Chapter

Introduction

Author(s):
International Monetary Fund. Monetary and Capital Markets Department
Published Date:
January 1995
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The Report provides a detailed description of the exchange and trade systems of individual member countries, including the nonmetropolitan territory of 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.

In general, the description relates to the exchange and trade systems as of the end of 1994, but in appropriate cases reference is made to significant developments that took place in early 1995.

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 1994 and in early 1995.

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 import deposit requirements, import surcharges, travel taxes, export licensing, and export incentive schemes. Similarly, the section Changes During 1994 (and 1995) includes references to certain developments that may have a direct impact on international transactions, such as major revisions of import tariffs or developments in regional cooperation, but are not necessarily reflected in the body of the country descriptions.

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 31, 1994, 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. When 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 Resident/Nonresident Accounts, and, in some instances, External Accounts or Foreign Currency 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 residents or not regarded as residents of that country, and the facilities and limitations attached to such accounts. When there is more than one type of resident/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 banknotes. 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, commercial banks, or exchange dealers 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 banknotes are described.

In the section on Capital, the special arrangements or limitations attached to international capital movements are described. When 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.

Islamic State of Afghanistan

(Position as of December 31, 1994)

Exchange Arrangement

The currency of the Islamic State of Afghanistan is the Afghani. Da Afghanistan Bank (the central bank) maintains an official rate defined in terms of the U.S. dollar. The official rate is applied to (1) a few transactions of the central Government (mainly debt-service payments); and (2) certain foreign currency income earned in Afghanistan (see section on Proceeds from Invisibles, below). On December 31, 1994, the official buying and selling exchange rates for the U.S. dollar were Af 1,000 and Af 1,025, respectively, per US$1.

Almost all other official transactions are conducted at a commercial rate set by the Government. A free market, in the form of a money bazaar, is also operative.

Between May and December 1989, the previously complex multiple exchange rate system was simplified significantly. 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 exchange rate. In December 1989, most public sector transactions, with the exception of debt servicing, were also moved to the commercial exchange rate. The commercial exchange rate was, however, not closely linked to the free market rate. Between December 1989 and February 1991, it was closely linked to the free market rate. In February 1991, it was maintained at Af 734 per US$1, and subsequently a significant premium developed between the commercial and free market exchange rates. The central bank limited sales of foreign exchange to five essential commodities (tea, vegetable oil, medicines, powdered milk, and soap) in March 1991. 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). The exchange rate applied to transactions of international organizations is set at 80 percent of the level of the commercial exchange rate.

Da Afghanistan Bank posts rates for deutsche mark, French franc, Indian rupees, Pakistani 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 or the commercial banking sector.

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 exchange market.

Prescription of Currency

Settlements with countries with which Afghanistan maintains bilateral payments agreements1 are made in bilateral accounting dollars in accordance with the procedures set forth in these agreements. Some of these have been inactive for several years and others are being phased out. 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) is 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 drawn up by the Ministry of Commerce covers both public and private sector imports. Adjustments in the public sector import plan are made as circumstances change. The import plan for the private sector, drawn up on the basis of proposals submitted by the Chamber of Commerce, is indicative. The importation of petroleum products was a state monopoly until late 1992. In light of recent oil shortages, however, the private sector has been allowed to import and distribute petroleum.

The present customs tariff structure, promulgated in June 1974, changed little until May 1989. At that time, tariff rates on most consumer items were adjusted upward to 30–50 percent from their former range of about 20–35 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 of at least equivalent value 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 when they open letters of credit. In January 1990, the deposit ratios, based on the c.i.f. value of imports, were adjusted downward to 20 percent from 25 percent for essential products and upward to a range of 30–60 percent from a range of 20–50 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 $1,000 a trip, except for travel to India, for which the limit is the equivalent of $700. On application, foreign exchange is allocated for business travel and for medical treatment abroad, and the amounts are determined by Da Afghanistan Bank; normally, the limits are $15,000 for business and $2,500 for medical treatment. Foreign exchange for other private purposes may be acquired in the money bazaar. The central bank levies a charge of Af 0.75 per US$1 and 1 percent of hard currency for permits that approve the exportation of convertible currency by authorized travelers. For medical treatment and business travel, the central bank levies Af 0.75 per US$1. Travelers may take out not more than Af 2,000 in domestic banknotes 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 be either 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 goods not included on the list of prohibited goods. Alternatively, at the end of the relevant holding period limit, foreign exchange holdings abroad must be repatriated and held in a foreign currency account with a bank in Afghanistan or sold at the commercial exchange rate. However, proceeds from seven items (raisins, fresh fruits, animal casings, skins, licorice roots, medicinal herbs, and wool) must be surrendered immediately at the commercial exchange 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 $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 the Investment Committee. The Foreign and Domestic Private Investment Law No. 1353 (issued on July 4, 1974), which is currently under revision, has a number of provisions, including (1) income tax exemption for four years (six years outside Kabul province), beginning with the date of the first sale 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 not among the prohibited exports; and (6) mandatory procurement by government agencies and departments from enterprises established under the law as long as the prices are not more than 15 percent higher than those of foreign suppliers. The law stipulates that foreign investment in Afghanistan can take place only through joint ventures, with foreign participation not exceeding 49 percent, and 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, silver, and jewelry require permission from Da Afghanistan Bank and the Ministry of Finance. Commercial exports of gold and silver jewelry and other articles containing minor quantities of gold or silver do not require a license. Customs duties are payable on imports and exports of silver in any form, unless the transaction is made by or on behalf of the monetary authorities.

Changes During 1994

No significant changes occurred in the exchange and trade system.

Albania

(Position as of December 31, 1994)

Exchange Arrangement

The currency of Albania is the Lek. The exchange rate of the lek is determined on the basis of underlying demand and supply conditions in the domestic market. Exchange rates for other currencies are determined on the basis of the cross-rate relationship between the U.S. dollar and the currencies concerned in the international market. The Bank of Albania calculates and announces the daily average exchange rates for the U.S. dollar and other major currencies. No margins are set between buying and selling rates for the official exchange rate. Government transactions are conducted at market rates. However, the commercial banks charge commissions ranging from 0.5 percent to 1.5 percent, depending on the amount, for cashing traveler’s checks.1 On December 31, 1994, the official (middle) rate for the U.S. dollar was lek 95.39 per US$1. There are no taxes or subsidies on purchases or sales of foreign exchange. There are no arrangements for forward exchange cover against exchange rate risk operating in the official or the commercial banking sector.

Administration of Control

The foreign exchange market is governed by new regulations issued on May 1, 1994 by the Bank of Albania, under the authority of Decree No. 127 of March 25, 1994 of the Council of Ministers. The Bank of Albania is vested with the powers to administer exchange controls.

All commercial banks are authorized to conduct foreign exchange transactions and hold accounts abroad. The Bank of Albania may (1) authorize banks and other dealers to conduct foreign exchange operations; (2) define the limits of their activities; and (3) supervise foreign exchange operations to prevent any participant from dominating the market. It charges licensed banks and foreign exchange bureaus and dealers with ensuring that their operations comply with foreign exchange regulations. There is a reporting requirement by banks and exchange dealers for transactions above $15,000 or equivalent.

Arrears are maintained with respect to external payments.

Prescription of Currency

All merchandise trade is conducted in convertible currencies. All transactions under bilateral payments agreements were suspended in 1992, and the settlement of clearing accounts is pending the outcome of negotiations.2 Resident individual juridical persons are not permitted to open accounts with banks and financial institutions abroad without the prior written approval of the Bank of Albania.

Resident and Nonresident Accounts

Resident and nonresident natural and juridical persons are permitted to hold accounts in domestic and foreign currencies with commercial banks. Residents and nonresidents may freely receive payments and make payments abroad for current transactions. Authorized banks must maintain 90 percent cover on the foreign deposits placed with them, of which 10 percent represents the reserve requirement. Commercial banks may conduct foreign exchange transactions and hold accounts abroad. There are no restrictions on withdrawals of foreign exchange from foreign exchange accounts by residents or nonresidents. Interest rates paid on foreign currency accounts are determined by banks.

Imports and Exports

All state and private enterprises, individuals, and juridical persons are free to engage in foreign trade activities. The lists of products subject to export and import licenses are issued by the Ministry of Industry and Trade. Licenses are required to import hazardous materials and arms. At the end of 1994, four categories of export products were subject to licensing requirements. Applicants for export licenses must pay a service fee of $5 for each license.

There are no surrender requirements, but all private and public companies or individuals operating in the export sector are required to repatriate their foreign exchange receipts to Albania. They are free to retain these proceeds in or outside the banking system or to convert them into leks.

There are four customs duty rates ranging from zero (for raw materials, intermediate and investment goods, and some foodstuffs) to 30 percent (for certain consumer goods) that are applied to both private and public sector imports. In addition, a surcharge of 5 percent, based on the c.i.f. value, is levied on all imports except wheat, flour, and investment goods.

Payments for and Proceeds from Invisibles

Payments for current invisible transactions are free of restrictions. There is no restriction on transfers of dividends and profits. Proceeds from invisibles are subject to the same repatriation as those from merchandise exports.

Capital

With certain exceptions, capital transfers are subject to the prior written approval of the Bank of Albania. The following capital transfers may be made freely: (1) inward capital transfers by residents or nonresidents; (2) outward transfers representing recorded capital inflows; (3) transfers of proceeds or withdrawal of nonresident deposits; (4) transfers undertaken in accordance with the law on foreign investment, Law No. 7764, November 1993, providing for the free repatriation of capital liquidation proceeds; and (5) transfers of the proceeds of the liquidation of Albanian assets by an emigrant on departure from Albania. Foreign direct investment into Albania is free of registration or preapproval requirements for most sectors. All requests for establishing joint ventures with government entities involving over $50,000 in foreign capital must be approved by the Council of Ministers. Similar requests from financial institutions are approved by the Bank of Albania. Profits of joint ventures may be subject to tax rates of up to 50 percent, depending on the activity of the enterprise; profits are not subject to any tax during the first two years of operation for long-term (at least ten-year) investment projects. Enterprises are eligible for reduced tax rates when they reinvest profits in Albania.

Gold

There are no restrictions on gold holdings. Precious metal exports are prohibited by Council of Ministers (COM) Decree No. 135, March 29, 1994.

Changes During 1994

Administration of Control

March 25. COM Decree No. 288 of July 1, 1992 on the regulation of the foreign exchange market was abolished and replaced by Decree No. 127, which granted authority to the Bank of Albania to govern exchange market regulations. New regulations removing currency restrictions on current transactions were issued by the Bank of Albania on May 1, 1994.

Imports and Exports

March 25. The regulation that export proceeds must be repatriated within 30 days of receipt was abolished.

March 29. Export licensing requirements were reduced to four product groups from eight product groups.

September 22. The temporary export taxes of 25–70 percent on fish and tobacco were abolished.

Payments for and Proceeds from Invisibles

May 1. Limits on foreign exchange allowance for travel abroad were abolished.

Algeria

(Position as of December 31, 1994)

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 (the central bank) in fixing sessions with the participation of commercial banks. 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, 1994, the buying and selling rates for the U.S. dollar were DA 42.8132 and DA 42.8280, respectively, per US$1.

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.

Under Regulation No. 91/07, residents may obtain from their commercial banks forward cover against exchange rate risk in the form of forward contracts to buy or sell foreign exchange. Payment for future delivery of foreign exchange may be effected either at the date the contract is made, in which case the spot exchange rate applies, or at the time the foreign exchange is delivered, in which case a forward rate quoted by the Bank of Algeria applies. The Bank of Algeria quotes 3-month, 6-month, 9-month, 12-month, 2-year, and 3-year forward exchange rates for specified currencies (listed in footnote 1). In April 1994, the Bank of Algeria ceased to offer forward cover but will continue to honor outstanding forward contracts.

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 for a number of exchange control procedures has been delegated to five commercial banks and the Postal Administration.

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 fourniture) 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 this date, these accounts may not be used for purposes unrelated to the contracts.

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:

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 natural persons of foreign nationality have been released for transfer abroad.

Foreign Accounts in Foreign Currency. Under Regulation No. 91/02, juridical and natural persons of foreign nationality may open accounts denominated in the convertible currency of their choice. Such accounts may be credited with (1) banknotes and other means of payment denominated in foreign currency; and (2) other dinar-denominated funds that meet all requirements for transfers abroad. They may be debited without restriction (1) to make transfers abroad, (2) to export through withdrawals of foreign banknotes, and (3) to make dinar payments in Algeria. These accounts pay interest and may not show a net debit position.

Final Departure Accounts may be opened, without prior authorization, in the name of any natural person residing in Algeria, not of Algerian nationality, who intends to leave Algeria to return to his or her country of origin. These accounts may be credited freely with (1) an amount equivalent to the holdings on October 20, 1963 of the person concerned; (2) the proceeds from sales of real estate by the account holder, provided that the funds are paid directly by a ministerial officer; (3) the proceeds of the sale of securities through a bank; and (4) 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.

Foreign Currency Accounts may be opened by natural and juridical Algerian nationals residing 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 were declared at the time of the account holder’s entry into the country, and (3) domestic bank-to-bank book transfers between accounts held by individuals. The accounts may be freely debited for book transfers abroad but only through the banking system; 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 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 are prohibited. Certain imports are prohibited, regardless of origin.

All import licenses have been abolished. Any juridical and natural persons licensed under the Commercial Register (including concessionaires and wholesalers) may import goods that are not prohibited or restricted without any prior authorization. All these imports are subject to obligatory domiciliation at an authorized intermediary bank, which an importer must establish by submitting a commercial contract or pro forma invoice. Import payments may be made freely but only through the domiciled bank, which effects payments in foreign exchange and debits the importer’s account with corresponding amounts in dinars valued at the official exchange rate. Before import payments are effected, domiciled banks may require from the importer a deposit in dinars up to the full value of the imports. Importers maintaining foreign currency accounts at authorized intermediary banks may use them to pay for imports. Payments for imports of gold, other precious metals, and precious stones must be made from foreign currency accounts.

External borrowing by importers for import financing purposes must be arranged through the authorized intermediary banks. External borrowing may not exceed the import value.

Instruction No. 20/94 of the Bank of Algeria stipulates that the commercial credits used to finance imports of capital goods, valued at more than $500,000 must have at least a three-year maturity.

Except as otherwise indicated by the Bank of Algeria, down payments for import payments may not exceed 15 percent of the total value of imports. 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.

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.

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.

Foreign exchange allocations for tourism abroad by Algerian residents were suspended in October 1986. Residents requiring medical treatment abroad are entitled to a foreign exchange allowance based on need. 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 banknotes up to DA 200 a person. Foreign nonresident travelers may also re-export any foreign currency they declared upon entry. 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 are prohibited. Certain exports are prohibited for social or cultural reasons regardless of destination. All proceeds from exports of crude and refined hydrocarbons, by-products from gas, and mineral products must be surrendered. Exporters of other products may retain 50 percent of their export earnings in a foreign currency account. 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. Exports other than hydrocarbons benefit from certain incentive measures granted by the Government, including exemption from the tax on industrial and commercial profits and the flat rate levy on the wage bill.

Sales on consignment must be authorized by the Ministry of Economy and must always be registered before customs clearance. Export proceeds must be repatriated within 120 days of collection. 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. The petroleum company that holds mineral rights, however, has different repatriation requirements.

Proceeds from Invisibles

Proceeds from invisibles must be repatriated, and 50 percent of the proceeds must be surrendered. There are no restrictions on the importation of foreign banknotes, coins (except gold coins), checks, and letters of credit, but nonresidents, including those of Algerian nationality, must declare such holdings when they enter Algeria. Resident travelers may reimport Algerian dinar banknotes up to DA 200 a person. Nonresident travelers are not permitted to bring in Algerian banknotes.

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.

Foreign direct investment is freely permitted, except in certain specified sectors, provided that it conforms to the laws and regulations governing regulated activities and that prior declaration is made to the authorities. The Law of Money and Credit of April 14, 1990 and Legislative Decree No. 93–12 on Investment Promotion provide guarantees on foreign direct investments in accordance with international codes that have been ratified by Algeria. Repatriation in respect of the sale or liquidation proceeds from invested foreign capital is guaranteed. The law also stipulates 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. Legislative Decree No. 93–12 provides for various tax and other incentives for foreign investment for periods of up to five years.

Algerian banks offer three-year interest-free bonds in dinars, which entitle the subscriber to exchange 20 percent of the placement value annually into a convertible currency at the official exchange rate.

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. Gold and other precious metals are included on the list of items importable by concessionaires.

Changes During 1994

Exchange Arrangement

March 31. The exchange rate of the Algerian dinar was devalued by 7.3 percent to DA 25.9 per US$1.

April 10. The exchange rate of the Algerian dinar was devalued by 28.1 percent to DA 36 per US$1. In conjunction with the devaluation, the system of forward cover provided by the Bank of Algeria was abolished.

October 1. The exchange rate of the Algerian dinar was devalued by 12.2 percent to DA 41 per US$1. Weekly fixing sessions organized by the Bank of Algeria with the participation of the commercial banks began to be held.

Imports and Import Payments

April 12. The comité ad hoc as well as the cahier des charges were eliminated. All imports were freed, except for a small list of products for which the importers must meet criteria ensuring professionalism, and a negative list of products whose importation is prohibited. The enforcement of the regulations concerning imports valued at more than $100,000 was delegated to the commercial banks.

In addition, the requirement to use own foreign exchange for certain imports was abolished except for private cars. Commercial banks were permitted to provide foreign exchange freely for all importers on the basis of their bona fide requests. Import financing and external borrowing were liberalized, but minimum maturity requirements were maintained temporarily for imports of capital goods.

August 24. The negative list of imports was further reduced.

Exports and Export Proceeds

April 12. All restrictions on exports were eliminated, with the exception of items of historical or archaeological significance. The surrender requirement ratios applicable to all export receipts, except hydrocarbon and mineral exports, were unified and lowered to 50 percent.

Angola

(Position as of December 31, 1994)

Exchange Arrangement

The currency of Angola is the New Kwanza. The official exchange rate is determined in foreign exchange auctions conducted three times a week by the Banco National de Angola (BNA), the central bank. Commercial banks are permitted to participate in these auctions, but are free to set their own exchange rates in transactions with customers. Exchange rates for 17 other currencies1 are established using the weekly average cross rates of the currencies concerned on the Brussels, Frankfurt, London, New York, Paris, and Zurich markets.

Two sets of exchange rates are published weekly by the BNA, one for transactions between the BNA and the commercial banks and the other for transactions between the commercial banks and economic agents. The BNA applies a margin of 0.25 percent to its buying and selling transactions with economic agents. Buying and selling margins for cash transactions are set at 3–4 percent, depending on the currency.

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

The Organic Law of the BNA and the Financial Institutions Law, promulgated on April 20, 1991, established the BNA and the commercial banks as the financial institutions that are legally authorized to conduct exchange transactions with foreign parties. The BNA has delegated authority to banks to license and execute permitted invisible foreign exchange transactions.

Commercial banks and foreign exchange dealers licensed by the BNA are authorized to deal in foreign exchange at the floating and the parallel exchange market rates. The BNA uses the floating rate in its dealings with financial institutions.

All imports and exports are subject to licensing. Foreign exchange transactions are effected through the BNA’s commercial department, the Banco de Poupança e Crédito (BPC), and the Banco do Comércio e Indústria (BCI), of which the latter two are commercial banks authorized to deal in foreign exchange under the Organic Law of the BNA and the Financial Institutions Law. The BNA’s commercial department was established to facilitate the transition from the centralized banking system to the two-tier banking system. Accordingly, the BNA serves both as the central bank and as a commercial bank.

Financial institutions must deposit with the central bank all amounts required for payment of taxes and import duties made by foreign enterprises and all proceeds from exports by domestic enterprises, including those credited to accounts abroad.

Arrears are maintained with respect to external payments.

Prescription of Currency

The BNA prescribes the currency to be used for imports, which depends upon the country with which the transactions are to be carried out. The currency is usually that of the exporting country or the U.S. dollar. Bilateral settlement arrangements, which do not contain bilateral payments features, are maintained with Brazil, Portugal, and Spain. These arrangements use single accounts whose monthly balances can be used without restriction for transactions with third parties.

Resident and Nonresident Accounts

Individual resident juridical persons may maintain demand and fixed-term foreign exchange accounts with Angolan financial institutions. These accounts are remunerated at current interest rates. Checkbooks may not be issued against these accounts. The opening of and transactions through these accounts are not subject to prior authorization from the BNA. These accounts may be credited only through delivery of foreign currency in cash, traveler’s checks, or foreign payment orders, and for interest accrued; they may be debited only through conversion into domestic currency or issuance of any instrument normally accepted on the international financial market, in settlement of imports of goods and current invisibles or of capital export operations carried out by the depositor. Transfers between accounts are forbidden.

Nonresidents may hold accounts in new kwanzas, subject to authorization from the BNA. These accounts may be opened and credited only through the sale of foreign means of payment and with deposits of proceeds from the account holder’s activities in Angola; they may be debited only through the issuance of orders of withdrawal for payment of local expenditures or through purchase of foreign means of payment.

Nonresidents may also hold foreign exchange accounts, subject to authorization from the BNA. These accounts may be opened and credited only through the importation of foreign means of payment or the deposit of proceeds from the account holder’s activities in Angola; they may be debited only through the sale of foreign means of payment or repatriation of all or part of the existing credit balance.

Former residents may also hold accounts in new kwanzas, but they may withdraw funds from these accounts only to cover expenses during their stay in Angola.

Imports and Import Payments

All imports are subject to licensing, according to a positive list with pre-established limits determined under the import plan, and are also subject to the availability of foreign exchange, except for imports of spare parts, accessories or similar goods, medicines, equipment, and raw materials, up to a quarterly maximum of $50,000 (or its equivalent). Enterprises buying foreign exchange must submit the exporter’s pro forma invoices (which may include insurance and freight). For imports exceeding $10,000, enterprises must submit an import registration bulletin within eight days of completion of the operation under penalty of being excluded from future foreign exchange auctions.

Licenses are granted only to registered enterprises of proven technical, commercial, and financial capacity and are issued on the basis of a foreign exchange allocation and restricted to imports of goods for which the enterprise is registered. To obtain a license, enterprises must present offers of three foreign suppliers to the sectoral ministries and the Ministry of Commerce. 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, supplier, intermediary, product (Brussels Nomenclature Classification, volume, and unit price), shipping and insurance companies, cost, and method and currency of payment. Once the importation of merchandise is approved, the BNA issues the credit document, with a copy for the import license applicant, stating that, before shipment to Angola, the goods must be examined by the international agencies for compliance with international standards for merchandise transactions. Import licenses are valid for 180 days after issuance and may be extended once for an additional 180 days. If an import transaction is not fully effected within this period, the original merchandise transaction is deemed to have become a capital transaction. 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 companies, and imports not insured domestically are approved only in exceptional cases.

Exchange allowances for private travel are granted at the floating rate; for medical treatment abroad, up to $5,000 is provided through the National Health Board at the official rate. A maximum monthly allowance of $2,500 is granted to residents who spend up to 90 days abroad for educational, scientific, or cultural purposes.

Up to the equivalent of $1,500 a month may be granted to Angolans or foreigners residing abroad who are direct ascendants or descendants of, and financially dependent on, residents in Angola, provided that (1) they are minor descendants under 18 years or, if of legal age, they can demonstrate that they are students or are incapable of working; or (2) they are ascendants over 60 years or, if younger, they can demonstrate they are incapable of working.

Education travel expenses are normally expected to be covered by scholarships, but an additional foreign exchange amount may be granted at the floating rate.

Resident nationals who wish to travel abroad may, upon presentation of their passport and airline tickets, where applicable purchase foreign exchange from financial institutions as follows: (1) children up to the age of 16 years, up to $500 a person a trip to neighboring countries and up to $1,000 a trip to other countries; and (2) individuals over 16 years, up to $1,500 a person a trip to neighboring countries and up to $3,000 a trip to other countries. Companies may purchase foreign exchange from financial institutions to cover their employees’ travel expenses abroad on trips of up to 30 days, for business, service, or training, with the following daily limits: (1) president or equivalent, $350; (2) vice president or equivalent, $300; and (3) department director or equivalent, $200. If a person returns to Angola earlier than expected, the remaining foreign exchange must be resold to a financial institution. All these transactions take place at the floating rate.

The exportation of domestic currency is prohibited. When departing Angola, nonresidents visiting the country for purposes of tourism or business are permitted, upon presentation of the corresponding sales vouchers, to repurchase up to 50 percent of the foreign exchange they sold to institutions accredited to deal in foreign exchange.

Exports and Export Proceeds

Exports of certain goods are prohibited.2 Re-exports of goods other than capital goods and personal belongings are also prohibited. Restrictions apply to the exportation of products that are in short domestic supply. All other exports are subject to prior licensing. Proceeds from exports must be collected within 30 days of shipment. Oil exporters must surrender all proceeds to the BNA, while exporters of all other products may also sell their proceeds to commercial banks.

Proceeds from Invisibles

Service contracts with nonresidents must be approved by the BNA. The sectoral ministries supervise the execution of contracts. All proceeds must be surrendered to the BNA within 30 days of receipt.

There are no limits on the amount of foreign banknotes or traveler’s checks in foreign exchange that a person may bring into the country, but any amount exceeding the equivalent of $10,000 must be declared upon arrival. Residents are permitted to leave the country with more than $5,000 in foreign exchange only if they present exchange purchase documents; nonresidents must present such documents when the amount exceeds $10,000. The importation of domestic currency is prohibited.

Capital

All capital transfers are subject to licensing and control. The Foreign Investment Law of 1994 (Law No. 15/94 of September 23, 1994) prohibits investment in strategic sectors.3 Direct 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

The importation and exportation of gold are a monopoly of the BNA. Residents are permitted to hold gold only in the form of jewelry.

Changes During 1994

Exchange Arrangement

April 25. An exchange rate system was introduced, under which the official exchange rate is determined in foreign exchange auctions conducted by the BNA. Commercial banks would be allowed to participate in the auctions and would be free to set their own exchange rates in transactions with their customers.

Antigua and Barbuda

(Position as of December 31, 1994)

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, 1994, 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 risks 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.

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 export trade, whose receipts are primarily in foreign currency and a large number of inputs are imported or 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

Most goods may be freely imported under open general licenses granted by the Ministry of Trade, Industry, and Commerce. 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 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, generally under the Fiscal Incentives Act of 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, including Caricom traveler’s checks (which are denominated in Trinidad and Tobago currency) for each trip outside the ECCB area. 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 transactions 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, approval from the Ministry of Finance must be obtained. Levy exemptions for transfers, especially for charitable 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 1994

No significant changes occurred in the exchange and trade system.

Argentina

(Position as of January 31, 1995)

Exchange Arrangement

The currency of Argentina is the Peso, the external value of which is pegged to the U.S. dollar. On December 31, 1994, the middle rate of the peso in terms of the U.S. dollar was Arg$0.999 per US$1. Exchange rates of other currencies are based on the buying and selling rates for the U.S. dollar in markets abroad. Swap transactions and forward exchange operations are permitted in any currency, and the rates may be freely negotiated. Since January 12, 1995, the Central Bank of the Republic of Argentina (BCRA) has been converting pesos into U.S. dollars, and U.S. dollars into pesos, at a rate of Arg$1 to US$1. Deposits denominated in pesos and maintained by the financial institutions at the Central Bank to meet cash reserve requirements are automatically converted into U.S. dollars.

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 are carried out through entities authorized expressly for this purpose with no restrictions on the purchase or sale of foreign exchange at market prices. These authorized entities include banks, exchange agencies, exchange houses, exchange offices, and financial companies; each type of institution is subject to separate regulations. Credit funds and mortgage savings and loan companies may also effect certain foreign exchange transactions, on the condition that they meet certain additional capital requirements.

Prescription of Currency

Within the framework of the multilateral clearing system of the Latin American Integration Association (LAIA), payments between Argentina and Brazil, Chile, Colombia, Ecuador, Mexico, Paraguay, Peru, Uruguay, and Venezuela are settled voluntarily through payment agreements and a reciprocal credit mechanism. All payments between Argentina and Bolivia and the Dominican Republic must be effected through the accounts specified in the agreements. Argentina has also signed similar agreements with Bulgaria, Cuba, Hungary, Malaysia, and the Russian Federation. Payments between Argentina and these countries are settled on a voluntary basis through the accounts maintained by the Central Bank of Argentina and the central banks concerned, with the exception of Bolivia, Cuba, and the Dominican Republic, where settlement through the accounts specified in the agreements is obligatory. Transactions with other countries must be settled in freely usable currencies.

Resident and Nonresident Accounts

Authorized banks may open accounts in pesos or foreign exchange in the name of residents or nonresidents who have met certain identification requirements that are aimed at, among other things, preventing money laundering. Accounts in foreign exchange must be denominated in convertible currencies and may be credited only with cash or with remittances from abroad in the following currencies: U.S. dollars for current accounts, savings, and fixed-term deposits; and deutsche mark and other currencies that the BCRA explicitly authorizes at the request of financial institutions for deposits in savings and fixed-term accounts. Both resident and nonresident holders of demand or time foreign currency accounts may use their credit balances freely in Argentina or abroad. Transfers between accounts may be made freely. Use of checking accounts denominated in U.S. dollars is allowed for domestic transactions.1

Imports and Import Payments

Import payments may be effected in convertible currencies. Payments for imports may be freely settled by authorized financial entities.

The Treaty of Asunción, signed in 1991, became effective in January 1995. It established the Southern Cone Common Market (Mercosur) between Argentina, Brazil, Paraguay, and Uruguay and implemented a 47 percent reduction in tariffs on goods traded among Mercosur countries, retroactive to June 30, 1991. Thereafter, tariff reductions were implemented until they were completed at the end of 1994; the tariff positions exempted from these reductions were also eliminated during this period. Tariffs were reduced at a rate of 7 percent every six months. At the end of 1994, a substantial portion of intra-Mercosur trade was conducted at a zero tariff rate and the nontariff barriers listed in the Schedule of the 1991 Asunción Treaty were also removed.

In accordance with Decision No. 5/94 of the Mercosur Council of Ministers, the member countries may maintain tariffs for some items in intra-Mercosur trade. Argentina applies tariffs to certain textiles, paper, and iron and steel products. This regime will be in force until the end of 1998, at which time tariffs will be reduced to zero.

Since January 1, 1995, Argentina and the Mercosur countries have been applying a common external tariff (CET) to imports from the rest of the world that encompasses all products, with certain exceptions (Argentina has 300 exceptions) that are subject to a transitional regime until 2001 and 2006. CET rates currently range from zero to 20 percent. At the end of the transitional period in 2001, the CET will be 14 percent for capital goods, and in 2006, the CET will be 16 percent for computer and telecommunications equipment.

Argentina applies a special regime to automobile and sugar imports with the authorization of Mercosur, pending agreement on a common regime for these sectors. Quantitative restrictions are applied to the automobile sector and to some paper products. Other restrictions are in force solely for security, hygiene, and public health reasons.

A statistical tax of 3 percent is applied to imports from all countries, except those from Mercosur. This tax is waived for capital goods, fuel, and sensitive goods from the paper, computer, and telecommunications sectors.

Payments for Invisibles

Neither payments for invisibles nor the exportation of domestic and foreign banknotes is restricted.

Exports and Export Proceeds

Export proceeds are not required to be repatriated.

Until the end of 1994, the rates of export rebates were equal to the import duties applied to the products concerned (Decree No. 1239/92). On January 1, 1995, rebate rates were changed when Mercosur became effective (Decree No. 2275/94), and the applicable rates were reduced (Resolution ME&OSP No. 310/95 of March 20, 1995). At present, the rebates range from 3 percent to 15 percent.

Other export promotion measures involving rebates are the regime for exporting turnkey plants, under which exports of industrial plants and engineering operations sold under turnkey contracts benefit from the highest effective rebate rate of 15 percent; and the regime for Puerto Patagónicos, under which exports through the ports and customs posts located on the Colorado River received an additional rebate ranging from 7 percent to 12 percent until the end of 1994. (Since January 1, 1995, these rates are being reduced by 1 percent a year.)

The drawback regime is in addition to the export rebates, and it allows exporters to receive refunds of import duties, the statistical tax, and the value-added tax (VAT) that are levied on inputs used in the processing of products for export. To be eligible for drawback, the exporter must be a direct importer of inputs. Since March 10, 1995, the drawback regime has been adapted to the new Mercosur terms, distinguishing between the treatment of exports to member countries of Mercosur and those to nonmember countries (Resolution ME&OSP No. 288/95).

The temporary admission regime permits the importation, free of consumer and statistical taxes, of merchandise for industrial processing, provided that such goods are exported in their new form within 180 days, which may be extended for a further 180 days. To benefit from the temporary admission regime, the exporter must be the direct user of the merchandise subject to temporary importation. Temporary admission is an alternative to the drawback system, and both cannot be used simultaneously.

Quantitative restrictions on exports are maintained only on arms, protected animal species, and products subject to international agreements.

The financing system for promoted exports has been suspended by Communication “A” 1807 of March 8, 1991, except with respect to those products that were in the process of exportation at that time. Under Communication “A” 1994 of August 31, 1992, this system was transferred to the Banco de Inversión y Comercio Exterior (Investment and Foreign Trade Bank).

Proceeds from Invisibles

Proceeds from invisible transactions of the private sector need not be repatriated. The importation of domestic and foreign banknotes is not subject to exchange control.

Capital

Beneficiaries of loans in foreign currencies are not required to convert them into domestic currency in the exchange market. Foreign borrowing by the public sector is regulated by Law No. 24.156 of October 29, 1992.

Decree Law No. 1853 of September 1993 governs foreign investment, combining in one law the liberalization measures contained in the Economic Emergency and State Reform Acts of 1989 and the Foreign Investment Law of 1993. This law allows foreign companies to invest in Argentina, without prior government approval, on an equal footing with domestic firms, thus effectively applying national treatment to foreign investors. Foreign investors are entitled to the same rights and subject to the same obligations as domestic investors, and may enter into any area of economic activity on their own, because no law or regulation forces them to be associated with local partners.

There are no approvals or procedures required to effect foreign investment. Regardless of the amount or the area of economic activity in which they are made, foreign investments may be made without any prior approval. This principle applies even in cases where a foreign investment results in full foreign ownership of a domestic company.

In the banking and insurance sectors, where special statutes require all operators to apply for licenses, foreign and domestic investors are guaranteed access to such licenses on an equal footing. The principle of nondiscrimination applied to banking laws is extended to eliminate the traditional reciprocity requirement when considering a foreign bank application to do business in Argentina, which effectively gives foreign banks full legal equality with their domestic counterparts.

Foreign investors are entitled to repatriate their capital and transfer abroad their realized earnings at any time, without any approval or authorization. Foreign investors may repatriate the full amount of their invested capital at any time, irrespective of the duration of investment. Their access to the foreign exchange market is also unrestricted. These rights assisting foreign investors have been further established under international law by means of over 30 Investment Promotion and Protection Agreements, including all countries where foreign investment usually originates, such as Canada, France, Germany, Italy, Spain, Sweden, Switzerland, the United Kingdom, and the United States. Argentina is a member of the Multilateral Investment Guarantee Agency and the International Center for the Settlement of Investment Disputes and maintains a valid and active agreement with the Overseas Private Investment Corporation.

Swaps of bonds for eligible debts agreed to under the Brady Plan by Argentina and foreign creditor banks were completed in 1994.

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 as well as other precious metals whose market value is based on the daily list prices of major transactions. The importation of gold coins and good delivery bars is not restricted. 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 also subject to a sales tax. Institutions may carry out arbitrage operations with their clients in gold coins or good delivery gold against foreign banknotes. Authorized institutions may export gold to entities abroad.

Changes During 1994

Imports and Import Payments

January 1. Tariff preferences vis-à-vis Mercosur trading partners were increased to 82 percent from 75 percent.

July 1. Tariff preferences vis-à-vis Mercosur trading partners were increased to 89 percent from 82 percent.

December 31. The 10 percent statistical tax was abolished.

Capital

April 28. Swaps of bonds for eligible debts agreed to under the Brady Plan by Argentina and foreign creditor banks were completed.

Changes During 1995

Imports and Import Payments

January 1. Tariffs vis-à-vis Mercosur trading partners were eliminated (except for a number of products), and a common external tariff (CET) ranging from zero to 20 percent (with 11 different positions) would apply to most products from non-Mercosur countries.

Armenia

(Position as of May 1, 1995)

Exchange Arrangement

The currency of the Republic of Armenia is the Dram,1 which is the sole legal tender. The exchange rate against the U.S. dollar is determined on the basis of foreign exchange auctions held by the Yerevan Stock Exchange three times a week and auctions held by Givmri twice a month. Only banks may participate in the auctions (based on marginal pricing). Enterprises may buy and sell at the auction only through banks. On April 28, 1995, the average noncash auction rate was dram 407.8 per US$1.

The Central Bank of Armenia quotes official rates in terms of U.S. dollars three times a week on the basis of the average rate prevailing at the latest foreign exchange auctions. This rate must be used for accounting valuation of all foreign exchange transactions of all economic agents. Exchange rates for other major currencies are calculated either on the basis of quotations on the Yerevan Stock Exchange where applicable, or solely on the basis of the quotation for the U.S. dollar in major interbank markets against the currencies concerned.

Enterprises or any other physical or juridical persons (including state enterprises) are free to buy and sell foreign exchange without restriction through authorized institutions.

Forward transactions, futures, and options in foreign exchange are permitted.

Administration of Control

Central Bank of Armenia Decision No. 33 of May 17, 1994 sets out the principles and procedures for foreign exchange and currency transactions between residents and nonresidents. The Central Bank of Armenia has overall responsibility for regulating financial relations between Armenia and other countries in close collaboration with the Ministry of Finance.

Banks are granted two types of foreign exchange licenses. A general license gives a bank authority to conduct any type of foreign exchange transaction, including those with nonresidents abroad, excluding gold transactions, which are licensed separately. Banks with a general license may offer a full range of currency transactions. A second, more restricted form of activity, included in licenses to operate as a bank in Armenia, allows banks only to buy and sell foreign exchange, only on behalf of their clients.

Prescription of Currency

Settlements with the Baltic countries, the Russian Federation, and the other countries of the former Soviet Union are made through a system of correspondent accounts maintained by the central banks of these countries but can also be made through other channels. Settlements with countries with which Armenia maintains bilateral payments agreements are effected in accordance with the terms of the agreements.2 Settlements with all other countries may be made in convertible currencies.

Resident and Nonresident Accounts

Under Central Bank Decision No. 30 of May 16, 1994, residents may only open, maintain, and use loan accounts and foreign exchange bank accounts in banks abroad. Regulations pertaining to the transfer to these accounts of Russian ruble balances held in Armenia have not yet been formulated. Residents may also open, maintain, and use foreign currency accounts at licensed banks in Armenia. There are no limits on the amount of foreign currency banknotes that can be purchased with drams from banks, and banknotes can be deposited in a foreign exchange account or used for transactions with nonresidents. Resident enterprises may maintain and use foreign exchange accounts in banks abroad with the authorization of the Central Bank of Armenia. The opening and use of domestic foreign exchange accounts are not restricted, except that residents may not transfer these balances to other residents.

Nonresident natural and juridical persons may open and use foreign exchange accounts with licensed domestic banks, provided that they are registered with the local authorities. Balances in these accounts may be transferred abroad or sold to licensed domestic banks for drams. Legislation is being drafted to allow nonresident juridical persons to open accounts in drams and use them for domestic transactions. Foreign governments and international institutions may open dram accounts with authorization from the Central Bank of Armenia.

Imports and Exports

Imports of a number of products are prohibited for public health, national security, and environmental reasons. A license from the Ministry of Agriculture and the Ministry of Health is required and granted on a case-by-case basis to import medicinal preparations and chemical agents for plant protection (pesticides). Imports of weapons, military equipment and parts, and explosives require special authorization from the Government. The Agreement on Creation of a Free Trade Zone, signed in April 1994, establishes the legal framework for the signing of free trade agreements between Armenia and the other countries of the Commonwealth of Independent States (CIS). Bilateral free trade agreements have been signed with the Kyrgyz Republic, Moldova, Tajikistan, the Russian Federation, and Ukraine (to date, only the agreement with the Russian Federation has been ratified), and customs tariffs are thus exempt only for products from the Russian Federation. Government Decree No. 39, passed on January 27, 1995, established new tariff duties. This decree sets five rates for import duties, from zero, 5, 10, 30, and 50 percent; the rate for most imports is zero. There are no export duties.

According to Government Decision No. 17 of January 17, 1995, export licenses are required for three product groups: medicine, wild animals and plants, and textile products exported to the European Union (EU). In addition, special government permission is required for the export of nuclear technology, nuclear waste, and related nonnuclear products having direct military applications. Minimum threshold prices for the export of ferrous and nonferrous metals and foreign produced goods thereof remain in force. By Government Decree No. 615, passed on December 10, 1994, all restrictions on barter trade have been removed. Proceeds from exports must be repatriated within 30 days of receipt, and, as of January 1, 1995, 30 percent of the proceeds are required to be surrendered. Expenses, commissions, and taxes paid abroad relating to exports may be deducted from export proceeds prior to repatriation. As of April 1, 1995, export receipts are no longer subject to the surrender requirement.

Payments for and Proceeds from Invisibles

Resident persons and enterprises may freely purchase foreign exchange or use foreign exchange balances in their foreign exchange accounts with domestic banks to conduct invisible transactions. Verification procedures are being formulated by the Central Bank of Armenia. There are no limits on foreign exchange allowances for travel.

Proceeds from cultural activities performed abroad are exempt from the repatriation requirement. Proceeds from other invisibles are subject to the same regulations as those applicable to proceeds from merchandise exports.

The importation of foreign banknotes is not restricted. The exportation of foreign banknotes is also not restricted, although a declaration needs to be completed for amounts exceeding the equivalent of $500.

Capital

Foreign investors, including joint ventures, are not required to obtain authorization to undertake investment in Armenia. A foreign investment law passed on July 31, 1994 reflects current international practices and is liberal in its treatment of foreign direct investment. Other inward and outward capital transfers require approval from the Ministry of Finance.

Gold

A license is required to conduct trade in gold. There are no regulations currently in force governing domestic trade in gold, and regulations on purchasing, selling, and holding gold and precious metals by banks have been prepared by the Central Bank of Armenia. The modalities of its implementation are expected to enter into force in May 1995.

Changes During 1994

Exchange Arrangement

March 1. The dram became the sole legal tender in the Republic of Armenia.

Administration of Control

December 1. Banks with a general foreign exchange license were required to offer at least a minimum set of international transaction services.

Capital

July 31. A foreign investment law was passed.

Changes During 1995

Imports and Exports

January 1. The surrender requirement for export proceeds was reduced to 30 percent from 50 percent.

January 10. The number of categories for which export licenses are required was reduced to three product groups from nine product groups.

January 15. The new customs law reduced the number of tariff rates to five, with most imports being zero rated.

April 1. The surrender requirement for export proceeds was abolished.

Aruba

(Position as of December 31, 1994)

Exchange Arrangement

The currency of Aruba is the Aruban Florin, which is pegged to the U.S. dollar at Af. 1.7900 per US$1. The Centrale Bank van Aruba deals with local commercial banks within margins of 0.00279 percent on either side of parity. On December 30, 1994, the official buying and selling rates for the U.S. dollar were Af. 1.77 and Af. 1.80, respectively, per US$1. Official buying and selling rates for other currencies1 are set daily on the basis of U.S. dollar rates on the international exchange market. A foreign exchange commission of 1.3 percent is levied on all payments made by residents to nonresidents, except when settled in Netherlands Antillean guilders. Purchases of foreign exchange by resident companies with 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 Central Bank. Import licenses, when 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, as well as receipts through local banks and banks abroad, must be reported to the Central Bank.

Nonresident Accounts

Nonresidents may freely open accounts in any foreign currency and are also permitted to hold accounts in Aruban florins up to Af. 200,000.

Resident Foreign Bank Accounts

Residents are obligated to report in writing to the Central Bank the opening of foreign bank accounts.

Imports and Import Payments

Imports other than eggs are not subject to any quantitative restrictions. The restriction on the importation of eggs, however, is administered liberally, depending on the domestic supply situation. Payments for imports may be made freely.

Payments for Invisibles

Most payments for invisibles exceeding Af. 50,000 a quarter require a license from the Central Bank. Allowances for education remittances for family maintenance and allowances for medical treatment are granted liberally. Residents may buy foreign exchange for travel purposes, up to a maximum amount equivalent to Af. 400 for each day of travel, Af. 8,000 a trip, or Af. 15,000 a calendar year, without a special permit, and up to a maximum amount equivalent to Af. 2,500 without presenting travel documents. Transfers of profits and dividends require a license from the Central Bank. The exportation of Aruban banknotes is prohibited, and that of foreign currencies requires a license.

Exports and Export Proceeds

Exports do not require a license. Unless specifically exempted, export proceeds must be converted into local currency within eight working days and credited to a foreign currency account with a local bank or with a foreign bank with the approval of the Central 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 banknotes denominated in foreign currency.

Capital

The following transactions require a license from the Central Bank: (1) purchases from and sales to nonresidents of domestic and officially listed securities (a resident natural person must obtain a license if values exceed Af. 200,000 a year); (2) purchases from and sales to nonresidents of domestic and foreign real estate (a resident natural person must obtain a license if values exceed Af. 200,000 a year); (3) proceeds from the liquidation of direct foreign investments; (4) loans received from, and extended to, nonresidents; and (5) other short- and long-term investments by residents abroad, or of nonresidents in Aruba (a resident natural person must obtain a license if values exceed Af. 200,000 a year).

Changes During 1994

No significant changes occurred in the exchange and trade system.

Australia

(Position as of December 31, 1994)

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. There is no official exchange rate for the Australian dollar. The Reserve Bank of Australia publishes an indicative rate for the Australian dollar based on market observation at 4 p.m. daily. On December 31, 1994, the indicative rate in terms of the U.S. dollar was $A 1.2873 per US$1. There are no taxes or subsidies on purchases or sales of foreign exchange.

Authorized foreign exchange dealers may deal among themselves, with their customers, and with overseas counterparties at mutually negotiated rates for both spot and forward transactions in any currency, in respect of trade- and nontrade-related transactions. The Reserve Bank sets a limit for each dealer’s net open overnight foreign exchange exposure.

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 only restrictions on external payments and transfers are those introduced to give effect to UN Security Council Resolutions imposing sanctions against transfers to the governments and nationals of Iraq, the Federal Republic of Yugoslavia (Serbia/Montenegro), Libya, and the Republic of Bosnia and Herzegovina.

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 must be undertaken with an authorized foreign exchange dealer.

Nonresident Accounts

Nonresidents may establish and operate accounts without formality and may repatriate funds 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 to interest-bearing investments by foreign government monetary authorities (see section on Capital, below).

Imports and Import Payments

There are no import-licensing requirements or quotas on imports other than tariff quotas, which apply to cheese and curd. Australia is not a signatory of the Multifiber Arrangement. For some products, imports are allowed only if written authorization is obtained from the relevant authorities or if certain regulations are complied with. Among the goods subject to control are 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.

Almost all tariff rates have been subject to a tariff-reduction program in recent years. In 1991–92, the import-weighted average tariff rate (i.e., total duty paid divided by the f.o.b. value of all imports) was 6.5 percent. Under the tariff-reduction program announced in 1988, tariff rates above 15 percent were gradually reduced to 15 percent by July 1992, and tariff rates higher than 10 percent but lower than 15 percent were phased down to 10 percent over the same period. Proportional reductions were made to those tariffs not expressed in ad valorem terms. In the tariff reduction plan announced in March 1991, most specific duty rates were converted to ad valorem rates as from July 1993. The March 1991 plan called for most tariffs to be reduced to a maximum level of 5 percent by July 1996. The exceptions in these two tariff-reduction programs are for passenger automobiles and the textile, clothing, and footwear sectors, where tariffs have been relatively high, especially in effective terms. Under the 1988 program, tariffs on passenger automobiles were reduced to 35 percent by July 1992, and tariff quotas in the textile, clothing, and footwear sectors were eliminated since March 1993. The March 1991 program calls for further phased tariff reductions to 15 percent in the passenger motor vehicle industry and to a maximum of 25 percent in the textile, footwear, and clothing sectors by the year 2000.

Australia’s antidumping procedures were 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. Antidumping duties and undertakings will lapse automatically after five years, although domestic industries may renew the antidumping petition. 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. In March 1991, the Government announced plans to strengthen the antidumping procedures, including accelerating the complaint process and extending the injury test to cover upstream agricultural industry. In December 1991, the Government announced it would reduce the time taken to process complaints and change the way in which dumping duties are levied. Australia’s antidumping and countervailing legislation was amended on December 6, 1994, to come into effect on January 1, 1995 in line with Uruguay Round changes to the GATT texts on antidumping and countervailing. Some of the major areas of change included (1) a requirement for a set level of support by the Australian industry before an investigation can be initiated; (2) the inclusion of prescribed methodologies to establish dumping margins; and (3) a requirement that investigations will be terminated promptly where it is established that the margins of dumping (or level of subsidization) are de minimis or there are negligible volumes of dumped (or subsidized) imports. A combination of company-specific and residual rates of duty to apply to exporters from subject countries were introduced. The legislation also provided detailed guidelines on what constitutes a countervailable subsidy, giving preferential treatment to developing countries in the consideration of countervailing duties. Specific criteria are listed for making a determination regarding the existence of threat of material injury. The legislation now requires greater levels of evidence from interested parties and notification by authorities.

Under the terms of the Australia-New Zealand Closer Economic Relations and Trade Agreement (Anzcerta), trade in goods across the Tasman became free from July 1, 1990 (five years ahead of schedule). Imports of motor vehicles from New Zealand were subject to a customs tariff until January 1, 1990. The provision for antidumping actions against imports from New Zealand ceased after July 1, 1990, and domestic trade practices legislation was amended at the same time to provide redress for unfair competition from New Zealand.

The South Pacific Regional Trade and Economic Cooperation Agreement (Sparteca) provides for duty-free and unrestricted access to Australian and New Zealand markets on a nonreciprocal basis for most of the products exported by the member countries. In the case of Papua New Guinea, although it obtains trade concessions from New Zealand under Sparteca, its trade and commercial relations with Australia are covered by the Agreement on Trade and Commercial Relations between Australia and Papua New Guinea.3

Developing countries obtain tariff preferences on their exports to Australia under the Australian System of Tariff Preference for Developing Countries. Since 1986, a uniform preferential margin of 5 percentage points on dutiable goods has applied to all developing countries; if the general tariff rate is below 5 percent, imports from developing countries enter duty free. From July 1, 1993, the developing countries’ preferences have been phased out for Hong Kong, the Republic of Korea, and Taiwan Province of China, and margins applicable to certain industries, including textiles, clothing and footwear, chemicals, vegetable and fruit preparations, tuna, and sugar have been removed for all but the least-developed countries and the South Pacific Island Territories. The preferential rates for these specified industries will be frozen until the General Tariff rate falls to the preference rate; the General Tariff rate will then apply. Both the 1991 and 1993 decisions came into effect on July 1, 1993.

Payments for Invisibles

Payments for invisibles are unrestricted, except for certain transactions involving Iraq, the Federal Republic of Yugoslavia (Serbia/Montenegro), Libya, and the Republic of Bosnia and Herzegovina. There is no restriction on the amount of Australian or foreign currency that can be taken out of Australia, so long as the foreign currency was purchased from an authorized dealer. Travelers who are not residents of Australia may also take out any foreign currency that they brought into Australia.

Persons leaving Australia with cash (banknotes and coins) in any currency totaling $A 5,000 or more must complete a report for the Australian Transaction Reports and Analysis Center (Austrac); the report forms are available at ports or airports from the Australian customs authorities.

Anzcerta also provides, through a protocol, for a progressive 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 exclusions are the areas of telecommunications, banking (removed after the Martin report), airport services and aviation, coastal shipping, media, and postal services. The protocol was reviewed in 1990 and 1992 and will be reviewed again in 1994 with a view to liberalizing currently exempted services.

Exports and Export Proceeds

The export regime is designed to encourage the relatively unrestricted exportation of Australian products. Bounties are paid to producers of a limited number of products, some of which may be exported. 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 exportation of certain defense goods; regulate the exportation of goods that involve high technology and have dual civilian and military applications;4 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 has abolished or amended export controls on many mineral and petroleum products. Remaining controls on primary products apply mainly to food and agricultural products.

The Government monitors trade in the bauxite, alumina, coal, and iron ore sectors and retains 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 nonproliferation policy obligations. Restrictions also apply to the exportation of certain other nuclear and related materials.

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

Australia participates in several voluntary restraint agreements (VRAs) or similar restraint agreements affecting its exports. These comprise limits on exports of the meat of sheep and goats as well as high-quality “Hilton” beef to the European Union (EU), and bovine meat and steel products to the United States. 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 to under the GATT for these products. Exports of red meat and livestock can be made only 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. Other Commonwealth statutory marketing authorities that have export control powers are the Australian Horticultural Corporation, the Australian Honey Board, the Australian Wheat Board, and the Australian Wine and Brandy Corporation. The Australian Wheat Board’s powers make it the sole exporter of Australian wheat.

Proceeds from Invisibles

Earnings from invisibles in foreign currencies may be retained or sold for Australian dollars. Travelers may bring in any amount in Australian or foreign currency, subject to completion of an Austract report for cash amounts totaling $A 5,000 (notes and coins) or more. (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 foreign governments, their agencies, and international organizations. These entities are barred from issuing bearer bonds and, when borrowing in the Australian capital market, must advise the Treasury or Reserve Bank of the details of each borrowing after its completion. Although 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 informed of their Australian dollar portfolios. Interest-bearing investments of a foreign government’s official foreign reserves are exempt from taxation consistent with the principle of sovereign immunity. Income derived by a foreign government from the conduct of commercial operations is not exempt from Australian taxation.

The Government recognizes the substantial contribution foreign investment makes to the development of Australia’s industries and resources and has framed its policies so as to encourage direct investment in line with the needs of the community. Under Australia’s foreign investment policy, certain types of proposals by foreign investors for acquisition or investment of more than $A 50 million are subject to full examination. These include (1) acquisitions of substantial interests in existing Australian businesses; and (2) proposals for the establishment of new businesses. Proposals for investments in the following areas are subject to examination irrespective of size: (1) investment in the media; (2) direct investment by foreign governments or their agencies; and (3) acquisition of residential real estate (unless exempt under the regulations). Foreign investors may acquire residential real estate within a designated integrated tourist resort (ITR) without obtaining approval under the foreign investment guidelines.

In most industry sectors, the Government approves proposals to establish new businesses involving total investments of $A 10 million or more and those to acquire existing businesses with total assets valued at $A 5 million or more ($A 3 million or more if more 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 to 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 valued at over $A 5 million (acquisitions of developed nonresidential commercial real estate valued at less than $A 5 million do not require approval).

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 advisor to the Government on foreign investment matters, stands ready to assist and advise foreign investors in formulating their proposals.

In February 1992, the Government decided to permit foreign banks authorized under the Banking Act to operate as wholesale banks in the form of a branch (previously, foreign banks were authorized as incorporated subsidiaries). All foreign corporations seeking authorization to conduct banking business in Australia must satisfy the Reserve Bank of their willingness and capacity to adhere to high standards of prudential management. Foreign bank branches are not required to maintain “endowed capital” in Australia and, consequently, the Reserve Bank does not impose any capital-based large exposure limits on these branches.

Gold

Australia has no restrictions applying to owning, buying, selling, importing, or exporting gold and gold coins. If the exportation or importation of coins (together with any notes) exceeds $A 5,000, it must be reported to Austrac.

Changes During 1994

Administration of Control

April 4. Changes arising from the 1992 CER Review of Rule of Origin were put into effect. The technical and administrative changes from the CER agreement were at the same time applied to all other preference arrangements.

Imports and Import Payments

December 1. Antidumping and countervailing legislation was amended in line with changes that were made to the GATT as a result of the Uruguay Round.

Austria

(Position as of February 1, 1995)

Exchange Arrangement

The currency of Austria is the Austrian Schilling. Austria participates with Belgium, Denmark, France, Germany, Ireland, Luxembourg, the Netherlands, Portugal, and Spain in the exchange rate mechanism (ERM) of the European Monetary System (EMS).1 In accordance with this agreement, Austria maintains the spot exchange rates between the schilling and the currencies of the other participants within margins of 15 percent above and below the cross rates based on the central rates expressed in European currency units (ECUs)2 and continues to keep the schilling’s external value consistent against the deutsche mark.

The arrangements imply that the Oesterreichische Nationalbank (the central bank) stands ready to buy or sell the currencies of the other participating states in unlimited amounts at specified intervention rates. On January 9, 1995, these rates were as follows:

Specified Intervention Rates per:Austrian Schilling
Upper limitLower limit
100Belgian or Luxembourg francs39.4089029.37670
100Danish kroner214.17400158.84100
100Deutsche mark816.92700605.87700
100French francs243.58600190.65400
1Irish pound19.8971014.60820
100Netherlands guilders726.06600537.74000
100Portuguese escudos38.268006.12520
100Spanish pesetas410.325907.65811

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

Forward transactions are permitted. Forward premiums and discounts are left to the interplay of market forces, and the Oesterreichische Nationalbank does not intervene in the forward market or provide cover for the forward positions of commercial banks. On December 31, 1994, the authorized banks’ buying and selling rates for the U.S. dollar were S 11.045 and S 11.145, 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

Most exchange transactions are effected through Austrian banks authorized by the central bank. Certain restrictions on payments and transfers for current international transactions to the Government of Iraq are still in force.

In accordance with the Fund’s Executive Board Decision No. 144–(52/51), adopted on August 14, 1952, Austria notified the Fund on July 7, 1992 that, in compliance with United Nations Security Council Resolution No. 757 (1992), certain restrictions had been imposed on the making of payments and transfers for current international transactions in respect of the Federal Republic of Yugoslavia (Serbia/Montenegro). Restrictions are imposed on certain current payments and transfers to Libya in accordance with UN Security Council Resolution No. 833 (1993).

Export and import licenses required under the Foreign Trade Act of 1984 and its amendments must be issued by the Federal Ministry for Economic Affairs for industrial products and by the Federal Ministry of Agriculture and Forestry for agricultural products. In instances where the customs authorities are authorized to issue import and export licenses on behalf of these ministries, the licenses are granted without delay or formal application (automatic licensing) when the goods clear customs.

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 and are not subject to restrictions. 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 are subject to the same conditions as free schilling accounts.

Imports and Import Payments

As a member of the European Union, Austria applies the Common Import Regimes. Payments for imports are not restricted.

Payments for Invisibles

Residents are permitted to conclude transactions with nonresidents involving payments for invisibles without restriction. Residents traveling abroad for purposes of tourism may purchase foreign exchange from authorized banks or obtain short-term advances from nonresidents without limitation.

Exports and Export Proceeds

Licenses for exports regulated under the Foreign Trade Law must 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 EU trade agreements and the fulfillment of quotas established in accordance with such agreements, and the needs of the Austrian economy.

Proceeds from Invisibles

Proceeds from invisibles may be deposited without restriction. Persons entering Austria may import unlimited Austrian or foreign banknotes and coins.

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. Nonresidents are permitted to issue bonds on the domestic market.

Foreign banks are not permitted to establish branches in Austria. In the auditing and legal profession, the transport sector, and the electric power generation sector, there are certain restrictions for investments by nonresidents and Austrian residents who are not nationals of one of the countries of the European Economic Area.

Residents and nonresidents may export capital freely without a license. Nonresidents’ direct investments in Austria and the purchases of Austrian or foreign equities do not require approval.

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, as well as to foreign banks and financial institutions.

Residents may acquire participation rights in foreign companies, associations, and other enterprises; earnings accrued from such investment may be freely used. Residents are permitted to acquire real estate abroad and to purchase from nonresidents securities denominated in Austrian and foreign currencies without restriction. Residents are also permitted to open bank accounts and issue bonds abroad.

Gold

Residents may freely hold gold in any form and may trade with residents and nonresidents both at home and abroad. Imports and exports of gold in any form by residents and nonresidents are unrestricted and free of license.

Changes During 1994

Administration of Control

January 1. The European Economic Area (EEA) came into operation, extending the freedom of movement of goods, services, capital, and persons within the EU to Austria.

March 1. Terms for Austria’s accession to the EU were agreed.

Changes During 1995

Administration of Control

January 1. Austria became a member of the European Union.

Exchange Arrangements

January 9. Austria joined the exchange rate mechanism of the European Monetary System.

(See Appendix for a summary of trade measures introduced and eliminated on an EU-wide basis during 1994, page 554.)

Azerbaijan

(Position as of December 31, 1994)

Exchange Arrangement

The currency of the Republic of Azerbaijan is the Manat, the external value of which is determined in weekly auctions. Auctions of foreign exchange (noncash) are held weekly at the Baku Interbank Currency Exchange (BICEX). Participation in the auctions is restricted to the commercial banks that are licensed to deal in foreign exchange bidding on behalf of their customers.1 Since December 15, 1994, the official exchange rate has been set on the basis of the outcome of the foreign exchange auctions. It is used for official transactions and as an accounting rate to value the foreign exchange assets of state-owned enterprises and banks and is applied to proceeds surrendered from exports of services (50 percent of the proceeds). Authorized banks are free to set buying and selling rates for cash transactions. These rates are published weekly at the International Bank. On January 1, 1995, the official exchange rate was Manat 4,182 per US$1, and the exchange rate for cash transactions was Manat 4,300 per US$1 buying and Manat 4,360 per US$1 selling. No commission is assessed on purchases of foreign exchange by the International Bank, but a commission of 2–3 percent is added for sales of foreign exchange.

Differential buying rates arise from the operation of partial surrender requirements in connection with export proceeds, which are converted at highly appreciated exchange rates (see section on Imports and Exports, below).2

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 transactions are regulated by the Azerbaijan National Bank Law, which gives the ANB responsibility for regulating the exchange rate of the manat, conducting foreign currency operations, and administering gold and convertible currency reserve holdings. The ANB also has overall responsibility for issuing licenses to deal in foreign exchange; for regulating foreign exchange operations, including implementing and monitoring compliance with the law; and for establishing prudential rules governing foreign exchange operations.

Foreign trade is regulated under the Foreign Economic Activity Law by the Ministry of Foreign Economic Relations (MFER). The customs service law regulates the organization and operation of the customs service. Enterprises engaged in foreign trade must register with the Ministry of Justice. Trade licenses for petroleum, cotton, and other goods considered strategic are issued by the MFER, and minimum export quotas are determined by the Ministry of Economy.3

Foreign private investment in joint ventures must be registered with the MFER and the Ministry of Finance. Investment abroad by both Azeri nationals and companies is regulated by a state decree that limits the opening of foreign exchange accounts in foreign countries. A license must be obtained from the ANB as well as permission from the Cabinet of Ministers to open such accounts.

Arrears are maintained with respect to external payments.

Prescription of Currency

Residents of Azerbaijan may, once a transaction is approved, make and receive payments and transfers in any convertible currency. Settlements with the Baltic countries and the other countries of the former U.S.S.R. other than the Russian Federation are effected through correspondent accounts of the commercial banks in these states or through correspondent accounts of the respective central banks. Settlements with the Russian Federation are carried out mostly through the correspondent accounts of the respective central banks, although commercial banks are being licensed to open such accounts with banks in the Russian Federation. Azerbaijan maintains a bilateral payments arrangement with the Islamic Republic of Iran. The balance on account earns interest at LIBOR plus 0.75 percent. At the end of three months, the outstanding balance is settled in convertible currencies within 25 days.

Resident and Nonresident Accounts

Resident persons or enterprises may open and use foreign exchange bank accounts at banks abroad subject to authorization by the ANB. Residents may freely open and use foreign currency accounts maintained at licensed banks in Azerbaijan. No declaration of the origin of the foreign exchange is required for individuals. Individuals may transfer a limited amount of foreign exchange held in these accounts upon authorization to the holder’s bank account abroad or may freely convert it into domestic currency. Enterprises may use the foreign exchange held in these accounts to pay for imports or convert it freely into domestic currency through the BICEX.

Nonresident persons and enterprises are free to open foreign exchange accounts with licensed domestic banks. Foreign exchange in these accounts may be transferred abroad or sold to the banks for manats. Nonresident enterprises may also open and operate accounts in manats and use them for domestic transactions in accordance with instructions issued by the ANB. Foreign governments and international institutions may open and operate manat accounts with specific authorization from the ANB.

Imports and Exports

Payments for imports from the Baltic countries, Russia, and the other countries of the former Soviet Union may be made in any mutually agreeable currency, including banknotes, or through the system of correspondent accounts operated by the ANB and the commercial banks. Payments for imports from the rest of the world are made in accordance with normal commercial practices. There are no restrictions on the use of foreign exchange for import payments from enterprises’ own accounts.

There are no licensing requirements for imports. However, imports are largely controlled through bilateral trade agreements with the Baltic countries, Russia, and the other countries of the former Soviet Union or through a system of contract registration. For imports from the rest of the world, volume and price are constrained by export licenses and contracts in the originating state. A few imports are banned for health, environmental, or security reasons.

Duties are levied on imports in accordance with Resolution No. 252 of June 27, 1994 of the Cabinet of Ministers. Duty rates vary by product but do not distinguish between imports from the Baltic countries, Russia, and the other countries of the former Soviet Union and those from other countries. A customs fee of 0.15 percent is levied on imports from all sources.

Resident persons and enterprises are required to repatriate proceeds from exports within three months and transfer them to a licensed bank in Azerbaijan within ten days of receipt unless specifically exempted by the Government. Expenses, commissions, and taxes paid abroad relating to economic activities may be deducted from the proceeds prior to transfer to a licensed bank. After transfer to a licensed bank, export proceeds are distributed among the exporter’s foreign exchange accounts and the Unified Foreign Exchange Fund (UFEF)4 in accordance with Presidential Decree No. 77 of April 25, 1994.

Surrender requirements range from zero to 75 percent, with rates ranging from 50 percent to 70 percent for major export commodities such as energy products and cotton. The surrender requirement ratios for exports to the Baltic countries, Russia, and the other countries of the former Soviet Union are one-half of the surrender requirements for exports to other countries. The values of foreign exchange subject to surrender requirements are calculated as follows: (1) exporters of goods, the prices of which are officially controlled, receive the domestic currency counterpart to surrendered foreign exchange earnings, calculated as the export volume times the domestic currency price of the commodity; (2) exporters of all other goods are compensated for surrendered foreign exchange at the cost price plus a 15 percent profit margin (enterprises are required to submit information concerning their prices to the ANB); and (3) surrendered foreign exchange originating from foreign exchange exports of services are valued at 50 percent of the official exchange rate.5 Exports of strategic goods must be licensed by the Ministry of Foreign Economic Relations, and they are subject to global quotas set for each product by the Ministry of Economy based on an estimation of production and domestic consumption. Sub-quotas are set for exports to the Baltic countries, Russia, and the other countries of the former Soviet Union, in accordance with bilateral agreements. The MFER issues licenses freely for exports within quota limits, subject to verification of the contract. No licenses are required for other exports, although contracts must be registered with the MFER. Some export bans exist, mainly on defense equipment.

Export duties are assessed in accordance with Resolution No. 252 of June 27, 1994 of the Cabinet of Ministers. Duty rates vary by commodity but do not distinguish between exports destined for the Baltic countries, Russia, and the other countries of the former Soviet Union and those for other countries. However, higher rates are assessed on goods exported under barter trade agreements with Azerbaijan. Duties are payable in foreign exchange received from exports or in manats for goods traded under barter agreements.

A customs fee of 0.15 percent is levied on exports to all destinations.

Payments for and Proceeds from Invisibles

There are no restrictions on the availability of foreign exchange for invisible payments by resident individuals, but documentation is required.

The exportation of foreign banknotes is regulated by the ANB and the Ministry of Finance, in conformity with customs regulations.

Proceeds from invisibles must be repatriated within three months and transferred to a licensed bank within ten days of receipt. The importation of foreign banknotes is regulated by the ANB and the Ministry of Finance in conformity with customs regulations.

Capital

Inward private capital transfers are not restricted, and borrowing abroad by the Government is subject to an annual ceiling determined by Parliament. Foreign exchange transactions of private investors are protected by the Protection of Foreign Investment Law adopted on January 15, 1992. Under this law, the treatment of foreign investment cannot be less favorable than that extended to domestic investment, and foreign investment may receive preferential treatment.

Foreign investment is protected from nationalization and expropriation unless state interests or force majeure is involved. If nationalization or expropriation occurs, adequate compensation is paid. Profits may be reinvested in local currency, held in Azerbaijan, or converted into foreign currency and transferred without restriction. Foreign investors are granted certain privileges: enterprises or joint ventures with foreign equity capital ownership of more than 30 percent are entitled to a two-year holiday on profit taxes; imports and exports of goods and services may be undertaken without licenses; and exporters of manufactured goods are allowed to retain 100 percent of their exchange earnings.

Gold

A license is required to conduct international trade in gold. There are no regulations governing domestic trade in gold.

Changes During 1994

Exchange Arrangement

January 1. The manat became sole legal tender.

May 24. The official exchange rate began to be set on the basis of the weighted average of commercial bank rates.

June 27. All purchases and sales of foreign currency outside the BICEX were prohibited (Decree No. 251 of the Cabinet of Ministers).

Exports and Export Proceeds

April 25. Regulations governing surrender requirements for exports to the Baltic countries, Russia, and the other countries of the former Soviet Union were changed to one-half of those applicable to exports to other countries. The method of calculating the values of foreign exchange subject to surrender requirements was changed as follows: (1) exporters of goods whose prices are officially controlled would receive the domestic currency counterpart to surrendered foreign exchange earnings, calculated as the export volume times the domestic currency price of the commodity; (2) exporters of all other goods would be compensated for surrendered foreign exchange at the cost price plus a 15 percent profit margin (enterprises are required to submit information concerning their prices to the ANB); and (3) surrendered foreign exchange originating from foreign exchange exports of services would be valued at 50 percent of the official exchange rate.

December 15. The official exchange rate began to be set on the basis of the outcome of the foreign exchange auctions held at the BICEX.

Payments for and Proceeds from Invisibles

May 2. Restrictions on the availability of foreign exchange for travel abroad were eliminated by Resolution No. 136 of the Cabinet of Ministers.

The Bahamas

(Position as of December 31, 1994)

Exchange Arrangement

The currency of The Bahamas is the Bahamian Dollar, which is pegged to the U.S. dollar, the intervention currency, at B$1 per 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, with the buying rate based on the rate in the New York market; the selling rate is 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 £1. A stamp tax of 1.5 percent is applied to all outward remittances.

There is also a market in which investment currency1 may be negotiated between residents through the Central Bank at freely determined rates, usually attracting a premium above the official market rate.

Commercial banks may provide forward cover for residents of The Bahamas when the resident is due to receive or must pay foreign currency under a contractual commitment. Commercial banks may not, however, sell foreign currency spot to be held on account in cover of future requirements without the Central Bank’s permission. Authorized dealers may deal in foreign currency forward with nonresidents without prior approval from the Central Bank. Commercial banks may deal forward among themselves at market rates and must ensure when carrying out all forward cover arrangements that their open spot or forward position 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, including payments for imports up to B$100,000; approval authority for 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 approval of the Central Bank. Balances may be converted freely into foreign currency and transferred abroad.4

Accounts credited with funds that may not be placed at the free disposal of nonresidents are designated blocked accounts and are held mainly by emigrants. When 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 approval of the Central Bank, in certain resident-held assets, or they may be spent locally for any other purpose.

Imports and Import Payments

The importation of certain commodities is prohibited or controlled for social, humanitarian, or health reasons. All other goods may be imported without a license. Prior approval from the Central Bank is required to make payments for imports exceeding B$100,000, 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 300 percent, depending on the type of goods, and stamp duties on imports vary from 2 percent to 22 percent. For all imports of agricultural products, a permit must be obtained from the Ministry of Agriculture. 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 may make payments to nonresidents on behalf of residents for certain services and other invisibles, such as commissions, royalties, education, freight, ships’ disbursements, and insurance premiums within specified limits. On application to the Central Bank, residents are entitled to a foreign exchange allowance for tourist travel equivalent to B$1,000 a person above the age of 18 years and B$500 a person up to the age of 18 years a trip; B$10,000 a person a year for business or professional travel; B$3,000 for educational travel; B$1,000 for travel for medical reasons. The allowance 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 the official amounts must be referred to the Central Bank, which approves bona fide applications. Foreign exchange obtained for travel may not be retained abroad or 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 return to The Bahamas.

Subject to adequate documentary evidence, an education allowance is granted without a limit. Temporary residents may, with the approval of the Central Bank, remit up to 50 percent of their wages and salaries, but if commitments outside The Bahamas are more 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 export Bahamian banknotes not exceeding B$70 in value; Bahamian travelers may not export the banknotes of any other country, except with specific approval from 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 banknotes. The importation of domestic banknotes 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 use of the funds in The Bahamas may require authorization. The permission of the Central Bank is required for 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 from the Central Bank, by foreign currency purchased in the investment currency market, or by the 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. Foreigners intending to purchase land for commercial purposes or property larger than five acres in size must obtain a permit from the Foreign Investment Board, under the provisions of the International Landholding Act. If such an application is approved, payment for the purchase may be made either in Bahamian dollars from an external source or in foreign currency. Nonresidents wishing to purchase property for residential purposes may do so without prior approval but are required to obtain a Certificate of Registration from the Foreign Investment Board on completion of the transaction.

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, may be made only with investment currency, and approval is limited to one property a family. 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 to nonresident beneficiaries under the wills or intestacies of persons who were Bahamian residents at the time of their death is permitted.

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 obtained by selling 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, export proceeds, or other current earnings; payment must be made with investment currency. All purchases, sales, and swaps of foreign currency securities in The Bahamas and all swaps in foreign currency securities by Bahamian residents, wherever the swap 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. Sale proceeds from such resident-held foreign currency securities, if registered at the Central Bank by December 31, 1972, are eligible for sale in the investment currency market. Unregistered securities 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. Generally, they 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 their 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. Once a person is redesignated a nonresident, income accruing from assets remaining in The Bahamas is remittable at the current market rate in the official foreign exchange market.

Residents other than authorized banks must obtain permission to borrow foreign currency from nonresidents, and authorized dealers are subject to exchange control direction of their foreign currency loans to residents. Residents must also obtain 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, it is 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 wholly owned by nonresidents is not 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 local currency borrowing is determined in relation to the resident interest in the equity of the company. Banks and other lenders resident in The Bahamas must have permission to extend loans in domestic currency to any corporate body (other than a bank) that is also resident in The Bahamas but is controlled by any means, whether directly or indirectly, by nonresidents. However, companies set up by nonresidents primarily to import and distribute products manufactured outside The Bahamas are not allowed to borrow Bahamian dollars from residents for either fixed or working capital. Instead, they must provide all their financing in foreign currency, and foreign currency loans 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, and no import duty is imposed on these items. Commercial imports of gold jewelry do not require a license but are subject to an import duty of 35 percent. 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 1994

No significant changes occurred in the exchange and trade system.

Bahrain

(Position as of December 31, 1994)

Exchange Arrangement

The currency of Bahrain is the Bahrain Dinar, which is pegged to the SDR at the rate of BD 0.46190 per SDR 1. The exchange rate for the Bahrain dinar in terms of the SDR may be set within margins of ± 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; since December 1980, the exchange rate has remained unchanged at BD 1 per US$2.6596. 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 to 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. The BMA does not deal with the public. On December 31, 1994, the BMA’s buying and selling rates for the U.S. dollar were BD 0.375 and BD 0.377, respectively, per US$1. 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 mil (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 rates 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. The BMA monitors the forward exchange transactions of commercial banks through the open position of the 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 BMA is the exchange control authority, but there is no exchange control legislation in Bahrain. No import or export licenses are required (except for arms, 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. Imports of a few commodities are prohibited from all sources for reasons of health, public policy, or security. Imports of cultured pearls are prohibited. In practice, rice is imported mainly by the Bahrain Import-Export Company.

The rates of customs tariffs range between 5 percent and 10 percent on most commodities, but the rate is 20 percent on vehicles, 50 percent on tobacco, and 125 percent on alcoholic beverages. Mandatory government procurements give preference to goods produced in Bahrain and member countries of the Cooperation Council for the Arab States of the Gulf (GCC), provided that the quality and prices of these goods are within specified margins of the prices of imported substitutes (10 percent for goods produced in Bahrain and 5 percent for goods produced in 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. Otherwise, all products 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 banknotes.

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, except 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 profits. Licensed offshore banking units may freely engage in transactions with nonresidents, although 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. Brokers doing business in gold and other commodities must obtain approval from the BMA before they can register with the Ministry of Commerce and Agriculture. Such businesses are 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 1994

No significant changes occurred in the exchange and trade system.

Bangladesh

(Position as of December 31, 1994)

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, 1994, Bangladesh Bank’s (spot) middle rate of the taka in terms of the U.S. dollar was Tk 40.25 per US$1, and the spot buying and selling rates of Bangladesh Bank (the central bank) for authorized dealers were Tk 40.15 and Tk 40.55, respectively, per US$1. Bangladesh Bank deals with authorized domestic banks only in U.S. dollars and the currencies of the member countries of the Asian Clearing Union (ACU).1 Authorized banks are free to set their own buying and selling rates for the U.S. dollar and the rates for other currencies based on cross rates in international markets.

Forward contracts are available from authorized banks, 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. For the currencies of ACU member countries, the authorized banks may, in turn, take forward cover from Bangladesh Bank against transactions entered into through forward contracts with their customers.

Authorized banks are permitted to retain working balances with their foreign correspondents. Currency swaps and forward exchange transactions are permitted when they are against underlying approved commercial transactions.

Bangladesh formally accepted the obligations of Article VIII, Sections 2, 3, and 4 of the Fund Agreement, as from April 11, 1994.

Administration of Control

Exchange control is administered by Bangladesh Bank in accordance with general policy formulated in consultation with the Ministry of Finance. The commercial banks and specialized financial institutions are issued licenses as 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-owned agencies, including the Trading Corporation of Bangladesh (TCB).

Prescription of Currency

Settlements normally take place in convertible currencies, and in some cases through nonresident taka accounts. Settlements with ACU member countries are required to be effected through the ACU in terms of the Asian monetary unit (AMU).2 There are commodity exchange agreements with a few countries.3 Settlements for trade under these agreements are effected through special nonconvertible U.S. dollar accounts.4 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 in Bangladesh to a nonresident bank account 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, Iraq, and the Federal Republic of Yugoslavia (Serbia/Montenegro) are prohibited.

Resident and Nonresident Accounts

The accounts of individuals, firms, or companies residing 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.5 Nonresident foreign currency accounts may be opened by authorized dealers without prior approval from Bangladesh Bank for Bangladeshi nationals and foreign nationals who reside abroad and for foreign firms operating abroad. Specified debits and credits to these accounts may be made in the account holder’s absence by authorized dealers without prior approval from Bangladesh Bank. Certain other debits and credits may be made without prior approval from Bangladesh Bank but are subject to ex post reporting.

Convertible taka accounts. All diplomatic missions operating in Bangladesh, their diplomatic officers, home-based members of the mission staffs, international nonprofit organizations (including charitable organizations functioning in Bangladesh and their respective personnel), foreign oil companies engaged in oil exploration in Bangladesh and their expatriate employees, UN organizations and other international organizations, 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 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 and shipping companies, and international nonprofit organizations in Bangladesh may open interest-bearing accounts, but the interest earned can be disbursed only in local currency.

Foreign currency accounts of Bangladeshi nationals working abroad. Bangladeshi nationals and persons of Bangladeshi 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 (banknotes, traveler’s checks, drafts, etc.) brought into Bangladesh by the account holders, provided that amounts exceeding $5,000 have been declared to customs upon arrival in Bangladesh; (3) transfers from other foreign currency accounts opened under the former Wage Earners’ Scheme (WES); and (4) transfers from nonresident foreign currency deposit accounts. The accounts may be debited without restriction, but debits for the following purposes must be reported to Bangladesh Bank: (1) all local disbursements; (2) transfers to other foreign currency accounts opened under the WES; (3) payments for imports of specified goods against letters of credit; (4) payments of bank commissions and other bank charges connected with imports; and (5) travel expenditures up to prescribed limits abroad for business or private purposes.

Nonresident foreign currency deposit accounts. Bangladeshi nationals residing abroad; foreign nationals, companies, and firms registered or incorporated abroad; banks and other financial institutions, including institutional investors; officers and staff of Bangladeshi missions and government institutions; autonomous bodies; and commercial banks 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 $1,000 or £500 ($25,000 for foreigners), with remittances in convertible currencies and transfers from existing foreign currency deposit accounts maintained by Bangladeshi nationals abroad. The balance, including interest earned, may be transferred in foreign exchange by the account holder to any country or to any foreign currency deposit account maintained by Bangladeshi nationals abroad. The balances in the accounts, which are freely convertible into taka, must be reported monthly by banks to Bangladesh Bank.

Nonresident Bangladeshis who do not open or maintain a foreign currency deposit account while abroad may open a nonresident foreign currency deposit with foreign exchange brought in from abroad within six months of the date of their return to take up permanent residence in Bangladesh.

Resident foreign currency deposit (RFCD) accounts. Resident Bangladeshis, at the time of their return from travel abroad, may bring in any amount of foreign currency with a declaration and up to $5,000 or the equivalent without a declaration and may maintain an RFCD account with the foreign exchange brought in. However, proceeds of exports of goods and services from Bangladesh or commissions arising from business deals in Bangladesh are not allowed to be credited to such accounts. Balances in these accounts are freely transferable abroad and may be used for travel in the usual manner. These accounts may be opened in U.S. dollars and pounds sterling. Exporters and local joint-venture firms executing projects financed by a foreign donor or international agency may open foreign currency accounts. Foreign currency accounts may also be opened in the names of diplomatic missions in Bangladesh, their expatriates, and diplomatic bonded warehouses (duty-free shops).

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 a two-year IPO announced by the Government. The controlled list contains 107 items in about 1,400 categories at the four-digit level of the Harmonized System Codes. The importation of these items is restricted or prohibited either for social or religious reasons or because similar items are produced locally. Up to 26 items are restricted purely for trade purposes. Items not specified in the control list of the IPO are freely importable, provided that the importer has a valid import registration certificate. Imports from Israel 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, importers are allowed to effect imports against LCAFs issued by authorized dealer banks without an import license. 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 imports transported on flag vessels of Israel are prohibited. Goods must be shipped within 17 months of the date of issuance of LCAFs in the case of machinery and spare parts and 9 months in the case of all other items.

Payment against imports is generally permissible only under cover of irrevocable letters of credit. 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 back-to-back letters of credit on a deferred-payment basis of 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 from 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 established by the Board of Investment. Firms in the industrial sector are given an entitlement to import 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 but does apply to items appearing on the controlled list. 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.

Authorized dealers may establish letters of credit on an f.o.b. basis without the approval of Bangladesh Bank, subject to the following conditions: (1) cost of goods, cost of freight, and insurance will be accommodated within the amount recorded in the LCAF issued in favor of the importer; (2) cost of freight will be paid locally out of the LCAF value in local currency; and (3) other directives of the IPO will be duly complied with. Foreign exchange for authorized imports is provided automatically by authorized dealers when payments are due. Advance payments for imports require approval from 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. Applications for foreign exchange for family maintenance and education abroad are accepted upon verification of their bona fide nature. For medical treatment, up to $10,000 can be obtained without prior approval; for larger amounts, the total amount required is granted, subject to the approval of Bangladesh Bank. The indicative allowance for personal travel by resident Bangladeshi nationals to countries other than Bhutan, India, Maldives, Myanmar, Nepal, Pakistan, and Sri Lanka is $2,500 a year; the allowance for air travel to these seven countries is $500 a person a year. Larger amounts are available upon verification by Bangladesh Bank of the bona fide nature of the request. Business travelers may obtain up to $6,000 without prior authorization and more upon verification of bona fides. Exporters maintaining retention accounts may use the funds on these accounts to cover travel expenses abroad without prior approval from Bangladesh Bank. Foreign nationals working in Bangladesh may freely remit up to 50 percent of net salary in terms of service contracts approved by the Government; the entire amount of their leave salaries and savings can also be remitted freely. No prior permission is required for the remittance of royalties and technical fees of up to 6 percent of sales; training and consultancy fees of up to 1 percent of sales; and fees for undergraduate, postgraduate, and some professional courses.

Nonresident travelers may take out the foreign currency and traveler’s checks they brought in and declared on entry or up to $5,000 or the equivalent brought in without declaration. They may also, without obtaining the approval of Bangladesh Bank, reconvert taka notes up to Tk 6,000 into convertible foreign currencies at the time of their departure. Resident travelers may take out foreign currency and traveler’s checks up to the amount of any travel allocation they are granted. A Bangladeshi or a foreign national may take out Tk 500 in domestic currency; otherwise, the exportation of Bangladeshi 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; applications must be supported by an audited balance sheet and profit-and-loss account, a board resolution declaring dividends out of profit derived from the normal business activities of the company, and an auditor’s certificate that tax liabilities are covered. Authorized dealers may remit profits of foreign firms, banks, insurance companies, and other financial institutions operating in Bangladesh to their head office on receipt of applications supported by documentation. These remittances are, however, subject to ex post checking by Bangladesh Bank.

Exports and Export Proceeds

Exports to Israel are prohibited. Proceeds from exports must be received within four months of shipment unless otherwise allowed by Bangladesh Bank. Exporters are permitted to retain 5 percent of products with a low value added and 15 percent of other products of the proceeds from exports; they may use retained earnings for bona fide business purposes, such as business travel abroad, participation in trade fairs and seminars, and imports of raw materials, spare parts, and capital goods. They may also be used to set up offices abroad without prior permission from Bangladesh Bank.

Joint ventures, other than in 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 place the remaining 30 percent in a bank account in domestic currency.

Proceeds from Invisibles

Exporters of services are permitted to retain 5 percent of the proceeds and use retained earnings for bona fide business purposes. Bangladeshi 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 Bangladeshi nationals who reside 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. However, returning residents may keep, on hand or in a foreign currency account opened in their name, up to $5,000 without declaration.

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 importation of Bangladeshi currency notes and coins exceeding Tk 500 is prohibited. Foreign currency traveler’s checks and foreign currency notes may be brought in up to $5,000 without declaration and up to any amount without limit, provided the amount brought in is declared to customs upon arrival in Bangladesh.

Capital

All outward transfers of capital require approval, which is not normally granted for resident-owned capital. Inward capital transfers other than portfolio investment and direct investment in the industrial sector also require approval. Movable and immovable assets, including foreign exchange, owned in any country other than Bangladesh must be declared to Bangladesh Bank by resident Bangladeshi nationals. However, Bangladeshi residents may continue to maintain foreign currency accounts opened during their stay abroad. There is no restriction on the importation of securities into Bangladesh. The issuing and transfer of shares and securities in favor of nonresidents against foreign investment or inward remittance are allowed without the prior permission of Bangladesh Bank. The transfer of Bangladeshi shares and securities from one nonresident holder to another nonresident holder also does not require prior approval from Bangladesh Bank. Nonresident persons and institutions, including nonresident Bangladeshis, may buy Bangladeshi shares and securities through stock exchanges in Bangladesh against freely convertible foreign currency remitted from abroad through the banking channels. Proceeds from sales including capital gains and dividends earned on the shares or securities bought in this manner may be remitted abroad in freely convertible currency.

Authorized dealers may obtain short-term loans and overdrafts from overseas branches and correspondents for a period not exceeding seven days at a time. Private sector industrial units in Bangladesh may borrow funds from abroad without the approval of the Board of Investment if the interest rate does not exceed 4 percent above the LIBOR, the repayment period is not less than seven years, and the down payment is not more than 10 percent; industrial units in the export promotion zones, including foreign-owned and joint ventures, may obtain short-term foreign loans without prior approval. Local currency loans to enterprises controlled by foreigners or residents do not require Bangladesh Bank approval. Lending by authorized dealers in local currency against overseas or collateral outside Bangladesh requires approval from Bangladesh Bank. Authorized dealers may grant, without reference to Bangladesh Bank and according to banking practice, loans without a specific limit in domestic currency to foreign-owned manufacturing companies located in Bangladesh. Authorized dealers may also approve loans, overdrafts, or credit facilities against goods intended for exportation from Bangladesh to companies controlled by persons residing 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.

When their work in Bangladesh is finished, expatriate workers may transfer their savings abroad, provided that their salaries and benefits were initially certified by the Board of Investment.

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 for the protection and equitable treatment of foreign private investment, indemnification, protection against expropriation and nationalization, and guarantee for repatriation of investment. With the exception of a few reserved sectors, private foreign investment is freely allowed.

There is no ceiling on private investment. Tax holidays are granted for periods of up to nine years, depending on the location. There is no upper limit on the foreign equity portion of an industrial investment, and there is no prior approval requirement for investments, which should, however, be registered with 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 activities. Dividends on foreign capital may be remitted freely after payment of taxes.

Gold

The importation and exportation of gold and silver are prohibited without special permission. However, adult female passengers are free to bring in or take out any amount of gold jewelry without prior approval from Bangladesh Bank. Exports of gold jewelry are also allowed 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 1994

Exchange Arrangement

April 11. Bangladesh accepted the obligations of Article VIII, Sections 2, 3, and 4 of the Fund Articles of Agreement.

Payments for Invisibles

March 28. Business travelers were permitted to obtain foreign exchange in excess of $6,000 upon providing verification of the bona fide nature of travel.

March 28. Applications for foreign exchange for family maintenance abroad would be approved upon verification that the need was bona fide.

Barbados

(Position as of December 31, 1994)

Exchange Arrangement

The currency of Barbados is the Barbados Dollar, which is pegged to the U.S. dollar, the intervention currency, at BDS$2 per US$1. On December 31, 1994, the official buying and selling rates for the U.S. dollar were BDS$1.9975 and BDS$2.0350, respectively, per US$1. Buying and selling rates for the Canadian dollar, the deutsche mark, and the pound sterling are also officially quoted on the basis of their cross-rate relationships to the U.S. dollar. The quoted rates include commission charges of 0.125 percent buying and 1.75 percent selling against the U.S. dollar, and 0.1875 percent buying and 1.8125 percent selling against the Canadian dollar, the deutsche mark, and the pound sterling.

Under clearing arrangements with regional monetary authorities, the Central Bank of Barbados currently sells currencies of only three Caribbean Common Market (Caricom) countries;1 these are the Guyana dollar, the Eastern Caribbean dollar, and the Belize dollar. The Trinidad and Tobago dollar and the Jamaica dollar now float against the U.S. dollar, and the Central Bank fixes daily selling rates based on rates supplied by the monetary authorities of these countries. These rates are applicable only to government transactions. All selling rates fixed by the Central Bank in respect of Caricom currencies include a commission of 0.125 percent. The Central Bank purchases Eastern Caribbean dollar notes only. 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 the commercial banks may charge their customers for 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 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. The Central Bank and commercial banks enter into swap transactions in U.S. dollars, while commercial banks may freely switch between nonregional currencies.

Barbados formally accepted the obligations of Article VIII, Sections 2, 3, and 4 of the Fund Agreement, as from November 3, 1993.

Administration of Control

Exchange control applies to all countries and is administered by the Central Bank, which 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. Trade controls are administered by the Ministry of Industry, Commerce, and Business Development.

Prescription of Currency

Settlements with residents of countries outside the Caricom area 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 and Trinidad and Tobago, 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 U.S. dollar traveler’s checks to Barbadian residents traveling to other Caricom countries, within the approved limits for travel allowances. With effect from September 21, 1991 and April 13, 1993, the Bank of Jamaica and the Central Bank of Trinidad and Tobago abolished exchange control in Jamaica and Trinidad and Tobago, respectively; as a result, settlements with residents of Jamaica and Trinidad and Tobago are made in U.S. dollars.

Resident and 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 is opened. Other credits and debits require individual approval.

Authorized dealers may open external accounts for nonresidents without consulting the Central Bank. These accounts, maintained in Barbados dollars, 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 payment 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

Certain imports require individual licenses. However, not all goods that are subject to import licensing are subject to quantitative restrictions or import surcharges. Some items on the import-licensing list may be freely imported throughout the year, while others are subject to temporary restrictions (particularly agricultural products, which tend to be subject to seasonal restrictions). 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.

The customs duty rates on most goods range from 5 percent to 35 percent, the same range as the Common External Tariff (CET) of the Caricom region.3 Import surcharges in the form of stamp duties, consumption taxes, and luxury taxes amount to a total of up to 203 percent.

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 up to the equivalent of BDS$20,000 (c.i.f.) for advance payments for imports into Barbados. Other advance payments require the prior approval of the Central Bank.

Payments for Invisibles

Payments for invisibles require exchange control approval. 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 personal and sundry payments. These include foreign travel, for which up to BDS$5,000 a person a calendar year may be allocated for private travel inside or outside the Caricom area; BDS$500 a day for business travel, up to BDS$4,000 a person a calendar year; expenses for education abroad, BDS$20,000 a person a year; remittances of cash gifts not exceeding BDS$1,000 a donor a year; subscriptions to newspapers and magazines, BDS$5,000 a person a year; remittances for medical purposes, up to BDS$50,000 a year; and 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.

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

Specific licenses are required for the exportation of certain goods to any country, including rice, cane sugar, rum, molasses, and 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 foreign exchange proceeds are surrendered to authorized dealers 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 Union.

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 returning to Barbados are required to sell their holdings of foreign currencies to an authorized dealer.

Capital

All outward capital transfers, including direct investments by residents and the purchase by residents of foreign currency securities and 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$30,000 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$1,000 a donor a year. Emigrating Barbadian nationals are granted settling-in allowances from their declared assets at the rate of BDS$30,000 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 the assets they hold in Barbados.

Direct investment by nonresidents may be made with exchange control approval. The remittance of earnings on, and liquidation of proceeds from, such investment is permitted, provided that evidence documenting the validity of the remittance is submitted, all liabilities related to the investment have been discharged, and the original investment was registered 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.

A 6 percent tax is levied on portfolio investments of pension funds with foreign companies that are not registered with the Barbados Supervisor of Insurance.

Gold

Gold coins with face values of BDS$50, 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 Industry, Commerce, and Business Development; no license is required to export gold, but exchange control permission is required to do so.

Changes During 1994

Administration of Control

March 17. Barbados lifted economic sanctions against South Africa.

Imports and Import Payments

February 10. Quantitative restrictions and licenses were eliminated on a number of items. A surcharge of 100 percent was imposed on imported products for which locally produced goods can be substituted.

October 1. All taxes on inputs used in the agricultural and manufacturing sectors were eliminated.

Payments for Invisibles

April 5. Authorized dealers were allowed to release foreign exchange as follows: (1) for remittances for cash gift purposes, BDS$1,000 a donor a year; (2) for advertising, legal fees, commissions, dividends, subscriptions, film processing, insurance payments, and personal loan payments, up to BDS$5,000; (3) for advance payments for imports into Barbados, up to BDS$50,000 c.i.f. against specified documentary evidence; (4) for medical treatment outside Barbados, up to BDS$50,000 against specified documentary evidence; and (5) foreign exchange for foreign travels as follows (i) from Barbados to other countries, at the rate of BDS$5,000 a person a calendar year; (ii) business travel from Barbados to other countries, at the rate of BDS$500 a day, up to a maximum of BDS$40,000 a person a calendar year.

Capital

April 5. The annual allowance allowed for remittances under a legacy was raised to BDS$30,000 a person from BDS$20,000.

April 25. (1) The annual allowance for Barbadian national emigrants was increased to BDS$30,000 a person, or family unit from BDS$20,000, and (2) the amount allowed for excess capital gains was raised to BDS$30,000 a year from BDS$24,000.

Belarus

(Position as of December 31, 1994)

Exchange Arrangements

The currency of Belarus is the Rubel.1 Restrictions on conversion of noncash rubels into cash (and vice versa) have been abolished effective December 31, 1994. This has eliminated the differentiation that existed between cash and noncash rubels against foreign currencies. The exchange rates of the rubel against the U.S. dollar, the deutsche mark, the Russian ruble, and the Ukrainian karbovanets are established twice weekly, at the Minsk Currency Exchange, with participation of the commercial banks licensed to conduct foreign currency operations and the National Bank of Belarus (NBB). On December 31, 1994, the market exchange rate was Rbl 9,680 per US$1.

The official exchange rates are set on the basis of the auction rate and are used for accounting purposes, for all foreign exchange transactions for the government, for transactions related to exports and imports, and for most current transfers and capital account transactions.

By resolution of the Board of the NBB of October 5, 1994, restrictions on conducting cash transactions on the foreign currency exchange have been lifted. By NBB Board Resolution of November 23, 1994, commercial banks with the required foreign exchange license are permitted to trade at the currency auction for their own account.

Foreign investors must pay a 15 percent tax in convertible currency on income received as a result of the profit remittances. There are no arrangements for forward cover against exchange risk in the official or the commercial banking sector.

Administration of Control

The Parliament is responsible for legislating exchange control regulations and the NBB for administering them. The country’s official foreign exchange reserves are controlled by the Council of Ministers and the NBB. Local governments control the local foreign exchange funds. Foreign exchange for official import payments is administratively allocated through state and local government foreign exchange funds. Foreign exchange regulations to vest the NBB with greater authority to control official foreign exchange reserves and to implement exchange rate policy are under preparation.

Only banks may obtain licenses to engage in foreign exchange transactions. Enterprises may obtain permission to open foreign exchange offices, sell goods, and render services for freely convertible currency within Belarus.

Prescription of Currency

Payments with countries with which Belarus has bilateral payments agreements are effected in the currencies specified in these agreements and in accordance with their regulations.2 The agreements with the Baltic countries, Russia, and the other countries of the former Soviet Union provide for settlement through bilateral clearing accounts held with central banks or authorized commercial banks. Settlement is to take place in convertible currencies, national currencies, or rubels; a number of countries of the former Soviet Union have signed an agreement (in October 1992) that they will use only the ruble in nonbarter transactions among themselves. Foreign trade payments outside this sphere are made in convertible currency. A significant share of trade is conducted in the framework of barter agreements. An attempt is being made to balance the trade with a cash trading partner, but if an imbalance emerges, it is settled, in principle, with deliveries of goods or in convertible currency. Since September 9, 1992, barter trade of certain goods has required approval from the Commission of the Council of Ministers on the Issuance of Authorization to Engage in Commodity-Exchange Operations.

Payments in foreign currency for goods and services (including wage payments) transactions among residents are prohibited.

Resident and Nonresident Accounts

Without declaring the sources of their foreign exchange, residents may open foreign currency accounts at commercial banks in Belarus authorized to handle foreign exchange (authorized banks). Residents may maintain bank accounts abroad only with the permission of the NBB. Foreign exchange received by resident juridical persons as a result of foreign economic activities must be repatriated to accounts of authorized banks in Belarus, unless otherwise authorized by the NBB.

Nonresident juridical persons may maintain foreign exchange accounts with authorized banks in Belarus. These accounts may be credited with funds from abroad, proceeds from sales of goods and services in the ruble area to residents and nonresidents, debt-service payments, interest earned on balances in the accounts, funds from other foreign exchange accounts of nonresidents in Belarus, and earnings from investments in the Baltic countries, Russia, and the other countries of the former Soviet Union. These accounts may be debited for purchases of goods and services and for investments in the Baltic countries, Russia, and the other countries of the former Soviet Union, as well as for payments to residents and nonresidents. Funds from these accounts may be freely repatriated or exchanged for Belarussian rubels at the unified exchange rate through the authorized banks.

Nonresident juridical persons may also open two types of accounts in the official currency of Belarus at authorized commercial banks. The first type, “L” Accounts, may be credited with the rubel counterpart of foreign exchange sold to the NBB or authorized banks; dividends from foreign-owned enterprises or joint ventures; returns on securities; and from sales of such securities within Belarus. Funds from these accounts are freely usable in the ruble area and may be converted into foreign currency at the unified exchange rate. The second type, “N” Accounts, may be funded by proceeds from the sale of goods produced in Belarus or received from residents. Balances in these accounts may be used only for business travel expenses; to purchase inputs used for production of goods for export from Belarus; to purchase foreign exchange at the free exchange rate at auctions (up to the limit of nonresidents’ initial investment plus proceeds from sales of their output in Belarus); for payment of wages; and for investment purposes according to the procedures established by legislation.

Imports and Exports

Trade with the Baltic countries, Russia, and the other countries of the former Soviet Union is conducted (1) under intergovernmental agreements; (2) through intermediation by former ministries or other agencies involved in resource distribution; (3) through enterprise deals; and (4) through commodity exchanges.

The bilateral trade agreements Belarus maintains with other countries include an appendix that specifies in volume terms the amounts of about 150 products to be delivered during the period covered by the agreement. The signatory governments guarantee that the specified volumes will be provided to the partner country. In most cases, the guarantee takes the form of state orders if corresponding state orders are in effect in the partner country.3 Defense-related goods are excluded from trade agreements.

Trade in these products that exceeds the volume specified in the appendices and trade in products not included in the appendices of the trade agreements are mainly conducted as follows. The ministries, agencies, or self-financing wholesale trade organizations involved in controlling resource distribution periodically collect information on the demand and supply conditions regarding the products that fall in their respective areas of responsibility. They submit this information to their counterparts in the other countries to match with their lists. When trade takes place, the individual enterprises and organizations negotiate the terms of delivery.

Fifty percent of proceeds from exports in convertible currencies are subject to surrender requirements. Nonconvertible currency proceeds must be repatriated and deposited in special accounts with Belarussian banks and used for payments of imports. If deposits are not used within 20 days, they must be sold through auctions held by the NBB. By NBB Board Resolution of October 5, 1994, the 100 percent surrender requirement for export earnings received in Russian rubles has been lowered to 50 percent. Also, by the same resolution, enterprises and individuals have been permitted to open bank accounts in Russian rubles.

Resident natural and juridical persons must obtain a license to engage in foreign economic activities (licenses are issued by the Committee on Foreign Economic Relations). With the exception of goods on a short negative list (comprising mainly arms and drugs), these licensed agents may trade in any product.

Residents do not need a license or approval from the NBB to conduct foreign exchange operations related to trade, except for (1) down payments for imports or services exceeding $100,000 or the equivalent that represent more than 30 percent of the value of the goods or services imported; (2) import payments or export receipts not effected within 180 days of the date of shipment;4 and (3) interest payments to nonresidents on returned down payments when an original contract is not fulfilled. Licenses or approvals for these exceptions are granted by the NBB on a case-by-case basis.

Imports of the following products require a license: medicines, herbicides, industrial waste, movie films, and imports conducted in the framework of intergovernmental trade agreements. By Resolution of the Council of Ministers of December 2, 1994, all export taxes, export licenses, and quotas have been abolished, with the exception of those mandated by international and bilateral commitments, including the customs union arrangement with the Russian Federation.

A new import tax structure was introduced on October 6, 1993 with Resolution No. 672 of the Council of Ministers. Taxes are levied on products traded under barter arrangements and on a cash basis. The rates range from 10 percent to 90 percent. The highest rate is applicable to some old automobiles, and the 80 percent rate is charged on whiskey, gin, and some other alcoholic beverages. Unprocessed leather and intermediate leather products are taxed at 30 percent and 15 percent, respectively.

Payments for and Proceeds from Invisibles

Resident individuals may purchase annually foreign exchange for tourist travel up to an amount equivalent to 25 times the minimum wage at the free market exchange rate; for travel to the Baltic countries, Russia, and the other countries of the former Soviet Union, the limit is 50 times the minimum wage. Larger amounts may be taken out with customs declaration proof that they were brought into Belarus or with a certificate from an authorized bank that they were exchanged legally. Purchases of foreign exchange for education, medical treatment, family maintenance, repatriation of salaries and wages, payments of insurance premiums, profit remittances, and purchases exceeding $10,000 require approval from the NBB. Salaries and wages earned by foreign nationals employed in joint-venture enterprises may be remitted abroad without restriction.

Post-1992 Russian banknotes up to Rub 500 may be taken abroad or brought into the country when traveling to the Baltic countries, Russia, and the other countries of the former Soviet Union; a similar restriction applies to the importation and exportation of rubel banknotes, for which the limit is Rbl 100,000 for travel to the Baltic countries and other countries. Residents of the Baltic countries, Russia, and the other countries of the former Soviet Union may pay for air and train tickets as well as hotel expenses in Russian rubles; nonresidents may be required to pay for these expenses in convertible currency.

Capital

The properties owned by foreign investors in Belarus are protected from expropriation.5 Foreign investors are guaranteed full freedom to repatriate their initial investment capital and profits earned in Belarus. Repatriation of profits is subject to a tax of 15 percent payable in convertible currency. Foreign investment must be registered with the Committee on Foreign Economic Relations and, in the case of financial institutions, also at the NBB. At the time of registration, the enterprise obtains a license to engage in activities in a particular area of specialization and may not pursue other activities. The proportion of equity capital share by nonresidents in direct investments is not restricted, except in the financial sector, where it cannot exceed 50 percent. Joint-venture enterprises are free to set their own product prices. They may participate in foreign exchange auctions and commodity exchange transactions through authorized banks.

Nonresidents may take part in auctions of state property with their own funds. However, special coefficients that raise the price of state property for nonresidents are set by the Committee of State Property. Other coefficients are set by the Council of Ministers, or their local agencies, and the Ministry of Finance and are announced to participants before auctions take place.

Enterprises with more than 30 percent foreign capital ownership are permitted to export a certain proportion of their output and import inputs necessary for their production without restriction. These enterprises are exempted from the profit tax for three years from the first year the enterprise reports a profit. If the enterprise is deemed to be essential for the economy of Belarus by the Council of Ministers, the profit tax rate may be reduced by 50 percent for an additional three-year period.

External borrowing by residents must be registered with the Ministry of Finance, and the opening of bank accounts abroad requires approval from the NBB.

Gold

A license is required for the exportation of gold, which is on the short list of products (together with arms, radioactive materials, and narcotics) under the strictest licensing requirements.

Changes During 1994

Exchange Arrangement

August 20. The Russian ruble ceased to be legal tender.

December 31. The use of foreign currency in local transactions was prohibited.

Imports and Exports

October 5. The ratio of surrender requirement for exports received in Russian rubles was reduced to 50 percent from 100 percent.

October 19. The surrender requirement for proceeds from exports in convertible currencies was set at 50 percent.

December 2. All export taxes, licenses, and quotas, except those mandated by international or bilateral commitments, including the customs union arrangement with the Russian Federation, were abolished.

Belgium and Luxembourg

(Position as of December 31, 1994)

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 Austria, Denmark, France, Germany, Ireland, the Netherlands, Portugal, and Spain in the exchange rate and intervention mechanism (ERM) of the European Monetary System (EMS).1 In accordance with this agreement, Belgium and Luxembourg maintain spot exchange rates between their currencies and the currencies of the other participants within margins of 15 percent above or below the cross rates derived from the central rates expressed in European currency units (ECUs).2

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, 1994, these rates were as follows:

Specified Intervention Rates per:Belgian Francs or Luxemburg Francs
Upper limitLower limit
100Danish kroner627.8800465.6650
100Deutsche mark2,395.20001,776.2000
100French francs714.0300529.6600
1Irish pound57.744542.8260
100Netherlands guilders2,125.60001,576.4500
100Portuguese escudos324.212017.9570
100Spanish pesetas430.271522.4510

The participants in the EMS do not maintain the exchange rates for other currencies within fixed limits. However, 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, 1994, the indicative middle rate for the U.S. dollar was BF 31.87 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.

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 Economic 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 or received through a bank in Belgium or Luxembourg, residents provide this information to the BLEI through their banks; for all other professional foreign transactions, residents report to the BLEI directly on a monthly basis.

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) all imports from Albania, Bulgaria, China, the Democratic People’s Republic of Korea, Mongolia, the Baltic countries, Russia, and the other countries of the former Soviet Union, and Viet Nam;5 and (2) certain specified imports from all other countries,6 including 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 EU countries, the BLEU applies quotas on a number of textile products from non-EU countries in the framework of the Multifiber Arrangement (MFA) and also applies a system of minimum import prices to foreign steel products.

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

Payments for Invisibles

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

Exports and Export Proceeds

Export licenses are required only for a few products, mostly of a strategic character, and for some agricultural and iron and steel products.

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 francs 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 of 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.7

Bonds denominated in Belgium or Luxembourg francs may be issued freely on the Luxembourg capital market. After they are issued, they are reported to the LMI, mainly for statistical purposes.

Gold

Residents may freely purchase, hold, and sell gold coins and 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 1 percent value-added tax in Belgium.

Changes During 1994

No significant changes occurred in the exchange and trade system.

(See Appendix for a summary of trade measures introduced and eliminated on an EU-wide basis during 1994, page 554.)

Belize

(Position as of December 31, 1994)

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 per 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, respectively, per US$1. On December 31, 1994, the buying and selling rates in transactions between the banks and members of the public were BZ$2.69 and BZ$2.71, respectively, per US$1. The Central Bank quotes daily rates for the Canadian dollar, the pound sterling, 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 accepted the obligations of Article VIII, Sections 2, 3, and 4 of the Fund Agreement as from June 14, 1983.

Administration of Control

The Central Bank is responsible for administering exchange control, which applies 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

Banks must have permission from the Central Bank to open external or foreign currency accounts. The Central Bank may also stipulate 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 14 percent of the c.i.f. value. Imports by most of the public sector and by 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$5,000 a person a calendar year; (2) business travel by residents, BZ$500 a day a person, up to a maximum of BZ$20,000 a year; (3) business or nonbusiness travel by nonresidents, BZ$500 a person a year unless payment is made from an external account or from proceeds of foreign currency; and (4) gifts, BZ$100 a donor. Requests in excess of these amounts are referred to the Central Bank, which grants all bona fide requests. Foreign exchange is provided for payment of correspondence courses by the authorized dealers when applications are properly documented.

Exports of foreign and domestic banknotes and currency are subject to limits as follows: each traveler may carry domestic banknotes 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 items are subject to an ad valorem export duty of 5 percent.3 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 imports of foreign currency are not restricted. Resident travelers are required to sell their excess holdings of foreign currencies to an authorized dealer upon returning to Belize.

Capital

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

Gold

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

Changes During 1994

No significant changes occurred in the exchange and trade system.

Benin

(Position as of December 31, 1994)

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 per F 0.01. The official buying and selling rate is CFAF 100 per 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 mil on transfers to all countries outside the West African Monetary Union (WAMU), which must be surrendered in its entirety to the Treasury. 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. 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. For 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 and Tourism. The Ministry of Finance, however, in collaboration with the BCEAO, draws up the exchange control regulations. The BCEAO is authorized to collect, either directly or through banks, financial institutions, and the Postal Administration, 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 the African, Caribbean, and Pacific (ACP) State signatories to the Lomé Convention and from member countries of European Union (EU) and Operations Account countries have been abolished. Upon the recommendation of the Directorate of Monetary and Financial Affairs of the Ministry of Finance, exports of diamonds and other precious or semiprecious metals require authorization from the Directorate of External Commerce.

Arrears are maintained with respect to external payments.

Prescription of Currency

Because 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. There is an inoperative payment agreement with Hungary.

Nonresident Accounts

Because the BCEAO has suspended the repurchase of banknotes circulating outside the territories of the CFA franc zone, nonresident accounts may not be credited or debited with BCEAO banknotes. These accounts may not be overdrawn without the prior authorization of the Ministry of Finance. Transfers of funds between nonresident accounts are not restricted.

Imports and Import Payments

Certain imports, such as narcotics, are prohibited from all sources. Certain agencies have an import monopoly over specified commodities.

Imports of goods originating in the EU, the Operations Account countries, and countries belonging to the ACP group are free of import-licensing requirements. All merchandise imports originating in other countries are subject to prior authorization from the Directorate of Foreign Trade. Before shipment, goods from all sources are subject to inspection for quality and price.

All imports valued at more than CFAF 500,000 must be domiciled with an authorized intermediary bank. Importers may not purchase foreign exchange to pay for imports earlier than eight days before suppliers ship the goods if a documentary credit is opened, and only on the due date of payment if the goods have already been imported.

Customs duties consist of four bands (i.e., 5, 10, 15, and 20 percent).

Payments for Invisibles

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 Monetary and Financial Affairs of the Ministry of Finance, 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 subject to prior authorization.

Residents traveling for tourism or business purposes to countries in the franc zone other than WAMU member countries are allowed to take out the equivalent of CFAF 2 million in banknotes other than the CFA franc; amounts in excess of this limit may be taken out in the form of means of payment other than banknotes. The allowances for travel to countries outside the franc zone are subject to the following regulations: (1) for tourist travel, CFAF 500,000 without limit on the number of trips or differentiation by the age of the traveler; (2) for business travel, CFAF 75,000 a day for up to one month, corresponding to a maximum of CFAF 2.25 million (business travel allowances may be combined with tourist allowances); (3) allowances in excess of these limits are subject to the authorization of the respective ministries of finance or, by delegation, the BCEAO; and (4) credit cards, which must be issued by resident financial intermediaries approved by the Ministry of Finance, may be used up to the ceilings indicated above for tourist and business travel. Returning resident travelers are required to declare all means of payment in their possession upon arrival at customs and surrender within eight days all means of payment exceeding the equivalent of CFAF 25,000. Upon departure, all residents traveling to countries that are not members of the WAMU must declare in writing all means of payment at their disposal. Nonresident travelers may re-export all means of payment other than banknotes issued abroad and registered in their name, subject to documentation that they had used funds drawn from a foreign account in CFA francs or other foreign exchange to purchase these means of payment. The re-exportation of foreign banknotes is allowed up to the equivalent of CFAF 250,000; the re-exportation of foreign banknotes above these ceilings requires documentation demonstrating either the importation of the foreign banknotes or their purchase against other means of payment registered in the name of the traveler or through the use of nonresident deposits lodged in local banks.

Upon presentation of an appropriate pay voucher, a residence permit, and documents indicating family situation, foreigners working in Benin may transfer up to 50 percent of their net salary abroad if they live with their family in Benin, or up to 80 percent if their family is living abroad.

Exports and Export Proceeds

Exports to all foreign countries, including those in 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 from the Ministry of Finance, with the exception of articles 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 Directorate of Monetary and Financial Affairs of the Ministry of Finance. Receipts from exports must be collected within 180 days of the arrival of the shipment at its destination. Proceeds must be repatriated to Benin through the BCEAO and 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 banknotes 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 banknotes and coins (except gold coins) of countries outside the Operations Account area.2 Residents bringing in foreign banknotes and foreign currency traveler’s checks exceeding the equivalent of CFAF 25,000 must declare them to customs upon entry and sell them to an authorized intermediary bank within eight days.

Capital

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 from 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 from 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 also maintained 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 from the Minister of Finance; at least 75 percent of the 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 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 those that imply control of a company or enterprise. Investment that does not exceed 20 percent of the capital of a company whose shares are quoted on a stock exchange is not considered direct investment.

Borrowing by residents from nonresidents requires prior authorization from 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 from the Minister of Finance.

The Investment Code (Law No. 90–002 of May 9, 1990) stipulates that preferential status may be granted to foreign and domestic investments in industry, mining, fisheries, agriculture, and tourism that 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 consists of 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 exempt from customs duties and levies on equipment and materials during the investment period (excluding the local roads and statistical taxes), as well as 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 at more than CFAF 500 million (but less than CFAF 3 billion) and employ at least 20 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 that provide services in health, education, or public works. They 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

Authorization from the Directorate of External Commerce, issued after a favorable ruling by the Directorate of Monetary and Financial Affairs of the Ministry 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 from the Ministry of Finance, 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 bytravelers 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 1994

Exchange Arrangement

January 12. The CFA franc was devalued to CFAF 100 per F 1 from CFAF 50 per F 1.

Imports and Import Payments

February 1. The number of tariff bands was changed to four (5, 10, 15, and 20 percent).

Bhutan

(Position as of December 31, 1994)

Exchange Arrangement

The currency of Bhutan is the Ngultrum, the external value of which is pegged to the Indian rupee. Indian rupees also circulate in Bhutan at a rate of Nu 1 per Rs 1. The rates for currencies other than Indian rupees 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, 1994, the buying and selling rates of the ngultrum for the U.S. dollar (cash) were Nu 30.85 and Nu 31.85, respectively, per US$1; the buying and selling rates of the ngultrum for the U.S. dollar (traveler’s checks) were Nu 31.00 and Nu 31.70, respectively, per US$1. 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. The Ministry of Finance has delegated to the Royal Monetary Authority the authority to release foreign exchange (other than Indian rupees) for current transactions. The Royal Monetary Authority is charged with 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

Except for imports of large capital goods for which clearance by the Ministry of Finance is required, there are no restrictions on payments or transfers relating to any current account transaction with India. Clearance by the Ministry of Finance is required for the importation of capital and intermediate goods from third countries. The release of foreign exchange is managed separately by the Royal Monetary Authority upon recommendation by the Ministry of Finance. The Royal Monetary Authority does not provide foreign exchange to importers of consumer goods; the latter must make their own arrangements to obtain the foreign exchange before an import license is issued.

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 one of four rates ranging from 5 percent to 20 percent of the c.i.f. value, with the lowest rate applying to unprocessed primary products and the highest rate applying to processed products. Exports of antiques of Bhutanese origin require government approval. 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 within 90 days.

Payments for and Proceeds from Invisibles

Most invisible payments, other than those made in Indian rupees, must be approved 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 be approved by the Ministry of Finance.

Gold

There are no specific regulations on transactions in gold.

Changes During 1994

No significant changes occurred in the exchange and trade system.

Bolivia

(Position as of December 31, 1994)

Exchange Arrangement

The currency of Bolivia is the Boliviano. The exchange rate (the official selling rate) is determined at auctions held daily by the Central Bank of Bolivia. This 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 and is based on the exchange rates of the deutsche mark, Japanese yen, pound sterling, and U.S. dollar. 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. 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. On December 31, 1994, the official selling rate was Bs 4.70 per US$1.

Sales of foreign exchange by the Central Bank to the public are 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 may 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 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 buying and selling exchange rates on December 31, 1994, were Bs 4.69 and Bs 4.71, respectively, per US$1. 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 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.

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 those controlled for reasons of public health or national security. Restrictions on imports of sugar were eliminated on October 13, 1992.

Bolivia has a general uniform tariff of 10 percent. A tariff rate of 5 percent is applied to capital goods, and a rate of 2 percent is applied to imports of books and printed material. Wheat and investment-related products covered by the Investment Code and the Hydrocarbons Law are exempt from the import tariff.1

Payments for Invisibles

There are no restrictions on payments for invisibles. Profit remittances abroad are subject to a 12.5 percent tax (which is computed as equivalent to the 25 percent income tax times the presumed net profit of 50 percent of the amount remitted). Residents traveling by air to neighboring countries are required to pay a travel tax of Bs 100; the 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 transaction. Exports other than hydrocarbons are subject to an inspection fee of 1.55 percent for nontraditional products and 1.6 percent for traditional products. A system of tax rebates reimburses exporters for indirect taxes and import duty paid on inputs of exported goods and services, including the duty component of depreciation of capital goods used. Exporters of small items whose value in Bolivia’s annual exports is less than $3 million receive tax rebates of 2 percent or 4 percent of the f.o.b. export value under a simplified procedure, and other exporters receive tax and import duty rebates based on annually determined coefficients that reflect their documented cost structure. 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.

Banks are allowed to hold foreign exchange positions up to the value of their net worth minus fixed assets.

Foreign investments in Bolivia, except those involving petroleum and mining, are governed by the provisions of the Investment Law. In September 1990, the Investment Law of December 14, 1981 was replaced by another investment law, under which domestic and foreign investors are treated equally (Law No. 1182 on Investment). The law is administered by the National Investment Institute. Investments in petroleum and mining are governed by the Hydrocarbons Law and the Mining Law. 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 3 percent on the gross value of sale of gold bullion (Supreme Decree No. 23394, February 3, 1993).

Changes During 1994

Payments for Invisibles

January 1. Profit remittances abroad were subject to a 12.5 percent tax, which is computed as equivalent to the 25 percent income tax times the presumed net profit of 50 percent of the amount remitted (Law No. 1606: Modifications of Tax System Law No. 843, December 22, 1994).

Exports and Export Proceeds

December 12 (and January 30, 1995). The system of indirect tax and duty drawback was revised. Exporters of small items whose value in Bolivia’s annual exports is less than $3 million receive tax rebates of 2 percent or 4 percent of the f.o.b. export value under a simplified procedure, and other exporters receive tax and import duty rebates based on annually determined coefficients that reflect their documented cost structure (Supreme Decree No. 23899 of December 12, 1994 and Supreme Decree No. 23944 of January 30, 1995).

Capital

June 5. New regulations on foreign exchange position were introduced, specifying that banks may hold foreign exchange positions up to the value of their net worth minus fixed assets.

Botswana

(Position as of December 31, 1994)

Exchange Arrangement

The currency of Botswana is the Botswana Pula. Its external value in terms of the U.S. dollar, the intervention currency, is determined with reference to a weighted basket of currencies comprising the SDR and currencies of the country’s major trading partners. On December 31, 1994, the closing middle rate for the U.S. dollar was P 2.7174 per US$1; on the same date, the rate for the SDR was P 3.9635 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 loans undertaken by parastatals before October 1, 1990 have been protected from exchange rate movements under a Foreign Exchange Risk-Sharing Scheme; the scheme does not apply to new loans undertaken by parastatals subsequent to October 1, 1990. At the end of 1994, the scheme applied to 37 outstanding loans. Under the scheme, risks associated with exchange rate fluctuations up to 4 percent are fully borne by the borrower, while the next 6 percent and the following 5 percent of fluctuations are shared between the borrower and the Government on a 50:50 and 25:75 basis, respectively. Risks associated with exchange rate fluctuations in excess of 15 percent are 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. Forward cover may be given in respect of the foreign currency proceeds derived from the exportation of goods for at least three months and, in some cases, for up to 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. Since January 1, 1994, remittances for payments of imports of goods and services have been handled by the commercial banks without reference to the Bank of Botswana.

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.

Imports and Import Payments

Botswana is a member of the Southern African Customs Union (SACU) with Lesotho, Namibia, South Africa, and Swaziland, and there are generally no import restrictions on goods moving among the five countries. The arrangement provides for the free movement of goods and the right of transit among members, as well as a common external tariff. 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 exceeding P 2,500 require documentation before foreign exchange is released.

Applications for 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 within six months of the date of exportation. Retention of export proceeds for up to one year to finance certain transactions may be permitted by the Bank of Botswana on a case-by-case basis. The value of goods that can be given as gifts to nonresidents is limited to P 3,000 per year. A few items, such as precious and semiprecious stones, require permits before they can be exported.

Payments for and Proceeds from Invisibles

Payments to nonresidents for current transactions, although subject to control, are not restricted. Authority to approve a range of current payments within limits (i.e., basic exchange allowances) is delegated to commercial banks; any remittances in excess of basic exchange allowances must be referred to the Bank of Botswana for prior approval. Once the bona fide nature of applications has been established and all other requirements have been fulfilled by the applicant, remittances are approved. The basic exchange allowance for tourist travel by permanent residents is the equivalent of P 24,000 a calendar year for an adult (P 12,000 for a child). The allowance for business travel by permanent and temporary residents is P 1,000 a day, up to a maximum of P 70,000 a calendar year. Permanent residents may use credit cards in Botswana for settlement of both pula and foreign currency liabilities; airline tickets may be purchased directly from travel agents or be remitted from abroad, and they are not counted as part of the annual travel allowance. The amount of unused foreign currency for travel that a resident may retain for future travel use is the equivalent of P 2,000 in currency or traveler’s checks; any excess amount must be surrendered within six months of the date of return. The basic foreign study allowance for permanent residents to cover maintenance and incidental expenses other than fees or tuition is P 5,000 a month a person and P 7,500 a month a family, with a vacation travel allowance of P 2,000 a year. A temporary resident employed on a contractual basis may remit abroad annually, without reference to the Bank of Botswana, P 25,000 or 65 percent of total eligible earnings, whichever is greater; the limit applicable to a self-employed temporary resident is P 50,000. The period during which temporary residents are allowed to remit their earnings abroad is a block of 36 months, or the period of employment, whichever is shorter. Separately, travelers residing in Botswana may take out domestic banknotes and foreign currency in amounts of P 2,000 and P 5,000 a trip, respectively, and may freely bring in any amount of domestic banknotes and coins. Visitors may take out any foreign currency that they brought in with them in addition to a maximum of P 500 a trip in domestic currency.

The Bank of Botswana may authorize residents to maintain foreign currency accounts with banks abroad in cases where there is a proven commercial need for such a facility.

Capital

Pension and life insurance funds may invest up to one-half of their funds abroad, subject to the requirement of 12 month’s advance notification to Bank of Botswana of intention to repatriate funds. Applications for investment abroad of other funds are treated on their merits and in light of possible benefits to Botswana. Foreign inward direct investment in new or existing businesses is generally encouraged but must be financed with funds from external sources. On disinvestment by a nonresident, the Bank of Botswana allows immediate repatriation of proceeds up to a maximum of P 50 million. The excess may be required to be repatriated in installments over a period not exceeding three years. Authorized dealers may approve remittances of dividends/profits without referring to the Bank of Botswana. Remittances of interim dividends are permitted only for companies listed in the Botswana Share Market. Inward portfolio investment is also permitted in shares issued by companies quoted in the Botswana Share Market, provided the funds for financing the acquisitions originate with a nonresident source. Nonresident-controlled companies incorporated in Botswana may make similar investments (referred to as internal portfolio investments), which need not be financed with funds from external sources. In the case of both inward and internal portfolio investments, a shareholder or his nominee may not acquire an interest in excess of 5 percent of the company’s paid-up stock. Total portfolio holdings by nonresidents, including nonresident-controlled companies, may not exceed 49 percent of the “free stock” of a local company, that is, total stock issued and paid up less stock held by direct investors. Nonresident-controlled companies may also invest with domestic currency funds in any securities issued by the Bank of Botswana. Nonresident-controlled companies (including branches of foreign companies) are permitted to borrow locally from all sources up to P 500,000. Applications for local finance in excess of P 500,000 by nonresident-controlled companies may be considered by the Bank of Botswana, provided that the resulting debt-equity ratio does not exceed 4:1. Borrowed funds may be used for working capital purposes or for acquisition of new fixed assets (e.g., plant, machinery, equipment, and buildings); these funds may not be used to acquire financial assets. Equity is defined as paid-up capital, reserves, and retained earnings. The 4:1 limit may be exceeded by nonresident-controlled manufacturing companies, 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. Double taxation agreements exist between Botswana and South Africa, Sweden, and the United Kingdom.

Permanent residents are eligible for an emigration allowance of up to P 150,000 in addition to household and personal effects whose value does not exceed P 75,000. Applications for remittances in excess of these amounts are dealt with by the Bank of Botswana. Such remittances are normally authorized if the amount is not too large; if the amount is excessive, remittances may be permitted in installments over three years.

Nonresident-controlled companies are allowed to invest domestically generated funds in pula as well as those from external sources in any securities issued by the Bank of Botswana.

Self-employed temporary residents may remit abroad up to 65 percent of the previous year’s taxable income, or P 50,000, whichever is greater.

Changes During 1994

No significant changes occurred in the exchange and trade system.

Brazil

(Position as of December 31, 1994)

Exchange Arrangement

The currency of Brazil is the Real (R$), the external value of which is determined by demand and supply in the interbank exchange market, although the Central Bank has set a floor for the external value of the real in the commercial market at a rate of R$1 per US$1.1 Transactions in the exchange market are carried out by banks, brokers, and tourist agencies authorized to deal in foreign exchange; the tourist agencies and brokers deal only in banknotes and traveler’s checks. The exchange rates are freely negotiated between the authorized institutions and their clients in all operations. On December 31, 1994, the buying and selling rates in the interbank exchange market were R$0.844 and R$0.846, 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 currencies concerned in the international market.

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 is levied on exchange operations effected for the payment of imports of services.

Limits for the short position of banks are determined according to the size of the bank’s total net assets indicated in the financial demonstrations of June and December. No limit is imposed on the long position, but authorized banks must deposit overnight, at the Central Bank, the amounts needed to eliminate overbought positions that exceed the equivalent of US$50 million. The limit for the long position of brokers is fixed at US$1 million; they may not maintain a short position. The banks are permitted to buy and sell foreign exchange to each other without restriction; such transactions may be carried out either on a spot basis by cable or on a forward basis and must be settled within 2 working days for spot transactions or within 180 days for forward transactions. Banks may pay their clients a premium, corresponding to the expected variation of the domestic currency in relation to the currency subject of negotiation, by reason of forward operations. In addition, when an exchange contract for forward settlement is concluded, banks can provide short-term financing to exporters by providing domestic currency in advance, before or after the shipment of goods.

Administration of Control

The National Monetary Council 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 Planning enforces limits on foreign borrowing by the public sector.

The foreign trade policy is formulated by the Ministry of Industry, Trade, and Tourism, implemented by the Secretariat of Foreign Trade (SECEX) and carried out by the Technical Department of Commercial Interchange (DTIC).

The Technical Department of Tariffs (DTT) of the Ministry of Industry, Trade, and Tourism is responsible for formulating guidelines for tariff policy. The DTT also decides on changes in customs duties under the provisions of existing legislation. The Ministry of Finance coordinates public sector import policy.

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 countries2 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 can be made through special central bank accounts 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 and no special payments arrangements are made in U.S. dollars or other freely usable currencies.

Imports and Import Payments

All importers must be registered with the SECEX, and goods may be imported only by registered firms or persons. Imports are grouped into the following three broad categories: (1) imports that do not require prior administrative documentation, including samples without commercial value and certain educational materials; (2) imports that require an import certificate issued by the DTIC; and (3) prohibited imports (luxury boats with an initial sale price of US$3,500 or more, agrochemical products not authorized under Brazilian regulations, and certain drugs that are not licensed for reasons of security, health, morality, or industrial policy). Importers are permitted to purchase foreign exchange in the exchange market within 180 days of the settlement date.

There is also a limit on the direct importation and purchase on the domestic market of consumer goods by the public sector (the Government, autonomous agencies, and public enterprises).3

Most imports require prior approval from the DTIC, which is usually given promptly to registered importers of nonprohibited items.4 The DTIC 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. The DTIC issues clearance certificates for certain groups of commodities to special bonded warehouse importers. Import certificates for a number of specified imports may be obtained after the commodities have been landed but before they clear customs.

The importation of certain products requires the approval of the Ministry of Science and Technology. For some products, 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 zones are subject to an annual quota. Foreign goods up to the equivalent of US$600 imported into the Manaus free trade zone can be transferred to other parts of Brazil (as a passenger’s baggage) free of import taxes.

The SECEX may approve applications for payment for imports of any goods at terms of up to 720 days from the date of shipment without prior authorization from the Central Bank. External financing at terms in excess of 720 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 accrued interest may be made only upon presentation of a certificate of authorization and a payment schedule issued by the Department of Foreign Capital (FIRCE) of the Central Bank. On October 19, 1994, the time to settle anticipatory settlements for critical imports was set at 30 days.

Exchange contracts may be settled within 180 days. The drafts, or letters of credit, relative to such contracts must be settled on maturity against the presentation of the appropriate documents by the importer. Official education and research institutions and the Ministry of Health may settle contracts within 360 days following the same rules. 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. Official education and research institutions and the Ministry for Health may settle exchange contracts up to 360 days prior to the maturity date.

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, Law No. 4131 of September 3, 1962. 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). Payments for current invisibles not covered by current regulations require approval from the Central Bank’s Exchange Department (DECAM) or the FIRCE; remittances are authorized freely, subject to the presentation of supporting documents as evidence that a bona fide current transaction is involved.

Prior to October 1994, Brazilian residents temporarily staying abroad were permitted to purchase foreign exchange up to the equivalent of US$4,000 a month in the foreign exchange market; this limit was eliminated on October 19, 1994.

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 with the 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 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 the withholding income tax at a rate of 15 percent or at the rate determined by the agreements concluded with the country concerned for the purpose of avoiding double taxation. 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 income tax liability to determine the taxable income, up to the limit of 5 percent of gross receipts in the first five years of the company’s operation; amounts exceeding this limit are considered 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 transaction tax of 25 percent. The financial transaction tax applicable to purchases of foreign exchange for payments of contracts involving transfers of technology that are registered with the National Institute of Industrial Property was reduced to zero from 25 percent in 1994.

Travelers may take out domestic and foreign banknotes without restriction but must declare to customs any amount over US$10,000 or the equivalent in other currencies. Foreign tourists leaving Brazil may buy foreign currency up to 50 percent of the amount exchanged into domestic currency during the visit.

Exports and Export Proceeds

Exports of certain goods require the prior approval of the SECEX, while exports of others, such as hides of wild animals in any form, are prohibited. 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 the SECEX, and exports requiring prior authorization from government agencies. In January 1993, the authorities introduced a computerized system of export-licensing customs clearance and exchange clearance controls. This Integrated Foreign Trade System (Sistema Integrado de Comércio Exterior—SISCOMEX), introduced by Decree No. 660, dated September 25, 1992 and implemented on January 4, 1993, integrates the activities related to registration, monitoring, and control of foreign trade operations in a single computerized flow of information. The SISCOMEX comprises, basically, two subsystems (exports and imports). The exports subsystem has eliminated, for more than 90 percent of Brazilian exports, all paperwork (forms, licenses, and certificates), allowing exporters, carriers, banks, and brokers to register the various stages of an export process directly through the interlinked computers of the SECEX, customs, and the Central Bank. The import subsystem is being developed.

Prior to October 1994, foreign exchange contracts covering transactions could be concluded either 180 days before the goods were shipped or within 180 days of shipment and needed to be settled within 5 working days of payment abroad. Pre-export financing could be obtained either through a local bank against exchange contracts up to a maximum period of 180 days or through the foreign supplier, who could prepay for imports before the goods arrived. On October 19, 1994, the regulations governing anticipatory export settlements were tightened, and export prefinancing was banned in respect of operations with terms exceeding 720 days. The time for anticipatory settlements was reduced to 90 days from 180 days for large exporters (exporting more than US$10 million a year) and to 150 days for small exporters.

Proceeds from Invisibles

Exchange proceeds from current invisibles must be sold to the authorized banks at the prevailing market rate. Travelers may freely bring in domestic and foreign currency notes but must declare to customs any values over US$10,000 or the equivalent in other currencies.

Capital

Brazilian banks are permitted to sell foreign exchange to Brazilian investors in Mercosur countries in the exchange market.

Capital inflows in the form of financial loans under National Monetary Council Resolution No. 63, as amended, or under the provision of Law No. 4131 on foreign investment, 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 (that is, 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 funds originate abroad. Proceeds of foreign borrowing converted into domestic currency are subject to a financial transaction tax of 7 percent (increased from 3 percent on October 19, 1994). Otherwise, inward transfers are unrestricted and free of control, although subsequent use of the proceeds for the acquisition of certain domestic assets may be restricted.

There is a separate regime for inward portfolio investment. Portfolio investment by foreign investors in fixed-income instruments is restricted to a single class of fixed-income funds, and these instruments are subject to a transaction tax of 9 percent (increased from 5 percent on October 19, 1994). For the purposes of the repatriation and remittance of income, however, inward transfers of foreign capital and the reinvestment of profits on foreign capital must be registered with the FIRCE. Foreign capital is defined for this purpose as (1) goods, machinery, and equipment used to produce goods or 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 residing 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 and includes reinvested profits from foreign capital. Direct investment is defined as the 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, except portfolio investments. Any loan obtained to purchase capital goods abroad is considered import financing, whether financed by the manufacturer (suppliers’ credit) or by a third party.

Basically, foreign investments in the Brazilian capital market may be made through one of the five alternatives established under National Monetary Council Resolution 1289, Annexes I–V, dated March 20, 1987. Investment Companies (Annex I) are open to natural persons and companies, and residents domiciled or headquartered abroad. Such companies take the form of authorized capital corporations whose objective is to invest in diversified securities portfolios. They are managed by investment banks, brokerage firms, or securities and exchange dealers. Investment Funds (Annex II) are open to natural persons and companies, and residents domiciled or headquartered abroad, as well as to funds or other foreign collective investment entities. The funds originate from a fund of resources to be invested in a securities and exchange portfolio, established as an open fund without legal representation. Annex III is a Diversified Stock Portfolio managed by an investment bank, a brokerage firm, or a securities and exchange dealer, headquartered in Brazil and owned jointly with a foreign institution. The minimum participation in investment companies by foreign firms or individuals is US$1,000. 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 invested capital may be repatriated freely. Funds and other collective investment entities established abroad (including pension funds, portfolios belonging to financial institutions and insurance companies, and mutual investment funds) may maintain portfolios of bonds and other securities in Brazil once the constitutions and administrations of these entities have been approved by the Central Bank and the Securities and Exchange Commission (Annex IV). Through the mechanism of Depository Receipts (Annex V), it is possible to purchase abroad certificates representing stocks of a domestic public company (open capital). These papers represent the securitizations of the stocks of an issuing company. The depository receipts are issued abroad when a foreign importer or a Brazilian investor acquires stocks of a Brazilian company and deposits them, on custody, in a local custodian bank, which then instructs the depository bank abroad to issue the corresponding depository receipts. Portfolio investment in fixed-income instruments may be made through the purchase of quotas of the Investment Fund Foreign Capital. Portfolio investments are exempt from the capital gains tax, but profits earned by foreign investors are subject to a 15 percent income tax. Invested capital may be repatriated freely. In October 1994, a financial transaction tax of 1 percent was imposed on new foreign investment in the stock market. The issuance of debentures that can be converted into stocks in domestic enterprises is permitted. Externally financed nonprofit organizations are permitted to undertake debt-for-nature swaps.

Investments made in the form of goods are subject to approval and registration at the Central Bank. To register loans made in a foreign currency, the interest rate must correspond to that prevailing in the loan’s original market; the amortization schedule must not be disproportionately heavy in the early stages of repayment.

Reinvestments are defined as the profits of companies established in Brazil and accruing to persons or companies residing 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 the currency of the country to which the profits could have been remitted. The conversion is calculated at the average exchange rate prevailing on the date the profits are reinvested. 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 re-lending in order to finance 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. Financial and nonfinancial institutions are authorized to obtain resources from abroad by issuing commercial papers, notes, and bonds, including securities, that can be converted into stocks. Brazilian banks located abroad are allowed to issue medium- and long-term certificates of deposit, and exporters are allowed to issue medium-term debt instruments secured with future export receipts. All other financial loans in foreign currency are governed by the general provisions of Law No. 4131 on foreign investment. Loans contracted under this law also require prior authorization from the Central Bank, but the Central Bank does not undertake to provide specific exchange cover for them. Loans contracted under Resolution No. 63 and Law No. 4131 must have a minimum term of 36 months. Loans are authorized only if the amount and the maturity conform to 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 1992, the Central Bank’s minimum acceptable maturity was set at 30 months. 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.

Remittances of proceeds from sales of property and inheritance have been permitted since October 19, 1994.

Outward transfers other than capital may be made directly through authorized banks upon presentation by the remitters of the appropriate documentation. Outward transfers not included in public regulations need prior authorization from the Central Bank.

The private sector and both the financial and nonfinancial public sector are allowed access to foreign exchange for the purpose of servicing their debts, including those owed to nonresident banks.

Gold

Since the adoption of the Federal Constitution in 1988, gold transactions in Brazil have been delivered in two separate markets: the financial and commercial markets. Over 50 percent of transactions occur in the financial market, which is regulated by the Central Bank. The first domestic negotiation of newly mined gold on this market is subject to a 1 percent financial transactions tax. Rules regarding gold transactions for industrial purposes are defined separately by the federal states, which also establish different rates for the commercial tax levied on them. The Central Bank and authorized institutions are empowered to buy and sell gold on the domestic and international markets (Law No. 4595 of December 31, 1964 and Law No. 7766 of May 11, 1989). Purchases of gold are made at current domestic and international prices; the international price is considered a target price. Imports of gold are subject to the issuance of an import certificate by the SECEX. Exports of gold are subject to the same procedures as those that are applied through the SECEX in respect of other products.

Changes During 1994

Exchange Arrangement

March 1. The authorities introduced a new unit of account (the Unit of Real Value or URV) equivalent to US$1 and sought to establish the use of the URV in the denomination of contracts and prices. The URV would be adjusted daily in light of estimated inflation to keep the exchange rate between the cruzeiro real and the U.S. dollar constant.

June 21. The financial transactions tax for purchases of foreign exchange for payment of contracts involving transfers of technology that are registered with the National Institute of Industrial Property was reduced to zero from 25 percent.

July 1. A new currency, the real (R$), was introduced to replace the cruzeiro real and the URV at the conversion rate of 2,750 cruzeiro real to R$1. All contracts denominated in URVs were converted to reais at a conversion rate of 1:1. The Central Bank would set a floor of R$1 per US$1 in the commercial market and be committed to use its international reserves to maintain the floor for an indefinite period. Otherwise, the exchange rate would be determined by market forces.

Imports and Import Payments

August 31. The 80 percent prefinancing requirement of imports with financing greater than 360 days was abolished (Carta-Circular Form No. 2486).

Payments for Invisibles

March 2. The transfer abroad of national currency was required to be supported by documents (Circular No. 2409 of the Central Bank of Brazil).

October 19. The limit on the foreign exchange allowance for travel abroad was eliminated (Circular No. 2494 of the Central Bank of Brazil).

Exports and Export Proceeds

October 19. The regulations governing anticipatory exports settlements were tightened. The period during which to effect these settlements was reduced to 90 days from 180 days for large exporters (who export more than US$10 million a year) and to 150 days for small exporters (in early February 1995, the distinction between small and large exporters was eliminated).

October 19. Anticipatory settlements were subjected to a 15 percent reserve requirement on credit operations (without interest remuneration).

Capital

January 13. National Monetary Council Resolution No. 2042 authorized certain institutions to conduct swap operations involving gold, exchange rates, interest rates, and price indices in the over-the-counter market.

January 19. National Monetary Council Resolution No. 2046 modified the provisions of Regulation No. 1289 of March 20, 1987 concerning the constitution, operation, and administration of foreign capital, investment companies, and stock and bond portfolios maintained in the country by foreign institutional investors.

February 28. The regulations on the financial transactions tax were revised whereby up to 25 percent may be applied on the issue of bonds abroad and on foreign investments in fixed-income securities, when the Government considers it necessary to raise the tax rates from the current levels of 3 percent and 5 percent, respectively.

March 2. Automatic authorization for issuing bonds, commercial paper, and other fixed-income instruments abroad was terminated. Circular No. 2410 altered the provisions that govern the prior authorization and registration of foreign credits through issues of securities on the international market. Circular No. 2411 permitted foreign currency deposits resulting from excess exchange buyer positions to be made in cash.

April 15. Brazil completed arrangements to reschedule its external debts to commercial bank creditors.

June 15. National Monetary Council Resolution No. 2079 modified the provisions of Regulation No. 1289 of March 20, 1987, concerning the constitution, operation, and administration of foreign investment companies and stock and securities portfolios.

July 1. The minimum period for external export prefinancing was extended to two years.

August 31. Prepayment of foreign borrowing and import financing was permitted (Resolution No. 2105). The 20 percent limit for import financing down payments was eliminated (Circular Letter No. 2486).

September 22. The constitution and operation of Foreign Investment Funds were regulated by Resolution No. 2111 and Circular No. 2485.

October 5. Inflows of resources in the form of advances for future capital increases and bridge investment in anticipation of future conversions of debts into investment were prohibited (Circular No. 2487).

October 19. National Monetary Council Resolution No. 2115 altered the provisions of Regulations No. 1289 of March 20, 1987 pertaining to the constitution, operation, and administration of foreign investment companies and stock and securities portfolios.

October 19. The financial transaction tax on foreign investment in fixed-income instruments was increased to 9 percent from 5 percent.

October 19. (1) The financial transaction tax was levied on foreign investment in stocks at the rate of 1 percent; (2) inflows of resources through operations involving anticipated payment of exports were suspended; and (3) the financial transaction tax on foreign borrowing was increased to 7 percent from 3 percent.

Bulgaria

(Position as of December 31, 1994)

Exchange Arrangement

The currency of Bulgaria is the Lev. The Bulgarian National Bank quotes daily the exchange rate of the lev in terms of the U.S. dollar based on the weighted average of transactions in the interbank exchange market during the previous trading day. 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 December 31, 1994, the exchange rate quoted by the Bulgarian National Bank in terms of the U.S. dollar was Leva 65.015 per US$1. Exchange bureaus are allowed to conduct foreign exchange transactions in cash only. 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. Twenty commercial banks, 2 branches of foreign banks, and 1 financial institution conduct foreign exchange (forex) transactions. Another 13 banks are authorized to open bank accounts for settlement of payments abroad.

Arrears are maintained with respect to certain external payments.

Prescription of Currency

Payments to and from countries with which Bulgaria maintains bilateral agreements are made in the currencies and in accordance with the procedures set forth in those agreements.1 Transactions are generally settled through clearing accounts. Balances in these accounts (annual and multiyear) are generally to be settled in goods during the six months after the agreement has been terminated; thereafter, they are settled in convertible currencies.

Resident and Nonresident Accounts

Residents may maintain foreign currency deposit accounts in Bulgaria, which may be credited without restriction, and from which transfers abroad may be made with permission from the Ministry of Finance and the Bulgarian National Bank (pursuant to the provisions of Decree No. 15 of the Council of Ministers of 1991). Balances on these accounts earn interest at international market rates. Nonresidents may maintain accounts in foreign currencies and leva without authorization, limitation, or restriction for purposes of making transactions in Bulgaria. The crediting and debiting of foreign currency accounts are not subject to any regulations, and transfers abroad from these accounts are free of restriction.

Imports and Exports

Imports of some sensitive goods are subject to registration at the Ministry of Trade. Imports of ice cream are subject to a quota. Imports of certain goods are restricted for health and security reasons. Import tariff rates range from 5 percent to 55 percent. Tariffs are calculated on the transaction values (actual invoice price paid) in foreign currency and converted to leva. An import surcharge of 3 percent was introduced in August 1993, was reduced to 2 percent effective January 1, 1994, and is to be reduced to 1 percent effective January 1, 1995. The surcharge is waived for the importation of certain energy products, pharmaceuticals, and facilities for environmental protection. Under Government Decree No. 241 (January 1, 1994), certain goods in these categories are exempt from customs duty or are subject to ceilings for duty-free imports or reduced-duty imports.

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. 241, export taxes are levied on certain types of timber, hides, wool, sunflower oil, grain, and some copper products. The export tax is quoted in U.S. dollars but paid in leva. Exports and imports of tobacco products, coal, petroleum, livestock and meat, dairy products, certain grains, textiles, ferrous metals and alloys, and imports of flat glass are required to be registered.

Special licenses are required for transactions under barter and clearing arrangements, for exports proceeds to be received in leva; exports under government credits and exports subject to quotas and voluntary export restraint agreements; imports and exports of military hardware and related technologies; endangered flora and fauna; radioactive and hazardous materials; crafts and antiques; pharmaceuticals; herbicides; pesticides; flour; unbottled alcohol; intellectual property; jewelry; and rare and precious metals. Licenses are normally granted within two working days. Exports of ferrous and nonferrous scrap metal, female livestock, and grains were prohibited until the end of 1994. The exportation of goods received as humanitarian aid and of human blood and plasma is prohibited.

Payments for and Proceeds from Invisibles

Foreign exchange allowances for business travel are granted without restriction. Allowances for tourist travel are limited to the leva equivalent of up to $2,000 a person a year for people without foreign currency deposits. Resident holders of foreign exchange deposits may use balances on these deposit accounts without restriction.

Commercial banks may sell foreign exchange freely to resident individuals or resident legal persons if proper documentation certifies that foreign exchange is needed for (1) authorized imports of goods and services; (2) transportation and other expenses related to the conveyance of goods and passengers carried out by nonresidents; (3) interest and amortization with respect to credits approved by the Bulgarian National Bank; (4) business travel in compliance with the established procedures; (5) insurance fees; (6) banking commissions; (7) education and training; (8) health care; (9) diplomatic, consular, and other government agencies of Bulgaria abroad; (10) commercial representative offices of Bulgarian traders abroad; (11) commissions, advertising fees, and other expenses related to economic activities (including fairs and exhibitions); (12) membership fees in international organizations; and (13) participation in international contests and festivals.

Nonresidents may purchase foreign currency from Bulgarian commercial banks to transfer abroad (1) investment income received in leva; (2) compensation received following nationalization of investment enterprises; (3) proceeds from liquidation of investment; (4) proceeds from sales of investment enterprises received in leva; and (5) amounts received in leva under judicial settlement of guaranteed claims. Transfers abroad in compliance with the above cases may be effected upon presentation of documents that certify that outstanding liabilities have been paid. Remittances of earnings by foreign workers and remittances for family maintenance are not explicitly mentioned in Decree No. 15 (of February 8, 1991), which governs foreign exchange control, but they have been treated implicitly as transfers abroad that are not related to merchandise imports. The following transfers abroad require prior permission from the Bulgarian National Bank in consultation with the Ministry of Finance as stipulated by the Decree No. 15: (1) indirect investments; (2) official credits extended to and received from abroad; (3) investments abroad; and (4) free transfers in foreign currency when they are not connected with imports of goods and services.

Proceeds from invisibles must be repatriated within one month but do not have to be surrendered and may be retained in foreign currencies or sold in the interbank exchange market.

Residents and nonresidents may take out or bring in Bulgarian banknotes and coins up to Leva 10,000; permission from the Bulgarian National Bank is required to import or export amounts exceeding this limit. Residents may take out foreign currency notes up to the equivalent of $1,000 without restriction. There is no limit on foreign currency notes nonresidents may bring into the country but the amount must be declared, and they may take out unspent foreign currency notes upon departure.

Capital

Licensed banks 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 from 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 lev loans to residents and nonresidents.

Foreign direct investments in Bulgaria are governed by the Law on the Economic Activity of Foreign Persons and Protection of Foreign Investments (State Gazette No. 8/1992). Foreign direct investments must be registered with the Ministry of Finance and 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, and transfers of profits in domestic currency do not require a special authorization.

Gold

The Ministry of Finance controls the acquisition, possession, processing, and disposal of gold, silver, and platinum. 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 precious metals. Resident individuals may hold gold but may not trade or deal in it. The amount of gold and jewelry products that 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, the Bulgarian National Bank, and the Ministry of Industry and Commerce to buy gold, silver, and platinum products.

Changes During 1994

Administration of Control

January 1. Government Decree No. 241 on import and export regulations was issued.

February 11. A new currency regulation governing the exportation and importation of Bulgarian banknotes and coins, foreign currency notes, and other financial assets was issued.

December 20. Government Decree No. 307 on imports and exports was issued, replacing Government Decree No. 241.

Imports and Exports

January 1. The import surcharge was reduced to 2 percent.

May 15. The prohibition on exports of female livestock was extended until December 31, 1994.

June 6. Exports of meat and livestock were allowed with licenses.

October 15. The prohibition on exports of grains was extended from the end of September 1994 to December 1994.

Burkina Faso

(Position as of December 31, 1994)

Exchange Arrangement

The currency of Burkina Faso is the CFA Franc,1 the external value of which is pegged to the French franc, the intervention currency, at the fixed rate of CFAF 1 per F 0.01. The official buying and selling rate is CFAF 100 per F 1. Exchange rates for other currencies are derived from the rate 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 mil 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.3

In the official and commercial banking sectors, forward exchange cover may be arranged only by residents for settlements with respect to imports of goods on certain lists. All contracts for forward exchange cover must be denominated in the currency of payment stipulated in the contract and are subject to prior authorization by the Minister of Finance. Nonrenewable forward exchange contracts may be concluded for one month. For certain products, the maturity period of forward exchange cover may be renewed once for three months.

With the exception of measures relating to gold, the repatriation of export proceeds, the issuing, advertising or offering for sale of securities and capital assets, and the soliciting of funds for investments abroad, Burkina Faso’s exchange controls do not apply to (1) France (and its overseas departments and territories) and Monaco; and (2) all countries whose bank of issue is linked with the French Treasury by an Operations Account (Benin, Cameroon, Central African Republic, Chad, Comoros, Congo, Côte d’Ivoire, Equatorial Guinea, Gabon, Mali, Niger, Senegal, and Togo). 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 for exchange control (except for imports and exports of gold, forward exchange cover, and the opening of external accounts in foreign currency) has been delegated to the BCEAO and, within limits specified in the exchange control regulations, to its 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 Industry, Commerce, and Mines. Import certificates for liberalized commodities and export attestations are made out by the importer or exporter 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

Because Burkina Faso is an Operations Account country, settlements with France (as defined above), Monaco, and other Operations Account countries are made in CFA francs, French francs, or the currency of Operations Account countries. Current transactions with The Gambia, Ghana, Guinea, Guinea-Bissau, Liberia, Mauritania, Nigeria, and Sierra Leone are settled through the West African Clearing House. Certain settlements are channeled through special accounts.4 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 other currencies of the Operations Account Area through foreign accounts in francs.

Nonresident Accounts

The crediting to nonresident accounts of BCEAO banknotes, French banknotes, or banknotes issued by any other institute of issue that maintains an Operations Account with the French Treasury is prohibited. These accounts may not be overdrawn without prior authorization.

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 license (autorisation spéciale d’importation (ASI)) is required for imports of sugar, rice, explosives, arms, munitions, and military paraphernalia.

A technical import visa (cerificat de conformité) is required for the following products: sugar, selected pharmaceutical products (tables R06, R6, R20), insecticides, printed fabric and bleached and tinted threads, wheat and cereal flour, tomato paste, tires and inner tubes for motorcycles, and mats and bags of polyethylene and polypropylene. Imports of certain other products, a list of which is established by decree, may be exempted from the import document requirement. The Minister of Industry, Commerce, and Mines may, on the basis of criteria established by the ministry, waive the prescribed formalities for imports from countries with which Burkina Faso has concluded a customs union or free trade area agreement. All imports, with a few exceptions, are subject to customs duties of 5 percent; the rates on cereals range from 4 percent to 26 percent, and a statistical tax of 4 percent.

All imports from outside the Economic Community of West African States (Ecowas) are subject to a solidarity communal levy of 1 percent, and imports of certain goods that are also locally produced are subject to a protection tax ranging from 10 percent to 30 percent.

Imports of the following products are prohibited: oil-carrying tank trucks, used coaches and buses, moped inner tubes, bicycle tires and inner tubes, and wheat flour from countries other than those of the West African Economic Community (WAEC), as well as ivory and fishing nets with a mesh not greater than 3 square centimeters.

All import transactions with a value of more than CFAF 500,000 effected with foreign countries must be domiciled with an authorized bank. 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 must be made before importation.

Payments for Invisibles

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 of 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 or business purposes to countries in the franc zone that are not members of the WAMU are allowed to take out banknotes other than CFAF banknotes up to the equivalent of CFAF 2 million; amounts in excess of this limit may be taken out in the form of other means of payment. The allowances for travel to countries outside the franc zone are subject to the following regulations: (1) for tourist travel, CFAF 500,000 without limit on the number of trips or differentiation by the age of the traveler; (2) for business travel, CFAF 75,000 a day within the limit of one month, corresponding to a maximum of CFAF 2.25 million (business travel allowances may be cumulated with tourist allowances); (3) allowances in excess of these limits are subject to the authorization of the respective ministries of finance or, by delegation, the BCEAO; and (4) the use of credit cards, which must be issued by resident financial intermediaries and specifically authorized by the respective ministries of finance, is limited to the ceilings indicated above for tourist and business travel. Returning resident travelers are required to declare all means of payment in their possession upon arrival at customs and to surrender within eight days all means of payment exceeding the equivalent of CFAF 25,000. All resident travelers, when traveling to countries that are not members of the WAMU, must declare in writing all means of payment at their disposal at the time of departure. The re-exportation by nonresident travelers of means of payment other than banknotes issued abroad and registered in the name of the nonresident traveler is not restricted, subject to documentation that they had been purchased with funds drawn from a foreign account in CFA francs or with other foreign exchange. The re-exportation of foreign banknotes is allowed up to the equivalent of CFAF 250,000; the re-exportation of foreign banknotes above these ceilings requires documentation demonstrating either the importation of foreign banknotes or their purchase against other means of payment registered in the name of the traveler or through the use of nonresident deposits lodged in local banks.

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 from the relevant services of the Ministry of Industry, Commerce, and Mines, except in the case of certain goods, a list of which is established by decree. In accordance with criteria defined by the Minister of Industry, Commerce, and Mines, exports of ivory are subject to special regulations (autorisation spéciale d’exportation (ASE)). Exports to Ghana are also 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 must not, in principle, be more than 180 days after the goods arrive at their destination). All export transactions of more than CFAF 500,000 relating to foreign countries, including countries in the Operations Account Area, must be domiciled with an authorized bank. 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. Resident and nonresident travelers may bring in any amount of banknotes 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 banknotes 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 25,000 that they bring in and must surrender these to an authorized bank within eight days of their return.

Capital

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 in addition 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 from the Minister of Finance. Exempt from authorization, however, are operations in connection with (1) loans backed by a guarantee from the Burkinabé 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 also maintained over imports and exports of gold, over the soliciting of funds for deposit with foreign firms, institutions, and private individuals, as well as 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 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 from the Minister of Finance5 and, unless the Minister specifically exempts them, 75 percent of such investments must be financed from borrowing abroad. Foreign direct investments in Burkina Faso6 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 to 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 Burkinabé 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 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 Burkinabé 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 from the Minister of Finance, who establishes the sale value.

Borrowing by residents from nonresidents also requires prior authorization from 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 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 of these loans outstanding—including the new borrowing—does not exceed CFAF 100 million for any one borrower, the annual interest rate does not exceed the normal market rate, and 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 of Finance if the loan itself is subject to such approval but is exempt if the loan is 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 from 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-filled 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 1994

Exchange Arrangement

January 12. The CFA franc was devalued to CFAF 100 per F 1 from CFAF 50 per F 1.

Payments for Invisibles

January 18. Residents traveling for tourism or business purposes to countries in the franc zone that are not members of the WAMU are allowed to take out banknotes, other than CFAF banknotes, up to the equivalent of CFAF 2 million; amounts in excess of this limit may be taken out in the form of other means of payment. (Prior to this decree, the limit applied to BCEAO banknotes for travel to countries in the BEAC zone was equivalent to CFAF 2 million, and the limit for travel to France and Comoros was the equivalent to CFAF million in banknotes other than CFA notes.)

Administration of Control

January 11. The treaty establishing the West African Economic and Monetary Union (WAEMU), complementing the West African Monetary Union (WAMU), was signed by the following seven countries: Benin, Burkina Faso, Côte d’Ivoire, Mali, Niger, Senegal, and Togo. One of the objectives of this union would be to create a common market among the member countries, based on free movement of persons, goods, services, and capital; a common external tariff; and a common trade policy.

March 15. The WAEC was dissolved.

May 6. Law No. 17/94 establishing relations with foreign countries as part of the reform of exchange regulations within WAEMU was adopted.

Burundi

(Position as of December 31, 1994)

Exchange Arrangement

The currency of Burundi is the Burundi Franc, the external value of which has been pegged since May 14, 1992 to a basket of currencies that reflects the pattern of Burundi’s international trade. On December 31, 1994, the official buying and selling rates for the U.S. dollar were FBu 244.96 and FBu 248.92, respectively, per US$1. Exchange rates for 18 currencies1 and for 2 units of account, European currency units (ECUs), and units of account of the Common Market for Eastern and Southern Africa, are quoted by the Bank of the Republic of Burundi (the central bank) on the basis of the Burundi franc-U.S. dollar rate and the transaction value of these currencies and units in terms of the U.S. dollar. Commercial banks are authorized to buy and sell foreign exchange on their own account and on behalf of their customers at rates within maximum margins of 1 percent on either side of the middle rate established by the central bank. Commercial banks are allowed to borrow foreign exchange to hedge against exchange rate risks. Exporters of coffee are also allowed to borrow foreign exchange through their banks or from their customers for purposes of crop financing and hedging against exchange risks.

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 six authorized banks.

Prescription of Currency

Settlements relating to trade with Rwanda and Zaïre in products specified in the commercial agreements between these countries are effected through SDR 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 convertible currency.

Nonresident (Foreign Currency Convertible Burundi Franc) Accounts

Accounts in convertible Burundi francs may be maintained by (1) natural persons of foreign nationality (such as staff of diplomatic missions) who are temporarily established in Burundi, (2) juridical persons of foreign nationality with special status (such as diplomatic missions and international organizations), and (3) any other natural or juridical persons authorized by the central bank. These accounts may be credited freely with any convertible currency, and they may be debited freely for withdrawals of Burundi francs or for conversion into foreign exchange. Up to FBu 20,000 in foreign currency may be withdrawn in banknotes upon presentation of travel documents (a passport and an airline ticket) for an unlimited number of trips. Withdrawals of banknotes 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.

Certain nonresidents whose main activities are outside Burundi may maintain accounts in foreign currencies with an authorized bank. These accounts may be maintained by (1) natural and juridical persons of foreign nationality who reside abroad, (2) enterprises authorized to operate in the free trade zone, (3) exporters of nontraditional products, who are authorized to retain 30 percent of their export proceeds, (4) Burundi nationals resident abroad, and (5) any other natural or juridical persons authorized by the central bank.

These accounts may be credited freely with any convertible currency received from abroad. They may be debited freely for (1) conversion into Burundi francs for payments in Burundi; and (2) payments abroad for travel and representation or for the purchase of foreign goods, except for banknotes. These accounts must not be overdrawn. However, they may bear interest freely. 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 in banknotes upon presentation of travel documents. Withdrawals in excess of this amount are subject to the prior authorization of the central bank. If no deposits are made to the foreign account within three months of its opening, the account must be closed.

Imports and Import Payments

Imports are fully liberalized, except for a limited number of goods the importation of which is restricted mainly for health or security reasons. 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 and price by an international supervising and oversight organization on behalf of the Burundi authorities.

In principle, foreign exchange is made available either at the time the goods are shipped on the basis of the shipping documents or after the goods are imported. 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 abroad up to 70 percent of their net annual income (80 percent in the case of foreign nationals working for companies that export at least 50 percent of their production). Private joint-stock companies may freely and immediately transfer 100 percent of the return on foreign capital and of the share allocated to foreign directors after payment of taxes. Airlines are authorized to transfer abroad 100 percent of their earnings after deduction of local expenses.

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, office, and residential buildings is permitted up to 50 percent of net rental income (after payment of taxes and a deduction of 20 percent for maintenance expenses) in any one-year period; the remainder, plus any accrued interest, may be transferred in full after one year provided that the funds have been held on deposit with a domestic financial institution for two years for commercial, industrial, and office buildings, and for three years for residential buildings.

Residents may apply for foreign exchange needed for foreign travel. The foreign exchange allowance for business travel is $200 a person a day or its equivalent ($250 for exporters), subject to a maximum limit of 15 days a trip. These limits may be increased for travel requiring a longer stay abroad. There is no limit on the number of trips a person may take. All travelers may take out up to FBu 5,000 in Burundi banknotes.

Exports and Export Proceeds

All exports are fully liberalized. Export proceeds must be collected within 30 days of the date of export declaration at customs for shipment by air or within 90 days for all other shipments.

Exporters operating in the free trade area are not required to surrender their export proceeds to an authorized bank.

Deadlines for the collection of proceeds from exports of nontraditional products are set by individual banks. All proceeds from traditional exports must be surrendered to an authorized bank. Exporters of nontraditional products may retain up to 30 percent of proceeds. Exports of mineral products, coffee, and hides are subject to export duties as are exports of all goods that do not qualify for export promotion. Duties paid on raw materials at the time of importation may be refunded, provided that the manufactured products are exported and the proceeds collected. In the case of fully paid exports of nontraditional primary products, the refund will cover 10 percent of the value of such payments.

Proceeds from Invisibles

Exchange receipts from invisibles must be surrendered to authorized banks. Travelers may bring in any amount of foreign currency quoted by the central bank and traveler’s checks and up to FBu 5,000 in Burundi banknotes.

Nonresidents staying in a hotel or guest house in Burundi must pay their hotel bills by selling convertible currencies 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 from the central bank and in the case of nationals of Rwanda or Zaïre 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 January 14, 1987, 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 Ministry of Development Planning and Reconstruction 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; and the retransfer may take place as soon as the funds to be transferred are available and with no time limitation. The guarantee provides for the transfer of the amount received from abroad. The repatriation of invested capital in the event of sale or shutdown of the business is also guaranteed.

Gold

All natural 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 daily rates communicated by the central bank. Gold exports are authorized jointly by the mining and customs departments.

Changes During 1994

No significant changes occurred in the exchange and trade system.

Cambodia

(Position as of December 31, 1994)

Exchange Arrangement

The currency of Cambodia is the Cambodian Riel. The exchange rate system comprises two rates: the official and the market rates. Adjustments to the official exchange rate are made daily by the National Bank of Cambodia so as to limit the spread between the official and parallel market rates to no more than 1 percent since June 1994. The official exchange rate applies mainly to external transactions conducted by the Government and state-owned enterprises. On December 31, 1994, the official exchange rate was CR 2,588 per US$1, and the market rate was CR 2,605 per US$1.

The National Bank is responsible for quoting daily official rates, at which the Foreign Trade Bank of Cambodia and the Phnom Penh Municipal Bank (two state-owned commercial banks) buy and sell foreign exchange. Other commercial banks are free to buy foreign exchange and sell it at their own rates. Exchange transactions take place at the rate prevailing in the market. Foreign exchange dealers are permitted to buy only banknotes and traveler’s checks and are required by law to conduct their transactions at the official rate; in practice, however, these transactions take place at the market rate. 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

The exchange control regime is defined by the 1991 Law on the Management of Foreign Exchange, Precious Metals, and Stones. This law vests responsibility for the management of foreign exchange (as well as precious metals and stones) with the Ministry of Economy and Finance and the National Bank. The National Bank is authorized to license commercial banks and other agents to engage in foreign exchange transactions and to regulate current and capital transactions. State-owned enterprises must be authorized by the Ministry of Economy and Finance to engage in export/import trade or in any other businesses generating foreign exchange and are required to repatriate foreign exchange earnings. Registered trading companies are not required to have a license to engage in foreign trade activities. New foreign exchange legislation that eliminates the foreign exchange restrictions contained in the 1991 law is expected to be presented to the National Assembly by May 1995.

Prescription of Currency

There are no prescription of currency requirements. Cambodia does not maintain operative bilateral payments agreements.

Resident and Nonresident Accounts

Residents and nonresidents are permitted to maintain foreign currency accounts with commercial banks. Although there are no limits on the balances of these accounts, under the 1991 law, the funds may not be used to settle domestic transactions but must be converted into domestic currency. In practice, however, such transactions are allowed to be settled through foreign currency accounts.

Imports and Import Payments

Trade policy is formulated by the Ministry of Commerce, in consultation with the Ministry of Finance.

Imports undertaken by registered trading companies require no license and there are no quantitative restrictions on imports, although imports of certain products are subject to control or are prohibited for reasons of national security, health, environmental well-being, or public morality.

Payments for Invisibles

Payments for invisibles related to trade are not restricted, but are regulated by the Law on Investment in the Kingdom of Cambodia of August 1994. The repatriation of profits is permitted in accordance with the relevant laws and regulations issued by the National Bank of Cambodia.

Under the 1991 law, an exchange allowance for travel of $3,000 a person is granted at the official rate for Cambodians going abroad for all types of travel, irrespective of the length of stay; in practice, however, there are no limits on the use of foreign exchange for travel abroad. Amounts in excess of this limit may be approved by the National Bank. There are no officially established limits on other invisible payments.

Exports and Export Proceeds

Exports of most products by registered trading companies may be undertaken without a license. Exports of a limited list of goods by both state-owned and private sector entities must be licensed by the Ministry of Commerce. Export licenses are required for sawed timber and logs. Exports of rice, gems, and sawed timber are subject to a quota. There are also export restrictions on gold, silver, and antiquities. All proceeds from exports by state-owned enterprises must be repatriated and sold to or deposited with the Foreign Trade Bank of Cambodia (FTBC); private sector entities must repatriate and hold export proceeds in accounts with commercial banks.

Proceeds from Invisibles

Proceeds from invisibles received by private sector entities are not subject to the repatriation or surrender requirement. Proceeds from invisibles earned by state-owned enterprises are subject to the same regulations as those governing proceeds from merchandise exports.

Capital

Borrowing abroad is permitted only with the approval of the Ministry of Economy and Finance. Foreign investors are required to submit investment applications to the Cambodia Investment Board at the Council for Development of Cambodia for review and approval. Foreign direct investment inflows must also be approved by the Cambodian Investment Board and are governed by the Law on Investment. A recently adopted investment law eliminated foreign exchange restrictions applying to investors in Cambodia.

Changes During 1994

Exchange Arrangement

September 1. The spread between the official rate and the market rate was narrowed to less than 1 percent.

Capital

August 4. An investment law eliminating foreign exchange restrictions applying to investors in Cambodia was adopted.

Cameroon

(Position as of December 31, 1994)

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 per F 0.01. The official buying and selling rate is CFAF 100 per F1. 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 in the Paris exchange market for the currencies concerned. A commission of 0.25 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 more than nine months. Settlements must be effected within eight days of the maturity date of the forward contract.

Administration of Control

Exchange control is administered by the Directorate of Economic Controls and External Finance of 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.

Resident and Nonresident Accounts

The regulations pertaining to nonresident accounts are based on those applied in France. As the BEAC has suspended the repurchase of BEAC banknotes circulating outside the territories of the CFA franc zone, BEAC banknotes received by the foreign correspondents of authorized banks and mailed to the BEAC agency in Yaounde may not be credited to foreign accounts in francs. Nonresidents are allowed to maintain bank accounts in convertible francs. These accounts, held mainly by diplomatic missions, international institutions, and their nonresident employees, may be credited only with (1) proceeds of spot or forward sales of foreign currencies transferred from abroad by account owners; (2) transfers from other nonresident convertible franc accounts; and (3) payments by residents in accordance with exchange regulations. These accounts may be debited only for (1) purchases of foreign currencies; (2) transfers to other nonresident convertible franc accounts; and (3) payments to residents in accordance with exchange regulations. Nonresidents may not maintain accounts in CFA francs abroad or accounts in foreign currency in Cameroon. Residents are not permitted to maintain accounts abroad or accounts in foreign currency in Cameroon.

Imports and Import Payments

Certain imports are prohibited for ecological, health, or safety reasons. Surcharges apply to imports from countries outside the Central African Customs and Economic Union (UDEAC) and imports of maize meal, trailers, iron reinforcing bars, and cement.

All import transactions valued at more than CFAF 500,000 must be domiciled with an authorized bank if the goods are not considered to be in transit. Transactions involving goods in transit 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 and are subject to presentation of relevant invoices. Payments for invisibles related to trade follow the same regime as basic trade transactions, as do transfers of income accruing to nonresidents in the form of profits, dividends, and royalties.

Residents traveling for tourism or business purposes to countries other than France (as defined above), Monaco, and the Operations Account countries may be granted foreign exchange allowances subject to the following regulations: (1) for tourist travel, CFAF 100,000 a day, with a maximum of CFAF 2 million a trip; (2) for business travel, CFAF 250,000 a day, with a maximum of CFAF 5 million a trip; (3) allowances in excess of these limits are subject to the authorization of the Ministry of Finance or, by delegation, the BEAC; and (4) the use of credit cards, which must be issued by resident financial intermediaries and approved by the Ministry of Finance is limited to the ceilings indicated above for tourism and business travel. Returning resident travelers are required to declare all means of payment in their possession upon arrival at customs and to surrender within eight days all means of payment exceeding the equivalent of CFAF 25,000. All resident travelers, regardless of destination, must declare in writing all means of payment at their disposal at the time of departure. The re-exportation by nonresident travelers of means of payment, other than banknotes, issued abroad and registered in the name of the nonresident traveler is not restricted, subject to documentation that they were purchased with funds drawn from an account in CFA francs or with other foreign exchange. The re-exportation of foreign banknotes is allowed up to the equivalent of CFAF 250,000; re-exportation above this ceiling requires documentation showing either the importation of foreign banknotes or their purchase against other means of payment registered in the name of the traveler or through the use of deposits lodged in local banks.

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 tax payments. 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. The transfer of up to 50 percent of the salary of a foreigner working in Cameroon, depending on the number of dependents abroad, 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 who have been insured previously, residents and nonresidents are not allowed to contract insurance abroad when the same services are available in Cameroon. However, payments of premiums for authorized contracts are not restricted.

Exports and Export Proceeds

Export transactions valued at CFAF 500,000 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, 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

All receipts from services and all income earned abroad must be collected within a month of the due date, and foreign currency receipts must be surrendered within a month of collection. Resident and nonresident travelers may bring into Cameroon any amount of banknotes and coins issued by the Bank of France, or a bank of issue maintaining an Operations Account with the French Treasury, as well as any amount of foreign banknotes and coins (except gold coins) of countries outside the Operations Account Area.

Capital

Capital transactions between Cameroon and France (as defined above), Monaco, and the Operations Account countries are free of exchange control. Outward capital transfers to all other countries require exchange control approval and are restricted. Inward capital transfers are free of restrictions, except for foreign direct investments and borrowing, which are subject to registration and authorization. Provided they have met their tax obligations, emigrants to countries outside the Operations Account Area may transfer abroad their full savings.

Direct investments abroad2 require the prior approval of the Ministry of Finance, unless they take the form of a capital increase resulting from the reinvestment of undistributed profits or 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 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 a report 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 Cameroonian investments abroad or foreign investments in Cameroon, must be reported to the Minister of Finance within 20 days of each operation. (Direct investments are defined as investments implying control of a company or enterprise. Mere participation is not considered 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 from 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, when their issuing, advertising, or offering for sale in Cameroon has already been authorized. All foreign securities and titles embodying claims on nonresidents must be deposited with an authorized intermediary and are classified as foreign, whether they belong to residents or nonresidents.

Borrowing abroad by natural 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 from 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 natural 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 from 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 the five regimes described below.

The generalized fiscal benefits include an exemption from 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 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 as follows: (1) The basic regime applies to firms whose investment is labor intensive (defined as one job for each CFAF 10 million investment), export-oriented firms, and firms 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, these firms 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 for each CFAF 5 million investment), whose investment is of modest size (less than CFAF 1.5 billion), and whose level of 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. This regime provides the same benefits as those under the basic regime during the installation phase, which is five years, and the same benefits as those available under the small and medium-size enterprise regime during the exploitation phase, which is 12 years. (4) The free trade zone regime is available to enterprises devoted exclusively to exporting; terms are fixed by individual agreements. (5) Firms that expand by more than 20 percent or that satisfy certain other conditions are eligible for benefits under the reinvestment regime. For 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, these firms are entitled to certain fiscal exemptions.

Law No. 90/19 of August 10, 1990 provides that Cameroonian interests 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 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 from the Ministry of Mines, Water, and Energy and the Minister of Finance, although such authorization 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 small 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 1994

Exchange Arrangement

January 12. The CFA franc was devalued to CFAF 100 per F 1 from CFAF 50 per F 1.

Imports and Import Payments

January 24. All quantitative restrictions were eliminated. The range of tariff rates was changed to 5–30 percent from 0–200 percent. Duties from the member countries of UDEAC were set at 20 percent of the corresponding rate applicable to imports from other countries.

September 1. A 30 percent temporary import surcharge was introduced on maize meal.

November 1. A 20 percent temporary import surcharge on trailers, iron reinforcing bars, and cement was introduced.

Capital

January 24. The Investment Code was revised to withdraw the exemption from customs duties on imports and from recording taxes that was granted to foreign firms, and this benefit was replaced by a 50 percent reduction in the corporate profit tax.

Canada

(Position as of December 31, 1994)

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, 1994 was Can$1.4028 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. The licensing of imports and exports, when required, is handled mostly by the Department of Foreign Affairs and International Trade, but other departments also issue licenses in specialized fields.

In accordance with the Fund’s Executive Board Decision No. 144–(52/51) adopted on August 14, 1952, Canada notified the Fund on July 23, 1992 that in compliance with UN Security Council Resolution No. 757 (1992), certain restrictions had been imposed on the making of payments and transfers for current international transactions in respect of the Federal Republic of Yugoslavia (Serbia/Montenegro). Canada has also imposed restrictions on financial transactions with Bosnia and Herzegovina in accordance with UN Resolution No. 942.

Prescription of Currency

No prescription of currency requirements are in force.

Imports and Import Payments

Import permits are required for only 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. In 1994, permits were required for the importation of controlled substances classified as dangerous drugs and firearms for military use. In addition, Health Canada does not permit the importation of drugs not registered with it. Import permits are required for carbon and specialty steel products for monitoring purposes only. Permits are rarely issued for some agricultural items, such as butter and milk, while other agricultural items may be subject to a quota. Commercial imports of certain products, primarily margarine and used motor vehicles (less than 15 years old) have been generally prohibited. However, the prohibition on imports of used vehicles from the United States was phased out over a five-year period that began in 1989, and the prohibition on imports of used vehicles from Mexico will be phased out by January 1, 2019. The prohibition on imports of margarine expired on January 1, 1995. Imports of some clothing and certain textile products, usually in the form of bilateral restraint agreements (Memoranda of Understanding) concluded under the Multifiber Arrangement negotiated within the framework of the General Agreement on Tariffs and Trade (GATT), are also subject to quantitative restrictions. As a result of the commitments made under the Uruguay Round Agreement, Canada has agreed to replace all agricultural import restrictions with tariff rate quotas and to ensure import access levels as negotiated in the Uruguay Round. These changes will be effective on either January 1, 1995 or August 1, 1995 depending on the product. In accordance with the provisions of the Uruguay Round Agreement on textiles and clothing, Canada’s system of import controls on textiles and clothing will be liberalized in stages over a ten-year period beginning January 1, 1995.

Exports and Export Proceeds

To support their export sales, exporters may have access to financing and insurance services provided by the Export Development Corporation.

The surrender of 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 Export Control List and Area Control List. The Export Control List identifies all goods that are controlled in order to implement intergovernmental arrangements, maintain supplies, or ensure security. It includes all items identified in the International Munitions List, the International Industrial List, and the International Atomic Energy List. In addition, controls are maintained over a broad range of items controlled for nonproliferation purposes (chemical, biological, and nuclear weapons and their delivery systems).

The Area Control List includes a limited number of countries to which all exports are controlled. At present, the following countries are on the Area Control List: Angola, Bosnia and Herzegovina, the Libyan Arab Jamahiriya, and the Federal Republic of Yugoslavia (Serbia/Montenegro).

Permits are required for the exportation of listed goods to all countries except, in most cases, the United States as well as for all goods destined to countries on the Area Control List.

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. Specific restrictions exist on inward direct investments in the broadcasting, telecommunication, transportation, fishery, and energy sectors. As a result of the Uruguay Round Agreement, Canada has eliminated the few remaining restrictions in the financial services sector. Specifically, the 10 percent individual, and 25 percent collective, limitations on the foreign ownership of Canadian-controlled, federally regulated financial institutions, and the 12 percent asset ceiling on the size of the foreign bank sector in Canada were eliminated. This became effective on December 15, 1994, when amendments to the Bank Act, the Trust and Loan Companies Act, the Insurance Companies Act, the Cooperative Insurance Companies Act, and the Investment Companies Act received Royal Assent as part of the World Trade Organization Agreement Implementation Act. These restrictions had already been lifted in the North American Free Trade Agreement (NAFTA). In addition, under the provisions of the Investment Canada Act, new foreign investments are in general subject to notification requirements but not to review requirements. By the end of 1994, only direct acquisitions of businesses with assets exceeding Can$160 million were subject to review. As a result of NAFTA, indirect acquisitions are no longer subject to review. This provision was multilateralized as part of Canada’s implementation of the Uruguay Round results. In addition, acquisitions below these limits and investments to establish new businesses in culturally sensitive sectors may be reviewed. Investments subject to review are required only to pass a test proving that they will yield a net benefit to Canada. There are no controls on outward direct investment or on inward or outward portfolio investment.

Gold

Residents may freely purchase, hold, and sell gold in any form, at home or abroad. 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 1 ounce of gold, have also been issued since 1979. In 1982, Can$5 and Can$10 coins containing 110 and ¼ of an ounce of gold, respectively, were issued; in 1986, a coin containing ½ of an ounce of gold with a face value of Can$50 was issued.

Changes During 1994

Administration of Control

January 1. The North American Free Trade Agreement between Canada, the United States, and Mexico came into force. NAFTA replaced the Canada-United States Free Trade Agreement and extended the benefits of the agreement to Mexico.

December 11. Chile was invited by Canada and the other two NAFTA signatories to join in pre-accession negotiations with a view to having Chile become the fourth member of the trade agreement.

December 15. The Canadian Parliament passed an act to implement the agreement establishing the World Trade Organization, which took effect on January 1, 1995 implementing Canada’s obligations resulting from the Uruguay Round.

Imports and Import Payments

During 1994, the injury findings in respect of sour cherries, delicious apples, and malt beverages (beer) imported from the United States ended, as did the undertakings in respect of aluminum wedge clamps and steel grinding balls from the United States. The injury finding in respect of the dumping of electric motors also expired. There were injury findings in respect of the dumping of carbon steel plate, 12-gauge shotgun shells and corrosion-resistant steel, each from various countries, as well as an injury finding in respect of the subsidizing and the dumping of black granite memorials from India.

March 31. The Canadian General Preferential Tariff was extended to June 30, 2004, and a review of the scheme was announced.

May 6. The 25 percent surtax on boneless beef levied on imports of more than 72,021 metric tons from countries other than the United States and Mexico was liberalized and would be levied on imports of more than 85,021 metric tons.

October 6. Certain cuts of boneless beef were excluded from the application of the 25 percent surtax on imports from countries other than the United States and Mexico.

December 31. The 25 percent surtax on certain imports of boneless beef lapsed.

Cape Verde

(Position as of December 31, 1994)

Exchange Arrangement

The currency of Cape Verde is the Cape Verde Escudo, which is pegged to a weighted basket of currencies issued by the nine countries (other than the United States) that are the most important suppliers of imports and emigrant remittances. 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, 1994, the buying and selling rates for the U.S. dollar were C.V. Esc 80.85 and C.V. Esc 81.42, respectively, per US$1. Most dealings in foreign exchange with the general public are conducted by the two commercial banks (BCA and CECV), which are allowed net foreign exchange positions of up to the equivalent of US$1.5 million and US$1 million, respectively. In addition to the two commercial banks, hotels and tourist agencies are authorized to buy foreign exchange from the public. 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 Bank of Cape Verde (the central bank). Certain categories of imports, exports, and re-exports exceeding specified limits are subject to licensing.

Arrears are maintained with respect to external payments.

Prescription of Currency

Export proceeds must be repatriated in convertible currencies. Cape Verde maintains bilateral payments agreements with Angola and São Tomé and Príncipe, both of which are currently inoperative.

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 may 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

Imports with a value of less than C.V. Esc 100,000 are exempt from the licensing requirement. Imports of goods exceeding C.V. Esc 100,000 and not involving payments from the country’s foreign exchange resources are subject to the preregistration requirement. The importation of maize, rice, sugar, and cooking oil is a government monopoly.

Licenses, which are issued by the General Directorate of Commerce in the Ministry of Economy, Transportation, and Communications, require the endorsement 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. The Ministry of Tourism, Industry, and Commerce establishes a list of products for which imports are subject to a global annual quota. This list includes mostly locally produced food items and beverages, (e.g., fish, bread, tomatoes, bananas, cereals, salt, beer, and soft drinks), with some items subject to seasonal quotas (e.g., potatoes, onions, and poultry).

Payments for Invisibles

All payments for invisibles require prior authorization. Any person traveling abroad may take out foreign currency equivalent to C.V. Esc 100,000. Nationals of Cape Verde traveling abroad as tourists are required to buy round-trip tickets in advance. Cape Verdean nationals studying abroad are allowed up to a maximum of C.V. Esc 100,000 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 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 they declared upon entry.

Exports and Export Proceeds

All exports exceeding C.V. Esc 2,500 are subject to licensing and to approval by the central bank. Export proceeds must be repatriated within three months of the date of issuance of the license, but this period may be extended.

Proceeds from Invisibles

Receipts from invisibles must be surrendered to a commercial bank. The importation 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 exportation of resident-owned capital is not normally permitted. Foreign direct investments are allowed to be repatriated (within 30 days of submission of applications to the Bank of Cape Verde).

Gold

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

Changes During 1994

No significant changes occurred in the exchange and trade system.

Central African Republic

(Position as of December 31, 1994)

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 per F 0.01. Exchange transactions in French francs between the BEAC and commercial banks take place at the rate of CFAF 100 per 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 in the Paris exchange market for the currencies concerned. 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 no taxes or subsidies on purchases or sales of foreign exchange.

With the exception of measures 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, Equatorial Guinea, Gabon, Mali, Niger, Senegal, and Togo). All payments to these countries may, therefore, 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 approval authority to the Director of the Budget. The Autonomous Amortization Fund (CAADE) of the Ministry of Finance supervises borrowing abroad. The Office of Foreign Financial Relations of the same ministry supervises lending abroad; the issuing, advertising, or offering for sale of 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 approval authority to the BEAC,2 to 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 of 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 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 regulations applied in France. The principal nonresident accounts are foreign accounts in francs. As the BEAC has suspended the repurchase of BEAC banknotes circulating outside the territories of the CFA franc zone, BEAC banknotes received by the foreign correspondents of authorized banks and mailed to the BEAC agency in Bangui by the Bank of France or the Central Bank of West African States (BCEAO) may not be credited to foreign accounts in francs.

Imports and Import Payments

No imports from any country are 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. Approval authority for many types of payment 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.

Residents traveling for tourism or business purposes to countries in the franc zone are allowed to take out BEAC banknotes up to a limit of CFAF 2 million; amounts in excess of this limit may be taken out in the form of means of payment other than banknotes. The allowances for travel to countries outside the franc zone are subject to the following regulations: (1) for tourist travel, CFAF 100,000 a day, with a maximum of CFAF 2 million a trip; (2) for business travel, CFAF 250,000 a day, with a maximum of CFAF 5 million a trip; (3) allowances in excess of these limits are subject to the authorization of the Ministry of Finance or, by delegation, the BEAC; and (4) the use of credit cards, which must be issued by resident financial intermediaries and approved by the Ministry of Finance, is limited to the ceilings indicated above for tourism and business travel. Returning resident travelers are required to declare all means of payment in their possession upon arrival at customs and surrender within eight days all means of payment exceeding the equivalent of CFAF 25,000. All resident travelers, regardless of destination, must declare in writing all means of payment at their disposal at the time of departure. The re-exportation by nonresident travelers of means of payment other than banknotes registered in their name and issued abroad is not restricted; however, documentation is required that such means of payment have been purchased with funds drawn from a foreign account in CFA francs or with other foreign exchange. The re-exportation of foreign banknotes is allowed up to the equivalent of CFAF 250,000; the re-exportation of foreign banknotes above these ceilings requires documentation demonstrating either the importation of foreign banknotes or their purchase against other means of payment registered in the name of the traveler or through the use of nonresident deposits held in local banks.

Exports and Export Proceeds

All exports require a declaration. Proceeds from exports to foreign countries must be collected and repatriated within one month of the due date, which 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 French francs or those of 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. If payment is received in foreign currency, it must be surrendered within one month of the date of receipt. Resident and nonresident travelers may bring in any amount of banknotes 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 banknotes 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 (in addition 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 the 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 the 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. All direct investments, whether Central African Republic investments abroad or foreign investments in the Central African Republic, that are made or liquidated 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 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, when issuing, advertising, or offering them 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 of loans outstanding does not exceed CFAF 50 million for any one borrower. Loans referred to under (4) and each repayment 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 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 granted by registered banks, and (2) other loans when the total amount of loans outstanding does not exceed CFAF 50 million for any one lender. The contracting of loans that are exempt from authorization, and each repayment, 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 Decision No. 18/65 of December 14, 1965, of the Central African Customs and Economic Union, 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 importation of specified equipment. In addition, certain enterprises are exempt from direct taxes on specified income.

The law also provides for three categories of preferential treatment (A, B, and C) that allow fiscal and other privileges to be accorded to firms investing either in new enterprises or in the expansion of existing ones in most sectors of the economy, except the commercial sector. Requests for approval of preferential treatment must be submitted to the Minister of Industry, who is Chairman of the Investment Commission that considers the application. If the Commission gives a positive decision, the proposed authorization is submitted to the Council of Ministers. Preferential treatments A and C are granted by decree from 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 small 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 1994

Exchange Arrangement

January 12. The CFA franc was devalued to CFAF 100 per F 1 from CFAF 50 per F 1.

Administration of Control

May 13. The Ministry of Finance issued a regulation that brought exchange regulations of the Central African Republic in line with those adopted by the other BEAC countries (following the suspension of the repurchase of CFA banknotes in circulation outside the BEAC zone).

Chad

(Position as of December 31, 1994)

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 per F 0.01. The official buying and selling rate is CFAF 100 per F 1. 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 in the Paris exchange market for the currencies concerned. 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, the Central African Republic, Comoros, Congo, Côte d’Ivoire, Equatorial Guinea, Gabon, Mali, Niger, Senegal, and Togo). Hence, all payments to these countries may be made freely. However, they must be declared and made only through authorized banks, using 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

Exchange control is administered by the Minister of Finance, who has delegated approval authority in part to the External Finance and Exchange Control Subdirectorate, which issues instructions to the authorized banks. All exchange transactions relating to countries outside the Operations Account Area must be made through authorized banks. Import and export licenses are issued by the Ministry of Commerce and Industrial Promotion. The Ministry of Finance supervises public and private sector 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.

Arrears are maintained with respect to debt-service payments on public debt.

Prescription of Currency

Since Chad is an Operations Account country, settlements with France (as defined above), Monaco, and other 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 regulations applied in France. The repurchase of banknotes issued by the BEAC and in circulation outside the BEAC area is suspended; BEAC banknotes received by the foreign correspondents of authorized banks and mailed to the BEAC agency in Chad by the Bank of France or the Central Bank of West African States (BCEAO) may not be credited to foreign accounts in francs.

Imports and Import Payments

Imports of wheat, wheat flour, and sugar from all sources require licenses. All other imports from countries in the French Franc Area and the original member states of the EU (other than France) may be made freely. All imports from non-EU 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 Industrial Promotion on the basis of proposals drawn up by the Committee on Imports.

The import program contains global quotas for imports from non-EU 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 EU countries, countries in the Operations Account Area, and 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, may be imported through compensation transactions by an importer. 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 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. Only a simple declaration is required for transfers to countries outside the BEAC area by residents not exceeding CFAF 500,000; for transfers of more than CFAF 500,000, prior authorization must be obtained from the competent authorities. For many types of payment, approval authority has been delegated to authorized banks. Authorized banks are required to execute promptly all duly documented transfer orders, and in any case to dispatch cable transfers within 24 hours of receipt of the relevant request. Payments for invisibles related to trade are permitted freely if 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. On a temporary basis, nonresidents, except diplomatic missions and their staff, international organizations and their staff, agencies with equivalent status and their staff, as well as employees and self-employed members of the professions (professionally active in Operations Account Area countries for less than a year) are not permitted to send transfers to countries that are not franc zone members without prior authorization from the competent authorities. They may, however, receive transfers from abroad.

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

The exportation (and importation) of banknotes issued by the BEAC to areas outside the BEAC area is prohibited.

Travelers—civil servants on missions, students, persons on pilgrimage, etc.—must use the following payments instruments: foreign exchange, traveler’s checks; bank drafts, bank and postal transfers, etc. Residents visiting other franc zone countries may obtain an unlimited allocation in French francs. This allocation can be provided in banknotes, traveler’s checks, bank drafts, bank or postal transfers, etc. For travel to countries outside the franc zone, the exchange allocation shall depend on the type of travel (as indicated below) and is subject to prior authorization from the relevant administrative authorities. This allocation can be made in banknotes, traveler’s checks, bank drafts, or postal transfers. Residents traveling outside the franc zone for tourism may obtain an exchange allocation equivalent to CFAF 100,000 a day up to a maximum of CFAF 2 million a trip a person over 10 years of age; for children under 10, the allocation is reduced by one-half. Residents traveling to countries outside the franc zone for tourism may obtain an exchange allocation equivalent to CFAF 250,000 a day, up to a maximum of CFAF 5 million a trip. Students or trainees leaving for the first time or returning to their normal place of study in countries outside the franc zone may obtain an exchange allocation equivalent to a three-month scholarship plus expenses for supplies. However, a student, whether or not the holder of a scholarship, may obtain an exchange allocation not exceeding the equivalent of CFAF 1 million. Civil servants and government employees traveling on official business to countries outside the franc zone may obtain an exchange allocation equivalent to the allowances stipulated for such travel. However, civil servants and government employees may obtain an exchange allocation on the same basis as tourists only if their mission costs are less than a daily allocation of CFAF 100,000, up to a limit of CFAF 2 million. Residents traveling to countries outside the franc zone for medical treatment may obtain an exchange allocation equivalent to CFAF 100,000 a day up to a limit of CFAF 2.5 million. Residents traveling to countries outside the franc zone for reasons other than those listed above (sporting events, participation in expositions, organization of fairs, participation in seminars or international meetings in a personal capacity, pilgrimages, etc.) shall be granted exchange allocations on the same basis as those traveling for tourism. Resident and nonresident travelers may import into BEAC area countries an unlimited amount of coins and banknotes other than those denominated in CFA francs.

Exports and Export Proceeds

All exports to non-EU countries outside the French Franc 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, if received in a foreign currency, surrendered within two months 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, surrendered within two months of the due date.

Nonresidents traveling from one BEAC member country to another may take with them an unlimited amount of franc zone banknotes and coins. Nonresident travelers may take out foreign exchange or other foreign means of payment up to the amount they declared on entry into the BEAC area. If they have made no declaration on entry into one of the BEAC countries, they may take out only up to the equivalent of CFAF 250,000.

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 held by residents or nonresidents in Chad must be deposited with authorized banks in Chad.

Special controls in addition to any exchange control requirements that may be applicable or suspended 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 only 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 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, when issuing, advertising, or offering them for sale in Chad has already been authorized.

Borrowing abroad by natural or juridical persons, whether public or private, residing 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 of the loan outstanding does not exceed CFAF 10 million for any one borrower, the interest rate is no higher than 7 percent, and the maturity is two years or less. The contracting of loans referred to under (3) that are free of authorization and each repayment must be declared to the Minister of Finance within 30 days of the operation.

Lending abroad by natural or juridical persons, whether public or private, residing 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 of these loans outstanding 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 must be declared to the Minister of Finance within 30 days of the operation. Commercial banks must maintain a specified minimum amount of their assets in Chad.

Under the Investment Code published on December 9, 1987, any domestic or foreign enterprise established in Chad is granted, under certain conditions, reduced duties and taxes on specified imports and exemption from direct taxes on specified income. The code provides for four categories of enterprises that may be eligible to receive various forms of preferential treatment (including certain tax 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 without specific authorization. Imports and exports of gold, whether unworked or refined, require prior authorization from both the Ministry of Finance and the Directorate of Geological and Mining Research, 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 small quantity of gold (such as gold-filled or gold-plated articles). Unworked gold may be exported only to France. Both licensed and exempt imports of gold are subject to customs declaration.

Changes During 1994

Exchange Arrangement

January 12. The CFA franc was devalued to CFAF 100 per F 1 from CFAF 50 per F 1.

Chile

(Position as of December 31, 1994)

Exchange Arrangement

The currency of Chile is the Chilean Peso (Ch$). Its external (reference) value is pegged to a fixed basket of currencies consisting of 0.45 U.S. dollar, 0.4691 deutsche mark, and 24.6825 Japanese yen; the weight of each currency in the basket is based on its relative importance in Chile’s international transactions. The external value of the basket is adjusted daily on the basis of the exchange rate relationships between the currencies included in the basket and the differential between the domestic and the foreign rates of inflation. The Central Bank of Chile conducts foreign exchange transactions with the official exchange market entities within margins of 10 percent around the reference rate. On December 31, 1994, the reference rate was Ch$419.62 per US$1 and the interbank rate was Ch$404.09 per US$1. The official foreign exchange market consists of commercial banks, exchange houses, and other entities licensed by the Central Bank. Fifty percent of proceeds from exports 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 are allowed to take place. In both markets, economic agents are free to negotiate exchange rates.

The banks are authorized to sell their excess foreign exchange holdings to other banks. Foreign exchange may be bought for the repayment of capital or interest abroad due within 90 days if these debts are properly registered at the Central Bank. The Central Bank provides an exchange subsidy on the following service payments on some debts contracted before August 6, 1982 (the original amount of the debt was about $8 billion):1 (1) payments to Chilean banks or financial companies whose debt is indexed to the official exchange rate; and (2) payments abroad on debt obligations registered with the Central Bank. The subsidy is paid by means of notes indexed to inflation with a minimum maturity of six years and an interest rate of 3 percent. On December 31, 1994, the subsidized rate was Ch$40.55 above the official reference rate. As of the end of 1994, only those debtors whose obligations were equal to or less than US$50,000 on June 30, 1985 have had access to this subsidized rate. However, the actual amount for which this exchange rate was being applied at the end of 1994 was nil, due to the bankruptcy of many of the affected debtors and to the fact that the official reference rate was lower than the preferential rate.

Administration of Control

The Central Bank is responsible for implementing exchange control policy. The Chilean Copper Commission is responsible for supervising copper exports and all imports of the copper industry in accordance with general rules enacted by the Central Bank.

Prescription of Currency

Settlements with Argentina, Bolivia, Brazil, Colombia, the Dominican Republic, Ecuador, Mexico, Paraguay, Peru, Uruguay, and Venezuela are 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).

Imports and Import Payments

Most imports are free of controls, with the exception of used motor vehicles. Most imports require a document (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 meeting the documentary requirements are granted access to the official foreign exchange market, regardless of the terms of the obligation involved, at least 30 days after the obligation’s expiration date as it appears in the Informe de Importación. Imports are subject to a uniform tariff rate of 11 percent. A few items are exempt from the general tariff regime, including items on which tariffs have been negotiated with LAIA countries and under a number of bilateral trade agreements. Imports of wheat, maize, edible oil, and sugar are subject to a special regime involving price margins within which the after-duty price must 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 are granted for certain transactions; others must take place through the informal exchange market. Authorization is provided upon presentation of the appropriate documents. The limit for tourist travel (in addition to the fares) is US$3,000 a trip for travel to Latin American and Caribbean countries and US$5,000 a trip to other countries. Higher amounts for travel other than for purposes of tourism may be authorized by the Central Bank upon presentation of adequate justification. Travelers may also purchase additional foreign currency in the informal exchange market.

Residents may purchase from commercial banks foreign exchange up to US$3,000 a month for study abroad, subscriptions to magazines and books, registrations for seminars, social security payments, medical treatment payments, or remittances of rents earned by real estate owners living abroad; for all these transactions, the appropriate documents must be presented. 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 the prior approval of the Central Bank.

There are no special provisions for exports of domestic banknotes.

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 must be surrendered through commercial banks, which are required to inform the Central Bank. Commercial banks are authorized to purchase all spot foreign exchange proceeds from exporters. Exporters are allowed to retain, and freely dispose of, up to 50 percent of export proceeds, with a cumulative limit of US$50 million during a 12-month period. Windfall receipts from copper exports of Codelco (the state copper mines) must be deposited in a special foreign currency account at the Central Bank, and withdrawals from this account are permitted only under certain circumstances.

Export proceeds subject to surrender requirements must be repatriated within 270 days of shipment and surrendered within 11 days. However, export proceeds may be surrendered within 90 days of repatriation if they are held as foreign exchange deposits with domestic banks. Repatriation periods may be extended for certain products.

Exporters of a limited number of products (approximately 6 percent of the country’s annual exports) have the option of taking a tax reimbursement (within 120 days of surrendering the proceeds) in lieu of benefits under the existing import duty drawback scheme; alternatively, exporters of these products may avail themselves of the provisions of Law No. 19.024, under which they may obtain refunds of the duties paid on imported inputs. Eligible products were defined initially as those whose average annual export values in 1990 were equal to or less than US$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 each year.

Proceeds from Invisibles

In general, foreign exchange proceeds from invisibles must be surrendered only when required by a legal provision. Royalties and copyright fees, commissions, proceeds from insurance, and other benefits related to foreign trade are subject to the same surrender requirement. The proceeds from family remittances, other commissions, or the surplus foreign exchange from travel allocations are not required to be surrendered.

There are no special provisions for imports of domestic banknotes.

Capital

All new foreign borrowing or refinancing of existing credits by commercial banks requires prior registration at, or approval from, the Central Bank; exceptions are lines of credit of up to one-year maturity with foreign correspondents. 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 that do not require its approval. All foreign borrowings, except for credits that are provided directly to Chilean exporters by foreign importers or by foreign suppliers to Chilean importers, are subject to a reserve requirement of 30 percent; this requirement may be satisfied by lodging a deposit in U.S. dollars at the Central Bank without interest or by entering into a special repurchase agreement with the Central Bank that effectively imposes a cost equivalent to the interest forgone. The length of the period during which the reserve requirement must be held in the Central Bank is one year for loans and bonds. Credit lines and deposits must also satisfy the 30 percent reserve requirement, which is based on the average monthly outstanding balance. Credits granted by foreign commercial banks to Chilean commercial banks as part of restructuring packages are exempt from the reserve requirement. 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 that capital brought into the country in the form of foreign borrowing (créditos externos) must be sold through authorized banks. Although there is no minimum term on the maturity of foreign borrowing, the 30 percent reserve requirement against external credits entering under Chapter XIV must be retained for one year. Repatriation 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, which refers to American Depository Receipts (ADRs), individuals and legal entities that are domiciled and resident abroad and that meet 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 concerning the inflow and outflow of capital or credits. Chilean enterprises and banks were authorized under Chapter XIV Regulations on May 13, 1992 to issue bonds in foreign markets. As of April 15, 1994, nonfinancial enterprises with a credit rating from an international rating company that is equal to or better than that assigned to Chile can issue bonds with a minimum value of US$25 million. Issues of bonds by banks are subject to prior authorization by the Central Bank. In accordance with Chapter XXVI regulations, Chilean enterprises and banks are also authorized to issue ADRs. Requirements as of September 15, 1994 are that (a) the issue be equal to at least US$25 million; and (b) the company be rated at least BBB+ by two international rating agencies.

(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 special 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 that stipulates that capital transfers to Chile will not normally exceed eight years for mining and three years for other projects. Investments of less than US$5 million may be approved by the Executive Vice President 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. Since March 1993, capital may be repatriated after one year unless specified otherwise in the investment contract. Foreign investors may opt for one of two income tax systems. Both systems are based on the regular Chilean corporate income tax of 15 percent on profit repatriation. Under the first system, a fixed rate of 42 percent (which includes the corporate income tax of 15 percent) is guaranteed over a period of 10 years. Alternatively, they may select a tax system that is similar to that which is applied to domestic investors. This system applies a 35 percent rate on profits before tax and deducts from it the 15 percent corporate income tax. The first system results in an effective rate of 38 percent on gross profits (before tax) and the second system in an effective rate of 35 percent on gross profits. Any foreign credits involved must be on financial terms authorized by the Central Bank. Foreign capital that entered Chile before the promulgation of Decree-Law No. 600 and that 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 abroad and repatriation of selected Chilean foreign debt instruments at a discount. Eligible instruments are defined as external debt payable in foreign currency outside Chile with a maturity of more than one year when the debtor is 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 the repatriation of such capital as well as to dividend payments.

Under Chapter XIX, foreign investors may sell their investments to domestic investors after paying a fee to the Central Bank. The last operation of debt conversion under these schemes took place in 1991. Chapter XVIII specifies the regulations for the conversion into peso assets (without remittance rights) of debt purchased abroad by residents and nonresidents at a discount 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, stipulates 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.

Foreign currency deposits in banks are also subject to a reserve requirement of 30 percent, based on the average monthly balance. Banks may sell foreign exchange using their term deposits in foreign exchange.

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 1994

Exports and Export Proceeds

April 15. The proportion of export proceeds exempted from surrender requirements was increased to 15 percent from 10 percent. The maximum amount exempted was increased to US$10 million from US$5 million per exporter in any 12-month period. The period during which foreign exchange must be repatriated was extended to 180 days from 150 days.

September 9. The proportion of export proceeds exempted from surrender requirements was increased to 25 percent from 15 percent. The maximum amount exempted was increased to US$15 million from US$10 million per exporter in any 12-month period. The period during which foreign exchange must be repatriated was extended to 210 days from 180 days.

November 30. The proportion of export proceeds exempted from surrender requirements was increased to 50 percent from 25 percent. The maximum amount exempted was increased to US$50 million from US$15 million per exporter in any 12-month period. The period during which foreign exchange must be repatriated was extended to 270 days from 210 days.

Capital

April 15. The requirement that nonfinancial enterprises be rated A by the National Risk Classification Commission in order to be eligible to issue bonds in foreign markets or to issue American Depository Receipts (ADRs) was replaced with the requirement that they be rated BBB+. The minimum amount for each ADR issue or band issue was lowered to US$25 million from US$50 million for these issuers. The maximum amount that pension funds, insurance companies, and mutual funds are allowed to invest abroad was raised to 4 percent from 3 percent of their portfolio.

September 9. The issuance of ADRs but not of bonds by banks was simplified: the minimum amount for each issue was lowered to US$25 million from US$50 million, and the requirement that the issuing bank be rated A by the National Risk Classification Commission was replaced by the requirement that it be rated BBB+ by two international rating agencies.

September 29. Rules regulating investments by banks and financial institutions in offshore financial institutions were established.

November 30. The ceiling on foreign exchange positions held by commercial banks was eliminated, and all reserve requirements on foreign borrowing were required to be held solely in U.S. dollars.

People’s Republic of China

(Position as of March 31, 1995)

Exchange Arrangement

The currency of the People’s Republic of China is the Renminbi, the external value of which is determined in the interbank market.1 At the start of each trading day, the People’s Bank of China (PBC) announces a reference rate based on the weighted average of the buying and selling rates against the U.S. dollar during the previous day’s trading. Daily movement of the exchange rate of the renminbi against the U.S. dollar is limited to 0.3 percent on either side of the reference rate. The PBC publishes the middle rates of the renminbi against 21 convertible currencies, except the U.S. dollar, on the basis of the exchange rate of the currencies concerned in the international markets.2 Based on the middle rate published by the PBC, the designated banks then quote their buying and selling rates to their customers within a range of 0.25 percent. On December 31, 1994, the middle market rate of the renmimbi against the U.S. dollar was Y 8.4462 per US$1.

Administration of Control

The PBC exercises central bank functions and control over foreign exchange; the State Administration of Exchange Control (SAEC), as a government institution under the leadership of the PBC, is responsible for implementing exchange regulations and for administering the foreign exchange market 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 principal 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 two hundred institutions are authorized to handle foreign exchange transactions. Individuals may hold foreign exchange but generally may not deal in it or conduct arbitrage operations. Financial institutions may hold foreign exchange.

Prescription of Currency

As of the end of 1994, an operative bilateral payments agreement was maintained with Cuba.3 Unless there are specific regulations, the currencies used in transactions are determined by the terms of the respective contracts.

Nonresident and Foreign Currency Accounts

Nonresidents4 remaining in China for a short time may open nonresident accounts with the BOC and other authorized banks and financial institutions. Foreign-funded enterprises (FFEs), including joint ventures, may also open foreign exchange current accounts and use them to make payments abroad. In addition, the PBC has specified other categories of foreign exchange for which domestic establishments can open foreign exchange accounts with designated banks by presenting the certificates of permit issued by the SAEC. Branches of foreign banks and other financial institutions may grant loans in foreign exchange and accept foreign currency deposits from FFEs and enterprises approved by the SAEC.

Individuals may open resident foreign currency savings accounts with authorized banks and may withdraw foreign currency from, or deposit it to, such accounts without restriction.

Imports and Exports

Primary responsibility for formulating foreign trade policies and ensuring the implementation of regulations and policy measures rests with the Ministry of Foreign Trade and Economic Cooperation (Moftec), which also issues the licenses required for restricted imports and a large number of exports.5 Moftec does not engage in direct foreign trade transactions and is no longer involved in the daily management of trading corporations. Foreign trade is conducted by foreign trade corporations (FTCs) and other entities licensed by Moftec to conduct foreign trade. At the end of 1994, about 4,000 FTCs were in operation. In addition, some 60,000 FFEs are permitted to conduct international trade directly.

All enterprises other than registered FTCs must obtain approval from the local foreign trade bureau in accordance with Moftec authorization, as well as a license from the local bureau for industry and commerce, to engage in foreign trade. All foreign exchange earnings from exports must be repatriated and must be sold to designated banks, except those of FFEs and those approved by the SAEC. FFEs are allowed to retain all their foreign exchange and to sell or purchase foreign exchange in the swap centers. In principle, beginning in 1995, the SAEC has been conducting annual examinations for FFEs. The FFEs passing the annual examinations need no further approval from the SAEC to conduct foreign exchange transactions. The purpose of approval is to ensure that export and contractual obligations are met. In practice, SAEC approval for purchase transactions was quite liberal in 1994.

Authorized local banks provide foreign exchange for imports when import contracts and commercial documentation are presented. Import licenses, when required, are examined by the banks. Residents may not pay for imports with local currency, except in border trade.

Imports into China are classified into two categories—restricted imports and unrestricted imports.6 The importation of products on the restricted list is controlled through licensing requirements or quotas. The importation of the following products is subject to canalization (i.e., restricted to designated FTCs): wheat, chemical fertilizer, crude oil, oil products, rubber, steel, timber, plywood, polyester synthetic fibers, tobacco and its products, cotton, and wool.

Imports of all secondhand garments, poisons, narcotic drugs, diseased animals, and plants are prohibited. In addition, the importation and exportation of weapons, ammunition and explosives, radio receivers and transmitters, Chinese currency exceeding Y 6,000, 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 they can be released 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. Controls in the form of registration for surveillance purposes are exercised on the importation of machinery and electric equipment to monitor the equilibrium of supply and demand.

The customs regulations in force are the Customs Law of China and the Regulations on Import and Export Tariff of China. The tariff rates for imports fall into two categories: general and preferential. General rates apply to imports originating in the countries or regions with which China has not concluded trade treaties or agreements with reciprocal favorable tariff clauses; preferential rates apply to imports originating in the countries with which China has concluded such treaties and agreements. The duties are calculated on the basis of the transaction value of imported goods. At the end of 1994, the average unweighted tariff rate was 36.4 percent.

Imports into Tibet are subject to a separate system of customs duties established by the State Council. The tariff applies to goods imported for use in Tibet on a nondiscriminatory basis and irrespective of their origin. It does not apply to imports into Tibet by mail or brought in as part of the luggage carried by travelers, which are subject to the regular Chinese tariff.

Domestic enterprises are liable to a product tax and a value-added tax on imports of certain products into China; FFEs are liable to a consolidated industrial and commercial tax. Since January 1, 1994, a uniform value-added tax has been applied to both domestic and imported products; the relevant provisions are contained in Provisional Regulations of the People’s Republic of China on Value-Added Tax (December 13, 1993), and Provisional Regulations of the People’s Republic of China on Consumption Tax (December 13, 1993).

Before 1991, special economic zones were set up in Shantou, Shenzhen, Xiamen, Zhuhai, and Hainan. A special development area was established in Pudong (Shanghai), and economic and technological development zones were established in 14 designated coastal cities. In 1992, approval was granted for the establishment of a large number of similar zones in selected inland cities and border regions that have recently been declared open to foreign trade and investment. Foreigners, Chinese working overseas, and Chinese from Hong Kong, Macao, and Taiwan Province of China are permitted to invest in and open businesses in these zones and areas either through wholly owned ventures or joint ventures with Chinese investors. Equipment and machinery or parts and components thereof, 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.

A number of restrictions are imposed on exports, primarily raw materials and food products. At the end of 1994, 114 product items were subject to export-licensing requirements or quotas, and 47 product items were subject to export duties. A portion of output of goods not produced in adequate quantities but for which a strong demand exists in the foreign market is set aside for export. Exports of certain products, such as valuable cultural relics, rare books, and animals, seeds, plants, precious metals, and artifacts made from precious metals are prohibited.

Export quotas for certain products are allocated, on an experimental basis, through a public bidding system.7 Successful bidders are required to guarantee maximum export value by offering higher benchmark export prices. During 1994, 24 items subject to export quotas were distributed under the bidding system.

Purchases of foreign exchange other than by foreign-funded enterprises for trade (and trade-related) transactions do not require the approval of the SAEC.

Foreign exchange for trade may be purchased from designated banks, provided that the importer has a valid import contract and a notice of payment from a foreign financial institution; for imports subject to licensing, quotas, or registration procedures, presentation of the certificates concerned is also required.

Payments for and Proceeds from Invisibles

Foreign exchange may be purchased to pay for trade-related services upon presentation of contracts or payment notices. The remittance of profits and dividends earned on foreign direct investment is not restricted after applicable taxes have been paid.

After-tax profits of foreign funded enterprises may be remitted in accordance with foreign exchange regulations; such remittances should be paid through the foreign exchange account of the joint venture. If the outstanding balance of such an account is not sufficient, FFEs may buy foreign exchange from foreign exchange adjustment centers.

Foreign exchange needed for nontrade and non-commercial payments by budgeted organizations, institutions, and social bodies may be purchased from the BOC, upon presenting the Application for Nontrade Payments, at the exchange rate of the day of purchase and within the limits specified by the SAEC. Off-budget domestic establishments may purchase foreign exchange for nontrade and non-commercial payments from designated banks by presenting the Exchange Sale Instruction issued by the SAEC.

Chinese residents wishing to spend money on travel abroad or remit money abroad may apply to the designated banks. In cases of serious illness, death, or injury affecting Chinese residents’ parents, spouses, or children outside China, the residents may apply for foreign exchange up to a specified limit on presentation of documentary verification. In general, if permission is granted to travel abroad, Chinese residents are allowed to take a reasonable amount of their own foreign exchange to cover expenses for transport and subsistence. There is no tax on travel. Chinese residents who retire and emigrate are normally permitted to receive their pensions abroad, but transfers of proceeds from the sale of their assets in China are limited.

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 to foreign and overseas Chinese partners in joint ventures set up in the special economic zones and the economic and technological development areas in the 14 open coastal cities and the newly opened inland and border cities.

Enterprises, except for FFEs, must sell their foreign exchange earnings from invisible transactions to an authorized bank. Foreign exchange remitted from abroad or from Hong Kong and Macao to Chinese residents may be retained and used to open a savings account at an authorized bank or sold for renminbi at the rate quoted by the banks. Similarly, foreign exchange owned by immigrants or returning Chinese before they become residents may be retained.

The following must be repatriated and may not be deposited abroad: all foreign exchange earned by Chinese residents working abroad, in Hong Kong, or in Macao; or earned from publication fees, copyright fees, awards, subsidies, honoraria, or other premiums. Individuals may retain or deposit exchange receipts with designated banks.

Foreign staff members and employees of FFEs, as well as those from Hong Kong and Macao,8 may remit their salaries and other income earned in China after paying taxes and deducting their living expenses in China and after receiving approval from the relevant local authorities.

Capital

Foreign borrowing is classified as either “plan” or “nonplan” borrowing.9 Plan borrowing includes (1) borrowing by the government sector (through the PBC, the Ministry of Finance, the Ministry of Agriculture, and Moftec and enterprises under the Moftec’s control) from foreign governments or international organizations and bilateral sources; (2) external borrowings of Chinese financial institutions; and (3) external borrowings of authorized Chinese enterprises. Nonplan borrowing includes (1) borrowing of FFEs; (2) branches of foreign banks operating in China; and (3) short-term trade credits.

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, Moftec, foreign trade corporations, and provincial governments) propose projects to the SPC. The 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 the loans are intended. The SPC reviews these plans and, in cooperation with the SAEC, the Ministry of Finance, and Moftec, 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.

Within these guidelines, loans from international financial institutions and foreign governments require the clearance of the SPC and the approval of the State Council. Loans from the World Bank are generally the responsibility of the Ministry of Finance; borrowing from the International Monetary Fund (IMF) and the Asian Development Bank (ADB) are the responsibility of the PBC; and intergovernmental loans are the responsibility of Moftec. Local governments and enterprises usually borrow through the BOC (or with its guarantee) or through specialized agencies, such as international trust and investment companies, rather than borrowing directly abroad themselves. The SPC sets an annual limit on such borrowing. Resident organizations issuing securities for foreign exchange must be approved by the PBC.

All medium- and long-term commercial borrowing abroad (including bond issues) under the plan requires prior approval from the SAEC on a case-by-case basis and may be conducted through authorized Chinese financial institutions. Borrowing quotas are allocated under the annual plan. The China International Trust and Investment Corporation (CITIC) has been permitted, on an experimental basis, to borrow abroad without first obtaining approval for each loan from the SAEC, as long as its outstanding debt is within the limits set by the State Council. Chinese financial institutions are permitted an annual ceiling by the SAEC for the balance outstanding on short-term loans.

All foreign direct investment projects are, in principle, subject to the approval of Moftec. 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 for insufficient domestic capital and to facilitate the introduction of modern technology and management.

Joint-venture enterprises and wholly foreign-owned companies are required to balance their foreign exchange receipts and payments, and foreign borrowing must be reported to, and filed with, the SAEC.10 Most foreign exchange earned by joint ventures and other enterprises involving nonresident capital must be deposited with 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 Hong Kong or Macao. When a joint venture ceases operation, the net claims belonging to the foreign investor may be remitted with SAEC approval. Alternatively, the foreign investor may apply for repayment of paid-in capital.

The profits of joint ventures in special economic zones, the 14 coastal cities, the newly opened inland and border cities, and those exploiting petroleum, natural gas, and other specified resources are subject to tax at the rate of 15 percent. 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 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.

Foreign companies, enterprises, and other economic organizations with establishments in China that are engaged in independent business operations, cooperative production, or joint business operations with Chinese enterprises are subject to tax only on their net income from sources in China. Under the Income Tax Law of the Peoples’ Republic of China for Enterprises with Foreign Investment and Foreign Enterprises (July 1, 1991), a standard income tax rate of 33 percent is levied on all foreign investment enterprises and foreign enterprises; it consists of a 30 percent state income tax and a 3 percent local tax. Certain exemptions and reductions from income tax are available in the special economic zones and other special open investment areas. Correspondingly, foreign state banks located in countries where income from interest on the deposits and loans of China’s state banks is exempt from income tax are also exempt from this Chinese tax. Foreign business without establishments in China are subject to a reduced tax of 10 percent (half the usual rate) on interest income or leasing fees (less than the value of equipment) earned under credit, trade, and leasing agreements made with Chinese companies and enterprises from 1983 to 1985 but only for the duration of the agreements. For fees collected by foreign businessmen for the use of special technology provided 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 waived for advanced technology provided on favorable terms.

Foreign investment by Chinese enterprises is subject to approval; profits earned thereby must be sold to designated banks, except for a portion that may be retained abroad as a working balance.

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. Non-residents may buy gold and silver and gold and silver products at special stores but must present the invoice when exporting them.

Changes During 1994

Exchange Arrangement

January 1. The official exchange rate and the swap market rate were unified at the prevailing swap market rate. Issuance of export retention quotas ceased except those for outstanding contracts. Enterprises were allowed to use their outstanding retention quotas to purchase foreign exchange at the official exchange rate prevailing on December 31, 1993. In addition, for undistributed quotas for which foreign exchange was sold before December 31, 1993, the distribution and deposit of quotas into relevant accounts were required to be completed before the end of January 1994. The redemption of outstanding retention quotas was terminated at the end of 1994.

January 1. Foreign Exchange Certificates (FECs) ceased to be issued. The existing FECs were withdrawn from circulation by the end of 1994 at the official exchange rate prevailing at the end of December 1993, and outstanding FECs were to be converted into foreign exchange only through the end of June 1995.

April 1. The China Foreign Exchange Trade System (CFETS) in Shanghai (an integrated electronic system for interbank foreign exchange trading) came into operation. Twenty-two cities were linked to this system by the end of 1994.

Imports and Exports

January 1. The foreign exchange retention system was abolished; enterprises were allowed to continue to use outstanding retention quotas to purchase foreign exchange at the official exchange rate prevailing at the end of 1993. The priority import list was abolished. Foreign exchange for trade transactions could be purchased from designated banks, provided that the importer has a valid import contract and a notice of payment from a foreign financial institution; for imports subject to licensing, quotas, or registration procedures, these documents would also be required.

January 1. The mandatory import plan was abolished. The approval procedures for domestic enterprises engaged in foreign trade were liberalized.

February 1. A public bidding system for allocation of export quotas was introduced. Three types of bidding would be conducted under the system: (1) “negotiated” bidding applied to products whose exportation is to be balanced by the state; (2) “invitation” bidding applied to raw materials produced in geographically concentrated areas; and (3) “oriented” bidding applied to products manufactured in geographically concentrated areas and whose export channels are limited. Only one type of bidding would be conducted for a product in any calendar year. Successful bidders would be required to guarantee maximum profits by higher benchmark prices.

May 1. Import-licensing requirements and quota controls on 195 items were eliminated.

September 1. Import-licensing requirements and quota controls on 125 items were eliminated.

Payments for and Proceeds from Invisibles

April 1. The requirement to obtain approval from the SAEC for the purchase of foreign exchange for trade and trade-related transactions (for domestic enterprises) and the priority list governing purchases of foreign exchange were abolished.

Colombia

(Position as of December 31, 1994)

Exchange Arrangement

The currency of Colombia is the Colombian Peso. All foreign exchange operations take place at a market-determined exchange rate. The Superintendency of Banks calculates a representative market exchange rate based on market rates.1 The Banco de la República conducts foreign exchange transactions only with the Ministry of Finance and authorized financial intermediaries and does not conduct foreign exchange transactions directly with the nonbank private sector. The Banco de la República announces the upper and lower limits of a 14 percentage point band ten days in advance for indicative purposes. The Banco de la República quotes buying and selling rates for certain other currencies2 daily on the basis of the buying and selling rates for the U.S. dollar in markets abroad. On December 31, 1994, the representative market exchange rate was Col$831.27 per US$1.

Other effective exchange rates result from (1) tax credit certificates for nontraditional exports (certificados de reembolso tributarios or CERTs) granted at three different percentage rates; (2) an 8 percent surtax on remittances of earnings on existing non-oil foreign investments (to be reduced to 7 percent by 1996), a 15 percent surtax on remittances of earnings on existing foreign investments in the oil sector (to be reduced to 12 percent in 1996), and a 12 percent surtax on remittances of earnings from foreign investments made after 1993; and (3) a 10 percent withholding tax on foreign exchange receipts from personal services and other transfers. The Government purchases foreign exchange for all public debt payments and other expenditures included in the national budget under the same conditions as other authorized intermediaries.3

Residents are permitted to buy forward cover against exchange rate risks in respect of foreign exchange debts in convertible currencies registered at the Banco de la República on international markets. Residents may also deal in over-the-counter forward swaps and options in U.S. dollars.

Administration of Control

All imports require registration at the Colombian Institute of Foreign Trade (Incomex). The Customs and Taxes Direction (DIAN), within the Ministry of Finance, enforces ex post control and supervision over trade transactions and is responsible for applying penalties for any violation of the exchange regulations. The authorized foreign exchange intermediaries are commercial banks, financial corporations, Financiera Energética Nacional (FEN) and Banco de Comercio Exterior de Colombia (BANCOLDEX), and savings and loan corporations. Commercial banks are required to hold a net foreign exchange position equivalent to at least 40 percent of their foreign exchange liabilities (outstanding at the end of June 1991). There are no regulations governing the net foreign exchange positions of exchange houses; they may sell their excess foreign holdings to authorized financial intermediaries because they do not have access to the Banco de la República.

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 anti-dumping cases. The National Council for Economic and Social Policy (CONPES) issues directives to the Banco de la República and the National Planning Department concerning foreign direct investment in Colombia. The Banco de la República 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, and commissions.

Prescription of Currency

Payments and receipts are normally effected in U.S. dollars, but residents and financial intermediaries are allowed to carry out operations in any currency. Settlements for commercial transactions with countries with which Colombia has reciprocal credit agreements may be made through special accounts in accordance with the provisions of such agreements. Settlements between Colombia and Argentina, Bolivia, Brazil, Chile, the Dominican Republic, Ecuador, Mexico, Paraguay, Peru, Uruguay, and Venezuela may be 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, Hungary, and the Russian Federation.

Nonresident Accounts

Residents may maintain foreign accounts, registered at the Banco de la República (compensation accounts), to pay for imports, to invest abroad in financial assets, or to carry out any other foreign exchange operations. Proceeds from services (except interest and profits) and transfers may be used to maintain foreign accounts abroad; these accounts do not have to be registered at the Banco de la República. Credit institutions are authorized to receive short-term deposits in foreign currency from nonresident individuals or firms; these deposits are freely available to the holders. Banks must report transactions through these accounts to the Banco de la República.

Imports and Import Payments

Importers may obtain foreign exchange from the exchange market with exchange certificates purchased in the market or may purchase foreign exchange directly from the exchange market. In addition, they may use the proceeds from deposits held abroad. Foreign enterprises in the oil, coal, and natural gas sectors and firms in the free trade areas are not permitted to purchase foreign exchange from financial intermediaries. Import payments must be made within four months of the due date of payment indicated in the import registration form; otherwise, they are treated as debt (as discussed below).

Imports are subject to one of the following two regimes: (1) freely importable goods, requiring registration only with Incomex;4 and (2) goods subject to prior approval and requiring an import license. Most imports are in the free-import regime, where 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 members of the Andean Pact. Imports subject to a prior licensing requirement consist of medicines and chemical products (30 tariff positions) and weapons and munitions (39 tariff positions).

A distinction is drawn between reimbursable and nonreimbursable imports. Reimbursable imports involve purchases of official foreign exchange from a financial intermediary, 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.

Import registrations are granted automatically. However, import registrations by some public sector agencies are screened by Incomex to determine whether local substitutes are available. Both import licenses and registrations are valid for 6 months, except those for agricultural and livestock products, which are valid for 3 months, and those for capital goods, which are valid for 12 months. Import licenses may be extended for only one period. The charge for import registration is Col$12,800. Imports of crude oil and petroleum products are effected by Empresa Colombiana de Petroleo (Ecopetrol).

Payments for Invisibles

Foreign exchange for payments for invisibles may be obtained through foreign exchange intermediaries or exchange houses.

Exports and Export Proceeds

Export licenses are not required. All exchange proceeds from exports of goods that are repatriated must be surrendered to authorized financial intermediaries within six months or must be maintained in foreign accounts registered at the Banco de la República. However, exporters are permitted to retain their export proceeds abroad, in compensation accounts, to settle import payments, to invest in financial assets, to pay back debt, or to effect any other payment operation. In addition, foreign enterprises in the oil, coal, and natural gas sectors and firms in free trade areas are not required to surrender their foreign exchange. On surrendering their export proceeds in the foreign exchange market, exporters of products other than coffee, petroleum and petroleum products, and exports effected through special arrangements (such as barter and compensation) may receive tax credit certificates in an amount corresponding to a specified percentage of the f.o.b. value surrendered. Three rates—2.5 percent, 4 percent, and 5 percent—are applied, depending on the product and the country of destination; the rates are calculated on domestic value added. 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.

Exports of coffee are subject to the following regulations: (1) a minimum surrender price is fixed on the basis of the international market prices; (2) exporters pay a coffee contribution, which is determined by the difference between the export value of coffee surrendered and its estimated cost, taking into account the domestic buying price for coffee intended for export; (3) exporters pay a 6.4 percent tax on surrendered export proceeds, of which 2.7 percent is earmarked for the National Federation of Coffee Growers and 3.7 percent for the National Coffee Fund; (4) exporters must either surrender without payment (in the form of untreated coffee) a certain proportion of the volume of excelso coffee that they wish to export or pay the National Federation of Coffee Growers the peso equivalent if the National Coffee Committee (composed of the Ministers of Finance and Agriculture and the Managing Director of the Federation) so decides (as of the end of 1991, this provision was not in operation); and (5) the National Coffee Committee establishes a domestic buying price based on international prices, for coffee intended for re-export, expressed in pesos for each load of 125 kilograms.

Foreign exchange proceeds earned by the public sector may be surrendered to financial intermediaries or to the Banco de la República.

Proceeds from Invisibles

Exchange proceeds from services and transfers are not required to be surrendered through the foreign exchange market but may be sold to exchange houses or to financial intermediaries or used through foreign accounts. 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 market rates.

All foreign investments and foreign loans, direct lines of foreign credit obtained by nonbank residents,5 and the transfer of capital previously imported (except loans previously registered under Decree No. 2322 of September 2, 1965) must be registered with the Banco de la República. Foreign direct investments in Colombia are governed by Law No. 9 of 1991 (January 17, 1991) and CONPES Resolution No. 49, 51–57 of 1991. These regulations are in accordance with the provisions of Decision Nos. 291 and 292 of the Cartagena Agreement, which govern foreign investments within the member countries of the Andean Pact. Foreign investment is freely allowed up to 100 percent of ownership in any sector of the economy except in defense and waste disposal. Special regimes remain in effect in the financial, petroleum, and mining sectors. While foreign capital participation in the financial sector is permitted up to 100 percent, the purchase of 10 percent or more of the shares of a Colombian financial institution requires the prior approval of the Superintendent of Banks. CONPES can legislate special conditions affecting foreign investment in specific sectors of the economy and overrule the above-mentioned provisions (CONPES Resolution No. 49, 51–57 of October 1991). 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.

Registration of capital with the Banco de la República entitles the investor to export profits and to repatriate capital under specified conditions. Limitations on annual transfers of profits abroad were abolished in October 1991. Colombian investment abroad should also be registered at the Banco de la República.

Short-term foreign borrowing to finance any activity is permitted. Foreign loans with maturities ranging from 30 days to 5 years are subject to a nonremunerated deposit requirement ranging from 43 percent to 140 percent of the loan, respectively. The deposits are held for a period corresponding to the loan maturities. Exempted from the deposit requirement are credits for imports of capital goods; short-term loans granted by BANCOLDEX to Colombian exporters;6 credit card balances; loans destined for Colombian investments abroad; and green coffee, coal, and oil preshipment financing.7 The limit on contractual interest rates of 2.5 percent over LIBOR or the U.S. prime rate remains in effect for the public sector, and there is a limit of 20 percent a year in U.S. dollar terms for the private sector. Foreign loans for government entities in excess of specified amounts require prior authorization from 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 Banco de la República; 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 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. Such investments must be maintained in Colombia for at least 18 months.

Contracts involving royalties, commissions, trademarks, or patents should be registered with Incomex for statistical purposes only.

Colombian residents are authorized to maintain assets and earned income abroad.

Gold

Under Law No. 9 of January 17, 1991, Colombian residents are allowed to purchase, sell, hold, import, and export gold.

The Banco de la República makes domestic sales of gold for industrial use directly at a price equivalent to the average quotation in the gold market in London during the previous day; this price is converted into pesos at the representative market exchange rate.

The Banco de la República from time to time issues commemorative gold coins, which are legal tender. Residents and nonresidents may freely buy such coins.

Changes During 1994

Exchange Arrangement

January 21. The system of exchange certificates was abolished. The Banco de la República stopped issuing exchange certificates.

Imports and Import Payments

August 16. The maximum payment period for imports was reduced to four months from six months.

Capital

August 12. New deposit requirements on foreign borrowing, varying with each additional month of maturity, were introduced as follows: 140 percent for loans with maturities of up to 30 days; 127 percent for those with maturites of 6 months; 112 percent for those with maturities of 12 months; 100 percent for those with maturities of 18 months; 69 percent for those with maturities of 3 years; and 43 percent for those with maturities of 5 years.

Comoros

(Position as of December 31, 1994)

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 per F 0.0133. The current buying and selling rates for the French franc are CF 75 per F 1. Exchange rates for other currencies are officially quoted on the basis of the fixed rate of the Comorian franc for the French franc and the Paris exchange market rates for other currencies. 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 bank 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 bank (the only authorized dealer) 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 investment. Part of the approval authority in respect of exchange control has been delegated to the commercial bank and the Postal Administration. All exchange transactions relating to foreign countries must be made 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.

Imports and Import Payments

The importation of certain goods is prohibited from all countries. The importation of other goods, except those originating from member countries of the European Union, Monaco, and the Operations Account countries, is subject to individual licensing. All import transactions must be domiciled with the (single) authorized bank if the value is CF 500,000 or more.

Payments for Invisibles

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 when supporting documents can be produced. These regulations apply to allowances for education, family maintenance, and medical treatment, as well as to remittances by foreign workers of savings from their earnings.

Residents traveling to France (as defined above), Monaco, and the other Operations Account countries may take out the equivalent of CF 500,000 in banknotes 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 any means of payment up to the equivalent of CF 250,000 a person a trip. Any amount in excess of these limits is subject to the prior approval of the Central Bank, which is granted if supporting documentation is provided.

Nonresident travelers may export the equivalent of CF 500,000 in banknotes and any means of payment issued abroad in their name without providing documentary justification. Other cases are authorized pursuant to the Exchange Regulations when supporting documents can be produced.

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

Exports and Export Proceeds

With a few exceptions, exports to any destination are free of licensing requirements. Proceeds from exports to foreign countries must be repatriated within 30 days of the expiration of the commercial contract and sold immediately to the authorized bank. All export transactions 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 repatriated and, if received in foreign currency, surrendered to the authorized bank within one month of the due date or date of receipt. Resident and nonresident travelers may bring in any amount of domestic and foreign banknotes and coins.

Capital

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 (in addition to any applicable exchange control requirements) are maintained over borrowing abroad, inward direct investment, and all outward investment; these controls relate to approval of the underlying transactions, 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 1994

Exchange Arrangement

January 12. The Comorian franc was devalued to CF 75 per F 1 from CF 50 per F 1.

Republic of Congo

(Position as of December 31, 1994)

Exchange Arrangement

The currency of the Republic of Congo is the CFA Franc,1 which is pegged to the French franc, the intervention currency, at the fixed rate of CFAF 1 per F 0.01. The official buying and selling rate is CFAF 100 per F 1. 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 in the Paris exchange market for the currencies concerned.

Payments to all countries 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, 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. Foreign exchange purchased by the Diamond Purchase Office is subject to a commission of 0.5 percent, with a minimum charge of CFAF 100. An additional commission of 0.25 percent is levied on all payments 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 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. The system of import licenses has been replaced by a system of ex post declarations for all but 13 products (Decree No. 88/414, May 28, 1988).

Arrears are maintained with respect to external payments.

Prescription of Currency

Because 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. As the BEAC has suspended the repurchase of BEAC banknotes circulating outside the territories of the issuing zone, BEAC banknotes received by foreign correspondents of authorized banks mailed to the BEAC agency in Brazaville may not be credited to foreign accounts in francs.

Imports and Import Payments

The imports regime is, in principle, liberal; only certain items require import licenses. An annual import program classifies imports by zones: (1) the countries of the Central African Customs and Economic Union (UDEAC); (2) France; (3) other Operations Account countries; (4) European Union (EU) countries other than France; and (5) all remaining countries. Thirteen product items under this program require licenses, and others are subject to expost declaration. The quotas for non-EU 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 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.

In April 1994, a new tariff structure was introduced in the context of the UDEAC tax and customs reform with a view to rationalizing protection rates by narrowing dispersion while eliminating quantitative restrictions. The common duty rate of the UDEAC member countries for basic necessities was reduced to 5 percent, to 10 percent for raw materials and capital goods, to 20 percent for intermediate and miscellaneous goods, and to 30 percent for products requiring special protection. Customs duties on imports from UDEAC member countries were set at preferential rates equivalent to 20 percent of the corresponding common external tariff rate.

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 that 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 for tourist or business purposes to countries in the franc zone are allowed to take out an unlimited amount in banknotes or other payment instruments in French francs. The allowances for travel to countries outside the franc zone are subject to the following regulations: (1) for tourist travel, CFAF 100,000 a day, with a maximum of CFAF 2 million a trip; (2) for business travel, CFAF 250,000 a day, with a maximum of CFAF 5 million a trip; (3) for official travel, the equivalent of expenses paid and CFAF 100,000 a day, with a maximum of CFAF 2 million a trip; and (4) for medical expenses abroad, CFAF 100,000 a day, with a maximum of CFAF 2.5 million a trip. Allowances in excess of these limits are subject to the authorization of the Ministry of Finance. The use of credit cards, which must be issued by resident financial intermediaries and approved by the Ministry of Finance, is limited to the ceilings indicated above for tourist and business travel. Returning resident travelers are required to declare all means of payment in their possession upon arrival at customs and surrender within eight days all means of payment exceeding the equivalent of CFAF 25,000. All resident travelers, regardless of destination, must declare in writing all means of payment at their disposal at the time of departure. The re-exportation by nonresident travelers of means of payments other than banknotes issued abroad and registered in the name of the nonresident traveler is not restricted, subject to documentation that they had been purchased with funds drawn from a foreign account in CFA francs or with other foreign exchange. The re-exportation of foreign banknotes is allowed up to the equivalent of CFAF 250,000; the re-exportation of foreign banknotes above these ceilings requires documentation demonstrating either the importation of foreign banknotes or their purchase against other means of payment registered in the name of the traveler or through the use of nonresident deposits lodged in local banks.

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. Transfers by residents of amounts smaller than CFAF 500,000 to nonmember countries of the franc zone are subject to simple declaration, and those exceeding CFAF 500,000 require prior authorization. Transfers to nonmember countries by nonresidents living in the Congo for less than one year are subject to authorization. Members of diplomatic missions, employees of international organizations, employees of companies operating in the Congo, and government employees, as well as members of liberal professions, are exempt from this regulation.

Exports and Export Proceeds

In principle, all exports require an exchange commitment, 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 banknotes and coins issued by 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 banknotes 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 in addition to the 0.75 percent commission. 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 (in addition 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 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, the interest is no higher than 5 percent, and the term is at least two years, are exempt from this requirement. The contracting of loans that are free of authorization, and each repayment, 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 currency granted by registered banks, and (2) other loans when the total amount outstanding of these loans does not exceed the equivalent of CFAF 5 million for any one lender. The making of loans that are free of authorization, and each repayment, 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 small 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 1994

Exchange Arrangement

January 12. The CFA franc was devalued to CFAF 100 per F 1 from CFAF 50 per F 1.

Imports and Import Payments

April 1. A new tariff structure was introduced in the context of the UDEAC tax and customs reform with a view to rationalizing protection rates by narrowing dispersion while eliminating quantitative restrictions. The common duty rate adopted by the UDEAC member countries for imported basic necessities was reduced to 5 percent, to 10 percent for raw materials and capital goods, to 20 percent for intermediate and miscellaneous goods, and to 30 percent for products requiring special protection. Customs duties on imports from UDEAC member countries were set at preferential rates equivalent to 20 percent of the corresponding common external tariff rate.

Costa Rica

(Position as of December 31, 1994)

Exchange Arrangement

The currency of Costa Rica is the Costa Rican Colón, the external value of which is determined freely by commercial banks and other financial institutions in the interbank market.1 A tax of Ȼ 0.68 per US$1 applies to all foreign exchange transactions in the official market. The difference between buying and selling rates of authorized banks and financial institutions may not exceed 0.7 percent. The Government and public sector institutions conduct foreign exchange transactions directly with the Central Bank. These operations are carried out at the official reference exchange rate, which is calculated at the close of each business day as the weighted average of the exchange rates used in the market during the day. On December 31, 1994, the buying and selling bank rates were Ȼ 164.51 and Ȼ 165.63, respectively, per US$1.

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.

Administration of Control

Exchange regulations are issued by the Central Bank. The only institutions authorized to deal in foreign exchange are the Central Bank, the state commercial banks, private banks, and other nonbank financial institutions authorized by the Central Bank.

Arrears of the nonfinancial public sector are maintained with respect to external payments.

Prescription of Currency

Nearly all payments for exchange transactions are made in U.S. dollars. Trade payments to Central America may be made in U.S. dollars or in local currencies.

Imports and Import Payments

A limited number of imports are subject to licensing requirements. All payments for imports may be made freely. Imports made on a barter basis require a barter license (licencia de trueque), issued by the Ministry of Economy and Commerce.

Customs tariff rates on most goods range from zero to 20 percent. 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, from which certain essential items are exempt; and (3) a selective consumption tax at rates varying from zero to 75 percent, depending on the essential quality of the item.

Payments for Invisibles

Payments for invisibles are not restricted. Withholding taxes of 15 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 an officially acknowledged stock exchange. Remittances of interest abroad 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.

Exports and Export Proceeds

Sixty percent of export proceeds from all exports may be retained by exporters, and the remainder must be sold to any financial institution authorized to operate in the interbank market. In turn, a financial institution must transfer to the Central Bank 25 percent of total purchases of foreign exchange related to exports. The exchange rate applicable to this transfer is the buying exchange rate of the institution plus Ȼ0.10 per US$1. Exporters of nontraditional products to markets outside Central America are entitled to receive freely negotiable tax credit certificates (CATs) at the following rates based on the f.o.b. value: 15 percent for exports to the United States, Puerto Rico, and Europe; and 20 percent for exports to Canada.2

Most export licenses have been eliminated. However, licenses are required for goods, 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 purebred 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); textiles; flowers, 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.

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 agricultural items, within 60 days of shipment; those from exports of industrial products (excluding those indicated next) and other agricultural products, within 120 days of shipment; those from exports of durable and semi-durable industrial consumer products, within 180 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 and, in some cases, are graduated in line with 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

There are no restrictions on capital transfers, and capital transactions between residents and nonresidents are permitted. 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 Authority3 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 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 buy or sell, subject to approval from the Ministry of Energy and Natural Resources, 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. 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 1994

Exchange Arrangement

April 13. The Central Bank announced that the spread between the buying and selling rates of authorized banks and financial institutions cannot exceed 0.7 percent.

Administration of Control

December 19. The assembly approved a comprehensive trade agreement with Mexico that would become effective January 1, 1995. The trade agreement covers trade in foods and services, investment, intellectual property rights, and disputed settlement and envisages free trade of over 90 percent of goods within five years and of almost all goods within ten years.

Exports and Export Proceeds

April 13. The surrender requirement for proceeds from exports was reduced 40 percent, and the requirement was extended to all exports.

August 4. All financial institutions authorized to operate in the interbank market were required to transfer to the Central Bank 25 percent of their purchases of foreign exchange related to exports.

Côte d’Ivoire

(Position as of December 31, 1994)

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 per F 0.01. The official buying and selling rate is CFAF 100 per F 1. Exchange rates for other currencies are derived from the rates in the Paris exchange market for the currencies concerned 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; commissions 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 essential commodities; no renewal of cover is possible. Forward cover against exchange rate risk is permitted, with prior authorization from the Directorate of the Treasury, Monetary and Banking Affairs in the Ministry of Economy, Finance, and Planning, only for 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 the Treasury, Monetary and Banking Affairs in the Ministry of Economy, Finance, and Planning. The BCEAO is authorized to collect any information necessary to compile 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 licenses for a short list of controlled products (Decree No. 93–313 of March 11, 1993) are issued by the Directorate of External Trade Promotion in the Ministry of Commerce.

Arrears are maintained with respect to the external debt-servicing obligations of the central Government.

Prescription of Currency

Because 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 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 regulations applied in France. Because the BCEAO has suspended the repurchase of BCEAO banknotes circulating outside the territories of the CFA franc zone, foreign accounts in francs may not be credited or debited with BCEAO banknotes or show an overdraft position without prior authorization.

Imports and Import Payments

Under the current regulations, all imports are classified into three categories, as follows: (1) goods requiring prior authorization or the approval of ministries; (2) goods subject to quantitative or other restrictions requiring licenses issued by the Directorate of External Trade Promotions; and (3) freely importable goods.

Quantitative or other limits for goods in the second category are set each year by the Minister of Industry and Commerce, in light of market conditions, local production, and following consultation with the Competitiveness Committee. With certain specific exceptions (e.g., diplomatic imports and used vehicles), all unrestricted imports with an f.o.b. value exceeding CFAF 3 million are subject to a preshipment inspection to verify their price, quantity, and quality; for values between CFAF 1.5 million and CFAF 3 million, imports may be subject to random inspection. For all imports (except those with prior authorization) whose f.o.b. value exceeds CFAF 500,000, an import information declaration for statistical purposes is also required.

A maximum tariff rate of 35 percent has been in effect since January 1994. A statistical tax of 2.5 percent of the c.i.f. value is levied on all imports. 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 valued at more than CFAF 500,000 conducted with foreign countries must be domiciled with an authorized bank; 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, and 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 downpayment 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 underlying transaction has been approved.

Residents traveling for tourism or business purposes to countries in the franc zone that are not members of the WAMU are allowed to take out banknotes other than the CFA banknotes up to the equivalent of CFAF 2 million; amounts in excess of this limit may be taken out in the form of means of payment other than banknotes. The allowances for travel to countries outside the franc zone are subject to the following regulations: (1) for tourist travel, CFAF 500,000 without limit on the number of trips or differentiation by the age of the traveler; (2) for business travel, CFAF 75,000 a day for up to one month, corresponding to a maximum of CFAF 2.25 million (business travel allowances may be combined with tourist allowances); (3) allowances in excess of these limits are subject to the authorization of the Ministry of Economy and Finance; and (4) credit cards, which must be issued by resident financial intermediaries and authorized by the respective ministers of finance, may be used up to the ceilings indicated above for tourist and business travel. Returning resident travelers are required to declare all means of payment in their possession upon arrival at customs and surrender within eight days all means of payment exceeding the equivalent of CFAF 25,000. All resident travelers, when traveling to countries that are not members of the WAMU, must declare in writing all means of payment at their disposal at the time of departure. Nonresident travelers may freely re-export means of payment, other than banknotes issued abroad and registered in their name, subject to documentation that they used funds drawn from a foreign account in CFA francs or other foreign exchange to purchase the means of payment. The re-exportation of foreign banknotes is allowed up to the equivalent of CFAF 250,000; the re-exportation of foreign banknotes above these ceilings requires documentation demonstrating either their importation or their purchase against other means of payment registered in the name of the traveler or through the use of nonresident deposits lodged in local banks.

Exports and Export Proceeds

All exports are free of restrictions, with the exception of certain metals, including precious metals and gems, the exportation of which requires prior authorization. Exports of ivory (above a minimum weight) and certain types of tropical wood are prohibited. Exports require a customs declaration but not a license. Exports of lumber are subject to quantitative quotas allocated through auction. Exports of cocoa and coffee are subject to a specific unitary export tax and can be effected only by exporters authorized by the Price Stabilization Fund.

Payment for exports to foreign countries, including those in the Operations Account Area, must be made within 120 days of the arrival of the goods at their destination. Regardless of the currency of settlement and of the country of destination, export receipts must be collected and repatriated through authorized intermediary banks within one month of the due date. Regardless of destination, all export transactions valued at more than CFAF 1 million 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 for 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 banknotes 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 banknotes and coins (except gold coins) of countries outside the Operations Account Area. Residents bringing in foreign banknotes 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, in addition to any exchange control requirements that may apply, are maintained over borrowing abroad by the private sector, foreign inward direct investment, all outward direct investment in foreign countries, and over the issuing, advertising, or offering for sale of foreign securities in Côte d’Ivoire. Such operations, as well as issues by Côte d’Ivoire companies, require prior authorization from the Ministry of Economy, Finance, and Planning. Exempt from authorization, however, are operations in connection with (1) loans backed by a guarantee from the Government of Côte d’Ivoire, and (2) foreign 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 also maintained 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, Finance, and Planning.3 Foreign direct investments in Côte d’Ivoire must be authorized in advance by the Minister of Economy, Finance, and Planning.4 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 direct and other investments in Côte d’Ivoire or abroad must also be reported in advance to the Minister. Both the making and the liquidation of investments, whether Ivoirien investments abroad or foreign investments in Côte d’Ivoire, 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.)

Borrowing by residents from nonresidents must be authorized in advance by the Minister of Economy, Finance, and Planning. 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 loans approved by international trading houses to finance international trade transactions; (2) loans contracted by authorized banks; and (3) loans other than those mentioned above whose total outstanding amount, including the new borrowing, does not exceed CFAF 50 million for any one borrower and whose 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 loansrequires 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 exempt 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 fourth-to-last year of the exemption period and is reduced progressively to 75 percent of the tax in the third-to-last year, 50 percent in the second-to-last year, and 25 percent in the last year. Imports of 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, Finance, and Planning; authorization 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 small 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 1994

Exchange Arrangement

January 12. The CFA franc was devalued to CFAF 100 per F 1 from CFAF 50 per F 1.

Imports and Import Payments

January 19. The revision of the tariff regime that began in October 1992 was completed. The new regime consists of a single customs duty rate of 5 percent and six fiscal duties ranging from 5 percent to 30 percent. A few specific rates were retained on some products.

January 21. The minimum value of imports requiring preshipment inspection was raised to CFAF 3 million.

August 1. Imports of luxury rice were liberalized.

December 29. Twelve groups of products subject to prior authorization or approval were liberalized.

Exports and Export Proceeds

January 15. The export premium on locally manufactured products and agricultural products (excluding unprocessed coffee, cocoa, cotton, and pineapples) was eliminated.

January 25. The single export tax on cocoa and coffee was introduced.

September 23. (1) The period during which proceeds from exports must be received was shortened to 120 days from 180 days, and (2) the value of export transactions to which the domiciliation requirement applies was raised to CFAF 1 million.

Croatia

(Position as of December 31, 1994)

Exchange Arrangement

The currency of Croatia is the Kuna, the external value of which is determined in the interbank market. The exchange rates in the interbank market are determined by authorized banks that transact with each other at freely negotiated rates. The National Bank of Croatia may set intervention exchange rates at which it will transact with banks outside the interbank market for purposes of smoothing undue fluctuations in the exchange rate. On December 31, 1994, the average interbank market rate for the U.S. dollar was HRK 5.6287 per US$1.

There are no taxes or subsidies on purchases or sales of foreign exchange.

Croatia formally accepted the obligations of Article VIII, Sections 2, 3, and 4 of the Fund Agreement, as from May 29, 1995.

Administration of Control

Foreign exchange transactions are governed by the Law on the Foreign Exchange System, Foreign Exchange Operations, and Gold Transactions, which was enacted on October 7, 1993. The National Bank formulates and administers exchange rate policy and may issue foreign exchange regulations under this law. A foreign trade law (coordinated with domestic trade legislation) is under preparation. Companies wishing to engage in foreign trade must register with the commercial courts. The representative offices of foreign companies must be registered with the Ministry of Economy.

Foreign exchange transactions must be conducted through authorized banks; currently 39 commercial banks in Croatia are licensed to conduct foreign exchange transactions. Restricted licenses are given to banks that may open accounts for resident natural persons and may buy and sell banknotes and checks (currently 13 banks).

Arrears are maintained with respect to external payments.

Prescription of Currency

Settlements between residents and nonresidents may be effected in any convertible currency.

Resident and Nonresident Accounts

Resident natural and juridical persons may, in principle, open and operate foreign exchange accounts only in Croatia. However, the National Bank has the authority to allow resident juridical persons to keep foreign exchange in accounts with foreign banks in order to cover the costs of business operations and meet the requirement of regular foreign trade activities abroad. The law also makes specific provisions for resident juridical persons engaged in capital project construction abroad to maintain accounts with foreign banks, subject to a license issued by the National Bank.

Nonresidents may open foreign exchange accounts with fully licensed banks in Croatia. These accounts may be credited freely with foreign exchange and debited for payments abroad for conversion into domestic currency; reconversion of domestic currency into a foreign currency is permitted. Juridical persons may not credit these accounts with foreign banknotes up to the limit of $20,000 without special permission from the National Bank.

Nonresident natural and juridical persons may open accounts in domestic currency with the proceeds from sales of goods and services or with foreign exchange transferred from abroad. They may purchase foreign exchange with funds held in these accounts without restriction.

Imports and Import Payments

Imports from the Federal Republic of Yugoslavia (Serbia/Montenegro) are prohibited in accordance with UN Security Council resolutions. Pending the introduction of a new import regime, the product classification of the import regime of the former Socialist Federal Republic of Yugoslavia is maintained, with a free list (LB), a list of items subject to quotas, and a list of items subject to ad hoc licensing (D).

Items on the free list (just under 6,000 out of a total of about 6,600) comprise about 90 percent of the value of imports. Of the restricted items, only about 2 percent of imports are subject to licensing and about 2 percent to quotas. The Ministry of Economy, in consultation with the Chamber of Commerce, administers the quotas and licensing. List D includes items whose importation is controlled by international agreement for noneconomic reasons (such as, arms, gold, illegal drugs and narcotics, and artistic and historic work). The importation of these items is allowed on a case-by-case basis and for specific purposes.

Imports are subject to a customs tariffs of up to 18 percent (compared with up to 25 percent in the former Socialist Federal Republic of Yugoslavia) plus a tax of up to 10 percent, and a customs administration fee of 1 percent. The exemption for duty-free imports by travelers is $100. Goods imported by travelers and postal shipments up to the value of $500 are subject to a simplified customs procedure with a unified tariff rate of 8 percent. For imports exceeding that value, the regular import tariffs and taxes are applied. Returning citizens may bring into the country household effects duty-free up to the equivalent of $45,000 for household effects and $100,000 for private business purposes. Under certain conditions, goods imported by nonresidents for investment purposes are exempt from import duties. Also, raw materials and intermediate products used in the production of exports are exempt from all import duties and taxes, except the 1 percent customs fee, provided that the value added of the export product is at least 30 percent of the value of the imported items and that export proceeds are received in convertible currency.

Payments for authorized imports by juridical persons are not restricted.

Advance payments for imports are not permitted, except where down payments are required by suppliers in accordance with customary international practices.

Payments for Invisibles

Payments for invisibles related to authorized imports by juridical persons may be made freely. Payments of leasing fees are permitted provided that temporary imports have been registered with the Customs Office. Natural persons may also purchase foreign exchange in the interbank market for the payment of goods and services abroad and for deposit in a foreign exchange account for the purpose of future payments. Resident juridical persons (including tradesmen, natural persons engaging in independent activities) may purchase foreign exchange only for authorized payments abroad, except to make payments for activities related to scientific, humanitarian, cultural, or sport events. Payments of royalties, insurance, and legal obligations and contracting of life and casualty insurance policies with foreign companies are also permitted.

Resident natural persons may take out of the country foreign currency equivalent to DM 1,000. An additional amount equivalent up to DM 2,000 may be taken out, provided that it is withdrawn from foreign currency accounts or purchased from banks for travel expenses. In both cases the National Bank may allow higher amounts to be taken out on a case-by-case basis. The exportation of Croatian currency by both residents and nonresidents is limited to HRK 2,000 a person.

Exports and Export Proceeds

Exports to the Federal Republic of Yugoslavia (Serbia/Montenegro) are prohibited in accordance with UN Security Council resolutions. In principle, exports are free of restrictions except for certain products for which permits must be obtained (list D products: e.g., weapons, drugs, and art objects); several basic foodstuffs to ensure adequate domestic supplies; and high-quality wood.

Export proceeds must be collected and repatriated in full to Croatia within 60 days of the date of exportation; this period may be extended with the permission of the National Bank. If payment terms in excess of 60 days have been agreed with foreign importers, the credit arrangement must be registered with the National Bank.

Proceeds from Invisibles

Proceeds from services are, in principle, subject to the same regulations as those applying to merchandise exports. The importation of Croatian currency by both residents and nonresidents is limited to HRK 2,000 a person.

Capital

Resident juridical persons, including commercial banks, may borrow abroad. They are required to register the loans contracted, including commercial credits, with the National Bank. Financial credits may be extended to nonresidents by resident juridical persons, including tradesmen and natural persons engaging in independent activities, only if these credits are financed from profits or credit obtained from abroad. Natural persons are permitted to obtain loans from nonresidents in domestic or foreign currency. The foreign exchange positions of commercial banks are subject to a limit.

Foreign direct investment by nonresidents may take the form of joint ventures or full ownership and must be registered with the commercial courts. Repatriation of capital and transfers abroad of profits are not restricted. In principle, domestic and foreign investment is treated equally, but in practice nonresident investors enjoy certain benefits. If the foreign equity capital participation exceeds 20 percent, inputs used in the project are exempt from import duties. Earnings in the first year of operation are exempt from the profit tax, and 50 percent and 25 percent of earnings in the second and third years, respectively, are exempt from the profit tax. Foreign direct investment abroad by residents must be registered with the Ministry of Economy. Such investment must generally be undertaken through loans abroad or through reinvestment of profits. Inward portfolio investment is not restricted, but outward portfolio investment is restricted.

Nonresident natural persons may acquire real estate in Croatia through inheritance as long as their country of residence extends reciprocal treatment to residents of Croatia. Nonresident natural persons not engaged in economic activities in Croatia may purchase real estate only under the same conditions. Nonresident natural or juridical persons engaged in economic activities in Croatia may also purchase real estate under these conditions and may sell it to resident or nonresident juridical persons. In principle, residents may acquire real estate abroad on the basis of reciprocity of treatment, but in practice, they are not permitted to purchase foreign exchange in the exchange market for this purpose; the use of balances in foreign exchange accounts for this purpose is also prohibited.

Gold

The exportation or importation of gold, except unprocessed gold by producers of gold and gold coins or by authorized commercial banks, is subject to the approval of the National Bank.

Changes During 1994

Exchange Arrangement

May 30. The kuna replaced the Croatian dinar as the national currency at the ratio of 1 kuna for 1,000 Croatian dinars.

October 7. Foreign exchange repurchase agreements were introduced by the National Bank of Croatia. Although these are offered to commercial banks at the initiative of the National Bank for monetary management purposes, they can be used by commercial banks to manage forward exchange risks.

Prescription of Currency

June 30. Croatia canceled unilaterally the bilateral payments agreement with Slovenia.

Changes During 1995

Exchange Arrangement

May 29. Croatia formally accepted the obligations of Article VIII, Sections 2, 3, and 4 of the Fund Agreement.

Cyprus

(Position as of December 31, 1994)

Exchange Arrangement

The currency of Cyprus is the Cyprus Pound, the external value of which is pegged to a basket based on the European Currency Unit (ECU) at ECU 1.7086 per £C 1, within margins of ±2.25 percent around the ECU central rate. On December 31, 1994, the official buying and selling rates for the U.S. dollar, the intervention currency, were £C 0.4759 and £C 0.4778, respectively, per US$1. The Central Bank of Cyprus also quotes daily buying and selling rates for the ECU, 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, forward 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 (for example, 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 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.

Resident and 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 (generally designated as offshore companies) 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. Resident persons and firms dealing with transit trade or engaged in manufacturer-exporter activities or in the hotel business may open and maintain foreign currency accounts subject to certain requirements. Residents dealing with transit trade may deposit up to 95 percent of sale proceeds in these accounts and use balances to pay for the value of traded goods. Residents engaged in manufacturer-exporter activities may deposit up to 50 percent of export proceeds in these accounts and use balances to pay for imports of raw materials used in production. Both transit traders and manufacturers-exporters are, however, required to convert into Cyprus pounds at the end of each year any balances in excess of the amount that is necessary for payments of the value of traded goods of raw materials during the following three months. Resident hoteliers may deposit in foreign currency accounts part of their receipts in foreign currency and use balances to make installment payments on foreign currency loans. Cypriot repatriates may keep in foreign currency, in external accounts in Cyprus or in accounts abroad, all of their foreign currency holdings and earnings accruing from properties they own abroad.

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 may be credited to an external account or foreign currency account. In addition to income, up to £C 10,0003 in principal may be released annually from blocked funds for transfer outside Cyprus. Funds can also be released from blocked accounts to meet reasonable expenses in Cyprus of the account holder and his or her 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

Most imports are free of licensing requirements. An import license is required for certain commodities such as fresh fruits, fresh vegetables, fresh meat, and other goods produced or manufactured locally.

The Minister of Commerce and Industry may amend the list of commodities subject to licensing as deemed necessary to regulate the importation of goods for the encouragement of local production and manufacture and for the improvement of the balance of payments. 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 20,000. Authorized dealers are allowed to sell to departing residents of Cyprus foreign exchange up to £C 20,000 for purchases and for the importation of goods into Cyprus; foreign exchange in excess of this limit may be sold to departing residents with the approval of the Central Bank. An import surcharge of 3.8 percent (2.5 percent for imports from European Union countries) ad valorem is levied on all imports, except food, 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 may be transferred abroad without limitation, after payment of any due charges and taxes. Insurance premiums owed to foreign insurance companies may be remitted after all contingencies have been deducted. Nonresidents who are temporarily employed in Cyprus by resident firms or individuals and are paid in local currency may transfer abroad their remuneration less local living expenses and taxes.

Allowances are granted to residents for study abroad at colleges, universities, or other institutions of higher education, and certain lower-level institutions of learning.4 Exchange allowances are based on the cost of living, which is reviewed yearly, and cover the full amount of tuition fees plus living expenses for the student. The current annual allowance for living expenses for studies in Western European countries, excluding Greece, is £C 5,000; for Greece, £C 3,300; for Canada and the United States, £C 6,600; for Australia, £C 4,000; and for all other countries, £C 3,300. There is no limit on the remittance of foreign exchange for payment of tuition fees.

Authorized dealers are allowed, without any reference to the Central Bank, to sell to resident travelers foreign exchange up to £C 750 a person a trip for tourist travel; the Central Bank approves applications for allocations of additional foreign exchange without limitation to cover genuine travel expenses. The allowance for business travel is not fixed but depends on the length of stay abroad. Authorized dealers are empowered to provide up to £C 150 a day with a maximum of £C 1,500 a trip; additional amounts may be granted with the approval of the Central Bank on proof of need.

Company credit cards valid abroad are issued to resident businessmen and professionals traveling abroad on business. These international credit cards entitle the holders to charge their expenses for hotels, restaurants, unlimited transportation and international telephone calls, cash withdrawals of up to £C 100 a trip, and any other expense up to £C 300 a trip, as well as payments abroad or from Cyprus up to £C 300 per case for certain additional purposes such as subscriptions to professional bodies or societies and fees for enrollment in educational seminars or conferences. If resident travelers hold an international credit card, authorized dealers are allowed to provide an allowance of up to £C 80 a day with a maximum of £C 800 a trip for business travel. Additional amounts for business travel may be provided with the approval of the Central Bank. In addition, enterprises may use international credit cards for payments of up to £C 300 for mail orders of books or other items. Authorized dealers are also allowed to issue personal credit cards, valid abroad, to certain categories of residents. Foreign exchange for medical expenses abroad is granted without limit, and authorized dealers are empowered to provide allowances of up to £C 3,000 without reference to the Central Bank.

On leaving Cyprus, travelers may take out with them up to £C 50 in Cyprus 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 less expenses incurred in Cyprus. Nonresidents entering Cyprus should declare any foreign exchange that they plan to use to purchase goods to export, to purchase properties, or to deposit with authorized dealers. Nonresidents may export up to $1,000 in foreign currency notes that they imported, even if these notes were not declared on arrival. In addition, authorized dealers may convert up to £C 100 into foreign currency for departing nonresidents and are permitted to issue to departing nonresidents, as well as to departing resident employees of offshore companies, any amount of foreign currency notes against external funds.

Exports and Export Proceeds

All exports whose value exceeds £C 1,000 are subject to exchange control monitoring to ensure the repatriation of the sale proceeds. Export proceeds must be surrendered to authorized dealers without delay. Exports of potatoes and carrots are carried out by the respective marketing boards, and exports of wheat, barley, and maize are carried out by the Cyprus Grain Commission.

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 require authorization from the Central Bank. Direct investment abroad by residents is permitted, provided that the proposed investments will promote exports of goods and services or will benefit the Cypriot economy. Outward portfolio investment by residents is not permitted, except for insurance companies (up to 20 percent of their reserves); Cypriot repatriates who hold foreign currency or external accounts; and resident employees of multinational enterprises who participate in the employee stock purchase plan offered to them by their employer.

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. Foreigners may own up to 100 percent of the capital of enterprises engaged in the manufacture of goods exclusively for export. Foreign participation of up to 49 percent is allowed for manufacture of new products, certain tourist activities, and other industrial projects. Inward investment is particularly welcome in projects that upgrade the tourist product (such as marinas, golf courses, and theme parks). In sectors of specific treatment, such as banking and finance, applications are examined on a case-by-case basis. Foreign direct investment is discouraged in saturated sectors such as trading, real estate development, travel agencies, restaurants, and local transportation. Foreign participation in inward portfolio investment in listed company securities is permitted up to a limit of 30 percent generally and 40 percent in investment companies and mutual funds. Foreigners are allowed to purchase government securities in domestic currency. 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 taxes.

Commercial credits from abroad with a maturity of less than 200 days and commercial credit from Cyprus with a maturity of less than 180 days may be negotiated freely. With the permission of the Council of Ministers, nonresident aliens may acquire immovable property in Cyprus for use as a residence or holiday home; they must, however, purchase such property with foreign exchange. The sales proceeds of such property are transferable abroad up to the original purchase price of the property; the remaining balance is transferable at an annual rate of £C 10,000, 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 20,000 per household; any excess amount is deposited in a blocked account and released at the rate of £C 10,000 a year.5 The transfer abroad of funds from estates and intestacies and from the sale of real estate, other than that referred to in the preceding paragraph, is limited to £C 10,000, with any excess amount to be credited to a blocked account and also released at the rate of £C 10,000 a year. Interest earned on a blocked account can be freely transferred 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. 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 1994

Payments for Invisibles

April 4. The use of international credit cards was expanded so as to cover additional payments for telephone calls abroad without limit and payments abroad up to £C 300 for each occurrence for the following additional purposes: examination fees and application fees to educational institutions abroad, subscriptions to professional bodies or societies, fees for enrollment in educational seminars or conferences, and hotel reservation fees.

Czech Republic

(Position as of December 31, 1994)

Exchange Arrangement

The currency of the Czech Republic is the Czech Koruna. Its external value is determined on the basis of a basket consisting of the deutsche mark (65 percent) and the U.S. dollar (35 percent). This exchange rate applies to all transactions except those with the Slovak Republic. On December 31, 1994, the buying and selling rates in terms of the U.S. dollar were Kč 27.91 and Kč 28.19, respectively, per US$1. A floating exchange rate applies to tourist transactions with the Slovak Republic.

The Czech National Bank (CNB) quotes daily buying and selling rates for 22 convertible currencies,1 European currency units (ECUs), and SDRs. The market value of the koruna, which is determined at daily fixing sessions attended by the CNB and participants in the domestic interbank foreign exchange market, is allowed to fluctuate within a margin of ±0.5 percent around its theoretical level, based on exchange rates in the international market. The exchange rates for other currencies are based on the cross rates of these currencies against the U.S. dollar. The exchange rates set at the daily fixing sessions are used as the official exchange rates at which customers can choose to trade the next day. Forward foreign exchange transactions are permitted.

Administration of Control

The Ministry of Finance and the CNB are responsible for the administration of exchange controls and regulations in accordance with the Foreign Exchange Act. In general, the Ministry of Finance exercises authority over governmental credits and over budgetary and subsidized organizations, civic associations, churches, religious societies, foundations, and other legal persons not engaged in business activities and over the nonbusiness activities of natural persons. The CNB exercises authority over the activities of all registered enterprises and entrepreneurs.

Prescription of Currency

Payments to and receipts from countries are effected in convertible currencies, with the exception of payments to and receipts from the Slovak Republic. Since February 1993, all commercial transactions with the Slovak Republic, excluding transactions relating to re-exports and payments from foreign exchange accounts, have been required to be effected through a clearing account maintained by the central banks of the two countries. Transactions are converted from the currency of the contract into clearing ECUs at a rate that may differ by up to 5 percent from the market cross rate against the ECU, as set by the central banks. As of December 31, 1994, the exchange rate of the Czech koruna against the clearing ECU was the same as the market cross rate. If the balances on the account outstanding at the end of each month exceed clearing ECU 130 million, the excess balances are settled in a convertible currency by the fifteenth of the following month. Payments by juridical persons and entrepreneurs in connection with obligations incurred before February 8, 1993 are effected through another set of clearing accounts denominated in clearing koruny at the exchange rate of 1 clearing koruna per Kč 1 or Sk 1 (Slovak koruna). Their exchange rate to the clearing ECU equals the exchange rate of the Czech koruna to the ECU that was in effect on February 8, 1993. These accounts are settled every month.

Resident and Nonresident Accounts

Resident Accounts. Without revealing the source of foreign exchange, resident natural persons may open interest-bearing foreign exchange accounts at any resident commercial bank authorized to deal in foreign exchange. Balances on these accounts may be used by the account holder without restriction. Resident enterprises that had outstanding foreign exchange accounts on December 31, 1990 and entrepreneurs that had outstanding foreign exchange accounts are also allowed to maintain these accounts. However, enterprises opening such accounts after December 31, 1990 must obtain a permit exempting them from the 100 percent surrender requirement and allowing them to use balances on these accounts freely to finance their activities. These permits are granted liberally.

Nonresident Accounts. Nonresidents (natural and juridical persons) may maintain two types of interest-bearing accounts:

(1) Domestic currency accounts, which may be opened with commercial banks in koruny. Balances on these accounts may be used freely to make payments in the Czech Republic. All transfers abroad from these accounts, except for those relating to bilateral agreements on support and protection of investments and those relating to inheritance and alimony, require a permit from the CNB or the Ministry of Finance.

(2) Foreign currency accounts, in which foreign exchange may be deposited freely and from which payments may be made, in the Czech Republic or abroad, without restriction.

Imports and Exports

Imports and exports may be undertaken by any registered enterprise or entrepreneur. Import licenses are required for a few strategic items, such as uranic ore, its concentrates, coal, poisons, military materials, firearms and ammunition, and narcotics. In addition, an automatic licensing system accompanied by levies applies to some agricultural products, mineral fuel and oils, iron and steel and their products, and some chemical products. All imports, including those by individuals, are subject to an ad valorem customs duty ranging up to 80 percent and to a value-added tax (VAT) of 5 percent or 23 percent.2 Imports from the Slovak Republic are exempt from customs duties. Imports from developing countries are granted preferential treatment under the Generalized System of Preferences (GSP). Under the GSP, 43 “least developed” countries benefit from a duty exemption, and 80 developing countries are granted a 75 percent reduction from the applicable customs duties; tropical products are granted reductions of 85–100 percent.

Resident individuals are required to repatriate foreign exchange acquired abroad and to sell to a bank or deposit in a private foreign exchange account foreign exchange (including gold and gold bullion but not gold coins) exceeding the equivalent of Kč 5,000. Resident enterprises and entrepreneurs are normally required to repatriate, without delay, foreign exchange receipts from exports and sell them to commercial banks or keep them in foreign exchange accounts.

A limited number of products require export licenses for purposes of health control (including livestock and plants), facilitating voluntary restraints on products on which partner countries have imposed import quotas (such as textiles and steel products), or preserving for the internal market 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, neither quantitative nor value limits are in force.

Payments for and Proceeds from Invisibles

Czech resident individuals may withdraw an unlimited amount of foreign exchange from their foreign currency accounts to make invisible payments. In addition, residents are entitled to buy foreign exchange to travel abroad, up to the equivalent of Kč 12,000. Transfers of alimony may be made to a citizen of a country that is a party to an international agreement on enforcement of alimonies or that does not restrict such transfers to the Czech Republic. Transfers of inherited assets abroad are allowed to all countries on a reciprocal basis. A special permit is required in most instances for remittances relating to family maintenance, education, and medical treatment.

Foreign investors may freely transfer abroad their dividends, profits, capital gains, and interest earnings. Transfers of payments connected with debenture bonds denominated in koruny that are payable within one year are permitted with the approval of the CNB.

Repatriation of wage savings by nonresident workers must be authorized by the CNB unless stipulated differently by an intergovernmental agreement. With certain exceptions related to tourism, exports and imports of koruna banknotes exceeding Kč 5,000 and their transfer abroad are permitted only with a foreign exchange license issued by the CNB. Licenses are not required for the importation or exportation of foreign exchange assets, including foreign currencies, by nonresidents.

Capital

Resident enterprises and entrepreneurs may freely obtain suppliers’ credits. Financial credits may be obtained from foreign banks with the approval of the CNB, and foreign direct investments abroad must be approved by the CNB, the Ministry of Finance, and the Ministry of Industry and Trade. There is no limit on equity participation by nonresidents. In the event of liquidation of the enterprise, foreign investors are allowed to repatriate freely the full value of their capital participation and capital gains in the original currency after payment of taxes.

Gold

Within 30 days of acquisition, residents are required to sell gold to commercial banks that are authorized to conduct foreign exchange transactions. Nonresidents may export gold coins without a license, 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 gold bullion, exporters must obtain a foreign exchange license.

Changes During 1994

Prescription of Currency

March 3. The exchange rate of the Czech koruna against the clearing ECU was adjusted from 3 percent above the market cross rate to parity with the market cross rate.

Resident and Nonresident Accounts

February 24. Procedures for enterprises to obtain permits to keep foreign currency accounts were simplified and partially liberalized.

Payments for and Proceeds from Invisibles

January 1. The maximum allowance for foreign travel was raised to the equivalent of Kč 12,000 a year.

September 1. The limit on the amount of the domestic currency that can be imported or exported was increased to Kč 5,000.

Capital

September 1. (1) purchases of foreign securities by residents were partially liberalized; (2) the rules for acquiring properties abroad were simplified; and (3) exports and imports of securities denominated in koruny were permitted without restriction.

Denmark

(Position as of December 31, 1994)

Exchange Arrangement

The currency of Denmark is the Danish Krone. Denmark participates with Austria, Belgium, France, Germany, Ireland, Luxembourg, the Netherlands, Portugal, and Spain in the exchange rate and intervention mechanism (ERM) of the European Monetary System (EMS).1 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 15 percent above or below the cross rates based on the central rates expressed in European currency units (ECUs).2

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, 1994, these rates were as follows:

Specified Intervention Rates per:Danish Kroner
Upper limitLower limit
100Austrian schillings62.9561046.69100
100Belgian or Luxembourg francs21.4747015.92660
100Deutsche mark442.96800328.46100
100French francs132.0660097.94300
1Irish pound10.679207.92014
100Netherlands guilders393.10500291.54400
100Portuguese escudos34.477703.32090
100Spanish pesetas45.598504.15190

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 and 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 21 foreign currencies, the SDR, and the ECU5 are officially fixed daily and reflect the rates prevailing at the time of the fixing. On December 30, 1994, the official rate for the U.S. dollar was Dkr 6.0830 per US$1.

All remaining foreign exchange regulations were lifted with effect from October 1, 1988. Residents may hold positions in foreign currencies without limitation with respect to the amounts, currencies, or instruments involved.

There are no restrictions on foreign exchange dealing. The Executive Order on Foreign Exchange Regulations, issued by the Ministry of Business and Industry with effect from July 23, 1994, stipulates that payments of more than Dkr 60,000 between residents and nonresidents must be reported to Danmarks Nationalbank for statistical purposes.

For tax control purposes, 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 July 23, 1994.

Administration of Control

No exchange control requirements are imposed on capital receipts or payments by residents or nonresidents. Reporting requirements for statistical purposes are administered by Danmarks Nationalbank and by the foreign exchange dealers, whereas reporting requirements for tax purposes on depositing foreign securities and on accounts abroad are part of the tax legislation and are administered by the tax authorities and the foreign exchange dealers. Foreign exchange dealers are commercial banks, savings banks, and stockbrokerage companies or other financial institutions, 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, when required, are issued by the Ministry of Industry or the Ministry of Agriculture and Fisheries.

In accordance with the Fund’s Executive Board Decision No. 144–(52/51) adopted on August 14, 1952, Denmark notified the Fund on July 27, 1992, that certain restrictions had been imposed on the making of payments and transfers for current international transactions in respect of the Federal Republic of Yugoslavia (Serbia/Montenegro).

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 Union (EU) system of export-import licenses has 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 country outside the EU that is not a state trading country. A larger number of items require a license when originating in or purchased from Albania, Bulgaria, China, the Czech Republic, Hungary, the Democratic People’s Republic of Korea, Mongolia, Poland, Romania, the Slovak Republic, the Baltic countries, Russia, and the other countries of the former Soviet Union, 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 the waste and scrap of certain metals.

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 Business and Industry are based on Articles 23a - 73a of the EU Treaty on Capital Movements and on the Organization for Economic Cooperation and Development Capital Code; no distinction is made in these rules between residents of member countries of the EU and those of the rest of the world.

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 25 percent; domestic transactions in gold are also taxed at the rate of 25 percent. There is no customs duty on imports of gold in bars or coins.

Changes During 1994

Administration of Control

July 23. By executive order, reporting requirements for tax purposes on depositing foreign securities and on accounts abroad were made part of the tax legislation and would be administered by the tax authorities and by foreign exchange dealers instead of by Danmarks Nationalbank.

Imports and Import Payments

(See Appendix for a summary of trade measures introduced and eliminated on an EU-wide basis during 1994, page 554.)

Djibouti

(Position as of December 31, 1994)

Exchange Arrangement

The currency of Djibouti is the Djibouti Franc, the external value of which is pegged to the U.S. dollar, the intervention currency, at DF 177.721 per US$1. Buying and selling rates for currencies other than the U.S. dollar are set by local banks on the basis of the cross rates for the U.S. dollar in international markets. The posted rates are subject to commission charges of 0.5–6 percent set by the commercial banks, depending on the currency concerned. A fixed commission of about DF 3,000 is charged on 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 for 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.

Djibouti formally accepted the obligations of Article VIII, Sections 2, 3, and 4 of the Fund Agreement as from September 19, 1980.

Administration of Control

There is no exchange control, except that all settlements with Israel are prohibited. 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.

Prescription of Currency

There are no prescription of currency requirements.

Imports and Import Payments

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 33 percent. 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

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. A tax of 10 percent applies to fees and salaries paid to individuals and legal entities who, for professional purposes, are not permanent residents of Djibouti.

Capital

There are no restrictions on inward or outward capital transfers. Under the Investment Code of February 13, 1984, enterprises established or expanded to undertake certain specific economic activities are eligible for various tax exemptions. Under the regime of “franc enterprises,” firms engaged in manufacturing and service activities that use high technology and are export oriented are exempted from the profit tax during the first ten years of operation and from the export tax in respect of goods and services that are exported.

Changes During 1994

Capital

October 1. For purposes of promoting industries in the private sector, a law establishing the regime of “franc enterprises” was enacted. Firms operating under this regime must be engaged in manufacturing or service activities using high technology and must be export oriented. They would be exempted from the profit tax during the first ten years of operation and from the export tax in respect of goods and services that are exported. The law established a National Commission on Investment with responsibility for administering simplified procedures for approving investment applications and resolving labor disputes.

Dominica

(Position as of December 31, 1994)

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 per US$1. On December 31, 1994, the buying and selling rates for the U.S. dollar were EC$2.69 and EC$2.71, 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 may be made in any foreign currency that is acceptable to 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; 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 Iraq are prohibited, and all imports originating from the member countries of the former Council for Mutual Economic Assistance, that is, Albania, Cambodia, China, and the Democratic People’s Republic of Korea, require a license. Imports of specified goods originating outside the Organization of Eastern Caribbean States (OECS)4 and Caricom require a license. The Common External Tariff of Caricom states is applied to all imports.

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 travel documents and a medical certificate stating that the journey is necessary; (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 from the Ministry of Finance must 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 and dividends from foreign direct investment may be remitted after settlement of all tax or other public liabilities.

The exportation of Eastern Caribbean banknotes 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 Iraq are prohibited, and specific licenses are required for the exportation of certain goods to any destination. The conversion of export proceeds to an ECCB currency account is mandatory, unless the exporter has a foreign currency account into which the proceeds may be paid. Bananas exported by the Dominica Banana Marketing Corporation are subject to a levy of 1 percent if the export price is between 55 cents and 60 cents a pound; if the export price exceeds 60 cents a pound, an additional levy equivalent to 25 percent of the excess is imposed.

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 banknotes 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 a family from their assets, 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 related liabilities. 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 for industrial purposes only with the approval of the Ministry of Finance.

Changes During 1994

No significant changes occurred in the exchange and trade system.

Dominican Republic

(Position as of December 31, 1994)

Exchange Arrangement

The currency of the Dominican Republic is the Dominican Peso, the external value of which is determined in the interbank market. Since September 1994, the official exchange rate has been set weekly on the basis of the average of the previous week’s exchange rates in the interbank market, in which the rates are determined by supply and demand. On December 31, the official exchange rate was RD$12.87 per US$1.

A commission equivalent to 3 percent of the f.o.b. value of imports has not been collected since June 1994 as its gradual elimination is provided for in Law No. 11–12 on tax reform by the Central Bank for the servicing of external debt.1 A commission of 1.5 percent is charged on sales of foreign exchange in both the bank market and the official market. There are no arrangements for forward cover against exchange rate risk operating in the official or the commercial banking sector.

The Dominican Republic formally accepted the obligations of Article VIII, Sections 2, 3, and 4 of the Fund Agreement, as from August 1, 1953.

Administration of Control

Exchange control policy is determined by the Monetary Board and is administered by the Central Bank. Thirteen commercial banks (including the state-owned Reserve Bank) are operating in the foreign exchange market.

Arrears are maintained with respect to external payments.

Prescription of Currency

Settlements with Bolivia, Brazil, Chile, Colombia, Ecuador, Mexico, Peru, and Uruguay may be made through special accounts established under reciprocal credit agreements within the framework of the Latin American Integration Association (LAIA). Settlements under the reciprocal credit agreement with Argentina and Venezuela have been suspended. All payments must be invoiced in U.S. dollars; otherwise, no obligations are imposed on importers, exporters, or other residents regarding the currency to be used for payments to or from nonresidents. Service payments on the external public debt are executed in the same currency in which the loan is denominated.

Imports and Import Payments

Payments for imports of coal for the use of the electric company and priority imports for public enterprises are transacted through the Central Bank at the official exchange rate. Imports on a document-against-payments basis must be denominated in U.S. dollars; for these imports, certification of the use of foreign currency is required for customs clearance. All other imports are transacted through the free interbank market and are subject only to verification of appropriate documentation.

Most tariff rates range from 5 percent to 35 percent, and certain luxury imported goods are subject to an excise tax ranging from 5 percent to 80 percent.

Payments for Invisibles

All invisible 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 with the Central Bank.

Nonresident tourists may freely convert pesos to dollars upon departure.

Exports and Export Proceeds

Certain exports are prohibited, including some food products and animal species, unprocessed wood (for environmental protection purposes), and blood (for public health reasons). For purposes of exchange surrender, declared export prices must equal or exceed the minimum export prices established by the Central Bank for certain exports. Firms operating in the industrial free zones and dealing in ferro-nickel exports are exempt from the surrender requirement; firms operating in the industrial free zones are not subject to export price restrictions.

The issuance of tax credit certificates (certificados de abono tributario), provided for by Law No. 69, was abolished by Law No. 11–92. Law No. 69 still 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.

The system of refunding a portion of import duties paid on raw materials and on inputs for nontraditional exports was abolished by Law No. 11–92 on tax reform or Law No. 14–93 on customs codes, respectively. The 100 percent refund of import duties in the industrial free trade zones was deleted from Law No. 299 and included in Law No. 8–90. (Exporters of nontraditional products eligible under the temporary system of Law No. 69 are also exempt from taxes.) Exporters may not extend credit with a maturity of more than 30 days from the date of shipment to foreign buyers without authorization from the Central Bank.

Proceeds from Invisibles

Foreign exchange proceeds from all invisibles may be sold in the interbank market. Certain other receipts from invisibles (including international telephone calls, international credit card transactions, jet fuel, foreign embassies, alimonies, donations, and real estate) must be surrendered to the Central Bank.

Capital

There are no restrictions on the inward movement of capital by either residents or nonresidents. However, foreign direct investment is regulated by Law No. 861 of July 19, 1978, which created the Directorate of Foreign Investment to approve direct investment requests. Such investments must be registered with the Central Bank.

External debt can be contracted directly by the central Government, subject to congressional authorization. According to Decree No. 101 of August 20, 1982 and Law No. 749 of January 6, 1978, new loans by other public entities require authorization from the President of the Republic for their subsequent registration by the Monetary Board. According to a set of criteria established by the Monetary Board on December 13, 1976, priority is given to the approval of new loans associated with exports, 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 a certain margin. There are also minimum maturity requirements according to the type of financing.

The Central Bank provides foreign exchange for the servicing of public external debt at the official exchange rate; the servicing of private external debt that is not guaranteed by the Government is effected through the interbank market.

Gold

Residents may purchase, hold, and sell gold coins 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 1994

Exchange Arrangement

September 7. The Monetary Board announced that the official exchange rate would be set weekly on the basis of the average of the previous week’s exchange rates in the interbank market; previously, the official exchange rate was set on a daily basis to reflect the previous day’s exchange rates in the interbank market.

Proceeds from Invisibles

September 7. The proceeds originating from international credit card transactions were subject to the surrender requirements.

Ecuador

(Position as of December 31, 1994)

Exchange Arrangement

The currency of Ecuador is the Ecuadoran Sucre. There are two exchange rates: (1) the free market rate; and (2) the central bank official exchange rate. The selling rate of the Central Bank of Ecuador is established weekly at a level equal to the average selling rate in the free market of the previous week. The buying rate of the Central Bank is set 2 percent lower than its selling rate. The Central Bank’s buying rate for the export proceeds of the state petroleum company (Petroecuador) is set S/. 180 lower than the selling rate. The Central Bank’s selling rate is applied to all external payments of the public sector.

All legally permitted foreign exchange transactions, other than those conducted through the Central Bank, may be conducted in the free market. On December 31, 1994, the buying and selling rates in the free market were S/. 2,268 and S/. 2,270, respectively. The Central Bank is authorized to intervene in the free market.

Banks and other financial institutions authorized to conduct foreign exchange transactions are permitted to conduct forward swaps and options and transactions in other financial derivative instruments, subject to the supervision and control of the Superintendency of Banks.

External credits contracted by the private sector must be registered at the Central Bank within 45 days of disbursement. Private sector credit arrangements that are not registered within the 45-day period are subject to a service charge equivalent to 0.25 percent of the credit amount.

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

Public sector foreign exchange transactions are carried out exclusively through the Central Bank. Private sector foreign exchange transactions related to the exploration for, and production, transportation, and commercialization of, oil and its derivatives may be carried out through the free market or through the Central Bank. Foreign exchange transactions of the private sector may be effected through banks and exchange houses authorized by the Monetary Board. Exports must be registered with the Central Bank to guarantee repatriation of any foreign exchange proceeds from the transaction. Import licenses granted by the Central Bank are required.

Prescription of Currency

Some settlements with Cuba and Hungary take place through bilateral accounts. Payments between Ecuador and Argentina, Bolivia, Brazil, Chile, Colombia, the Dominican Republic, Mexico, Paraguay, Peru, Uruguay, or Venezuela may 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 comprises priority goods (the “Special” Group), essential goods (Group A, consisting of capital goods, inputs for agriculture and industry, and consumer goods with no local substitutes), and semiessential goods (Group B, consisting of products with some local equivalent, except luxury goods). List II covers luxury goods. Imports of all goods not included on these two lists are prohibited, primarily to protect industry, the environment, and health. Imports of antiques and certain items related to health and national security are also prohibited. Certain imports require prior authorization from government ministries or agencies.

Prior import licenses are required for all permitted imports except books, newspapers, periodicals, printed music, medicines, and spare parts for machinery and automotive vehicles valued at $5,000 f.o.b. or less. In addition, Petroecuador may, without a license, import supplies, materials, and equipment during emergencies. Import licenses are issued free of charge irrespective of the origin of goods, provided that 80 percent of the import tax has been paid, prior ministerial authorization (when needed) has been obtained, and insurance has been arranged in Ecuador. Certain agricultural crops, milled flour, and cooking oil are granted special protection through the licensing process. All private sector imports are subject to the 10 percent value-added tax. There is a temporary import admission regime for inputs used in export production.

For certain agricultural imports, standard import tariffs were supplemented in 1993 by a system of corrective tariffs adopted with the announced intention of reducing the variation, over time, of the cost of such imports. The system incorporates upper and lower benchmark prices for each product. For imports priced below the lower benchmark, the supplementary corrective tariff is applied so as to raise import costs to the lower benchmark level. For imports priced above the upper benchmark, a rebate is available on the standard import tariff, so as to minimize the excess relative to the benchmark.

For automobiles, official reference prices are published for purposes of calculating tariffs. The reference prices establish a minimum f.o.b. value and when importers declare a higher value, tariffs are calculated on the basis of the higher value. Under the current import tariff regime, most goods are subject to the rates of 5 percent, 10 percent, 15 percent, or 20 percent, with the exception of automobiles, which are subject to a tariff of 40 percent.

Prepayments for imports by the private sector are permitted.

Payments for Invisibles

All public sector payments for invisibles, including interest on public debt, are transacted at the central bank rate. Other payments for current invisibles must be settled in the free market. There are no limitations on the amount of domestic and foreign banknotes that travelers may take out. The remittance abroad of dividends and profits is not restricted.

Residents and nonresidents traveling abroad by air must pay a tax of $25 for each exit visa. Airline tickets for foreign travel are taxed at 10 percent, and tickets for travel by ship are taxed 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. A list of agricultural exports and a list of exports subject to quotas (“exportable surplus”) are reviewed by the relevant ministries. All goods not on these lists may be exported freely. All export proceeds must be surrendered to authorized financial entities no later than (1) 90 days from the date of shipment for bananas and plantains, shrimp, unprocessed coffee and cocoa, fish and other unprocessed seafood, and other perishable and primary products; and (2) 180 days from the date of shipment for all other products. When exporters and foreign buyers agree on sight terms of payment, foreign exchange proceeds must be surrendered within 15 days of the date of shipment. Those who disregard the above surrender requirements are 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. Authorized financial entities may purchase foreign exchange in anticipation of future exports within a maximum period of 180 days before the projected date of the export settlement.

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. The surrender requirement does not apply to exports to countries with which Ecuador has bilateral payments agreements. In such cases, exporters are required to provide official documentation from the recipient country establishing the applicable forms of payment. Exporters may deduct up to 15 percent from their surrender requirement to cover the actual cost of consular fees and commissions paid abroad. Exporters of marine products are permitted to retain up to 30 percent of the f.o.b. value of their shipments to cover the actual cost of leasing foreign ships. 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 is made on the basis of the sale prices stated in the sales contracts and must be surrendered within 30 days of the date of shipment. All crude oil exports are subject to a tax of S/. 5 a barrel; in addition, a tax of $0.05 a barrel is paid on crude oil exported through the pipeline.

Proceeds from Invisibles

All receipts from invisibles must be sold in the free market, except for interest income on exchange reserves of the central bank and all invisible receipts of the public sector, which are transacted at the central bank rate. Travelers may bring in any amount of foreign or domestic banknotes.

Capital

Capital may freely enter or leave the country through the free market. Loan disbursements to the public sector must be transacted at the central bank rate. Unless specifically stated, new foreign direct investments do not require prior authorization. Both domestic and foreign enterprises are subject to a 25 percent income tax rate.

Repatriation of capital and remittances of profits on foreign investments are handled through the free exchange market if investments were made through this market. Transfers of all other gains are subject to a tax rate of 33 percent.

All foreign loans granted to or guaranteed by the Government or official entities, whether or not they involve the disbursement of foreign exchange, are subject to prior approval from the Monetary Board. Suppliers’ credits of up to one year’s maturity are exempt from this requirement. A request for such approval must be submitted by the Minister of Finance to the Monetary Board, accompanied by detailed information on the loan contract and 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 and on monetary aggregates. For public sector entities, the projects to be financed must be included in the General Development Plan or receive a favorable ruling from the National Council for Development (Conade). New external credits with a maturity of over one year that are contracted by the private sector, either directly or through the domestic financial system, must be registered with the Central Bank.

Gold

The private sector is authorized to buy and sell gold in the international and domestic markets.

Changes During 1994

Exchange Arrangement

November 1. (1) The spread between the Central Bank’s buying and selling rates applied to purchases of foreign exchange from the private sector was set at a 2 percent spread instead of S/. 250 per US$1. During the period from November 2 through December 31, 1994, the Central Bank reduced the spread between the buying and selling rates applied to export transactions by Petroecuador from S/. 250 per US$1 to S/. 180 per US$1; (2) the maximum period of 180 days for conducting forward foreign exchange operations was eliminated.

Administration of Control

November 1. Hydrocarbon transactions between foreign companies and Petroecuador were permitted to be carried out through the Central Bank’s exchange market or through the free exchange market.

Imports and Import Payments

August 16. Prepayments for private sector imports were allowed to be made without prior authorization from the Monetary Board and were permitted to be negotiated freely.

Capital

January 25. The commission of 0.25 percent applied to public sector foreign loan disbursements was abolished.

Egypt

(Position as of December 31, 1994)

Exchange Arrangement

The currency of Egypt is the Egyptian Pound, the external value of which is determined in a free market. The U.S. dollar is used as the intervention currency. Nonbank foreign exchange dealers are permitted to operate in the free market. They may buy and sell domestic and foreign means of payment (banknotes, coins, and traveler’s checks) on their own accounts. These transactions, however, must be conducted through the accounts maintained by dealers with authorized banks in Egypt. In addition, authorized nonbank dealers may broker any foreign exchange operation and transaction except transfers to and from the country, on the accounts of their bank or nonbank customers. On December 29, 1994, the exchange rate in the free market was LE 3.4 per US$1.

A special exchange rate of LE 1.30 per US$1 is applied to transactions effected under the bilateral payments agreement with Sudan. In addition, a separate rate of LE 0.3913 per US$1 is used for the liquidation of balances related to past bilateral payments agreements.

Authorized commercial banks are permitted to conduct forward foreign exchange transactions for their own accounts. No prior approval by the Central Bank of Egypt is required, and the banks are free to determine the rates applied for forward transactions.

Administration of Control

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 formulates external trade policy. The monopoly of the public sector over the exportation and importation of certain products has been abolished. Port Said City has held the status of a free zone since 1977.

Arrears are maintained with respect to external payments.

Prescription of Currency

Payments may be made in any convertible currency. Settlements with Sudan, the only country with which Egypt maintains an operative bilateral payments agreement, are made in accordance with the terms of the agreement. Payments not covered by the agreement may be made in any 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. Suez Canal dues are expressed in SDRs and are paid by debiting free accounts in foreign currency.

Nonresident Accounts

In addition to the special accounts related to Egypt’s bilateral payments agreements, the indemnity agreements concluded with certain countries, there are four types of accounts: free accounts, “D” accounts, special capital accounts, and capital and operations accounts.

Free accounts in foreign currency may be opened in the name of any entity. These accounts may be credited with transfers of convertible currencies from abroad and transfers from other similar accounts, foreign banknotes, foreign currency equivalents from funds transferred from previously existing free accounts 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 banknotes by the owner or others, and for payments in Egypt.

“D” accounts may be opened in the name of residents of Sudan. These accounts are largely historical. They are usually credited with transfers under the respective payments agreement. Balances are used to make local payments allowed under the bilateral agreement, including for imports from Egypt. Currently, outstanding balances on these accounts are minimal.

Special capital accounts may be credited with proceeds from sales of real estate owned by foreigners residing abroad. Authorized banks may transfer funds abroad from these accounts up to the amount in foreign exchange previously transferred and surrendered for Egyptian pounds at the time of the acquisition of the property, plus 5 percent of the value of the property for each year following the first five years of ownership until the property is sold; the remainder may be paid and/or transferred in five equal installments.

Capital and operations 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 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).

Imports and Import Payments

The Ministry of Economy and Foreign Trade formulates long-term export and import policies and prepares indicative annual export and import plans. Both public and private entities are allowed to trade with all countries with which Egypt maintains a bilateral payments agreement.

All imports financed by the Central Bank are effected at the free market rate, with the exception of imports under the bilateral payments agreement, which are effected at a more appreciated rate.

Import payments in foreign exchange by the private sector are effected through the commercial banks or through importers’ own foreign exchange resources. All products may be freely imported, with the exception of a few items, such as inputs for industrial production, which may be incorporated with the approval of the Ministry of Industry.

For customs purposes, products are classified into eight groups, on which tariff rates range from 5 percent to 70 percent (with several exceptions). In 1994, the unweighted statutory average rate was 28 percent, excluding alcoholic beverages, and 34 percent, including alcoholic beverages. Surcharges at the rates of 2 percent and 5 percent are levied on most imports.

Payments for Invisibles

Commercial banks and other agencies authorized to deal in foreign exchange may sell without restriction foreign currencies for payments for invisibles to the Government, public authorities, the public and private sectors, and companies established under the domestic investment regime, in accordance with the provisions of the Investment Law.

Travelers may not take out more than LE 1,000 in domestic banknotes but are permitted to take out foreign banknotes and other instruments of payment in foreign currency without limitation.

Exports and Export Proceeds

Apart from a limited number of products required for the national economy that may be restricted, exports may be effected without license. Exports of cotton, rice, and petroleum are no longer a public sector monopoly. There are no repatriation requirements.

Proceeds from exports by the private and public sectors to the bilateral payments agreement country (i.e., Sudan) are obtained in Egyptian pounds, in accordance with the provisions of the relevant agreement.

Proceeds from Invisibles

Foreign exchange earned abroad may be held abroad or retained indefinitely in free accounts.

Persons arriving in Egypt from abroad may import up to LE 1,000 in Egyptian banknotes and are permitted to bring in, and to use locally, unlimited amounts of foreign exchange.

Capital

Proceeds of sales of Egyptian and foreign securities registered at the stock market in Egypt may be transferred through the free market for foreign exchange. The same treatment is applied to the transfer of income earned from Egyptian securities and profits owed to foreigners from investments in projects established in Egypt.

Payments for real estate that foreigners are allowed to own must be made in convertible currencies. Proceeds from sales of property owned in Egypt by foreigners or their heirs must be deposited in a special capital account in the name of the foreign seller at an authorized bank. The authorized bank may transfer funds abroad from the account, but the transfer must be limited to the amount of foreign exchange units previously transferred and surrendered for Egyptian pounds at the time of the acquisition of the property, plus 5 percent of the value of the property for each year following the first five years of ownership until the property was sold; the remainder may be paid and/or transferred in five equal annual installments.

The ratio of foreign currency liabilities to foreign currency assets of authorized commercial banks is subject to a maximum limit of 105 percent, and the open foreign exchange position for a single currency and for all currencies combined is subject to limits of 10 percent and 20 percent, respectively, of their capital. Nonbank foreign exchange dealers may maintain foreign exchange working balances of up to $225,000 for the first LE 1 million of paid-up capital and up to $295,000 for each LE 1 million after the first LE 1 million of paid-up capital.

Gold

Banks are not authorized to deal or speculate (for their own or their customers’ account) in precious metals.

Changes During 1994

Administration of Control

June 3. A foreign exchange law came into effect.

Prescription of Currency

November 30. An account containing unsettled payment orders related to the bilateral payments agreement with the Russian Federation was closed.

Imports and Import Payments

February 1. The maximum tariff rate was reduced to 70 percent from 80 percent, and the rates above 30 percent were reduced by 10 percentage points. In addition, the tariff rates on some capital goods were reduced to 10 percent or 5 percent.

February 14. Import surcharges at the rates of 2 percent and 5 percent were imposed on most imports.

June 9. The requirement that an importer must furnish documentation establishing that importing actually took place was abolished.

Payments for Invisibles

August 4. The limit on the amount of domestic banknotes that travelers may take out of the country was raised to LE 1,000 from LE 100.

Exports and Export Proceeds

June 9. The repatriation requirements for proceeds from exports were eliminated.

Proceeds from Invisibles

August 4. The limit on the amount of domestic banknotes that travelers may bring into the country was raised to LE 1,000 from LE 100.

Capital

June 3. A number of restrictions on the purchase of assets were eliminated. In addition, the regulation governing the transfers of proceeds from sales of real estate by nonresidents was modified.

July 12. Nonbank foreign exchange dealers may maintain foreign exchange working balances of up to $225,000 for the first LE 1 million of paid-up capital and up to $295,000 for each LE 1 million after the first LE 1 million of paid-up capital.

El Salvador

(Position as of December 31, 1994)

Exchange Arrangement

The currency of El Salvador is the Salvadoran Colón, the external value of which is set by commercial banks and exchange houses at a rate determined by supply and demand conditions. The Central Reserve Bank establishes the daily exchange rates, which are applied to its transactions with the public sector, and the calculation of tax obligations. This exchange rate is the simple average of the exchange rates set by commercial banks and exchange houses of the previous working day. In addition, the Central Reserve Bank may purchase or sell foreign exchange to commercial banks and exchange houses at the rate prevailing in the market at the time of the transaction.

On December 31, 1994, the Central Reserve Bank’s buying and selling exchange rates were Ȼ8.71 and, Ȼ8.71 respectively, per US$1; the average buying and selling exchange rates of commercial banks were Ȼ8.71 and Ȼ8.78, respectively, per US$1, and the average buying and selling rates of exchange houses were Ȼ8.71 and Ȼ8.79, respectively, per US$1.

There are no arrangements for forward cover against exchange rate risk operating in the official, commercial banking, or exchange house 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

Exchange regulations are administered by the Central Reserve Bank in accordance with its organic law. All private sector imports and payments for invisibles are delegated to the commercial banks and exchange houses.

Exports of a number of products require permits issued by the Centro de Trámites de Exportación (CENTREX). 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.

Foreign Currency Deposit Accounts

Both residents and nonresidents may maintain deposit accounts in foreign currencies with authorized banks. Balances on these accounts may be sold to the commercial banks or used to make payments abroad without restriction. Transfers of funds between these accounts are also not restricted. The commercial banks are required to submit periodic reports to the Central Reserve Bank on the use of such accounts. The reserve requirement on foreign currency deposits is 50 percent compared with 30 percent on checking deposits and 20 percent on savings deposits in national currency.

Imports and Import Payments

Import permits are issued by the Ministry of Economy and are required for only a few items, including gasoline, kerosene, fuel oil, asphalt, propane and butane gas, cloth and jute sacks, sugar, and molasses.

The commercial banks and exchange houses are authorized to make payments for private imports. Payments for public sector imports and settlements of official lines of credit are made by the commercial banks and the Central Reserve Bank after deposits have been made in local currency to cover the full value of credit.

Import tariffs range from 5 percent to 20 percent although some products, such as automobiles, alcoholic drinks, textiles, and luxury items, are subject to an import tariff of 30 percent.

Payments for Invisibles

Payments for invisibles of a personal nature (e.g., medical treatment and study and travel abroad) are free of restrictions, 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.

Exports and Export Proceeds

CENTREX issues certificates of origin and health when foreign importers require them. All exports, irrespective of value, must be registered. Export permits are issued by the Ministry of Economy and are required for diesel fuel and liquefied petroleum gas.

Proceeds from exports of goods must be surrendered to the commercial banks; proceeds from exports outside of Central America amounting to less than $25,000 may be surrendered to exchange houses.

Exporters of nontraditional products to markets outside Central America receive a drawback of taxes paid in cash on imported raw materials equivalent to 6 percent of the f.o.b. value of their exports.

Since December 1992, proceeds from exports of coffee have been subject to an income tax, which replaced the export tax.

Proceeds from Invisibles

All exchange receipts from invisibles must be surrendered to commercial banks or exchange houses.

Capital

Foreign direct investments and inflows of capital with a maturity of more than one year must be registered with the Ministry of Economy but are not restricted. Outward remittance of interest and amortization on external loans may be made without restriction.

Act No. 279 of March 27, 1969 sets certain minimum capital requirements for businesses owned by foreign residents and those having foreign resident shareholders. This act defines foreign residents as persons residing in El Salvador who are not citizens of one of the five member countries of the Central American Common Market (CACM).1

Gold

Gold coins in the denomination of Ȼ2,500 have been issued as legal tender. Residents and nonresidents may hold and acquire gold coins for numismatic purposes. Gold coins in denominations of Ȼ25, Ȼ50, Ȼ100, and Ȼ200 have been issued as legal tender but do not circulate. These coins are not available for sale and exist only for numismatic purposes in the Central Reserve Bank collection. The importation and exportation of gold in any form are not restricted.

Changes During 1994

Exports and Export Proceeds

May 1. The 50 percent surrender requirement on proceeds from coffee exports was eliminated.

December 19. The Foreign Exchange Electronic Negotiation System (SINED) was introduced to improve the competitiveness and transparency of the foreign exchange market. Commercial banks, exchange houses, and the Central Reserve Bank participate in this system and conduct foreign exchange transactions at the rates determined by supply and demand conditions.

Equatorial Guinea

(Position as of December 31, 1994)

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 per F0.01. The official buying and selling rate is CFAF 100 per F 1. 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 in the Paris exchange market for the currencies concerned. A commission of 0.5 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 rate 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) of 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 regulations applied in France. The principal nonresident accounts are foreign accounts in francs. As the BEAC suspended the repurchase of BEAC banknotes circulating outside the territories of the CFA franc zone, BEAC banknotes received by the foreign correspondents of authorized banks and mailed to the BEAC agency in Equatorial Guinea by the Bank of France or the Central Bank of West African States (BCEAO) may not be credited to foreign accounts in francs.

Imports and Import Payments

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.

In April 1994, a new tariff structure was introduced in the context of the tax and customs reform of the Central African Customs and Economic Union (UDEAC). For UDEAC member countries, the common duty rate for basic necessities was reduced to 5 percent, for raw materials and capital goods to 10 percent, for intermediate and miscellaneous goods to 20 percent, and for consumer goods to 30 percent.

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.

Residents traveling for tourism or business purposes to countries in the franc zone are allowed to take out BEAC banknotes up to a limit of CFAF 2 million; amounts in excess of this limit may be taken out in the form of means of payment other than banknotes. The allowances for travel to countries outside the franc zone are subject to the following regulations: (1) for tourist travel, CFAF 100,000 a day, with a maximum of CFAF 2 million a trip; (2) for business travel, CFAF 250,000 a day, with a maximum of CFAF 5 million a trip; (3) allowances in excess of these limits are subject to the authorization of the Ministry of Finance or, by delegation, the BEAC; and (4) the use of credit cards, which must be issued by resident financial intermediaries and approved by the Ministry of Finance, is limited to the ceilings indicated above for tourist and business travel. Returning resident travelers are required to declare all means of payment in their possession upon arrival at customs and to surrender within eight days all means of payment exceeding the equivalent of CFAF 25,000. All resident travelers, regardless of destination, must declare in writing all means of payment at their disposal at the time of departure. The re-exportation by nonresident travelers of means of payments other than banknotes issued abroad and registered in the name of the nonresident traveler is not restricted, subject to documentation that they had been purchased with funds drawn from a foreign account in CFA francs or with other foreign exchange. The re-exportation of foreign banknotes is allowed up to the equivalent of CFAF 250,000; the re-exportation of foreign banknotes above these ceilings requires documentation demonstrating either the importation of foreign banknotes or their purchase against other means of payment registered in the name of the traveler or through the use of nonresident deposits lodged in local banks.

The transfer of rent from real property owned in Equatorial Guinea by foreign nationals is permitted up to 50 percent of the income declared for taxation purposes, net of tax. Remittances for current repair and management of real property abroad are limited to the equivalent of CFAF 200,000 every two years. The transfer abroad of the salaries of expatriates working in Equatorial Guinea is permitted upon presentation of the appropriate pay voucher as well as justification of expenses, provided that the transfer takes place within three months of the pay period concerned. Except in the case of expatriates working in Equatorial Guinea on a temporary basis, payments of insurance premiums of up to CFAF 50,000 to foreign countries are permitted; larger amounts may be authorized by the ONCC.

Exports and Export Proceeds

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 banknotes 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 banknotes 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

Under the investment code of April 30, 1992 (as modified June 6, 1994), a number of privileges may be granted to approved foreign investments. These privileges include exemption from import- and export-licensing requirements and free transfer abroad of debt payments and net profits.

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. Approval is not normally given because 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; authorization 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 small 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 1994

Exchange Arrangement

January 12. The CFA franc was devalued to CFAF 100 per F 1 from CFAF 50 per F 1.

Imports and Import Payments

April 6. A new tariff structure was introduced in the context of the UDEAC tax and customs reform. The common duty rate adopted by the UDEAC member countries for imported basic necessities was reduced to 5 percent, to 10 percent for raw materials and capital goods, to 20 percent for intermediate and miscellaneous goods, and to 30 percent for consumer goods.

Eritrea1

(Position as of December 31, 1994)

Exchange Arrangement

The provisional legal tender of Eritrea is the Ethiopian Birr, which is issued by the National Bank of Ethiopia and is pegged to the U.S. dollar at the rate of Br 5.95 per US$1. The official exchange rate applies only to transactions between Eritrea and Ethiopia that are associated with refinery services. The Bank of Eritrea applies the marginal auction rate determined in the fortnightly auctions conducted by the National Bank of Ethiopia to all aid-funded imports and most service transactions. The marginal rate established in an auction is effective for the two-week period following the auction. There is also a more depreciated preferential exchange rate that is used for the remaining external transactions, including the conversion of foreign exchange remittances by Eritreans living abroad, export proceeds, and most imports. The preferential exchange rate is fixed by the authorities, but it is close to the rate quoted in the parallel market.

The Bank of Eritrea undertakes transactions with authorized dealers, which in turn carry out transactions with the public on its behalf. There is also a limited number of unofficial, but sanctioned, dealers that buy and sell foreign exchange at the preferential rate. Exchange rates for currencies other than the U.S. dollar2 are communicated daily by the Bank of Eritrea to the authorized dealers on the basis of same day early morning cross quotations in the London market against the U.S. dollar. For all foreign currency transactions, except transactions involving foreign currency notes, the Bank of Eritrea prescribes a commission of 0.5 percent for purchases of foreign exchange and 1.5 percent for sales of foreign exchange. The authorized dealers are permitted, but not obliged, to levy a service charge 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 a margin charge that is applied by the correspondents abroad.

There are no taxes or subsidies on purchases or sales of foreign exchange. There is no forward cover provided in foreign exchange by the Bank of Eritrea or the authorized dealers.

Administration of Control

The Bank of Eritrea, during the transitional period, is working to ensure that all foreign exchange transactions are effected through the authorized dealers who are licensed in accordance with the Monetary and Banking Proclamation No. 32/1993. Under this proclamation, the Bank of Eritrea may from time to time issue regulations, directives, and instructions on foreign exchange matters. Comprehensive foreign exchange regulations, as well as a new Central Bank Act, have been prepared and submitted for the Government’s approval.

The Exchange Control Department of the Bank of Eritrea issues permits only for those imports that require foreign exchange from the banking system. The Ministry of Trade and Industry issues licenses for importers, exporters, and commercial agents, and has authority to regulate foreign investments (Investment Proclamation No. 59/1994); it vets and licenses technology transfer agreements, as well as investment projects (including joint ventures) that are eligible to take advantage of the tax, foreign exchange, and other concessions of the Investment Proclamation. The Asmara Chamber of Commerce issues certificates of origin for exports.

Prescription of Currency

Settlements may be made in currencies quoted by the Bank of Eritrea or in any other convertible currency it deems acceptable. All transactions with Ethiopia, except for those related to the imports of spare parts for the refinery in Assab, are settled in the Ethiopian birr.

Under the agreement of friendship and cooperation, signed by the Presidents of Eritrea and Ethiopia in September 1993, these two countries undertook to cooperate closely and develop common policies concerning a wide range of issues, including matters pertaining to their exchange and trade systems. A joint ministerial commission is entrusted to ensure that implementation of the provisions of the agreement, notably its Article 9, which calls for mutual consultation on the use of the Ethiopian birr and the exploration of the possibilities of adopting a common currency by both countries. In May 1994, a communiqué was issued to further underscore the need for harmonization and coordination, but no detailed agreement has yet been concluded.

An agreement that governs trade between Eritrea and Ethiopia has not yet been concluded. Both Governments are committed to encourage bilateral trade on a free-market basis, to exempt such trade from customs duties, and to harmonize their customs tariffs, as well as the rules and formalities of trade between both countries, in order to facilitate the exchange, storage, and shipment of goods and transfer of payments. Payments are generally made in the Ethiopian birr, although the Government of Ethiopia has required payments in foreign currencies for Eritrea’s purchases of Ethiopia’s exports, as well as for goods that are in short supply in Ethiopia. Under an intergovernmental agreement between Eritrea and Ethiopia, Eritrea pays Ethiopia in birr for its domestic requirements of petroleum products. The refinery in Assab is reimbursed in birr for the costs of refining the derivative products consumed by Ethiopia, except that the portion corresponding to the depreciation of equipment is paid for in foreign exchange.

As stipulated under an intergovernmental transit and port services agreement as well as a customs arrangement (amended annually), the port of Assab is a free port for Ethiopia, with its own Ethiopian customs branch office, and goods shipped to or from Ethiopia remain exempt from the Eritrean customs duties and related charges. Procedures for the clearing of goods and the exchange of documentation are to be coordinated, and the port and shipping charges are paid in Ethiopian birr.

Resident and Nonresident Accounts

With the approval of the Bank of Eritrea, nonresidents may open accounts denominated in U.S. dollars or in Ethiopian birr with the Commercial Bank of Eritrea. These accounts may be credited with foreign currencies, apart from exceptional cases that are subject to approval by the Bank of Eritrea. The Bank of Eritrea has also authorized the maintenance of interest-bearing accounts denominated in U.S. dollars for Eritreans residing abroad since November 1, 1993. Members of the diplomatic community, welfare organizations, nongovernmental organizations, and their personnel may maintain nonresident accounts denominated in birr. Joint ventures and other business firms that invest their capital wholly or partly in foreign exchange may also maintain nonresident accounts in birr.

Residents are not allowed to maintain foreign currency accounts, with the exception of investors who, in accordance with the regulations of the Bank of Eritrea, may maintain foreign currency accounts in Eritrea, and any individuals earning foreign exchange in connection with foreign trade. Nonbank residents may not open accounts abroad, except where they are specifically authorized by the Bank of Eritrea.

Imports and Import Payments

All importers must possess a valid trade license issued by the Ministry of Trade and Industry. These licenses must be renewed each year at a fee of Br 200.3 Import payments made through the banking system require permits that are issued by the Bank of Eritrea upon presentation of pro forma invoices providing information as to type, quantity, unit price, and freight cost (where applicable). A commission of 2 percent is collected on imports that do not require official foreign exchange and are not aid funded. The Bank of Eritrea ensures full collection of franco valuta commissions by requesting the display of a payment document to the Customs Office at the time of the import declaration. Imports of cars and other motor vehicles require prior permission from the Ministry of Transport to ensure their suitability for existing infrastructure and other similar considerations. There are no priority and negative lists for imports, except that a public enterprise producing tobacco and matches holds a monopoly over the import of these products. Most imports requiring official foreign exchange are effected under letters of credit or on a cash-against-documents basis. Suppliers’ credits must be registered by the Bank of Eritrea.

Payments for Invisibles

Payments for invisibles may be made to all countries with a foreign exchange permit, which is issued free of charge by the Bank of Eritrea. The travel allowance for business trips is $50 a person a day for up to 20 days and is limited to no more than two trips a year. In bona fide cases, these limits may be exceeded with the approval of the Bank of Eritrea. Also, exporters may freely use their retention accounts for this purpose. For personal travel, the allowance is $100 a person (adult or minor) for up to two trips a year. Medical expenses of up to $2,000 for treatment abroad are allowed upon the recommendation of the Medical Board of the Ministry of Health. This limit may be exceeded in exceptional circumstances. Residents may remit premiums on life insurance policies that were taken out before May 1991.

Upon the approval of the new foreign exchange regulations, foreign investors may freely remit net profits and dividends accrued from investment and fees and royalties in respect of any technology transfer agreements. Foreign employees may remit up to 40 percent of their net earnings each month, and up to 60 percent of their cumulative earnings upon completion of their term of service in Eritrea.

Exports and Export Proceeds

Exporters must be licensed by the Ministry of Trade and Industry. The annual licensing fee is Br 300 for producers and Br 500 for the commercial agents of foreign companies. All exports require documentation by the Bank of Eritrea, which examines the sales contracts as to type of product, quantity, and unit price. Certain commodities may require clearance from specific government bodies (e.g., the Eritrean Institute of Standards). In particular, livestock and cereals require the permission of the Ministry of Agriculture, and marine products require the permission of the Ministry of Marine Resources. Exports of hides and skins have been suspended since mid-1993 in an attempt to improve the supply to domestic tanneries and processors.

Exports may be made under a letter of credit or on an advance payments basis; in some cases, exports can be permitted on a consignment basis. All export proceeds must be repatriated to an authorized bank within 90 days of shipment; where justified, this deadline can be extended by another 90 days. Exporters may retain up to 100 percent of the sales proceeds.

Proceeds from Invisibles

Except for temporary visitors to Eritrea, all foreign exchange receipts from current invisibles by residents must be surrendered to authorized dealers. However, residents earning foreign exchange from foreign trade, such as consultants and engineers working temporarily abroad for foreign companies, may on request be permitted by the Bank of Eritrea to hold foreign exchange in Eritrea in interest-bearing U.S. dollar accounts provided for nonresident Eritreans, or in accounts abroad. Travelers are not required to declare their foreign exchange holdings at the point of entry into Eritrea and are not allowed to reconvert their balances back into foreign currency upon departure.

Capital

Foreign exchange proceeds representing capital inflows must be surrendered to the Bank of Eritrea, except for funds deposited in authorized nonresident accounts. Capital inflows must be registered with the Bank of Eritrea in order to ensure the smooth transfer of profits, dividends and interest, amortization of principal, and proceeds of the sale of shares to residents or from the liquidation of investments.

Direct foreign investments (including joint ventures) in Eritrea are governed by the provisions of the Investment Proclamation No. 59/1994 (which repealed Proclamation No. 18/1991). Foreign direct investment is permitted in all sectors, except that domestic retail and wholesale trade, and import and commission agencies are open to foreign investors only when Eritrea has a bilateral agreement of reciprocity with the country of the investor; the latter condition may be waived by the Government. Approved investments and their subsequent expansion enjoy exemption from customs duties and sales tax for capital goods and spare parts associated with the investment. There are no exemptions from income tax. Under the foreign exchange regulations submitted to the Government, foreign investors may freely remit proceeds received from liquidation of investment and/or expansion, and payments received from the sale or transfer of shares. Petroleum contractors and subcontractors may freely transfer abroad funds accruing from petroleum operations and pay subcontractors and expatriate staff abroad.

Foreign borrowing by residents in Eritrea has to be registered with the Bank of Eritrea. Authorized banks are permitted to purchase and hold foreign banknotes up to the equivalent of $500,000. Amounts exceeding this limit must be surrendered to the Bank of Eritrea or deposited in the correspondent accounts abroad. With the approval of the Bank of Eritrea, authorized banks may borrow abroad or overdraw their correspondent accounts abroad. They may acquire securities under similar conditions.

Gold

Residents may own gold jewelry without restrictions. Beyond this, ownership or possession of gold or other precious metals or ores requires the authorization of the Ministry of Energy, Mines and Water Resources.

Estonia

(Position as of December 31, 1994)

Exchange Arrangement

The currency of Estonia is the Kroon. Since the introduction of a currency board system, the convertibility of the kroon has been guaranteed by the Bank of Estonia (BOE); the BOE exchanges kroon banknotes and reserve deposits of commercial banks with the BOE into deutsche mark and vice versa at the exchange rate of EEK 8 per DM1. The kroon is fully convertible for all current international transactions and for virtually all international capital transactions.

Transactions in convertible currencies are freely handled by the commercial banks, and commercial banks are free to quote their own exchange rates.

Estonia formally accepted the obligations of Article VIII, Sections 2, 3, and 4 of the Fund Agreement, as from August 15, 1994.

Administration of Control

The authority to issue and enforce foreign exchange regulations is based on the Central Bank Law. Import and export controls are administered by the Ministry of Finance.

Prescription of Currency

Settlements with the Baltic countries, Russia, and the other countries of the former Soviet Union can be effected through a system of correspondent accounts maintained by the BOE with the respective central banks. Balances accrued in these accounts may be used freely by their holders, to purchase either goods or services in the country concerned. In operating these accounts, the Bank of Estonia acts as an intermediary only and does not convert any balances to krooni. Kroon balances held by central banks of the Baltic countries, Russia, and the other countries of the former Soviet Union on their correspondent accounts are fully convertible without delay. These agreements also allow for separate decentralized payments arrangements between commercial banks in the respective states and do not provide for swing credits or overdraft facilities. In addition, Estonian exporters and importers may effect payments without undue delays. Settlements with countries with which Estonia maintains bilateral payments agreements are effected in accordance with the terms of the agreements.1

Commercial banks in Estonia are permitted and encouraged to open their own correspondent accounts with counterpart commercial banks in the Baltic countries, Russia, and other countries of the former Soviet Union to effect payments associated with trade with those countries.

Estonia maintains outstanding balances on inoperative correspondent accounts with a number of countries of the former Soviet Union.

Resident and Nonresident Accounts

Enterprises must obtain a license to open and operate foreign exchange accounts with foreign banks abroad; licenses, whose sole purpose is to enforce the monthly reporting requirements, are granted freely. Enterprises need not obtain licenses to open and operate foreign currency accounts in domestic banks.

Imports and Exports

Imports are not subject to licensing requirements or quantitative restrictions. Import tariffs of 16 percent are levied on fur and fur goods and of 10 percent on automobiles, bicycles, launches, and yachts.2 In addition, imports are subject to a 0.5 percent ad valorem fee to cover the cost of administrative processing and are subject to an 18 percent value-added tax, which is also levied on domestically produced goods. Alcoholic beverages and tobacco products are subject to excise taxes levied, at point of entry by the customs authority, at the following rates: wine, 20 percent; vodka, 100 percent; and raw tobacco and cigarettes, 40 percent.

Quantitative restrictions on exports have been completely eliminated with the removal on October 18, 1994 of the remaining quotas on gravel, specialized clay, and quartz sand. Export duties apply only to items of cultural value at a rate of up to 100 percent. The exportation of metals is subject to state monopoly; private exports of metal are subject to licenses. In addition, all exports are subject to an ad valorem fee of 0.5 percent to cover the cost of administrative processing.

Enterprises are not required to repatriate export proceeds.

Payments for and Proceeds from Invisibles

There are no regulations governing payments for or proceeds from invisibles.

The importation and exportation of domestic banknotes are not restricted.

Capital

Inward and outward capital transfers are not controlled or restricted.

Gold

International and domestic trade in gold is subject to the licensing requirement administered by the Ministry of Finance.

Changes During 1994

Exchange Arrangement

August 15. Estonia formally accepted the obligations of Article VIII, Sections 2, 3, and 4 of the Fund Agreement.

Resident and Nonresident Accounts

March 23. Individuals were permitted to open foreign exchange accounts with domestic banks.

Imports and Exports

January 1. The ban on exports of oil shale was abolished.

October 18. The remaining export quotas on gravel, clay, and quartz sand were eliminated.

Ethiopia

(Position as of December 31, 1994)

Exchange Arrangement

The currency of Ethiopia is the Ethiopian Birr. The exchange rate system consists of two rates: the official rate and the auction rate. The official exchange rate is pegged to the U.S. dollar and is adjusted occasionally on the basis of the marginal rates derived from the auctions. It is applied to imports of petroleum products, fertilizers, pharmaceutical goods, Ethiopia’s contributions to international organizations, and external debt-service payments. On December 31, 1994, the official exchange rate was Br 5.95 per US$1. Buying and selling rates for certain other currencies are set daily by the National Bank of Ethiopia (the central bank) on the basis of both the auction rate and the official exchange rate for the U.S. dollar and the previous day’s closing rate of the currency against the U.S. dollar in London. The auction rate is determined in a biweekly auction (Dutch type), with successful bidders receiving an allocation of foreign exchange based on the exchange rate contained in their bids.

The marginal exchange rate from the auction (“secondary market exchange rate”) serves as the exchange rate until the next auction for all current and capital transactions outside the auction, except for transactions to which the official exchange rate applies. It is applied to all foreign exchange inflows and to foreign exchange provided by the National Bank outside the auction market for limited expenses, including tuition fees, medical treatment abroad, business travel, and personal remittances by expatriate workers. On December 31, 1994, the marginal exchange rate was Br 6.25 per US$1.

All licensed importers are allowed to submit bids to the auction if foreign exchange is to be used to import goods that are not included on a negative list. Applicants must deposit 100 percent of the birr equivalent in advance. Authorized dealers must observe a prescribed commission of 0.50 percent on buying and 1.50 percent on selling, the proceeds of which accrue to the National Bank. Dealers are authorized to levy service charges of up to 0.25 percent on buying and 0.75 percent on selling for their own accounts. For currencies other than the U.S. dollar, dealers are authorized to include the margin charges applied by the correspondents abroad. In practice, the authorized charges are usually levied. The commission and service charges are also applied by the National Bank in its dealings with the Government and certain public sector entities.

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 must be carried out through an authorized dealer under the control of the National Bank. The Exchange Controller of the National Bank issues exchange licenses for all exports and payments abroad and issues permits for all shipments. The Minister of Trade formulates external trade policy. 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. Settlements with Eritrea, except those relating to imports of spare parts for the refinery in Assab, Eritrea, are made in birr. The net proceeds of exports must be surrendered in a freely convertible foreign currency or in any other acceptable foreign currency.

Nonresident Accounts

Nonresidents may open accounts either in birr or in foreign currencies at authorized banks upon approval of the Exchange Control Department of the National Bank. Deposits to these accounts must be made only in foreign exchange. Balances on nonresident foreign currency accounts may be freely transferred abroad, and transfers between nonresident accounts do not require prior approval. Members of the diplomatic community must use transferable or nontransferable birr accounts for payment of local expenses. Joint ventures are permitted to open foreign currency accounts or 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 the entry of the goods purchased with such funds must be submitted to the Exchange Control Department of the National Bank. In general, these accounts may be replenished only after the documents have been presented.

Blocked accounts of nonresidents maintained with authorized banks are used to retain funds in excess of Br 20,000 arising from disinvestments in Ethiopia (see the section on Capital, below). Resident Ethiopian nationals are not allowed to maintain a bank account abroad.

Imports and Import Payments

Payments abroad for imports require exchange licenses, which can be obtained when a valid importer’s license is presented. Applications for exchange licenses must be accompanied by information on costs and payment terms and by 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 imports included in a negative list. Most goods on this negative list may, however, be imported under the franco valuta arrangement (i.e., imports are financed with foreign exchange from external sources) without a license. Imports of cars and other vehicles require prior authorization from the Minister of Transport and Communications, and authorization is readily granted without restriction if the imports are financed with foreign exchange balances held abroad. 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 for business purposes related to importing or exporting are granted foreign exchange up to $120 a day for a maximum period of 20 days in any one calendar year; for other business travel, the limits for tourism are applied. For tourism purposes, persons 18 years of age and over are allowed up to $50 a trip with a maximum of two trips a year. For government travel, the schedule of rates varies by country and city based on cost of living. Students are allowed foreign exchange up to the equivalent of Br 1,200 to study abroad. With approval of the Ministry of Education, Ethiopian nationals with dependents 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 verification by a medical board and the Ministry of Health, residents may obtain a foreign exchange allocation of up to Br 30,000 for medical treatment and travel abroad. After providing for payment of local taxes, foreign companies may remit dividends on their invested and reinvested capital in any currency. Travelers may take with them a maximum of Br 10 in Ethiopian banknotes.

Exports and Export Proceeds

Exports of most cereals to any destination other than Djibouti are 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 the section on Prescription of Currency, above). Exports of raw hides and skins are regulated or prohibited until the needs of local factories are met. The exportation of coffee is subject to a coffee export duty at the rate of Br 15 a quintal, a coffee export cess at the rate of Br 5 a quintal, and a coffee surtax.

Proceeds from Invisibles

Foreign exchange receipts from invisibles must be surrendered. Travelers may bring in Br 10 in Ethiopian currency and must declare any foreign exchange in their possession entering Ethiopia. Except for short-term visitors, travelers must have authorization to re-export foreign exchange. 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, prevent an unwarranted accumulation of external debt, and keep the authorities informed of the country’s external debt position.

All receipts of capital in the form of foreign exchange must be surrendered. Authorization of the Exchange Controller is required for repatriation of capital, and registration of capital inflows with the exchange control authorities establishes the evidence of inflows that is required for authorization. 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 with 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 Council of State Special Decree No. 11/1989 (of July 5, 1989) and investments made under Proclamation No. 15/1992 (of May 25, 1992). Transfers by emigrants who have 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 certain sectors: precious metals, public utilities, telecommunications, banking and insurance, transport, and trade in selected products deemed essential to the economy by law. All applications for joint ventures must be approved by the Investment Office; 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 exemption from customs duties and other specified import levies. 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) may 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 or royalties in respect of technology transfer agreements.

Borrowing abroad requires approval from the Exchange Control Department and is restricted. Authorized banks may freely place their funds abroad except on fixed-term deposit but may not acquire securities denominated in foreign currency without the permission of the National Bank. In addition, they need prior approval from the National Bank to overdraw their accounts with foreign correspondents, borrow funds abroad, or 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 1994

Exchange Arrangement

April 1. The official exchange rate was adjusted to reach 85 percent of the average of the marginal auction rates of the preceding month.

May 16. The official exchange rate was adjusted to reach 90 percent of the average of the marginal auction rates of the preceding month.

November 7. The official exchange rate was adjusted to reach 95 percent of the average of the marginal auction rates of the preceding month.

Imports and Import Payments

September 26. The negative list of imports to which auction exchange rates apply was shortened, with textiles, perfumes, beverages, tobacco products, television and radio receivers, and used materials remaining the principal items on this list.

Payments for Invisibles

April 19. The regulations related to availability of foreign exchange for business and government travel were modified.

Fiji

(Position as of December 31, 1994)

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 consisting of the Australian dollar, the Japanese yen, the New Zealand dollar, the pound sterling, and the U.S. dollar. The weights in the formula are reviewed annually; the most recent revision was made in April 1993. The exchange rate of the Fiji dollar in terms of the U.S. dollar, the intervention currency, is fixed daily by the Reserve Bank of Fiji on the basis of quotations for the U.S. dollar and other currencies included in the basket. On December 31, 1994, the midpoint exchange rate for the Fiji dollar in terms of the U.S. dollar was F$1.409 per US$1. The Reserve Bank provides official quotations only for the U.S. dollar. There are no taxes or subsidies on purchases or sales of foreign exchange. Forward exchange facilities are provided by authorized dealers for trade transactions for forward periods of up to six months for exports and nine months for imports.

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 acting as agent of the Government; the Reserve Bank delegates to authorized dealers the authority to approve normal import payments, and other current payments and transfers up to specified limits or full amounts in some cases.

Prescription of Currency

Transactions with all countries are subject to exchange control. Settlements with residents of any country may be made in Fiji dollars through an external account or in any foreign currency.1

Resident and Nonresident Accounts

A nonresident may open and operate an external account in Fiji dollars or a foreign currency account with an authorized dealer without specific approval from the Reserve Bank.2 These accounts may be credited freely with the account holder’s salary (net of tax), 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 banknotes 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.

Exporters may retain up to 10 percent of proceeds from exports in foreign currency accounts and use the proceeds for import payments (see section on Exports and Export Proceeds, below).

Imports and Import Payments

Imports of most goods are under open general license; imports of bulk butter and lubrication oil products in any form require a specific license. The Ministry of Trade and Commerce is responsible for issuing import licenses, with the exception of those for gold, timber, and butter. Import licenses for gold are issued by the Ministry of Finance and Economic Planning, for timber by the Ministry of Forestry, and for butter by the Ministry of Primary Industries and Cooperatives. Export licenses are issued by various government departments and monitored by the Comptroller of Customs. A wide range of consumer goods are imported by national cooperative societies under a joint arrangement with six other Pacific island countries. The importation of a few commodities from all sources is prohibited 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 approve advance payments for imports of up to F$50,000 an application without specific approval from the Reserve Bank, if such payments are required by the supplier.

Payments for Invisibles

Payments for invisibles are permitted under a delegated authority to authorized dealers up to specific limits, as follows: (1) family maintenance expenses, F$4,000 a year; (2) subscription payments for clubs, societies, and trade organizations, F$5,000 an application; (3) travel allowances, F$6,000 an applicant a trip; (4) payments of royalties, commissions, patents, brokerage, and copyrights, F$10,000 an application; (5) gift remittances, F$500 a donor a year; and (6) professional fees, F$10,000 a year a beneficiary. The use of credit cards for travel-related expenses is not restricted, except for a F$2,000 limit on its use for shopping on each trip; in addition, F$400 a month may be withdrawn in cash. Emigrants are allowed to transfer, after one year abroad, the full amount of the current year’s dividends or profits earned on assets left in Fiji.

Prior approval from the Reserve Bank is not required to make the following payments if they are accompanied by supporting documentary proof: (1) for medical treatment and for educational expenses, up to F$10,000, in addition to tuition fees, direct to the institution; (2) wage payments by shipping companies to foreign crew members, up to F$20,000; (3) advertising fees, up to F$10,000; (4) payments of charges for movie film rental and news services; and (5) proceeds from the maturity of life insurance, up to F$15,000 an applicant, subject to completion of emigration procedures with the Reserve Bank. Amounts exceeding the established limits may be granted with the approval of the Reserve Bank upon presentation of documents certifying that the payments are bona fide.

Nonresident-owned companies must obtain permission from the Reserve Bank to transfer dividends abroad. Under the present policy, remittance of the current year’s profits and two years’ retained earnings that have not previously been remitted is allowed. The remittance abroad of rent accruing on properties owned by emigrants is permitted as part of the transfers of F$25,000 an emigrant is allowed to make every six months (see section on Capital, below).

Exports and Export Proceeds

Specific licenses are required only for exports of sugar, wheat bran, copra meal, certain lumber, certain animals, and a few other items. Irrespective of 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 from exports within six months of the date of shipment of the goods from Fiji and may not, without specific permission, grant more than six months’ credit to a nonresident buyer. At least 90 percent of the value of 1993 export proceeds must be offered for sale to an authorized dealer; up to 10 percent of 1993 export proceeds may be kept in foreign currency accounts maintained with an authorized dealer or a foreign bank abroad with approval from the Reserve Bank; the rate of retention from each export receipt is not subject to control. Payments are admissible for imports of raw materials, professional and management fees, loan repayments, and remittances of profits and dividends.

Proceeds from Invisibles

All receipts from invisibles must be surrendered to authorized dealers. Travelers may bring in freely Fijian and foreign currency banknotes, but must declare them to customs or immigration officials on arrival in order to export the unused balance on departure. 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 semiannually unless approval for reinvestment abroad has been granted by the Reserve Bank.

Capital

Repatriation of capital funds sources from, or withdrawal of foreign investment in, Fiji requires specific permission from the Reserve Bank, which is readily granted with evidence that the investment funds originated offshore. 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. Special tax incentives and concessions are granted for investments that qualify under Fiji’s Tax Free Factory Zone status, and an investment allowance similar to that for hotels is provided for large-outlay investment projects that support the tourist industry.

Nonresident-owned companies are permitted to repatriate in full the proceeds from sales of assets and capital gains on investments of up to F$5 million a year.

The transfer of inheritances and dowries owed 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$125,000 for a family and F$75,000 for a single person; thereafter, the emigrant is allowed an automatic transfer of F$25,000 every six months commencing six months after emigration until the amount cleared by the Inland Revenue Department has been fully transferred; emigrants intending to leave Fiji within 12 months are allowed to transfer up to F$100,000 a family and up to F$50,000 a single person. Nonresidents departing Fiji permanently may remit up to F$250,000 on departure and thereafter up to F$50,000 every six months. Overseas investments and other forms of capital transfers abroad have been temporarily suspended. The purchase of personal property abroad is not permitted.

Authorized dealers may lend up to F$100,000 to a newly established company or a branch of a company in Fiji (other than a bank) that is controlled directly or indirectly by persons who reside outside Fiji and up to F$30,000 to individual nonresident customers; individual nonresident borrowers must repay their loans before leaving Fiji. Any amounts in excess of these limits require prior approval from the Reserve Bank. The banks may not lend foreign currency to any resident of Fiji without the specific permission of the Reserve Bank. Residents must obtain prior permission from the Reserve Bank to borrow foreign currency in Fiji or abroad.

Individuals are allowed to invest up to a maximum of F$5,000 a family a year offshore for a total of up to F$10 million as follows: F$5 million in foreign currency and F$5 million in securities to acquire foreign currency securities. Nonbank financial institutions are allowed to invest offshore up to F$15 million on approval. Local companies are allowed to remit up to F$300,000 to set up sales office or subsidiaries abroad. The proceeds from the sale or realization of such investment must be sold to authorized dealers. Authorized dealers must obtain permission from the Reserve Bank to borrow abroad.

Gold

Residents may freely purchase, hold, and sell gold coins, but not gold bullion, in Fiji. The exportation of gold coins, except numismatic coins and collectors’ pieces, requires specific permission from the Reserve Bank. The importation of gold, other than gold coins, from all sources requires a specific import license issued by the Ministry of Finance and Economic Planning; these are restricted to authorized gold dealers. Gold coins and gold bullion are exempt from fiscal duty but are subject to 10 percent value-added tax (VAT). Gold jewelry is also exempt from fiscal duty but subject to a 10 percent VAT and is not under licensing control. Samples of gold and gold jewelry sent by foreign manufacturers require import licenses if their value exceeds F$200.

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 3 percent. All newly mined gold is refined in Australia and sold at free market prices.

Changes During 1994

Exchange Arrangement

January 1. Transactions eligible for the forward exchange contracts concluded by authorized dealers were extended to include payments for dividends and services.

November 11. Provision of forward cover facility to the commercial banks by the Reserve Bank of Fiji was suspended.

Resident and Nonresident Accounts

January 1. The limit on deposits that expatriates are permitted to make in their external accounts was increased to F$20,000 a family from the sale of assets upon departure from Fiji.

Imports and Import Payments

January 1. The limit on advance payments for imports that commercial banks are authorized to make was raised to F$50,000 from F$10,000.

Payments for Invisibles

January 1. The limit on travel allowances that commercial banks are authorized to provide was increased to F$6,000 from F$4,000 an applicant a trip.

January 1. The limit on the use of credit cards for shopping was increased to F$2,000 from F$1,000 for each trip.

January 1. In addition to tuition fees for education, commercial banks were authorized to provide up to F$10,000 a year for students’ living allowances.

January 1. The limit on subscription payments that commercial banks are authorized to provide was raised to F$5,000 from F$1,000 a subscription.

January 1. Commercial banks were authorized to pay up to F$15,000 an applicant in proceeds from life insurance that has reached maturity.

January 1. Commercial banks were authorized to pay the full amount due on re-insurance and premium payments.

January 1. Commercial banks were authorized to pay up to F$10,000 a year a beneficiary for professional fees.

January 1. The limit on profit remittances by companies was increased to F$5 million from F$1 million a year. The limit on local companies’ remittances to set up sales offices or subsidiaries abroad was increased to F$300,000 from F$200,000.

Capital

January 1. Commercial banks were permitted to lend up to F$100,000 to new and existing companies controlled by nonresidents.

January 1. Nonbank institutions were allowed to invest up to a maximum of F$15 million offshore.

January 1. Individuals were allowed to invest offshore F$5,000 a family up to a total of F$10 million in foreign currency deposits and securities.

Finland

(Position as of December 31, 1994)

Exchange Arrangement

The currency of Finland is the Finnish Markka, the external value of which is determined on the basis of underlying supply and demand conditions in the exchange market. The Finnish authorities do not maintain margins in respect of foreign exchange transactions. On December 31, 1994, the middle rate for the U.S. dollar was Fmk 4.7432 per US$1. 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. Forward premiums and discounts quoted by authorized banks reflect interest rate differentials in the countries of the currencies concerned. The Suomen Pankki (Bank of Finland) does not provide forward cover for commercial banks.

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

There are no exchange controls. Import and export licensing are administered mainly by a special unit in the Ministry of Trade and Industry. This unit 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 July 6, 1992 that, in compliance with UN Security Council Resolution No. 757 (1992), certain restrictions had been imposed on the making of payments and transfers for current international transactions in respect of the Federal Republic of Yugoslavia (Serbia/Montenegro).

Prescription of Currency

Settlements with all 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 without a license. However, an import license is required for certain agricultural products including those imported under bilateral trade agreements, foodstuffs, fish, fodder, and cut flowers. A monitoring license is required for imports of certain steel products. In addition, all imports from the Democratic People’s Republic of Korea and all textile imports and imports of certain plastic products from Taiwan Province of China require a license.

Payments for Invisibles

Payments for invisible transactions are not restricted.

Exports and Export Proceeds

Proceeds from exports are not subject to exchange control. Export licenses are required only for exports of metal ships to be scrapped and goods related to international export control regimes. Sales of arms are strictly controlled.

Proceeds from Invisibles

Receipts from current invisibles are not subject to controls. The funds may be held in a domestic foreign currency account in Finland. The importation of domestic and foreign banknotes and coins is unrestricted.

Capital

Capital transactions, except the acquisition of real estate by foreigners in Finland, are allowed without restriction. Permits are required if the property is to be used for a vacation dwelling. Restrictions on foreign ownership in Finnish companies have been lifted, but a monitoring system concerning the acquisition of the largest companies by foreigners has been put in place. The system is intended to provide the Government an opportunity to intervene if important national interests are considered to be in jeopardy.

The international banking activities of authorized Finnish banks are free from regulation and subject only to certain supervisory reporting requirements.

Gold

Residents may freely hold, buy, and sell gold in any form in Finland.

Changes During 1994

Imports and Import Payments

(See Appendix for a summary of trade measures introduced and eliminated on an EU-wide basis during 1994, page 554.)

Exports and Export Proceeds

July 1. The export levy on corn was suspended until the end of 1994.

France

(Position as of December 31, 1994)

Exchange Arrangement

The currency of France is the Franc. France participates with Austria, Belgium, Denmark, Germany, Ireland, Luxembourg, the Netherlands, Portugal, and Spain in the exchange rate and intervention mechanism (ERM) of the European Monetary System (EMS).1 In accordance with this agreement, France maintains the spot exchange rates between the franc and the currencies of the other participants within margins of 15 percent above and below the cross rates based on the central rates expressed in European currency units (ECUs).2

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, 1994, these rates were as follows:

Specified Intervention Rates per:Francs
Upper limitLower limit
100Austrian schillings65.3545041.05330
100Belgian or Luxembourg francs18.8800014.00500
100Danish kroner102.1000075.72000
100Deutsche mark389.48000288.81000
1Irish pound9.389506.96400
100Netherlands guilders345.65000256.35000
100Portuguese escudos33.937002.91990
100Spanish pesetas44.922503.65050

The participants in the EMS do not maintain the exchange rates for other currencies within fixed limits. However, 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, the ECU, and the U.S. dollar. Indicative rates for 21 currencies are published daily by the central bank on the basis of market rates.5 On December 31, 1994, the rate was F 5.3350 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 two CFA francs, which are the currencies of two groups of African countries that are linked to the French Treasury through an Operations Account.6 These fixed parities are CFPF 1 per F 0.055 and CFAF 1 per F 0.01, respectively.

Registered banks in France and 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 non-enterprise 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.

Administration of Control

All exchange control regulations have been phased out on the basis of Decree No. 89–938 of December 29, 1989.

The Directorate of the Treasury of the Ministry of the Economy is the coordinating agency for financial relations with foreign countries. It is responsible for all matters relating to inward and outward direct investment and has certain powers over matters relating to insurance, reinsurance, annuities, and the like. 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). 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 technical assistance contracts.

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.7 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

All residents, including individuals and enterprises not engaged in international trade, are permitted to hold ECU-denominated accounts in France, accounts denominated in foreign currency in France or abroad, and accounts denominated in French francs 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 restrictions on overdrafts and advances on nonresident-held franc accounts have been lifted.

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

Imports of goods that originate in other countries and that are subject to quantitative restrictions require individual licenses. Some imports from non-EU 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 three 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, Canada, Egypt, Ethiopia, Fiji, Finland, Israel, Jordan, Lebanon, Liberia, Sudan, Syrian Arab Republic, United States, and Western Samoa; (2) some specified countries;8 and (3) 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 (for 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-EU countries of most products covered by the Common Agricultural Policy (CAP) of the EU are subject to variable import levies that have replaced all previous barriers to imports; common EU regulations are also applied to imports from non-EU countries of most other agricultural and livestock products.

Liberalized imports are not subject to trade controls but do require a customs document, which 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 EU-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 EU level. EU-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 EU are enforced through temporary import restrictions authorized by the EU Commission under Article 115 of the EEC Treaty. In cases where the restrictions are not officially recognized by the EU (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 EU 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 banknotes. 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 for statistical purposes but are not restricted as to amount. Registered banks are permitted to approve applications for payments for all categories of current invisibles without limitation. Remittances abroad for family support and 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 banknotes resident and nonresident travelers may take out, but amounts exceeding F 50,000 or its equivalent must be declared to customs upon departure.

Exports and Export Proceeds

Certain goods on a prohibited list may be exported only under a special license. Some other exports also require individual licenses, but if their total value does not exceed F 10,000 (F 100,000 for art objects or collectors’ items), they may be permitted without any formality, subject to certain exceptions.

Exporters are allowed to cover forward for 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 exports, even when paid for in francs, and are exempt from taxes.

Proceeds from Invisibles

All proceeds from transactions in invisibles 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 banknotes and coins (except gold coins) in francs, CFA francs, CFP francs, or any foreign currency; amounts of F 50,000 or more, however, must be declared to customs upon arrival. At the request of Algeria, Morocco, and Tunisia, banknotes issued by those countries may not be exchanged.

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. Residents’ capital assets abroad are not subject to repatriation. The transfer abroad of nonresident-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 may also be sold in France, and the sale proceeds may 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 may not 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, through registered banks abroad, French and foreign securities that are not quoted on a recognized stock exchange. French and foreign securities may be held or sold abroad but 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, as amended by Decree No. 92–134 of February 1992, which applies to financial relations with all countries except Monaco and those belonging to the Operations Account Area.

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 of the capital is considered 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 and applies to each individual foreign participation but not to the total of foreign participation. To determine whether a company is under foreign control, the Ministry of Economy and Finance may also take into account any special relationships resulting from stock options, loans, patents and licenses, and commercial contracts.

EU or non-EU investments in new firms are not subject to a prior declaration to the Ministry of Economy. Foreign direct investments in existing French firms generally require prior declaration to the Ministry of Economy. The following foreign investments, however, do not require increases in capital of subsidiaries in which foreign ownership or voting rights exceed 66.66 percent: loans and transactions involving less than F 10 million in craft trades; retail trade; hotels; restaurants; various commercial services; quarries and gravel pits; and acquisitions of agricultural lands, except vineyards and wine-making properties. Juridical and natural persons may freely invest in any project that is at least 50 percent owned by juridical and natural persons residing in the EU, but the completion of the project must be reported to the Ministry of Economy. Investments of EU groups having permanent recognition of EU status are not subject to any prior declaration and are required only to report to the Ministry of Economy within 20 days of completion. The Minister of Economy may issue a finding within one month to prohibit the EU investment if public health, order, security, or national security is considered to be in danger. Non-EU investments of less than F 50 million, if the turnover of the acquired firm is less than F 500 million, are not restricted but must be reported to the Ministry of Economy before completion. The Minister of Economy may issue a finding within 30 days, at the maximum, to prohibit the investment if public health, order, security, or national security is considered to be in danger.

The Minister of the Economy is allowed a one month period, at the maximum, during which a non-EU investment can be suspended if the investment involves more than F 50 million or if the turnover of the acquired firm is more than F 500 million.

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 if such investments exceed F 5 million, they must be reported to the Bank of France within 20 days. The liquidation of direct investments abroad is free from any prior application, provided that the corresponding funds, if they exceed F 5 million, are reported to the Bank of France.

Foreign issues on the French capital market, except issues originating in EU countries, are subject to prior authorization from the Ministry of Economy and Finance. 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. Application of the controls over direct investment and borrowing is delegated to the Bank of France insofar as these activities relate to French firms engaged primarily in real estate business. Lending in French francs to nonresidents is not restricted. 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 a 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 a capital gains tax.

Changes During 1994

No significant changes occured in the exchange and trade system during 1994.

(See Appendix for a summary of trade measures introduced and eliminated on an EU-wide basis during 1994, page 554.)

Gabon

(Position as of December 31, 1994)

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 per F 0.01. The official buying and selling rate is CFAF 100 per F 1. 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, 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 of 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 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.

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 regulations applied in France. Because the BEAC has suspended the repurchase of BEAC banknotes circulating outside the territories of its member countries, BEAC banknotes received by foreign correspondents’ authorized banks and mailed to the BEAC agency in Libreville may not be credited to foreign accounts in francs.

Imports and Import Payments

Imports from member countries of the Central African Customs and Economic Union (UDEAC) are free of formalities, with the exception of refined vegetable oil, which requires prior approval. All imports whose value exceeds CFAF 500,000 from countries outside the UDEAC are subject to authorization. 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. All imports of commercial goods must be insured through authorized insurance companies in Gabon.

Effective January 30, 1994, a new tariff structure was introduced in the context of the UDEAC tax and customs reform. The common duty rates of the UDEAC member countries were reduced to 5 percent for basic necessities, to 10 percent for raw materials and capital goods, to 20 percent for intermediate goods, and to 30 percent for consumer goods.

Quantitative restrictions on the importation of edible oils, bottled water, soap, and cement were lifted with effect from July 5. Quantitative restrictions on the importation of sugar remain in effect.

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, in the form of profits, dividends, and royalties, accruing to nonresidents are also permitted freely when the basic transaction has been approved.

Residents traveling for tourism or business purposes to countries in the franc zone are allowed to take out BEAC banknotes up to a limit of CFAF 2 million; amounts in excess of this limit may be taken out in the form of means of payments other than banknotes. Allowances for travel to countries outside the franc zone are subject to the following regulations: (1) for tourist travel, CFAF 100,000 a day, with a maximum of CFAF 2 million a trip; (2) for business travel, CFAF 250,000 a day, with a maximum of CFAF 5 million a trip; (3) allowances in excess of these limits are subject to the authorization of the Ministry of Finance or, by delegation, the BEAC; and (4) the use of credit cards, which must be issued by resident financial intermediaries and approved by the Ministry of Finance, is limited to the ceilings indicated above for tourism and business travel. Bona fide requests for travel allowances in excess of the existing limits have been granted. Returning resident travelers are required to declare all means of payment in their possession upon arrival at customs and surrender within eight days all means of payment exceeding the equivalent of CFAF 25,000. All resident travelers, regardless of destination, must declare in writing all means of payment at their disposal at the time of departure. The re-exportation by nonresident travelers of means of payment other than banknotes issued abroad and registered in the name of the nonresident traveler is not restricted, subject to documentation that they were purchased with funds drawn from a foreign account in CFA francs or with other foreign exchange. The re-exportation of foreign banknotes is allowed up to the equivalent of CFAF 250,000; the re-exportation of foreign banknotes above these ceilings requires documentation demonstrating either the importation of foreign banknotes or their purchase against other means of payment registered in the name of the traveler or through the use of nonresident deposits lodged in local banks.

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 of 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. All export taxes, other than those on mining and forestry products, have been eliminated; the taxes on mining and forest products are 0.5 percent and 5–11 percent, respectively.

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, surrendered within a month of the due date. Resident and nonresident travelers may bring in any amount of banknotes 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 banknotes 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 exceeding CFAF 500,000 are restricted and require the approval of the Directorate of Financial Institutions, but capital receipts from these 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 in addition 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 Gabon; these controls apply 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 investments must also be declared to the Ministry unless the operation involves the relinquishing of a shareholding 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 the 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 shareholding that had previously been approved as constituting a direct investment in Gabon. Both the making and the liquidation of direct investments, whether Gabonese investments abroad or foreign investments in Gabon, must be reported to the ministry within 20 days of the operation. (Direct investments are defined as those that imply control of a company or enterprise.)

The issuing, advertising, or offering for sale of foreign securities in Gabon requires prior authorization from the Ministry of Finance, Budget, and Participations. 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 issuing, advertising, or offering for sale in Gabon has previously been authorized.

Borrowing abroad by natural 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 from 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 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 natural 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 from 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, loans that are free of authorization and each repayment 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 nationals 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 small 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 1994

Exchange Arrangement

January 12. The CFA franc was devalued to CFAF 100 per F 1 from CFAF 50 per F 1.

Imports and Import Payments

January 30. A new tariff structure was introduced in the context of the UDEAC tax and customs reform. The common duty rates of the UDEAC member countries were reduced to 5 percent for basic necessities, to 10 percent for raw materials and capital goods, to 20 percent for intermediate goods, and to 30 percent for consumer goods.

July 5. Quantitative restrictions on the importation of edible oils, bottled water, soap, and cement were lifted and replaced by a temporary surtax of 30 percent.

Exports and Export Proceeds

July 5. All export taxes, other than those on mining and forestry products, were eliminated.

The Gambia

(Position as of December 31, 1994)

Exchange Arrangement

The currency of The Gambia is the Gambian Dalasi. Commercial banks and foreign exchange bureaus are free to transact among themselves, with the Central Bank of The Gambia (CBG), or with customers at exchange rates agreed on by the parties to these transactions. The CBG conducts a foreign exchange market review session on the last working day of each week with the participation of the commercial banks and foreign exchange bureaus. During this session, the average market rate during the week is announced as the rate for customs valuation purposes for the following week. On December 31, 1994, the midpoint exchange rate of the dalasi in the interbank market was D 9.5785 per US$1. 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.

The Gambia formally accepted the obligations of Article VIII, Sections 2, 3, and 4 of the Fund Agreement as from January 21, 1993.

Administration of Control

The Exchange Control Act was repealed in November 1992, and no exchange controls are in force.

Prescription of Currency

Settlements with other countries may be made and received from nonresident sources in dalasis or in any convertible currency. 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 holder’s 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 payments to residents of other countries, for transfers to other external accounts, and for purchases 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 exempt 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 from the Forestry Department. The exportation of all other goods can take place without individual licenses.

Proceeds from Invisibles

There is no restriction on the importation of foreign currency notes or Gambian banknotes.

Capital

Inward transfers for purposes of direct equity investment are not restricted but must be reported to the CBG for statistical purposes. Prior approval from the CBG is not required for residents to accept loans in foreign currency from any source.

Commercial banks may provide overdraft facilities to members of diplomatic and international missions in The Gambia. Since the repeal of the Exchange Control Act in November 1992, loans and advances by commercial banks to nonresidents no longer require authorization from the CBG. Foreign exchange working balances held by the commercial banks and exchange bureaus 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 weekly basis and transactions must be reported daily to the CBG. In addition, The Gambia Telecommunication Company (GamTel), which is a parastatal organization, is temporarily permitted to maintain limited working balances in foreign exchange. The limits must be observed on a monthly basis, and the amounts held must be reported within the same period to the CBG. Any amount in excess of the limit must be surrendered to a commercial bank in The Gambia.

Gold

The importation of gold coins and bullion requires the approval of the CBG.

Changes During 1994

No significant changes occurred in the exchange and trade system.

Georgia

(Position as of December 31, 1994)

Exchange Arrangement

The currency of the Republic of Georgia is the Georgian Coupon (GEK),1 the external value of which is determined in fixing sessions that are held at the Tbilisi Interbank Currency Exchange, in which the National Bank of Georgia (NBG) and the major commercial banks participate.2 The official exchange rates for the U.S. dollar and the Russian ruble are determined in these sessions. The official rates are determined for convertible currencies on the basis of the cross rates for the U.S. dollar and the currencies concerned in the international market. For the currencies of the Baltic countries, rates are determined on the basis of the official cross rates for the Russian ruble as published by the Central Bank of Russia. The official exchange rates are used for budget and tax accounting purposes, as well as for all payments between the Government and enterprises and other legal entities. At the end of December 1994, the official exchange rate quoted by the NBG for the U.S. dollar was GEK 1.28 million per US$1. For all commercial transactions, the exchange rates of the coupon are negotiated freely between the banks and foreign exchange bureaus that are licensed by the NBG and their customers.

Foreign exchange bureaus are permitted to buy and sell foreign currency notes. 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

The NBG is responsible for administering exchange control regulations, which are formulated in collaboration with the Ministry of Finance. Decree No. 259 of March 5, 1992, First-Stage of Liberalization of Foreign Exchange Activity, established the legal basis for the conduct of foreign economic activities in Georgia. The main provisions of this decree (1) allow all enterprises to engage directly in foreign trade, (2) allow all residents to acquire and hold foreign currency and engage in foreign transactions with a licensed foreign exchange dealer, and (3) authorize banks to open foreign exchange accounts for all residents. Trade with countries other than the Baltic countries, Russia, and the other countries of the former Soviet Union is controlled by the State Committee on Foreign Economic Relations (SCFER) (Decree No. 265 of March 31, 1993 on Quotas and Licensing of Merchandise Trade).

The NBG has the authority to issue general foreign exchange licenses to banks that will permit them to engage in foreign exchange transactions with residents and nonresidents and to open correspondent accounts with banks outside Georgia. The NBG also has the authority to issue internal licenses to banks that will permit them to engage in the same range of foreign exchange transactions as general license holders, except that holders of internal licenses may not open correspondent accounts