent in foreign currencies from funds transferred from a Free Account in Egyptian Pounds, and interest earned on these accounts. These accounts may be debited for transfers abroad, transfers to other similar accounts, withdrawals in foreign bank notes to the owner or others, transfers to Free Accounts in Egyptian Pounds, and for any payment in Egypt, including those for exports and for bank charges and commissions.

Free Accounts in Egyptian Pounds may be credited with (1) the equivalent in Egyptian pounds for transfers from abroad in convertible currencies or from a Free Account in Foreign Currency; (2) transfers from similar accounts; (3) proceeds of sales to an authorized bank of foreign currencies registered in a customs declaration form; (4) proceeds of sales of bank instruments; and (5) interest on these accounts. These accounts may be debited for the equivalent in Egyptian pounds for transfers abroad in convertible currencies, transfers to other Free Accounts in Foreign Currency or transfers to similar accounts, funds withdrawn in foreign bank notes on behalf of the owner of the account or others, and funds used to meet local expenditures for the settlement of export goods.

D Accounts may be opened in the name of any resident of a country with which Egypt has a bilateral payments agreement. The accounts must be designated by the name of the partner country concerned. These accounts may be credited with receipts under the respective payments agreement and with the equivalent of transfers authorized from the country of the account holder. They may be debited for transfers to the country of the account holder and for local payments (including those for Egyptian exports) authorized by the implementing regulations and within the scope of the relevant payments agreement.

Nonconvertible Capital Accounts may be credited with any payment of a capital nature to a foreigner living outside Egypt that is not remittable under the exchange control regulations. Banks may debit these accounts for charges legally due from the account holder. Accounts held by individuals may be debited up to a limit of LE 10,000 a year for use by the account holder. Accounts held by juridical persons may be debited for settlement of outstanding obligations to the Egyptian authorities; they may also be used for payments to residents for services rendered, up to a limit of LE 20,000 a year for expenses incurred in connection with the activities or residence of the holder’s employees in Egypt.

Resident Accounts

In addition to Free Accounts, which may be opened by both nonresidents and residents, residents may hold Foreign Exchange Retention Accounts, Import Accounts in Foreign Exchange, and Capital and Working Accounts.

Foreign Exchange Retention Accounts may be opened in the name of authorized recipients and credited with the proceeds from certain exports of goods and invisible receipts. Public sector companies may use these funds for their purposes within the allocations of the foreign exchange budget, transfer them to other public sector companies within the same industrial group, or sell them to the authorized banks at the commercial bank rate. Private sector exporters may debit these accounts for visible and invisible payments related to their economic activity or sell the exchange in the commercial bank market, but may not transfer these funds to free accounts. Holders of Export Retention Accounts in the private sector are entitled—without the need to submit any documentation—to use up to 25 percent of the proceeds of their exports for financing travel expenses for the exporter or his employees, for other invisible payments related to the account holder’s activity, and for settling repatriation requirements. Unused balances in retention accounts owned by the public sector, unless exempted, must be sold periodically to the banking system at the commercial bank rate. If the balances in the retention accounts owned by the public sector entities originate from invisible proceeds, unused balances must be surrendered monthly. In addition, balances in these accounts must be fully used by the account holder before authorized transactions can be effected by the public or private sector through the commercial bank market.

Import Accounts in Foreign Exchange may be opened by authorized banks in the name of Egyptian nationals. They may be credited with transfers in convertible currencies, transfers from Free Accounts in Foreign Exchange or in Egyptian Pounds, transfers from another Import Account in Foreign Exchange, the equivalent in free currency of any amount of foreign exchange deposited by clients (regardless of the means of payment and the origin), and bank interest. They may be debited for the financing of private sector imports by the account holder, for transfers abroad to cover invisible transactions related to the activity of the account holder, for settlements of obligations related to import transactions effected on behalf of the private sector, and to cover in the form of foreign bank notes and other acceptable means of payment the expenditures of the account holder or others abroad within the limit of US$500 (or its equivalent) a calendar year, provided that the amount drawn is registered on the user’s passport and travel ticket. The account holder may withdraw cash without any limit.

Capital and Working Accounts may be opened by companies covered by Law No. 230 (of July 1989). These accounts may be credited with transfers from abroad, advance payments and long-term rents in foreign exchange, loans, funds purchased from the free bank market, and funds purchased from the free accounts to meet the project requirement; they may be debited for payments by the account holder (e.g., imports, profit remittances, interest, other invisibles, and financing of local expenditures). Holders of these accounts are not permitted to use the commercial bank market resources before the balances in their accounts are fully used.

Imports and Import Payments

All imports from South Africa are prohibited. The Supreme Council for the Planning of Foreign Trade formulates a long-term policy for exports and imports, controls the annual export and import plan, and supervises the execution of the foreign exchange budget. Imports under payments agreements and imports of specified goods from any source are reserved for the public sector. Private sector trade with payments agreement countries is permitted in convertible currencies in items not covered by Trade Protocol agreements.

Imports by the Government, public authorities, and public sector companies are effected within the provisions of the foreign exchange budget through the central bank pool and the commercial bank market. For purposes of the foreign exchange budget, the economy is divided into several sectors (agriculture, industry, and transportation). The annual foreign exchange budget provides for a specific quota for each sector, and the authorities in charge of each sector decide on the goods to be imported and the entities that are to import them within that quota. All imports financed by the Central Bank are effected at the central bank rate, with the exception of capital goods imports financed by suppliers’ credits, which are effected at the commercial bank rate, and imports under bilateral payments agreements, which are effected at a special, more appreciated rate (except for imports from the U.S.S.R. (see section on Exchange Arrangement, above)).

Imports by the private sector are effected through the commercial bank market or from importers’ own exchange resources. All commodities not included on the prohibited list of 210 items can be freely imported. Certain goods (e.g., imports financed with bilateral and multilateral assistance, components imported by licensed local manufacturers and assembly units, and free zone imports) are exempted from the negative list, and the items on the negative list may be imported with the approval of the Ministry of Economy. On application to open a letter of credit, private sector importers (including companies covered by Law No. 230) must lodge with an authorized bank a 35 percent prior import deposit in domestic or foreign currency. These deposits have to be financed from the importers’ own resources. Banks are allowed to finance all or part of the remaining 65 percent. When suppliers’ credit facilities are available, the importer may not be required to cover the remaining 65 percent of the letter of credit, depending on the conditions of the suppliers’ credit agreement. Goods may not be shipped before a letter of credit is opened, except for imports of spare parts needed for machinery and equipment for production activities provided that the importer pledges to present certification that, within two months, the parts were used or installed in accordance with the relevant regulations.

For purposes of customs tariffs, products are classified under 12 groups. The rates range from 0.7 percent to 120 percent. The weighted average rate was 25–30 percent in 1990.

Payments for Invisibles

Banks are authorized to provide foreign exchange through the commercial bank market for all invisible payments by the public sector, within the framework of the foreign exchange budget and in accordance with current rules and regulations, provided that the public sector entities concerned have used up the balances of their retention accounts. Payments for invisibles related to authorized imports are not restricted. Invisible payments (e.g., authorized pilgrimage and medical treatment abroad, education, specified payments for emigrants, etc.5) by the private sector may be financed through the commercial bank market. Egyptian nationals may use foreign exchange in their free accounts for invisible payments abroad. They may also purchase additional foreign exchange from other free accounts (see section on Nonresident Accounts, above). Profit remittances by companies covered by Law No. 230 are authorized through the commercial bank market, provided that funds in capital and working accounts have been used up first.

Only Egyptian nationals, foreigners who have lived in the country for a continuous period of five years, and foreigners permitted to reside in Egypt for a period of ten years can purchase airline tickets (one-way or round-trip originating in Egypt) under certain conditions in Egyptian pounds. With this exception, all others must purchase tickets with convertible currencies or with Egyptian pounds converted at the commercial bank exchange rate.

Travelers may not take out more than LE 20 in Egyptian bank notes. Egyptian travelers may take with them any foreign exchange that they have acquired legitimately; foreign travelers leaving Egypt may reconvert their remaining Egyptian pounds after deducting US$30 for each night spent in Egypt, provided that they produce evidence that they obtained Egyptian pounds at the commercial bank rate.

Foreign workers and experts are authorized to transfer up to 50 percent of their earnings through commercial banks.

Exports and Export Proceeds

Apart from exports to South Africa, which are prohibited, and commodities required for the national economy that may be restricted, exports may be made without license. Exports of many products are organized and supervised by foreign trade committees. Cotton, rice, and petroleum are exported by the public sector only, and their proceeds must be repatriated within three months.

Proceeds from exports of books, newspapers, and other publications must be repatriated as soon as they are received and in any case within a period of not more than five years from the date of shipment. Proceeds from all other exports must be repatriated within one year of the date of shipment. Proceeds from exports of petroleum, cotton, and rice have to be sold to the Central Bank. Proceeds from exports of other products may be fully retained in Foreign Exchange Retention Accounts, except that only 50 percent of the proceeds from exports of peanuts, onions, garlic, potatoes, citrus, live goats and sheep, fish, and molasses may be retained, and the remainder must be sold to the commercial banks at the bank rate. Proceeds from exports by both private and public sectors to bilateral payments agreement countries are obtained in Egyptian pounds, in accordance with the provisions of the relevant agreement.

All departing foreigners who are carrying on their person gifts valued at more than LE 250 are required to show evidence that they exchanged foreign exchange equivalent to the excess value at an authorized bank at the commercial bank rate. The corresponding limit on excess value applied to Egyptian nationals is LE 100, and that for purchases left behind with Khan El Khalil merchants is LE 500 (provided that they are exported within three months of the date of the traveler’s departure and that proof is provided that he visited Egypt).

Proceeds from Invisibles

Foreign exchange earned abroad by persons and juridical entities other than the Egyptian Government, public authorities, and public sector entities may be held abroad or retained indefinitely in Free Accounts.

Receipts from tourism must be surrendered to the banking system at the commercial bank rate. However, hotels are allowed to retain 25 percent of their foreign exchange earnings in their working accounts. Hotels operating under Law No. 230 are allowed to retain all of their foreign exchange earnings in their working accounts. With the approval of the Ministry of Economy and Foreign Trade, hotels other than those operating under Law No. 230 may also retain an additional 15 percent of their foreign exchange earnings to meet their debt-service obligations. Travel agencies belonging to the private sector are allowed to retain 10 percent of their foreign exchange earnings, and 100 percent if they operate under Law No. 230; Misr Travel is allowed to retain 25 percent.

Other invisible earnings by public sector entities may be retained to the extent of 10 percent of the total; authorization to retain more or exemption from periodic surrender requirements must be approved by the Ministry of Economy and Foreign Trade. Certain travel in Egypt by foreigners may be financed from various special accounts, such as those under indemnity agreements with certain countries.

Persons arriving in Egypt from abroad may import up to LE 20 in Egyptian bank notes and are permitted to bring in, and to use locally, unlimited amounts in foreign exchange; a customs declaration is required if the traveler wishes to re-export foreign currency.

Capital

There are no restrictions on the use or transfer of balances on free accounts maintained in banks operating in Egypt. With this exception, outward capital transfers are restricted. Egyptian emigrants are authorized to transfer abroad funds up to LE 900 a person or LE 3,500 a family, and to export other personal effects and furniture up to LE 1,200 a person or LE 3,000 a family, and LE 6,000 for a woman of Egyptian nationality married to a foreigner.

Transactions in Egyptian and foreign securities abroad relating to the purchase and sale of these securities must be carried out through authorized banks, provided that the funds used for this purpose represent free foreign exchange. Brokers registered on the stock exchanges of Cairo and Alexandria are authorized to intermediate in the transfer of ownership of securities, whether at home or abroad, and to undertake the local collection or payment in foreign currency of the value of the securities. All banks are required to deposit 15 percent of their foreign currency deposits with the Central Bank.

Transfers of accrued alimony are permitted in accordance with court orders. Foreigners leaving Egypt permanently after a period of residence of at least five years are permitted to transfer abroad the equivalent of LE 5,000 in foreign currencies through authorized banks, irrespective of whether this sum represents capital assets owned by, or income accrued to, the foreign national. Amounts exceeding this sum are deposited in a Nonconvertible Capital Account.

Law No. 230 of July 1989, concerning the investment of Arab and Foreign Funds and the Free Zones, defines the treatment of new foreign investments. Requests for transfers of profits not covered by this law are considered on an individual basis.

Gold

Banks are not authorized to deal or speculate (for their own or their customers’ account) in precious metals. The importation of precious metals and stones for industrial and local market requirements is regulated. The exportation of gold and silver fabrics may be permitted, provided that the sales proceeds are repatriated in convertible currencies. Travelers are permitted to take out and bring in their gold jewelry within specified limits.

Changes During 1990

Exchange Arrangement

July 1. The central bank pool rate was adjusted from LE 1.1 = US$1 to LE 2.0 = US$1, and the Ministry of Finance changed its accounting exchange rate for budgetary purposes from LE 0.7 = US$1 to LE 2.0 = US$1.

Foreign exchange earned from rice exports, the Suez Canal Authority, and the Egyptian General Petroleum Company was effected at the central bank pool rate, and transactions on Subaccount One in respect of profits from foreign exchange operations that are maintained by the Ministry of Finance at the Central Bank were suspended.

Foreign exchange from cotton exports was effected at the rate of LE 1.1 = US$1 instead of LE 0.7 = US$1, and Subaccount Two would be credited with the difference between the exchange rate prevailing on the date of transaction and the exchange rate of LE 1.1 = US$1. Subaccount Three was suspended. External debt-service obligations and defense outlays would henceforth be debited to the Ministry’s account at the central bank pool rate prevailing on the date of their maturity.

El Salvador

(Position on December 31, 1990)

Exchange Arrangement

The currency of El Salvador is the Salvadoran Colón. El Salvador maintains a unified floating exchange rate system under which commercial banks and exchange houses are free to purchase and sell foreign exchange for authorized transactions at rates determined by supply and demand conditions in the market. The Central Reserve Bank establishes weekly the exchange rate applicable to transactions between the Central Reserve Bank and the public sector, to foreign exchange surrendered by coffee exporters to the Central Reserve Bank, and to the calculation of tax obligations. This exchange rate is the simple average of the exchange rates set by commercial banks and exchange houses during the previous week. In addition, the Central Reserve Bank may purchase or sell foreign exchange to commercial banks at the rate prevailing in the market at the time of the transaction. On December 31, 1990, the Central Reserve Bank’s buying and selling exchange rates were Ȼ 8.08 and Ȼ 8.13, respectively, per US$1. On December 31, 1990, the average rate of commercial banks was Ȼ 8.06 = US$1, and the average rate of exchange houses was Ȼ 8.05 = US$1. A tax of 0.1 percent is applicable to all sales of exchange; on amounts of less than Ȼ 100,000, the tax is levied at fixed amounts that may slightly exceed 0.1 percent. There are no arrangements for forward cover against exchange rate risk operating in the official or the commercial banking sector.

On November 6, 1946, El Salvador notified the Fund that it was prepared to formally accept the obligations of Article VIII, Sections 2, 3, and 4 of the Fund Agreement.

Administration of Control

Subject to the general directives issued by the Monetary Board, exchange control authority is exercised by the Central Reserve Bank. Authorization for all private sector imports and invisible payments is delegated to the commercial banks and exchange houses. Capital account transactions have to be authorized by the Central Reserve Bank.

Exports of a number of products require licenses issued by the Ministry of Economic Affairs, subject to agreement by the Ministry of Agriculture. The Salvadoran Coffee Council issues permits freely to private sector traders to conduct external or domestic trade in coffee.

Prescription of Currency

There are no prescription of currency requirements. Settlements are usually made in U.S. dollars or other convertible currencies. On August 20, 1986, a new payments mechanism called the Derecho de Importación Centroamericana (DICA) was approved in principle to settle trade transactions with other countries of Central America. To date, operations under this payment mechanism have been negligible, and they have de facto been suspended.

Nonresident Accounts

Accredited diplomatic missions and other foreign institutions and nonresidents in El Salvador may hold Nonresident Accounts in foreign currency with authorized banks, provided that such accounts are credited with foreign exchange received from abroad. Banks may also freely open Foreign Currency Accounts, for any period of time and in any amount, in the names of individuals (whether of foreign or Salvadoran nationality) who reside abroad and, for a maximum period of six months, in the names of foreign persons residing in El Salvador for less than six months. All Nonresident Accounts may be utilized freely, but the commercial banks must make periodic reports to the Central Reserve Bank of the movements of such accounts.

Foreign Currency Deposit Accounts

Banks may open Foreign Currency Deposit Accounts in the name of duty-free shops and enterprises exporting nontraditional goods and services or requiring imported inputs and services for production. The accounts may be opened in U.S. dollars or in any other approved foreign currency; transactions can be effected only in the currency in which an account is opened. Accounts may be in the form of a demand or time deposit and are subject to a reserve requirement of 50 percent. The banks must place the funds thus deposited in investments abroad. Interest rates on these deposits must be set at 2 percent below LIBOR. Funds from foreign currency deposit accounts can only be utilized for transactions of the holder.

Imports and Import Payments

Import licenses are issued by the Ministry of Economy and are required for only a few items, including airplanes, firearms, ammunition, military equipment, dynamite, cotton for industrial use, jute sacks, skins, leather, some chemical and pharmaceutical products, coffee for seeding, sugar, and saccharin.

Imports from the member countries of the Central American Common Market (CACM) can be financed by sight drafts or letters of credit with unrestricted maturity, direct payments, or through the regional clearing arrangement. Imports from countries outside the CACM that apply discriminatory restrictions against exports from El Salvador must be paid for before customs clearance, with the exception of industrial raw materials, which may be paid for within three years.

Authorization for private sector import payments is delegated to the commercial banks. Payments for imports by the public sector are made by the External Department of the Central Reserve Bank. The External Department handles all official bilateral lines of credit, and lines of credit for Industrial Reactivation funded by the Inter American Development Bank.

Import tariffs generally range from 5 to 35 percent.

Payments for Invisibles

Restrictions on payments for invisibles of a personal nature (i.e., medical treatment, study abroad, and foreign travel) were eliminated in December 1990, and the authority to grant foreign exchange for expenses relating to foreign travel and study abroad is delegated to the commercial banks and exchange houses. Travelers may not take out more than Ȼ 200 in domestic bank notes and coins.

Exports and Export Proceeds

Export licenses are not required except for certain foodstuffs and other items for which the authorities wish to ensure an adequate local supply. An export registration certificate from the Central Reserve Bank is required for all exports exceeding US$200.

Export proceeds from coffee are required to be surrendered to the Central Reserve Bank. In addition, all other export proceeds received through the commercial banks must be reported to the Central Reserve Bank.

The term for export receipts on a collection basis normally must not exceed 30 days after the issuance of export registration certificate.

Exporters of specified nontraditional products to markets outside Central America receive a “drawback” to the equivalent of 20 percent of the f.o.b. value of export products. These certificates may be used for payment of direct and indirect taxes.

Exports of coffee are subject to an export tax of 30 percent, which is applied to prices exceeding US$45 a pound.

Proceeds from Invisibles

All exchange receipts from invisibles may be sold to the Central Reserve Bank, an authorized commercial bank or an exchange house. Travelers may bring in Ȼ 200 in domestic bank notes and coins; this limit is, however, subject to modification to facilitate border trade with other Central American countries.

Capital

All exchange receipts resulting from capital transactions must be surrendered to the monetary authorities, including direct and indirect foreign investment. The entry of capital with a maturity in excess of one year in the form of foreign investment must be registered with the Ministry of Economic Affairs. Registration ensures (1) free remittance of net profits on foreign capital invested in industrial enterprises, enterprises engaged in the extraction of nonrenewable natural resources, and tourist enterprises; (2) remittance of net profits of enterprises engaged in other activities up to a limit of 10 percent a year of the registered capital (larger amounts may be authorized in special cases by the Ministry of Economic Affairs); (3) repatriation of the proceeds from the total or partial liquidation of the enterprises (after payment of taxes) in proportion to the participation of foreign capital in the total capital; (4) remittance of the sales proceeds of shares and other instruments representing investments or participations, including capital gains; and (5) payment of interest and amortization as determined at the time of registration. In the case of (3) and (4), in addition to the approval of the Central Reserve Bank, the prior approval of the Ministry of Economic Affairs is required.

Payments abroad representing capital transfers require exchange licenses; such licenses are not granted for resident-owned capital. Prior approval by the Central Reserve Bank is required for outward remittances of interest and amortization on external loans. Foreign loans with a maturity of up to one year must be authorized by the Central Reserve Bank; foreign loans with a maturity of more than one year must be authorized by the Ministry of Economic Affairs. The Central Reserve Bank is authorized to set ceilings on the utilization of foreign credit by the commercial banks and the mortgage bank.

Decree No. 279 of March 27, 1969 sets certain minimum capital requirements for businesses that are owned by foreign nationals and for those in which foreign nationals have a shareholding interest. For purposes of this decree, foreign nationals are defined as persons who are not citizens of one of the five CACM member countries.

Gold

Gold coins in denominations of Ȼ 25, Ȼ 50, Ȼ 100, and Ȼ 200 have been issued as legal tender but do not circulate. Residents may hold and acquire gold coins in El Salvador for numismatic purposes. With this exception, residents other than the monetary authorities are not allowed to hold or acquire gold in any form other than jewelry, at home or abroad. Imports and exports of gold in any form other than jewelry require licenses issued by the Central Reserve Bank; such licenses are granted for imports and exports by or on behalf of the monetary authorities and industrial users. In practice, imports of nonmonetary unworked gold are made only by jewelers’ cooperatives acting on behalf of their members and other users for dental purposes.

Changes During 1990

December 13. El Salvador became a member of the GATT.

Exchange Arrangement

March 19. A temporary system of multiple exchange rates was established. It consisted of an official exchange rate of Ȼ 6.9 = US$1, a bank rate that was determined jointly between the Central Reserve Bank and the commercial banks, and a combination of these two rates for payments for certain imports and receipts from coffee exports. The exchange system was simplified on May 24 through a series of measures, including the establishment of exchange houses (effectively legalizing the parallel market), greater flexibility in the commercial bank market, and ultimately, in June, the establishment of the official rate in reference to the transaction rates of the commercial banks and exchange houses. (See June 1 change, below.)

April 10. The regulations on the establishment of exchange houses were announced. Exchange houses would be permitted to buy and sell foreign exchange in the form of banknotes, traveler’s checks and other instruments at rates freely determined by supply and demand conditions.

June 1. The process of unification of the exchange system, which began in May, was completed. The Central Reserve Bank’s official exchange rate would henceforth be determined on a weekly basis as a simple average of the exchange rate prevailing in the exchange markets of commercial banks and exchange houses during the previous week. This exchange rate would be applied to transactions between the Central Reserve Bank and the public sector, to foreign exchange surrendered by coffee exporters to the Central Reserve Bank, and to the calculation of tax obligations. For tax purposes, the actual transaction rates of commercial banks and exchange houses may also be used, provided that they do not differ by more than 3 percent from the exchange rate of the Central Reserve Bank. In addition, the Central Reserve Bank reserved the right to transact (buy or sell) foreign exchange with commercial banks and exchange houses at the prevailing exchange rate.

December 3. The Central American Payment System, based on a cooperation agreement between the Central American Community and the European Community, entered into effect. The system may be used to effect payments for trade in goods and services between the members of the Central American Community, and it is intended to complement pre-existing mechanisms of trade finance. The system is integrated with the Central American Multilateral Clearing Mechanism, and the participating central banks are subject to quotas regarding outstanding debit positions under the arrangement.

Imports and Import Payments

April 1. The maximum tariff rate for all products, except for certain luxury goods, was lowered to 35 percent from 50 percent.

July 1. Authorization for imports in excess of US$300 was transferred to commercial banks.

August 7. The 20 percent guarantee deposit required for advanced payments for imports of goods and services was eliminated.

December 3. A trade agreement was signed with Honduras, which provided that, on a nonreciprocal basis, a range of Honduran goods may be imported into El Salvador duty free.

Payments for Invisibles

July 1. Authorization for payments of invisibles was transferred to commercial banks and exchange houses.

December 5. Restrictions on the sale of foreign exchange for purposes of overseas travel, educational expenses, and official missions were eliminated.

December 29. The maximum tariff rate on luxury goods was lowered to 35 percent.

Exports and Export Proceeds

November 28. The guarantee deposit requirement for temporary exports (such as sending machinery abroad for repair) was eliminated. The guarantee deposit requirement for anticipated export receipts was also eliminated in respect of re-exports.

April 27. The Law for the Reactivation of Exports, abolishing the “certificate for discounting taxes” and introducing a “drawback” of 8 percent of the f.o.b. value of nontraditional exports to markets outside Central America, came into effect.

Equatorial Guinea

(Position on December 31, 1990)

Exchange Arrangement

The currency of Equatorial Guinea is the CFA Franc,1 which is pegged to the French franc, the intervention currency, at the fixed rate of CFAF 1 = F 0.02. Exchange transactions in French francs between the BEAC and commercial banks take place at the rate of CFAF 50 = F 1, free of commission. Buying and selling rates for certain other foreign currencies are also officially posted, with quotations based on the fixed rate for the French franc and the rate for the currency concerned in the Paris exchange market. A commission of 0.50 percent is levied on transfers to countries that are not members of the BEAC, except transfers in respect of central and local government operations, payments for imports covered by a duly issued license domiciled with a bank, scheduled repayments on loans properly obtained abroad, travel allowances paid by the Government and its agencies for official missions, and payments of reinsurance premiums. There are no taxes or subsidies on purchases or sales of foreign exchange.

With the exception of those relating to gold, Equatorial Guinea’s exchange control measures generally do not apply to (1) France (and its Overseas Departments and Territories) and Monaco; and (2) all other countries whose bank of issue is linked with the French Treasury by an Operations Account (Benin, Burkina Faso, Cameroon, Central African Republic, Chad, Comoros, Congo, Côte d’Ivoire, Gabon, Mali, Niger, Senegal, and Togo). Hence, all payments to these countries may be made freely, but all financial transfers of more than CFAF 500,000 to countries of the Operations Account Area must be declared to the authorities for statistical purposes. All other countries are considered foreign countries. There are no arrangements for forward cover against exchange risk operating in the official or the commercial banking sector.

Administration of Control

Exchange control is administered by the Directorate General of Exchange Control (ONCC) in the Ministry of Finance. Exchange transactions relating to all countries must be effected through authorized intermediaries—that is, authorized banks. Import and export licenses are issued by the Ministry of Commerce and Industry. Arrears are maintained with respect to external payments.

Prescription of Currency

Because Equatorial Guinea is an Operations Account country, settlements with France (as defined above), Monaco, and the Operations Account countries are made in CFA francs, French francs, or the currency of any other institute of issue that maintains an Operations Account with the French Treasury. Settlements with all other countries are usually made through correspondent banks in France in any of the currencies of those countries or in French francs through Foreign Accounts in Francs.

Nonresident Accounts

The regulations pertaining to nonresident accounts are based on those applied in France. The principal nonresident accounts are Foreign Accounts in Francs. BEAC bank notes received by the foreign correspondents of authorized banks and mailed to the BEAC agency in Equatorial Guinea by the Bank of France or the Banque Centrale des Etats de l’Afrique de l’Ouest (BCEAO) may be credited freely to Foreign Accounts in Francs.

Imports and Import Payments

Imports from South Africa are prohibited. All other imports valued at more than CFAF 50,000 are subject to license, but licenses are issued freely.

All import transactions whose value exceeds CFAF 50,000 must be domiciled with an authorized bank. Import transactions by residents involving goods for use outside Equatorial Guinea must be domiciled with a bank in the country of final destination. Settlements for imports effected under an import license benefit from the authorization of uninterrupted transfer given to the authorized banks by the Ministry of Finance.

Payments for Invisibles

Payments in excess of CFAF 500,000 for invisibles to France (as defined above), Monaco, and the Operations Account countries require prior declaration but are permitted freely; those to other countries are subject to the approval of the Ministry of Finance. Payments for invisibles related to trade are permitted freely when the basic trade transaction has been approved or does not require authorization. Transfers of income accruing to nonresidents in the form of profits, dividends, and royalties are also permitted freely when the basic transaction has been approved. For tourist travel, residents traveling to countries other than France (as defined above), Monaco, and the Operations Account countries may obtain an exchange allocation of an amount equivalent to CFAF 200,000 a person a year; any foreign exchange remaining after their return to Equatorial Guinea must be surrendered. For business travel, the corresponding allocation is the equivalent of CFA 15,000 a day, subject to a maximum of CFAF 450,000 a trip. Of that amount, CFAF 150,000 may be bills. Travelers must present certificates of their activity and permission from their enterprise to travel. Additional allocations may be allowed.

The transfer of rent from real property owned in Equatorial Guinea by foreign nationals is permitted up to a limit equivalent to 50 percent of the income declared for taxation purposes, net of tax. Remittances for current repair and management of real property abroad are to be limited to the equivalent of CFAF 200,000 every two or three years. The transfer of the salary of a foreigner working in Equatorial Guinea will be permitted upon presentation of the appropriate pay voucher as well as justification of expenses, provided that the transfer takes place within a month of the pay period concerned. Except in the case of foreigners working in Equatorial Guinea temporarily, payments of insurance premiums to foreign countries up to CFAF 50,000 are permitted; larger amounts may be authorized by the ONCC. Resident and nonresident travelers to countries outside the Operations Account Area may take out up to CFAF 20,000 in BEAC bank notes. Travelers to other countries of the Operations Account Area may, subject to prior declaration, take out any amount in BEAC bank notes.

Nonresident travelers may take out bank notes and coins up to the amount they declared on entry, or up to CFAF 50,000 if no declaration was made.

Exports and Export Proceeds

All exports to South Africa are prohibited. Export transactions valued at CFAF 50,000 or more must be domiciled with an authorized bank. Exports to all countries are subject to domiciliation requirements for the appropriate documents. Proceeds from exports to all countries must be repatriated within 30 days of the payment date stipulated in the sales contract. Payments for exports must be made within 30 days of the arrival date of the merchandise at its destination.

Proceeds from Invisibles

Proceeds from transactions in invisibles with France (as defined above), Monaco, and the Operations Account countries may be retained. All amounts due from residents of other countries in respect of services, and all income earned in those countries from foreign assets, must be collected within a month of the due date and surrendered within a month of collection if received in foreign currency. Resident and nonresident travelers may bring in any amount of bank notes and coins issued by the BEAC, the Bank of France, or a bank of issue maintaining an Operations Account with the French Treasury, as well as any amount of foreign bank notes and coins (except gold coins) of countries outside the Operations Account Area.

Capital

Capital movements between Equatorial Guinea and France (as defined above), Monaco, and the Operations Account countries are free of exchange control. Capital transfers to all other countries require exchange control approval and are restricted, but capital receipts from such countries are freely permitted.2

Gold

Residents are free to hold, acquire, and dispose of gold jewelry in Equatorial Guinea. They must have the approval of the Directorate of Mines to hold gold in any other form. Such approval is not normally given, as there are no industrial users in Equatorial Guinea. Newly mined gold must be declared to the Directorate of Mines, which authorizes either its exportation or its sale in the domestic market. Exports are allowed only to France. Imports and exports of gold require prior authorization from the Directorate of Mines and the Minister of Finance, which is seldom granted for imports. Exempt from this requirement are (1) imports and exports by or on behalf of the monetary authorities, and (2) imports and exports of manufactured articles containing a minor quantity of gold (such as gold-filled or gold-plated articles). Both licensed and exempt imports of gold are subject to customs declaration.

Changes During 1990

No significant changes occurred in the exchange and trade system.

Ethiopia

(Position on December 31, 1990)

Exchange Arrangement

The currency of Ethiopia is the Ethiopian Birr, which is pegged to the U.S. dollar, the intervention currency, at the official rate of Br 2.07 = US$1. Buying and selling rates for certain other currencies are also officially posted; daily quotations by the National Bank of Ethiopia (the central bank) are set on the basis of the official rate for the U.S. dollar and the previous day’s closing rate of the currency concerned against the U.S. dollar in London. The National Bank does not deal with the public; its transactions in U.S. dollars with the authorized dealers take place at the official rate. Authorized dealers must observe the official rate for the U.S. dollar and prescribed commission charges, which accrue to the National Bank, of 0.50 percent buying and 1.50 percent selling; in addition, they are authorized, but not obliged, to levy service charges for their own account of up to 0.25 percent buying and 0.75 percent selling and, for currencies other than the U.S. dollar, to include the margin charges applied by the correspondents abroad. In practice, the authorized charges are usually levied. These commissions are applied also to the National Bank’s dealings with the Government and certain public sector entities. There are no taxes or subsidies on purchases or sales of foreign exchange. Authorized dealers require the approval of the National Bank to undertake forward exchange transactions. There are no arrangements for forward cover against exchange rate risk operating in the official or the commercial banking sector.

Administration of Control

All transactions in foreign exchange must be carried out through authorized dealers under the control of the National Bank. All payments abroad require licenses issued by the Exchange Controller, whose office is a department of the National Bank. All exports are licensed by the Exchange Controller to ensure the surrender of the foreign exchange proceeds, and shipments require permits issued by that office. The Minister of Foreign Trade has statutory authority to prohibit, restrict, or regulate imports and exports. Arrears are maintained with respect to external payments.

Prescription of Currency

Outgoing payments are normally made in convertible foreign exchange appropriate to the country of the recipient or in U.S. dollars. The net proceeds of exports must be received in a freely convertible foreign currency, or in any other acceptable foreign currency.

Nonresident Accounts

Nonresidents may, subject to exchange control approval, open nonresident accounts either in birr or in foreign currencies at authorized banks. Deposits to these accounts can be made only in foreign exchange. Balances on nonresident foreign currency accounts may be freely transferred abroad. Transfers between nonresident accounts do not require prior approval. Members of the diplomatic community must use transferable or nontransferable birr accounts for payments of local expenses. No resident Ethiopian national may maintain a bank account abroad. A joint venture may be permitted to open foreign currency, transferable or nontransferable, birr accounts to purchase raw materials, equipment, and spare parts not available in the local market. As soon as the goods are received, documentary evidence of entry of the goods purchased with such funds must be submitted to the Exchange Control Department. In general, the accounts may be replenished only after such documents have been presented.

Blocked accounts of nonresidents are maintained with authorized banks and are used to retain funds in excess of Br 20,000 arising from disinvestments in Ethiopia (see section on Capital, below).

Imports and Import Payments

All imports from South Africa are prohibited, and all imports from other sources require a license. Payments abroad for imports require exchange licenses, which are obtainable upon presentation of a valid importer’s license. Approval of applications for exchange licenses is conditional upon the provision of satisfactory information on costs and payment terms and upon the submission of evidence that adequate insurance has been arranged with the Ethiopian Insurance Corporation, particularly for goods imported under letters of credit. Foreign exchange is not made available for a specified group of imported goods (including alcoholic beverages and certain durable consumer goods) considered to be nonessential or readily substitutable by domestic products. Imports of cars and other vehicles require prior authorization from the Minister of Transport and Communications. Such authorization is readily granted if imports are financed with foreign exchange balances held abroad without restriction as to frequency. Exchange licenses are granted in the currency appropriate to the country of origin, or in any convertible currency that may be requested. Payments by letter of credit, mail transfer, telegraphic transfer, or cash against documents at sight are all normally acceptable, but the National Bank must be consulted regarding imports on a cash against documents basis.

Certain imports (about 100 items, mostly consumer goods) may not be financed on an acceptance basis, and virtually no imports take place on this basis. Importation on suppliers’ credits requires prior approval of the terms and conditions of the credit, and such imports are limited to raw and intermediate materials, pharmaceuticals, and machinery and transport equipment.

All imports are subject to a general (ad valorem) sales tax.

Payments for Invisibles

Payments for invisibles require exchange licenses. Invisibles connected with trade transactions are treated on the same basis as the goods to which they relate. Foreign employees may remit monthly up to 30 percent of their net earnings (but only for the first three years of their contract if employed by the private sector); they may remit a maximum of between 40 percent and 50 percent of total net earnings during the period of service and upon final departure. Other expatriate employees may on final departure take out the same maximum amount, but not more than Br 20,000 in any one year. Foreign nationals who are not entitled to remittance facilities may, however, remit up to 30 percent of their net earnings for the education of their children.

Persons traveling abroad are allowed foreign exchange equivalent to Br 125 a day for a maximum period of 20 days in any one calendar year if the journey is made for business purposes; for tourism, persons 18 years of age and over are allowed up to the equivalent of Br 600 a year. Students are allowed foreign exchange up to the equivalent of Br 500 to study abroad, and Ethiopian nationals with dependents who are pursuing higher studies at accredited institutions abroad are allowed to remit funds to meet school fees and reasonable expenses. Residents may remit premiums on insurance policies taken out before April 1962. Subject to certain limits and to submission of evidence, persons may obtain a foreign exchange allocation of up to Br 10,000 for medical treatment and travel abroad. After providing for payment of local taxes, foreign companies may, in principle, remit dividends on their invested and reinvested capital in any currency. Travelers may take with them a maximum of Br 10 in Ethiopian bank notes.

Exports and Export Proceeds

All exports to South Africa are prohibited. Exports of most cereals to any destination other than Djibouti are also prohibited. All commodity exports require permits from the Exchange Controller and some require, in addition, the approval of specified public bodies. When applying for a permit, an exporter must specify the goods to be exported, their destination, and their value. For exports on a c.i.f. basis, exporters must obtain full insurance from the Ethiopian Insurance Corporation. The granting of a permit by the Exchange Controller enables the goods to pass through customs. The licensing system is used to ensure that foreign exchange receipts are surrendered to the National Bank, generally within three months, and that export proceeds are received in an appropriate currency (see section on Prescription of Currency, above). Exports of hides and skins are regulated and are prohibited until the needs of local factories have been met.

Proceeds from Invisibles

Foreign exchange receipts from invisibles must be surrendered. Travelers may bring in Br 10 in Ethiopian currency. Foreign exchange must be declared by travelers on entry, and its re-export is subject to authorization, except for temporary visitors. Reconversion of birr must be supported by documentary evidence of prior exchange of foreign currency.

Capital

Controls over capital movements are designed to restrict outflows, to prevent an unwarranted accumulation of external debt, and to keep the authorities informed of the country’s external debt position.

All receipts of capital in the form of foreign exchange must be surrendered. Exchange control authorization is required, and registration of capital inflows with the exchange control authorities establishes evidence of receipt, which is required for repatriation. All recognized and registered foreign investments may be terminated on presentation of documents regarding liquidation and on payment of all taxes and other liabilities. Subject to appropriate documentation, foreign businessmen having nonregistered investments may transfer their capital abroad on liquidation and final departure from Ethiopia, but may not transfer more than Br 20,000 in any one calendar year; funds in excess of this amount must be deposited in a blocked account with an authorized bank. This regulation does not apply to joint ventures established under the Council of State Special Decree on Investment No. 17/1990 of May 19, 1990. Transfers by emigrants who had operated their own businesses are restricted to Br 20,000 in any one calendar year.

Foreign investors are permitted to hold a majority share in a joint venture, except in the precious metals, public utilities, telecommunications, banking and insurance, transport, and retail trade sectors. All applications for joint ventures must be approved by the Office of the State Committee for Foreign Economic Relations and registered with the Ministry of Domestic Trade; a minimum of 25 percent of share capital must be paid before registration. Exemptions from income taxes are granted for up to five years for new projects, and for up to three years for major extensions to existing projects. Imports of investment goods and spare parts for such ventures are also eligible for exemptions from customs duties and other specified import levies in the case of new projects or major expansions to existing projects. Proceeds from the liquidation of a joint venture (as well as dividends received from the activities of a joint venture and payments received from the sale or transfer of shares) can be remitted abroad in convertible currency without restriction. A joint venture may also transfer abroad in convertible currency payments in respect of debt contracted and fees/royalties in respect of technology transfer agreements relating to a joint venture.

Borrowing abroad requires exchange control approval and is restricted. Authorized banks may freely place their funds abroad, except on fixed-term deposit, but they may not acquire securities denominated in foreign currency without the permission of the National Bank. In addition, they need the prior approval of the National Bank to overdraw their accounts with foreign correspondents, to borrow funds abroad, or to accept deposits in foreign currency.

Gold

The ownership of personal jewelry of which gold or platinum forms a part is permitted. Unless specifically authorized by the Minister of Mines and Energy, the possession or custody of 50 ounces or more of raw or refined gold or platinum, or of gold or platinum in the form of nuggets, ores, or bullion, is not permitted. Newly mined gold is sold by the Ethiopian Mineral Resources Development Corporation to the National Bank. Imports and exports of gold in any form other than jewelry require exchange licenses issued by the National Bank. Such licenses are not normally granted except for imports and exports by or on behalf of the monetary authorities.

Changes During 1990

Imports and Import Payments

May 9. A general (ad valorem) sales tax was introduced on imported goods.

May 21. Any individual or organization was permitted to import vehicles of any type under the Franco-Valuta system without restriction as to frequency.

Capital

May 19. The Council of State Special Decree on Investment No. 17/1990 was promulgated, replacing the Joint Venture Council of State Special Decree No. 11/1989 of 1989. The Decree removed restrictions on the size of activity and substantially liberalized restrictions on the type and sectors of activity for private participation. It also guaranteed the right of foreign investors to remit profits and dividends and the proceeds from the sale of assets. Investors in agriculture, industry, construction, and hotel services were accorded such incentives as exemption from customs duties and income tax; incentives were made more attractive for larger investments and investments in priority areas. To implement this policy, the decree contained the regulations for the issuance of licenses for investment in agricultural activities, tourist and hotel facilities, and manufacturing.

Fiji

(Position on December 31, 1990)

Exchange Arrangement

The currency of Fiji is the Fiji Dollar, the external value of which is determined on the basis of the fixed relationship between the Fiji dollar and a weighted basket of the currencies of Fiji’s most important trading partners. The weighting formula is normally reviewed every three years; the most recent revision was made in 1986. The exchange rate of the Fiji dollar in terms of the U.S. dollar, the intervention currency, is fixed daily on the basis of quotations for the U.S. dollar and other currencies included in the basket. On December 31, 1990, the midpoint exchange rate for the Fiji dollar in terms of the U.S. dollar was F$1.4592 per US$1. The Reserve Bank of Fiji provides official quotations only for the U.S. dollar. There are no taxes or subsidies on purchases or sales of foreign exchange.

Fiji formally accepted the obligations of Article VIII, Sections 2, 3, and 4 of the Fund Agreement, as from August 4, 1972.

Administration of Control

Exchange control is administered by the Reserve Bank of Fiji, acting as agent of the Government; the Reserve Bank delegates to authorized dealers the authority to approve normal import payments. Except with the specific permission of the Reserve Bank, residents of Fiji are required to offer for sale to an authorized dealer all foreign currencies they receive.1 The Ministry of Trade and Commerce is responsible for issuing import licenses, with the exception of those for gold, timber, rice, and dairy products. Import licenses for gold are issued by the Ministry of Finance and Economic Planning, for timber by the Ministry of Forestry, and for rice and dairy products by the Ministry of Primary Industries and Cooperatives. Export licenses are issued by the Comptroller of Customs.

Prescription of Currency

Transactions with all countries are subject to exchange control. Settlements with residents of any country may be made in Fiji currency through an External Account or in any foreign currency.

Nonresident Accounts

A nonresident2 may maintain an External Account in Fiji currency or a Foreign Currency Account with an authorized bank; such accounts may be opened without the specific approval of the Reserve Bank of Fiji. These accounts may be credited freely with interest payable on the account, with payments from other External Accounts, with the proceeds of sales of foreign currency or foreign coins by the account holder, and with Fiji currency notes that the account holder brought into Fiji or acquired by debit to an External Account or by the sale of foreign currency in the country during a temporary visit. External Accounts may also be credited with payments by residents for which either general or specific authority has been given. External Accounts may be debited for payments to residents of Fiji, transfers to other External Accounts, payments in cash in Fiji, and purchases of foreign exchange.

Imports and Import Payments

Imports of most goods are under open general license; imports of seed potatoes and coffee in any form require a license. A wide range of consumer goods are imported by national cooperative societies under a joint arrangement with six other Pacific Island countries. Import prohibitions are imposed on a few commodities from all sources, mainly for security, health, or public policy reasons.

Payments for authorized imports are permitted upon application and submission of documentary evidence to authorized dealers, who may allow payments for goods that have been imported under either a specific import license or an open general license. Authorized banks may allow advance payments of up to F$2,000 for all imports, provided the goods are imported into Fiji within 90 days of the date the advance payment is made. The approval of the Reserve Bank of Fiji is required in cases where amounts exceed F$2,000.

Payments for Invisibles

Payments for invisibles are permitted either under a delegated authority to banks or, where large amounts or nondelegated payments are involved, upon application to the Reserve Bank of Fiji. Payments may be made freely for all bona fide current transactions. The approval of the Reserve Bank of Fiji, however, is required in cases where amounts exceed the established limits. Residents of Fiji traveling to other countries may obtain from a bank, without reference to the Reserve Bank, a foreign currency travel allowance for a private or business visit up to the equivalent of F$2,000 a person a journey; amounts in excess of this limit are approved by the Reserve Bank of Fiji in cases of genuine need supported by documentary proof. There is no restriction on the number of trips a resident may make in any one year. Each traveler may take with him F$100 in Fiji currency and the equivalent of F$500 in other currencies, provided that these amounts are not in addition to travel allowances approved by a bank or the Reserve Bank of Fiji. Residents of Fiji are allowed to make cash gifts to nonresidents equivalent to F$200 a donor a year; additional funds are permitted in compassionate cases.

Foreign-owned companies must apply to the Reserve Bank for permission to transfer dividends abroad. The policy of the Reserve Bank is to allow the remittance of the current year’s profits and one year’s retained earnings. The transfer abroad of rent to nonresidents must be approved by the Reserve Bank.

Exports and Export Proceeds

Specific licenses are required only for exports of rice, sugar, wheat bran, copra meal, certain lumber, scrap metals, certain animals, and a few other items. Irrespective of any export-licensing requirements, however, exporters are required to produce an export permit for commercial consignment of all goods with an f.o.b. value of more than F$1,000; this permit is required for exchange control purposes. Exporters are required to collect the proceeds of exports within six months of the date of exportation of the goods from Fiji and may not grant credit to a nonresident buyer in excess of six months without specific permission. All foreign currencies must be offered for sale to an authorized dealer within one month of receipt.

Proceeds from Invisibles

All receipts from invisibles must be surrendered to authorized dealers. Travelers may bring in freely any amount in Fiji notes or foreign currency notes. Residents are required to sell their foreign currency holdings to an authorized dealer within one month of their return.

Receipts of interest, dividends, and amortization must be surrendered on a half-yearly basis unless approval for reinvestment abroad was given by the Reserve Bank.

Capital

The inflow of capital in any form requires the specific permission of the Reserve Bank of Fiji. Foreign investment in Fiji is normally expected to be financed from a nonresident source. Such foreign investment may be given “approved status,” which guarantees the right to repatriate dividends and capital. Overseas investments and other forms of capital transfers abroad have been temporarily suspended. The purchase of personal real property abroad is not permitted.

Foreign-owned companies are permitted to repatriate proceeds from the sale of assets up to the limit of F$1 million a company a year.

The transfer of inheritances and dowries due to nonresidents is permitted, as is the transfer of the proceeds from the sale of a house owned by a nonresident. The transfer of funds by emigrants on departure is limited to F$20,000 for married and F$13,000 for single applicants. Thereafter, the emigrant is allowed an automatic transfer of F$3,000 a month commencing three months after emigration until the amount cleared by the Inland Revenue Department has been fully transferred.

Authority is delegated to banks operating in Fiji to approve transactions involving F$50,000 or more arising from (1) the conversion of foreign currency into Fiji currency, whether for credit to a resident account or to an External Account; and (2) the crediting of an External Account with Fiji currency emanating from another External Account (including Fiji currency accounts of overseas banks). The banks must send confirmation of such inflows to the Reserve Bank; they must also have the approval of the Bank before granting any loans of more than F$10,000 to a company or branch in Fiji (other than a bank) that is controlled directly or indirectly by persons resident outside Fiji or by individuals designated as nonresidents; however, the banks do not need such approval to lend up to F$10,000 to individual nonresident customers, who must repay such loans prior to their departure from Fiji. The banks may not lend foreign currency to any resident of Fiji without the specific permission of the Reserve Bank of Fiji. Residents require permission from the Reserve Bank of Fiji before they may borrow foreign currency in Fiji or abroad.

The facility for residents to purchase foreign currency up to a maximum of F$5,000 a family a year to acquire foreign currency securities has been suspended. The purchase of personal real property outside Fiji is not permitted. Special tax incentives are granted for investments in the tourism industry, and an investment allowance similar to that for the hotel industry is provided for large outlay investment projects that support the tourist industry. Portfolio investment in Fiji by nonresidents requires the approval of the Reserve Bank; the proceeds of the sale or realization of such investment may be repatriated. Banks require exchange control permission to borrow abroad; they may accept deposits from nonresidents. During 1990 the Reserve Bank of Fiji encouraged accelerated repayments of more expensive external loans.

Gold

Residents may freely purchase, hold, and sell gold coins in Fiji but not gold bullion. The exportation of gold coins, except numismatic coins and collectors’ pieces, requires the specific permission of the Reserve Bank of Fiji. Gold imports from all sources, other than imports of gold coins, require a specific import license issued by the Ministry of Finance and Economic Planning; these are restricted to authorized gold dealers. Gold coins are free of fiscal tax but are subject to a customs duty of 10 percent; gold bullion is exempt from customs duty but is subject to a fiscal tax of 7.5 percent. Gold jewelry is subject to customs duty at the rate of 10 percent and to a fiscal duty of 10 percent but does not require a license when valued at less than F$200; samples of gold and gold jewelry sent by foreign manufacturers require import licenses if over F$200 in value.

Exports of gold jewelry are free of export duty but require licenses if their value exceeds F$1,000. Exports of gold bullion are subject to an export duty of 2 percent. All newly mined gold is refined in Australia and sold at free market prices. Commemorative gold coins of F$100, F$200, and F$250 have been issued; these are legal tender but do not normally circulate.

Changes During 1990

Exports and Export Proceeds

November 21. The export tax on gold, silver, sugar, and molasses was reduced to 2 percent from 5 percent.

Finland

(Position on December 31, 1990)

Exchange Arrangement

The currency of Finland is the Finnish Markka. The external value of the markka is defined in terms of an index reflecting a weighted average of the exchange rates of the convertible currencies most important for Finland’s foreign trade. These are defined as the convertible currencies of countries that have accounted for not less than 1 percent of Finland’s commodity imports and exports in each of the preceding three calendar years. The value of the exchange rate index is maintained by the Suomen Pankki (Bank of Finland) within a margin established by the Council of State. During January 1984–November 1988, the range was 101.3–106.0 (1982 = 100); it was widened to 100.5–106.8 in December 1988, and lowered by about 4 percentage points, to 96.5–102.5, as of March 17, 1989. The index weights are adjusted quarterly and are based on the average trade shares for the past two years; the base year is changed annually. The Suomen Pankki calculates and publishes the currency index on a daily basis and quotes daily (noon) buying and selling rates for the U.S. dollar, the intervention currency. On December 31, 1990, the rates were Fmk 3.626 and Fmk 3.642 per US$1, respectively. Buying and selling rates for the clearing ruble are based on the rates of the State Bank of the U.S.S.R. for the U.S. dollar against the ruble. Quotations for other currencies are based on market cross rates. There are no taxes or subsidies on purchases or sales of foreign exchange.

Authorized banks may deal among themselves, with residents, and with nonresident banks in U.S. dollars and other convertible currencies. Nonbanks may obtain forward cover for authorized transactions only. Forward premiums and discounts quoted by authorized banks reflect interest rate differentials in the countries of various currencies. The Suomen Pankki does not provide forward cover for commercial banks. It also does not quote forward ruble rates.

Finland formally accepted the obligations of Article VIII, Sections 2, 3, and 4 of the Fund Agreement, as from September 25, 1979.

Administration of Control

The Suomen Pankki operates the exchange control system, delegating authority in practice to the authorized banks (mainly commercial banks). Import and export licensing is administered by the Export and Import Permits Office (a unit subordinate to the Ministry of Trade and Industry), which is headed by a board composed of government officials, including a representative of the Suomen Pankki.

In accordance with the Fund’s Executive Board Decision No. 144-(52/51), adopted on August 14, 1952, Finland notified the Fund on September 10, 1990 that certain restrictions were imposed on the making of payments and transfers for current international transactions to the Government of Iraq and persons within the territories of Iraq and Kuwait.

Prescription of Currency

For prescription of currency purposes, countries are divided into two groups: the convertible currency countries and the bilateral countries.1 Settlements with the bilateral countries must be made in the currency of the agreement (the clearing ruble for the U.S.S.R. and the clearing Finnish markka for Bulgaria). Settlements with the convertible currency countries may be made in any convertible currency or through Convertible Accounts.

Nonresident Accounts

Nonresident Accounts may be held in an authorized bank in any convertible currency, including Finnish markkaa. These accounts may be freely credited and debited.

Imports and Import Payments

Most goods may be imported free of license from the multilateral countries, provided that the goods are purchased from, and originate in, those countries. However, certain goods2 may be imported from the multilateral area under a global quota system, which provides for import licenses to be issued at least up to the amounts of quotas for specified commodity groups.

With the exception of the commodities to which reference was made in the preceding paragraph, import licenses are not required for most commodities originating in and purchased from the U.S.S.R., or originating in and purchased from the four countries with which agreements on the reciprocal removal of obstacles to trade have been concluded (Bulgaria, Czechoslovakia, Hungary, and Poland). All imports of commodities originating in countries or areas not classified3 in either the multilateral area or the bilateral area require individual licenses. The State Granary is the main agency responsible for the importation of wheat, rye, barley, oats, and products of these grains for human consumption, but individual importers may also import these commodities under license. There is a state monopoly for imports of alcoholic beverages.

Authorized banks freely grant foreign exchange for all imports for which licenses are granted, on presentation of a notification form, the import license (when required for imports from countries with nonconvertible currencies), and the original commercial invoice, provided that the goods are already in the country or there is sufficient evidence to guarantee their importation. An importer may obtain foreign credits through an authorized bank for the payment of imports, provided that the maturity period of credit does not exceed six months; for a credit with longer maturity, the Suomen Pankki grants permission after verification.

Payments for Invisibles

Payments in respect of invisible transactions are not restricted. The authorized banks have general permission to effect payments for most invisibles.

A Finnish resident traveling abroad may purchase foreign exchange without limit from commercial banks. Nonresident travelers may take out of the country Fmk 10,000 a trip in Finnish or foreign bank notes and coins without export certificates for means of payment and any amount in Finnish or foreign bank notes and coins they declared upon entry; resident travelers may take out of the country foreign or domestic currency, or any combination of these, up to Fmk 10,000, without the export certificate for means of payment.

Exports and Export Proceeds

Exporters are required to repatriate foreign exchange proceeds within eight days of collection, which they may then hold in a domestic foreign currency account with an authorized bank in Finland or convert into domestic currency. Export licenses are required only for exports of scrap metal.

Sales of arms are strictly controlled. Exports to the U.S.S.R., which is outside the scope of agreements on the reciprocal removal of obstacles to trade, are allocated by means of bilateral trade arrangements.

Proceeds from Invisibles

Foreign exchange receipts from current invisibles must be repatriated within eight days of collection. The funds may be held in a domestic foreign currency account in Finland. The importation of domestic and foreign currency and coins is unrestricted.

Capital

The Suomen Pankki has exempted from regulation foreign credits with at least a one-year maturity raised by companies engaged in business activities or by other corporate entities, with the exception of housing and real estate companies. The authorized banks and certain other financial institutions are entitled to act as intermediaries between such credits and their corporate customers. Companies engaged in business activity may grant credits exceeding one year to nonresidents. Financial and insurance companies may, however, obtain credits from or grant credits to nonresidents only after they have obtained the permission of the Suomen Pankki. Permission is not required for customary export credits; suppliers’ credits over three months to residents of Bulgaria and the U.S.S.R. are, however, subject to special permit by the Suomen Pankki. International banking activities of Finnish authorized banks are free of regulations but are subject to certain supervisory reporting requirements.

Residents of Finland are authorized to invest in foreign securities or real estate abroad, or to place funds in accounts with foreign monetary institutions. Outward direct investments are also freely permitted without referring to the Suomen Pankki. Inheritances are freely transferable to the beneficiaries. Persons who reside outside Finland are allowed to transfer abroad their net assets in Finland in one lump sum.

Sales abroad of new markka-denominated bonds with maturities that exceed one year, with the exception of bonds issued by housing and real estate companies, are permitted.

Nonresidents may purchase Finnish securities only if they are “free shares” or related options quoted on the Helsinki Stock Exchange or on the authorized banks’ OTC market in Finland. A nonresident purchaser of Finnish shares is permitted to sell them and to transfer abroad the net proceeds of the sale in a convertible currency.

Inward direct investments require the approval of the Council of State if they involve purchases of property and real estate; other inward direct investments are approved by the Ministry of Trade and Industry; such approval is usually granted. Direct investments from countries with which Finland maintains bilateral payments agreements as well as direct investments in the financial and insurance sectors must be approved by the Suomen Pankki.

Proceeds from the sale of securities and real property must be repatriated under the general rule of repatriation.

Gold

Residents may freely hold, buy, and sell gold in any form in Finland.

Changes During 1990

Capital

February 1. The following measures were announced: (1) the Suomen Pankki authorized sales abroad of new markka-denominated bonds with maturities exceeding one year, with the exception of bonds issued by housing and real estate companies (the existing ban on cross-border sales remains in force for bonds issued previously); (2) nonresidents were authorized to issue markka-denominated bonds in Finland; (3) the Suomen Pankki exempted Finnish companies’ share issues abroad from the requirement of prior authorization; (4) the Suomen Pankki no longer required quotation by the Helsinki Stock Exchange or the OTC market as a condition for the issue of foreign securities in Finland; and (5) nonresidents purchasing Finnish securities were no longer required to effect their purchases through the Helsinki Stock Exchange or the OTC market.

March 1. The Suomen Pankki decided that finance companies were permitted to apply for the right to intermediate and raise foreign loans to the extent allowed by the limits on their foreign currency position. (Previously only deposit banks were accorded this right.)

July 1. The Suomen Pankki permitted private persons to undertake foreign investments and to grant loans of over one year’s maturity to nonresidents without limit. This liberalization measure would also apply to corporate entities, such as housing and real estate companies, considered comparable to private persons. Furthermore, local authorities were allowed to undertake foreign investments, grant loans of over one year’s maturity to nonresidents, and raise foreign loans of over one year’s maturity for financing their own operations.

The Suomen Pankki also expanded the scope of financial sector enterprises to engage in foreign operations. In addition to banks, mortgage banks and credit companies would be able to apply for the right to intermediate and raise foreign loans and to make foreign investments within the limits of their foreign currency positions.

September 1. The Suomen Pankki decided that residents may purchase and sell derivative instruments on foreign or Finnish shares without restriction.

January 1, 1991. All remaining foreign exchange controls, except those regarding the raising of loans abroad by private individuals and comparable corporate entities, were abolished.

France

(Position on December 31, 1990)

Exchange Arrangement

The currency of France is the Franc. France participates with Belgium, Denmark, Germany, Ireland, Italy, Luxembourg, the Netherlands, Spain, and the United Kingdom in the exchange rate mechanism (ERM) of the European Monetary System (EMS). In accordance with this agreement, France maintains the spot exchange rates between the franc and the currencies of the other participants within margins of plus 2.2753 percent or minus 2.2247 percent (in the case of the Spanish peseta and the pound sterling, plus 6.18 percent or minus 5.82 percent, in the case of the pound sterling, within margins of 6 percent) against the cross rates derived from the central rates expressed in European Currency Units (ECUs).

The agreement implies that the Bank of France (the Central Bank) stands ready to buy or sell the currencies of the other participating states in unlimited amounts at specified intervention rates. On December 31, 1990, these rates were as follows:

Specified Intervention

Rates per:
Francs
Upper LimitLower Limit
100Belgian or Luxembourg francs16.63115.899
100Danish kroner89.92585.970
100deutsche mark343.05327.92
1Irish pound9.1898.785
100Italian lire0.458550.4383
100Netherlands guilders304.44291.04
1pound sterling10.50559.3180
100Spanish pesetas5.47854.8595

The participants in the EMS do not maintain the exchange rates for other currencies within fixed limits. However, in order to ensure a proper functioning of the system, they intervene in concert to smooth out fluctuations in exchange rates, the intervention currencies being each other’s and the U.S. dollar. Buying and selling rates for 20 currencies are quoted daily on the basis of market rates.1 On December 28, 1990, the buying and selling rates for the U.S. dollar were F 5.1230 and F 5.1350, respectively, per US$1. There are no taxes or subsidies on purchases or sales of foreign exchange.

Fixed conversion rates in terms of the franc apply to the CFP franc, which is the currency of the Overseas Territories of French Polynesia, New Caledonia, and Wallis and Futuna Islands, and to the CFA franc, which is the currency of countries that are linked to the French Treasury through an Operations Account2. These fixed parities are CFPF 1 = F 0.055 and CFAF 1 = F 0.02, respectively.

Registered banks in France and in Monaco, which may also act on behalf of banks established abroad or in Operations Account countries, are permitted to deal spot or forward in the exchange market in France. Registered banks may also deal spot and forward with their correspondents in foreign markets in all currencies. Nonbank residents may purchase foreign exchange forward in respect of specified transactions. All residents including nonenterprise individuals may purchase or sell foreign exchange forward without restriction. Forward sales of foreign currency are not restricted, whether or not they are for hedging purposes.

France formally accepted the obligations of Article VIII, Sections 2, 3, and 4 of the Fund Agreement, as from February 15, 1961.

Exchange Control Territory

The exchange control regulations apply in all territories of the French Republic, that is, France, the Overseas Departments (Guadeloupe, Martinique, French Guiana, and Réunion), Mayotte, St. Pierre and Miquelon, and the three Overseas Territories (Wallis and Futuna Islands, New Caledonia, and French Polynesia). No exchange control is applied in relation to Monaco or the Operations Account countries (see footnote 2); all payments between France and these countries or territories are free of restriction on the part of France and take place at fixed exchange rates. All other countries or territories are considered foreign countries for exchange control purposes.

The exchange control regulations include controls over inward direct investment on the basis of Decree No. 89-938 of December 29, 1989 and Decree No. 9058 of January 15, 1991. These decrees apply to financial relations with all countries except those belonging to the Operations Account countries.

Administration of Control

The Directorate of the Treasury of the Ministry of Economy, Finance and the Budget is the coordinating agency for financial relations with foreign countries. It is responsible for exchange control and all matters relating to inward and outward direct investment and to borrowing abroad, unless they relate to real estate companies, in which case the Bank of France screens applications. The Directorate of the Treasury also evaluates the balance of payments, together with the Bank of France, which collects the data for its compilation.

The Directorate of Treasury of the Ministry of Economy, Finance and the Budget has certain powers in respect of matters relating to insurance, reinsurance, annuities, and so on. The execution of all transfers has been delegated to registered banks and stockbrokers and to the Postal Administration. The Directorate-General of Customs and Indirect Taxes establishes import and export procedures and controls, within the framework of commercial policy directives given by the Directorate of Foreign Economic Relations (DREE); the Directorate-General also issues import and export licenses and is responsible for any litigation relating to the exchange regulations. Technical visas required for certain imports and exports are issued by the appropriate ministry or by the Directorate-General of Customs and Indirect Taxes. The Ministry of Industry has certain responsibilities in respect of licensing contracts and contracts relating to technical assistance.

In accordance with the Fund’s Executive Board Decision No. 144-(52/51), adopted on August 14, 1952, France notified the Fund, on August 8, 1990, that certain restrictions were imposed on the making of payments and transfers for current international transactions to the Government of Iraq and persons within the territories of Iraq and Kuwait.

Prescription of Currency

Settlements with the Operations Account countries may be made in francs or the currency issued by any institute of issue that maintains an Operations Account with the French Treasury.3 Settlements with all other countries may be made in any of the currencies of those countries or through nonresident Foreign Accounts in francs. Importers and exporters are free to invoice in any currency.

Resident and Nonresident Accounts

Resident enterprises engaged in international trade are authorized to hold foreign currency accounts in France or abroad. Such enterprises are also authorized to hold accounts in francs abroad. All residents, including individuals and enterprises not engaged in international trade, are permitted to hold ECU-denominated accounts in France, to hold foreign currency-denominated accounts in France or abroad, and to hold French franc-denominated accounts abroad.

Nonresident accounts in francs may be freely opened by registered banks for nonresidents, including French nationals (other than officials) who are residing abroad. Since March 1989, all overdrafts and advances on non-resident-held franc accounts have been unrestricted. Nonresident accounts may be operated freely.

Emigrants of foreign or French nationality may take out all of their assets upon departure. In addition, nonresidents may hold foreign currency accounts with French and foreign-owned banks.

Imports and Import Payments

Goods originating in and shipped from other countries that are accorded privileged treatment in respect of exchange control regulations (see section on Exchange Control Territory, above) are generally admitted free of quantitative restrictions and individual licenses. Imports of goods that originate in other countries and are not covered by French import liberalization require individual licenses. Some imports from non-EC countries are subject to minimum prices; these require an administrative visa and sometimes, exceptionally, an import license. Certain imports require certificates of origin.

For import control purposes, countries other than those that are accorded privileged treatment are divided into four groups according to the extent of import liberalization: (1) the former Organization for European Economic Cooperation (OEEC) countries, their dependent territories, and certain former dependent territories, Andorra, Canada, Egypt, Ethiopia, Fiji, Finland, Israel, Jordan, Lebanon, Liberia, Sudan, Syrian Arab Republic, United States, Western Samoa, and Yugoslavia; (2) some specified countries;4 and (3) the Eastern European countries (Albania, Bulgaria, Czechoslovakia, Hungary, Poland, Romania, and U.S.S.R.), People’s Republic of China, Democratic People’s Republic of Korea, and Mongolia. Goods covered by the import liberalization arrangements applicable to one country may be imported freely from another country, provided that the country of origin and the country of shipment both benefit from the same degree of liberalization.

Imports of practically all industrial products from countries in group (1) are free of quantitative restrictions, but restrictions are applied to a number of agricultural and electronic products; there is relatively little difference between the lists of goods that may be imported freely from different countries in this group. Imports of certain industrial products from countries in group (2) are restricted, and restrictions are applied to these and to certain additional industrial products from group (3) countries. For some commodities, global quotas are allocated annually (petroleum and petroleum products) or semiannually and apply to all countries (other than those that have bilaterally negotiated quotas or receive privileged treatment). Imports from all countries of certain agricultural items and certain raw materials are free of quantitative restrictions.

Imports from non-EC countries of most products covered by the Common Agricultural Policy (CAP) of the EC are subject to variable import levies that have replaced all previous barriers to imports; common EC regulations are also applied to imports from non-EC countries of most other agricultural and livestock products.

Liberalized imports are not subject to trade controls, but do require a customs document that constitutes the customs declaration. For some liberalized imports, an administrative visa issued by the Central Customs Administration or by the appropriate ministry is required on an import declaration. Imports of the products of the European Coal and Steel Community (ECSC) require such administrative visas when originating in non-ECSC countries.

Other imports generally require individual import licenses. These are granted up to quotas determined on an individual commodity basis or for a group of commodities and apply to specified countries or areas in accordance with trade agreements or an import plan drawn up for a definite period. Imports of some products must pass through designated customs offices. Documents accompanying goods passing through customs must be written in or translated into French.

Quantitative import restrictions consist of EC-wide restrictions and national restrictions. The former include bilaterally agreed restrictions on textile imports under the Multifiber Arrangement (MFA) and voluntary export restraints on a number of agricultural and industrial products negotiated at the EC level. EC-wide restrictions are enforced through import licensing subject to prior authorization. National restrictions on imports from third countries that are in free circulation within the EC are enforced through temporary import restrictions authorized by the EC Commission under Article 115 of the EEC Treaty. In cases where the restrictions are not officially recognized by the EC (e.g., industry-to-industry understandings that do not directly involve member governments), import restrictions are enforced through national import licensing or standards and certification procedures. Automatic licensing is granted for imports that are under surveillance at either the EC or the national level.

Payments for imports from foreign countries may be made by credit to a Foreign Account in Francs, with foreign currency purchased in the French exchange market or by debiting a foreign currency account in France or abroad. All residents and international trading houses may freely open accounts in foreign currencies in France with registered banks or abroad (also in French francs) without limit on the credit balance. Payments may be made by transfer through a registered bank, by credit card, by check, by compensation of debts or claims, or by bank notes. The amounts that may be transferred through postal channels are not subject to limitation, but, in practice, the Postal Administration does not make import payments valued at over F 250,000. Registered banks may, without special authorization, permit advance payments to be made that are provided for in the commercial contract. There is no restriction on the use of suppliers’ credits.

Payments for Invisibles

Payments to foreign countries by residents for current invisibles have to be reported but are not restricted as to amounts. Registered banks are permitted to approve applications for payments for all categories of current invisibles without any limitation. Transfers of amounts exceeding the equivalent of F 50,000 are required to be declared. Outward remittances for family support abroad and transfers of donations to nonresidents are freely permitted.

Irrespective of the exchange control regulations, certain transactions between persons or firms in France and abroad are subject to restriction; these include certain transactions relating to insurance, reinsurance, and road and river transport.

There are no limits on expenditures for travel abroad. There is no restriction on the amount of foreign or domestic bank notes resident and nonresident travelers may take out, but amounts near or exceeding F 50,000 or its equivalent must be declared to customs upon departure.

Exports and Export Proceeds

Certain goods on a prohibited export list may be exported only under a special license. Some other exports also require individual licenses, but if the total value does not exceed F 1,000 (F 5,000 for art objects or collectors’ items), these exports may be permitted without any formality, subject to certain exceptions.

Exports to foreign countries are not subject to any exchange control, except when they are made by an occasional exporter, in which case payment must be received through the exchange market. Exporters are allowed forward coverage of an unlimited period, and may hold foreign currency accounts at home and abroad without limit on the credit balance. Registered banks may freely extend foreign currency advances to exporters; such advances and their repayment may be settled by the receipts of the corresponding exports.

Certain goods purchased in France by persons not normally residing in France are considered as exports, even when paid for in francs, and are exempt from taxes.

Proceeds from Invisibles

Proceeds from transactions in invisibles with Monaco and the Operations Account countries may be retained. With minor exceptions for certain types of transactions, services performed for nonresidents do not require licenses.

Resident and nonresident travelers may bring in any amount of bank notes and coins (except gold coins) in francs, CFA francs, CFP francs, or any foreign currency; amounts of F 50,000 or larger, however, must be declared to customs upon arrival. The exchange of bank notes issued by Algeria, Morocco, and Tunisia is prohibited at the request of those countries.

Capital

Capital movements between France and Monaco and the Operations Account countries are free of exchange control; purchases of French and foreign securities abroad and the corresponding outward transfers of resident-owned capital are free; capital receipts from foreign countries are permitted freely. Capital assets abroad of residents are not subject to repatriation. The transfer abroad of non-resident-owned funds, including the sales proceeds of capital assets, is not restricted.

French and foreign securities held in France by nonresidents may be exported, provided that they have been deposited with a registered bank in a foreign dossier (dossier étranger de valeurs mobilières); French securities held under a foreign dossier can also be sold in France, and the sales proceeds can be transferred abroad. Foreign securities held in France by nonresidents must be deposited with a registered bank; French securities held in France by nonresidents need not be deposited but cannot be dealt with or exported unless they have been deposited. Foreign securities held in France by residents must be deposited with a qualified bank or broker. Residents may hold French and foreign securities abroad under the control of a French registered bank or broker.

Subject to compliance with the special regulations concerning inward and outward direct investment, residents may purchase abroad French and foreign securities on stock exchanges and securities that are not quoted on a recognized stock exchange through registered banks. French and foreign securities may be held or sold abroad, but they may also be imported and then either held or sold on a French stock exchange. Correspondingly, nonresidents holding French or foreign securities abroad (whether acquired before November 24, 1968 or later) may import them into France through a registered bank and hold them in a foreign dossier or sell them on a French stock exchange.

The exchange control regulations include control over inward direct investments in existing French firms. The basis for control over foreign direct investments is Decree No. 89–938 of December 29, 1989, which applies to financial relations with all countries except those belonging to the Operations Account and Monaco.

Direct investments are defined as investments leading to control of a company or enterprise. Any participation leading foreign investors to hold more than one third (20 percent before the decree of December 29, 1989) of the capital is considered as direct investment. In the case of firms whose shares are quoted on the stock exchange, the threshold is reduced to 20 percent of the capital, but it applies only to each individual foreign participation and not to the total of foreign participations. To determine whether a company is foreign controlled, the Ministry of Economy, Finance and the Budget may also take into account any special relationships resulting from stock options, loans, patents and licenses, and commercial contracts.

Foreign direct investments in existing French firms generally require prior declaration to the Ministry of Economy, Finance and the Budget. Investments in real estate (except development companies and vineyards) and, when they do not exceed F 10 million, in hotels, restaurants, and retail trade and services, are exempt from prior declaration. It is also the case for increases of equity capital in a company already controlled by a foreign investor and for complementary participations in a company in which an investor already holds more than two thirds of the capital share. The period during which the Ministry of Economy, Finance and the Budget may suspend the acquisition by non-EC investors of a participation in an existing French firm is 30 days. Any non-EC investment can take place freely after this period if the Minister of Economy, Finance and the Budget has not formally notified the investor of his decision to suspend the acquisition.

Foreign companies controlled by EC residents are free to take over any participation in the capital of a French company, and they are subject only to prior notification to the Treasury. Unless the Ministry of Economy, Finance and the Budget formally communicates to the investor, within 15 days of the receipt of the notification, that he cannot be considered as controlled by EC residents, the investor can proceed with his acquisition.

EC-controlled companies can request that they receive the full benefit of the EC status on a permanent basis, if their total turnover exceeds F 1 billion a year and if they have completed at least three fiscal years of operations. The permanent acquisition of the EC status eliminates all prior notification requirements of an investor.

Regardless of the nationality of a nonresident investor, the Minister of Economy, Finance and the Budget is entitled to issue a finding within one month to prohibit a participation if public health, order, security, or defense is considered to be in danger.

Foreign direct investments, whether or not they have been subject to prior notification, must be reported to the Ministry of Economy, Finance and the Budget within 20 days of their fulfillment.

The liquidation proceeds of foreign direct investment in France may be freely transferred abroad; the liquidation must be reported to the Ministry within 20 days of its occurrence. Foreign direct investments by residents are not restricted, but must be reported to the Ministry of Economy, Finance and the Budget within 20 days if they exceed F 5 million. The liquidation of direct investments abroad is free from any prior application, provided that the corresponding funds are reported to the Ministry of Economy, Finance and the Budget if they exceed F 5 million.

Foreign issues on the French capital market, except issues originating in EC countries, are subject to prior authorization by the Ministry of Economy, Finance and the Budget.5 Exempt from authorization, however, are operations in connection with (1) loans backed by a guarantee from the French Government, and (2) shares similar to securities that are already officially quoted on a stock exchange in France.

Borrowing abroad in French francs or foreign currencies by natural or juridical persons, whether public or private persons, whose normal residence or registered office is in France, or by branches or subsidiaries in France of juridical persons whose registered office is abroad, is unrestricted. The application of the controls over direct investment and borrowing is delegated to the Bank of France insofar as these activities relate to French firms that are mainly engaged in real estate business. All restrictions on lending in French francs to nonresidents were abolished, effective March 9, 1989. Limitations for the purposes of exchange control on the foreign exchange positions of commercial banks were also abolished as of June 1, 1989. Registered banks are free to lend foreign currency to residents. Nonresidents may freely purchase French short-term securities, including treasury bills, bons de caisse, and private drafts.

Gold

Residents are free to hold, acquire regularly, and dispose of gold in any form in France. They may continue to hold abroad any gold they held there before November 25, 1968. There is a free gold market for bars and coins in Paris, to which residents and nonresidents have free access and in which normally no official intervention takes place.

Imports and exports of “monetary” gold (defined as gold having a fineness or a weight that is recognized in the gold market) into or from the territory of continental France are now governed by the regulations applying to ordinary goods. Movements of industrial gold are subject to a simple declaration, as are imports and exports of manufactured articles containing a minor quantity of gold, such as gold-filled and gold-plated articles. Collectors’ items of gold and gold antiques are subject to specific regulations.

Most gold coins are traded on the Paris stock exchange. In domestic trading, purchases of bars and coins are not subject to value-added tax. Imports of monetary gold, except gold imported by the Bank of France, are subject to customs duty and value-added tax. Domestic transactions in gold and gold coins are subject to capital gains tax.

Changes During 1990

Administration of Control

January 1. All remaining exchange controls were lifted, allowing residents to hold accounts in any foreign currency.

Imports and Import Payments

(See Appendix for a summary of trade measures introduced and eliminated on an EEC-wide basis during 1990, page 569.)

Capital

January 1. Firms based in OECD countries were permitted to issue securities on the French capital market.

January 15. Administrative procedures for the acquisition of existing French enterprises were simplified and placed on a lapse-of-time basis so as to expedite authorization procedures when these are still required. Authorization procedures would continue to apply to companies from outside the European Community for investments exceeding F10 million. Investment applications would be considered to be approved if the Ministry of Economy, Finance and the Budget does not object within one month.

Gabon

(Position on December 31, 1990)

Exchange Arrangement

The currency of Gabon is the CFA Franc,1 which is pegged to the French franc, the intervention currency, at the fixed rate of CFAF 1 = F 0.02. Exchange transactions in French francs between the BEAC and commercial banks take place at the same rate. Buying and selling rates for certain foreign currencies are also officially posted, with quotations based on the fixed rate for the French franc and the rate for the currency concerned in the Paris exchange market, and include a commission. Commissions are levied at the rate of 0.25 percent on transfers made by the banks for their own accounts and on all private capital transfers to countries that are not members of the BEAC, except those made for the account of the Treasury, national accounting offices, national and international public agencies, and private entities granted exemption by the Ministry of Finance, Budget and Participations because of the nature of their activities. There are no taxes or subsidies on purchases or sales of foreign exchange. There are no arrangements for forward cover against exchange rate risk operating in the official or the commercial banking sector.

With the exception of those relating to gold, Gabon’s exchange control measures do not apply to (1) France (and its Overseas Departments and Territories) and Monaco; and (2) all other countries whose bank of issue is linked with the French Treasury by an Operations Account (Benin, Burkina Faso, Cameroon, the Central African Republic, Chad, Comoros, Congo, Côte d’Ivoire, Equatorial Guinea, Mali, Niger, Senegal, and Togo). Hence, all payments to these countries may be made freely. All other countries are considered foreign countries.

Administration of Control

The Directorate of Financial Institutions in the Ministry of Finance, Budget and Participations supervises borrowing and lending abroad. Exchange control is administered by the Minister of Finance, Budget and Participations, who has partly delegated his approval authority for current payments to the authorized banks and that with respect to the external position of the banks to the BEAC. All exchange transactions relating to foreign countries must be effected through authorized intermediaries—that is, the Postal Administration and authorized banks. Import and export authorizations, where necessary, are issued by the Directorate of External Trade of the Ministry of Commerce and Industry.

Arrears are maintained with respect to external payments.

Prescription of Currency

Since Gabon is an Operations Account country, settlements with France (as defined above), Monaco, and the Operations Account countries are made in CFA francs, French francs, or the currency of any other institute of issue that maintains an Operations Account with the French Treasury. Settlements with all other countries are usually made through correspondent banks in France in any of the currencies of those countries or in French francs through Foreign Accounts in francs.

Nonresident Accounts

The regulations pertaining to nonresident accounts are based on those applied in France. BEAC bank notes may be credited to Foreign Accounts in francs when they have been mailed to the BEAC agency in Libreville by an authorized bank’s foreign correspondent. Otherwise, the crediting to nonresident accounts of BEAC bank notes, French bank notes, or bank notes issued by any other institute of issue that maintains an Operations Account with the French Treasury is prohibited.

Imports and Import Payments

In general, imports from member countries of the Central African Customs and Economic Union (UDEAC) are free of formalities; however, imports of refined vegetable oil from these countries require prior approval. All imports from countries outside the UDEAC are subject to an authorization to import (when the value is more than CFAF 500,000). Quantitative restrictions are maintained only on imports of sugar, vegetable oil, soap, mineral water, and cement. For perishables and spare parts, an anticipatory authorization is given to simplify administrative procedures. Imports from countries outside the UDEAC that are similar to, and compete with, domestic products are subject to licensing, but, with a few exceptions2 that are established by Ministerial Order, import authorizations are granted liberally. Some imports are prohibited for security and health reasons. Imports of refined vegetable oil are suspended except when they originate from UDEAC member countries. All imports of commercial goods must be insured through authorized insurance companies in Gabon.

All import transactions relating to foreign countries must be domiciled with an authorized bank. Authorizations duly endorsed by the Ministry of Foreign Trade and the Ministry of Finance, Budget and Participations (Directorate of Financial Institutions) entitle importers to purchase the necessary foreign exchange, provided that the shipping documents are submitted to the authorized bank.

Payments for Invisibles

Payments for invisibles to France (as defined above), Monaco, and the Operations Account countries are permitted freely; those to other countries are subject to approval, which is granted when the appropriate documents are submitted. For many types of payment the approval authority has been delegated to authorized banks. Payments for invisibles related to trade are permitted freely when the basic trade transaction has been approved or does not require authorization. Transfers of income accruing to nonresidents in the form of profits, dividends, and royalties are also permitted freely when the basic transaction has been approved.

For tourist travel, residents traveling to countries other than France (as defined above), Monaco, and the Operations Account countries may obtain an exchange allocation equivalent to CFAF 200,000 a person a trip (CFAF 100,000 for children under 10 years) for any number of trips a year; any foreign exchange remaining after return to Gabon must be surrendered. For business travel to foreign countries, there is a special allocation equivalent to CFAF 25,000 a day, subject to a maximum of CFAF 500,000 a trip. Tourist and business travel allocations may not be combined. Travelers to foreign countries may take out up to a maximum of CFAF 25,000 in BEAC bank notes; the amount taken out is not deducted from the travel allocation. Travelers to France (as defined above), Monaco, and the other Operations Account countries may not export CFA or French bank notes in excess of an amount equivalent to CFAF 200,000 (CFAF 100,000 for children under 10 years) for tourist travel; for business travel the amount of such bank notes that may be carried out is the equivalent of CFAF 25,000 a day and CFAF 500,000 a trip. Transfers may be effected without limit through the banking or postal systems.

Exports and Export Proceeds

Exports require authorization, irrespective of destination. Export transactions relating to foreign countries must be domiciled with an authorized bank. Export proceeds received in currencies other than those of France or an Operations Account country must be surrendered. Export proceeds normally must be received within 150 days after the arrival of the commodities at their destination. The proceeds must be collected and, if received in a foreign currency, surrendered within one month of the due date.

Proceeds from Invisibles

Proceeds from transactions in invisibles with France (as defined above), Monaco, and the Operations Account countries may be retained. All amounts due from residents of other countries in respect of services and all income earned in those countries from foreign assets must be collected and, if received in foreign currency, be surrendered within a month of the due date. Resident and nonresident travelers may bring in any amount of bank notes and coins issued by the BEAC, the Bank of France, or any other bank of issue maintaining an Operations Account with the French Treasury, as well as any amount of foreign bank notes and coins (except gold coins) of countries outside the Operations Account Area.

Capital

Capital movements between Gabon and France (as defined above), Monaco, and the Operations Account countries are free of exchange control; capital transfers to all other countries require the approval of the Directorate of Financial Institutions and are restricted, but capital receipts from such countries are permitted freely. All foreign securities, foreign currency, and titles embodying claims on foreign countries or nonresidents that are held in Gabon by residents or nonresidents must be deposited with authorized banks in Gabon.

Special controls (additional to any exchange control requirements that may be applicable) are maintained over borrowing and lending abroad, over inward and outward direct investment, and over the issuing, advertising, or offering for sale of foreign securities in Gabon; these controls relate to the transactions themselves, not to payments or receipts. With the exception of controls over the sale or introduction of foreign securities in Gabon, the control measures do not apply to France (as defined above), Monaco, and the Operations Account countries.

Direct investments abroad3 must be declared to the Ministry of Finance, Budget and Participations, unless they take the form of a capital increase resulting from reinvestment of undistributed profits; the full or partial liquidation of such investments must also be declared to the Ministry, unless the operation involves the relinquishing of a participation that had previously been approved as constituting a direct investment abroad. Foreign direct investments in Gabon4 must be declared to the Ministry unless they take the form of a capital increase resulting from reinvestment of undistributed profits; within two months of receipt of the declaration, the Ministry may request the postponement of the project. The full or partial liquidation of direct investments in Gabon must also be declared to the Ministry unless the operation involves the relinquishing of a participation that had previously been approved as constituting a direct investment in Gabon. Both the making and the liquidation of direct investments, whether these are Gabonese investments abroad or foreign investments in Gabon, must be reported to the Ministry within 20 days following each operation. Direct investments are defined as investments implying control of a company or enterprise.

The issuing, advertising, or offering for sale of foreign securities in Gabon requires prior authorization by the Ministry of Economy and Finance. Exempt from authorization, however, are operations in connection with (1) loans backed by a guarantee from the Gabonese Government, and (2) shares similar to securities whose issue, advertising, or offering for sale in Gabon has previously been authorized.

Borrowing abroad by physical or juridical persons, whether public or private, whose normal residence or registered office is in Gabon, or by branches or subsidiaries in Gabon of juridical persons whose registered office is abroad, requires prior authorization by the Ministry of Finance, Budget and Participations. The following are, however, exempt from this authorization: (1) loans constituting a direct investment abroad for which prior approval has been obtained, as indicated above; (2) loans directly connected with the rendering of services abroad by the persons or firms mentioned above, or with the financing of commercial transactions either between Gabon and countries abroad or between foreign countries in which these persons or firms take part; (3) loans contracted by registered banks; and (4) loans other than those mentioned above, when the total amount outstanding does not exceed CFAF 50 million for any one borrower. However, the contracting of loans referred to under (4) that are free of authorization, and each repayment thereon, must be declared to the Directorate of Financial Institutions within 20 days of the operation, unless the total outstanding amount of all loans contracted abroad by the borrower is CFAF 5 million or less.

Lending abroad by physical or juridical persons, whether public or private, whose normal residence or registered office is in Gabon, or by branches of subsidiaries in Gabon of juridical persons whose registered office is abroad, requires prior authorization by the Ministry of Finance, Budget and Participations. The following are, however, exempt from this authorization: (1) loans granted by registered banks; and (2) other loans, when the total amount outstanding does not exceed CFAF 50 million for any one lender. However, making loans that are free of authorization, and each repayment thereon, must be declared to the Directorate of Financial Institutions within 20 days of the operation, except when the total outstanding amount of all loans granted abroad by the lender does not exceed CFAF 5 million.

Under the Investment Code of July 6, 1989, any enterprise to be established in Gabon, whether domestic or foreign, is granted, under certain conditions, reduced duties and taxes on specified income. In addition to fiscal privileges, the Code provides for four categories of preferential treatment. Eligible companies may receive protection against foreign competition and may be given priority in the allocation of imports, public credit, and government contracts. Foreign companies investing in Gabon must offer shares for purchase by Gabonese nations for an amount equivalent to at least 10 percent of the companies’ capital. Non-Gabonese firms or individuals are not permitted to own land in Gabon.

Gold

Residents are free to hold, acquire, and dispose of gold in any form in Gabon. Imports and exports of gold require the authorization of the Ministry of Finance, Budget, and Participations. Exempt from this requirement are (1) imports and exports by or on behalf of the monetary authorities, and (2) imports and exports of manufactured articles containing a minor quantity of gold (such as gold-filled or gold-plated articles). The exportation of gold is the monopoly of the Société gabonaise de recherches et d’exploitation minières. However, imports of gold exempted from licensing and authorization requirements are subject to customs declaration.

Changes During 1990

No significant changes occurred in the exchange and trade system.

The Gambia

(Position on December 31, 1990)

Exchange Arrangement

The currency of The Gambia is the Gambian Dalasi. Commercial banks are free to transact among themselves, with the Central Bank, or with customers at exchange rates agreed on by the parties to these transactions. The Central Bank of The Gambia (CBG) conducts a fixing session on the last working day of each week with the participation of the commercial banks during which the exchange rate is established for customs valuation purposes for the following week. On December 31, 1990, the midpoint exchange rate of the dalasi in the interbank market was D 7.49 per US$1, and the exchange rate for customs valuation purposes was D 7.37 per US$1. Since April 1990, foreign exchange bureaus have been allowed to operate. There are no arrangements for forward cover against exchange rate risk operating in the official or the commercial banking sector. There are no taxes or subsidies on purchases or sales of foreign exchange.

Administration of Control

Exchange control policy is formulated by the Ministry of Finance and Economic Affairs, with the day-to-day administration of exchange control being carried out by the CBG. However, with the suspension of the Foreign Exchange Control Act, controls are not in force.

Prescription of Currency

Settlements with other countries may be made and received in dalasis or in any convertible currency from nonresident sources. Settlements with the Central Bank of West African States (BCEAO) (Benin, Burkina Faso, Côte d’Ivoire, Niger, Senegal, and Togo), and also Ghana, Guinea, Guinea-Bissau, Liberia, Mali, Mauritania, Nigeria, and Sierra Leone are normally made through the West African Clearing House.

External Accounts

Accounts denominated in dalasis held by residents of other countries are designated external accounts. Such accounts may be opened without reference to the CBG when commercial banks are satisfied that the account holders’ source of funds is from abroad in convertible foreign currency. Designated external accounts may be credited with payments from residents of other countries, with transfers from other external accounts, and with the proceeds of sales through the banking system of other convertible currencies. They may be debited for any payment to residents of other countries, for transfers to other external accounts, and for the purchase of other convertible currencies.

Imports and Import Payments

The importation of certain specified goods is prohibited from all sources for social, health, or security reasons. All other imports are freely permitted under open general licenses.

All merchandise imports are subject to a national sales tax of 10 percent of the c.i.f. value; imports by the Government, diplomatic missions, and charitable organizations are exempted from this tax.

Payments for Invisibles

There are no restrictions on payments for invisibles. Visitors to The Gambia are not required to declare foreign currency in their possession.

Exports and Export Proceeds

The exportation of forestry products is subject to prior authorization by the Forestry Department. The exportation of all other goods can generally be made without individual licenses, if settlement is made in accordance with procedures laid down by the CBG. Export proceeds must be received through a commercial bank within six months of the date of exportation in a convertible foreign currency and sold to commercial banks or through transfers from a designated external account.

Proceeds from Invisibles

There is no restriction on the importation of foreign currency notes or Gambian bank notes.

Capital

Inward transfers for the purpose of direct equity investment are not restricted but must be reported to the CBG. Prior approval from the CBG is required in order for residents to accept loans in foreign currency from any source.

Overdraft facilities may be provided by the banks to members of diplomatic and international missions in The Gambia up to reasonable amounts. Loans and advances by commercial banks to nonresident companies are subject to the authorization of the CBG. Foreign exchange working balances held by the commercial banks are subject to limits set by the CBG; amounts held in excess of these limits must be offered for sale in the interbank market or offered to the CBG. These limits must be observed on a daily basis, and the amount held must be reported weekly to the CBG. In addition, two parastatals (The Gambia Produce Marketing Board (GPMB) and The Gambia Telecommunication Company (GamTel)) are permitted temporarily to maintain limited working balances in foreign exchange. The limits must be observed on a weekly basis, and the amounts held must be reported monthly to the CBG. Any amount in excess of the limit must be surrendered, by the GPMB to the Central Bank of The Gambia and by GamTel to a commercial bank in The Gambia.

Gold

The importation of gold coins and bullion requires the approval of the CBG.

Changes During 1990

Exchange Arrangement

April 17. The establishment of foreign exchange bureaus was permitted.

Exports and Export Proceeds

February 20. The monopoly of the GPMB on the exportation of groundnuts was abolished.

Germany

(Position on December 31, 1990)

Exchange Arrangement

The currency of the Federal Republic of Germany is the Deutsche Mark. Germany1 participates with Belgium, Denmark, France, Ireland, Italy, Luxembourg, the Netherlands, Spain, and the United Kingdom in the Exchange Rate Mechanism (ERM) of the European Monetary System (EMS). In accordance with this agreement, Germany maintains the spot exchange rates between the deutsche mark and the currencies of the other participants within margins of 2.25 percent (in the case of the Spanish peseta and the pound sterling, 6 percent) above or below the cross rates based on the central rates expressed in European Currency Units (ECUs).

The agreement implies that the Deutsche Bundesbank (the central bank) stands ready to buy or sell the currencies of the other participating states in unlimited amounts at specified intervention rates. On December 31, 1990, these rates were as follows:

Specified Intervention

Rates per:
Deutsche Mark
Upper LimitLower Limit
100Belgian or Luxembourg francs4.9594.740
100Danish kroner26.81025.630
100French francs30.49529.150
1Irish pound2.7402.619
100Italian lire0.13670.1307
100Netherlands guilders90.77086.780
1pound sterling3.1322.778
100Spanish pesetas1.6331.449

In principle, interventions within the EMS are made in participating currencies but they may also take place in third currencies, such as the U.S. dollar. The participants in the EMS do not maintain the exchange rates for other currencies within fixed limits, but they intervene periodically to smooth out erratic fluctuations in exchange rates.

Official middle, buying, and selling rates are quoted for 17 foreign currencies on the foreign exchange market of Frankfurt am Main.2 On December 31, 1990, the official middle rate for the U.S. dollar was DM 1.4940 per US$1. There are no taxes or subsidies on purchases or sales of foreign exchange. Forward exchange contracts involving both commercial and financial transactions may be negotiated freely by residents and nonresidents in all leading convertible currencies in the domestic exchange market and at major international foreign exchange markets. There are no officially fixed rates in the forward exchange market, and all transactions are negotiated at free market rates.

Germany formally accepted the obligations of Article VIII, Sections 2, 3, and 4 of the Fund Agreement, as from February 15, 1961.

Administration of Control

The administration of control in respect of imports and exports of goods and services is operated by the Federal Ministry of Economics, the Federal Ministry of Finance, the Federal M