Chapter

Introduction

Author(s):
International Monetary Fund. Monetary and Capital Markets Department
Published Date:
January 1996
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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 1995, but in appropriate cases reference is made to significant developments that took place in early 1996.

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 1995 and in early 1996.

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 imports and exports. 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 1995 (and 1996) 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, 1995, 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, sometimes at a specified exchange 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.

Albania

(Position as of December 31, 1995)

Exchange Arrangement

The currency of Albania is the Lek. The exchange rate of the lek is determined on the basis of 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. The commercial banks are free to determine the margins on purchases and sales of foreign banknotes, but they do not charge commissions. On December 31, 1995, the official (middle) rate for the U.S. dollar was lek 94.24 per $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 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 bureaus for transactions above $15,000, or its 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.1 Resident individuals 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 import licenses are issued by the Ministry of Industry and Trade. Licenses are required to import hazardous materials and arms.

Exports of unprocessed wood, metal scrap, and copper are prohibited. There are no export licensing requirements. 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 three customs duty rates ranging from 7 percent to 40 percent 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 requirements 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 No. 7764 on foreign investment of November 1993, providing for the free repatriation of capital liquidation proceeds; and (5) transfers of the proceeds of the liquidation of Albanian assets by emigrants 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 the Council of Ministers Decree No. 135 of March 29, 1994

Changes During 1995

Imports and Exports

January 9. The remaining four export licensing requirements were abolished and export bans were introduced on unprocessed wood, metal scrap, and copper.

May 18. Parliament adopted a new customs tariff law, which came into effect on July 1. The law included a simplification of import tariffs from four to three rate categories, 7 percent, 25 percent, and 40 percent, in conjunction with the elimination of major import tariff exemptions (for investment machinery and equipment, medical equipment, and agricultural machinery). A surcharge of 5 percent, based on the c.i.f. value on all imports, except wheat, flour, and investment goods, was abolished.

October 19. Customs tariffs for wheat, maize, and flour were temporarily suspended (until June 16, 1996); the tariff rate for these items was 7 percent.

October 31. The customs tariff rate for electric heaters was raised to 100 percent from 25 percent, and kerosene heaters were zero rated.

November 30. The tariff rate on meat was reduced to 25 percent from 40 percent.

Algeria

(Position as of January 31, 1996)

Exchange Arrangement

The currency of Algeria is the Algerian Dinar. During 1995, daily buying and selling rates for the U.S. dollar, the intervention currency, and other specified currencies1 were established by the Bank of Algeria in fixing sessions with the participation of commercial banks. Effective January 2, 1996, the Bank of Algeria (the central bank) established an interbank foreign exchange market. No margin limits are imposed on buying and selling exchange rates in the interbank foreign exchange market. However, a margin of DA 0.017 has been established between the buying and selling rates of the Bank of Algeria for the dinar against the U.S. dollar. On December 31, 1995, the buying and selling rates for the U.S. dollar by the Bank of Algeria were DA 32.1655 and DA 32.1825, respectively, per $1.

Official exchange reserves are centralized in the Bank of Algeria. With the establishment of an interbank foreign exchange market, the authorized banks were allowed to keep open foreign currency positions.

Residents may obtain from the commercial banks forward cover against exchange rate risk in the form of forward contracts to buy or sell foreign exchange. No forward cover is provided by the Bank of Algeria.

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 payment 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 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 may be opened, under Regulation No. 91/02, by juridical and natural persons of foreign nationality. These accounts may be denominated in the convertible currency of the holder’s 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 the requirements for transfer abroad. They may be debited without restriction to make transfers abroad, to export foreign banknotes, and 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 businesses.

Imports and Import Payments

Imports from Israel are prohibited. A small number of imports are prohibited, regardless of origin, for religious, cultural, or safety reasons.

All import licenses have been abolished. Any juridical or natural person licensed under the Commercial Register (including concessionaires and wholesalers) may import goods without 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. In April 1995, the requirement that commercial credits to finance imports of capital goods valued at more than $500,000 have at least a three-year maturity was eliminated.

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. 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 of up to DA 100,000 a year upon presentation to the Bank of Algeria of documentation verifying the bona fide nature of the transaction. 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. In June 1995, the Bank of Algeria delegated to the Postal Administration authority to provide foreign exchange for educational expenses abroad by residents, up to DA 5,000 a month in each school year.

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. Since December 1995, proceeds from exports of nonhydrocarbons, and nonminerals may be surrendered to commercial banks and other authorized participants in the interbank foreign exchange market. 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 1995

Exchange Arrangement

December 23. The Bank of Algeria established an interbank market and authorized commercial banks to maintain open foreign exchange positions and offer forward cover to residents. In addition, the surrender of nonhydrocarbon and nonmineral export proceeds to commercial banks and other authorized participants in the interbank foreign exchange market was allowed (earlier, foreign exchange surrender was exclusively to the Bank of Algeria).

December 26. Regulations on spot and forward foreign exchange positions of the participants in the interbank foreign exchange market were issued.

Imports and Import Payments

April 22. The minimum requirement of three years for the maturity of commercial credits to finance imports of capital goods was eliminated.

Payments for Invisibles

June 14. The Bank of Algeria delegated to the Postal Administration the authority to provide foreign exchange for educational expenses abroad to Algerian residents up to DA 5,000 a month for each school year. In addition, the Bank of Algeria authorized the provision of foreign exchange for medical expenses overseas by Algerian residents up to DA 100,000 a year upon presentation of documentation to the Bank of Algeria to verify the bona fide nature of the transaction.

Changes During 1996

Exchange Arrangement

January 2. The Bank of Algeria established an interbank foreign exchange market.

Angola

(Position as of December 31, 1995)

Exchange Arrangement

The currency of Angola is the Adjusted Kwanza. The official exchange rate against the U.S. dollar is fixed by the Government, and foreign exchange is sold to commercial banks based on allocations determined by administrative priorities that are set at fixing sessions held from time to time.1 Exchange rates for 17 other currencies2 are established using the weekly average cross rates of the currencies concerned on the Brussels, Frankfurt, London, New York, Paris, and Zurich markets.

The primary official rate is used for transactions between the National Bank of Angola (the central bank) and the commercial banks. The commercial banks are authorized to engage in transactions at market-determined exchange rates when buying and selling foreign exchange outside the fixing sessions. The National Bank applies a spread of 2 percent to its buying and selling exchange rates, and commercial banks apply a spread of 6.1 percent to their buying and selling rates. Foreign exchange dealers licensed by the National Bank to operate in foreign exchange are also authorized to operate at market-determined exchange rates. On December 31, 1995, the average official exchange rate for the U.S. dollar was KZR 5,692 per $1.

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

Administration of Control

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

All imports and exports are subject to licensing by the Ministry of Commerce. The National Bank has issued guidelines and delegated authority to commercial banks to license invisible and capital foreign exchange transactions carried out by their clients. With the exception of government transactions and those in the oil sector, all foreign exchange transactions must be carried out by the commercial banks and the foreign exchange dealers.

Arrears are maintained with respect to external payments.

Prescription of Currency

The National Bank prescribes the currency to be used for import and export transactions, which is that of the country of origin of imports and the country of destination of exports, or the U.S. dollar. Bilateral settlement arrangements, which do not entail bilateral payment mechanisms, are maintained with Brazil, Portugal, and Spain.

Resident and Nonresident Accounts

Residents and nonresidents (natural persons or enterprises) may maintain foreign exchange accounts without prior authorization from the National Bank. Checkbooks may not be issued against personal accounts. These accounts may be credited with retained export earnings, foreign currency transferred from abroad, cash, traveler’s checks, foreign payment orders, and interest accrued; they may be debited with sales against domestic currency or the issue of any instrument normally accepted on the international financial market in settlement of imports of goods and invisibles or capital payments. Transfers between these accounts are prohibited. The opening of foreign exchange accounts by nonresidents is subject to authorization by the National Bank. These accounts may be credited with foreign exchange transferred from abroad or with the proceeds from the account holder’s activities in Angola; they may be debited with the sale of foreign exchange or the repatriation of all or part of the existing deposit.

Imports and Import Payments

All imports are subject to licensing based on a positive list. The issue of import licenses for transactions to be carried out with foreign exchange purchased from the banking system is subject to the availability of foreign exchange; the corresponding positive list assigns priority to particular transactions, which are periodically announced by the National Bank. Import licenses are also required for statistical purposes even if foreign exchange is not purchased from the banking system. These licenses are issued upon application.

Licenses are granted only to registered enterprises of proven technical, commercial, and financial capacity, and are issued only for imports of goods for which the enterprise is registered. To obtain a license, enterprises must present bids from 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 Ministry of Commerce. 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. Import licenses are valid for 180 days after issue and may be extended once for an additional 180 days. A license fee of 0.1 percent of the import value is levied.

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. Remittances of dividends and profits from foreign investments are permitted under the Foreign Investment Law. Foreign investors are guaranteed the right to remit dividends, provided the investment in the resident company exceeds $250,000, and, in these cases, an authorization from the Ministry of Finance is required only as a formality.

Individuals are permitted to buy foreign exchange up to certain limits to pay expenses associated with travel, education allowances, and medical treatment.

Resident nationals who wish to travel abroad may, upon presentation of their passport and airline tickets, 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 for 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 planned, the remaining foreign exchange must be resold to a financial institution. For medical treatment abroad, up to $5,000 is provided through the National Health Board on a case-by-case basis at the official rate. Education travel expenses are normally expected to be covered by scholarships, but an additional foreign exchange amount may be granted. 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, demonstrate that they are students or are incapable of working; or (2) they are ascendants over 60 years or, if younger, demonstrate they are incapable of working.

The exportation of domestic currency is prohibited. When leaving 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

With the exception of exports of foreign oil companies, all exports of goods are subject to licensing. Exports of certain goods are prohibited.3 Re-exports of goods other than capital goods and personal belongings are also prohibited. Exports of products that are in short domestic supply are restricted. With the exception of foreign oil companies, all export proceeds must be surrendered to the National Bank or the commercial bank through which the exports were transacted. The National Bank may authorize exporters of goods and services to retain a certain proportion of foreign exchange earnings to be deposited in accounts to be held at local banks. Proceeds from exports must be collected and surrendered within 30 days of shipment.

Proceeds from Invisibles

Service contracts with nonresidents must be approved by the National Bank. The sectoral ministries supervise the execution of contracts. All proceeds must be surrendered to the National Bank within 30 days of receipt unless authorized by the National Bank to retain a portion of the proceeds.

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 by the National Bank, which has delegated certain authority to the commercial banks. The Foreign Investment Law of 1994 (Law No. 15/94 of September 23, 1994) prohibits investment in strategic sectors.4 Direct investments in the oil sector are encouraged. Resident foreign companies must obtain prior authorization from the Ministry of Finance to borrow abroad. 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 National Bank. Residents are permitted to hold gold only in the form of jewelry.

Changes During 1995

Exchange Arrangement

No significant changes occurred in the exchange and trade system.

Antigua and Barbuda

(Position as of December 31, 1995)

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, 1995, 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 accepted the obligations of Article VIII, Sections 2, 3, and 4 of the Fund Agreement on 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 tourism-oriented industries or export trade, whose receipts are primarily in foreign currency and whose inputs are mainly 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.

On January 1, 1995, Antigua and Barbuda implemented the first stage of Caricom’s common external tariff; tariff rates were lowered to a range of zero to 35 percent for nearly all items, entailing a decrease in the average tariff rate. Tariff rates on a number of items, including milk and poultry meat, were reduced to zero.

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 area served by the Central Bank. 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 Inland Revenue Department that the enterprise is registered 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 out over time by the Financial Secretary.

Gold

There are no restrictions on the importation of gold.

Changes During 1995

Imports and Import Payments

January 1. Antigua and Barbuda implemented the first stage of Caricom’s common external tariff in 1995; tariff rates were lowered to a range of zero to 35 percent for nearly all items, entailing a decrease in the average tariff rate.

January 1. Tariffs rates on a number of items, including milk and poultry meat, were reduced to zero.

Argentina

(Position as of December 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, 1995, the middle rate of the peso in terms of the U.S. dollar was Arg$1 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. Deposits denominated in pesos and maintained by the financial institutions at the Central Bank of the Republic of Argentina to meet cash reserve requirements are automatically converted into U.S. dollars. As of November 1, 1995, reserve requirements have been replaced by minimum cash requirements, which may include earning assets (activos retribuibles).

Argentina accepted the obligations of Article VIII, Sections 2, 3, and 4 of the Fund Agreement on 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 payments 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 Russia, whereby 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 and Cuba, where settlement through the accounts specified in the agreements is obligatory. Transactions with other countries must be settled in freely convertible 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 Central Bank 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, and they 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, tariffs were reduced at a rate of 7 percent every six months until they were completed at the end of 1994; the tariff positions exempted from these reductions were also eliminated during this period. 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.

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 the years 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; in 2006, the maximum 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, and iron and steel 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 are restricted.

Exports and Export Proceeds

Export proceeds are not required to be repatriated.

Until the end of 1994, export rebates equal to the import duties applied to the products concerned (Decree No. 1239/92). On January 1, 1995, export rebate rates were changed when Mercosur became effective (Decree No. 2275/94). Subsequently, the applicable rates were reduced by 25 percent (Resolution ME&OSP No. 310/95 of March 20, 1995).

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 (15 percent outside the zone and 10 percent within the zone); 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 allows exporters to recover 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 be eligible for 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 Inversion 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; irrespective of the amount or areas of economic activities concerned, 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 to assist 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.

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 1995

Imports and Import Payments

January 1. The Treaty of Asunción (1991), establishing the Southern Core Common Market (Mercosur) became effective. Tariffs on imports from the member countries of Mercosur 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 be applied to most products from non-Mercosur countries.

March 1. The statistical tax of 3 percent was reimposed on all imports, with the exception of capital goods, fuel, and goods produced in the paper, computer, and telecommunications sectors. All goods imported from the member countries of Mercosur were also exempted.

Exports and Export Proceeds

January 1. When Mercosur became effective, export rebates were changed.

March 20. Export rebates were reduced by 25 percent.

Armenia

(Position as of April 30, 1996)

Exchange Arrangement

The currency of the Republic of Armenia is the Dram; the exchange rate vis-à-vis the U.S. dollar is determined on the basis of foreign exchange auctions held five times a week in the Yerevan Stock Exchange and twice a week in the Gjumry Stock Exchange. Banks and financial dealers holding licenses from the Central Bank of Armenia may participate in the auctions. Anyone may buy and sell at the auction through banks. Foreign exchange transactions may also be made through the interbank market. On April 30, 1996, the average auction rate for the U.S. dollar was dram 405 per $1, and the average exchange rate at the exchange offices was dram 407 per $1.

The Central Bank quotes official rates in terms of U.S. dollars daily on the basis of the weighted average rate at foreign exchange auctions on the previous trading day (Central Bank Decree No. 189, issued on December 1, 1995). This rate is 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, when applicable, or solely on the basis of quotations for the U.S. dollar in major international 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 banks and licensed cash bureaus.

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

Administration of Control

Central Bank 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 has overall responsibility for regulating financial relations between Armenia and other countries in close collaboration with the Ministry of Finance. The Ministry of Finance has the authority over trade transactions, including customs tariff policies.

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 and including gold transactions that require an additional license. Banks with a full license may offer a full range of currency transactions, including gold. A second, more restricted form of license allows banks operating in Armenia to buy and sell foreign exchange only on behalf of their clients.

Prescription of Currency

Settlements with other states are made through correspondent accounts maintained by the commercial banks, which may be opened freely without notifying the Central Bank. The settlements can also be effected through the correspondent accounts of the Central Bank. Settlements with countries with which Armenia maintains bilateral payments agreements are effected in accordance with the terms of the agreements.1 Settlements with all other countries may be made in any currency.

Resident and Nonresident Accounts

Under Central Bank Resolution No. 179 of October 20, 1995, and Resolution No. 8 of January 1, 1996, resident and natural and juridical persons may open, maintain, and use accounts in banks abroad with prior notification to the Central Bank. They 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 or cash bureaus, 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. The opening and use of domestic foreign exchange accounts are not restricted, except that residents may not transfer these balances to other residents in order to make payments for goods and services, because this would contravene the dram’s status as sole legal tender in Armenia.

Nonresident natural and juridical persons may freely open and use foreign exchange accounts with licensed domestic banks. According to Central Bank Resolution No. 124 of July 28, 1995, such persons are also free to make withdrawals to effect current transactions. Balances in these accounts may be transferred abroad or sold to the licensed domestic banks for drams. Central Bank Resolution No. 177 of October 20, 1995, permits nonresident juridical persons to open accounts in drams and use them for domestic transactions. Foreign governments and international institutions may freely open dram accounts with banks in Armenia without prior authorization from the Central Bank.

Imports and Exports

Imports of a number of products are restricted for public health, national security, and environmental reasons. A license from the Ministry of Agriculture and the Ministry of Health, granted on a case-by-case basis, is required 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 the Creation of a Free Trade Zone, signed in April 1994, establishes the legal framework for the signing of free trade agreements between Armenia and other countries of the former Commonwealth of Independent States (CIS). To date, bilateral free trade agreements have been signed with the Kyrgyz Republic, Moldova, Russia, Tajikistan, Turkmenistan, and Ukraine. Currently, only the one with Russia has been ratified. Products imported from countries of the former CIS are exempt from customs tariffs. The customs tariffs range from zero to 10 percent. There are no tariffs on exports.

In accordance with Government Decision No. 17 of January 17, 1995, export licenses are required for three product groups: medicines, wild animals and plants, and textile products exported to the European Union. In addition, special government permission is required for the export of nuclear technology, nuclear waste and related non-nuclear products, and technology with direct military applications. Minimum threshold prices for the export of ferrous and nonferrous metals and the re-export of foreign-produced goods made thereof remain in force. In accordance with Government Decree No. 615 of 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 April 1, 1995, are not subject to the surrender requirement. Expenses, commissions, and taxes paid abroad relating to exports may be deducted from export proceeds prior to repatriation.

Payment 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. There are no limits on foreign exchange allowances for travel.

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

The importation of foreign currency banknotes is not restricted. The exportation of foreign currency banknotes is also not restricted, but a declaration must be made for amounts exceeding the equivalent of $500.

Capital

Foreign investors, including joint ventures, are not required to obtain authorization from the Ministry of Finance. A foreign investment law passed on July 31, 1994, reflecting current international practices, 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 specific regulations governing domestic trade in gold. Regulations on purchases, sales, and holdings of gold and precious metals by banks have been prepared by the Central Bank, and they are expected to come into force in 1996.

Changes During 1995

Exchange Arrangement

July 28. Interbank foreign exchange transactions were permitted.

December 1. The official exchange rate was determined on a daily basis instead of three times weekly (Decision No. 189).

Resident and Nonresident Accounts

July 28. Nonresidents were allowed to open accounts at Armenian banks without restrictions (Decision No. 214).

Imports and Exports

January 1. The rate of surrender requirement for export receipts 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 27. The number of tariff rates was reduced to five, with zero rates for most imports (Government Decree No. 39).

April 1. The surrender requirement for export receipts was eliminated.

Changes During 1996

Resident and Nonresident Accounts

January 1. Resolution No. 8 regulating foreign exchange accounts held by residents abroad and in Armenia was issued.

Aruba1

(Position as of December 31, 1995)

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, the Central Bank, deals with local commercial banks within margins of 0.002795 percent on either side of parity. On December 31, 1995, the official buying and selling rates were Af. 0.98 and Af. 1.002, respectively, per NA f. 1.00. Official buying and selling rates for other currencies2 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. No arrangements for forward cover against exchange rate risk are 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. 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 accounts with nonresidents, including 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

The majority of 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 each 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 per year); (2) purchases from and sales to nonresidents of domestic and foreign real estate, or resident natural persons must obtain a license if the amount of the transaction exceeds Af. 200,000 per 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 by nonresidents in Aruba or by resident natural persons if the amount of the transaction exceeds Af. 200,000 a year.

Changes During 1995

No significant changes occurred in the exchange and trade system.

Australia

(Position as of December 31, 1995)

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 foreign 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, 1995, the indicative rate in terms of the U.S. dollar was $A 1.3423 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 non-trade-related transactions. The Reserve Bank sets a limit for each dealer’s net open overnight foreign exchange exposure.

Australia accepted the obligations of Article VIII, Sections 2, 3, and 4 of the Fund Agreement on 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 Iraq and Libya.

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 the tariff quota, which applies to certain cheeses 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.

Australia is implementing a tariff reduction program under which most tariffs are to be reduced to a maximum level of 5 percent by July 1996. Tariffs are to be reduced on passenger automobiles from 35 percent to 15 percent, and in the textile, footwear, and clothing sectors, to a maximum of 25 percent by the year 2000. Tariff quotas in the textile, clothing, and footwear sectors were eliminated in March 1993. Most specific duty rates were converted to ad valorem rates in July 1993.

Australia’s antidumping and countervailing legislation, primarily the revised Custom Tariff (Antidumping) Act of 1988, was amended in accordance with World Trade Organization rules and reflected in Uruguay Round changes to the GATT texts on antidumping and countervailing measures and came into effect on January 1, 1995. The amendments included (1) a requirement for a set level of support by 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 provision to allow for a combination of company-specific and residual rates of duty applying to exporters from subject countries was also introduced. The legislation also provided detailed guidelines on what constitutes a counter-vailable 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. The Antidumping Authority and Australian customs share responsibility for implementing the Government’s antidumping policies.

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). The provision for antidumping actions against imports of New Zealand origin 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. However, provision for countervailing action to be taken on goods from New Zealand still exists.

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 and Libya. 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.

The 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, airport services and aviation, coastal shipping, limits on foreign ownership of broadcasting and television, and postal 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. 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 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.

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 General Agreement on Tariffs and Trade (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 Austrac report for cash amounts (notes and coins) totaling $A 5,000 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 a ban on the issue of bearer bonds and foreign governments, their agencies, and international organizations. When borrowing in the Australian capital market, these entities must advise the Treasury or Reserve Bank of the details of each borrowing after its completion for information purposes only. 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.

Under Australia’s foreign investment policy, proposals by foreign investors for the 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 normally 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 continuous 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.

Since February 1992, foreign banks have had the option of being authorized under the Banking Act to operate as wholesale banks in the form of a branch (previously, foreign banks could be authorized only 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) totals $A 5,000 or more, it must be reported to Austrac.

Changes During 1995

No significant changes occurred in the exchange and trade system.

Austria

(Position as of December 31, 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 constant 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 December 31, 1995, these rates were as follows:

Specified Intervention

Rates Per:
Austrian Schilling
Upper limitLower limit
100Belgian or
Luxembourg francs39.608929.3757
100Danish kroner214.1740158.8410
100Deutsche mark816.9270605.8770
100French francs243.5860180.6540
1Irish pound19.697114.6082
100Netherlands guilders725.0650537.7400
100Portuguese escudos7.97005.9108
100Spanish pesetas9.603387.1220

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 National-bank does not intervene in the forward market or provide cover for the forward positions of commercial banks. On December 28, 1995, the buying and selling rates for the U.S. dollar were S 10.038 and S 10.183, respectively, per $1. There are no exchange taxes or subsidies.

Austria accepted the obligations of Article VIII, Sections 2, 3, and 4 of the Fund Agreement on 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 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).3 Restrictions are imposed on certain current payments and transfers to Libya in accordance with UN Security Council Resolution No. 883 (1993).

Export and import licenses required under the Foreign Trade Act of 1995 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.4

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 Austrian or foreign banknotes and coins without limit.

Capital

The acquisition by nonresidents of Austrian securities and shares and participation by nonresidents in Austrian companies are unrestricted. The acquisition of real estate is subject to approval by local authorities. Nonresidents are permitted to issue bonds on the domestic market.

Foreign banks are 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 are allowed to 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 1995

Exchange Arrangement

January 9. Austria joined the exchange rate mechanism of the EMS.

Administration of Control

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

Imports and Import Payments

January 1. Austria became a member of the World Trade Organization (WTO).

(See Appendix for a summary of trade measures introduced and eliminated on an EU-wide basis during 1995.)

Azerbaijan

(Position as of December 31, 1995)

Exchange Arrangement

The currency of the Republic of Azerbaijan is the Manat. The external value of the manat for noncash operations is determined in auctions held three times a week 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 April 17, 1995, the Azerbaijan National Bank has been quoting an official exchange rate against the U.S. dollar every Wednesday, which is equal to the Wednesday auction rate. The official rate is used for all official foreign exchange transactions and valuation of foreign assets.

Authorized banks are free to set buying and selling rates for cash transactions. These rates are published weekly by the International Bank. On December 31, 1995, the official exchange rate for the U.S. dollar was manat 4,440 per $1, and the December monthly average buying and selling rates for cash transactions were manat 4,502, and manat 4,556, respectively, per $1. 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.

All residents of the Azerbaijan Republic (legal entities and enterprises and organizations that do not enjoy a right of legal entity) must sell 30 percent of their foreign exchange earnings through the BICEX auctions.

There are no taxes or subsidies on purchases or sales of foreign exchange. There are no arrangements for forward cover against exchange rate risk provided by the official or the commercial banking sectors. The sum of the long and short positions of authorized commercial banks in convertible currencies must not exceed 15 percent of their capital; the ratio for the currencies of the Baltic countries, Russia, and the other countries of the former Soviet Union is 5 percent.

Administration of Control

Foreign exchange transactions are regulated by the National Bank Law, which gives the National Bank responsibility for regulating the exchange rate of the manat, conducting foreign currency operations, and administering gold and convertible currency reserve holdings. The National Bank 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. The Customs Service Law regulates the organization and operation of customs. Enterprises engaged in foreign trade must register with the Ministry of Justice.

Foreign private investment in joint ventures must be registered with the Ministry of Foreign Economic Relations and the Ministry of Finance. Investment abroad by both Azerbaijani 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 National Bank as well as permission from the Cabinet of Ministers to open such accounts.

Prescription of Currency

Residents may, once a transaction is approved, make and receive payments and transfers in any convertible currency. Settlements with the Baltic countries, Russia, and the other countries of the former Soviet Union are effected through correspondent accounts of the commercial banks in these states or through correspondent accounts of the respective central banks. Azerbaijan maintains a bilateral payments arrangement with the Islamic Republic of Iran.

Resident and Nonresident Accounts

Resident persons or enterprises may open and use foreign exchange bank accounts at banks abroad subject to authorization by the National Bank. Residents may freely open and use foreign currency accounts maintained at licensed banks in Azerbaijan. No declaration of the origin of foreign exchange is required for individuals. Individuals may transfer foreign exchange held in these accounts freely up to $5,000 and, upon authorization, larger amounts may be transferred to the holder’s bank account abroad or may be freely converted into domestic currency. Enterprises are obliged to repatriate the foreign exchange held in accounts abroad (except the amount used for paying for imports) and to sell 30 percent of foreign exchange earnings 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 manat. Nonresident enterprises may also open and operate accounts in manat and use them for domestic transactions in accordance with instructions issued by the National Bank. Foreign governments and international institutions may open and operate manat accounts with specific authorization from the National Bank.

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 agreed currency, including banknotes, or through the system of correspondent accounts operated by the National Bank 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 except for reasons of health, environmental protection, or security. Bilateral trade agreements exist with Turkmenistan, Ukraine, and the Islamic Republic of Iran; however, these agreements are fulfilled by procurement through market mechanisms.

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 not by origin. 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, which in turn should be instructed by the exporter to sell 30 percent of export proceeds at the BICEX auction.

As of November 1, 1995, there are no licensing requirements for exports, including those of strategic goods. However, export contracts for strategic goods remain subject to review by the Ministry of Foreign Economic Relations with respect to the contract price and payment terms in order to prevent underinvoicing. Some export bans exist, mainly on defense equipment.

Export duties were imposed in March 1995 on strategic goods whose domestic prices remained significantly below world market levels, notably oil products and cotton; as a result, 70 percent of the difference between the domestic and the export price was taxed away. This tax was removed for petroleum products in November 1995, when domestic prices were raised to world market levels.

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 invisibles payments by resident individuals, but documentation is required.

The exportation of foreign banknotes is regulated by the National Bank 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 National Bank 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 foreign exchange earnings.

Gold

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

Changes During 1995

Exchange Arrangement

April 17. The National Bank began to quote an official exchange rate against the U.S. dollar every Wednesday, which is equal to the Wednesday auction rate. The official rate is to be used for all official foreign exchange transactions, and valuation of foreign assets.

Imports and Exports

March 13. Regulations governing surrender requirements were replaced with a full repatriation requirement. All residents of Azerbaijan (legal entities and enterprises, and organizations that do not enjoy a right of legal entity) were required to sell 30 percent of their foreign exchange earnings through BICEX auctions.

November 1. Export quotas and licensing requirements were abolished. Export contracts for strategic goods remain subject to review by the Ministry of Foreign Economic Relations with respect to the contract price and payment terms in order to prevent underinvoicing.

The Bahamas

(Position as of December 31, 1995)

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 accepted the obligations of Article VIII, Sections 2, 3, and 4 of the Fund Agreement on December 5, 1973.

Administration of Control

Exchange control is administered by the Central Bank, which delegates to authorized dealers2 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.3 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 currency4 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.5

The accounts of residents emigrating from The Bahamas and who are redesignated upon departure as nonresidents are blocked for amounts in excess of B$25,000 for a period of four years. Balances on blocked accounts are transferable through the official exchange market after that time 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;6 this approval is normally given automatically upon submission of pro forma invoices or other relevant documents proving the existence of a purchase contract. Import duties vary from zero to 200 percent, depending on the type of goods; the tariff rate on most goods is 42 percent, and the average tariff rate is 35 percent. Stamp duties on imports vary from 2 percent to 27 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 7 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; and 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. 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, which are encouraged, are required to go through the manual exchange control approval process, 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 locally or abroad.7

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 must obtain a permit from the Investments Board, under the provisions of the International Persons Landholding Act of 1993. 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 a year. This amount may be exceeded, with permission, in special circumstances.

Foreign nationals domiciled in The Bahamas, who have been designated 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 dollar-denominated securities must fund the acquisition of such securities from foreign currency sources. 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 by Bahamian residents require permission from the Central Bank and are normally transacted through authorized agents.8 These institutions are free to act on behalf of nonresidents in relation to such transactions without any further approval from the Central Bank.

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 emigrating from The Bahamas and who are redesignated upon departure as nonresidents 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; assets exceeding B$25,000 are deposited in blocked accounts (see Nonresident Accounts, above). 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 fixed capital in Bahamian dollars although approval may be granted to obtain working capital in local currency. If the company is partly owned by residents, the amount of local currency borrowing for fixed capital purposes 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 and are duty free, but they are subject to a 10 percent stamp tax. 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 1995

No significant changes occurred in the exchange and trade system.

Bahrain

(Position as of December 31, 1995)

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 stable relationship with the U.S. dollar, the intervention currency; the exchange rate has remained unchanged at BD 1 per $2.6596 since December 1980. The middle rate of the Bahrain dinar for the U.S. dollar is quoted by the Bahrain Monetary Agency.

The Bahrain Monetary Agency does not deal with the public. It 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. On December 31, 1995, the Bahrain Monetary Agency’s buying and selling rates for the U.S. dollar were BD 0.375 and BD 0.377, respectively, per $1. In their dealings with the public, commercial banks are required to use the Bahrain Monetary Agency’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 Bahrain Monetary Agency’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 Bahrain Monetary Agency monitors the forward exchange transactions of commercial banks through the open position of the banks’ monthly returns.

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

Administration of Control

The Bahrain Monetary Agency is the exchange control authority, but there is no exchange control legislation in Bahrain. No import or export licenses are required (except for arms, ammunition, and alcoholic beverages). However, importers and exporters must be registered with the commercial registry maintained by the Ministry of Commerce 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 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 Bahrain Monetary Agency 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 1995

No significant changes occurred in the exchange and trade system.

Bangladesh

(Position as of January 31, 1996)

Exchange Arrangement

The currency of Bangladesh is the Bangladesh Taka. Bangladesh Bank, the central bank, determines its buying and selling rates for the U.S. dollar (the intervention currency) vis-à-vis authorized dealers with reference to a weighted basket consisting of the currencies of the country’s major trading partners. On December 31, 1995, the (spot) middle rate of the taka in terms of the U.S. dollar was Tk 40.75 per $1, and the spot buying and selling rates for authorized dealers were Tk 40.65 and Tk 40.85, respectively, per $1. Bangladesh Bank deals with authorized dealers 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. The interbank market has expanded substantially during 1995, with most transactions other than official foreign aid and official debt-service payments being transacted in this market. Bangladesh Bank places prudential limits on each authorized dealer’s open exchange position, taking into account the dealer’s past foreign exchange operations approximated by the volume of letters of credit business and the quality of the dealer’s management.

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.2 Bangladesh Bank does not transact in the forward market, nor does it regulate transactions beyond the normal requirements of prudential supervision.

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 accepted the obligations of Article VIII, Sections 2, 3, and 4 of the Fund Agreement on 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).

Settlements with Iraq and the Federal Republic of Yugoslavia (Serbia/Montenegro) are prohibited pursuant to UN Security Council Resolution No. 757 (1992).

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).3 Bangladesh has commodity exchange agreements with Bulgaria, the Czech Republic, and Hungary. Settlements for trade under these agreements are effected through special nonconvertible U.S. dollar accounts, and Bangladesh is committed to settling promptly any outstanding liability on these accounts. Payments for imports may be made to the country of origin of the goods or to any other country (with the exception of those countries from which importation is prohibited). They may be made (1) in taka for credit 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.

Resident and Nonresident Accounts

Nonresident accounts of individuals, firms, or companies are regarded for exchange control purposes as accounts related to the country in which the account holder is a permanent resident.4 Nonresident foreign currency accounts may be opened by authorized dealers without prior approval from Bangladesh Bank for Bangladesh 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 Bangladesh nationals working abroad. Bangladesh nationals and persons of Bangladesh origin who are working abroad are permitted to open foreign currency accounts denominated in deutsche mark, Japanese yen, 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, subject to reporting to Bangladesh Bank.

Nonresident foreign currency deposit accounts. Bangladesh nationals residing abroad; foreign nationals, companies, and firms registered or incorporated abroad; banks and other financial institutions, including institutional investors; officers and staff of Bangladesh missions and government institutions; autonomous bodies; and commercial banks may open interest-bearing nonresident foreign currency deposit accounts denominated in deutsche mark, Japanese yen, 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), equivalent, with remittances in convertible currencies and transfers from existing foreign currency deposit accounts maintained by Bangladesh 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 Bangladesh nationals abroad. The balances in the accounts, which are freely convertible into taka, must be reported monthly by banks to Bangladesh Bank.

Nonresident Bangladesh 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 Bangladesh, 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 deutsche mark, Japanese yen, pounds sterling, or U.S. dollars. 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 110 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 public safety, religious, environmental, and social reasons, or because similar items are produced locally. Up to 26 items are restricted purely for trade purposes (7 of which are banned and 19 are restricted). Items not specified in the control list of the IPO are freely importable, provided that the importer has a valid import registration certificate. The maximum tariff rate is 50 percent.

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 units operating under the bonded warehouse system may effect imports of up to four months’ requirement of their raw and packing materials by establishing letters of credit without reference to any export letters of credit. They may also effect such imports by opening back-to-back letters of credit (either on a sight basis under the Export Development Fund, or up to 180 days usance basis) 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.

In September 1995, Bangladesh Bank required nationalized commercial banks (NCBs) and domestic private banks to impose a minimum deposit requirement of 25 percent on opening letters of credit for “commercial” imports. In October 1995, the minimum requirement ratios were changed to 50 percent for consumer durable goods, 30 percent for other consumer goods, 15 percent for raw materials, and 10 percent for capital goods. These requirements are, however, not applied to foreign banks, and importers are allowed, without any restrictions, to open letters of credit through these banks. Although there are no penalties for noncompliance, these requirements are generally adhered to by both NCBs and domestic private banks. The deposits are remunerated at market interest rates.

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 Bangladesh nationals to countries other than Bhutan, India, Maldives, Myanmar, Nepal, Pakistan, and Sri Lanka is $3,000 a year; the allowance for air travel to these seven countries is $1,000 a person a year. Larger amounts are available upon verification by Bangladesh Bank of the bona fide nature of the request. Foreign currency for education is made available up to the cost of tuition and living expenses, as estimated by the educational institution concerned. Foreign exchange is available for the costs of dependents abroad, after production of a certificate from the Bangladesh embassy in the country concerned, up to a reasonable level assessed by the embassy in light of prevailing prices. For new exporters, the indicative limit for business travel is $6,000, while established exporters are permitted to utilize balances held under the export retention scheme (7.5 percent of exports of ready-made garments and 40 percent of other export proceeds). Manufacturers producing for domestic market and importers are granted, respectively, business travel allowances equivalent to (1) 1 percent of turnover as declared in tax returns, and (2) 1 percent of the value of imports. In both cases, the allowance is subject to an annual ceiling of $5,000. 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 allowance they are granted, and also up to $5,000 they brought in without declaration while returning from a previous visit abroad. A Bangladesh or a foreign national may take out Tk 500 in domestic currency; otherwise, the exportation of Bangladesh currency notes and coins is prohibited.

Authorized dealers are allowed to remit dividends to nonresident shareholders without the prior approval of Bangladesh Bank on receipt of applications from the companies concerned; 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. Exports of about 20 product categories are banned or restricted. Some of these, such as arms, are restricted for nontraded reasons, while others are restricted to ensure the supply of the domestic market. Export licenses are required for all banned or restricted items. Quotas are imposed on garment exports as a result of the Multifiber Arrangement restrictions. Quotas are allocated by the Export Promotion Bureau on the basis of the previous year’s performance. The Export Promotion Bureau monitors quota use to be able to reallocate unfilled quotas.

Proceeds from exports must be received within four months of shipment unless otherwise allowed by Bangladesh Bank. Exporters are permitted to retain 7.5 percent of the proceeds of exports of ready-made garments and 40 percent of the proceeds of other 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 80 percent of their export earnings in a foreign currency deposit account and place the remaining 20 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. Bangladesh nationals working abroad may retain their earnings in foreign currency accounts or in nonresident foreign currency deposit accounts. Unless specifically exempted by Bangladesh Bank, all Bangladesh nationals who 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, in a resident foreign currency account opened in their name, foreign exchange brought in at the time of return from abroad, provided that the amount does not represent proceeds of exports from Bangladesh or commissions earned from business activities in Bangladesh. Residents may retain on hand up to $5,000 brought in 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 Bangladesh 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 Bangladesh nationals. However, Bangladesh 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 Bangladesh 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 Bangladesh, may buy Bangladesh 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’s 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.

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 and imports of gold and silver for exports/manufacturer of 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 1995

Resident and Nonresident Accounts

August 1. Persons/firms eligible to maintain foreign currency accounts with authorized dealers were permitted to maintain these accounts in deutsche mark, Japanese yen, pounds sterling, and U.S. dollars.

Imports and Import Payments

July 1. The maximum import tariff was reduced to 50 percent from 60 percent.

Payments for Invisibles

July 1. (1) The annual travel allowance for private travel was increased to $1,000 from $500 for visits to SAARC member countries and Myanmar (in case of overland visits, to $500 from $250); and to $3,000 from $2,500 for visits to other countries; (2) manufacturers producing for domestic market and importers were granted, respectively, business travel allowance equivalent to (1) 1 percent of turnover as declared to tax authorities and (2) 1 percent of the value of imports settled. In both cases, the allowance is subject to an annual ceiling of $5,000.

Exports and Export Proceeds

June 30. Joint venture (type B) and wholly locally owned (type C) units (other than garment units) in EPZs were allowed to retain in foreign currency accounts up to 80 percent of export receipts, instead of 70 percent.

October 1. The export earnings retention ratio was increased to 7.5 percent from 5 percent for exports of ready-made garments, and to 40 percent from 25 percent for other exports.

Capital

September 1. Bangladesh Bank required nationalized commercial banks (NCBs) and domestic private banks to impose a minimum deposit requirement of 25 percent on opening letters of credit for “commercial” imports. In October 1995, the minimum requirement ratios were changed to 50 percent for consumer durable goods, 30 percent for other consumer goods, 15 percent for raw materials, and 10 percent for capital goods. These requirements were not applied to foreign banks, and importers would be allowed, without any restrictions, to open letters of credit through these banks. Although there were no penalties for noncompliance, the requirements were generally adhered to by both NCBs and domestic private banks. The deposits would be remunerated at market interest rates.

October 1. Bangladesh Bank ceased to prescribe overall foreign currency holding limits for ADs but would continue to prescribe and monitor their open exchange position limits.

Changes During 1996

Exchange Arrangement

January 1. Bangladesh Bank ceased to deal in the currencies of ACU member countries.

Barbados

(Position as of December 31, 1995)

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 31,1995, 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 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 accepted the obligations of Article VIII, Sections 2, 3, and 4 of the Fund Agreement on 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. Security considerations do not influence decisions on payments restrictions. 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

Authorized dealers may, in most instances, maintain foreign currency accounts in the names of residents of Barbados and of other countries. Such accounts are opened on the basis of anticipated frequency of receipts and payments in foreign currency. Certain receipts and payments may be credited and debited to foreign currency accounts under conditions established at the time the account is opened. Other credits and debits require individual approval. However, where authority has not been delegated to authorized dealers, the permission of the Central Bank is required.

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.3 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 30 percent, the same range as the Common External Tariff (CET) of the Caricom region. The maximum tariff was lowered to 30 percent on April 1, 1995. 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, including derivatives of crude oil other than reformate, 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$100,000 (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); and BDS$500 a day for business travel, up to BDS$40,000 a person a calendar year, expenses for education abroad (BDS$40,000 a person a year), remittances of cash gifts not exceeding BDS$1,000 a donor a year, subscriptions to newspapers and magazines (BDS$50,000 a person a year), remittances for medical purposes up to BDS$50,000 a year, income tax refunds, official payments, and life insurance premiums. Authority has also been delegated to authorized dealers to provide foreign exchange in respect to other current transactions such as profits, dividends, and interest up to BDS$100,000 a transaction, royalties and management fees not exceeding BDS$250,000 a transaction, other current payments including services, up to BDS$250,000 a transaction, and other insurance payments and premiums, excluding investment, pension, and surplus funds, as long as the amount is approved for payment by the Supervisor of Insurance. 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$30,000 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 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.

Changes During 1995

Administration of Control

March 1. Authorized dealers were allowed to release foreign exchange for (1) advertising, legal fees, commissions, subscriptions, and film processing not exceeding BDS$50,000 a nonresident beneficiary; (2) dividends, profits, and interest not exceeding BDS$100,000 a transaction; (3) personal loan repayments not exceeding BDS$20,000 a year; (4) advance payments for imports into Barbados up to BDS$100,000 c.i.f., against specified documentary evidence; (5) education not exceeding BDS$40,000 a person an academic year; and (6) management fees and royalties not exceeding BDS$250,000 a transaction.

Authorized dealers may open and maintain foreign currency accounts for companies operating in Barbados earning a minimum of BDS$100,000 annually in foreign exchange; open and maintain foreign currency accounts in the names of nonresidents of Barbados; and open and maintain foreign currency accounts for residents of Barbados earning at least BDS$50,000 annually in foreign exchange.

Imports and Import Payments

April 1. The maximum import tariff was lowered to 30 percent.

August 7. The following items were deleted from the list of items requiring import licenses: orange juice concentrate, other orange juice, grapefruit juice concentrate, and other grapefruit juice; organic surface active agents, surface active preparations, washing preparations, and cleaning preparations, whether or not containing soap; transport-type passenger motor vehicles, cars and other motor vehicles, including station wagons and racing cars, principally designed for the transport of persons (not for public transport); chassis with or without engines for the assembly of coaches and buses; and yachts and other vessels for pleasure or sport.

November 16. Uncooked pasta, unstuffed or otherwise prepared, was added to the list of items requiring import licenses.

Belarus

(Position as of December 31, 1995)

Exchange Arrangement

The currency of Belarus is the Rubel. On August 20, 1994, the rubel become the unit of account replacing the Belarussian ruble, which was formally recognized as the sole legal tender on May 18, 1994.1 The conversion took place at the rate of 10 Belarussian rubles per 1 rubel. Restrictions on conversion of non-cash rubels into cash (and vice versa) were abolished on December 31, 1995. 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 in daily auctions2 at the Minsk Interbank Currency Exchange, with the participation of the commercial banks licensed to conduct foreign currency operations and the National Bank of Belarus. The authorities regularly intervene in the auctions. On December 31, 1995, the exchange rate for the U.S. dollar was Rbl 11,500 per $1.

Banks can buy foreign currencies at the auction only for confirmed import orders.3 Authorized banks are also free to trade foreign currencies on the interbank market, although this market was effectively closed in November 1995, when a low maximum trading amount was set. There is no formal forward market in foreign currency.

Repatriation of profits in convertible currencies is subject to a 15 percent tax payable in a convertible currency.

Administration of Control

The Parliament is responsible for legislating exchange control regulations and the National Bank is responsible for administering them. The authority to amend exchange control regulations rests with the Parliament, which determines general principles and adopts laws on foreign exchange regulations and control. Foreign exchange regulations are based on provisional regulations issued by the Parliament in March 1992 and subsequently amended on occasion. The National Bank manages the Government’s official currency reserves, except for a small amount of government deposits, which are controlled by the Cabinet of Ministers through the Ministry of Finance. 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.

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. About half of the commercial banks operating in Belarus hold a general license that enables them to open correspondent accounts outside the country; banks holding a domestic license can conduct foreign exchange operations through general licensed banks. A small number of banks are not allowed to conduct foreign exchange operations.

Prescription of Currency

Payments to countries with which Belarus has bilateral payments agreements are effected in the currencies specified in these agreements and in accordance with their regulations.4 Payments in the currencies of the Baltic countries, Russia, and the other countries of the former Soviet Union are made in accordance with the rules specified in an agreement signed on October 21, 1994. The agreement with these countries provides for settlement through bilateral clearing accounts held with central banks or authorized commercial banks. Recently, about 10 percent of such settlements have taken place through central bank correspondent accounts, with the balance being settled through commercial bank correspondent accounts. Since January 1, 1995, no trade, other than certain trade with Russia, goes through official correspondent accounts. Settlement may take place in convertible currencies, national currencies, or Russian rubles.

Bilateral clearing accounts have been established with the Baltic countries, Russia, and the other countries of the former Soviet Union. However, there were only two intergovernmental clearing agreements in 1995: the “Roscontract” agreement with Russia, which specified the intergovernmental exchange of crude oil from Russia for strategic products from Belarus, and a clearing agreement with Uzbekistan calling for the exchange of cotton from Uzbekistan for strategic goods from Belarus on a balanced basis.

Foreign trade payments outside the Baltic countries, Russia, and the other countries of the former Soviet Union are made in convertible currency. A significant, albeit declining, share of trade is conducted within 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 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) in connection with 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 that are authorized to deal in foreign exchange. Residents may maintain bank accounts abroad only with the permission of the National Bank. Foreign exchange earnings by resident juridical persons must be repatriated within 60 days of the date the exports leave the country, and these funds must transit accounts of authorized banks in Belarus, unless the Ministry of Foreign Economic Relations approves a delay in this repatriation.5

Nonresident juridical persons may maintain foreign exchange accounts with authorized banks in Belarus. The sources of the funds can be receipts from abroad; proceeds from the sale of goods and services in the territory of Belarus, including sales to residents; 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 rubels at the market exchange rate through authorized banks.

Nonresident juridical persons can also open two types of accounts in rubels at authorized commercial banks. These are designated as “L” accounts and “N” accounts. L accounts can be credited with the rubel counterpart of foreign exchange sold to the National Bank or authorized banks, dividends from foreign-owned enterprises or joint ventures, returns on securities, and sales of such securities within Belarus. Funds from these accounts may be used freely in the territory of the Republic of Belarus and may be converted into foreign currency at the market exchange rate. N accounts can be funded by proceeds from the sale of goods produced in Belarus or from the sale of goods directly imported from abroad. Balances in these accounts may be used only for business travel expenses; to purchase inputs used for the production of goods for export from Belarus; to purchase foreign exchange at the market 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 as determined by the Government with the permission of the Ministry of Foreign Economic Relations.6

Imports and Exports

Trade with the Baltic countries, Russia, and the other countries of the former Soviet Union is conducted primarily through intergovernmental agreements or interenterprise deals.

The bilateral trade agreements Belarus maintains with other countries include appendices that list the goods to be delivered by each party.7 In some cases these lists include volume and/or prices. Increasingly, these lists are used only as indicators. The guarantee of the delivery of goods under these agreements was previously in the form of state orders. However, state orders have been reduced and, for most products, constitute less than 30 percent of total bilateral trade under the agreements (except for oil and certain chemical products, where state orders may exceed 50 percent of the total).8 Therefore, trade under these agreements is increasingly conducted directly by the enterprises with the assistance of such organizations as Belkontract. Defense-related goods are excluded from trade agreements.

Bilateral trade agreements are used primarily for two reasons. First, goods traded under such agreements are generally subject to zero or reduced tax rates; second, for key goods from some countries, access to these goods is possible only via a quota that is issued by that country’s government as part of a bilateral trade agreement.

Trade in these products exceeding the volume specified in the appendices and in products not included in the appendices of the trade agreements is mainly conducted through interenterprise deals. Settlement difficulties, primarily due to lack of foreign exchange on the part of one or both enterprises, have caused most such deals to be conducted on a barter basis.

As a result of the customs union agreement between Belarus and Russia signed January 6, 1995, and the Protocol on Free Trade between Belarus and Russia signed on January 5, 1995, there are now no customs barriers on trade between the two countries, and the countries have adopted a common trade policy toward other countries.

Since May 1, 1995, export earnings in Russian rubles are exempt from surrender requirements. All export proceeds must be deposited in a “transit” account in a bank in Belarus within 60 days of shipping, unless special permission for a longer period of repatriation has been approved by the Ministry of Foreign Economic Relations; the period is 180 days for goods exported under a barter or clearing contract and 30 days for service exports.

Surrender requirements on foreign exchange proceeds in convertible currencies were eliminated as of July 1, 1995. Prior to the elimination of the surrender requirements, these proceeds were sold in the interbank currency auction. Export proceeds in convertible currencies are subject to the same repatriation requirements as those exports to countries of the Baltic countries, Russia, and the other countries of the former Soviet Union.

Residents do not need a license or approval from the National Bank to conduct foreign exchange operations related to trade, except for (1) down payments for imports or services exceeding $10,000 or the equivalent that represent more than 30 percent of the value of the goods or services imported; (2) payments for imports more than 60 days in advance of receipt of the goods in Belarus, which requires the advance permission of the Ministry of Foreign Economic Relations;9 and (3) interest payments to nonresidents on returned down payments when an original contract is not fulfilled. Foreign exchange purchased for imports has to be used within a period of 30 days from the date of purchase.

Export bans exist for some medicinal herbs, arts and antique collections, certain wild animals, goods imported into Belarus on a humanitarian basis, and certain types of leather. The list of items under export quotas and licensing requirements includes only crude oil and some refined oil products, mineral fertilizers, and certain types of nonprocessed timber. Belarus had abolished all export taxes on December 2, 1994. However, under the customs union agreement with Russia, Belarus adopted Russian export taxes by Decree 218 of the Cabinet of Ministers, approved April 19, 1995.10

A new import tariff structure was similarly introduced by the Cabinet of Ministers Decree 219, approved on April 19, 1995, whereby Belarus adopted Russian import duties. As a result of changes in Russian customs duties, Belarus adopted a new amended Decree 340 of June 29, 1995. These duties were implemented in three phases (on May 1, June 10, and August 20, 1995). Import duty rates for goods subject to minimum rates (plants, seeds, individual foodstuffs, raw materials, ores, petroleum, and spare parts) range from 1 percent to 5 percent, while import duty rates for goods subject to maximum rates (weapons, ammunition, precious metal products, carpets, and motor vehicles) range from 40 percent to 100 percent. There are numerous exceptions. Regular import duty rates apply to countries that have been accorded most-favorednation treatment. Import duty rates are doubled if goods are imported from a country that has not been accorded most-favored-nation treatment. These are halved or reduced to zero for developing countries covered by Russia’s provisional system of preferences. The importing of radioactive or toxic wastes, as well as publications or videos that are against state morals, health, or security are prohibited, while import licenses are required for the importing of certain pesticides, herbicides, and industrial wastes.

Payments for and Proceeds from Invisibles

Resident individuals are permitted to purchase up to $500 a year at the market exchange rate for tourist travel; 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. However, persons with international credit cards who use such cards for tourist travel expenses can purchase foreign exchange to settle the obligations on those cards. There are no restrictions on the purchase of foreign exchange for bona fide expenses related to business travel or invisible transactions such as education, medical treatment, family maintenance, repatriation of salaries and wages, payment of insurance premiums, and profit remittances.

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 policy applies to the importation and exportation of rubel banknotes, for which the limit is Rbl 100,000 for travel to the Baltic countries, Russia, and the other countries of the former Soviet Union. 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 a convertible currency.

Capital

The properties owned by foreign investors in Belarus are protected from expropriation.11 Foreign investors are guaranteed full freedom to repatriate their initial investment capital and profits earned in Belarus. Foreign investment must be registered at the Ministry of Foreign Economic Relations and, in the case of financial institutions, also at the National Bank. 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 49 percent. Nonresidents may participate in foreign exchange auctions through authorized banks. As of March 29, 1995, the importing of securities issued by non-Belarussian companies is prohibited, except with the approval of the Ministry of Finance.

Enterprises with more than 30 percent foreign capital ownership are permitted to export their products and import inputs necessary for their production without restriction. These enterprises are exempted from income tax for the three years following the first year the enterprise reports a profit. If the enterprise is deemed to be essential for the economy of Belarus by the Cabinet of Ministers, the income 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 National Bank.

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 1995

Exchange Arrangement

January 1. The restrictions on the conversion of noncash rubels into cash rubels were removed, and the foreign exchange market, which had been segmented into cash and noncash transactions, was unified.

July 1. Banks were authorized to trade both U.S. dollars and Russian rubles on the interbank market in addition to the auction market (Resolution No. 543, National Bank of Belarus, adopted in June).

November 1. A list of imports, for which priority is given for purchases of foreign exchange in the auctions, was adopted.

November 13. A low maximum trading amount was set for operations in the interbank market that effectively closed it down.

Resident and Nonresident Accounts

August 2. The limitation on the convertibility of interest earned on so-called rubel “N” accounts was removed (National Bank letter No. 629 to banks).

November 13. Restrictions on the conversion of funds held in nonresident accounts were reintroduced.

Imports and Exports

January 6. The customs union agreement between Belarus and Russia was signed.

April 19. Belarus adopted Russian export taxes (Decree No. 218 of the Cabinet of Ministers) and decided to adopt Russian import duties in three phases: on May 1, June 10, and August 1, 1995 (Decree No. 219 of the Cabinet of Ministers).

May 1. Surrender requirements for export earnings in Russian rubles were eliminated.

May 1. Repatriation requirements were tightened. All export proceeds were required to be deposited in a “transit” account in a bank in Belarus or, with special permission of the National Bank, abroad (Presidential Decree No. 52).

May 15. Surrender requirements for export proceeds in U.S. dollars and other hard currencies were reduced to 30 percent.

May 26. The customs union between Russia and Belarus came into effect. All export taxes on trade, as well as other barriers between the two countries, were eliminated. Belarus adopted new schedules for export and import tariffs to conform with those in effect in Russia.

June 27. The lists of minimum and maximum export and import prices were abolished (Resolution No. 334 of the Cabinet of Ministers).

June 29. The schedule for import duties was amended as a result of changes in Russian customs duties (Decree No. 340 of the Cabinet of Ministers).

July 1. Surrender requirements for export proceeds in U.S. dollars and other hard currencies were eliminated.

November 13. The period within which foreign exchange purchased for imports must be used was reduced to 30 days from 45 days.

Capital

March 29. Imports of securities issued by non-Belarussian companies were subject to the approval of the Ministry of Finance.

Belgium and Luxembourg

(Position as of December 31, 1995)

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, 1995, these rates were as follows:

Specified Intervention

Rates Per:
Belgian Francs or

Luxembourg Francs
Upper limitLower limit
100Austrian schilling340.4200252.4700
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 escudos323.364517.3285
100Spanish pesetas428.152520.8795

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 29, 1995, the indicative middle rate for the U.S. dollar was BF 29.445 per $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 accepted the obligations of Article VIII, Sections 2, 3, and 4 of the Fund Agreement on February 15, 1961.

Administration of Control

In general, there are no exchange controls. In accordance with the Fund’s Executive Board Decision No. 144-(52/51) adopted in August 14, 1952, Belgium notified the Fund 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). Belgium also imposed restrictions against Iraq and Libya.

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) certain specified imports from all countries,5 including many textile and steel products, certain agricultural products and foodstuffs, diamonds, weapons, and products other than textiles from China. All other commodities are free of license requirements. 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) quota on a number of steel products from Russia, Ukraine, and Kazakstan, and quotas on a number of products from China (toys, shoes, ceramics, porcelain, and glassware) 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 diamonds, and some 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 except if the foreign company or individual involved is a resident of an EU country.

Bonds denominated in Belgian or Luxembourg francs may be issued freely on the Luxembourg capital market. After they are issued, they are reported to the Luxembourg Monetary Institute, 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. 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 1995

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 1995.)

Belize

(Position as of December 31, 1995)

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, 1995, the buying and selling rates in transactions between the banks and members of the public were BZ$1.9825 and BZ$2.0175, 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 on 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. However, in June 1995, the Central Bank began to ration its sales of foreign exchange to commercial banks on an ad hoc basis, except for a few essential import items such as fuel and pharmaceuticals. 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 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. In November 1995, specific taxes on imports of beer, tobacco products, and fuel were raised.3

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. Since June 1995, the Central Bank has also rationed its sale of foreign exchange for invisible payments to commercial banks on an ad hoc basis except for a few essential items such as insurance. 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 items4 are subject to an ad valorem export duty of 5 percent. Re-exports and transshipments are subject to a 3 percent customs administration fee. Since mid-1995, the Central Bank has resorted to direct purchases of sugar export proceeds bypassing the traditional practice of purchasing from commercial banks.

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 1995

Imports and Import Payments

November 7. Parliament raised the import taxes, as follows: (1) the surcharge (revenue replacement duty) on imported beer was raised to BZ$22.81 per imperial gallon from BZ$19.06; (2) the import duty on cigars, cheroots, and cigarillos was raised to BZ$26.67 per pound from BZ$16.67; (3) the import duty on cigarettes was raised to BZ$34.40 per pound from BZ$21.50; (4) the import duty on other cigars and tobacco products was raised to BZ$20.00 per pound from BZ$12.50; (5) the import duty on snuff was raised to BZ$24.80 per pound from BZ$15.50; and (6) the surcharge (revenue replacement duty) on fuel imports was raised by 25 cents per imperial gallon.

Benin

(Position as of June 30, 1996)

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 (WAEMU), 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, the repatriation of export proceeds, the issuing, advertising, offering for sale of securities and capital assets, and the soliciting of funds for investment abroad, the 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, the 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.

Benin accepted the obligations of Article VIII, Sections 2, 3, and 4 of the Fund Agreement on June 1, 1996.

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 or other precious or semiprecious stones and precious metals require authorization from the Directorate of External Commerce.

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.

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 from all origins and sources are freely imported. 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 five bands (i.e., zero, 5 percent, 10 percent, 15 percent, and 20 percent). A statistical tax of 3 percent is levied on the c.i.f. value of imports.

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 WAEMU 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; and (4) credit cards, which must be issued by resident financial intermediaries specifically 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 WAEMU must declare in writing all means of payment in their possession. 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 diamonds, gold, 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 repatriated to Benin, through the BCEAO, at the initiative of the authorized bank within 30 days of the contractual due date, and must be sold to authorized banks within 180 days of the arrival of the shipment at its destination.

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 Resident travelers 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 of their return to Benin.

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, in addition 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 WAEMU, 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 trade 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 by travelers of gold articles up to a maximum weight to be determined by an Order of the Minister. Both licensed and exempt imports of gold are subject to customs declaration.

Changes During 1995

Imports and Import Payments

June 22. Imports of goods from all origins and from all sources were liberalized.

Exports and Export Proceeds

May 19. Exports of food crops were temporarily suspended during the summer of 1995. The suspension was lifted on September 15.

Changes During 1996

Exchange Arrangement

June 1. Benin accepted the obligations of Article VIII, Sections 2, 3, and 4 of the Fund Agreement.

Bhutan

(Position as of December 31, 1995)

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 Re 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 29, 1995, the buying and selling rates of the ngultrum for the U.S. dollar (cash) were Nu 34.45 and Nu 35.65, respectively, per $1, the buying and selling rates of the ngultrum for the U.S. dollar (traveler’s checks) were Nu 34.60 and Nu 35.45, respectively, per $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 1995

No significant changes occurred in the exchange and the trade system.

Bolivia

(Position as of December 31, 1995)

Exchange Arrangement

The currency of Bolivia is the Boliviano. The official selling exchange rate is the weighted average of public sales of foreign exchange performed 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 $5,000 or multiples of this amount; the minimum allowable bid is $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, 1995, the official buying and selling rates were Bs 4.93 and Bs 4.94, respectively, per $1.

Sales of foreign exchange by the Central Bank to the public are subject to a commission of Bs 0.01 per $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 obligation of transferring funds from its accounts at the Commercial Bank of Bolivia to a special account at the Central Bank (cuenta “provisión bolsini”) that is for the sole purpose of buying foreign exchange. Banks are allowed to hold foreign exchange positions up to the value of the net worth minus fixed assets. 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, 1995, were Bs 4.93 and Bs 4.95, respectively, per $1. There are no arrangements for forward cover against exchange rate risk operating in the official or the commercial banking sector.

Bolivia accepted the obligations of Article VIII, Sections 2, 3, and 4 of the Fund Agreement on 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 may 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.

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. Donations of food, including wheat, are exempt from the import tariff.

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. The Investment Law does not restrict remittance of profits abroad.

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 15 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; these fees are paid by the Government and not by the exporters. 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.

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. 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 of September 1990 (Law No. 1182 on Investment), which treats domestic and foreign investors equally. The law is administered by the Secretariat of Industry and Commerce. Investments in petroleum and mining are governed by the Hydrocarbons Law and the Mining Law.

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 1995

Imports and Import Payments

November 6. The import tariffs on wheat flour, sugar, and maize were suspended for 180 days (Supreme Decree No. 24519).

Bosnia and Herzegovina1

(Position as of December 31, 1995)

Exchange Arrangement

The currency of Bosnia and Herzegovina is the Bosnian Dinar, which has been pegged to the deutsche mark at BDin 100 per DM 1 since its introduction in July 1994. The Bosnian dinar is issued by the National Bank of Bosnia and Herzegovina and is legal tender in the Bosnian-majority area of Bosnia. It is not legal tender in the Croat- or Serbian-majority areas of Bosnia and Herzegovina; these two areas use the Croatian kuna and the Yugoslav dinar, respectively. The Bosnian- and Croatian-majority areas form the Federation while the Serbian-majority area is known as the Republika Srpska. The deutsche mark is widely used in all three areas. Until December 9, 1995, the National Bank of Bosnia and Herzegovina also used a “stimulation exchange rate” to help build foreign reserves, which at the time of its elimination was BDin 105 per DM 1.

The National Bank of Bosnia and Herzegovina, which operates as a de facto currency board, communicates exchange rates to the commercial banks at least once a day. If there are significant changes in the rate during the day (that is, to the second decimal place), revised rates are communicated. Banks must charge the same rates for all transactions. In the Republika Srpska, the National Bank of Republika Srpska receives from the National Bank of the Former Republic of Yugoslavia at the close of each business day a list of buying and selling exchange rates for the major currencies. These rates are forwarded to the commercial banks and applied to the next day’s transactions. Banks must charge the same rates for all transactions. There is no bank in the Croatian-majority area that acts as a central bank. The National Bank of Bosnia and Herzegovina is responsible for some central banking functions in the Croatian-majority area but not for the use of Croatian kuna.

In both the Bosnian- and Serbian-majority areas, commercial banks are free to buy and sell foreign exchange in the interbank market without restrictions but must report all transactions to the National Bank of Bosnia and Herzegovina on a regular basis and to the National Bank of Republika Srpska, on a daily basis.

Administration of Control

The National Bank of Bosnia and Herzegovina administers foreign exchange control regulations in the Federation with limited delegation to commercial banks. The National Bank of Republika Srpska oversees foreign exchange regulations in the Republika Srpska, although the commercial banks are responsible for implementing controls; the banks provide the National Bank of Republika Srpska with the documentation for all foreign exchange transactions on a regular basis.

Resident and Nonresident Accounts

There are no restrictions on the holding of foreign exchange by individuals or enterprises in the Bosnian-majority area, although there is a limit of DM 2,000 on the amount of cash that an individual is permitted to carry across international borders at any one time. There is no limit on the frequency of border crossings with less than DM 2,000. Individuals and exporters can hold foreign exchange in accounts with commercial banks and do not need to supply evidence of the source of these funds. There are no restrictions on withdrawals from these accounts for domestic transactions. There are restrictions on withdrawals for the purpose of making foreign transactions. Foreign exchange held in these accounts need not be surrendered to the National Bank of Bosnia and Herzegovina, but if a bank purchases any of the foreign exchange held in these accounts, 45 percent of that amount must be surrendered to the National Bank of Bosnia and Herzegovina. There are no regulations on banks’ foreign exchange open positions.

Individuals and exporters in the Republika Srpska can hold foreign exchange in accounts with commercial banks and do not need to supply evidence of the source of these funds. There are no restrictions on withdrawals from these accounts for domestic transactions, however, there are restrictions on withdrawals for the purpose of making payments abroad. The limit on cash taken across international borders is DM 1,000 a trip, but there is no limit on the frequency of border crossings with less than DM 1,000. No foreign currency exposure limits apply to commercial banks that accept foreign currency deposits, but the banks must provide a guarantee and insure the accounts with an insurance company.

Imports and Exports

All importers in the Federation must be registered with a local court and with the Ministry of Foreign Trade. An importer can purchase foreign exchange for importing goods and services without drawing on foreign exchange held in bank accounts. Foreign exchange is rationed, with priority given to raw materials and essentials such as drugs; a list is maintained with goods and services listed in descending order of priority. Also, the Ministry of Foreign Trade classifies goods into three regimes: free; subject to quotas (for the protection of local industry); and banned (for health, environmental, or military reasons).

In the Republika Srpska, an importer must use all foreign exchange held in bank accounts before being entitled to purchase any further foreign exchange from a commercial bank or from the National Bank of Republika Srpska. Commercial banks ration foreign exchange, with priority given to raw materials and goods that meet basic human needs. Restrictions are imposed on the importation of goods for which domestic production is significant.

Fifteen percent of proceeds from exports of goods and services in the Bosnian-majority area must be surrendered to the National Bank of Bosnia and Herzegovina within 48 hours of repatriation in exchange for Bosnian dinars at the official exchange rate. Exports by companies that deal abroad are subject to a surrender requirement of 5 percent. There are no quantitative restrictions on exports from the Federation but exporters must be registered with the Ministry of Foreign Trade and a local court. There are no taxes or subsidies on exports and no monopolies granted for any exports.

In the Republika Srpska, 20 percent of the proceeds from exports of goods and services must be surrendered to the National Bank of Republika Srpska immediately upon repatriation. There are no quantitative restrictions on exports, but the exporter must be registered with the National Bank of Republika Srpska and with a local court. The Ministry of Foreign Trade also imposes some controls on the re-exportation of some imports.

Payments for and Proceeds from Invisibles

The National Bank of Bosnia and Herzegovina makes foreign exchange available as a priority for the importation of business-related services. However, debt-service payments were removed from the priority list in April 1992. Foreign exchange for individual travel abroad is limited to DM 2,000 a trip for the total cost of the trip (including airfare). However, there is no limit on payments for travel made before departure and effected through the commercial banks. Also, there is no limit on the frequency of trips in any period. Special authorization is required for larger amounts. Payments abroad for medical care are on the priority list but require documentation from the Ministry of Health and from the Ministry of Finance. The importation of other services by individuals requires approval by the commercial banks, in consultation with the National Bank of Bosnia and Herzegovina.

Payments of pensions from Germany resumed in December 1995 following an agreement in which the National Bank of Bosnia and Herzegovina provides documentation to Germany that the pensions have been paid by the commercial banks under its jurisdiction.

In the Republika Srpska, the purchase of foreign exchange for business-related services is unrestricted upon provision of the appropriate documentation to the commercial banks. The purchase of foreign exchange for individual travel abroad is limited to DM 1,000 a trip for the total cost of the trip (including airfare). There is no limit on the number of trips, but special authorization is required for larger amounts. Payments abroad for medical care require documentation from the Ministry of Health and a pro forma invoice from the service provider. The purchase of foreign exchange by individuals for the importation of other services requires approval from the commercial banks, in consultation with the National Bank of Republika Srpska.

Pension receipts from Germany have fallen to low levels as a result of sanctions and emigration.

Capital

There are no restrictions on direct foreign investments in the Federation, provided all other regulations in force are complied with. Full repatriation of after-tax profits and capital are permitted. Foreign investors are exempt from taxation of initial imports and of raw materials imported in the first year of operation. Loans from abroad involving a government guarantee must be approved by Parliament on the advice of the National Bank of Bosnia and Herzegovina and the Ministry of Finance. Neither of these institutions has been delegated the authority to contract or guarantee loans, but the National Bank of Bosnia and Herzegovina can borrow abroad for up to one year. A special law would be required for each state loan or guarantee.

Direct and portfolio investments abroad by Bosnian-majority area residents requires permission from the National Bank of Bosnia and Herzegovina.

The Republika Srpska also imposes no restrictions on direct investment from abroad and allows full repatriation of after-tax profits and capital after all domestic financial claims have been settled. Loans from abroad involving a guarantee from commercial banks require permission from the National Bank of Republika Srpska to ensure that the debt-servicing requirements are consistent with the future availability of foreign exchange.

A special license is required from the Government, based on advice from the National Bank of Republika Srpska and the Ministry of Foreign Trade, in order for Republika Srpska residents to undertake direct and portfolio investment abroad. Capital transfers abroad of inheritances and pensions are permitted, subject to documentation requirements. Other capital transfers abroad require special permission from the National Bank of Republika Srpska.

Botswana

(Position as of December 31, 1995)

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, 1995, the closing middle rate for the U.S. dollar was P 2.8217 per $1; on the same date, the rate for the SDR was P 4.1876 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. At the end of 1995, the scheme applied to 16 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 up to six months.

Botswana accepted the obligations of Article VIII, Sections 2, 3, and 4 of the Fund Articles of Agreement on November 17, 1995.

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 central bank.

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.

Resident and Nonresident Accounts

Companies operating in Botswana are permitted to open foreign currency accounts with commercial banks in deutsche mark, pounds sterling, South African rand, and U.S. dollars.

Commercial banks are authorized to open foreign currency accounts for permanent and temporary residents and nonresidents. The accounts are to facilitate foreign receipts and payments for approved transactions, without having to convert foreign currency receipts into pula and vice versa, and to protect against changes in exchange rates. The restriction on specified foreign currencies was removed, and commercial banks were allowed to open foreign currency accounts in any currency at their discretion.

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 5,000 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 central bank.

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 central bank 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 is delegated to commercial banks; any remittances in excess of those limits must be referred to the central bank 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. On January 1, 1995, annual consolidated personal foreign payment allowances (including for travel, subscriptions, and other payments) were set at the equivalent of P 100,000 per calendar year for an adult and P 50,000 for a child under the age of 18 years. On the same date, a consolidated business allowance to cover business travel, royalties, franchises, management fees, etc., was set at P 1 million per 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 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.

A temporary resident employed on a contractual basis may remit abroad annually, without reference to the central bank, 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 or 65 percent of eligible earnings, whichever is greater. 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/or foreign currency in amounts of P 5,000 a trip, 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.

The central bank 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 notice to the central bank of the intention to repatriate funds. Businesses and individuals may invest abroad up to P 1 million and P 100,000, respectively. However, companies must be commercially active for at least two years and must be registered with the Department of Taxes. 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 central bank 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 central bank. Remittances of interim dividends are permitted only for companies listed in the Botswana Stock Exchange. Inward portfolio investment is also permitted in shares issued by companies quoted on the Botswana Stock Exchange, 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 nonresident direct investors.

Nonresident-controlled companies may also invest with domestic currency funds in any securities issued by the central bank. Nonresident-controlled companies (including branches of foreign companies) are permitted to borrow locally from all sources up to P 500,000; borrowing in excess of that amount may be approved by the central bank, 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.

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 central bank. 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 central bank.

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.

Changes During 1995

Exchange Arrangement

November 17. Botswana accepted the obligations of Article VIII, Sections 2, 3, and 4 of the Fund Articles of Agreement.

Resident and Nonresident Accounts

January 1. Companies operating in Botswana were permitted to open foreign currency accounts with commercial banks in deutsche mark, pounds sterling, South African rand, and U.S. dollars.

July 31. Commercial banks were authorized to open foreign currency accounts for individual permanent and temporary residents, nonresident individuals, and incorporated entities. The accounts are to facilitate foreign receipts and payments for approved transactions, without having to convert foreign currency receipts into pula and vice versa, and to protect against changes in exchange rates. The restriction on specified foreign currencies was removed and commercial banks were allowed to open foreign currency accounts in any currency at their discretion.

Payments for and Proceeds from Invisibles

January 1. An annual consolidated allowance to meet personal foreign payments—travel, subscriptions, and other payments—was set at an indicative limit of P 100,000 an adult and P 50,000 a child under 18 years of age.

January 1. An annual consolidated business allowance was set at an indicative limit of P 1 million to cover business travel, royalties, management fees, and other payments (excluding imports).

Capital

January 1. Individuals and businesses were permitted to make direct or portfolio investments abroad up to P 100,000 and P 1 million, respectively. However, a qualifying company must have been operational for the previous two years and registered with the Department of Taxes.

Brazil

(Position as of February 29, 1996)

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 of Brazil has set an adjustable band for the external value of the real of R$0.97–R$1.06 per U.S. dollar as of January 30, 1996. The previous band of R$0.91–R$0.99 per U.S. dollar was established on June 22, 1995. 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, 1995, the buying and selling rates in the interbank exchange market were R$0.973 and R$0.977, respectively, per US$1. 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 up to 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 statements 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$5 million in the free exchange market. The limit for the long position in the exchange market of floating rates is fixed at US$1 million. 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 countries are made in “agreement dollars” through the relevant agreement account. A bilateral account is maintained with Hungary, but settlements are made in third-country currencies every 90 days, and interest rates payable on balances are based on those in the international capital market. 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.

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 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 (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).1

Most imports require prior approval from the DTIC, which is usually given promptly to registered importers of nonprohibited items.2 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, except for imports of capital goods. 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 at maturities over 360 days 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 January 11, 1995, the time to settle anticipatory settlements for critical imports was set at 60 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 exchange 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.

Payments for Invisibles

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.

There is no limit on the purchase of foreign exchange for Brazilian residents traveling abroad. Remittances abroad of income from foreign direct investments and reinvestment 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 No. 4131 of September 1962. Remittances are allowed only when the foreign capital concerned, including reinvestment, 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. 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.

Profit remittances are exempt from withholding for income tax purposes according to the Law No. 9249 of December 26, 1995.

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.

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.

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 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 percent of the amount exchanged into domestic currency during the visit.

Exports and Export Proceeds

Exports requiring the prior approval of the SECEX 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. Exports of hides of wild animals in any form are prohibited.

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 two subsystems; the exports subsystem 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.

On January 11, 1995, advances on foreign exchange contracts were reinstated for operations with terms exceeding 360 days. On January 11, 1995, the time for anticipatory settlements was extended from 90 days to 180 days for exporters exporting more than US$10 million per year and from 150 days to 180 days for small exporters. For products considered essential for the supply of the domestic market (fuel, mineral oils, chemical products, plastics, wood pastes, paper, cotton, linen and synthetic thread, flat steel, and aluminum) the maximum period was extended from 30 days to 60 days; the period was extended to 180 days in November 1995.

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. 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 with rates that range from 5 percent for loans with maturities under three years to zero percent for loans with maturities over six years. 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 two classes of fixed-income funds: the Fixed-Income Funds that are subject to a transaction tax of 7 percent and the Privatization Funds that are subject to a transaction tax of 5 percent. 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 investment or loan 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.

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. Annex I is for investment companies that 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. Through Annex II, or investment funds, natural persons and companies, and residents domiciled or headquartered abroad, as well as funds or other foreign collective investment entities, can invest in a securities portfolio established as an open fund without legal representation. Annex III is for diversified stock portfolios managed by an investment bank, a brokerage firm, or a securities and exchange dealer, headquartered in Brazil and owned jointly with a foreign institution. Annex IV is for funds and other collective investment entities established abroad including pension funds, portfolios belonging to financial institutions and insurance companies, and mutual investment funds that may acquire 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. Through Annex V, or depository receipts, 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. 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 earning resulting from variable income assets are subject to a 10 percent income tax and earning resulting from fixed-income assets are subject to a 15 percent income tax. Invested capital may be repatriated freely. 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 and SECEX. 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.

Reinvestment is 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 Económico e Social may be authorized to take up foreign currency credits abroad for domestic relending 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. Financial institutions of the National System of Rural Credit are allowed to contract foreign resources with a minimum maturity of 180 days for the financing in the agricultural sector (Resolution No. 2148). Financial institutions are allowed to contract resources with a minimum maturity of 720 days for the financing of the construction and acquisition of new real estate ventures (Resolution No. 2170), 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, except for relending operations to the agricultural sector, which may have a minimum term of 6 months. Exemptions to amount and maturity requirements are established in Resolutions Nos. 2148 and 2170, as mentioned above. There are 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. 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 relent to the same or to a second borrower.

Remittances of proceeds from sales of property and inheritance are permitted

Gold

There are two separate markets for gold transactions: the financial market, where over 50 percent of transactions occur and which is regulated by the Central Bank; and commercial markets. The first domestic negotiation of newly mined gold on the financial 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 1995

Exchange Arrangement

March 6. A new exchange rate system based on bands was introduced. The band was set at R$0.86–R$0.90 per U.S. dollar until May 2, when it would be changed to R$0.86–R$0.98 per U.S. dollar.

March 10. The exchange rate band was changed to R$0.88–R$0.93 per U.S. dollar for an undetermined period of time. The Central Bank specified that it would intervene in the foreign exchange market using electronic auctions.

June 22. The exchange rate band was changed to R$0.91–R$0.99 per U.S. dollar.

Imports and Import Payments

April 20. The anticipated payment for imports was limited to 20 percent of the value of the merchandise, except in some specific cases (Circular No. 2561).

Exports and Export Proceeds

January 11. The reserve requirement of 15 percent on Advances for Export Contracts (ACC) was eliminated (Circular No. 2534).

January 11. The anticipated payment for export operations was reinstated with a minimum term of 360 days (Circular No. 2538).

January 11. The maximum period for ACCs was lengthened from 90 days to 180 days for large exporters and from 150 days to 180 days for small exporters (Circular No. 2539). For products considered essential to internal supply, the maximum period was increased from 30 days to 60 days.

April 27. Anticipated payments for exports by foreign individuals, corporations, or financial institutions were authorized.

November 22. The period for the contracting of foreign exchange prior to shipment of merchandise considered essential for domestic supply was increased from 60 days to 180 days (Circular No. 2639).

December 20. Exports of goods and services may be financed with the resources of the Export Financing Program (Proex) through a discount of export credit securities and if there is a financing contract between the Brazilian government and foreign public sector entities (Resolution No. 2224). The channeling of Proex resources into establishing of any credit lines for foreign public or private entities was prohibited.

Capital

March 9. The minimum period for the renewal and extension of foreign credit operations through floating rate notes, fixed rate notes, floating rate certificates of deposits, fixed rate certificates of deposits, private and public bonds, notes, and commercial paper was lowered from 36 months to 6 months (Circulars Nos. 2547 and 2559, and Carta-Circular No. 2533).

March 9. The limits of the long position of banks and dealers in the fluctuating foreign exchange market were lowered from US$10 million to US$1 million, and from US$1 million to US$0.5 million, respectively (Circular No. 2548). The long position of banks in the commercial foreign exchange market was lowered from US$50 million to US$5 million (Circular No. 2549).

March 9. The IOF was reduced from 7 percent to zero percent on foreign loans, from 9 percent to 5 percent on investments in fixed-income funds, and from 1 percent to zero percent on investment in stocks (Portaria No. 95 of the Ministry of Finance).

March 9. The minimum average term for contracting financial loans was lowered from 36 months to 24 months (Circular No. 2546).

March 9. The minimum term for relending operations related to Resolution No. 63 was lowered from 540 days to 90 days (Circular No. 2545).

March 9. The permission granted for anticipated payment of financial loans and import financing was revoked (Resolution No. 2147).

March 16. Financial institutions of the National System of Rural Credit were allowed to contract foreign resources with a minimum maturity of 180 days for the financing of investment, marketing, and other expenses in the agricultural sector (Resolutions Nos. 2148 and 2151). The resources were exempted from the minimum period of three years for credit operations and fixed at 180 days, and from the financial taxation of 5 percent.

April 27. The limits on the short position of banks in the fluctuating and commercial foreign exchange markets were increased by 50 percent (Circulars Nos. 2565 and 2566).

June 30. Financial institutions were allowed to contract resources with a minimum maturity of 720 days for the financing of the construction and acquisition of new real estate ventures (Resolution No. 2170).

August 11. The tax on financial transactions (IOF) for interbank operations in the floating foreign exchange markets among financial institutions abroad and in Brazil was extended (Decree No. 1591). The IOF rate for these operations was set at 7 percent, and the IOF rates were raised for financial loans from zero to 5 percent, and for investments in fixed income funds, from 5 percent to 7 percent (Directive No. 202 of the Ministry of Finance).

August 11. Foreign investors were prohibited from channeling resources into operations in the futures and option markets.

August 15. The IOF rate for foreign resources for the agricultural sector was set at zero.

September 15. Differentiated IOF rates for financial loans with different maturities were established (Directive No. 228 of the Ministry of Finance).

September 28. The conversion of federal public sector entities’ foreign debt into investments, in the framework of the National Privatization Program, was regulated. The initial discount of 25 percent was reduced to zero (Resolution No. 2203 and Circular No. 2623).

October 12. Resources originating from the liquidation of ACCs must be used to pay the credit lines provided by foreign financial institutions for such purposes to financial institutions in Brazil that came under bankruptcy, extrajudicial liquidation, or intervention (Provisional Measure No. 1113).

Changes During 1996

Exchange Arrangement

January 30. The exchange rate band was set at R$0.97–R$1.06 per US$1.

Capital

January 1. Profits and dividends remitted abroad were exempted from income tax, while the tax rate applied to profits on direct investments were reduced from 25 percent to 15 percent. The maximum rate applicable to interests remitted abroad was also reduced from 25 percent to 15 percent. Profits from investments listed in Annexes I to IV of the Resolution No. 1289/87 were subject to a 10 percent income tax if they originated in variable income assets and to a 15 percent tax if they originated in fixed-income assets.

February 8. The resources obtained abroad under the terms of Resolution No. 63 may be invested in interbank on-lending operations and leasing operations, and in acquiring credit rights tied to exchange rate floating (Circular No. 2660).

February 8. The minimum average term for contracting, renewing, or extending foreign loans was increased from 24 months to 36 months, except for loans under the Resolution No. 2148 (Rural Credit System, minimum of 180 days), the Resolution No. 2170 (Real Estate, minimum of 720 days), and for loans carried out by financial institutions under the Special Temporary Administration (RAET, minimum of 24 months) (Circular No. 2661).

February 8. The IOF rate for foreign investments in Privatization Funds was extended (Decree No. 1815). The IOF rate for these investments was set at 5 percent (Directive No. 28).

February 8. The IOF rate for foreign investments in Real Estate Investment Funds and Mutual Investment Funds in Emergent Enterprises, over sale, redemption, or transferring value, for applications in quotas of the fund, was set at 10 percent when the fund has not been constituted or has not begun to work regularly, 5 percent when the fund has been constituted and is working regularly, and up to one year after its constitution, and zero after one year of the fund’s constitution (Decree No. 1814).

February 8. Foreign investors cited in Appendices I–IV to Resolution No. 1289 were prohibited from acquiring Agrarian Debt Securities (TDAO), National Development Fund Obligations (OFND), and debentures issued by Siderurgia Brasileira S.A. (SIDERBRAS) (Resolution No. 2246).

February 8. Foreign investors were allowed to buy quotas of Real Estate Investment Funds, constituted with authorization from the Securities and Exchange Commission—CVM (Resolution No. 2248).

February 8. Foreign investors were allowed to buy quotas of Mutual Investment Funds in Emergent Enterprises constituted with authorization from the Securities and Exchange Commission—CVM (Resolution No. 2247).

March 1. The resources obtained abroad under the terms of Resolution No. 63 may be invested in national currency deposits in the Central Bank, without remuneration (Circular No. 2670).

April 18. The operations carried out by the states, Federal District, the municipalities, and their respective semi-autonomous agencies were restricted according to several criteria (Resolution No. 2271).

Brunei Darussalam1

(Position as of December 31, 1995)

Exchange Arrangement

The currency of Brunei Darussalam is the Brunei Dollar (Ringgit in Malaysia). It is issued by the Brunei Currency Board, only against payment in Singapore dollars and at par. Under the terms of a 1967 Currency Interchangeability Agreement between the Brunei Currency Board and the Board of Commissioners of Currency of Singapore, the Singapore dollar is customary tender in Brunei Darussalam and the Brunei dollar is customary tender in Singapore. The Brunei Currency Board and Board of Commissioners of Currency of Singapore have undertaken to accept each other’s currency and exchange it, at par and without charge, into their own, and have instructed their banks to do the same with their customers. Any excess in currency is regularly repatriated with the issuing institution bearing the costs, and settlements are made in the other country’s currency. The Brunei Currency Board only deals in Singapore dollars and does not quote rates for other currencies. Banks, however, are free to deal in all currencies, with no restrictions on amount, maturity, or type of transaction.

The Brunei Association of Banks fixes daily buying and selling rates for telegraphic transfers and sight drafts in terms of 17 other currencies on the basis of these currencies’ interbank quotations in relation to the Singapore dollar.2 Banks in Brunei Darussalam must apply these rates for transactions with the general public in amounts up to B$100,000. Exchange rates for amounts exceeding B$100,000 are set competitively by each bank on the basis of the current interbank quotations for the Singapore dollar in the Singapore market.

There is no forward market for foreign exchange in Brunei Darussalam. However, as a result of the Currency Interchangeability Agreement with Singapore, foreign exchange risk can be hedged in terms of Singapore dollars by resorting to facilities available in that country, including foreign currency futures and options traded on the Singapore International Monetary Exchange (SIMEX), over-the-counter forward transactions arranged by banks in Singapore, and short-term foreign exchange swap market operated among the banks in the Singapore money market.

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

Brunei Darussalam accepted the obligations of Article VIII, Sections 2, 3, and 4 of the Fund Agreement on October 10, 1995.

Administration of Control

There are no formal exchange controls, but under the 1956 Exchange Control Act (as amended most recently in 1984), the Ministry of Finance retains responsibility for exchange control matters. The Ministry of Finance also licenses and supervises commercial banks, including foreign-owned banks incorporated in Brunei Darussalam and branches of foreign banks operating in Brunei Darussalam.

The Economic Development Board in the Ministry of Finance is responsible for elaborating and administering programs to encourage foreign investment. It may issue certificates granting tax relief for certain approved projects and may enter into joint-venture agreements with foreign investors. It may also purchase, hold, and lease land for industrial purposes. A one-stop agency in the Ministry of Industry and Primary Resources facilitates inward investment. The Registrar of Companies controls the functioning within Brunei Darussalam of enterprises incorporated locally or registered as the branch of a foreign limited company. The Tourism Promotion Committee in the Ministry of Industry and Primary Resources works to encourage tourism.

Prescription of Currency

There are no prescription of currency requirements. Settlements with residents of Singapore and the Eastern Malaysian states of Sabah and Sarawak are normally effected in the currencies of the countries involved or in third currencies, as agreed between the parties concerned.

Resident and Nonresident Accounts

There is no distinction between accounts of residents and nonresidents of Brunei Darussalam, and accounts may be maintained in both domestic and foreign currencies. Debits and credits to all accounts may be made freely.

Imports and Import Payments

There are no restrictions on the origin of imports. A few imports are banned or restricted for nature conservation, health, safety, security, or religious reasons. Restricted items may be imported only with the permission of the relevant ministry. Except for cigarettes and alcoholic beverages, all imports are subject to ad valorem tariff rates ranging from zero to 200 percent. Some 70 percent of items (including basic foodstuffs, and construction and educational materials) are zero rated. Rates of 5 percent, 15 percent, and 20 percent apply to most other items. Fireworks are subject to a 30 percent duty while automobiles are subject to duties of 40 percent to 200 percent, depending on engine size. Brunei Darussalam is a party to the Agreement on the Common Effective Preferential Tariff (CEPT) Scheme for the ASEAN Free Trade Area (AFTA). The CEPT Scheme came into operation in Brunei Darussalam on June 1, 1994, and under its terms, Brunei Darussalam will lower its tariff rates on imports from other ASEAN countries to zero by 2003, with the exception of about 120 tariff lines that are permanently excluded under the terms of the CEPT Scheme.

Payments for Invisibles

All payments for invisibles may be made freely. There are no restrictions on the amount of foreign exchange that may be used for travel abroad. Remittances to nonresidents of dividends, interest, and profits may be made freely, but interest payments to nonresidents are subject to a 20 percent withholding tax. Interest on loans exceeding B$200,000 that are used for the purchase of productive equipment (so-called approved foreign loans) may be exempt from the tax, subject to submission of the loan documentation. Resident and nonresident travelers may take out any amount in foreign or Brunei banknotes.

Exports and Export Proceeds

There are no restrictions on the destination of exports. Certain exports originating in Brunei Darussalam—for example, textiles and textile products—are subject to quantitative restrictions and other nontariff barriers in the importing countries, particularly Canada, Norway, the United States, and the members of the European Union. The Muara Export Zone, a free trade area, serves as an entry point for goods destined for the East ASEAN Growth Area (EAGA).

Export licenses are required for alcoholic beverages, cigarettes, diesel, gasoline, kerosene, rice, salt, and sugar. There are no export taxes.

Export proceeds need not be repatriated or surrendered.

Proceeds from Invisibles

Proceeds from invisibles need not be repatriated or surrendered and may be disposed of freely. Resident and nonresident travelers may bring in any amount in foreign banknotes and coins, including Brunei gold coins.

Capital

There are no restrictions on inward or outward capital transfers. Nonresidents are free to repatriate capital or profits or to borrow from banks in Brunei Darussalam. Banks may accept deposits and make loans in foreign currency.

There are no sectoral restrictions on inward foreign direct investment. Activities relating to national food security and those based on local resources require some degree of local participation. Industries producing for the local market that are not related to national food security and industries that solely export may be fully foreign owned. Joint ventures are particularly encouraged in export-oriented industries and activities supporting such industries. At least one-half of the directors of a company must be either Brunei citizens or residents of Brunei Darussalam.

The Industrial Incentives Act provides exemption from income tax and import duties to companies granted pioneer status, as well as established companies planning expansion. There is a double taxation agreement with the United Kingdom. Under the terms of the agreement, tax credits are available only for resident companies.3

Only Brunei citizens are allowed to own land. However, foreign investors may lease land on a long-term basis, including on-sites set aside for industry, agriculture, agroforestry, and aquaculture.

Gold

Only banks licensed to operate in Brunei Darusssalam and gold dealers and jewelers specifically authorized by the Ministry of Finance may buy and sell gold bars. Gold bars are not subject to import duty, but a 10 percent import duty is levied on the importation of gold jewelry.

Bulgaria

(Position as of December 31, 1995)

Exchange Arrangement

The currency of Bulgaria is the Lev (plural Leva). 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, 1995, the exchange rate quoted by the Bulgarian National Bank in terms of the U.S. dollar was leva 70.7 per $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 transactions. Another 13 banks are authorized to open bank accounts for settlement of payments abroad.

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 generally are settled through clearing accounts. Balances in these accounts (annual and multiyear) generally are 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; the removal of this quota is under consideration. 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. The import surcharge (which was 3 percent when introduced in August 1993, then reduced to 2 percent on January 1, 1994, and then to 1 percent on January 1, 1995) was eliminated at the end of 1995. The surcharge was 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. The only export quotas still in place relate to certain wheat exports and metal scrap. Wheat quotas were introduced in 1994 in conjunction with a narrowing of the coverage of the temporary export bans, which currently include only certain types of grains and metal scrap.

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.

Bulgaria has resumed its efforts to accede to the World Trade Organization (WTO) (it applied for accession to the GATT in 1986). Toward ensuring compatibility of its trade regime with the requirements of WTO and its member countries, Bulgaria has taken measures that include the passage of legislation on intellectual property and the granting of tariff concessions.

Payments for and Proceeds from Invisibles

Foreign exchange allowances for business travel are granted without restriction. Allowances for tourist travel and certain other invisible payments 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 1995

Imports and Exports

January 1. The import surcharge was reduced from 2 percent to 1 percent. The exportation of the following products was banned: goods received as humanitarian aid, blood products, natural mud for medical purposes, and unmanufactured and nonfermented tobacco. Temporary export bans on the following products were established: barley for the brewing industry (until October 30, 1995); maize (until October 30, 1995); ferrous waste and scrap; nonferrous waste and scrap; ingots and billets of copper; potassium iodate, potassium iodide, and iodized salt.

December 1. The import surcharge was eliminated.

Burkina Faso

(Position as of June 30, 1996)

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 Economic and Monetary Union (WAEMU), 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, 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.

Burkina Faso accepted the obligations of Article VIII, Sections 2, 3, and 4 of the Fund Agreement on June 1, 1996.

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, or 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. Settlements with a country outside the Operations Account area must be formally approved 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 currencies 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 the currencies of those countries, or through foreign accounts in francs in French francs or other currencies of the Operations Account area.

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 other countries for commercial purposes under any customs regulations may be made freely; prior acquisition of an official import document is necessary for imports exceeding a value of CFAF 250,000. A special import license (authorization spéciale d’importation) is required for imports of sugar, rice, explosives, arms, munitions, and military equipment.

A technical import visa (certificat 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. Imports, with a few exceptions, are subject to customs duties of 5 percent; the rates on cereals range from 4 percent to 26 percent, plus 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, wheat flour from countries other than those of the West African Economic Community (WAEC), 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 that are 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 WAEMU 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 WAEMU, 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 such means of payment 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 held 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 (authorization spéciale d’exportation). 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 WAEMU, 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 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 merchant 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 has a monopoly on exports of gold from Burkina Faso.

Changes During 1995

No significant changes occurred in the exchange and trade system.

Changes During 1996

Exchange Arrangement

June 1. Burkina Faso accepted the obligations of Article VIII, Sections 2, 3, and 4 of the Fund Agreement.

Burundi

(Position as of December 31, 1995)

Exchange Arrangement

The currency of Burundi is the Burundi Franc, the external value of which is pegged to a basket of currencies that reflects the pattern of Burundi’s international trade. On December 31, 1995, the official buying and selling rates for the U.S. dollar were FBu 275.94 and FBu 279.9, respectively, per $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 Bank of Burundi. 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 Bank of Burundi. Authority to carry out some transactions is delegated to six authorized banks.

Prescription of Currency

Settlements relating to trade with Rwanda and Zaire in products specified in the commercial agreements between these countries are effected through SDR accounts maintained with the Bank of Burundi 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 Bank of Burundi. 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 Bank of Burundi. These accounts may bear interest freely and must not be overdrawn.

Certain nonresidents whose main activities are outside of 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 Bank of Burundi.

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 Bank of Burundi. 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 is permitted (after payment of taxes and a deduction of 20 percent for maintenance expenses).

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; there is no limit on the number of trips a person may make. Limits on foreign exchange allowances for business or other travel may be exceeded on a bona fide basis. All travelers may take out up to FBu 5,000 in Burundi banknotes.

Exports and Export Proceeds

All exports are free. 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, as well as a maximum of 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 Bank of Burundi and in the case of nationals of Rwanda and Zaire 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. 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 Bank of Burundi. Gold exports are authorized jointly by the mining and customs departments.

Changes During 1995

Payments for Invisibles

December 26. The limit on transfers of rental income was removed.

December 28. Limits on foreign exchange allowances for travel abroad were liberalized. In addition, these limits may be exceeded in bona fide cases.

Cambodia

(Position as of December 31, 1995)

Exchange Arrangement

The currency of Cambodia is the Cambodian Riel. The exchange rate system comprises two rates: the official rate and the market rate. Since September 1994, 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 less than 1 percent. The official exchange rate applies mainly to external transactions conducted by the Government and state-owned enterprises. On December 31, 1995, the official exchange rate for the U.S. dollar was CR 2526 per $1, and the market rate was CR 2560 per $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 and sell foreign exchange 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 during 1996.

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 obligations but must be converted into domestic currency. In practice, however, all transactions can be settled in foreign currency.

Imports and Import Payments

Trade policy is formulated by the Ministry of Commerce in consultation with the Ministry of Economy and 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.

Effective September 1, 1995, preshipment import inspection for certain goods is required to improve customs duty collection. The coverage of the requirements will be gradually widened.

An excise tax of 10 percent applies to selected imports.

Payments for Invisibles

Payments for invisibles related to trade are not restricted but are regulated by the Investment Law of 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.

Under the 1991 law, an exchange allowance for travel in the equivalent 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; amounts in excess of this limit must be approved by the National Bank. In practice, however, there are no limits on the use of foreign exchange for travel abroad. 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. Exports licenses are required for sawed timber logs and rice. 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 resident commercial banks.

An excise tax of 10 percent of the estimated market value applies to exports of timber and other selected exports. An ad-valorem tax of 10 percent applies on exports of rubber.

Proceeds from Invisibles

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 by public sector agencies 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 under the Investment Law. The Investment Law eliminated foreign exchange restrictions applying to investors in Cambodia.

Changes During 1995

Exchange Arrangement

March 25. New banknotes were issued, with denominations ranging up to CR 100,000.

Imports and Import Payments

September 1. Certain imports were subject to pre-shipment inspection.

Cameroon

(Position as of June 30, 1996)

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 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 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 France (and its overseas departments and territories) and Monaco; and 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, the 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.

Cameroon accepted the obligations of Article VIII, Sections 2,3, and 4 of the Fund Agreement on June 1, 1996.

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.

Prescription of Currency

As Cameroon has an Operations Account with the French Treasury, 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 its zone of issue, BEAC banknotes received by the foreign correspondents of authorized banks and mailed to the BEAC agency in Yaoundé 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 of maize meal 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 in transit. Transactions involving goods in transit must be domiciled with a foreign bank. Advance import deposits are permitted if underlying contracts stipulate them.

Since January 1994, import tariff rates range from 5 percent to 30 percent and duties on products imported from the member countries of the Central African Customs and Economic Union (UDEAC) are 20 percent of the corresponding rate applicable to imports from other countries. In September 1994, a 30 percent temporary import surcharge was introduced on maize meal, and in November 1994, a 20 percent temporary import surcharge was introduced on trailers, plastic bags, iron reinforcing bars, and cement. In July 1995, these import surcharges were phased out for trailers, iron reinforcing bars, and plastic bags. They were maintained on maize meal and were lowered on cement to 10 percent from 20 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 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. However, these regulations are administered liberally and bona fide requests for allowances in excess of these limits are normally granted. 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.

Under the Investment Code of November 1990, 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 twelve 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 1995

Imports and Import Payments

July 1. Import surcharges introduced in late 1994 were eliminated on iron reinforcing bars, plastic bags, and trailers; the surcharge on maize meal was maintained at the rate of 30 percent, and the rate on cement was lowered to 10 percent from 20 percent.

July 1. The import of crude oil was liberalized.

Changes During 1996

Exchange Arrangement

June 1. Cameroon accepted the obligations of Article VIII, Sections 2, 3, and 4 of the Fund Agreement.

Canada

(Position as of December 31, 1995)

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 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, 1995 was Can$1.3640 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.

Canada accepted the obligations of Article VIII, Sections 2, 3, and 4 of the Fund Agreement on March 25, 1952.

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 1995, permits were required for the importation of controlled substances classified as dangerous drugs and certain military armaments. 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. Commercial imports of 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. 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. In accordance with the provisions of the Uruguay Round Agreement on textiles and clothing, Canada’s system of import controls on textiles and clothing is being liberalized in stages over a ten-year period beginning January 1, 1995. As a result of the commitments made under the Uruguay Round Agreement, Canada replaced agricultural import restrictions and prohibitions with tariff rate quotas for most products on January 1, 1995, and for certain dairy and grain products on August 1, 1995. Under the new system, a quantity of imports (the current or minimum access commitment called for in the Uruguay Round negotiating modalities, or the level of access required by the provisions of the Canada-U.S. Free Trade Agreement) enters at a low tariff, while additional imports are subject to a higher tariff rate.

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 for supply reasons and for purposes of promoting further processing in Canada (such as logs, roe herring, and (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, Angola and the Libyan Arab Jamahiriya are on the Area Control List.

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 14, 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. As a result of the NAFTA, only direct acquisitions of businesses with assets exceeding Can$168 million are subject to review beginning in 1996. Indirect acquisitions are no longer subject to review. These provisions were multilateralized as part of Canada’s implementation of the Uruguay Round results. Investments subject to review are required only to pass a test proving that they will yield a net benefit to Canada. In addition, acquisitions below these threshholds and investments to establish new businesses in culturally sensitive sectors may be reviewed. 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 1995

Administration of Control

June 7. Formal negotiations on Chile’s accession to NAFTA were initiated in Toronto. (Pending passage by the U.S. Congress of fast-track negotiating authority, Canada and Chile began negotiations on an interim bilateral trade accord in January 1996, consistent with the ultimate aim of NAFTA accession.)

July 24. Under the auspices of the World Trade Organization (WTO), Canada agreed to be part of the interim agreement on financial services reached on July 26, 1995. Canada is a full participant in the OECD-based negotiations of a Multilateral Agreement on Investment (MAI), formally launched in September 1995.

Imports and Import Payments

January 1. Most agricultural import restrictions were replaced with tariff rate quotas.

February 9. Final antidumping duties were imposed on golden delicious and red delicious apples.

June 13. A number of tariff changes and related Customs Tariff amendments were introduced and subsequently approved as part of Bill C-102 on December 5, 1995. These included reductions in tariffs on a wide range of manufacturing inputs (classified under some 1,500 tariff lines). Tourist exemption levels were increased.

July 5. Countervailing duties were revoked on refill paper.

August 1. Remaining agricultural import restrictions were replaced with tariff rate quotas.

October 20. Final antidumping duties were imposed on caps, lids, and jars.

November 6. Final antidumping and/or countervailing duties were imposed on imports of refined sugar.

December 21. Further reductions in preferential rates under Canada’s generalized system of preferences scheme, effective January 1, 1996, were announced.

Cape Verde

(Position as of December 31, 1995)

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 sources of emigrant remittances. The composition of the basket is revised annually; weights are determined using a formula giving a two-thirds weight to imports and a one-third weight to remittances. The exchange rate of the Cape Verde escudo is expressed in terms of the U.S. dollar, the intervention currency, and fixed daily on the basis of quotations for the U.S. dollar and the other currencies included in the basket. On December 31, 1995, the buying and selling rates for the U.S. dollar were C.V. Esc 74.46 and C.V. Esc 77.86, respectively, per $1.

Most dealings in foreign exchange with the general public are conducted by the two commercial banks, Banco Comercial do Atlantico (BCA) and Caija Económica de Cabo Verde (CECV), which are allowed net foreign exchange positions of up to the equivalent of $1.5 million and $1 million, respectively.1 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 Bank of Cape Verde licensing.

Arrears are maintained with respect to external payments.

There are payments restrictions for security reasons in effect.

Prescription of Currency

Export proceeds and proceeds from invisibles must be repatriated in convertible currencies. Cape Verde maintains inoperative bilateral payments agreements with Angola and São Tomé and Principe, under which Cape Verde is a net creditor.

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, and holders of savings-credit deposit accounts are allowed to benefit from loans on special terms for financing small-scale projects. Interest on all three types of accounts may be freely remitted abroad.

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 Bank of Cape Verde 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 Bank of Cape Verde. 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

Any persons 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 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 Bank of Cape Verde. 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

No licenses are required for exports. Proceeds from exports and invisibles must be sold to the commercial banks. Export proceeds must be repatriated within three months, but this period may be extended. Law 92/IV/93, concerning export incentives, and Law Decree 2/94, concerning capital operations, considerably reduce the effectiveness of this requirement.

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 Bank of Cape Verde, but legally imported capital, including foreign direct investment, may be re-exported without limitation. The exportation of resident-owned capital is not normally permitted.

Gold

Imports, exports, or re-exports of gold in either coins or bars require prior licensing by the Bank of Cape Verde.

Changes During 1995

No significant changes occurred in the exchange and trade system.

Central African Republic

(Position as of June 30, 1996)

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 Bank of Central African States (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 those relating to gold, the exchange control measures of the Central African Republic do not apply to (1) France (and its overseas departments and territories) and Monaco; and (2) all other countries whose bank of issue is linked with the French Treasury by an Operations Account (Benin, Burkina Faso, Cameroon, Chad, Comoros, the 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.

The Central African Republic accepted the obligations of Article VIII, Sections 2, 3, and 4 of the Fund Agreement on June 1, 1996.

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 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 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 these banknotes circulating outside the territories of the CFA franc zone, these 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

Imports from all countries are free of 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. However, these regulations are administered liberally and bona fide requests for allowances in excess of these limits are normally 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 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 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 1995

No significant changes occurred in the exchange and trade system.

Changes During 1996

Exchange Arrangement

June 1. The Central African Republic accepted the obligations of Article VIII, Sections 2, 3, and 4 of the Fund Agreement.

Chad

(Position as of June 30, 1996)

Exchange Arrangement

The currency of Chad is the CFA Franc issued by the Bank of Central African States (BEAC),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. All transfers and exchange operations are subject to a commission levied by the Treasury. The commission rate amounts to 0.25 percent in the franc zone and 0.5 percent outside the franc zone. There are no taxes or subsidies on the purchase or sale of foreign exchange.

Chad’s exchange control measures, with the exception of those relating to gold, 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.

Chad accepted the obligations of Article VIII, Sections 2, 3, and 4 of the Fund Agreement on June 1, 1996.

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. 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

All import transactions valued at CFAF 100,000 or more and relating to foreign countries must be domiciled with an authorized bank.

A special import authorization by the Ministry of Commerce and Industrial Promotion is required for imports of sulphur and other explosives. The import of sugar is the monopoly of the SONASUT.

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 not exceeding CFAF 500,000 to countries outside the BEAC area by residents; 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 48 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, and bank or postal transfers. For travel to countries outside the franc zone, the exchange allocation depends 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 200,000 a day up to a maximum of CFAF 4 million a trip for 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 business may obtain an exchange allocation equivalent to CFAF 500,000 a day, up to a maximum of CFAF 10 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 up to the equivalent of CFAF 2 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, such 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 200,000, up to a limit of CFAF 4 million. Residents traveling to countries outside the franc zone for medical treatment may obtain an exchange allocation equivalent to CFAF 250,000 a day up to a limit of CFAF 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. However, these regulations are administered liberally and bona fide requests for allowances in excess of these limits are normally granted. 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

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.

Specified exports to certain neighboring countries, including Nigeria and Sudan, may be made through compensation transactions. Exports of cotton are the monopoly of Cotontchad.

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 one month 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 500,000.

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) are free of authorization but 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 1995

Imports and Import Payments

June 29. Import and export licenses were abolished.

October 25. Imports of sulphur and explosives were subject to a special authorization.

Payments for Invisibles

August 21. Authorized banks were required to execute within 48 hours (formerly 24 hours) all duly documented transfer orders.

August 21. The allocation for residents traveling outside the CFA franc zone for tourism was increased to CFAF 200,000 a day from CFAF 100,000, to a maximum of CFAF 4 million a trip a person from CFAF 2 million. The limit for business trips was increased to CFAF 500,000 a day from CFAF 250,000, to a maximum of a CFAF 10 million a trip a person from CFAF 5 million. The allocation for students was increased to CFAF 2 million from CFAF 1 million. The allocation for civil servants and government employees could be the same as others if their mission costs are less than a daily allocation of CFAF 200,000, up to a limit of CFAF 4 million. The allocation for residents traveling outside the CFA franc zone for medical treatment was increased to CFAF 250,000 a day from CFAF 100,000, up to a maximum of CFAF 5 million from CFAF 2.5 million.

Proceeds from Invisibles

August 21. The maximum amount of foreign exchange or other foreign means of payment that nonresidents can take out without declaration at entry was increased to CFAF 500,000 from CFAF 250,000.

Changes During 1996

Exchange Arrangement

June 1. Chad accepted the obligations of Article VIII, Sections 2, 3, and 4 of the Fund Agreement.

Chile

(Position as of April 30, 1996)

Exchange Arrangement

The currency of Chile is the Chilean Peso (Ch$). Its external (reference) value is based on 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, adjusted for an estimate of the appreciation trend of Chile’s exchange rate. 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, 1995, the reference rate was Ch$434.02 per US$1 and the interbank rate was Ch$413.50 per US$1. The official foreign exchange market consists of commercial banks, authorized exchange houses, and other entities licensed by the Central Bank. 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 or to the Central Bank. Foreign exchange may be bought for the repayment of capital or interest abroad in due time if these debts are properly registered at the Central Bank. Pension funds and insurance companies may purchase foreign exchange through the official market to make investments abroad, subject to individual limits on such investments. Mutual funds must purchase foreign exchange for foreign investments through the informal market for foreign exchange.

Chile accepted the obligations of Article VIII, Sections 2, 3, and 4 of the Fund Agreement on July 27, 1977.

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, Malaysia, 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 Importatión) issued by the Central Bank, which must be obtained and processed through the intermediary of a local commercial bank. Payment for visible trade transactions through the official foreign exchange market is not permitted unless an Informe de Importatión 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 Importatión. 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

From April 17, 1996, foreign exchange houses were allowed to sell up to US$15,000, or its equivalent in other foreign currencies, a calendar month, to any person for travel expenses; payments to international organizations; payments for studies abroad; social security payments; payments of real estate rents; subscriptions to magazines; purchase of books and other publications; medical treatment expenses; and other nonspecified expenses upon presentation of a sworn declaration indicating the amount and use of the foreign exchange requested.

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. Foreign exchange proceeds from exports are not subject to a surrender requirement, although export transactions must be reported to the Central Bank. Commercial banks are authorized to purchase all spot foreign exchange proceeds from exporters. Windfall receipts from copper exports of Codelco (the state copper company) must be deposited in a special foreign currency account at the Central Bank, and withdrawals from this account are permitted only under certain circumstances.

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 repatriating 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 borrowing that does not require its approval. All foreign investment is subject to a minimum one-year withholding period. All foreign borrowing, except for credits that are provided directly to Chilean exporters by foreign importers or by foreign suppliers to Chilean importers, and foreign financial investment (including sales of existing equity in Chilean companies by Chilean residents to nonresidents) 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 for promissory notes with the Central Bank that effectively imposes a cost equivalent to the forgone interest. Banks and other financial institutions may reduce this reserve requirement through financial investments in foreign exchange up to the maximum limit of such investments. 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 foreign exchange deposits are also subject to the 30 percent reserve requirement, which is based on the average monthly outstanding balance. Foreign capital may enter Chile under one of the following arrangements, depending on the purpose and type of 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. 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 Chapters XXVI regulations, Chilean enterprises and banks are also authorized to issue ADRs. Since November 1995, the first issue should be for a minimum of US$25 million; the second issue should be for a minimum of US$10 million. The issuing company must be rated by two international rating agencies at least BBB+ in the case of banks and BBB for other companies.

(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. The deadline may be extended up to twelve years for mining and up to eight years for other investments exceeding US$50 million. 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. 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 (up to 20 years for investments in excess of US$50 million). Alternatively, foreign investors 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) Chapter XXVI of the Compendium of Foreign Exchange Regulations permits Chilean corporations with a minimum specified international credit rating which are listed on foreign exchanges to issue shares or share-backed instruments (a minimum of US$25 million or its equivalent if it is a first issue, and US$10 million or its equivalent for second issues) for purchase abroad, provided at least 90 percent of the initial issue is purchased by foreign investors. To be eligible, banks and other financial institutions must be rated at least BBB+; other corporations must be rated at least BBB. The issue must be underwritten by a foreign bank with a minimum capital of at least US$1 billion and five years’ operating experience at the time of reaching an agreement with the Central Bank. Under this chapter, individuals and legal entities that are domiciled and resident abroad and that meet certain conditions are also 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.

(5) Law No. 18.657 permits foreign capital investment funds to invest in shares in Chilean corporations, instruments guaranteed by the banking system, letters of credit, bonds, and other securities approved by the Securities Commission, provided such funds meet certain portfolio diversification requirements and have a minimum paid-up capital of not less than 6,000 UF (a value reference unit). Repatriation of capital from sales of such instruments is allowed only after five years. No restrictions apply to profit remittances by these funds. These funds have access to the official foreign exchange market for repatriation of capital, profits earned on such capital, and payments of expenses involved in foreign investment activities under certain conditions.

(6) Chilean corporations are permitted to invest abroad through a number of channels. Under Title I of Chapter XII of the Compendium of Rules on International Exchange, Chilean banks may invest up to 25 percent of their capital and reserves abroad, of which 20 percent may be in equity of foreign financial institutions, with approval from the Central Bank and the Office of the Superintendent of Banks and Financial Institutions. Up to 30 percent of the total amount permitted may be invested in financial instruments with a minimum rating of BB–. Pension funds may make foreign investments for amounts equivalent to up to 9 percent of their assets; up to 4.5 percent can be invested in equity instruments. Life insurance companies may invest up to 10 percent of their assets in foreign financial instruments and up to 3 percent in urban nonresidential real estate. General insurance companies may invest up to 15 percent in foreign financial instruments and up to 3 percent in urban nonresidential real estate. Mutual funds may invest up to 30 percent of their assets in foreign investments. Except for mutual funds, foreign investments must meet certain minimum risk criteria. Insurance companies must also meet certain portfolio diversification criteria. Except for mutual funds, foreign exchange for these transactions may be purchased through the official market for 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 1995

Exchange Arrangement

March 16. The Central Bank (1) defined norms and requirements for exchange houses and brokerage companies through which pension funds can carry out domestic and foreign financial transactions (these exchange houses and brokerage companies constitute the “formal secondary market”); (2) specified that mutual funds will not be granted access to the formal exchange market to carry out exchange operations related to their investments abroad.

Exports and Export Proceeds

April 18. The Central Bank extended until April 19, 1996, the general exchange restrictions contained in the Compendium of Foreign Exchange Regulations, and established that as of June 16, 1995, exporters would no longer be required to surrender export proceeds to the Central Bank, although they would still be required to inform the Central Bank of these operations for statistical purposes.

Capital

January 5. The Central Bank specified that the maximum amount of financial investment that banks and financial institutions can deduct from the foreign exchange position used to calculate their reserve requirement is equal to the maximum limit on such investments.

January 12. The Central Bank established the following ceilings on investment abroad: (1) for pension funds, the ceiling was raised to 6 percent from 3 percent of their total assets; (2) for life insurance companies, 10 percent of their assets in foreign financial instruments and up to 3 percent in urban nonresidential real estate; (3) for general insurance companies, 15 percent of their assets in foreign financial instruments and up to 3 percent in urban nonresidential real estate; (4) for mutual funds, 30 percent of their total assets, without reference to any minimum rating requirement or any specific number of countries. Pension funds and insurance companies are granted access to the formal exchange market to carry out these operations.

As a transitory provision, the Superintendency of Banks and Financial Institutions would determine the time period during which banks will be required to adjust the ratio between their foreign investments and their total assets to the ceiling established by the Central Bank.

March 2. The Central Bank authorized exchange houses operating in the formal exchange market to carry out exchange operations related to investment abroad by pension funds, insurance companies, and mutual funds.

May 17. The limit on foreign investment by pension funds was increased to 9 percent from 6 percent of the total value of the fund, and investment in variable income securities up to 4.5 percent of the value of the fund was allowed.

July 3. The coverage of the existing 20 percent reserve requirement on foreign liabilities was broadened to include investment flows that do not constitute an increase in the capital stock but only a transaction of assets from residents to nonresidents. Investment through the DL600 (the Foreign Investment Statute) and through Foreign Capital Investment Funds (FICEs) would be specifically excluded from the application of the reserve requirement. The Central Bank eased the ceiling on foreign investment by banks and financial institutions by allowing 30 percent of the 25 percent ceiling of capital and reserves to be invested in instruments with a minimum rating of BB–, but the remaining 70 percent must be invested in BBB– or less risky securities, below the minimum A– requirement in place earlier. The credit rating of the securities in which pension funds can invest was lowered from A– to BBB–. For the stock investments of insurance companies, instead of considering the country risk of the issuing country, a minimum BBB– credit rating requirement for the country where the stocks are traded was established.

August 7. Chapters XVIII and XIX of the Compendium on Foreign Exchange Regulations, which governed the purchase of selected Chilean foreign debt instruments abroad and restricted related profit and capital remittances, were eliminated, thus lifting restrictions on the remittances of profits and the three-year holding for capital entered under these regulations.

September 20. The Central Bank reduced to 5 days from 65 days the period in which banks can sell or purchase foreign exchange in connection with American depository receipts (ADR) transactions.

November 10. The Central Bank introduced an estimate of differentials in productivity growth between Chile and its trading partners as a new factor in the determination of the official reference exchange rate. This new factor will allow for a gradual yearly appreciation of 2 percent in real terms.

November 22. Corporations with ADRs in foreign stock exchanges were allowed to make new issues of ADRs with a minimum of US$10 million or its equivalent in other currencies.

Changes During 1996

Payments for Invisibles

April 17. Foreign exchange houses were allowed to sell up to US$15,000, or its equivalent in other foreign currencies, a calendar month, to any person for travel expenses; payments to international organizations; and payments for studies abroad.

People’s Republic of China

(Position as of April 30, 1996)

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 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. Based on the middle rate published by the PBC, the designated banks quote their buying and selling rates to their customers within a range of 0.25 percent. On December 31, 1995, the middle market rate of the renminbi against the U.S. dollar was Y 8.3179 per $1.

There are no forward exchange market arrangements operating in the official or commercial banking sectors.

Administration of Control

The People’s Bank of China 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 People’s Bank of China, 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 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 2,500 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 1995, an operative bilateral payments agreement was maintained with Cuba.2 Unless there are specific regulations, the currencies used in transactions are determined by the terms of the respective contracts.

Nonresident and Foreign Currency Accounts

Nonresidents3 remaining in China for a short time may open nonresident accounts with the Bank of China 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 People’s Bank of China has specified other categories of foreign exchange accounts that domestic enterprises may maintain 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 domestic banks may accept foreign currency deposits from FFEs and domestic enterprises approved by the SAEC.

Individuals may open resident foreign currency savings accounts with designated 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.4 Moftec does not engage in direct foreign trade transactions and is not 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 1995,4,228 FTCs were in operation. In addition, 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 sold to designated banks, except those of FFEs and those approved by the SAEC. FFEs are allowed to retain all of their foreign exchange and to sell or purchase foreign exchange in the swap centers. Since the beginning of 1995, FFEs that have passed an annual audit by the SAEC have not been required to obtain approval for each foreign exchange transaction in the swap centers; FFEs that have failed the audit are required to obtain approval for each transaction. The purpose of annual auditing is to ensure that export and contractual obligations are met. In 1995, SAEC approval was liberally granted. Since April 1996, FFEs are allowed to participate, directly or indirectly through a bank, in the interbank foreign exchange market.

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.5 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 fertilizers, crude oil and oil products, rubber, steel, timber, plywood, polyester 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 for purposes of quality control. Controls in the form of registration for surveillance purposes are exercised on the importation of machinery and electric equipment in order to monitor the supply and demand situation.

The customs regime is regulated by the Customs Law of China and the Regulations on Import and Export Tariffs 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 1995, the average unweighted tariff rate was 35.7 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 origin; it does not apply to imports into Tibet by mail or in the luggage of travelers, which are subject to the regular Chinese tariff.

A uniform value-added tax is 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 1995, product items were subject to export-licensing requirements or quotas, and 47 product items were subject to export duties. A portion of the 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 that allows free competition among enterprises leading to higher export prices, greater returns for exports, and higher efficiency of foreign trade enterprises.6 During 1995, 24 product items subject to export quotas were distributed under the bidding system.

Purchases of foreign exchange, other than by FFEs, 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 must 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 swap centers or in the interbank market. Income from interest, royalties, and rent earned by foreign businesses without establishments in China is subject to a 10 percent withholding tax in the special economic zones, in the economic and technological development areas of the 14 open coastal cities, and in the newly opened inland and border cities; and a 20 percent tax applies to all other regions.

Foreign exchange needed for nontrade and noncommercial payments by budgeted organizations, institutions, and social bodies may be purchased from the Bank of China, 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 noncommercial payments from designated banks by presenting the Exchange Sale Instruction issued by the SAEC.

Chinese residents wishing to travel abroad or remit funds 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.

All enterprises, except 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 a designated 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.

All foreign exchange earned by Chinese residents working abroad, including Hong Kong and Macao, and foreign exchange earned from publication fees, copyright fees, awards, subsidies, honoraria, or other premiums must be repatriated. Individuals may retain or deposit exchange receipts with designated banks.

Foreign members and employees of FFEs, as well as those from Hong Kong and Macao,7 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.8 Plan borrowing includes (1) borrowing by the government sector (through the People’s Bank of China, the Ministry of Finance, the Ministry of Agriculture, and Moftec or enterprises under the Moftec’S control) from foreign governments or international organizations and bilateral sources; (2) external borrowing by Chinese financial institutions; (3) external borrowing by authorized Chinese enterprises; and (4) short-term trade credits over three months. Nonplan borrowing includes (1) borrowing by FFEs; and (2) borrowing from branches of foreign banks or jointly invested banks operating in China.

Within these limits, the State Planning Commission (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, projected foreign exchange earnings, projected foreign borrowing, and the types 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) is the responsibility of the People’s Bank of China; and intergovernmental loans are the responsibility of Moftec. Local governments and enterprises usually borrow through the Bank of China (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 People’s Bank of China.

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 must 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 on the outstanding balance of 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.9 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 of 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 People’s 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 People’s Bank of China 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 People’s Bank of China export permit. Nonresidents may buy gold and silver and gold and silver products at special stores but must present the invoice when exporting them.

Changes During 1995

Imports and Exports

January 13. FFEs that have passed an annual audit by the SAEC are no longer required to obtain approval for each foreign exchange transaction in the swap centers. FFEs that have failed the audit are required to obtain approval for each transaction.

June 30. Import restrictions on 367 tariff lines were abolished. The main liberalized product items included crude oil, grain, chemical fiber fabrics, and some electronic goods.

July 1. Import tariff rates on a number of manufactured goods were reduced, including video tapes (from 100 percent to 50 percent) and vehicles (from 180 percent to 100 percent).

Changes During 1996

Administration of Control

April 1. The SAEC issued new foreign exchange control regulations.

Colombia

(Position as of June 30, 1996)

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, the central bank, 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. It also 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, 1995, the buying and selling rates of the Banco de la República were Col$884.70 and Col$1,017.88, respectively, per US$1. The representative market exchange rate was Col$987.65 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 3 percent withholding tax on foreign exchange receipts from personal services and other transfers (the rate was 10 percent during 1995). 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 Directorate (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 relating to trade. The Superintendency of Trade and Industry and the Superintendency of Banks are also responsible for the enforcement of exchange regulations. The authorized foreign exchange intermediaries are commercial banks, financial corporations, Financiera Enérgética Nacional (FEN), Banco de Comercio Exterior de Colombia (BANCOLDEX), and savings and loans corporations. Exchange houses (casas de cambio) are authorized to carry out a range of foreign exchange activities. Financial intermediaries are allowed to hold a net foreign exchange position equivalent to no more than 20 percent of their net worth. 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 of its own officers, determines overall import and export policy. Incomex, through its Import Board, controls those imports that are subject to prior licensing, and administers Plan Vallejo, which is a special import-export arrangement concerning a rebate of taxes paid on imported inputs used in the production of exported goods. Incomex, together with the Committee on Commercial Practices, administers antidumping cases. The Government regulates the foreign direct investments through legislative and executive decrees, in consultation with the National Council for Economic and Social Policy (CONPES). The Banco de la República keeps a 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 China.

Nonresident Accounts

Residents may maintain foreign exchange accounts (compensation accounts) registered at the Banco de la República 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. Foreign exchange intermediaries may receive deposits in domestic currency from nonresident individuals and juridical persons. The deposits need not be registered at the Banco de la República; they may only be used in trade-related transactions. Banks must report transactions through these accounts to the Banco de la República.

Imports and Import Payments

Importers 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 six months of the due date of the bill of lading.

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. With certain exceptions, imports are subject to the common external tariff 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).

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 only once for the same 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 or in compensation accounts, to invest in financial assets, or to effect any other payment operations. In addition, firms with foreign capital engaged in exploration and production of oil and natural gas are not required to surrender their foreign exchange. These firms, however, may not purchase foreign exchange in the exchange market for any purpose, and must sell foreign exchange in the exchange market for domestic currency to pay for expenses in Colombia. Firms that do not wish to take advantage of this special arrangement must inform the Banco de la República, and all of their exchange operations will be subject to the provisions of regular exchange regulations for an irrevocable period of ten years.

On surrendering their export proceeds in the foreign exchange market, exporters of products other than coffee, petroleum, and petroleum products 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. For a specified list of exports, the applicable rate of the certificate was raised by 3 percentage points during the period May-December 1995.

Exports of coffee are subject to the following regulations: (1) a minimum surrender price is the sales price shown on the export declaration; (2) exporters pay a coffee contribution on the basis of international market prices; (3) the National Coffee Committee (composed of the Ministers of Finance and Agriculture and the Managing Director of the Federation) may establish a physical coffee contribution on the basis of international market prices; and (4) the National Coffee Committee establishes a domestic buying price based on international prices for export-type coffee expressed in pesos per cargo 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 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 the CONPES Resolution No. 49, 51-57 of 1991. These regulations are in accordance with the provisions of Decisions 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, except in the areas of defense, disposal of foreign nuclear or chemical waste, and real estate, 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 (Resolution No. 51, of 1991, CONPES).

Registration of capital with the Banco de la República entitles the investor to export profits and to repatriate capital under specified conditions. Annual transfers of profits abroad and repatriation of capital is not restricted, but they may be temporarily restricted if international reserve holdings of the Banco de la República fall below the equivalent of three months of imports. Colombian investment abroad should also be registered with the Banco de la República.

Short-term foreign borrowing to finance any activity is permitted. Foreign loans with maturities ranging from one day to five years were subject to a nonremunerated deposit requirement of 140 percent and 43 percent of the loan, respectively, up to March 15, 1996. On that date, this maturity range was changed from one day to three years. 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 up to a maximum of 12 months;6 credit card balances; loans destined for Colombian investments abroad; and green coffee, coal, and oil pre-shipment 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. Foreign loans for government entities in excess of specified amounts require prior authorization from the Superintendency of Values. For loans to the Government, or those guaranteed by the Government, the following are also required: prior authorization from CONPES 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 Department.

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 sells gold for domestic industrial use directly at a price equivalent to the average quotation in the London gold market of 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 that are legal tender. Residents and nonresidents may freely buy such coins.

Changes During 1995

Exchange Arrangement

January 26. Exchange houses were authorized to participate in the official foreign exchange market for selected types of transactions, subject to licensing by the Superintendency of Banks.

Nonresident Accounts

September 29. Nonresidents were permitted to hold domestic currency deposits in domestic financial institutions. No registration with the Banco de la República was required. Financial institutions were also required to include transactions in domestic currency deposit accounts in the quarterly report on transactions in foreign currency accounts submitted to the Banco de la República and the Superintendency of Banks.

Imports and Import Payments

February 1. The common external tariff of the countries of the Andean Pact, of which Colombia is a signatory, was introduced.

March 17. Items of the tariff code defined as capital goods imports, whose delayed payment is exempt from the deposit requirement, were specified.

August 18. The maximum time limit for payment of imports not subject to the deposit requirement was increased to six months from four months.

Exports and Export Proceeds

April 21. BANCOLDEX was authorized to increase the total amount of loans to exporters that may be exempted from the deposit requirement to a maximum of US$500 million from US$350 million. The maximum maturity was increased to one year from six months.

June 16. The exemption from the deposit requirement for prefinancing of coffee exports was limited to prefinancing contracted as of December 1994; previously, the exemption applied to prefinancing contracted as of January 1994. Private coffee exporters were also permitted to use up to US$50 million of prefinancing authorized for the National Coffee Federation

September 23. The amount of authorized export prefinancing by BANCOLDEX not subject to the deposit requirement was increased to US$550 million from US$500 million.

Capital

January 20. The range of external debt prepayments subject to a deposit requirement was widened.

February 10. The deposit requirement to change the external holder of a credit in cases of spinoffs, mergers, liquidations, or concordats of enterprises was eliminated.

September 7. A limit on the net foreign exchange position of financial intermediaries equal to 45 percent of net worth was established; (the limit was to be reduced to 30 percent as of January 1, 1996) and a schedule was set up for phasing out the minimum required net foreign exchange position of 40 percent of the June 1991 level of liabilities by January 1, 1996

November 10. The minimum required net foreign exchange position of banks and other financial institutions was eliminated.

Changes During 1996

Exchange Arrangement

January 1. The withholding tax on foreign exchange receipts was reduced to 3 percent from 10 percent.

Administration of Control

January 1. Financial intermediaries were allowed to hold a net foreign exchange position equivalent to no more than 20 percent of their net worth (compared with 45 percent earlier).

Comoros

(Position as of December 31, 1995)

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 CF1 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, the 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. 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 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 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. Invisibles 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 flows between the Comoros and France (as defined above), Monaco, and 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 1995

No significant changes occurred in the exchange and trade system.

Republic of Congo

(Position as of June 30, 1996)

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.

The Congo accepted the obligations of Article VIII, Sections 2, 3, and 4 of the Fund Agreement on June 1, 1996.

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, such banknotes received by foreign correspondents of authorized banks and 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 ex post 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 was reduced to 5 percent for basic necessities, 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 may be insured with any insurance company.

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 2.5 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 Economy and Finance. The use of credit cards, which must be issued by resident financial intermediaries and approved by the Ministry of Economy and Finance, is limited to the ceilings indicated above for tourist and business travel. However, these regulations are administered liberally and bona fide requests for allowances in excess of these limits are normally granted. 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 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, government employees, and 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 eight days 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 Economy and Finance; 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 Economy and Finance, 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 Economy and Finance. 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 Economy and Finance. 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 Economy and Finance. The following are, however, exempt from this authorization: (1) loans in foreign currency granted by registered banks, and (2) other loans whose total amount outstanding 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 10, 1992, 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 Economy and Finance 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 1995

No significant changes occurred in the exchange and trade system.

Changes During 1996

Exchange Arrangement

June 1. Congo accepted the obligations of Article VIII, Sections 2, 3, and 4 of the Fund Agreement.

Costa Rica

(Position as of December 31, 1995)

Exchange Arrangement

The currency of Costa Rica is the Costa Rican Colón, the external value of which is determined by commercial banks and other financial institutions in the interbank market.1 A tax of 15 percent calculated on the average daily spread between buying and selling rates applies to all foreign exchange transactions in the interbank market. The Government and public sector institutions conduct foreign exchange transactions with the State Commercial Banks and 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, 1995, the buying and selling bank rates for the U.S. dollar were C 194.43 and C 195.37, respectively, per $1.

There are no arrangements for forward cover against exchange rate risks operating in the official or the commercial banking sector.

Costa Rica accepted the obligations of Article VIII, Sections 2, 3, and 4 of the Fund Agreement on February 1, 1965.

Administration of Control

Exchange regulations are issued by the Central Bank. 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 and under the purview of the Superintendency of Banks and Financial Institutions (SUGEF).

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

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

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 5 percent to 20 percent. In addition to any applicable customs tariff, the following taxes are levied on imports: (1) a sales tax of 15 percent, from which certain essential items are exempt; and (2) a selective consumption tax at rates varying from zero to 75 percent, depending on the essential nature of the item.

Payments for Invisibles

Payments for invisibles are not restricted. Withholding taxes of 15 percent are levied on remittances of dividends and profits. 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 government borrowing abroad is exempt.

Exports and Export Proceeds

Export proceeds are not subject to surrender requirements. However, proceeds from exports must be repatriated within 90 days before the end of each fiscal year. 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

Licenses are required for exports of 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, ipecacuanha root, 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.

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 must be repatriated within 90 days of the end of each fiscal year.

Capital

There are no restrictions on capital transfers, and capital transactions between residents and nonresidents are permitted.

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.

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, 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 1995

Exchange Arrangement

May 30. The Central Bank announced that the spread between the buying and selling rates of authorized banks and financial institutions cannot exceed 0.56 percent.

November 28. Spreads between the buying and selling rates can be freely set by authorized banks and financial institutions. A tax of 15 percent calculated on the average daily spread between the buying and selling rates is applied to all foreign trade transactions in the interbank market. All other taxes (transfers to some public enterprises) collected through the exchange system were eliminated.

Exports and Export Proceeds

May 24. The surrender requirement rate for proceeds from exports was reduced to 20 percent. All commercial banks and financial institutions authorized to operate in the interbank market were required to transfer to the Central Bank 34 percent of their purchases of foreign exchange.

November 28. Surrender and transfer requirements were eliminated. Exchange proceeds from goods (and services exports and tourism) must be repatriated within 90 days of the end of each fiscal year.

Côte d’Ivoire

(Position as of June 30, 1996)

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 Economic and Monetary Union (WAEMU).2 Banks and the postal system levy a commission on transfers to all countries outside the WAEMU; 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 and subject to the exchange control measures listed hereafter.

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.

Côte d’Ivoire accepted the obligations of Article VIII, Sections 2, 3, and 4 of the Fund Agreement on June 1, 1996.

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. At the end of 1995, a total of 25 products were subject to import licenses.

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

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. In addition, they may not show an overdraft position without prior authorization.

Imports and Import Payments

Under the current regulations, all imports are classified into the following three categories: (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 and 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 down payment is made.

Payments for Invisibles

Payments for invisibles to France (as defined above), Monaco, and the Operations Account countries are permitted freely; those to other countries must be approved. Payments for invisibles related to trade are permitted freely when the basic trade transaction has been approved or does not require authorization. Transfers of income accruing to nonresidents in the form of profits, dividends, and royalties are also permitted freely when the underlying transaction has been approved.

Residents traveling for tourism or business purposes to countries in the franc zone that are not members of the WAEMU 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 WAEMU, 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, and the export of timber, which is prohibited except for a small quota pending a review of environmental and taxation issues. 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.

Proceeds from exports to foreign countries, including those in the Operations Account area, must be received 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; over foreign inward direct investment; over 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 Ivoirien 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 WAEMU, and the Operations Account countries. Special controls are also maintained over the soliciting of funds for deposit with foreign natural 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 As from June 15, 1981, at least 75 percent of investments abroad by residents of Côte d’Ivoire had to 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.) In addition, the BCEAO subjects commercial banks’ foreign exchange positions to discretionary controls for prudential reasons. These restrictions apply to all correspondent accounts, including those located in France, Monaco, and the Operation Account countries.

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 loans requires authorization only if the loan itself was subject to prior approval. Lending abroad is subject to exchange control authorization.

Under the investment code introduced in 1984, special incentives are provided for foreign and domestic investments in certain priority sectors and priority geographical areas. The incentives include exemption from customs duties and tariffs on all imported capital equipment and spare parts for investment projects, provided that no equivalent item is produced in Côte d’Ivoire. In addition, all such investments are 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 1995

Imports and Import Payments

March 1. Quantitative restrictions on imports of coffee, tobacco, used sacks, and cloth made of synthetic or artificial fibers were eliminated.

Exports and Export Proceeds

September 6. Exports of timber were prohibited by a decree pending the review of environmental and taxation issues.

Changes During 1996

Exchange Arrangement

June 1. Côte d’Ivoire accepted the obligations of Article VIII, Section 2, 3, and 4 of the Fund Agreement.

Croatia

(Position as of February 29, 1996)

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, which it applies in transactions with banks outside the interbank market for purposes of smoothing undue fluctuations in the exchange rate. On December 31, 1995, the average interbank market rate for the U.S. dollar was HRK 5,3161 per $1.

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

Croatia accepted the obligations of Article VIII, Sections 2, 3, and 4 of the Fund Agreement on 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 Trade Law, coordinated with domestic trade and foreign trade legislation, was passed on January 31, 1996, and came into force on February 17, 1996. 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 48 commercial banks in Croatia are licensed to conduct foreign exchange transactions. Restricted licenses are given to those banks that are authorized to open accounts for resident natural persons and may buy and sell banknotes and checks (currently nine 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. With special permission from the National Bank, juridical persons may credit these accounts with foreign banknotes up to the limit of $20,000.

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 1994 import regime 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 account for about 96 percent of the total tariff items. Of the restricted items, only about 2 percent of imports are subject to licensing and about 1 percent to quotas. The Ministry of Economy, in consultation with the Chamber of Commerce, administers the quotas. 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 the equivalent of $100. Goods imported by travelers and postal shipments up to a 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 in an amount that is relative to the period spent abroad without restrictions, subject to the approval of the Ministry of Finance on a case-by-case basis. 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 permitted, 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 sports 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 90 days of the date of exportation; this period may be extended with the permission of the National Bank. If payment terms in excess of 90 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 limited to 30 percent of the bank’s capital.

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 (e.g., “national treatment”). If the foreign equity capital participation exceeds 20 percent, inputs used in the project are exempt from import duties. The profit tax rate is uniform at 25 percent. Foreign direct investment abroad by residents must be registered with the Ministry of Economy within a 30-day period commencing from signature of the contract. Such investment must generally be undertaken through loans abroad or through reinvestment of profits. Inward portfolio investment is not restricted, except in central bank short-term securities in the primary market. In general, 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 National Bank may export gold and gold coins without any restrictions. Unprocessed gold may be exported with the approval of the National Bank.

Gold coins may be exported by authorized commercial banks, with the approval of the National Bank.

Importation of gold is subject to the approval of the Ministry of Economy.

Changes During 1995

Exchange Arrangement

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

Changes During 1996

Imports and Import Payments

February 17. The Trade Law became effective.

Capital

January 1. The Law on Insurance and Sale of Securities came into force.

January 3. The Law on Investment Funds came into force.

Cyprus

(Position as of March 31, 1996)

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 29, 1995, the official buying and selling rates for the U.S. dollar, the intervention currency, were £C 0.4549 and £C 0.4567, respectively, per $1. The Central Bank of Cyprus also quotes daily buying and selling rates for the ECU, the deutsche mark, the Greek drachma, and the pound sterling. These rates are subject to change throughout the day. It also quotes indicative rates for other foreign currencies1 on the basis of market rates in international money market centers. Subject to certain limitations, including a limit on spreads between the buying and selling rates, authorized dealers (banks) are free to determine and quote their own buying and selling rates. There are no taxes or subsidies on purchases or sales of foreign exchange.

Authorized dealers are allowed to trade in the forward market at rates that may be freely negotiated with their customers. For U.S. dollars and pounds sterling, however, forward margins 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 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 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, and for up to 15 months for incoming tourism.

Cyprus accepted the obligations of Article VIII, Sections 2, 3, and 4 of the Fund Agreement on 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. Economic sanctions pursuant to United Nations Security Council resolutions are administered by the Central Bank and relevant government departments. Such sanctions are in effect against Iraq, Libya, and the UNITA organization in Angola. There are also certain restrictions still in effect in relation to the Federal Republic of Yugoslavia (Serbia/Montenegro), in accordance with the UN Security Council resolution 1022 (1995), and an embargo on deliveries of weapons and military equipment to the constituent republics of the former Socialist Federal Republic of Yugoslavia, in accordance with the UN Security Council resolution 1021 (1995). Under Executive Board Decision No. 144-(52/51), the Central Bank had notified the Fund on October 7, 1993, of restrictions imposed previously against the Federal Republic of Yugoslavia (Serbia/Montenegro) pursuant to earlier UN Security Council resolutions.

Prescription of Currency

Payments may be made by crediting Cyprus pounds to an external account, or in any foreign currency (i.e., other than the Cyprus pound); 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

Nonresidents 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 banknotes), 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. Authorized dealers are allowed to grant medium-and long-term foreign currency loans to nonresidents of up to 20 percent of their deposit liabilities in foreign currencies. In addition, they are allowed to grant short-term loans and credits to offshore companies of up to 10 percent of their deposit liabilities in foreign currencies.

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 at the end of each year to convert into Cyprus pounds any balances in excess of the amount that is necessary for payments of the value of traded goods or raw materials during the following three months. Resident hoteliers may deposit in foreign currency amounts that they need to make imminent installment payments on foreign currency loans.

Cypriot repatriates may keep in foreign currency, or external accounts with banks in Cyprus, or in accounts with banks abroad, all of their foreign currency holdings and earnings accruing from properties they own abroad. Resident persons temporarily working abroad may maintain their foreign currency earnings in foreign currency or external accounts with banks in Cyprus, or in accounts with banks abroad.

Other residents apart from those referred to in the preceding two paragraphs may hold foreign currency accounts with prior approval of the Central Bank, on a case-by-case basis.

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 50,000 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

Nearly all imports are free of licensing requirements. An import license is required for certain commodities prescribed by the Minister of Commerce, Industry, and Tourism. The list of commodities currently subject to import licensing includes fresh beef, cheese, and certain chemicals.

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.

Remittances for advance payments before shipment require the prior approval of the Central Bank if they exceed £C 50,000. 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. For advance import payments exceeding £C 20,000,10 percent of the amount must be deposited with the Central Bank as a guarantee, unless the foreign purchaser provides a bank guarantee for the return of the advance payment in case the shipment is not carried out.

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 deposit with authorized dealers up to £C 500 of their monthly remuneration in external or foreign currency accounts, the balance of which may be freely transferred abroad without reference to the Central Bank; deposits or transfers of greater amounts need the specific approval of the Central Bank.

Allowances are granted to residents for study abroad at colleges, universities, or other institutions of higher education, and certain lower-level institutions of learning. Exchange allowances are based on the cost of living, which is reviewed yearly. The current annual allowance for living expenses for studies in Western European countries, excluding Greece, is £C 5,500; for Greece, £C 3,600; for Canada and the United States, £C 6,600; for Australia, £C 4,000; and for all other countries, £C 3,600. 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 1,000 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 may provide up to £C 150 a day with a maximum of £C 1,500 a trip, or £C 80 a day with a maximum of £C 800 a trip if the traveler holds an international business card (see below); additional amounts may be granted with the approval of the Central Bank on proof of need. Authorized dealers may also sell to departing residents foreign exchange up to £C 5,000 for medical expenses abroad; unlimited additional amounts are provided with the approval of the Central Bank.

Authorized dealers may issue personal cards valid abroad to any resident, except for residents studying abroad or temporarily living abroad for any reason. These cards, which are designated as international personal cards, may be used abroad for payments to hotels and restaurants, payments for transportation expenses, payments to doctors, clinics, or hospitals, and unlimited international telephone calls, as well as payments abroad or from Cyprus up to £C 300 for each transaction for the following purposes: student examination fees, subscription to professional bodies or societies, fees for enrollment in professional or educational seminars or conferences, and hotel reservation fees.

Authorized dealers may also issue company cards valid abroad (designated as international business cards) to resident businesspeople and professionals who are involved in international trade of goods or services and travel abroad on business. Moreover, authorized dealers may issue special personal cards valid abroad (designated as special international personal cards) to certain categories of residents, such as public officials and university professors. Holders of special international personal cards and holders of international business cards are entitled to charge the following, in addition to the expenses allowed for holders of international personal cards: cash withdrawals up to £C 100 a trip and any other expenses up to £C 300 a trip, as well as mail orders of books (in the case of special international personal cards) or books and equipment for the company (in the case of international business cards) up to £C 1,000.

Authorized dealers may approve, without reference to the Central Bank, applications by resident travel agents to pay foreign travel agents and hotels up to £C 10,000 a trip. The Central Bank approves applications for higher amounts to cover genuine expenses without limitation. Authorized dealers may carry out, without prior reference to the Central Bank, payments of fares and freights by order of resident airlines, agents of foreign airlines, shipping agents, or other resident transport companies in favor of foreign airlines, shipping or other transport companies; if the payment exceeds £C 5,000, documentary evidence must be subsequently submitted to the Central Bank.

On leaving Cyprus, resident travelers may take out up to £C 100 in Cypriot banknotes. There is no limit on the amount of foreign banknotes 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 Cypriot or foreign banknotes they declared on arrival (see text under Proceeds from Invisibles). Nonresidents may also export up to $1,000 in Cypriot or foreign banknotes that they imported, even if these notes were not declared on arrival. In addition, nonresident travelers may take out up to £C 100 in Cypriot banknotes. Furthermore, 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 banknotes 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 of Cypriot or foreign banknotes. Nonresidents entering Cyprus should declare to customs any Cypriot or foreign banknotes that they plan to re-export, or to deposit with authorized dealers, or to use to purchase immovable property or goods to export.

Capital

Capital transfers abroad 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 is permitted only for the following residents: insurance companies (up to 20 percent of their trust fund); Cypriot repatriates and residents temporarily working abroad who hold foreign currency or external accounts; resident employees of multinational enterprises who participate in the employee stock purchase plan offered to them by their employer; and investment companies that have been admitted to the official stock exchange of Cyprus (which started to operate on March 29, 1996). These investment companies are allowed to invest abroad up to 20 percent of their capital.

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.2

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, or as office or factory in the case of an authorized direct investment. 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 50,000, 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 50,000 for each household; any excess amount is deposited in a blocked account and released at the rate of £C 50,000 a year. 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 50,000, with any excess amount to be credited to a blocked account and also released at the rate of £C 50,000 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 collection purposes. Residents other than monetary authorities, authorized dealers in gold, and industrial users are not allowed to hold or acquire gold bullion at home or abroad. Authorized dealers in gold are permitted to import gold bullion only for the purpose of disposing of it to industrial users. The exportation of gold coins or bullion requires the permission of the Central Bank.

Changes During 1995

Payments for Invisibles

March 1. The amount of foreign exchange that authorized dealers may sell to departing residents, for tourist travel abroad, without reference to the Central Bank was increased from £C 750 to £C 1,000 a person a trip.

April 6. The Central Bank empowered authorized dealers to carry out, without subsequent reference to the Central Bank, payments of fares and freights by order of resident airlines, agents of foreign airlines, shipping agents, or other resident transport companies in favor of foreign airlines, shipping or other transport companies up to £C 5,000.

May 26. Nonresident travelers were allowed to export any amount of Cypriot banknotes they imported and declared to customs on arrival. Nonresident travelers were allowed to take out up to the equivalent of $1,000 in Cypriot or foreign banknotes that they imported, even if they did not declare them on arrival. In addition, both resident and nonresident travelers were allowed to take out up to £C 100 in Cypriot banknotes; previously, the amount of Cypriot banknotes that a resident or nonresident traveler could export was limited to £C 50. Furthermore, authorized dealers were allowed to send any amount of Cypriot banknotes to foreign banks without reference to the Central Bank.

June 13. Authorized dealers were allowed to approve, without reference to the Central Bank, applications by resident travel agents to pay foreign travel agents and hotel for expenses up to £C 10,000 a trip.

July 1. The amount of foreign exchange that authorized dealers may sell to departing residents for medical expenses abroad without reference to the Central Bank was increased from £C 3,000 to £C 5,000.

The Central Bank empowered authorized dealers to issue personal cards valid abroad to any resident, except for residents studying abroad or temporarily living abroad for any reason. These cards, which are designated as international personal cards, may be used abroad for payments to hotels and restaurants, payments for transportation expenses, payments to doctors, clinics or hospitals, and international phone calls, without limit, as well as payments abroad or from Cyprus up to £C 300 for each transaction for the following purposes: examination fees, subscriptions to professional bodies or societies, fees for enrollment in professional or educational seminars or conferences, and hotel reservation fees.

July 10. The amount that may be paid through special international personal cards or international business cards for mail orders of books or equipment was increased from £C 300 to £C 1,000.

November 20. The amount that residents may remit through authorized dealers to nonresidents (e.g., relations) as financial assistance or gift, without reference to the Central Bank, was increased from £C 100 to £C 200 every six months. Prior approval of the Central Bank is required for higher amounts.

Proceeds from Invisibles

May 26. Restrictions on the import of Cypriot banknotes were abolished.

Changes During 1996

Imports and Import Payments

January 1. Most quantitative import restrictions were abolished; specifically, the number of commodities for which an import license is required was drastically reduced.

Capital

March 29. Investment companies admitted to the official stock exchange of Cyprus were allowed to invest abroad up to 20 percent of their capital.

Czech Republic

(Position as of December 31, 1995)

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 (approximately 65 percent) and the U.S. dollar (approximately 35 percent). The Czech National Bank quotes daily official exchange rates of the koruna against two currencies, the deutsche mark and the U.S. dollar. The National Bank may also intervene in the foreign exchange market according to rules specified in its relevant official announcements. On December 31, 1995, the middle rate of the koruna in terms of the U.S. dollar was Kč 26.602.

The National Bank announces daily foreign exchange rates for 21 other convertible currencies,1 including the Slovak koruna, European currency units (ECUs), and SDRs. Up to February 28, 1996, the foreign exchange rate of the Czech koruna, quoted by the National Bank was allowed to fluctuate within band limits of ±0.5 percent around the theoretical central rate; since then, the band has been ±7.5 percent. Forward foreign exchange transactions are permitted.

The Czech Republic accepted the obligations of Article VIII, Sections 2, 3, and 4 of the Fund Agreement on October 1, 1995.

Administration of Control

The Ministry of Finance and the National Bank 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, governmental credits (central and local authorities), budgetary organizations, and state funds. The National Bank exercises authority over all other agents.

Prescription of Currency

There are no prescription of currency requirements in effect.

Resident and Nonresident Accounts

There are no distinctions between resident and nonresident accounts.

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 (industrial products up to a rate of 45 percent, agricultural products up to 232.7 percent) and to a value-added tax (VAT) of 5 percent or 22 percent.2 Imports from the Slovak Republic are exempt from customs duties under a customs union. Imports from developing countries are granted preferential treatment under the Generalized System of Preferences (GSP). Under the GSP, 74 “least developed” countries benefit from a duty exemption, and 104 developing countries are granted a 50–100 percent reduction from the applicable customs duties; tropical products are granted reductions of 100 percent.

Residents are required to repatriate domestic and foreign currency acquired abroad.

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

There are no restrictions, other than the general repatriation requirement, on invisible transactions.

Capital

Portfolio investment by residents abroad may be, with some exceptions, executed only through authorized domestic agents or with prior approval. Prior approval is required when residents extend to nonresidents credits or guarantee an obligation of nonresident guarantees. The extension of credits and guarantees by nonresidents to residents is unrestricted.

Gold

Gold bullion may generally be traded only with authorized agents (banks). Export and import of gold bullion and/or more than 10 gold coins must be reported.

Changes During 1995

Exchange Arrangement

April 24. The National Bank introduced a fee of 0.25 percent on its foreign exchange transactions with banks.

October 1. The Czech Republic accepted the obligations of Article VIII, Sections, 2, 3, and 4 of the Fund Agreement.

October 1. The new Foreign Exchange Law (No. 219/1995) came into effect.

Prescription of Currency

September 30. The bilateral clearing arrangement with the Slovak Republic was terminated by mutual agreement.

Capital

June 22. The National Bank announced that effective August 3, 1995, borrowing abroad by banks would be curtailed by limiting open positions of the National Bank vis-à-vis nonresidents.

Denmark

(Position as of December 31, 1995)

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, 1995, 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 escudos4.321003.20400
100Spanish pesetas5.206403.86140

The participants in the EMS do not maintain the exchange rates for other currencies within fixed limits. The National Bank, 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,3 the SDR, and the ECU are officially fixed daily and reflect the rates prevailing at the time of the fixing. On December 31, 1995, the official rate for the U.S. dollar was DKr 5.546 per $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 the National Bank 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, who have deposited securities abroad, or who have entered into contracts with foreign life insurance companies are required to provide the Danish tax authorities with relevant information concerning these transactions.

Denmark accepted the obligations of Article VIII, Sections 2, 3, and 4 of the Fund Agreement on 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 the National Bank 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). The National Bank 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 September 10, 1990, and on July 27, 1992, that certain restrictions had been imposed on the making of payments and transfers for current international transactions in respect of Iraq and the Federal Republic of Yugoslavia (Serbia/Montenegro), respectively.

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, the other countries of the former Soviet Union, and Vietnam.

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 through 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 1995

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 1995.)

Djibouti

(Position as of December 31, 1995)

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 $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 accepted the obligations of Article VIII, Sections 2, 3, and 4 of the Fund Agreement, on September 19, 1980.

Administration of Control

There is no exchange control. The Djibouti franc is issued in notes and coins by the National Bank of Djibouti, which issues and redeems the currency against U.S. dollars.

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. However, a 1994 law authorizes the establishment of industrial export processing enterprises (enterprises franches industrielles) anywhere in the country. 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 an arrangement governing export processing enterprises, export-oriented manufacturing and services are exempt from the profit tax during the first ten years of operation, and their exports of goods and services are exempt from the export tax.

Changes During 1995

No significant changes occurred in the exchange and trade system.

Dominica

(Position as of December 31, 1995)

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, 1995, 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 accepted the obligations of Article VIII, Sections 2, 3, and 4 of the Fund Agreement on December 13, 1979.

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 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 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 (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 Belize, and Caricom require a license. Imports of a subset of these goods from the more developed countries of Caricom (Barbados, Jamaica, Guyana, and Trinidad and Tobago) also require a license. In addition, there are certain quantitative restrictions on imports of beverages, flour, and margarine; quotas are allocated to traditional importers based on their historical market shares. The Common External Tariff (CET) of Caricom countries is applied to all imports.

Payments for authorized imports are permitted upon presentation to a commercial bank of 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 ECCB.

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 1995

Imports and Import Payments

October 1. The CET was reduced by 5 percentage points on selected items.

Dominican Republic

(Position as of December 31, 1995)

Exchange Arrangement

The currency of the Dominican Republic is the Dominican Peso, the external value of which is determined in the interbank market. The official exchange rate, based on a September 1994 resolution1 is 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. However, since December 1994, the official exchange rate has been pegged to the U.S. dollar at RD$12.87. On December 31, 1995, the official exchange rate was RD$12.87 per US$1.

The commission equivalent to 3 percent of the f.o.b. value of imports was eliminated in June 1995 as provided for in Law No. 11-12 on tax reform by the Central Bank for the servicing of external debt. 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 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 the oil bill 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. The new Foreign Investment Law eliminated restrictions on profit remittances. Investors should submit to the Central Bank for its approval a timetable for the gradual remittance of the profits withheld under the terms of the former Foreign Investment Law. The timetable should not be less than five years.

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). 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 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 invisibles may be sold in the interbank market with certain exceptions (including international telephone calls, international credit card transactions, jet fuel, foreign embassies, alimonies, donations, and real estate), which must be surrendered to the Central Bank.

Capital

There are no restrictions on the inward movement of capital by either residents or nonresidents. 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. Total financial charges on foreign loans are not allowed to exceed the principal international interest rate by more than a certain margin.

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 1995

Payments for Invisibles

January 2. Persons traveling abroad cannot take out foreign currency in traveler’s checks or cash for an amount exceeding US$10,000 (Executive Decree No. 7-12).

Exports and Export Proceeds

September 14. Minimum prices for agricultural exports were eliminated (Monetary Board Resolution No. 19).

Capital

January 13. Commercial banks must sell any excess of foreign exchange after 48 hours of the purchase to the Central Bank at the official rate (Monetary Board Resolution No. 28).

July 20. Payments of interest on dollar accounts in commercial banks can be made in U.S. dollars (Monetary Board Resolution No. 3).

November 26. The Foreign Investment Law (No. 1695) was passed.

Ecuador

(Position as of December 31, 1995)

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 market rate of the sucre against the U.S. dollar fluctuates freely within a band that is preannounced by the Central Bank of Ecuador, having a width of 5 percent on each side of its midpoint; the midpoint depreciates at an annual rate of 16.5 percent. 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 selling rate is applied to all external payments of the public sector; on December 29, 1995, the official buying and selling rates were S/. 2,864 and S/. 2,922, respectively, per $1.

All legally permitted foreign exchange transactions, other than those conducted through the Central Bank, may be conducted in the free market. On December 29, 1995, the buying and selling rates in the free market were S/. 2,922 and S/. 2,925, respectively, per $1. 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.

Ecuador accepted the obligations of Article VIII, Sections 2, 3, and 4 of the Fund Agreement on 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, and for statistical reasons. Import licenses granted by the Central Bank are required.

Arrears are maintained with respect to public and publicly guaranteed debt service payments to official and private creditors.

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

Imports of all goods except for a small group of goods prohibited, primarily to protect the environment and health, are permitted. 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 for ecological, health, and national security reasons. In August 1995, Ecuador joined the World Trade Organization (WTO) and, in this context, has begun a review of its trade regulations to conform them to WTO norms.

Prior import licenses are required for all permitted imports. In addition, Petroecuador may, without a license, import supplies, materials, and equipment during emergencies. 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. Under provisions of the WTO, Ecuador has agreed to eliminate price bands of imports of 130 farm products over a seven-year period.

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, 20 percent, or 35 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 or 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 a person. 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

Exports do not require licenses but must be registered for statistical purposes. All export proceeds must be surrendered to authorized financial entities. Those who disregard the above surrender requirements cannot proceed with a new export operation until they comply with the requirement on the previous export. 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.

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 $1.02 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. A request for such approval must be submitted by the Minister of Finance and Public Credit 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 Planning Office (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.

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

Gold

The private sector is authorized to buy and sell gold in the international and domestic markets.

Changes During 1995

Exchange Arrangement

February 16. The midpoint of the preannounced exchange rate band was depreciated by about 3 percent.

June 30. The more appreciated central bank rate applied to the export proceeds of the state petroleum company was eliminated.

October 27. The exchange rate band was widened to 5 percent on each side of the midpoint (from about 2 percent); its midpoint was depreciated by 3.1 percent; and the annual pace of depreciation was accelerated to 16.5 percent (from 12 percent).

Egypt

(Position as of December 31, 1995)

Exchange Arrangement

The currency of Egypt is the Egyptian Pound, the external value of which is determined in the 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 31, 1995, the exchange rate for the U.S. dollar in the free market was LE 3.4 per $1.

A special exchange rate of LE 1.30 per $1 is applied to transactions effected under the bilateral payments agreement with Sudan. In addition, a separate rate of LE 0.3913 per $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 Trade and Supply 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 free zone status since 1977.

Pursuant to UN Security Council Resolution No. 883 of November 8, 1993, certain restrictions have been imposed on financial transactions in respect of the Libyan Arab Jamahiriya.

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 “D” accounts and the special accounts related to Egypt’s bilateral payments agreement with Sudan, as well as the indemnity agreements concluded with certain countries, there are three types of accounts: free accounts, special capital accounts, and capital and operations accounts.

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 payments for imports from Egypt. Currently, outstanding balances on these accounts are minimal.

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 (convertible currencies), foreign currency equivalents from funds transferred from 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.

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, as well as the balances of special accounts that were credited by the sale values of real estate previously purchased with transfers of convertible foreign exchange from abroad, may be paid in five equal annual installments with a minimum of LE 100. However, if the account balance is not exhausted after five years, this balance may be treated as a balance of a current account in Egyptian pounds.

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 Trade and Supply 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 in convertible currencies, with the exception of Sudan, 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 with Sudan, 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 textiles, which may be imported as inputs for production with the approval of the Ministry of Industry.

For customs purposes, products are classified into eight categories on which tariff rates range from 5 percent to 70 percent (with several exceptions). Surcharges ranging from 2 percent to 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 (e.g., hides and scrap metal) all goods may be exported without a license. Exports of cotton, rice, and petroleum are no longer a public sector monopoly. There are no requirements for repatriation of export proceeds.

Proceeds from exports by the private and public sectors under the bilateral payments agreement with 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. (See section on special capital accounts under Nonresident Accounts, above.)

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 exceeding the first LE 1 million of paid-up capital.

Gold

Banks are not authorized to deal or speculate, either for their own or their customers’ account, in precious metals.

Changes During 1995

No significant changes occurred in the exchange and trade system.

El Salvador

(Position as of December 31, 1995)

Exchange Arrangement

The currency of El Salvador is the Salvadoran Colón. Since January 1, 1994, the Central Reserve Bank has intervened in the foreign exchange market to maintain the exchange rate at C 8.75 per $1. 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 on the previous working day. On December 31, 1995, the buying and selling exchange rates of the Central Reserve Bank, the commercial banks, and the exchange houses were C 8.72 and C 8.79, respectively, per $1.

There are no arrangements for forward cover against exchange rate risk operating in the official, commercial banking, or exchange house sector.

El Salvador accepted the obligations of Article VIII, Sections 2, 3, and 4 of the Fund Agreement on November 6, 1946.

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 Expórtation (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. Reserve requirements on foreign currency deposits are the same as those for domestic currency deposits (30 percent on checking deposits and 20 percent on savings deposits).

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. Capital goods are subject to a 1 percent import tariff.

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 of plants and animal health as required by foreign importers, and extends textile visas for the categories with U.S. quotas. All exports must be registered, with the exception of exports amounting to less than $5,000, unless the product specifications call for such certification. Export permits issued by the Ministry of Economy are required for diesel fuel, liquefied petroleum gas, gray cement, and raw sugarcane for the U.S. preferential quota.

Proceeds from exports of goods may 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. External borrowing by financial institutions is subject to a reserve requirement of 10 percent. The net foreign asset position of commercial banks is limited to 20 percent of capital. Outward remittance of interest and amortization on external loans may be made without restriction.

Act No. 279 of March 27, 1996, 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).

Gold

Gold coins in the denomination of C 2,500 have been issued as legal tender. Residents and nonresidents may hold and acquire gold coins for numismatic purposes. Gold coins in denominations of C 25, C 50, C 100, and C 200 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 1995

Foreign Currency Deposit Accounts

April 29. Reserve requirements on domestic and foreign currency deposits were unified.

Imports and Import Payments

April 1. Import tariffs on capital goods were lowered to 1 percent from 5 percent.

Capital

May 20. The net foreign asset position of commercial banks was increased to 20 percent from 10 percent of their capital.

September 30. The reserve requirement on financial system external borrowing, eliminated in March 1995, was reimposed at 10 percent.

Equatorial Guinea

(Position as of June 30, 1996)

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 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 0.5 percent is levied on transfers to countries that are not members of the BEAC, except for 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 insurance 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 France (and its overseas departments and territories), Monaco, and 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). All payments to these countries may be made freely, but 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.

Equatorial Guinea accepted the obligations of Article VIII, Sections 2, 3, and 4 of the Fund Agreement on June 1, 1996.

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 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. Because 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 licensing, 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, 10 percent; for intermediate and miscellaneous goods, 20 percent; and for consumer goods, 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. However, these regulations are administered liberally, and bona fide requests for allowances in excess of these limits are normally granted. 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 1995

No significant changes occurred in the exchange and trade system.

Changes During 1996

Exchange Arrangement

June 1. Equatorial Guinea accepted the obligations of Article VIII, Sections 2, 3, and 4 of the Fund Agreement.

Eritrea

(Position as of March 31, 1996)

Exchange Arrangement

The provisional legal tender of Eritrea is the Ethiopian Birr, which is issued by the National Bank of Ethiopia. Prior to July 30, 1995, an official rate, the marginal auction rate (determined in the fortnightly auction conducted by the National Bank), and a preferential exchange rate existed in Ethiopia. Effective July 30, 1995, the official and marginal auction exchange rates were unified. This rate was Br 6.32 per U.S. dollar at the end of March 1996. The preferential exchange rate on that date was Br 7.20 per $1. The marginal auction rate applies to most transactions between Eritrea and Ethiopia, to government imports, and to all aid-funded imports. The preferential exchange rate is used for most private imports, all exports, and the conversion of foreign exchange remittances by Eritreans living abroad. The preferential exchange rate is fixed by the authorities for purchases of foreign exchange at Br 7.05 per $1, and for sales of foreign exchange at Br 7.20 per $1. There is also a parallel market rate, which stood at about Br 7.5 per $1 at the end of 1995.

The National Bank 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. dollar1 are communicated daily by the National Bank 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 National Bank 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 National Bank or the authorized dealers.

Administration of Control

The National Bank 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 National Bank 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 National Bank issues permits only for those imports that require foreign exchange from the banking system. The National Licensing Office issues licenses for importers, exporters, and commercial agents, and the Ministry of Trade and Industry 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 National Bank 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 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.

An agreement to establish a free trade area (FTA) between Eritrea and Ethiopia was signed on April 4, 1995.

Payments are generally made in 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

All residents are allowed to maintain foreign currency accounts. Nonbank residents may not open accounts abroad, unless they are specifically authorized by the National Bank.

With the approval of the National Bank, nonresidents may open accounts denominated in U.S. dollars or in Ethiopian birr with the Commercial Bank of Eritrea.

Imports and Import Payments

All importers must possess a valid trade license issued by the National Licensing Office. These licenses must be renewed each year at a fee of Br 200–Br 500. Import payments made through the banking system require permits that are issued by the National Bank 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 National Bank 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 with the National Bank.

There is a negative list for imports that must be financed through the banking system; however, goods included on this list may still be imported through the franco valuta system. As of March 30, 1996, the National Bank has not provided foreign exchange for the import of goods in the following categories: perfumes and cosmetics; hair wigs and dyes; toys and games; plastic shopping bags; jewelry and other ornaments; dishes and similar kitchen equipment, except for hotels; ready-made clothing; biscuits and confectionery items; fresh fruits, fruit juices, and vegetables, except for hotels and duty-free shops; live animals, except for breeding purposes; fresh or tinned meat, eggs, and fish; liquor and soft drinks, except for hotels and duty-free shops; salt; articles of decoration and Christmas trees; postcards, holiday or other greeting cards, and collectors’ postage stamps; ivory; and smoking articles. Effective November 11, 1995, importers have no longer been required to submit customs declarations to the National Bank for discharging purposes.

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 National Bank. The travel allowance for business trips abroad, except to Ethiopia, is $250 a person a day for up to 30 days. In bona fide cases, these limits may be exceeded with the approval of the National Bank. Exporters may freely use balances in their retention accounts for business travel purposes. For personal travel, the allowance is $100 a person (adult or minor) for up to two trips a year. The allowance for medical treatment abroad, other than Ethiopia, is up to $10,000 on recommendation of the Medical Board of the Ministry of Health. Residents may remit premiums on life insurance policies that were taken out before May 1991. Generally, the National Bank grants approval for purchase of foreign exchange exceeding limits. Effective November 11, 1995, the requirement to submit bills of settlement by authorized dealers of foreign exchange (e.g., hotels and duty-free shops) has been suspended, and the National Bank notified the general public that all Eritrean nationals could purchase air travel tickets in local or foreign currency.

In accordance with the Investment Code (Proclamation No. 59/1994), foreign investors may freely remit net profits and dividends accrued from investments, 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 National Licensing Office. 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 National Bank, which examines the sales contracts as to type of product, quantity, and unit price. Certain products 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 unprocessed 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 may 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

Foreign exchange receipts from current invisibles by residents must be surrendered to authorized dealers. 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 registered at the National Bank to ensure the smooth transfer of 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. 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 to pay subcontractors and expatriate staff abroad.

Foreign borrowing by residents in Eritrea must be registered with the National Bank. 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 National Bank or deposited in the correspondent accounts abroad. With the approval of the National Bank, 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. Ownership or possession of gold or other precious metals or ores requires the authorization of the Ministry of Energy, Mines, and Water Resources.

Changes During 1995

Exchange Arrangement

July 25. The official and marginal auction exchange rates were unified, and the marginal auction rate of Ethiopia (determined in the fortnightly foreign exchange auctions conducted by the National Bank of Ethiopia) was to be considered the official exchange rate of Eritrea.

Prescription of Currency

April 4. An agreement to establish a free trade area (FTA) between Eritrea and Ethiopia was signed.

Changes During 1996

Imports and Import Payments

March 30. The National Bank ceased to provide foreign exchange for the import of certain goods.

Estonia

(Position as of December 31, 1995)

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; the Bank of Estonia exchanges kroon banknotes and reserve deposits of commercial banks with the Bank of Estonia 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 accepted the obligations of Article VIII, Sections 2, 3, and 4 of the Fund Agreement on 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 other countries of the former Soviet Union can be effected through a system of correspondent accounts maintained by the Bank of Estonia with the respective central banks. Balances accrued in these accounts may in most cases 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 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

No licenses are needed to open and operate these accounts.

Imports and Exports

Imports are not subject to quantitative restrictions. Licenses are required for the following: metals, spirits, tobacco and tobacco goods, drugs, cars, weapons, ammunition and explosives, fuel and motor oil, and lottery tickets. Custom duties are levied on fur, fur goods, launches, yachts, and water-or motorskis. In addition, imports are subject to state duty and an 18 percent value-added tax, which is also levied on domestically produced goods. With the exception of beer, imported alcoholic beverages and tobacco products are subject to the same excise taxes levied on domestic products.2

Exports are not subject to quantitative restrictions. Licenses are required for the following: metals, spirits, tobacco and tobacco goods, drugs, cars, weapons, ammunition and explosives, fuel and motor oil, and lottery tickets. Customs duties are levied on items of cultural value. In addition, exports are subject to state duty for customs clearance.

Enterprises are not required to repatriate export proceeds. There are no surrender requirements.

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 1995

Imports and Exports

January 1. Free trade agreement with the European Union (EU) came into effect.

April 1. The import tariffs levied on fur, fur good, automobiles, bicycles, launches, and yachts were replaced with excises applicable for both domestic and imported products.

The ad valorem import and export processing fee of 0.5 percent was replaced by a specific fee in line with the World Trade Organization (WTO) principles.

December 31. Imported alcoholic beverages, except beer, and tobacco products were subject to the same excises as domestic products.

Capital

March 1. New prudential ratios for banks, set at international acceptable levels, became effective.

Ethiopia

(Position as of December 31, 1995)

Exchange Arrangement

The currency of Ethiopia is the Ethiopian Birr. Since May 1, 1993, the National Bank of Ethiopia has made foreign exchange available to licensed importers through a biweekly auction. Until May 15, 1995, the exchange system consisted of two rates: the official rate and the auction rate. The official exchange rate was pegged to the U.S. dollar and adjusted occasionally on the basis of the marginal rates derived from the auctions. On May 15, 1995, the two rates were unified in practice, with the official rate set at the average of the auctions rates during the preceding month. On July 25, 1995, the official and auction rates were unified de jure, with the official rate set equal to the marginal rate arising from the auction. The biweekly auctions are of the Dutch type, under which a preannounced quantity of foreign exchange is allocated among importers beginning with the highest price bid. Successful bids are completed at the respective bid prices, and the marginal exchange rate is determined by the lowest successful bid.

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. 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 purchase of foreign exchange for imports of petroleum products, pharmaceuticals, and fertilizers takes place outside the auction, with foreign exchange obtained directly from the National Bank at the official rate. Imports financed with suppliers’ credits require prior approval and are limited to raw and intermediate materials, pharmaceuticals, machinery, and transport equipment. 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 bank accounts abroad.

Imports and Import Payments

Unless importers have their own sources of foreign exchange (franco valuta imports) or obtain foreign exchange directly from the National Bank, they must participate in the foreign exchange auction. As of December 1995, the requirement that importers participating in the auction deposit 100 percent covers in an account with the National Bank was reduced to 25 percent. These deposits are not remunerated; if the importer is successful at the auction, the National Bank will open a letter of credit for the importer. Once the imports have arrived, foreign exchange is released by the National Bank against the import documents. The process may take up to six months, during which time the importer’s deposit is held with the National Bank.

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.

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 40 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 take out the same maximum amount on final departure, 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 $250 a day for a maximum period of 30 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 $300 a year. For government travel, the schedule of rates varies by country and city based on cost of living. Foreign exchange is not generally available to pay for education abroad. Residents sent abroad for training are allowed foreign exchange up to the equivalent of Br 1,200 a year. Residents may remit premiums on insurance policies taken out before April 1962. The limit on foreign exchange for medical treatment abroad was increased from $5,000 to $10,000, and subsequently eliminated on July 10, 1995. 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

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 the following 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 for debts, 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

Ownership of gold or platinum personal jewelry is permitted. Unless authorized by the Minister of Mines and Energy, the possession or custody of 50 ounces or more of raw refined gold or platinum, or in the form of nuggets, ore, 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 1995

Exchange Arrangement

July 25. The official and marginal auction exchange rates were unified.

Imports and Import Payments

February 3. The negative list of imports excluded from the foreign exchange auction was narrowed to used goods and imports restricted for reasons of health and security.

Payments for Invisibles

February 3. The share of net earnings that foreign employees may remit abroad monthly was increased from 30 percent to 40 percent.

February 3. The daily allowance of foreign exchange for business travelers was increased from $120 to $250, while the maximum period of days was raised from 20 to 30, and the requirement for an equivalent birr deposit was lifted. For tourism purposes, the allowance was raised to $300 a year from $50 a trip with a maximum of two trips a year.

February 3. The limit for the provision of foreign exchange for medical treatment abroad was increased to $10,000 from $5,000.

July 10. The limit for the provision of foreign exchange for medical treatment abroad was eliminated.

Fiji

(Position as of January 31, 1996)

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 were reviewed annually, but 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, 1995, the midpoint exchange rate for the Fiji dollar in terms of the U.S. dollar was F$1.4294 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 periods of up to six months for exports and nine months for imports.

Fiji accepted the obligations of Article VIII, Sections 2, 3, and 4 of the Fund Agreement on 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 nonresident2 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. These accounts may be credited freely with the account holders’ salaries (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. On January 1, 1996, residents (individuals) were allowed to open foreign currency accounts with domestic banks.

Exporters may retain up to 20 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$1,000 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$15,000, 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; (5) subscriptions to clubs, societies, and trade organizations, up to F$100,000; and (6) 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 three 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 that each emigrant is allowed to make every six months (see section on Capital, below).

Exports and Export Proceeds

Specific licenses are required for exports of sugar, wheat bran, copra meal, certain kinds of 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. Exporters may retain, with prior approval of the Reserve Bank, up to 20 percent of the 1993 export proceeds in foreign currency accounts maintained with an authorized dealer or a foreign bank abroad; 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$10 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$200,000 for a family and F$100,000 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$20 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 1995

No significant changes occurred in the exchange and trade system.

Changes During 1996

Resident and Nonresident Accounts

January 1. Residents (individuals) were allowed to open foreign currency accounts with domestic banks.

Payments for Invisibles

January 1. The limit on remittances of company profits was increased to operating profits earned during the current year plus retained earnings during the previous three years if not previously remitted (previously, two years); the limit for capital profits was increased to US$10 million a year from US$5 million a year.

January 1. Allowances for education expenses were increased to F$15,000 from F$10,000; for gift payments, to F$1,000 from F$500; and for subscriptions to clubs, societies, and trade organizations, to F$100,000 from F$50,000.

Exports and Export Proceeds

January 1. With prior approval of the Reserve Bank, exporters were allowed to retain up to 20 percent, previously 10 percent, of their total annual export earnings in a foreign currency account to meet import payments and other liabilities.

Capital

January 1. Nonbank financial institutions were allowed to invest up to US$20 million offshore in 1996.

January 1. Emigration allowances were increased to F$200,000 from F$125,000 for a family, and to F$100,000 from F$75,000 for a single person and, in both cases, to F$25,000 every six months thereafter.

Finland

(Position as of December 31, 1995)

Exchange Arrangement

The currency of Finland is the Finnish Markka, the external value of which is determined on the basis of supply and demand conditions in the exchange market. Finland became a member of the European Union (EU) without entry into the exchange rate mechanism (ERM). Necessary adjustments have been implemented under the European Economic Area (EEA) agreement.

The Finnish authorities do not maintain margins in respect of foreign exchange transactions. On December 29, 1995, the middle rate for the U.S. dollar was Fmk 4.3435 per $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 accepted the obligations of Article VIII, Sections 2, 3, and 4 of the Fund Agreement on September 25, 1979.

Administration of Control

There are no exchange controls. Export licensing is administered by the Ministry of Trade and Industry. The import licensing authority is the National Board of Customs; import licenses for firearms, etc., are issued by the Ministry of Internal Affairs. Export licensing for agricultural products relating to GATT export ceilings is administered by the Intervention Unit of the Ministry of Agriculture and Forestry.

In accordance with the Fund’s Executive Board Decision No. 144-(52/51) adopted on August 14, 1952, Finland notified the Fund on July 20, 1995, of exchange restrictions pursuant to UN Security Council Resolution on Libya, and of changes in exchange restrictions pursuant to UN Security Council Resolution on Iraq and the Federal Republic of Yugoslavia (Serbia/Montenegro)1 as well as on certain areas in Bosnia and Herzegovina, Libya, and Iraq.

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, certain steel and textile products, and certain industrial products originating from China.

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 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. There are no restrictions on foreign ownership in Finnish companies, but a monitoring system concerning the acquisition of the largest companies by foreigners is in place; this monitoring system does not apply to OECD country residents as of January 1, 1996. The system is intended to provide the Government with 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 1995

Exchange Arrangement

January 1. Finland became a member of the EU without entry into the exchange rate mechanism (ERM). Necessary adjustments have been implemented under the EEA agreement. At the same time, membership in the European Free Trade Association (EFTA) was terminated.

March 1. Exchange rate losses resulting from foreign-currency-denominated credits raised for private professional purposes are deductible in taxation according to the Income Tax Act.

France

(Position as of December 31, 1995)

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). 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).1

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, 1995, 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 escudos3.799202.51770
100Spanish pesetas4.577803.38510

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.2 On December 31, 1995, the rate for the U.S. dollar was F 4.9000 per $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.3 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 nonenterprise individuals, may purchase or sell foreign exchange forward without restriction. Forward sales of foreign currency are not restricted, whether or not they are for hedging purposes.

France accepted the obligations of Article VIII, Sections 2, 3, and 4 of the Fund Agreement on 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 in the currency issued by any institute of issue that maintains an Operations Account with the French Treasury.4 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 outside the European Union (EU) 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;5 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 (F100,000 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 where foreign investors 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 maximum, to prohibit the investment if public health, order, security, or national security is considered to be in danger.

The Minister of Economy is allowed a one-month period, at 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 1995

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 1995.)

Gabon

(Position as of June 30, 1996)

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, Economy, 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.

Gabon accepted the obligations of Article VIII, Sections 2, 3, and 4 of Fund Agreement on June 1, 1996.

Administration of Control

The Directorate of Financial Institutions of the Ministry of Finance, Economy, Budget, and Participations supervises borrowing and lending abroad. Exchange control is administered by the Minister of Finance, Economy, 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. 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 exceptions that are established by ministerial order,2 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.

There are quantitative restrictions on the importation of sugar, but those on the importation of edible oils, bottled water, soap, and cement were lifted on July 5, 1994.

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, Economy, 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 ma