Chapter

Introduction

Author(s):
International Monetary Fund. Monetary and Capital Markets Department
Published Date:
January 1996
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The Special Supplement seeks to provide information on countries’ exchange arrangements and exchange restrictions using a standardized approach with the intention of enhancing transparency and the uniformity of treatment of the information among countries. The new format also expands the coverage on the regulatory framework for capital movements. The information is drawn from a new exchange arrangements and exchange restrictions database established by the IMF. The following country tables present an abstract of the relevant information available to the Fund; a country table matrix included in an appendix provides a listing of the possible entries in this database.

The tabular presentation is organized as follows:

Status Under the IMF Articles of Agreement indicates whether the member country has accepted the obligations of Article VIII, Sections 2, 3, and 4 of the IMF’s Articles of Agreement or whether the country continues to avail itself of the transitional arrangements of Article XIV, Section 2.

Exchange Arrangement provides the description of the exchange arrangement that member countries have furnished to the IMF under Article IV, Section 2(a), including the exchange rate structure (i.e., whether there is one, two, or multiple exchange rates); the classification of exchange arrangements on the basis of how the exchange rate is determined in the main market when there is more than one market; the existence of exchange taxes or subsidies; and the features of forward exchange markets, if any. Official coverage of forward operations refers to the case where an official entity (the central bank or the government) assumes the exchange risk of a certain foreign exchange transaction.

Arrangements for Payments and Receipts provides a description, where appropriate, of prescription of currency requirements, the nature of payments arrangements, administration of exchange control, international security restrictions, the nature of payments arrears, and controls on the trading of gold and of domestic and foreign banknotes. The subsection Prescription of currency requirements 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. Under the subsection 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 subsection International security restrictions identifies restrictions on payments and transfers for current international transactions imposed by member countries for reasons of national or international security. IMF Executive Board Decision No. 144-(52/51) establishes the obligation of members to notify the Fund before imposing such restrictions, or if circumstances preclude advance notification to the Fund, the member should notify the Fund as promptly as possible, but ordinarily not later than 30 days after imposing the restrictions.

Resident Accounts and Nonresident Accounts describe the manner in which the country treats accounts, if any, maintained in its currency or in foreign currency, locally or abroad, by resident or nonresident account holders, 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.

Imports and Import Payments. This section seeks to describe the nature and extent of exchange and trade restrictions on imports and includes information on the existence of a foreign exchange budget (i.e., a priori allocation of a certain amount of foreign exchange, usually on an annual basis, for the importation of specific types of goods, sometimes indicating amounts for specified registered importers); on financing requirements for imports (minimum financing and advance payments requirements and the existence of advance deposits); and on documentation requirements for the release of foreign exchange for the payment of imports, such as the obligation to domicile the transactions with a specified financial institution, a preshipment inspection aimed at establishing the veracity of the import transaction in terms of volume, quality, and price, the obligation to pay by means of a letter of credit, and the need to submit an import license to obtain the foreign exchange. Under the subsection Import licenses and other nontariff measures, the following terms are used to describe the licensing system, if any: (1) positive list refers to the existence of a list in which goods that can be imported are listed; (2) negative list refers to the existence of a list in which goods whose importation is prohibited are listed; (3) open general licenses indicates arrangements whereby certain imports or other international transactions are exempt from the restrictive application of licensing requirements; (4) licenses with quotas refers to cases where a license for the importation of a certain good is granted, but a specific limit is imposed on the amount to be imported; and (5) other nontariff measures could include the prohibition to import a certain good or all goods from a certain country. Also this section provides a brief description of the import tax/tariff system, specifying whether they are collected through the exchange system, and information on whether state monopolies for the importation of certain goods exist.

Exports and Export Proceeds. This section identifies restrictions on the use of export proceeds as well as regulations on exports such as financing and documentation requirements (including letters of credit, the provision of guarantees, domiciliation, preshipment inspection, licensing requirements, and taxes levied—in particular through the exchange system—on exports. Repatriation requirement refers to the obligation of exporters to bring into the country exports proceeds either by selling them in the foreign exchange market or depositing them in authorized accounts. Surrender requirements refers to regulations requiring the recipient of export proceeds 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.

Under Payments for Invisible Transactions and Current Transfers, the procedures for permitting payments abroad for current transactions in invisibles are described with reference to prior approval requirements, the existence of quantitative limits and of indicative limits, and/or bona fide tests. Detailed information on the most common categories of transactions is provided when regulations differ for the various categories. Indicative limits establish maximum amounts up to which the purchase of foreign exchange is allowed upon declaration of the purpose of the transaction, mainly for statistical purposes. Amounts above those limits are granted if the bona fide nature of the transaction is established by presentation of appropriate documentation. Bona fide tests also can be applied for transactions for which quantitative limits have not been established.

Under Proceeds from Invisible Transactions and Current Transfers, any regulations governing exchange receipts derived from transactions in invisibles are given, and any limitations on the conversion into domestic currency and use of those receipts are described. The concepts of repatriation and surrender requirement are similar to those applied to export proceeds. Restrictions on the use of funds refers mainly to the limitations imposed on the use of receipts previously deposited in certain bank accounts.

The section on Capital Transactions describes regulations influencing capital movements. The concepts of controls and capital transactions are interpreted broadly. Thus controls on capital movements includes prohibitions; need for prior approvals, authorizations, and notifications; multiple currency practices; discriminatory taxes; and reserve requirements or interest penalties imposed by the authorities that regulate the conclusion or execution of transactions or transfers with respect to both inward and outward capital flows or the holding of assets at home by nonresidents and abroad by residents. The coverage of the regulations would apply to receipts as well as payments and to actions initiated by nonresidents and residents. Moreover, because of their close association with capital movements, information is also provided on local financial operations conducted in foreign currency.

Capital and money market instruments refers to the public offering or private placement on a primary market or listing for offering on a secondary market. Capital market securities refers to shares and other securities of a participatory nature, and bonds and other securities with original maturity above one year. Money market instruments refers to securities of an original maturity of one year or less and includes short-term instruments such as treasury bills, certificates of deposits, and bills of exchange.

Collective investment securities includes share certificates and registry entries or other evidence of investor interest in an institution for collective investment, such as mutual funds, and unit and investment trusts.

Derivatives and other instruments refers to operations in other negotiable instruments and nonsecuritized claims not covered under the earlier subsections. These may include operations in rights; warrants; financial options and futures; secondary market operations in other financial claims (including sovereign loans, mortgage loans, commercial credits, negotiable instruments originating as loans, receivables and discounted bills of trade); forward operations (including forward operations in foreign exchange); swaps of bonds and other debt securities; credits and loans; and other swaps (interest rate, debt/equity, equity/debt, foreign currency and swaps of any of the instruments listed above).

Credit operations is subdivided into commercial credits covering operations directly linked with international trade transactions or with the rendering of international services; financial credits, which are credits other than commercial credits; sureties and guarantees, including securities pledged for payment or performance of a contract, such as warrants or avals, performance bonds, and stand-by letters of credit; and financial backup facilities, which cover credit facilities used as a guarantee for independent financial operations.

Direct investment refers to investment for the purpose of establishing lasting economic relations, essentially for the purpose of producing goods and services, and, in particular, investments that give the possibility of exercising an effective influence on the management thereof. It includes the creation or extension of a wholly-owned enterprise, subsidiary, or branch and the acquisition of full or partial ownership of a new or existing enterprise that result in effective influence over the operations of this enterprise. Liquidation of direct investment refers to the transfer of principal, including the initial capital and capital gains of a direct investment as defined above.

Real estate transactions refers to the acquisition of real estate not associated with direct investment. It would include for example investments of a purely financial nature in real estate or the acquisition of real estate for personal use.

Provisions specific to commercial banks and other credit institutions describes regulations that are specific to these institutions, such as monetary and prudential controls, including reserve requirements; liquid asset requirements; interest rates regulations; credit controls; and open foreign exchange position limits. Provisions specific to institutional investors describes controls specific to those institutions, such as insurance companies and pension funds, and may include, for example, controls on the proportion of portfolios of such institutions that may be held in local or foreign assets. Other restrictions imposed by securities laws refers to additional regulations on capital movements imposed by those laws such as restrictions on the listing of foreign securities on local security markets.

Argentina

(Position as of December 31, 1995)

Status Under IMF Articles of Agreement
Article VIIIDate of acceptance: May 14, 1968.
Exchange Arrangement
CurrencyThe currency of Argentina is the Argentine peso.
Other legal tenderTransactions in convertible currencies are permitted, and contracts in these currencies are legally enforceable, although the currencies are not legal tender.
Exchange rate structureUnitary.
Classification
PeggedThe external value of the peso is pegged to the U.S. dollar under a currency board type of arrangement. Exchange rates of other currencies are based on the buying and selling rates for the U.S. dollar in markets abroad.
Exchange taxNo.
Exchange subsidyNo.
Forward exchange marketSwap transactions and forward exchange operations are permitted in any currency, and the rates may be freely negotiated.
Official cover of forward operationsNo.
Arrangements for Payments and Receipts
Prescription of currency requirementsTransactions with countries with which there are no payments agreements must be settled in freely convertible currencies.
Bilateral payments arrangementsNo.
Other payments arrangementsArgentina has signed agreements with Bulgaria, Cuba, Hungary, Malaysia, and Russia. Payments between Argentina and these countries are settled on a voluntary basis through accounts opened with the Central Bank of Argentina (BCRA) and the other central banks concerned, with the exception of Bulgaria and Cuba, where settlement through the accounts specified in the agreements is obligatory.
Regional arrangementsWithin the framework of the multilateral clearing system of the LAIA, payments between Argentina and Brazil, Chile, Colombia, Ecuador, Mexico, Paraguay, Peru, Uruguay, and Venezuela are settled voluntarily through payment agreements and a reciprocal credit mechanism. All payments between Argentina and Bolivia and the Dominican Republic must be made through the accounts specified in the agreements.
Administration of control
Exchange control authoritiesAll 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 make certain foreign exchange transactions on the condition that they meet certain additional capital requirements.
International security restrictions
In accordance with UN sanctionsRestrictions on current payments with respect to Iraq, Libya, and the Federal Republic of Yugoslavia (Serbia/Montenegro) were imposed.
Payments arrearsNo.
Controls on trade in gold (coins and/or bullion)
Controls on domestic ownership and/or tradeResidents 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 the market value of which is based on the daily list prices of major transactions.
Controls on external tradeThe 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%, as well as a sales tax. Institutions may carry out arbitrage operations with their clients in gold coins or good delivery gold bars against foreign banknotes. Authorized institutions may export gold to entities abroad.
Controls on exports and imports of banknotesNo.
Resident Accounts
Eligibility to hold accountsJuridical and natural persons are eligible. Authorized banks may open accounts in pesos or in foreign exchange provided that identification requirements aimed, inter alia, at preventing money laundering have been met.
Foreign exchange accounts permittedForeign exchange accounts must be denominated in convertible currencies and may be credited only with cash or with remittances from abroad in the following currencies: U.S. dollars for current accounts, savings, and fixed-term deposits; and deutsche mark and other currencies that the BCRA explicitly authorizes at the request of financial institutions for deposits in savings and fixed-term accounts. Credit balances may be used freely in Argentina or abroad. Transfers between accounts may be made freely. The use of checking accounts denominated in U.S. dollars is allowed for domestic transactions.
Held domesticallyYes.
Approval requiredNo.
Held abroadYes.
Approval requiredNo.
Accounts in domestic currency convertible into foreign currencyYes.
Nonresident Accounts
Eligibility to hold accountsSame regulations as for resident accounts apply.
Foreign exchange accounts permittedYes.
Approval requiredNo.
Domestic currency accountsYes.
Convertible into foreign currencyYes.
Approval requiredNo.
Blocked accountsNo.
Imports and Import Payments
Foreign exchange budgetNo.
Financing requirements for importsNo.
Documentation requirements for release of foreign exchange for importsNo.
Import licenses and other nontariff measures
Negative listRestrictions are in force solely for security, hygiene, and public health reasons.
Licenses with quotasQuantitative restrictions are applied to the automobile sector and to some paper products.
Other nontariff measuresThere are no nontariff barriers on intra-MERCOSUR trade. However, 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.
Import taxes and/or tariffsA substantial portion of intra-MERCOSUR trade is conducted at a zero tariff rate, but member countries may maintain tariffs for some items. Argentina applies tariffs to certain textiles, paper, and iron and steel products. This regime will be in force until the end of 1998, at which time tariffs will be reduced to zero.

Argentina and the MERCOSUR countries apply a common external tariff (CET) to imports from the rest of the world that encompasses all products, with certain exceptions (Argentina has 300 exceptions) that are subject to a transitional regime until 2001 and 2006. CET rates currently range up to 20%. At the end of the transitional period in 2001, the CET will be 14% for capital goods, and in 2006, the CET will be 16% for computer and telecommunications equipment.

A statistical tax of 3% is applied to imports from all countries, except those from MERCOSUR countries. This tax is waived for capital goods, fuel, and sensitive goods from the paper, computer, and telecommunications sectors.
Taxes collected through the exchange systemNo.
State import monopolyNo.
Exports and Export Proceeds
Repatriation requirementsNo.
Surrender requirementsNo.
Financing requirementsNo.
Documentation requirementsNo.
Export licensesLicenses are required only for goods subject to quantitative restrictions.
With quotasQuantitative restrictions on exports are maintained only on arms, protected animal species, and products subject to international agreements.
Export taxesExport rebate rates, which had been equal to import duties were reduced to a range of 3% to 15%, on January 1, 1995 when MERCOSUR became effective. Export rebates were further reduced on March 20, 1995 by 25%. Other rebates of 15% exist for exports of industrial plants and engineering operations sold under turnkey contracts outside the zone and 10% within the zone. Exports through ports and customs posts on the Colorado River received an additional rebate ranging from 7% to 12% until the end of 1994. Since January 1, 1995, the rates have been reduced by 1% each year. The drawback regime is in addition to the export rebates, allowing exporters to receive refunds of import duties, the statistical tax, and the value-added tax (VAT) that are levied on inputs used in the processing of products for export. To be eligible for the 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 an additional 180 days. To benefit from the temporary admission regime, the exporter must be the direct user of the merchandise subject to temporary importation. Temporary admission is an alternative to the drawback system, and both cannot be used simultaneously. 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 Investment and Foreign Trade Bank.
Taxes collected through the exchange systemNo.
Payments for Invisible Transactions and Current Transfers
Controls on these paymentsNo.
Proceeds from Invisible Transactions and Current Transfers
Repatriation requirementsNo.
Surrender requirementsNo.
Restrictions on use of fundsNo.
Capital Transactions
Controls on capital and money market instrumentsUnder the regulations of the National Securities Commission (CNV), foreign investors wishing to make a public offering of securities in Argentina must meet the same requirements as those applicable to Argentine investors. In each case they must establish a permanent representative office and a domicile in Argentina to receive notices. They must state whether the securities are also being offered to the public in their country of origin and specify the initial and periodic information requirements to which they are subject. If the CNV believes that the regulations in the country of origin properly protect local investors and guarantee an adequate flow of information, the CNV may lower the requirements for these investors. The CNV may authorize foreign investors, considering each case individually, to submit only such information as they would periodically submit to the corresponding authority in their jurisdiction of origin.
Controls on derivatives and other instrumentsNo.
Controls on credit operationsFunds lent by residents to nonresidents must be used locally.
Controls on direct investment
Inward direct investmentForeign companies are allowed to invest in Argentina without prior government approval on an equal footing with domestic firms. 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. This principle applies even in cases where a foreign investment results in full foreign ownership of a domestic company.
Controls on liquidation of direct investmentForeign investors are entitled to freely repatriate their investment, including earnings, and they may exercise their right at any time and have unrestricted access to the foreign exchange market. These rights assisting foreign investors have been further established under international law by means of over 30 investment promotion and protection agreements, including all countries where foreign investment usually originates, such as Canada, France, Germany, Italy, Spain, Sweden, Switzerland, the United Kingdom, and the United States. Argentina is a member of the Multilateral Investment Guarantee Agency and the International Center for the Settlement of Investment Disputes, and maintains a valid and active agreement with the Overseas Private Investment Corporation.
Controls on real estate transactions
Purchase locally by nonresidentsFor purchases of real estate in border areas, a foreign investor must seek prior approval for the project from the Border Superintendency of the Ministry of Defense. This limitation exists for national security reasons.
Provisions specific to commercial banks and other credit institutions
Differential treatment of nonresident deposit accounts and/or deposit accounts in foreign exchange
Open foreign exchange position limitsThere is an allowable open foreign currency position (liabilities exceeding assets) of up to 25% of qualifying net assets for two months prior to the reporting month.
Provisions specific to institutional investors
Limits (max.) on portfolio invested abroadThere is a 25% limit on the investment trust portfolio, but this limit does not apply to MERCOSUR.

Also, according to profitability and security criteria, no more than 10% of investments may be made in securities issued by a foreign country, and no more than 10% in the securities of foreign corporations.
Limits (min.) on portfolio invested locallyIn the event that the trust’s assets consist of the securities, tender offer should be made in Argentina or abroad with a minimum of 75% of the investment being made in assets issued and traded in Argentina.
Other controls imposed by securities lawsNo.

Australia

(Position as of December 31, 1995)

Status Under IMF Articles of Agreement
Article VIIIDate of acceptance: July 1, 1965.
Exchange Arrangement
CurrencyThe currency of Australia is the Australian dollar. It also circulates in several other countries, including Kiribati, Nauru, and Tuvalu.
Other legal tenderNo.
Exchange rate structureUnitary.
Independent floatingThe exchange rate of the Australian dollar is market determined. 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 with regard to trade- and non-trade-related transactions. But the Reserve Bank of Australia (RBA) retains discretionary power to intervene in the foreign exchange market. There is no official exchange rate for the Australian dollar. The RBA publishes an indicative rate for the Australian dollar based on market observation at 4 p.m. daily.
Exchange taxNo.
Exchange subsidyNo.
Forward exchange marketActive trading takes place in forward and futures contracts.
Official cover of forward operationsNo.
Arrangements for Payments and Receipts
Prescription of currency requirementsNo.
Bilateral payments arrangementsNo.
Other payments arrangementsNo.
Administration of control
Exchange control authoritiesThe RBA supervises authorized dealers and regulates open foreign exchange positions. The Australian Transaction Reports and Analysis Center (AUSTRAC), a law enforcement agency, receives information on international transactions including those in cash, which it can pass on to a number of other enforcement and governmental agencies.
International security restrictions
In accordance with UN sanctionsThe only restrictions on external payments and transfers are those to give effect to UN Security Council Resolutions imposing sanctions against Iraq and Libya. Restrictions also apply for transactions involving the authorities of the Federal Republic of Yugoslavia (Serbia/Montenegro).
Payments arrearsNo.
Controls on trade in gold (coins and/or bullion)Exportation or importation of coins and notes totaling $A5,000 or more must be re-ported to AUSTRAC.
Controls on exports and imports of banknotesAmounts equivalent to $A5,000 or more must be reported to AUSTRAC.
Resident Accounts
Eligibility to hold accountsJuridical and natural persons are eligible.
Foreign exchange accounts permittedYes.
Held domesticallyLocal purchases and sales of foreign currency must be through an authorized dealer.
Approval requiredNo.
Held abroadYes.
Approval requiredNo.
Accounts in domestic currency convertible into foreign currencyConversion must be done through an authorized foreign exchange dealer.
Nonresident Accounts
Eligibility to hold accountsJuridical and natural persons are eligible.
Foreign exchange accounts permittedLocal purchases and sales of foreign currency must be through an authorized dealer.
Approval requiredNo.
Domestic currency accountsYes.
Convertible into foreign currencyConversion must be done through an authorized foreign exchange dealer.
Approval requiredNo.
Blocked accountsOnly those accounts affected by UN sanctions are blocked.
Imports and Import Payments
Foreign exchange budgetNo.
Financing requirements for importsNo.
Documentation requirements for release of foreign exchange for importsNo.
Import licenses and other nontariff measuresThere are no import-licensing requirements or quotas on imports other than the tariff quota, which applies to certain cheeses and curd.
Negative listFor 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, certain chemicals and 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.
Import taxes and/or tariffsAustralia is implementing a tariff reform program that will reduce most rates to a maximum of 5% by July 1996. Tariffs on passenger automobiles will decline to 15% from 35%, while tariffs on textiles, footwear, and clothing will decline to a maximum of 25% by the year 2000. Tariff quotas on textiles, footwear, and clothing were eliminated in March 1993, while most specific duties were converted to ad valorem duties in July 1993.

The ANZCERTA establishes free trade in goods. The SPARTECA provides nonreciprocal, duty-free access to most markets in Australia and New Zealand for other members. Trade between Papua New Guinea and Australia is covered by the Agreement on Trade and Commercial Relations between Australia and Papua New Guinea.

Developing countries receive tariff preferences on exports to Australia under the Australian System of Tariff Preferences for Developing Countries, with a uniform preferential margin of 5%. Preferences have been eliminated on imports of certain industries such as textiles, clothing and footwear, chemicals, vegetable and fruit preparations, tuna, and sugar, except from the least-developed countries and South Pacific Island Territories.
Taxes collected through the exchange systemNo.
Exports and Export Proceeds
Repatriation requirementsNo.
Surrender requirementsNo.
Financing requirementsNo.
Documentation requirementsNo.
Export licensesExport prohibitions and restrictions in effect are designed to ensure quality control, administer trade embargoes, and meet obligations under international arrangements. These prohibitions are also set up to restrict the exportation of certain defense materials; regulate the exportation of goods that involve high technology and have dual civilian and military applications; maintain adequate measures of control over designated cultural property, resources, flora, and fauna; secure conservation objectives; and respond to specific market distortions abroad. Remaining controls on primary products apply mainly to food and agricultural products.

Approval must be obtained from the government to export coal, liquid natural gas, bauxite, and mineral sands. Export controls apply to uranium to ensure compliance with the government’s nonproliferation policy obligations. Restrictions also apply to certain other nuclear and related materials. Licenses are required for exports of unprocessed wood, including wood chips. The Australian Dairy Corporation administers export control powers in relation to prescribed dairy products under the provisions of the Dairy Produce Act. All exporters of controlled dairy products must be licensed. This system allows the control of exports to markets where quantitative restrictions apply and ensures that export prices do not fall below minimum prices agreed to under the GATT for these products.

Exports of red meat and livestock can be made only by persons or firms licensed by the Australian Meat and Livestock Corporation (AMLC). The AMLC has the power to engage in export trading in its own right and may introduce arrangements to control Australian exports to that market to observe quantitative restrictions in any particular market. Other Commonwealth statutory marketing authorities that have export control powers are the Australian Horticultural Corporation, the Australian Honey Board, the Australian Wheat Board, and the Australian Wine and Brandy Corporation. The Australian Wheat Board’s powers make it the sole exporter of Australian wheat.
Export taxes
Taxes collected through the exchange systemNo.
Payments for Invisible Transactions and Current Transfers
Controls on these paymentsNo.
Proceeds from Invisible Transactions and Current Transfers
Repatriation requirementsNo.
Surrender requirementsNo.
Restrictions on use of fundsNo.
Capital Transactions
Controls on capital and money market instrumentsThe purchase of shares and other securities of a participating nature, which may be affected by laws on inward direct investment, is restricted. Foreign governments, their agencies, and international organizations are not permitted to issue bearer bonds and, when borrowing in the Australian capital market, must advise the Australian authorities of the details of each borrowing after its completion. Overseas banks not authorized to do banking business in Australia may not, without prior approval of the Treasurer, issue securities in the name of the bank if they include “bank” or words of similar import.
On capital market securities
Purchase in the country by nonresidentsYes.
Sale or issue locally by nonresidentsYes.
On money market instruments
Sale or issue locally by nonresidentsYes.
On collective investment securitiesNo.
Controls on derivatives and other instrumentsYes.
Controls on credit operationsNo.
Controls on direct investment
Inward direct investmentPrior authorization is required for: (1) proposals by foreign interests that would result in the ownership of a shareholding of 15% or more by a single foreign interest or associates, or 40% or more by two or more unrelated foreign interests in an Australian corporation; however, foreign investment in businesses with total assets of less than $A5 million (less than $A3 million for rural properties) is exempt from examination and notification; (2) all investments in those sectors are subject to special restrictions; (3) proposals to establish new businesses in other sectors of the economy where the total amount of the investment is $A10 million or more; and (4) exemption from taxation on interest earned on investment of international organizations, foreign central banks, and other monetary authorities.
Controls on liquidation of direct investmentNo.
Controls on real estate transactions
Purchase locally by nonresidentsAll acquisitions of real estate must be notified, unless exempt by regulation. Acquisitions of nonresidential commercial real estate for development are normally approved, as are acquisitions of developed nonresidential commercial real estate subject to such acquisitions being made with 50% Australian equity participation; where Australian equity is not available, 100% acquisitions by foreign interests are approved unless they are contrary to the national interest.

Approval is also normally granted for residential land for development and for the acquisitions of dwellings (including condominiums), direct from a developer, either “off the plan,” while under construction, or completed but never occupied, provided that no more than 50% of the total number of dwellings is sold to foreign investors.

Foreign acquisitions of established residential real estate are not normally approved except in cases involving temporary residents who require accommodation for a period in excess of 12 months, subject to resale of the property upon departure. Foreign persons who are entitled to reside permanently in Australia are not required to seek approval to acquire any form of residential real estate. Foreign acquisition of residential real estate (including condominiums) within a designated “integrated tourist resort” is exempt from authorization.
Provisions specific to commercial banks and other credit institutions
Differential treatment of nonresident deposit accounts and/or deposit ac-counts in foreign exchange
Reserve requirementsYes.
Liquid asset requirementsYes.
Interest rate controlsYes.
Investment regulationsYes.
Credit controlsYes.
Open foreign exchange position limitsYes.

Austria

(Position as of December 31, 1995)

Status Under IMF Articles of Agreement
Article VIIIDate of Acceptance: August 1, 1962.
Exchange Arrangement
CurrencyThe currency of Austria is the Austrian schilling.
Other legal tenderNo.
Exchange rate structureUnitary.
Classification
Cooperative arrangementAustria participates in the ERM of the EMS. 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% around the cross rates based on the central rates expressed in ECUs, and continues to keep the schilling’s external value constant against the deutsche mark. However, to ensure a proper functioning of the system, the Austrian authorities 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.
Exchange taxNo.
Exchange subsidyNo.
Forward exchange marketYes.
Official cover of forward operationsNo.
Arrangements for Payments and Receipts
Prescription of currency requirementsSettlements with all countries may be made either in foreign currencies or through free schilling accounts.
Bilateral payments arrangementsThere are no bilateral payments agreements; however, several bilateral agreements exist for the promotion and protection of investments, which include provisions on transfers between the signatories.
Administration of control
Exchange control authoritiesMost exchange transactions are effected through Austrian banks authorized by the central bank.
International security restrictions
In accordance with UN sanctionsRegulation No. 241/94 of the EU Council regarding the further discontinuation of the economic and financial relations between the EU and the areas of Bosnia and Herzegovina under the control of Bosnian Serb forces is in force since January 1, 1995. Restrictions are imposed on certain current payments and transfers to Libya in accordance with UN Security Council Resolution No. 833 (1993). Certain restrictions on payments and transfers for current international transactions to the government of Iraq are still in force.
Payments arrearsNo.
Controls on trade in gold (coins and/or bullion)No.
Controls on exports and imports of banknotesNo.
Resident Accounts
Eligibility to hold accountsJuridical and natural persons are eligible.
Foreign exchange accounts permittedYes.
Held domesticallyYes.
Approval requiredNo.
Held abroadYes.
Approval requiredNo.
Accounts in domestic currency convertible into foreign currencyYes.
Nonresident Accounts
Eligibility to hold accountsJuridical and natural persons are eligible.
Foreign exchange accounts permittedYes.
Approval requiredNo.
Domestic currency accountsYes.
Convertible into foreign currencyYes.
Approval requiredNo.
Blocked accountsThese are accounts affected by UN sanctions.
Imports and Import Payments
Foreign exchange budgetNo.
Financing requirements for importsNo.
Documentation requirements for release of foreign exchange for importsNo.
Import licenses and other nontariff measuresExport and import licenses must be issued by the Federal Ministry for Economic Affairs for industrial products and by the Federal Ministry of Agricultural and Forestry for agricultural products. In instances where the customs authorities are authorized to issue import and export licenses on behalf of these ministries, licenses are granted without delay or formal application when the goods clear customs. As a member of the EU, Austria applies all import regulations based on the common commercial policy (Art. 113 EEC) i.e., for industrial product import restrictions in the textiles and clothing sector and statistical surveillance for products falling under the scope of the ECSC Treaty. There are also regulations vis-à-vis China for imports of some consumer products based on current EU law.
Import taxes and/or tariffsAustria applies the Common Import Regime of the EU.
Taxes collected through the exchange systemNo.
State import monopolyNo.
Exports and Export Proceeds
Repatriation requirementsNo.
Surrender requirementsNo.
Export licensesLicenses for regulated exports 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.
Without quotasYes.
With quotasYes.
Export taxes
Taxes collected through the exchange systemNo.
Payments for Invisible Transactions and Current Transfers
Controls on these paymentsNo.
Proceeds from Invisible Transactions and Current Transfers
Repatriation requirementsNo.
Surrender requirementsNo.
Restrictions on use of fundsNo.
Capital Transactions
Controls on capital and money market instrumentsNo.
Controls on derivatives and other instrumentsNo.
Controls on credit operationsNo.
Controls on direct investment
Outward direct investmentInvestments above S100,000 must be reported to the Austrian National Bank.
Inward direct investmentIn the auditing and legal profession, the transport sector, and the electric power generation sector, certain restrictions apply for investments by nonresidents and Austrian residents who are not nationals of one of the countries of the EEA.
Controls on liquidation of direct investmentNo.
Controls on real estate transactions
Purchase locally by nonresidentsThe acquisition of real estate is subject to approval by local authorities.
Provisions specific to commercial banks and other credit institutions
Differential treatment of nonresident deposit accounts and/or deposit ac-counts in foreign exchange
Open foreign exchange position limitsAn open position must not exceed 30% of own funds at the end of any business day; the total sum of all open positions must not exceed 50% of own funds.

Belgium and Luxembourg

(Position as of December 31, 1995)

Status Under IMF Articles of Agreement
Article VIIIDate of Acceptance: February 15, 1961.
Exchange Arrangement
CurrencyThe 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.
Other legal tenderNo.
Exchange rate structureUnitary.
Classification
Cooperative arrangementBelgium and Luxembourg participate in the ERM of the EMS. 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% above or below the cross rates derived from the central rates expressed in ECUs.
Exchange taxNo.
Exchange subsidyNo.
Forward exchange marketBanks 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.
Official cover of forward operationsNo.
Arrangements for Payments and Receipts
Prescription of currency requirementsNo.
Bilateral payments arrangementsNo.
Other payments arrangementsNo.
Administration of controlNo.
International security restrictions
In accordance with IMF Executive Board Decision No. 144-(52/51)Belgium and Luxembourg apply exchange restrictions against Iraq and the Federal Republic of Yugoslavia (Serbia/Montenegro). Belgium also imposes exchange restrictions on Libya and on the areas of Bosnia and Herzegovina under the control of the Bosnian Serb forces.
In accordance with UN sanctionsYes.
Payments arrearsNo.
Controls on trade in gold (coins and/or bullion)No.
Controls on exports and imports of banknotesNo.
Resident Accounts
Eligibility to hold accountsJuridical and natural persons are eligible.
Foreign exchange accounts permittedYes.
Held domesticallyYes.
Approval requiredNo.
Held abroadYes.
Approval requiredNo.
Accounts in domestic currency convertible into foreign currencyYes.
Nonresident Accounts
Eligibility to hold accountsJuridical and natural persons are eligible.
Foreign exchange accounts permittedYes.
Approval requiredNo.
Domestic currency accountsYes.
Convertible into foreign currencyYes.
Approval requiredNo.
Blocked accountsThere are accounts affected by international security restrictions.
Imports and Import Payments
Foreign exchange budgetNo.
Financing requirements for importsNo.
Documentation requirements for release of foreign exchange for importsNo.
Import licenses and other nontariff measures
Positive listIndividual licenses are required for certain specified imports from all countries (most imports do not require an import license when imported from the member countries of the EU), including many textile and steel products, certain agricultural products, foodstuffs, diamonds, weapons, and nontextile products from China. All other commodities are free of license requirements.
Licenses with quotasAlong with other EU countries, BLEU applies quotas on a number of textile products from non-EU countries in the framework of the MFA and also applies a system of minimum import prices to foreign steel products; quotas on a number of steel products from Kazakstan, Russia, and Ukraine; and quotas on a number of products from China (toys, shoes, ceramic, porcelain, and glassware).
Import taxes and/or tariffsBelgium applies the Common Import Regime of the EU to imports of most other agricultural and livestock products from non-EU countries.
Taxes collected through the exchange systemNo.
State import monopolyNo.
Exports and Export Proceeds
Repatriation requirementsNo.
Surrender requirementsNo.
Financing requirementsNo.
Documentation requirementsNo.
Export licensesExport licenses are required only for a few products, mostly of a strategic character, and for diamonds and for some iron and steel products.
Without quotasYes.
Export taxesNo.
Payments for Invisible Transactions and Current Transfers
Controls on these paymentsNo.
Proceeds from Invisible Transactions and Current Transfers
Repatriation requirementsNo.
Surrender requirementsNo.
Restrictions on use of fundsNo.
Capital Transactions
Controls on capital and money market instrumentsThe public issue or sale of debt, money market, and collective investment securities that are not of EU origin is restricted.
Controls on derivatives and other instruments
Sale or issue locally by nonresidentsThe public issue or sale of instruments and claims that are not of EU origin is restricted.
Controls on credit operationsNo.
Controls on direct investment
Inward direct investmentNo authorization is required for inward direct investment in Belgium, except for a takeover by or on behalf of a person, company, or institution from a non-EU state, and the acquisition of Belgian flag vessels by shipping companies not having their principal office in Belgium.
Controls on liquidation of direct investmentNo.
Controls on real estate transactionsNo.
Provisions specific to commercial banks and other credit institutionsNo.
Provisions specific to institutional investors
Currency matching regulations on assets/liabilities compositionYes.
Other controls imposed by securities lawsNo.

Brazil

(Position as of February 29, 1996)

Status Under IMF Articles of Agreement
Article XIVYes.
Exchange Arrangement
CurrencyThe currency of Brazil is the real (plural reais).
Other legal tenderNo.
Exchange rate structure
DualThe dual exchange rate market comprises an official (also identified as “free” or commercial) and a tourist (or floating) exchange rate. The same exchange rates apply to “agreement dollars” used for settlements with bilateral agreement countries. Rates for other currencies are based on the U.S. dollar rates in Brazil and the rates for the currencies concerned in the international market.
Classification
Managed floatingIn both exchange markets, the rates are freely negotiated between the authorized dealers and their clients. Banks make arbitrage operations between both markets; such transactions may be carried out either on a spot basis by cable or on a forward basis and must be settled within two working days for spot transactions. The Central Bank of Brazil (CBB) has set an adjustable band for the external value of the real. Since January 30, 1996, the band has been R$0.97 to R$1.06 per U.S. dollar. Transactions in the exchange markets 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.
Exchange subsidyNo.
Forward exchange marketBanks are permitted to buy and sell foreign exchange to each other without restriction; such transactions may be carried out on a forward basis and must be settled within 180 days. Banks may pay their clients a premium, corresponding to the expected variation of the domestic currency in relation to the currency subject to 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.
Official cover of forward operationsNo.
Arrangements for Payments and Receipts
Prescription of currency requirementsPrescription 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. Settlements with countries with which Brazil has no payments agreements and no special payments arrangements are made in U.S. dollars.
Bilateral payments arrangements
OperativeSettlements with Hungary are made in third-country currencies every 90 days, and interest rates payable on balances are based on those in the international capital market.
Other payments arrangements
Clearing agreementsPayments 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 LAIA.
Administration of control
Exchange control authoritiesThe 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 CBB. The Ministry of Planning and Budget 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 Department of Foreign Trade Operations (DECEX). The Department of International Negotiations (DEINT) or the SECEX is responsible for formulating guidelines for tariff policy. The DEINT also decides on changes in customs duties under the provisions of existing legislation. The Ministry of Finance coordinates public sector import policy.
Payments arrears
PrivateForeign exchange for payments of principal and interest, corresponding to medium- and long-term debt in arrears over 180 days, must be obtained in the floating-rate exchange market.
Controls on trade in gold (coins and/or bullions)There are two separate markets for gold transaction: the financial and commercial markets. Over 50% of transactions occur in the financial market, which is regulated by the CBB. The first domestic negotiation of newly mined gold on this market is subject to a 1 % 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 CBB and authorized institutions are empowered to buy and sell gold on the domestic and international markets. Purchases of gold are made at current domestic and international prices; the international price is considered a target price.
Controls on domestic ownership and/or tradeYes.
Controls on external tradeThe CBB and authorized institutions may buy and sell gold for monetary use on the international market. Imports and exports of gold for nonmonetary use are subject to the same procedures as those that are applied through the SECEX in respect of other products.
Controls on exports and imports of banknotesTravelers may take out or bring in 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% of the amount exchanged into domestic currency during the visit.
Resident Accounts
Eligibility to hold accountsJuridical and natural persons are eligible.
Foreign exchange accounts permittedInstitutions authorized to operate in the floating-rate market, tourism agencies, the Brazilian mail, credit card companies, the Brazilian Reinsurance Institute (IRB) may open these accounts.
Held domesticallyYes.
Approval requiredNo.
Held abroadYes.
Approval requiredNo.
Accounts in domestic currency convertible into foreign currencyNo.
Nonresident Accounts
Eligibility to hold accountsJuridical and natural persons are eligible.
Foreign exchange accounts permittedEmbassies, foreign delegations, and international organizations recognized by the Brazilian government; foreign companies of international transportation; foreign citizens in transit in the country; and Brazilian citizens living abroad may open these accounts.
Approval requiredNo.
Domestic currency accountsYes.
Convertible into foreign currencyFinancial institutions and nonfinancial natural or juridical persons, when the balance originated in a sale of foreign currency to a Brazilian bank, may hold these accounts (deposits on these accounts are not convertible).
Imports and Import Payments
Financing requirements for importsThe 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 CBB. External financing at terms in excess of 720 days for imports must be authorized by the CBB, 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 CBB. The time to settle anticipatory settlements for critical imports is 30 days. Exchange contracts may be settled within 180 days.
Documentation requirements for release of foreign exchange for importsAll importers must be registered with the SECEX, and goods may be imported only by registered firms or persons, except for imports by the public sector (federal, statal, and municipal); imports by PETROBRAS (Brazilian government oil enterprise) contracting or subcontracting firms for oil exploration through risk contracts; imports of medicines by persons up to US$5,000; imports of samples without commercial purpose, except for pharmaceutical products up to US$1,000; imports of products, except for those prohibited or under special control by persons for personal consumption; and imports of goods considered as a passenger’s baggage for personal consumption. Imports are grouped into the following three broad categories: (1) imports that do not require prior administrative documentation, including samples without commercial value and certain educational materials; (2) imports that require an import license issued by the DECEX; and (3) prohibited imports.

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).
Letters of creditThe drafts or letters of credit must be settled on maturity against the presentation of the appropriate documents by the importer. Official education and research institutions and the Ministry of Health may settle contracts within 360 days following the same rules. Exchange contracts for imports financed under letters of credit must be closed on the date of settlement or two working days before the maturity date of the letters of credit.
OtherFederal ministries and subordinate agencies and public enterprises are required to submit, for approval by the president, an annual investment program specifying their expected import requirements.
Import licenses and other nontariff measuresMost imports require prior approval from the DECEX (i.e., an import license), which is usually given promptly to registered importers of nonprohibited items. As a rule, certificates are valid for 60 days, except for imports of capital goods, with the exception of custom made capital goods. The Technical Department of Commercial Interchange (DTIC) issues clearance certificates for certain groups of commodities to special bonded warehouse importers. Import licenses for a number of specified imports may be obtained after the landing of commodities and the settlement of customs clearance. The importation of certain products requires approval of the Ministry of Science and Technology. For some products, eligibility for exemption from import duties may be precluded by the existence of exemptions on taxes on domestic transactions of an equivalent amount. Selected imports are exempt from prior approval requirements, including imports to the free trade zone of Manaus, wheat and petroleum imports, imports under the drawback scheme, and imports of goods included in trade agreements negotiated with LAIA member countries.
Negative listProhibited imports include agrochemical products not authorized under Brazilian regulations and certain drugs that are not licensed for reasons of security, health, morality, or industrial policy.
Licenses with quotasBesides imports under Brazilian concessions subject to quotas due to agreements between the LAIA member countries, goods imported into the Manaus and Tabatinga free zones are subject to an annual quota. Foreign goods up to the equivalent of US$2,000 imported into the Manaus free-trade zone can be transferred to other parts of Brazil (as a passenger’s baggage) free of import taxes.
Import taxes and/or tariffsThe MERCOSUR customs union agreement stipulates a common external tariff (CET) ranging from zero to 20% on about 85% of traded goods, and the remaining 15% of goods (including a list of national exceptions, capital goods, and computer goods) are subject to a schedule of adjustments designed to bring them into line with the CET within five or six years. The Adjustment Regime allows Brazil and Argentina to maintain tariffs on some intra-area trade until January 1, 1999, and Paraguay and Uruguay to maintain some intra-area tariffs until January 1, 2000. In April, 1995, Brazil increased the number of goods on its list of national exceptions to MERCOSUR to 450 from 300. In May 1995, the authorities announced that import duties on vehicles would decline to 62% by January 1996 and to 30% by April 1996. Tariffs on footwear were also raised to 47–63% from 20% with plans to reduce them back to 20% by April 1996.
Taxes collected through the exchange systemA financial transactions tax of 25% is levied on exchange operations effected for the payment of imports of services.
State import monopolyImports of petroleum and derivatives are conducted by the state.
Exports and Export Proceeds
Repatriation requirementsYes.
Surrender requirementsYes.
Financing requirementsAdvances on foreign exchange contracts are allowed for operations with terms exceeding 360 days, and the time for anticipatory settlements is 180 days. Also, 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 is 180 days.
Documentation requirements
Preshipment inspectionInspection is required for commodities subject to standardization.
OtherDocumentation includes invoices, international shipment notification, and export registration.
Export licensesExports of wild animals and their hides, hairs, plumes or eggs in any form; jacaranda-da-Bahia wood; ipecacuanha plant; red and drab varieties of honey; and antiques of more than 100 years are prohibited. Exports of certain goods require the prior approval of the SECEX, including those effected through bilateral accounts, exports without exchange cover, exports on consignment, reexports, commodities for which minimum export prices are fixed by the SECEX, and exports requiring prior authorization from government agencies. The Integrated Foreign Trade System (Sistema Integrado de Comércio Exterior (SISCOMEX)) integrates activities related to the registration, monitoring, and control of foreign trade operations in a single computerized flow of information. The SISCOMEX comprises two subsystems (exports and imports). The exports subsystem has allowed 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 CBB. The import subsystem is being developed.

Exports of sawed or cleft pine woods, mahogany, Brazilian walnut, and virola are subject to quotas. Furthermore, for exports of ethyl alcohol and sugar in any form, including sugar cane syrup inappropriate for human consumption, to be eligible for exemption from the export tax of 40%, they must comply with the requirement that domestic needs are satisfied, as authorized by the Industry, Trade, and Tourism Minister and the Finance Minister.
Export taxesExports are free from export duty, except exports of raw hides, which are subject to an export duty of 9%. Exports of coffee and cocoa are subject to a zero rate duty.
Taxes collected through the exchange systemNo.
Payments for Invisible Transactions and Current Transfers
Controls on these paymentsPayments for current invisibles not covered by current regulations require approval from the CBB’s Exchange Department (DECAM) or the FIRCE.
Freight/insurance
Prior approvalYes.
Quantitative limitsNo.
Indicative limits/bona fide testYes.
Unloading/storage costsThere are established rules and surveillance procedures related to the operations freely conducted in the market.
Prior approvalNo.
Quantitative limitsNo.
Indicative limits/bona fide testYes.
Administrative expenses
Prior approvalNo.
Quantitative limitsNo.
Indicative limits/bona fide testYes.
Commissions
Prior approvalNo.
Quantitative limitsNo.
Indicative limits/bona fide testYes.
Interest payments
Prior approvalPayments for medium- and long-term external debt are subject to prior approval by and registration with the FIRCE, and the issue of a certificate of registration, which is the authorization to remit abroad the related interest, expenses, and fees, provided that due taxes were paid.
Profit/dividendsIn addition to certain restrictions on remittances stipulated in the Foreign Investment Law of 1962, limits on income tax deductions are placed on remittances of all royalties and technical assistance fees.
Prior approvalYes.
Quantitative limitsRemittances are allowed only when the foreign capital concerned, including reinvestments and the contracts for patents and trademarks and for technical, scientific, and administrative assistance, are registered with the FIRCE in accordance with the established rules. Profit remittances are exempt from withholding for income tax purposes. 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% of gross receipts in the first five years of the company’s operation; amounts exceeding this limit are considered profits.
Indicative limits/bona fide testYes.
Payments for travelNo.
Medical costs
Prior approvalNo.
Quantitative limitsNo.
Indicative limits/bona fide testYes.
Study abroad costs
Prior approvalNo.
Quantitative limitsNo.
Indicative limits/bona fide testYes.
Subscriptions and membership fees
Prior approvalNo.
Quantitative limitsNo.
Indicative limits/bona fide testYes.
Consulting/legal fees
Prior approvalNo.
Quantitative limitsNo.
Indicative limits/bona fide testYes.
Foreign workers’ wages
Prior approvalNo.
Quantitative limitsNo.
Indicative limits/bona fide testYes.
Pensions
Prior approvalNo.
Quantitative limitsNo.
Indicative limits/bona fide testYes.
Gambling/prize earningsNo.
Family maintenance/alimony
Prior approvalNo.
Quantitative limitsNo.
Indicative limits/bona fide testYes.
Credit card use abroad
Prior approvalNo.
Quantitative limitsNo.
Indicative limits/bona fide testYes.
Proceeds from Invisible Transactions and Current Transfers
Repatriation requirementsYes.
Surrender requirementsExchange proceeds from current invisibles must be sold to the authorized banks at the prevailing market rate.
Capital Transactions
Controls on capital and money market instruments
On capital market securities
Purchase in the country by nonresidentsThe direct purchase of shares of Brazilian companies by nonresidents basically occurs through direct investments and portfolio investments made by institutional investors through the managers of the respective portfolios. Depository receipts (DRs) constitute another method of acquiring shares through stock exchanges. They provide a mechanism for the placement of shares of Brazilian enterprises in the international markets. DRs are certificates representing a certain number of shares of a given enterprise that confer upon their holders all of the rights inherent in said shares, including dividends, bonuses, splits, and market-quoted value. A Brazilian sponsoring enterprise places its shares in the custody of an institution headquartered in Brazil and authorized by the Securities Commission (CVM) to provide custody services for the specific purpose of DR issues (custodian institution). At the same time, an institution abroad (the depository bank) issues the corresponding DRs based on the securities held in custody in Brazil. Investments effected through the DR mechanism are exempt from income tax on capital gains. The rate applicable to earnings obtained in Brazil is 10%, as these are investments in variable-income assets.

As for other securities such as debentures and other fixed-income securities, the regulations do not provide for direct purchases by nonresidents, although they may be effected indirectly through investment funds. Securities portfolios held in the country by foreign institutional investors (i.e., pension funds, nonprofit institutions, and insurance companies) must be managed by an institution operating in the country and authorized by the CVM. The foreign investor has the option of applying for two types of registration for the portfolio: an “individual account” or an “omnibus account.” The individual account registration allows the investor to operate in its own name only, while the omnibus account registration allows the account holder to operate only on behalf of third parties, known in the market as “passengers.”

The management institution is responsible for the registration of foreign investment with the CBB, foreign exchange settlements, the collection of taxes, portfolio bookkeeping, and the safekeeping of documents related to the portfolio.

There is no limit or hold period for financial transfers resulting from inflows, flowbacks, and profits or dividends from capital duly registered with the CBB, provided that the accounting rules and tax laws are complied with. The transfers must be processed through banks authorized to conduct foreign exchange operations, with guaranteed access to the free foreign exchange market to purchase foreign currency.

To promote greater integration of the capital markets of the signatory countries of the Treaty of Asunción (MERCOSUR), an additional mechanism was established in 1992 to attract foreign resources targeting the Brazilian stock market. Natural and juridical persons resident or domiciled in MERCOSUR-treaty countries may invest freely in Brazilian stock exchanges without having to trade through investment funds or portfolios. The Brazilian market may be accessed directly by contacting a member institution of the Brazilian securities distribution system, or indirectly through the intermediation of an institution in the securities distribution system of the investor’s country.

The Brazilian intermediary institution through which the foreign investor trades represents the investor vis-à-vis the Brazilian authorities with respect to the operational, exchange, and tax aspects, and in providing information on the operations executed. These investments may be made in U.S. dollars, in the currency of the country of origin of the investment, or in reais. Operations involving the repatriation of capital are exempt from income tax withholding.

Earnings from variable-income investments are subject to 10% income tax withholding and those from fixed-income investments to 15% income tax withholding. Capital gains are subject to income tax at a rate of 10%.
Sale or issue locally by nonresidentsThe sale of shares of foreign enterprises in Brazil is regulated essentially for the MERCOSUR environment through share custody certificates or directly. There is no regulation in force allowing the sale of other foreign securities in the country. Inward and outward remittances associated with investments must be processed through banks authorized to conduct foreign exchange operations in the floating exchange rate market. There are no limits, authorizations, or hold periods for the investments.
Purchase abroad by residentsBrazilian natural and juridical persons may make investments through the purchase on Brazilian stock exchanges of custody certificates representing shares issued by companies headquartered in signatory countries of the Treaty of Asunción (MERCOSUR). These securities may be purchased through foreign investment funds or through direct equity investments in enterprises abroad.
Sale or issue abroad by residentsIn addition to the rules already mentioned governing the purchase of shares on stock exchanges by residents and the specific regulations for MERCOSUR, collective in-vestments can be made through Brazilian investment companies and funds.

Issues of securities abroad by residents are accorded the same treatment as direct external borrowing operations. Thus, exchange contracts involving the entry of foreign currencies must be authorized in advance by the CBB. Funds transfers associated with issues of securities abroad are subject to the conditions of the respective certificates of registration issued by the CBB, these conditions are set forth in the contract between the debtor and the creditor.
On money market instrumentsNo.
On collective investment securities
Purchase in the country by nonresidentsPortfolio 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% and the privatization funds that are subject to a transaction tax of 5% as of February 8, 1996.

The regulated forms of collective investment by nonresidents in local shares are the investment companies, funds, and diversified stock portfolios. For collective investments in other securities, the forms provided for in the regulations are the foreign capital fixed-income funds, privatization funds, real estate investment funds, and as of February 8, 1996, emerging enterprises investment funds. Their establishment, as well as changes in their by-laws, must be authorized in advance by the CVM, except for the foreign capital fixed-income funds. The constitution of those funds must be notified in writing to the CBB within a maximum of five days. The CBB may determine changes in the regulations of the fixed-income funds. Funds entering the country are subject to registration with the CBB for purposes of controlling foreign capital and future remittances abroad of cash dividends or bonuses and capital gains realized in the sale of the company’s shares.

Inward and outward remittances associated with investments must be processed through banks authorized to conduct foreign exchange operations, with guaranteed access to the free exchange rate market to purchase foreign currency.
Sale or issue abroad by residentsForeign investment funds are organized in the form of open-end mutual funds. Participation is limited exclusively to natural and juridical persons and to funds and other collective investment entities resident, domiciled, or headquartered in Brazil. Foreign investment funds may be managed by a multipurpose bank, commercial bank, investment bank, brokerage firm, or securities distributor, under the supervision and direct responsibility of the manager of the institution.

A minimum of 60% of the fund’s investments must be in securities representative of the federal government’s external debt and a maximum of 40% in other securities traded in the international market. These securities must be kept abroad in a custodian account in the fund’s name. The fund is authorized to conduct operations in organized derivatives markets abroad solely for the purpose of hedging the securities making up the respective portfolio.

Inward and outward transfers of resources through foreign investment funds are subject to registration with the CBB for purposes of monitoring and controlling Brazilian investment, as well as the respective income, investment repatriation, and capital gains. Transfers are processed in foreign currency through the free exchange rate market.

Earnings from the redemption of shares of foreign investment funds are subject to a 15% income tax rate to be withheld by the management institution of the foreign investment funds on the date of the redemption payment or credit and paid within three working days of the two-week period following the occurrence of the taxable event.
Controls on derivatives and other instruments
Purchase in the country by nonresidentsForeign capital fixed-income funds may conduct operations in organized derivatives markets in the country, including futures operations carried out in markets managed by stock exchanges or commodities and futures exchanges. The resources of investors from MERCOSUR-treaty countries may be invested in the domestic options and futures market. The use of funds entering the country for the purchase of fixed-income securities and in operations carried out in derivatives markets is prohibited. There are no restrictions on investments in derivatives operations in Brazil by recipients of direct investments.
Purchase abroad by residentsPrivate sector entities may engage in hedging operations with financial institutions or stock exchanges abroad to protect themselves against the risk of variations in interest rates, exchange rates, and commodities prices. The costs of such operations must conform to the parameters in force in the international market. The CBB may, at its sole discretion, require foreign exchange compensation sufficient to eliminate the effects of operations not in line with the established objective or executed outside those parameters, without prejudice to other sanctions that may apply. Payments and receipts in foreign currency, scheduled or expected to occur in the future in connection with commercial or financial rights or obligations, may also be protected by hedging. Hedging operations, however, are limited, at any time: (1) in interest rate and currency swaps, to the amount of the underlying commercial or financial rights and obligations remaining in foreign currency; and (2) in commodities swaps, open positions are limited to the physical volume of the commodity to be exported, imported, or traded in the domestic market.
Controls on credit operations
Commercial credits
By residents to nonresidentsOnly two forms of credits are permitted under (1) the Exporting Financing Program (PROEX), which is financed with national budget funds. PROEX resources may not be used to establish any facility for foreign public or private entities, insofar as financing is granted on a case-by-case basis, as credit may not be made available to nonresidents for use in several portions spread over a period of time; and (2) the Machinery and Equipment Export Financing Program (FINAMEX), which is operated through agent banks by the Special Industrial Financing Agency (FINAME). It provides funds so that financial institutions (FINAME agents) can grant loans to national exporters at rates and on terms similar to those available to their foreign competitors.
To residents from nonresidentsCommercial credits with terms in excess of 360 days must be authorized by and registered with the FIRCE of the CBB.

Prepayment of exports must be authorized by the CBB prior to the entry of the foreign exchange into Brazil. Operations governed by these regulations have a 361-day minimum term and are exempt from income tax and from the tax on credit, exchange, insurance, and securities operations. The CBB authorizes and registers external financing for imports of capital goods, intermediate goods, raw materials, and other goods and merchandise, regardless of the type of importer or destination of the merchandise if the operations have a term of at least one year.

In private sector import operations without the direct or indirect surety or guarantee of a public sector entity, the financing terms—interest rate, spread, downpayment—are freely contracted by the parties. In the case of a public sector entity and in cases involving the direct or indirect surety or guarantee of a public sector entity, interest rates may not exceed the LIBOR rate for the reference period plus specified maximum spreads.
Financial credits
By residents to nonresidentsRequests for authorization may be approved by the CBB, as there is no legal impediment to doing so.
To residents from nonresidentsThe proceeds of financial credits granted to residents must be kept within the country, and the resources must be used for investment in economic activities. Exchange contracts involving the entry of foreign exchange in connection with the borrowing are subject to prior approval by the CBB.

Remittances of loan, credit, or financing interest in excess of the interest rate indicated in the respective contract and registration are considered as principal payments. A 15% income tax rate is levied on remittances of interest and other income associated with foreign loan operations, except when bilateral agreements to avoid dual taxation specify another rate or when the borrower or lender is tax exempt. The tax on credit, exchange, insurance operations, and securities operations is calculated on the equivalent in reais of foreign currency entering the country as a foreign loan.

The federal government, states, municipalities, the federal district, and their foundations and agencies, as well as operations in which the payers abroad are multilateral organizations and foreign government agencies are exempted.
Guarantees, sureties, and financial backup facilities
By residents to nonresidentsGuarantees by nonfmancial juridical persons in credit operations for their foreign subsidiaries are subject to prior authorization by the CBB.

Exchange operations involving financial transfers abroad in execution of the bank sureties and guarantees in question are carried out exclusively through the floating exchange rate market when such guarantees relate or are linked to: (1) imports and other foreign currency operations not covered by certificates issued by the CBB or by a facility; (2) repatriation of amounts entering the country as advance payment for exports in the event of nonshipment of goods.

Exchange operations involving financial transfers associated with the execution of payment guarantees for imports, loans, or external financing covered by certificates of authorization or registration issued by the CBB are processed through the free exchange rate market.
To residents from nonresidentsThere are no restrictions on guarantees provided by nonresidents to residents in connection with foreign capital registered with the CBB, subject to the presentation of a formal statement by the foreign entity furnishing the guarantee. Data concerning the guarantee and the costs incurred in obtaining it are included in the certificate of authorization or registration of the guaranteed operation. If costs are incurred in obtaining the guarantee, the credit operation must be authorized in advance by the CBB.

There are no specific regulations governing other operations. In the event of the execution of a guarantee, the beneficiary must arrange for the entry of the corresponding foreign exchange directly through the banking system.
Controls on direct investment
Outward direct investmentBanks authorized to conduct foreign exchange operations may transfer up to US$5 million per financial group, including all remittances in the last 12 months and are basically required to keep on file and make available to the CBB the documents mentioned in said regulations. Transfers exceeding the established limit must be submitted to the CBB no less than 30 days in advance of the exchange contract and, regardless of the amount, exchange operations in which the purchaser of the foreign exchange is an entity belonging to the direct or indirect public administration are subject to prior authorization by the CBB. In this case, remittances must be processed through the free exchange rate market.

Brazilian enterprises may invest in financial institutions abroad on the floating exchange rate market (MCTF). However, such investments by nonfinancial enterprises require prior approval of the CBB and must meet some specified conditions: investments abroad by institutions authorized to operate by the CBB must obtain the prior opinion of the CBB and the Department of Financial System Organization and satisfy, especially with respect to paid-up capital, net assets, time in operation, fixed-asset ratio, and borrowing ceilings.
Inward direct investmentApplications for the registration of foreign direct investment and technology are not subject to prior authorization, except for foreign investments via the contribution of goods. Investments in commercial banks are limited to 30% of the voting capital, if there are restrictions on the operations of Brazilian banks in the markets where their main offices are located. The establishment in Brazil of new branches of financial institutions domiciled abroad is prohibited. Also, any increase in the percentage of equity participation in financial institutions headquartered in Brazil by natural or juridical persons resident or domiciled abroad is prohibited, except for authorizations resulting from international agreements or reciprocity arrangements, or in the interest of the Brazilian government as expressed by presidential decree.

In the case of highway freight transportation, except for companies established before July 11,1980 to which different rules apply, there are limitations on equity participation of up to one-fifth of the voting capital stock. In future capital increases by subscription, however, such entities are required to pay up to four-fifths of said increases in ordinary registered shares through national underwriters.

Foreign participation in journalistic and radio and television broadcasting enterprises is prohibited, and direct or indirect equity participation by foreign enterprises or capital in the health care sector in Brazil is also prohibited, except in special cases.

The registration of foreign investment through the verification of patent or trademark rights as a means of paying in capital is subject to prior recording of the deed of transfer or assignment of the rights to use the patent or trademark with the National Institute of Industrial Property and is limited to the value stated in the latter. The investment is registered in the currency of the country where the beneficiary is domiciled or headquartered and must be requested from the CBB by the party receiving the investment.

Foreign investments via the contribution of goods without exchange cover are subject to prior authorization by the CBB and the SECEX. The goods, machinery, or equipment must be used in the production of goods or the provision of services, must have a useful life of more than five years, and must be part of the enterprise’s assets for at least five years.

Investments through currency transfers are not subject to prior authorization. This type of investment may take place through the free exchange rate market to pay up the subscribed capital of enterprises already operating in Brazil, to organize a new enterprise, or to acquire an interest in an existing Brazilian enterprise.

Branches of foreign companies may be opened, subject to the prior issuance of an authorizing decree by the president of the Republic. A branch is understood to be an office of a foreign enterprise. Enterprises established in Brazil with any degree of foreign equity participation are not covered by this restriction.

The entry of resources and outward remittances associated with the investment shall be processed through a banking institution authorized to conduct foreign exchange operations.
Controls on liquidation of direct investmentYes.
Controls on real estate transactions
Purchase abroad by residentsTransfers for the purchase of residential or commercial real estate abroad may be made through the floating exchange rate market.
Purchase locally by nonresidentsPurchase of real estate in Brazil is not restricted. Foreign investments in the capital of Brazilian enterprises (including resources to be used for investment in the capital of real estate enterprises) by parties resident, domiciled, or headquartered abroad is unrestricted and not subject to prior authorization by the CBB. The exchange occurs on the free exchange rate market.
Provisions specific to commercial banks and other credit institutions
Borrowing abroadForeign borrowing for terms exceeding 360 days is subject to authorization and registration with the CBB. The CBB requires that banks authorized to conduct foreign exchange operations obtain facilities abroad for terms of up to 360 days to extend commercial credit in Brazil.

The National Bank for Economic and Social Development (BNDES), private investment or development banks, commercial banks authorized to conduct foreign exchange operations, and multipurpose banks with a commercial portfolio (if authorized to conduct foreign exchange operations and holding an investment or development portfolio) are permitted to contract loans abroad to be onlent to enterprises in Brazil by issuing commercial paper. They may also borrow abroad by issuing floating rate notes, fixed rate notes, floating rate certificates of deposit, fixed rate certificates of deposit, government bonds, and private bonds.

Financial institutions in the National Rural Credit System may borrow abroad to finance costs, investment, or the marketing of agricultural and livestock production.

Banks may raise funds abroad to be onlent to natural or juridical persons to finance the construction or purchase of new real estate. Banks authorized to conduct foreign exchange operations may use facilities contracted for terms exceeding 360 days with banks abroad to finance imports by resident enterprises.
Lending to nonresidents (financial or commercial credits)There are no legal provisions authorizing banks or credit institutions headquartered in Brazil to grant financial loans to nonresidents or to purchase securities issued abroad for terms exceeding 360 days. This restriction does not apply to the foreign branches of Brazilian banks.
Lending locally in foreign exchangeAll contracts, securities, or other documents, as well as any obligations executable in Brazil that require payment in foreign currency are null and void. Consequently, banks are prohibited from granting foreign currency loans within Brazil. However, this restriction does not apply to the onlending of external foreign currency loans.
Differential treatment of nonresident deposit accounts and/or deposit accounts in foreign exchange
Open foreign exchange position limitsLimits differ according to the exchange market in which the transactions take place as follows: (1) Banks authorized to conduct foreign exchange operations in the free exchange rate market may hold long positions of up to US$5 million, including all currencies and all of each bank’s branches. Amounts exceeding this ceiling must be deposited with the CBB in U.S. dollars. The ceiling on banks’ short exchange position is contingent upon each bank’s adjusted net worth. (2) On the floating exchange rate market, the following ceilings have been set:

(a) For licensed banks, the long exchange position is US$1 million (any amount in excess of this ceiling must be deposited with the CBB), and the short exchange position is contingent on the institution’s adjusted net worth;

(b) For licensed dealers (brokerage firms, securities distributors, and credit, financing, and investment enterprises), the ceiling on long exchange position is US$500,000, and no short exchange position is allowed;

(c) Licensed tourism agencies do not maintain exchange positions, but they are required to observe the daily operational ceiling (cash) of US$200,000; any surpluses must be sold to licensed banks or dealers; and

(d) Providers of tourist accommodations may have cash holdings in foreign currencies of up to US$50,000 to meet their operational needs; any surpluses must be sold to licensed banks or dealers.
Provisions specific to institutional investors
Limits (max.) on portfolio invested abroadThe institutional investors may invest up to 10% of their technical reserves in investment fund shares abroad. Private social security agencies may also invest up to 50% of their reserves (together with other investments up to the same ceiling) in shares of open companies, publicly issued convertible debentures, bonds for subscribing to shares issued by open companies, and certificates of deposit for shares issued by companies headquartered in countries signatory to the Treaty of Asunción (MERCOSUR).

Canada

(Position as of December 31, 1995)

Status Under IMF Articles of Agreement
Article VIIIDate of acceptance: March 25, 1952.
Exchange Arrangement
CurrencyThe currency of Canada is the Canadian dollar.
Other legal tenderNo.
Exchange rate structureUnitary.
Classification
Independent floatingThe exchange rate of the Canadian dollar is determined on the basis of supply and demand; however, the authorities intervene from time to time to maintain orderly conditions in the market.
Exchange taxNo.
Exchange subsidyNo.
Forward exchange marketForward exchange rates are freely determined in the exchange market.
Official cover of forward operationsNo.
Arrangements for Payments and Receipts
Prescription of currency requirementsNo.
Bilateral payments arrangementsNo.
Other payments arrangementsNo.
Administration of control
Exchange control authoritiesThere 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.
International security restrictions
In accordance with IMF Executive Board Decision No. 144-(52/51)Canada notified the IMF 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).
In accordance with UN sanctionsCanada imposed restrictions on financial transactions with Bosnia and Herzegovina in accordance with UN Security Council Resolution No. 942.
Payments arrearsNo.
Controls on trade in gold (coins and/or bullion)
Controls on external tradeReexports of gold of U.S. origin to all countries except the United States require a permit. Commercial imports of articles containing minor quantities of gold, such as watches, are unrestricted and free of license.
Controls on exports and imports of banknotesNo.
Resident Accounts
Eligibility to hold accountsJuridical and natural persons are eligible.
Foreign exchange accounts permittedYes.
Held domesticallyYes.
Approval requiredNo.
Accounts in domestic currency convertible into foreign currencyYes.
Nonresident Accounts
Eligibility to hold accountsJuridical and natural persons are eligible.
Foreign exchange accounts permittedYes.
Approval requiredNo.
Domestic currency accountsYes.
Convertible into foreign currencyYes.
Approval requiredNo.
Blocked accountsCertain assets connected to Iraq, Libya, and the Federal Republic of Yugoslavia (Serbia/Montenegro) are frozen, pursuant to resolutions of the UN Security Council.
Imports and Import Payments
Foreign exchange budgetNo.
Financing requirements for importsNo.
Documentation requirements for release of foreign exchange for importsNo.
Import licenses and other nontariff measures
Negative listImport 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. 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.
Open general licensesYes.
Licenses with quotasImports 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 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 has agreed to replace all agricultural import restrictions with tariff rate quotas and to ensure import access levels as negotiated in the Uruguay Round (or under the Canada -U.S. Free Trade Agreement). These changes became effective on either January 1, 1995 or August 1, 1995 depending on the product.
Other nontariff measuresMeasures consistent with international trade obligations (e.g., antidumping, countervailing duties, and safeguard provisions) are maintained.
Import taxes and/or tariffsNo.
State import monopolyCertain monopolies exist at the subfederal level.
Exports and Export Proceeds
Repatriation requirementsNo.
Surrender requirementsNo.
Financing requirementsNo.
Documentation requirementsNo.
Export licenses
Without quotasThe 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 (e.g., logs, herring roe) 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, the following countries are on the Area Control List: Angola and Libya. 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.
Export taxesNo.
Payments for Invisible Transactions and Current Transfers
Controls on these paymentsNo.
Proceeds from Invisible Transactions and Current Transfers
Repatriation requirementsNo.
Surrender requirementsNo.
Restrictions on use of fundsNo.
Capital Transactions
Controls on capital and money market instrumentsNo.
Controls on derivatives and other instrumentsNo.
Controls on credit operationsNo.
Controls on direct investment
Inward direct investmentSpecific restrictions exist on inward direct investments in the broadcasting, telecommunications, transportation, fishery, and energy sectors. In addition, under the provision 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 thresholds and investments to establish new businesses in culturally sensitive sectors may be reviewed.

The establishment of a new business, the direct acquisition of a business with assets of less than Can$168 million (1996 dollars, adjusted for nominal growth in GDP for subsequent years), and the indirect acquisition of a business by investors from WTO members are not subject to review and need only be notified, except in cases when the Canadian business represents 50% or more of the value of the total assets acquired in the international acquisition. (The acquisition of a Canadian enterprise may be considered “direct” where it involves the acquisition of control of a corporation carrying on a Canadian business and “indirect” where it involves the transfer of control of a non-Canadian corporation which then controls a Canadian corporation carrying on a Canadian business.)

The direct acquisition of a business whose assets exceed the above-mentioned limit is reviewed and assessed according to its net benefit to Canada, authorization being generally granted. All acquisitions or investments to establish a new business in cultural sectors such as book publishing, sound recording, and film are normally subject to review. Reviewable cases must be resolved within 75 days, unless the investor agrees to a longer time period. In practice, most cases are resolved within 45 days.

Different thresholds apply in the case of investments made by non-WTO investors. The direct acquisition of a business with assets greater than Can$5 million and the indirect acquisition of a business with assets greater than Can$5 million to Can$50 million which represent more than 50% of the value of the total international transaction in question can be reviewed. These limits also apply to investments made by investors from WTO members in any financial service, transportation service, and production of uranium.
Controls on liquidation of direct investmentNo.
Controls on real estate transactionsNo.
Provisions specific to commercial banks and other credit institutionsNo.
Provisions specific to institutional investorsNo.
Other controls imposed by securities lawsNo.

Chile

(Position as of April 30, 1996)

Status Under IMF Articles of Agreement
Article VIIIDate of acceptance: July 27, 1977.
Exchange Arrangement
CurrencyThe currency of Chile is the Chilean peso.
Other legal tenderNo.
Exchange rate structure
DualThere are two foreign exchange markets: the official, through which debt-service payments, remittances of dividends and profits, and authorized capital transactions including loan receipts are transacted, and the informal market through which all other transactions, including loan payments, take place. The official foreign exchange market consists of commercial banks and exchange houses and other entities licensed by the Central Bank of Chile (CBC).
Classification
Adjusted according to a set of indicatorsIn both exchange markets, economic agents are free to negotiate rates; the CBC conducts transactions in the official exchange market within margins of 10% around the reference rate. The exchange rate of the Chilean peso is adjusted daily on the basis of changes in the value resulting from a formula relating the currencies (0.45 U.S. dollars + 0.46 deutsche marks + 24.6825 Japanese yen) and in the differential between domestic and foreign rates of inflation, adjusted for the estimated differential in productivity growth.
Exchange taxNo.
Exchange subsidyThe CBC provides a subsidy (in the form of notes indexed to inflation with a minimum maturity of six years and an interest rate of 3%) on the following service payments on some debts contracted before August 6, 1982 (the original amount of the debt was about US$8 billion):

(1) Payments to Chilean banks or financial companies whose debt is indexed to the official exchange rate; and

(2) Payments abroad on debt obligations registered with the CBC. As of the end of 1995, only debtors whose obligations were equal to or less than US$50,000 on June 30, 1985 have had access to the subsidy, but many of the affected debtors are bankrupt and unable to claim the subsidy.

On December 31, 1995, the subsidized rate was the official reference rate.
Forward exchange marketYes.
Official cover of forward operationsNo.
Arrangements for Payments and Receipts
Prescription of currency requirementsNo.
Bilateral payments arrangementsNo.
Other payments arrangements
Regional arrangementsSettlements 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 CBC and the central banks of each of the countries concerned within the framework of the multilateral clearing system of the LAIA.
Administration of control
Exchange control authoritiesThe CBC is responsible for enacting regulations to obtain balance of payments information. The Chilean Copper Commission is responsible for advising the CBC with respect to exports of copper and subproducts.
International security restrictionsNo.
Payments arrearsNo.
Controls on trade in gold (coins and/or bullion)
Controls on domestic ownership and/or tradeMonetary gold may be traded only by authorized dealers, but ordinary transactions in gold between private individuals are unrestricted.
Controls on external tradeTrade is unrestricted, subject to normal export and import formalities, including registration with the CBC.
Controls on exports and imports of banknotesNo.
Resident Accounts
Eligibility to hold accountsJuridical and natural persons are eligible.
Foreign exchange accounts permittedYes.
Held domesticallyBoth natural and juridical persons can hold foreign currency checking accounts within the national financial system. The average balance is subject to legal reserve requirements.
Approval requiredJuridical persons must take into account legal restrictions on investments, given their commercial activities (i.e., pension fund administrators). In the case of checking accounts, commercial banks must certify the domicile reported.
Held abroadYes.
Approval requiredJuridical persons subject to foreign investment regulations (i.e., banks and pension funds) must abide by such regulations.
Accounts in domestic currency convertible into foreign currencyNo.
Nonresident Accounts
Eligibility to hold accountsJuridical and natural persons are eligible.
Foreign exchange accounts permittedChecking accounts cannot be held by nonresidents because a domicile in the country is required for holders.
Domestic currency accountsNo.
Blocked accountsNo.
Imports and Import Payments
Foreign exchange budgetNo.
Financing requirements for importsNo.
Documentation requirements for release of foreign exchange for importsPayment through the official foreign exchange market requires a document (Informe de Importaóion) issued by the CBC, which must be obtained from and processed through the intermediary of a local commercial bank. Access to foreign exchange is available no later than 30 days after the obligation’s expiration date as documented on the Informe de Importaóion.
Domiciliation requirementsOnly resident natural or juridical persons may engage in imports.
Import licenses and other nontariff measuresMost imports require a document (Informe de Importaóion) issued by the CBC.
Negative listImports of used motor vehicles are prohibited.
Other nontariff measuresImports of wheat, maize, edible oil, and sugar are subject to after-duty price margin limits. Antidumping and countervailing duty laws are applied.
Import taxes and/or tariffsImports are subject to a uniform 11% tariff rate with a few exceptions (including on goods from LAIA countries and under a number of bilateral trade agreements).
Taxes collected through the exchange systemNo.
State import monopolyNo.
Exports and Export Proceeds
Repatriation requirementsWindfall receipts from copper exports of CODELCO (state copper company) must be deposited in a special foreign currency account at the CBC; withdrawals are permitted only under prescribed circumstances.
Surrender requirementsNo.
Financing requirementsExports can be financed with advances from the foreign buyer, or with external or internal credit, as agreed between the trading parties.
Documentation requirements
DomiciliationYes.
OtherThe exporter must submit an export report to the CBC through a banking company establishing the exporter’s identity and the terms of the operation.
Export licensesNo.
Export taxes
Taxes collected through the exchange systemNo.
Payments for Invisible Transactions and Current Transfers
Controls on these payments
Freight/insuranceNo.
Unloading/storage costsNo.
Administrative expensesNo.
CommissionsNo.
Interest paymentsNo.
Profit/dividends
Prior approvalProfits and dividends on foreign direct investments require prior approval by the CBC.
Payments for travel
Prior approvalYes.
Quantitative limitsYes.
Medical costs
Prior approvalNo.
Quantitative limitsYes.
Study abroad costs
Prior approvalNo.
Quantitative limitsYes.
Subscriptions and membership fees
Prior approvalNo.
Quantitative limitsYes.
Indicative limits/bona fide testNo.
Consulting/legal feesNo.
Foreign workers’ wagesNo.
Pensions
Prior approvalYes.
Quantitative limitsYes.
Proceeds from Invisible Transactions and Current Transfers
Repatriation requirementsYes.
Surrender requirementsProceeds from selected transactions (e.g., royalties and copyright fees, commissions, proceeds from insurance, and other benefits related to foreign trade) are subject to a 100% surrender requirement.
Capital Transactions
Controls on capital and money market instruments
On capital market securities
Purchase in the country by nonresidentsNonresidents can invest in domestic securities in the country in three ways:

(1) Acquisition by Foreign Investment Funds (FICEs). These are formed by foreign capital and administered by an open society established in Chile. Investments cannot exceed 5% of social capital in one company and 10% of the funds’ total assets. FICEs cannot invest more than 40% of their portfolio in equities of the same holding period, and all FICEs as a group may not hold more than 25% of the equities of the same open society. Other requirements for FICEs are a five-year minimum holding period, a profit tax of 10%, and some portfolio restrictions that vary with the duration of holding period;

(2) Through a financial investment (purchase of fixed-income securities and equities). These are, however, subject to a reserve requirement of 30% for one year, a minimum holding period requirement of one year, and to the general income tax law. Equities that have American Depository Receipts (ADRs) can be acquired in the country and converted into ADRs through the mechanism established under Chapter XXVI of the Compendium of International Exchange Rules (CEIR). These transactions are also subject to the 30% reserve requirement. The issuance of primary ADRs is an exception to the above restrictions, but the issuers are subject to minimum international rating requirements, and there is a minimum amount to be issued; and

(3) Loans can also be used to finance the purchase of securities in the country. They are subject to a one-year reserve requirement of 30%, a 4% tax on interest payments, and a 1.2% stamp tax.
Sale or issue locally by nonresidentsProceeds from the sale of domestic securities by nonresidents are subject to the one-year holding period requirement, if the capital inflow entered as a financial investment. The sale of equities that are the property of foreigners due to the ADR mechanism is possible, since Chilean ADRs can be converted into domestic stock. However, the resources obtained through the sale must be repatriated. ADRs issued from equities directly acquired in the Chilean stock market (also called secondary ADRs) are tightly restricted, both for the authorized period for acquiring stocks domestically and for the authorized period for acquiring foreign exchange after a local stock sale. All the associated foreign exchange operations must be done through the formal exchange market. Issuance of foreign securities by nonresidents is subject to the same procedures for domestic securities. In practice, no foreign securities are traded domestically, and there is national treatment for foreigners that issue securities of companies established in Chile. Once the respective taxes have been paid, profits may be transferred freely without delay.
Purchase abroad by residentsExcept for banks and pension funds, there are no restrictions on the acquisition of international fixed-income assets and current account deposits. The acquisition of the associated foreign exchange must be done in the informal market. Pension funds are authorized to hold up to 9% of their funds in foreign assets, including a variety of fixed-income assets and company shares up to 4.5% of the fund. Life insurance companies are limited up to 10% of their technical reserves and risk net worth. For mutual funds, the limit is 30% of the fund.
Sale or issue abroad by residentsResidents can issue equities and bonds abroad, and the associated foreign exchange operations must be done through the formal exchange market. Equities can be sold according to the rules of Chapter XXVI of the CEIR that regulates capital inflows through the mechanism of ADRs. Primary ADR issues are only subject to minimum amounts (US$25 million the first time, and thereafter to a minimum of US$10 million) and two minimum international risk rating requirements for long-term debt of BBB+ for banks and BBB for other firms.
On money market instruments
Purchase in the country by nonresidentsIn general, money market instrument acquisitions are authorized for nonresidents, but there are regulations governing the mode of inflow. The associated capital inflows liquidation and the subsequent repatriation associated with the sale of the asset must be made through the formal exchange market. Acquisitions through external loans are subject to a reserve requirement of 30%, a 4% tax on interest, and a stamp tax of 1.2%. Acquisition through a FICE is subject to a minimum holding period of five years in addition to a 10% profit tax. In the case of financial investments, there is a 30% one-year reserve requirement and a minimum holding period of one year, and they are subject to the general income tax law.
Sale or issue locally by nonresidentsThe issue or sale of foreign money market instruments in the country is not authorized, and neither is the promotion of these or other financial services from abroad. To operate in the domestic financial market, the company must be registered, installed, and must have brought capital for operational purposes. The legal mechanism used is through the creation in Chile of an agency of the foreign corporation.
Purchase abroad by residentsThe acquisition of money market instruments by individuals and nonfinancial companies is not restricted. However, the formal exchange market is not available for these operations.
Sale or issue abroad by residentsThese are subject to a reserve requirement of 30%.
On collective investment securities
Purchase in the country by nonresidentsThese are considered financial investments subject to a reserve requirement of 30% for a year and a minimum holding period of one year. Funds that enter Chile through a FICE are subject to a minimum holding period of five years.
Sale or issue locally by nonresidentsNonresidents are not permitted to market these or other financial services from abroad. To operate in the domestic financial market, the company must be registered, established, and must have brought in capital for operational purposes. Once this has occurred, the sales of collective instrument securities are subject to the same domestic rules as any other investment, with no restrictions on the repatriation of profits.
Purchase abroad by residentsThere are no restrictions for nonfinancial agents, but there is no access to the formal exchange market for these purposes. Mutual funds are limited to 30% of their portfolio in foreign financial instruments. Pension funds are also restricted by the type of fund (mainly to avoid leveraged and hedged funds), country risk, regulation, liquidity, experience of the fund, and participant’s concentration. Investments must remain within limited amounts (up to 2% by issuer and up to 4.5% of the pension fund in variable income assets).
Sale or issue abroad by residentsIn practice, Chilean mutual funds (open funds) and investment funds (closed funds) are not offered directly abroad. To operate abroad, such funds must fulfill the existing regulations of the foreign country. Domestically issued instruments can be sold to nonresidents but funds must be repatriated. These inflows are considered a financial investment subject to a reserve requirement of 30% annually and a one-year holding requirement. FICEs that come into Chile under foreign ownership may be sold and traded in the New York or the London stock exchange. The capital committed by FICEs must remain invested in Chile for five years.
Controls on derivatives and other instruments
Purchase in the country by nonresidentsThe market is not well developed. Nonresidents cannot participate in the local market for currency derivatives.
Sale or issue locally by nonresidentsTo operate, foreign agents must have resident status.
Purchase abroad by residentsThe CBC regulates currency and interest rate derivatives taking place in foreign markets. Interest rate derivatives do not exist in the local market and are not regulated. Speculative positions with derivatives abroad can be taken by nonfinancial institutions acquiring the foreign exchange in the informal market. Banks can cover themselves in currency derivatives up to the level of the underlying asset or liability that needs to be covered. In the case of interest rate derivatives, banks are only allowed to cover mismatches between assets and liabilities. Pension funds and insurance companies are only allowed to cover themselves against currency volatility up to a maximum of their foreign financial investments, on a currency-by-currency basis.
Sale or issue abroad by residentsDerivatives for currency and interest rates exist for operations with foreign agents in over-the-counter operations, or with securities dealers or brokers that are authorized by the foreign authorities or with foreign banks, if preferred. There is access to formal spot exchange markets for hedging purposes. Currency and interest rate options are allowed except for banks. Other derivatives contracts (interest rates, currencies, and commodity prices) are permitted for residents including banks up to the amount of the underlying external asset or liability position that needs to be covered. However, these contracts cannot be done on the formal market, except for banks and institutional investors.
Controls on credit operations
Commercial credits
By residents to nonresidentsAll types of nonfinancial agents (except pension funds and insurance companies) are allowed to do international trade lending, but these operations must be done through the informal exchange market.
To residents from nonresidentsCommercial credits can be contracted with foreign banks and financial entities under a 30% reserve requirement charged on an average balance and subject to 4% tax on interest. Export advances and direct supplier credits to importers are exempted from the reserve requirement. Associated foreign exchange transactions must be made through the formal exchange market.
Financial credits
By residents to nonresidentsOperations by insurance companies, pension funds, and institutional investors are restricted. Others must operate through the informal market.
To residents from nonresidentsFinancial credits can be contracted with foreign banks and financial entities, subject to a one-year 30% reserve requirement, a 4% tax on interest, and a stamp tax of 1.2%.
Guarantees, sureties, and financial backup facilities
By residents to nonresidentsExcept banks, which have to be authorized by the CBC. Only the following operations can be guaranteed or backed up by banks: external credits received by domestic enterprises, financial credits, the issuance of documents abroad, and forward contracts with authorized agents abroad.
To residents from nonresidentsYes.
Controls on direct investment
Outward direct investmentRestrictions exist in the case of ownership in a foreign company, investments in a project, or establishment of a company abroad. Investments may take place in two ways:

(1) Through the formal market in which case the CBC grants approval but is subject to a 120-day profit repatriation period while avoiding double taxation; or

(2) Through the informal exchange market where the CBC must only be informed.

There are also some limitations on the purchase of equities and foreign direct investment through the formal exchange market, in which case the CBC gives the authorization to proceed, depending upon the provision of some specific information about the investment.

There is a maximum allowed repatriation period for profits of 120 days. There is also a diversification requirement that allows a maximum investment in subsidiaries and branches in one foreign country of 20% of the capital and reserves of a local bank. Investment abroad in foreign subsidiaries and branches must be deducted from the local capital base. Investments by commercial banks are limited to 25% of each bank’s capital and reserves, and restricted to bills and bonds issued or guaranteed by foreign governments or central banks and private enterprises with a minimum long-term international debt risk rating (and its equivalent for short-term debt) of BBB instruments; and pension funds and insurance companies are subject to minimum long-term international debt risk ratings of BBB.
Inward direct investmentCapital contributions to new establishments or shares in existing ones are subject to a one-year minimum holding period and a minimum amount of US$10,000. Projects of significant size may be undertaken through Decree Law 600 (DL600) where there is a minimum holding period of one year. In this case, the investor enjoys a favorable taxation treatment with regard to the choice between the general law of income tax or the guaranteed payment profit tax of 42%. There is also a guaranteed access to the formal exchange market for repatriation.
Controls on liquidation of direct investmentInvestments must be held in Chile for at least one year to qualify for repatriation. After that period, it must be demonstrated that the asset was sold and applicable taxes paid.
Controls on real estate transactions
Purchase abroad by residentsOnly insurance companies are restricted and can invest only 3% of reserves and risk net worth. Others remain free but must operate through the informal market.
Purchase locally by nonresidentsDirect purchase of real estate is treated as a financial investment and is subject to Chapter XIV of the CEIR that imposes a minimum investment of US$10,000, a reserve requirement of 30%, and a minimum holding period of one year.
Sale locally by nonresidentsThe investment must be held for one year in Chile. After that period, it must be demonstrated that the asset was sold and applicable taxes paid.
Provisions specific to commercial banks and other credit institutions
Borrowing abroadBanks are permitted to use foreign trade credits, but these are subject to a reserve requirement of 30% against the average balance. They may also obtain financial credits, according to Chapter XIV of the CEIR, with a reserve requirement of 30% for a year.
Maintenance of accounts abroadNonbank financial institutions are restricted. For banks, foreign time deposits must be within the margin for financial investment abroad, while external current accounts are not restricted.
Lending to nonresidents (financial or commercial credits)Banks are only allowed to grant loans related to foreign trade. However, they can purchase debt instruments and sovereign bonds issued abroad. Time deposits are considered part of the margin for financial investments. Banks satisfying a capital adequacy ratio of at least 10% may acquire stocks of foreign banks or establish branches abroad. Deposits, loans, and other assets of Chilean banks with foreign banks having Chilean bank ownership cannot exceed 25% of the capital and reserves of the foreign bank.
Lending locally in foreign exchangeBanks are only permitted to grant foreign exchange credits associated with foreign trade. However, they may grant loans or acquire securities denominated or expressed in foreign exchange provided they remain within the open position limits.
Purchase of locally issued securities denominated in foreign exchangeThere are no restrictions, but they are subject to open position limits.
Differential treatment of nonresident deposit accounts and/or deposit accounts in foreign exchange
Reserve requirementsYes.
Liquid asset requirementsThere are different reserve requirements for foreign currency deposits (time and current account deposits) and domestic currency time deposits. The requirement is 30% in the case of foreign currency deposits and 9% in the case of domestic currency time deposits.
Interest rate controlsBy law there are ceilings on interest rates on both domestic and foreign currency loans. Those ceilings are defined as 1.5 times the average market interest rate.
Investment regulationsForeign financial investments by commercial banks are limited to 25% of each bank’s capital and reserves, and restricted to bills and bonds issued or guaranteed by foreign governments or central banks and private enterprises. The general minimum long-term international debt risk rating (and its equivalent for short-term debt) for the financial instruments is BBB- and up to 30% of the 25% margin can be invested in BB-instruments. The acquisition of foreign exchange in order to invest abroad must be through the formal exchange market.
Open foreign exchange position limitsThe net position of foreign currency assets for banks cannot exceed 20% of capital and reserves. This margin includes derivative and spot instruments, foreign investment, and assets and liabilities issued abroad or denominated in foreign exchange. Additionally, there is a foreign financial investment ceiling of 25% of capital and reserves of each bank, a maximum investment in subsidiaries and branches abroad of 20% of capital and reserves of the domestic bank, and a requirement that the balances of all acquisitions and sales of foreign exchange for a bank be positive.
Provisions specific to institutional investorsThe type of foreign instruments that can be held by pension funds and insurance companies is restricted by a minimum international long-term risk rating requirement of BBB. Investors in these instruments may also acquire foreign instruments guaranteed by the U.S. Treasury, such as Brady bonds. Acquisition of equities and variable income assets by pension funds is restricted to instruments in some international markets. Specifically, there are regulations on the transparency, regulation, and information of the stock exchange where these instruments can be acquired. However, for insurance companies, the possible stock exchange options are wider, insurance companies can invest in markets where there is a daily average of at least US$10 million of equity transactions.
Limits (max.) on portfolio invested abroadPension funds may invest up to 9% of their resources abroad. Life insurance companies may invest their technical reserves and their risk net worth with global limits of up to 10% in financial investments and 3% in real estate. The limits for general insurance companies differ from the life insurance companies only in the case of financial investment abroad. The limit in that case is 15%.
Other controls imposed by securities lawsNo.

China

(Position as of April 30, 1996, unless otherwise stated)

Status Under IMF Articles of Agreement
Article VIIIDate of acceptance: December 1, 1996.
Exchange Arrangement
CurrencyThe currency of the People’s Republic of China is the renminbi (RMB). The currency unit is the yuan (100 fen = Yl and 10 fen = 1 jiao).
Other legal tenderNo.
Exchange rate structureUnitary.
Classification
Managed floatingThe exchange rate of the renminbi is determined in the interbank foreign exchange market. The People’s Bank of China (PBC) announces a reference rate for the renminbi against the U.S. dollar, the Hong Kong dollar, and the Japanese yen based on the weighted average price of foreign exchange transactions 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% on either side of the reference rate as announced by the PBC. The exchange rate of the renminbi against the Hong Kong dollar and the Japanese yen is limited to 1% on either side of the reference rate. The rates of the renminbi against other currencies should not exceed 0.5%. The selling price for cash transactions is the same as the buying price for cash transactions for all quoted currencies. The buying price for cash should not exceed 2.5% of its spot rate.

The Shanghai-based China Foreign Exchange Trading System is a nationally integrated electronic system for interbank foreign exchange trading. At present, it is electronically linked with 25 foreign exchange trading centers located in major cities. All foreign exchange transactions are conducted through the system. Financial institutions involved in foreign exchange transactions must become members of China’s Foreign Exchange Trading System.
Exchange taxNo.
Exchange subsidyNo.
Forward exchange marketNo.
Arrangements for Payments and Receipts
Prescription of currency requirementsThe currencies used in transactions are determined by the respective contracts.
Bilateral payments arrangements
InoperativeChina maintains arrangements with Cuba, the Democratic People’s Republic of Korea, Mongolia, Russia, and Vietnam. Cash settlements with Cuba began in 1996.
Other payments arrangementsNo.
Administration of control
Exchange control authoritiesThe PBC has authority over control and the State Administration of Exchange Control (SAEC) is responsible for implementing regulations.
International security restrictionsNo.
Controls on trade in gold (coins and/or bullion)
Controls on domestic ownership and/or tradeTrading of gold and silver is restricted to pharmaceutical, industrial, and other approved users. Private persons may hold gold but not trade it. Nonresidents can buy gold, gold products, silver, and silver products but must present the invoice to export them.
Controls on external tradeUnlimited amounts of gold, gold products, silver, and silver products may be imported but must be declared. Exportation requires permits.
Controls on exports and imports of banknotes
On exports
Domestic currencyThere is a limit of RMB 6,000.
Foreign currencyTravelers on official business can carry as much foreign currency as needed. Residents going abroad can carry foreign currency in cash up to the equivalent of $1,000. For amounts exceeding $1,000 approval of the SAEC is required. Banks will issue a “permit to carry foreign currency abroad” based on SAEC approval.
On imports
Foreign currencyThe import of foreign currency must be declared to customs.
Resident Accounts
Eligibility to hold accounts
Juridical personsDomestic establishments may maintain specified categories of foreign exchange accounts with permits issued by SAEC. Foreign-funded enterprises (FFEs) may open:

(1) Foreign exchange surrender accounts for receipts and payments under the current account; and

(2) Foreign exchange special use accounts for receipts and payments under the capital account with a maximum amount stipulated by the SAEC for each enterprise.
Natural personsForeign currency savings account may be opened with authorized banks.
Foreign exchange accounts permittedYes.
Held domesticallyYes.
Approval requiredYes.
Held abroadYes.
Approval requiredYes.
Accounts in domestic currency convertible into foreign currencyDomestic establishments in need of foreign exchange may convert domestic currency into foreign currency at authorized banks by presenting valid proof and commercial bills.
Nonresident Accounts
Eligibility to hold accounts
Juridical personsYes.
Natural personsPersons staying in China for a short time may open foreign currency savings accounts.
Foreign exchange accounts permittedFFEs and joint ventures can maintain foreign exchange accounts and use them to make authorized payments abroad.
Approval requiredYes.
Domestic currency accountsYes.
Convertible into foreign currencyNo.
Approval requiredYes.
Imports and Import Payments
Foreign exchange budgetNo.
Financing requirements for imports
Advance payments requirementImporters may make advance payment of loans not exceeding $10,000 at the banks, by presenting valid proof and commercial bills. Prior SAEC approval is required for payment of loans exceeding 15% of the contract amount or the equivalent of $100,000.
Documentation requirements for release of foreign exchange for importsImporters must provide valid proof and commercial bills, mainly import permits, automatic registration permits, proof of import, customs declarations, verification forms for foreign exchange payments, import contracts, and the like to obtain foreign exchange or pay directly from their foreign exchange accounts.
Preshipment inspectionAll imports require inspection prior to their release by customs at the port of entry.
Import licenses and other nontariff measures
Positive listAll enterprises other than registered foreign trade companies (FTCs) must obtain approval from the local foreign trade bureau, in accordance with the Ministry of Foreign Trade and Economic Cooperation (MOFTEC) authorization, as well as a license from the local bureau for industry and commerce, to engage in foreign trade.
Negative listImports of secondhand garments, poisons, narcotic drugs, diseased animals, and plants are prohibited. In addition, the importation of weapons, ammunition and explosives, radio receivers and transmitters, manuscripts, printed and recorded materials, and films that are deemed to be detrimental to Chinese political, economic, cultural, and moral interests are prohibited.
Licenses with quotasYes.
Import taxes and/or tariffsImport tariff rates fall into two categories: general and preferential. Preferential rates are granted to imports from countries with which China has concluded a trade treaty or agreement. Other imports are subject to the general rate of duty. The average unweighted tariff rate is 35.7%. China has a number of special economic zones where imports of inputs and capital goods are exempt from tariffs.
Taxes collected through the exchange systemNo.
State import monopolyFTCs conduct trade in specified products, including wheat, chemical fertilizers, crude oil and oil products, rubber, steel, timber, plywood, polyester fibers, tobacco and its products, cotton, and wool.
Exports and Export Proceeds
Repatriation requirementsYes.
Surrender requirementsDomestic establishments must sell their export earnings to designated banks; FFEs may retain their export earnings, provided those earning do not exceed the maximum amount allowed for a foreign exchange surrender account as prescribed by the SAEC; otherwise the balance, if any, must be sold to authorized banks or sold through foreign exchange adjustment centers.
Financing requirementsNo.
Documentation requirementsNo.
Export licenses
Without quotasExports of specific machine tools require a license from the SAEC 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.
With quotasQuotas for 24 product items are allocated through a bidding system under which successful bidders are required to guarantee maximum export value by offering higher benchmark export prices.
Export taxesExport duties are levied on 47 products.
Taxes collected through the exchange systemNo.
Payments for Invisible Transactions and Current Transfers
Controls on these paymentsNontrade payments by FFEs, public enterprises or institutions, and individuals are subject to different regulations. Restrictions on payments for invisible transactions and current transfers were removed upon acceptance of the obligations under Article VIII of the Articles of Agreement of the Fund.
Freight/insurance
Prior approvalNo.
Quantitative limitsNo.
Indicative limits/bona fide testProof of transactions is required.
Unloading/storage costs
Prior approvalNo.
Quantitative limitsNo.
Indicative limits/bona fide testProof of transactions is required.
Administrative expenses
Prior approvalNo.
Quantitative limitsNo.
Indicative limits/bona fide testProof of transactions is required.
Commissions
Prior approvalNo.
Quantitative limitsSAEC approval is required for amounts exceeding the prescribed limits (i.e., as a percentage of f.o.b. pricing: in the case of a hidden commission, the rebate should not exceed 2% of total contract amount; and in the case of a stated commission, rebate should not exceed 5% or if exceeding those percentages should be below $10,000). Traders may pay directly at authorized banks by presenting valid proof and commercial bills.
Indicative limits/bona fide testProof of transactions is required.
Interest payments
Prior approvalNo.
Quantitative limitsNo.
Indicative limits/bona fide testYes.
Profit/dividendsApplicable taxes must be paid before remittance.
Prior approvalNo.
Quantitative limitsNo.
Indicative limits/bona fide testProof of transactions is required.
Payments for travelThe foreign exchange requirements of companies within the budget are provided according to the prescribed limits. There are no restrictions on payments for travel of FFE staff

“Interim Regulations on Nontrade and Nonbusiness Foreign Exchange Utilization,” published by the Ministry of Finance, imposes a limit on the amount of foreign exchange utilized by persons traveling abroad on official business. Residents traveling to Hong Kong and Macao for personal reasons may purchase up to $500 worth of foreign currencies; individuals traveling to other countries or regions (including Taiwan Province of China) may purchase up to $1,000 worth of foreign currencies.
Prior approvalApproval of the SAEC is required for amounts exceeding those limits.
Quantitative limitsYes.
Indicative limits/bona fide testYes.
Medical costs
Prior approvalNo.
Quantitative limitsResidents may purchase foreign exchange up to $500 for payments of medicines and medical equipment abroad; for larger amounts they must submit appropriate documentation for SAEC’s verification.
Indicative limits/bona fide testYes.
Study abroad costs
Prior approvalNo.
Quantitative limitsPersons paying for their own studies abroad may be allowed a one-time purchase of foreign exchange of up to $1,000. Larger amounts require the approval of the SAEC.
Indicative limits/bona fide testNo.
Subscriptions and membership fees
Prior approvalNo.
Quantitative limitsYes.
Indicative limits/bona fide testYes.
Consulting/legal fees
Prior approvalNo.
Quantitative limitsYes.
Indicative limits/bona fide testYes.
Foreign workers’ wages
Prior approvalNo.
Quantitative limitsNo.
Indicative limits/bona fide testProof of earnings is required.
Pensions
Prior approvalNo.
Quantitative limitsPensions, including severance and separation payments, may be converted into foreign currency up to $1,000 in a one-time purchase. For amounts exceeding this limit, SAEC approval is required.
Indicative limits/bona fide testYes.
Gambling/prize earnings
Prior approvalNo.
Quantitative limitsNo.
Indicative limits/bona fide testProof is required.
Family maintenance/alimony
Prior approvalNo.
Quantitative limitsYes.
Indicative limits/bona fide testYes.
Proceeds from Invisible Transactions and Current Transfers
Repatriation requirementsYes.
Surrender requirementsForeign grants and financial aid received by domestic establishments and foreign exchange earmarked for external payments as prescribed by aid contracts may be maintained with the approval of the SAEC; foreign embassies and consulates, representative offices of international organizations and affiliates of foreign juridical persons, resident persons and foreign expatriates may retain their foreign exchange; FFEs may retain foreign exchange earnings from current account transactions, provided the retained amount does not exceed the maximum limit allowed by the SAEC. Balances, if any, must be sold to authorized banks or through foreign exchange swap centers.
Capital Transactions
Controls on capital and money market instruments
On capital market securities
Purchase in the country by nonresidentsNonresidents may only purchase B shares. The face value of B shares is denominated in renminbi. B shares are listed on the Chinese Securities Exchange and can only be bought by foreign investors.
Sale or issue locally by nonresidentsThese transactions are not permitted.
Purchase abroad by residentsResidents, except financial institutions permitted to engage in foreign borrowing, and authorized industrial and trade enterprises or groups are not permitted to purchase securities abroad. A qualifications review by the SAEC is required for financial institutions to purchase securities abroad.
Sale or issue abroad by residentsPrior approval by the PBC, the SAEC, or the Securities Supervisory Board is required. Issuing bonds abroad must be integrated within the state’s plan for utilizing foreign capital. Bonds can only be issued by financial institutions approved by the PBC.
On money market instruments
Purchase in the country by nonresidentsNonresidents are not allowed to purchase money market instruments.
Sale or issue locally by residentsNonresidents are not allowed to sell or issue money market instruments.
Purchase abroad by residentsResidents, except financial institutions permitted to engage in foreign borrowing, and authorized industrial and trade enterprises or groups are not allowed to purchase money market instruments. Financial institutions must undergo a review of qualifications by the SAEC before purchasing foreign money market instruments.
Sale or issue abroad by residentsSale or issue abroad of securities, other than stocks, requires PBC and SAEC approval.
On collective investment securities
Purchase in the country by nonresidentsThese transactions are not allowed.
Sale or issue locally by nonresidentsThere are no regulations, and if these instruments are traded, they must be approved by the Securities Policy Commission.
Purchase abroad by residentsSame regulations as for purchase of money market instruments apply.
Sale or issue abroad by residentsSame regulations as for sale or issue of money market instruments apply.
Controls on derivatives and other instruments
Purchase in the local market by nonresidentsThese transactions are not allowed.
Sale or issue by nonresidentsThese transactions are not allowed.
Purchase abroad by residentsOperations in such instruments by financial institutions are subject to prior review of qualifications and to limits on open foreign exchange positions.
Sale or issue abroad by residentsSame regulations as for purchases apply.
Controls on credit operations
Commercial credits
By residents to nonresidentsIndustrial and commercial enterprises may not provide lending to nonresidents. Provision of loans to nonresidents by financial institutions is subject to review of qualifications by the SAEC and to a foreign exchange asset-liability ratio requirement.
To residents from nonresidentsThe regulation of September 1991 on External Borrowing of Commercial Credit by Do-mestic Entities stipulates that only financial institutions permitted by the SAEC to engage in external borrowing and authorized industrial and commercial enterprises or groups can engage in external borrowing of commercial credit. For credit of over one-year maturity, the loan must be part of the state plan for utilizing foreign capital and must be approved by the SAEC. Short-term commercial credit (with a maturity of one year or less) is subject to foreign exchange balance requirements. Financial institutions permitted to engage in foreign borrowing are free to conduct short-term foreign borrowing within the target balance without obtaining approval, but must register the borrowing with the SAEC.

Short-term foreign financing with a maturity of three months or less provided to enterprises (excluding FFEs) is not subject to limitations, but short-term financing of longer than three months is subject to short-term foreign exchange balance requirements, and the borrowing must be registered with the SAEC.

FFEs may borrow from nonresidents without obtaining approval but must report the borrowing to SAEC.
Financial credits
By residents to nonresidentsSame regulations as for commercial credits apply.
To residents from nonresidentsSame regulations as for commercial credits apply.
Guarantees, sureties, and financial backup facilities
By residents to nonresidentsThe regulation on External Guarantees Provided by Domestic Entities, of September 1996, allows the provision of guarantees by financial institutions permitted to engage in providing foreign exchange guarantees and nonfinancial legal entities that have foreign exchange receipts. Government agencies or institutions cannot provide guarantees.
To residents from nonresidentsYes.
Controls on direct investment
Outward direct investmentAccording to the 1989 Regulation on Outward Direct Investment and the 1990 Implementation Procedures on Outward Direct Investment, foreign exchange will be provided after a SAEC review of sources of foreign exchange assets and an assessment of the investment risk involved, approval by MOFTEC, and registration with the SAEC.
Inward direct investmentAs long as nonresidents meet requirements under Sino-foreign joint venture laws and other relevant regulations, and are approved by MOFTEC, they are free to invest in China. There is no restriction on the inward remittance of funds as far as exchange control is concerned. In 1995, the State Planning Commission and other agencies issued Interim Regulations Guiding Foreign Investors and Directions for Foreign-Funded Enterprises. For environmental and security reasons, inward direct investment in some industries is prohibited.
Controls on liquidation of direct investmentNo.
Controls on real estate transactions
Purchase abroad by residentsSame regulations as for direct investment apply.
Purchase locally by nonresidentsSame regulations as for direct investment apply.
Provisions specific to commercial banks and other credit institutions
Borrowing abroadSame regulations as for commercial credits apply.
Maintenance of accounts abroadPrior approval by the SAEC is required for domestic entities opening foreign exchange accounts abroad.
Lending to nonresidents (loans, financial or commercial credits)Lending is allowed subject to review of qualifications by the SAEC and to asset-liability ratio requirements.
Lending locally in foreign exchangeLending is mainly subject to a qualifications review by the SAEC and to asset-liability ratio requirements.
Purchase of locally issued securities denominated in foreign exchangeChina does not issue securities denominated in foreign currency.
Differential treatment of nonresident deposit accounts and/or deposit ac-counts in foreign exchange
Reserve requirementsThere are different reserve requirements for deposits in renminbi and in foreign currencies, and also between the latter in domestic banks and in FFEs (i.e., 13% for deposits in renminbi, 5% for any foreign currency deposit in domestic banks, and 3% for deposits in foreign currency for over three months and 5% for less than three months, in foreign financial institutions.
Liquid asset requirementsBank foreign exchange liquid assets (one year or less) should not be less than 60% of liquid liabilities (one year or less) and 30% of total foreign exchange assets. Total deposits with three-month maturities, deposits in both domestic and foreign banks, funds used for purchasing transferable foreign-currency-denominated securities, deposits with the central bank, and cash holdings should not be less than 15% of total foreign exchange assets. Nonbank foreign exchange liquid assets (one year or less) should not be less than 60% of liquid liabilities (one year or less) and 25% of total assets. Total deposits with three-month maturities, deposits in both domestic and foreign banks, funds used for purchasing transferable foreign-currency-denominated securities, deposits with the central bank, and cash holdings should not be less than 10% of total assets.
Investment regulationBank equity investment should not exceed the difference between bank capital and mandatory paid-in capital. Nonbank financial institutions’ total equity investment (excluding trust accounts) should not exceed the difference between their capital and mandatory paid-in capital.
Credit controlsTotal loans, investment guarantees (calculated as 50% of the balance guaranteed), and other foreign exchange credits provided to a legal entity by banks or nonbank financial institutions should not exceed 30% of the foreign exchange capital owned by the banks or nonbank financial institutions.
Open foreign exchange position limitsFor financial institutions trading foreign exchange on their own behalf, the daily total amount traded (total open foreign exchange position) should not exceed 20% of the foreign exchange working capital. As authorized by the highest level of management, financial institutions trading foreign exchange on their own behalf may retain a small amount of overnight open position, but this should not exceed 1% of the foreign exchange working capital.
Provisions specific to institutional investorsNo.

Côte D’lvoire

(Position as of June 30, 1996)

Status Under IMF Articles of Agreement
Article VIIIDate of acceptance: June 1, 1996.
Exchange Arrangement
CurrencyThe currency of Côte d’Ivoire is the CFA franc.
Exchange rate structureUnitary.
Classification
PeggedThe CFA franc is pegged to the French franc, the intervention currency, at the fixed rate of CFAF 1 per F 0.01. 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. BCEAO levies no commission on transfers to or from all countries outside the WAEMU. However, banks and the postal system levy a commission on transfers to all countries outside the WAEMU, which must be surrendered to the Treasury.
Exchange taxNo.
Forward exchange marketForward exchange cover for eligible imports must not extend beyond one month for certain specified goods and three months for goods designated essential commodities with no renewal of cover 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 Economics, Finance, and Planning (MEFP), only for payments for imports of goods and only for the currency stipulated in the commercial contract.
Official cover of forward operationsNo.
Arrangements for Payments and Receipts
Prescription of currency requirementsBecause Côte d’Ivoire is linked to the French Treasury through an Operations Account, settlements with France, 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.
Bilateral payments arrangementsNo.
Other payments arrangements
Clearing agreementsCurrent 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.
Administration of control
Exchange control authoritiesExchange control is administered by the Directorate of the Treasury, Monetary and Banking Affairs in the MEFP.
International security restrictionsNo.
Payments arrears
OfficialYes.
Controls on trade in gold (coins and/or bullion)
Controls on external tradeImports and exports of gold from or to any other country require prior authorization from the MEFP, which is seldom granted.
Controls on exports and imports of banknotes
On exports
Foreign currencyThe reexportation of foreign banknotes is allowed up to the equivalent of CFAF 250,000; the reexportation 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.
On imports
Foreign currencyResidents and nonresidents may bring in any amount of foreign banknotes and coins (except gold coins) of countries outside the Operations Account area. Residents bringing in foreign banknotes and foreign currency traveler’s checks exceeding the equivalent of CFAF 5,000 must declare them to customs upon entry and sell them to an authorized intermediary bank within eight days.
Nonresident Accounts
Eligibility to hold accountsJuridical and natural persons are eligible.
Domestic currency accountsBecause 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 MEFP. Transfers of funds between nonresident accounts are not restricted.
Convertible into foreign currencyYes.
Imports and Import Payments
Foreign exchange budget No.
Financing requirements for importsNo.
Documentation requirements for release of foreign exchange for imports
Domiciliation requirementsAll imports exceeding CFAF 500,000 are subject to this requirement.
Preshipment inspectionInspection for quality and price is required for imports exceeding CFAF 3 million; imports valued at CFAF 1.5 million and CFAF 3 million may be subject to random inspection.
Letters of creditLetters of credit are required for goods imported from outside the EU, Operations Account countries, and ACP countries.
Import licenses and other nontariff measures
Positive listImports are classified into 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.
Open general licensesImport licenses for a short list of controlled products are issued by the Directorate of External Trade Promotions in the Ministry of Commerce.
Other nontariff measuresYes.
Import taxes and/or tariffsA maximum tariff rate of 35% is in effect. A statistical tax of 2.5% is levied on the c.i.f. value of all imports. Imports from members of the WAEC and the ECOWAS are exempt from the surcharges.
Exports and Export Proceeds
Repatriation requirementsProceeds from exports, including to countries in the Operations Account area, must be received within 120 days of the arrival of the goods at their destination.
Surrender requirementsExport receipts must be collected through authorized intermediary banks within one month of the due date.
Documentation requirementsExports require a customs declaration. 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.
Export licensesExports of lumber are subject to quantitative quotas allocated through auction.
Payments for Invisible Transactions and Current Transfers
Controls on these paymentsPayments to France, Monaco, and the Operations Account countries are permitted freely, those to other countries must be approved.
Freight/insuranceNo.
Unloading/storage costsNo.
Administrative expensesNo.
CommissionsNo.
Interest paymentsNo.
Profit/dividendsNo.
Payments for travel
Prior approvalYes.
Quantitative limitsThe limits are CFAF 500,000 a trip for tourism and CFAF 75,000 a day up to one month for business travel.
Indicative limits/bona fide testAllowances in excess of these limits are subject to authorization from the MEFP.
Credit card use abroad
Prior approvalNo.
Quantitative limitsCredit cards can be used up to the ceilings for tourist and business travel.
Proceeds from Invisible Transactions and Current Transfers
Repatriation requirementsAll proceeds must be collected and repatriated in full from transactions with non-Operations Account countries.
Surrender requirementsAll proceeds from transactions with non-Operations Account countries must be surrendered.
Capital Transactions
Controls on capital and money market instrumentsCapital movements to foreign countries are restricted. Capital may freely enter the member countries of the WAEMU, except with respect to direct investment subject to prior declaration and certain loan operations requiring advance authorization. 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, 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, Monaco, and the Operations Account countries.
On capital market securities
Sale or issue locally by nonresidentsThe issue of securities in Côte d’Ivoire by nonresidents is subject to the prior authorization of the MEFP. Likewise, the sale of the securities of foreign corporations or entities requires the prior approval of the ministry. The issue or sale of securities by a nonresident that has been authorized in advance may be purchased by a resident only after the latter has obtained prior approval from the MEFP. Securities sales consisting of the liquidation of an investment by means of a transfer between a nonresident and a resident may be freely executed, subject to the prescriptions concerning the financial settlement of the operation. Settlement of the operation on securities by transfer abroad or by crediting a nonresident account requires the preparation of an exchange authorization submitted for the approval of the MEFP in support of documents attesting to the validity of the operation.
Purchase abroad by residentsThese purchases and the transfer abroad of funds associated with them require the prior authorization of the MEFP.
Sale or issue abroad by residentsResidents are free to sell the securities of resident corporations abroad. If these operations result in the foreign control of establishments resident in Côte d’Ivoire, the foreign investors are required to file a declaration in advance with the MEFP. Securities sales involving the liquidation of an investment abroad are subject to prior declaration to the MEFP. The proceeds in foreign exchange from the sale or liquidation must be surrendered to an authorized intermediary bank.
On money market instruments
Sale or issue locally by nonresidentsThese sales are subject to the prior authorization of the MEFP (except sales involving the liquidation of an investment, which are restricted). Transfer of the proceeds of these operations requires the preparation of an exchange authorization submitted for the approval of the MEFP in support of documents attesting to the validity of the operation.
Purchase abroad by residentsThese purchases are subject to the prior authorization of the MEFP.
Sale or issue abroad by residentsResidents may freely sell money market instruments abroad. Sales involving the liquidation of an investment are subject to prior declaration. The proceeds in foreign exchange from the sale or liquidation must be surrendered to an authorized intermediary bank. The issue of money market instruments abroad by residents is governed by the provisions applicable to loans.
On collective investment securities
Sale or issue locally by nonresidentsYes.
Purchase abroad by residentsYes.
Sale or issue abroad by residentsYes.
Controls on derivatives and other instrumentsThese instruments, which are almost nonexistent in Côte d’Ivoire, fall within the scope of the regulatory framework generally applicable to securities and investments.
Controls on credit operations
Commercial creditsFor the issue of securities constituting a loan, the borrower must request advance authorization from the MEFP. However, this authorization is not required for loans contracted by authorized intermediaries or which comply with specific conditions as to amount and interest rate.
By residents to nonresidentsThese credits may be granted subject to the following provisions: (1) Debts arising from exports of goods must be collected and the corresponding amounts repatriated through the BCEAO within 30 days of the payment due date. The payment due date is the date specified in the commercial contract. It must in any case be no more than 120 days after the shipment of the goods; (2) Debts arising from payment for services must also be collected and surrendered on the exchange market no later than two months after the payment due date. No administrative limit is set for this due date.
To residents from nonresidentsThese credits may be freely granted; their repayment is generally authorized, subject to the presentation of documents attesting to the validity of the commercial transaction or the provision of the service, as well as the payment due date.
Financial credits
By residents to nonresidentsThe granting of financial credits, requires the prior authorization of the MEFP. In order to transfer funds abroad to service these facilities, an exchange authorization is prepared and submitted with the required vouchers to the MEFP.
To residents from nonresidentsThese facilities may be freely granted and the funds to service them must be transferred from abroad by an authorization intermediary. However, if these operations are carried out between a direct investment company established in Côte d’Ivoire and its parent company abroad, they are considered to be direct investments and are therefore subject to prior declaration to the MEFP.

The transfer abroad of the funds necessary to service a loan is subject to authorization if the loan itself required prior authorization. Requests for authorization must be accompanied by all supporting documents necessary to ensure the validity of the operation: authorization to borrow, references from the report prepared in connection with disbursement of the proceeds of the loan, and the like.
Guarantees, sureties, and financial backup facilities
By residents to nonresidentsThe granting of guarantees, sureties, and financial backup facilities requires the prior authorization of the MEFP. In order to transfer funds abroad to service these facilities, an exchange authorization is prepared and submitted with the required vouchers to the MEFP.
To residents from nonresidentsThese facilities may be freely granted, and the funds to service them must be transferred from abroad by an authorization intermediary. However, if these operations are carried out between a direct investment company established in Côte d’Ivoire and its parent company abroad, they are considered to be direct investments and are therefore subject to prior declaration to the MEFP.
Controls on direct investment
Outward direct investmentInvestment abroad (including purchases of real estate) by a resident is subject to prior authorization by the MEFP, which must be requested by the party concerned in a letter designating the authorized intermediary that will execute payment. This payment, by transferring funds abroad or by crediting a foreign account in francs, may not be made before the end of the time period agreed by the parties.
Inward direct investmentInvestments are subject to prior declaration to the MEFP, which has a period of two months in which to request the suspension of the operation. The transfer of a direct investment by a nonresident to another nonresident is also subject to prior declaration. 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% of applicable tax up to the fourth-to-last year of the exemption period and is reduced progressively to 75% of the tax in the third-to-last year, 50% in the second-to-last year, and 25% in the last year. Imports of raw materials for which no equivalents are produced locally are not exempt from import duties and taxes.
Controls on liquidation of direct investmentProceeds from the sale or liquidation of direct foreign investment may be freely transferred abroad or credited to a foreign account in francs after presentation of the requisite vouchers to the MEFP and the ministry’s response. 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 the operation.
Controls on real estate transactions
Purchase abroad by residentsInvestment abroad (including purchases of real estate) by a resident is subject to prior authorization by the MEFP, which must be requested by the party concerned in a letter designating the authorized intermediary that will execute payment. This payment, by transferring funds abroad or by crediting a foreign account in francs, may not be made before the end of the time period agreed by the parties.
Purchase locally by nonresidentsPurchases can be freely made if they are not direct investments in a business, branch, or corporation.
Sale locally by nonresidentsProceeds from sales of real estate may be freely transferred abroad or credited to a foreign account in francs after presentation of the requisite vouchers to the MEFP and the ministry’s response.
Provisions specific to commercial banks and other credit institutions
Borrowing abroadAuthorized intermediaries are permitted to borrow abroad without restriction.
Maintenance of accounts abroadBanks and financial institutions are not permitted to hold liquid assets outside the WAEMU, except to cover the requirements of their current operations.
Lending to nonresidents (financial or commercial credits)These operations can be freely executed in the case of commercial credits or are subject to the prior authorization of the MEFP in the case of loans, financial credits, or the purchase of securities issued abroad.
Lending locally in foreign exchangeLending locally in foreign currency or purchasing locally issued securities denominated in foreign exchange requires the prior authorization of the MEFP. (There are no explicit provisions on the books with respect to these operations.)
Purchase of locally issued securities denominated in foreign exchangeThese purchases require the prior authorization of the MEFP. (There are no explicit provisions on the books with respect to these operations.)
Differential treatment of nonresident deposit accounts and/or deposit accounts in foreign exchange
Credit controlsYes.
Provisions specific to institutional investors
Limits (max.) on portfolio invested abroadYes.
Limits (min.) on portfolio invested locallyYes.
Currency matching regulations on assets/liabilities compositionYes.
Other controls imposed by securities lawsNo.

Czech Republic

(Position as of December 31, 1995)

Status Under IMF Articles of Agreement
Article VIIIDate of acceptance: October 1, 1995.
Exchange Arrangement
CurrencyThe currency of the Czech Republic is the Czech koruna.
Other legal tenderNo.
Exchange rate structureUnitary.
Classification
PeggedThe external value is determined on the basis of a basket consisting of the deutsche mark (65%) and the U.S. dollar (35%). The Czech National Bank (CNB) quotes daily buying and selling rates for 23 convertible currencies, the ECU, and the SDR. Since June 1993, commercial banks are allowed to set their own foreign exchange rates of the Czech koruna against other currencies, which are applied to the transactions with their clients. Since February 28, 1996, the exchange rate of the Czech koruna quoted by the CNB is allowed to fluctuate within band limits of ± 7.5% against the central rate.
Exchange taxThere is no exchange tax; however, on the occasion of fixing, the CNB collects a fee of 0.25% on its foreign exchange transactions with commercial banks.
Exchange subsidyNo.
Forward exchange marketYes.
Official cover of forward operationsNo.
Arrangements for Payments and Receipts
Prescription of currency requirementsNo.
Bilateral payments arrangementsNo.
Other payments arrangementsNo.
Administration of control
Exchange control authoritiesThe Ministry of Finance and the CNB are responsible for the administration of exchange controls and regulations in accordance with the Foreign Exchange Act. In general, the Ministry of Finance exercises authority over governmental credits, central and local authorities, budgetary organizations, and state funds. The CNB exercises authority over the activities of all other agents.
International security restrictionsNo.
Payments arrearsNo.
Controls on trade in gold (coins and/or bullion)
Controls on domestic ownership and/or tradeGold bullion may, with some exceptions, be traded only with authorized agents (generally banks).
Controls on external tradeThe export and import of gold bullion and/or more than 10 gold coins must be reported.
Controls on exports and imports of banknotesThere are reporting obligations on exports and imports exceeding K£ 200,000.
Resident Accounts
Eligibility to hold accountsJuridical and natural persons are eligible.
Foreign exchange accounts permittedYes.
Held domesticallyYes.
Approval requiredNo.
Held abroadYes.
Approval requiredApproval is required with some exceptions.
Accounts in domestic currency convertible into foreign currencyYes.
Nonresident Accounts
Eligibility to hold accountsJuridical and natural persons are eligible.
Foreign exchange accounts permittedForeign currency accounts, in which foreign exchange may be deposited freely and from which payments may be made in the Czech Republic or abroad without restriction.
Approval requiredNo.
Domestic currency accountsDomestic currency accounts may be opened with commercial banks in Czech koruny. Balances on these accounts may be used freely to make payments in the Czech Republic. All transfers abroad from these accounts can be made freely.
Convertible into foreign currencyYes.
Approval requiredNo.
Blocked accountsNo.
Imports and Import Payments
Foreign exchange budgetNo.
Financing requirements for importsNo.
Documentation requirements for release of foreign exchange for importsNo.
Import licenses and other nontariff measures
Negative listYes.
Open general licensesImport licenses are required for a few strategic items, such as uranium 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.
Licenses with quotasImports of hard coal, lignite, uranium ore and its derivatives, and technological components containing uranium are subject to licenses with quotas.
Import taxes and/or tariffsAll imports are subject to an ad valorem customs duty of up to 45% for industrial goods and up to 233% for agricultural goods. Imports are also subject to a value-added tax of 5% or 22%. Imports from the Slovak Republic are exempt from customs duties under a customs union. Imports from developing countries are granted preferences.
Taxes collected through the exchange systemNo.
State import monopolyNo.
Exports and Export Proceeds
Repatriation requirementsYes.
Surrender requirementsNo.
Financing requirementsNo.
Documentation requirementsNo.
Export licenses
Without quotasA 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.
Export taxesNo.
Payments for Invisible Transactions and Current Transfers
Controls on these paymentsNo.
Proceeds from Invisible Transactions and Current Transfers
Repatriation requirementsYes.
Surrender requirementsNo.
Restrictions on use of fundsNo.
Capital Transactions
Controls on capital and money market instruments
On capital market securities
Sale or issue locally by nonresidentsThe issue of foreign securities in the Czech Republic or their introduction on the domestic market is allowed only with a foreign exchange permit from the CNB.
Purchase abroad by residentsThe purchase of foreign securities by residents requires a foreign exchange permit granted by the foreign exchange authorities. The Foreign Exchange Act defines those cases where a foreign exchange permit is not required:

(1) A purchase within the framework of a direct investment;

(2) A purchase from an own account of a foreign exchange entity having a banking license with a required scope of activities;

(3) A purchase through a foreign exchange entity having a banking license with a required scope of activities;

(4) A purchase of publicly tradable foreign bonds denominated in Czech currency issued in the Czech Republic only with a foreign exchange permit;

(5) A purchase of employee shares and other financially preferred shares issued by a nonresident, his or her domestic employees, or the domestic employees of a resident in whose enterprise the issuer has an ownership participation; and

(6) A purchase of foreign securities acquired from another resident pursuant to a separate act.
Sale or issue abroad by residentsThere are no controls on these transactions, but the yield is subject to the transfer obligation. Pursuant to the Foreign Exchange Act, the regulation includes only those derivatives whose assets are built up through financial means in foreign currency, gold, and foreign securities.
On money market instruments
Sale or issue locally by nonresidentsThe issue of foreign securities in the Czech Republic or their introduction on the domestic market is allowed only with a foreign exchange permit from the CNB.
Purchase abroad by residentsYes.
On collective investment securities
Sale or issue locally by nonresidentsThe issue of foreign securities in the Czech Republic or their introduction on the domestic market is allowed only with a foreign exchange permit from the CNB.
Purchase abroad by residentsYes.
Controls on derivatives and other instrumentsPursuant to the Foreign Exchange Act, the regulation includes only those derivatives whose assets are built up through financial measures in foreign currency, gold, and foreign securities.
Sale or issue locally by nonresidentsThe issue of foreign securities in the Czech Republic or their introduction on the domestic market is allowed only with a foreign exchange permit from the CNB.
Purchase abroad by residentsYes.
Sale or issue abroad by residentsPermitted if a participant in the transaction is a foreign exchange entity having a banking license with a required scope of activities; otherwise, it is allowed only with a CNB foreign exchange permit.
Controls on credit operations
Financial credits
By residents to nonresidentsFinancial credits can be extended by residents to nonresidents only based on a foreign exchange permit from the foreign exchange authorities. The following operations are exceptions:

(1) Extension of a credit by a bank having a banking license with a required scope of activities;

(2) The extended credit is a direct investment; and

(3) The credit is granted between natural persons and is not intended for business activities.
Guarantees, sureties, and financial backup facilities
By residents to nonresidentsA nonresident’s obligation can be secured only with a foreign exchange permit from foreign exchange authorities. However there are exceptions where the guarantee is provided by a foreign exchange entity having a license with a required scope of activities.
Controls on direct investmentNo.
Controls on liquidation of direct investmentNo.
Controls on real estate transactions
Purchase locally by nonresidentsA nonresident, who is not a citizen of the Czech Republic, can acquire real estate only in those cases specified by the act:

(1) By heritage;

(2) For the diplomatic representation of a foreign country under the terms of reciprocity;

(3) If it is real estate acquired in an unapportioned co-ownership of a married couple of which only one is a nonresident, or where a nonresident acquires property from a husband, wife, parents or grandparents;

(4) Through the exchange of domestic real estate which he owns for other domestic real estate the usual price of which does not exceed the usual price of the former real estate;

(5) If he has a preemption by reason of a proportioned co-ownership of real estate;

(6) If it is a construction built by a nonresident on his own land; and

(7) Under the terms explicitly stipulated by a separate act (e.g., Act No. 403/1990 of the Coll. of Laws, on Mitigating the Consequences of Some Property Injustice).
Provisions specific to commercial banks and other credit institutions
Lending locally in foreign exchangeThe range is determined by the banking license granted.
Purchase of locally issued securities denominated in foreign exchangeThe range is determined by the banking license granted.
Differential treatment of nonresident deposit accounts and/or deposit accounts in foreign exchange
Open foreign exchange position limitsBoth as a monetary regulation limiting open short position vis-à-vis nonresidents and as a prudential regulation limiting commercial banks’ open positions in foreign currency.
Provisions specific to institutional investorsInvestments into an entity cannot exceed 20% of its equity.
Limits (min.) on portfolio invested locallyYes.
Other controls imposed by securities lawsThe Act on Bonds establishes that the introduction of bonds by residents on the foreign exchange market and by nonresidents on the domestic market is allowed only with a permit from the Ministry of Finance.

The Act on Securities establishes that the introduction of foreign securities denominated in koruny on the domestic market is allowed only if these securities are traded on the public market in the issuer’s country.

In addition, there are special regulations on acquiring the capital participation of nonresidents in selected institutions or economic areas—banking (a CNB permit required), audit institutions (to a maximum of 10%), and the Securities Stock Exchange (to a maximum of 33%).

Denmark

(Position as of December 31, 1995)

Status Under IMF Articles of Agreement
Article VIIIDate of acceptance: May 1, 1967.
Exchange Arrangement
CurrencyThe currency of Denmark is the Danish krone.
Other legal tenderNo.
Exchange rate structureUnitary.
Classification
Cooperative arrangementDenmark participates in the ERM of the EMS. In accordance with this agreement, Denmark maintains the spot exchange rates between the Danish krone and the currencies of the other participants within margins of 15% above or below the cross rates based on the central rates expressed in ECUs.
Exchange taxNo.
Exchange subsidyNo.
Forward exchange marketYes.
Official cover of forward operationsYes.
Arrangements for Payments and Receipts
Prescription of currency requirementsNo.
Bilateral payments arrangementsNo.
Other payments arrangementsNo.
Administration of controlNo.
International security restrictions
In accordance with IMF Executive Board Decision No. 144-(52/51)Denmark notified the IMF on September 10, 1990 and July 27, 1992, that certain restrictions had been imposed on the making of payments and transfers for current international transactions with respect to Iraq and the Federal Republic of Yugoslavia (Serbia/Montenegro), respectively. On December 22, 1993, in accordance with UN Security Council Resolution No. 883, Denmark imposed restrictions on the making of payments and transfers for current international transactions with respect to Libya. Restrictions against the Federal Republic of Yugoslavia (Serbia/Montenegro) have been lifted.
Payments arrearsNo.
Controls on trade in gold (coins and/or bullion)No.
Controls on exports and imports of banknotesNo.
Resident Accounts
Eligible to hold accountsJuridical and natural persons are eligible.
Foreign exchange accounts permittedYes.
Held domesticallyYes.
Approval requiredNo.
Held abroadYes.
Approval requiredNo.
Accounts in domestic currency convertible into foreign currencyNo.
Nonresident Accounts
Eligible to hold accountsJuridical and natural persons are eligible.
Foreign exchange accounts permittedYes.
Approval requiredNo.
Domestic currency accountsNo.
Blocked accountsThose accounts affected by security restrictions.
Imports and Import Payments
Foreign exchange budgetNo.
Financing requirements for importsNo.
Documentation requirements for release of foreign exchange for importsNo.
Import licenses and other nontariff measures
Open general licensesA few items require a license when originating in Japan, the Republic of Korea, or any other country outside the EU that is not a state trading country. A larger number of items require a license when originating in or purchased from Albania, Bulgaria, China, the Czech Republic, Hungary, the Democratic People’s Republic of Korea, Mongolia, Poland, Romania, the Slovak Republic, the Baltic countries, Russia, and the other countries of the FSU, and Vietnam.
Licenses with quotasThey are required for imports of textiles, toys, and footwear.
Import taxes and/or tariffsNo.
State import monopolyNo.
Exports and Export Proceeds
Repatriation requirementsNo.
Surrender requirementsNo.
Financing requirementsNo.
Documentation requirementsNo.
Export licenses
Without quotasExcept for certain items subject to strategic controls, licenses are required only for exports of waste and scrap of certain metals.
Export taxesNo.
Payments for Invisible Transactions and Current Transfers
Controls on these paymentsNo.
Proceeds from Invisible Transactions and Current Transfers
Repatriation requirementsNo.
Surrender requirementsNo.
Restrictions on use of fundsNo.
Capital Transactions
Controls on capital and money market instrumentsNo.
Controls on derivatives and other instrumentsNo.
Controls on credit operationsNo.
Controls on direct investmentNo.
Controls on liquidation of direct investmentNo.
Controls on real estate transactions
Purchase abroad by residentsYes.
Purchase locally by nonresidentsHowever, the prohibition does not apply to the acquisition of real estate by

(1) persons who have formerly been residents of Denmark for at least five years;

(2) EU nationals working in Denmark and EU-based companies operating in Denmark for residential or business purposes; and

(3) non-EU nationals who are either in possession of a valid residence permit or are entitled to stay in Denmark without such a permit for residential or active business purposes.
Provisions specific to commercial banks and other credit institutionsNo.
Provisions specific to institutional investorsNo.
Other controls imposed by securities lawsNo.

Egypt

(Position as of December 31, 1995)

Status Under IMF Articles of Agreement
Article XIVYes.
Exchange Arrangement
CurrencyThe currency of Egypt is the Egyptian pound.
Other legal tenderNo.
Exchange rate structure
MultipleIn addition to the free market exchange rate, 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 minimal balances related to past bilateral payments agreements.
Classification
Managed floatingThe external value of the Egyptian pound is determined in the foreign exchange market. The U.S. dollar is used as the intervention currency by the Central Bank of Egypt (CBE). 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 account. These transactions may be conducted either in cash or through their accounts maintained 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.
Exchange taxNo.
Exchange subsidyNo.
Forward exchange marketAuthorized commercial banks are permitted to conduct forward foreign exchange trans-actions for their own accounts. No prior approval by the CBE is required, and the banks are free to determine the rates applied for forward transactions.
Official cover of forward operationsNo.
Arrangements for Payments and Receipts
Prescription of currency requirementsCertain 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 CBE. The balances of these accounts are very minimal. Suez Canal dues are expressed in SDRs and are paid by debiting free accounts in foreign currency.
Bilateral payments arrangements
OperativeWith Sudan; settlements are made in accordance with the terms of the agreement.
InoperativeWith the Russian Federation to settle mutual debts between the Arab Republic of Egypt and the former Union of Soviet Socialist Republics. The agreement, signed on November 10, 1994, is operative since April 25, 1995.
Other payments arrangements
Barter agreements and open accountsYes.
Administration of control
Exchange control authoritiesBanks are authorized to execute foreign exchange transactions within the framework of a general authorization without obtaining specific exchange control approval.
International security restrictions
In accordance with UN sanctionsRestrictions exist against Libya.
Payments arrearsThere are payment arrears with certain non-Paris Club members and with Paris Club members for nonguaranteed debts. Negotiations have been taking place to clear these arrears.
OfficialYes.
PrivateYes.
Controls on trade in gold (coins and/or bullion)
Controls on domestic ownership and/or tradeBanks are not authorized to deal or speculate for their own or customers’ accounts in precious metals.
Controls on exports and imports of banknotes
On exports
Domestic currencyTravelers may not take out more than LE 1,000 in Egyptian banknotes.
On imports
Domestic currencyPersons arriving in Egypt may import up to LE 1,000 in Egyptian banknotes.
Resident Accounts
Eligibility to hold accountsJuridical and natural persons are eligible.
Foreign exchange accounts permittedYes.
Held domestically“D” accounts may be opened in the name of residents of Sudan. Most of these accounts have been opened a long time ago. They are usually credited with transfers under the respective payments agreement. Balances are used to make local payments allowed under the bilateral agreement, including for imports from Egypt. Currently, outstanding balances on these accounts are minimal.
Approval requiredNo.
Accounts in domestic currency convertible into foreign currencyBalances can be converted through the foreign exchange market.
Nonresident Accounts
Eligibility to hold accountsJuridical and natural persons are eligible.
Foreign exchange accounts permitted“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), 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.
Approval requiredNo.
Domestic currency accounts“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% of the value of the property for each year following the first five years of ownership until the property is sold. The remainder may be paid and/or transferred in five equal installments. As of July 15, 1996, these accounts were canceled and changed into convertible current accounts.

“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).
Convertible into foreign currencyYes.
Approval requiredNo.
Blocked accountsNo.
Imports and Import Payments
Foreign exchange budgetNo.
Financing requirements for importsNo.
Documentation requirements for release of foreign exchange for importsNo.
Import licenses and other nontariff measures
Negative listMost items can be imported freely.
Import taxes and/or tariffsProducts are classified into eight groups for customs purposes with tariff rates ranging from 5% to 70% (with several exceptions). In 1994, the unweighted average statutory rate was 28%, excluding alcoholic beverages and 34% including them. Surcharges at rates of 2% and 5% apply to most imports.
Taxes collected through the exchange systemNo.
State import monopolyNo.
Exports and Export Proceeds
Repatriation requirementsNo.
Surrender requirementsNo.
Financing requirementsNo.
Documentation requirementsNo.
Export licenses
Without quotasExports of raw hides are restricted.
Export taxesNo.
Payments for Invisible Transactions and Current Transfers
Controls on these paymentsNo.
Proceeds from Invisible Transactions and Current Transfers
Repatriation requirementsForeign exchange earned abroad may be held indefinitely abroad or in local free accounts.
Surrender requirementsNo.
Restrictions on use of fundsNo.
Capital Transactions
Controls on capital and money market instrumentsThere are no legal restrictions on the issue of securities in the country by nonresidents. Trading in securities denominated in foreign currencies must be settled in foreign currencies. The foreign exchange market could be mediated for transferring proceeds associated with the sale of both Egyptian securities and foreign securities.
Controls on derivatives and other instrumentsDerivatives have not yet been introduced into the Egyptian market.
Controls on credit operationsNo restrictions are applied if the commercial credits are within the limit of one year or if these credits are received by the private sector. Ministries, governmental administrations, public authorities, and public sector companies are required to refer to the CBE when borrowing from abroad in convertible currencies, in order to register loans of more than a one-year term. If external loans are used to finance capital goods or projects, such a transaction falls under the state investment plan.
Controls on direct investment
Outward direct investmentUnder the foreign exchange system, transfers abroad are made freely.
Inward direct investmentThere are no restrictions under the Foreign Exchange Law or its Executive Regulations Manual on inward direct investment. However, this manual stipulates that nonbank companies of foreign exchange dealers should be owned entirely by Egyptians.
Controls on liquidation of direct investmentNo restrictions are imposed under the Foreign Exchange Law with respect to the liquidation of foreign direct investment. Article 23 of Investment Law No. 230/1989 regulates the liquidation of foreign direct investment as follows:

Upon the request by foreign investors and subject to approval of the board of the General Investment Authority, the repatriation of the invested capital will be within the limits of its value calculated on basis of the announced exchange rate at the time of liquidation or disposition; this should be in five equal annual installments, provided that the Authority approves the result of the liquidation. Exceptionally, the invested capital could be transferred in full, in case the balance of the foreign currency account held by the investor with one of the authorized banks, permit or if the Authority’s board has approved making the transfer in full in light of the conditions considered by the board. If the invested capital is provided in kind, it could be repatriated in kind.
Controls on real estate transactions
Purchase locally by nonresidentsArticle 31 of the Executive Foreign Exchange Regulations Manual refers to Law No. 56/1988 regulating the foreign ownership of the local real estate and vacant lands. Under this law, natural or juridical foreign persons may own real estate and vacant lands under the following conditions:

(1) The ownership shall be confined to a single property in a city or a summer or winter resort for the purpose of the foreigner’s or his family’s habitation, without prejudice to the right of ownership of the property required for performing the private activity licensed by the competent Egyptian authorities;

(2) The area of the property’s buildings and its precincts or vacant lands should not exceed 3,000 square meters;

(3) The property should not be co-owned with an Egyptian; and

(4) An amount of foreign convertible currency equal to the price of the property converted at the prevailing exchange rate shall be transferred by the foreigner. Such price is to be determined according to the value mentioned in the contract and the schedule set for this purpose by the Minister of Justice in agreement with the Minister of Housing.

(As of July 15, 1996, these instructions were canceled and nonresidents were permitted to buy real estate either in foreign or domestic currency.)
Sale locally by nonresidentsForeigners cannot dispose of their property before five years.

The proceeds of sale in Egyptian pounds should be deposited in a special capital account to be opened in the name of the foreign seller with one of the authorized banks. The authorized bank may transfer funds abroad from the account, but the transfer must be limited to the amount of convertible foreign exchange units previously transferred and surrendered in return for Egyptian pounds at the time of the acquisition of the property, plus 5% of the value for each year following the first five years of ownership until the property was sold. The remainder in the special capital account or the special capital account balances, in the case of a resident foreigner who did not previously surrender convertible currency for the purpose of the acquisition of the property, could be paid in five equal annual installments with a minimum of LE 100,000. However, if the account balance is not exhausted after five years, the account shall be converted to a current account in Egyptian pounds. (As of July 15, 1996, these accounts were changed into convertible current accounts.)
Provisions specific to commercial banks and other credit institutions
Differential treatment of nonresident deposit accounts and/or deposit accounts in foreign exchange
Reserve requirementsAccounts in foreign currency held by either Egyptian nationals or foreigners are subject to the 10% requirement (the interest-free reserve ratio requirement of deposits in Egyptian pounds is 15%), which must be deposited with the CBE at LIBOR.
Liquid asset requirementsThe liquidity ratio requirement applied to assets in foreign currencies is 25%, while it is 20% with regard to assets in Egyptian pounds.
Open foreign exchange position limitsCBE regulations apply to open foreign currency positions as follows:

(1) for each currency (local or foreign): 10% of Tier 1 and Tier 2 capital;

(2) total long or short positions should not exceed 20% of Tier 1 and Tier 2 capital; and

(3) total foreign assets to total foreign liabilities, or vice versa, should not exceed 105%.
Provisions specific to institutional investorsNo.
Other controls imposed by securities lawsThe sale or issue of securities or collective instruments securities on local markets by nonresidents should be in accordance with Law No. 95/1992 requiring, inter alia, the preparation of a prospectus to be approved by the Capital Market Authority in which case Law No. 95 does not provide any restriction on the transfer abroad of the proceeds associated with these sales or issues.

Finland

(Position as of December 31, 1995)

Status Under IMF Articles of Agreement
Article VIIIDate of Acceptance: September 25, 1979.
Exchange Arrangement
CurrencyThe currency of Finland is the markka.
Other legal tenderNo.
Exchange rate structureUnitary.
Classification
Independent floatingThe external value of the markka is market determined. Authorized banks may deal among themselves, with residents, and with nonresident banks in U.S. dollars and other convertible currencies.
Exchange taxNo.
Exchange subsidyNo.
Forward exchange marketForward premiums and discounts quoted by authorized banks reflect interest rate differentials in the countries of the currencies concerned.
Official cover of forward operationsNo.
Arrangements for Payments and Receipts
Prescription of currency requirementsNo.
Bilateral payments arrangementsNo.
Other payments arrangementsNo.
Administration of controlNo.
International security restrictions
In accordance with IMF Executive Board Decision No. 144-(52/51)Finland notified the Fund on July 20, 1995 of exchange restrictions pursuant to the UN Security Council resolution on Libya, and of changes in exchange restrictions pursuant to the UN Security Council resolutions on Iraq and the Federal Republic of Yugoslavia (Serbia/Montenegro) (these restrictions were suspended in December 1995 pursuant to a UN Security Council resolution), as well as on certain areas in Bosnia and Herzegovina and Libya.
In accordance with UN sanctionsYes.
Payments arrearsNo.
Controls on trade in gold (coins and/or bullion)No.
Controls on exports and imports of banknotesNo.
Resident Accounts
Eligibility to hold accountsJuridical and natural persons are eligible.
Foreign exchange accounts permittedYes.
Held domesticallyYes.
Approval requiredNo.
Held abroadYes.
Approval requiredNo.
Accounts in domestic currency convertible into foreign currencyYes.
Nonresident Accounts
Eligibility to hold accountsJuridical and natural persons are eligible.
Foreign exchange accounts permittedYes.
Approval requiredNo.
Domestic currency accountsYes.
Convertible into foreign currencyYes.
Approval requiredNo.
Blocked accountsNo.
Imports and Import Payments
Foreign exchange budgetNo.
Financing requirements for importsNo.
Documentation requirements for release of foreign exchange for importsNo.
Import licenses and other nontariff measuresMost 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 in China. Licenses are administered by the National Board of Customs.
Negative listYes.
Licenses with quotasThe following products are subject to quantitative import restrictions and require an import license when imported into the EU: certain steel products subject to bilateral agreements with Russia and Ukraine, certain steel products subject to an autonomous community quota for Kazakstan, specific textile products subject to bilateral agreements with third countries, particular third-country textile products subject to an autonomous community quota, and certain Chinese industrial products subject to an autonomous community quota.
Import taxes and/or tariffsNo.
State import monopolyNo.
Exports and Export Proceeds
Repatriation requirementsNo.
Surrender requirementsNo.
Financing requirementsNo.
Documentation requirementsNo.
Export licensesExport licenses are required only for exports of goods related to international export control regimes and are administered by the Ministry of Trade and Industry. The sale of arms is strictly controlled.
Without quotasYes.
Export taxesNo.
Payments for Invisible Transactions and Current Transfers
Controls on these paymentsNo.
Proceeds from Invisible Transactions and Current Transfers
Repatriation requirementsNo.
Surrender requirementsNo.
Restrictions on use of fundsNo.
Capital Transactions
Controls on capital and money market instruments
On capital market securities
Purchase in the country by nonresidentsThe control applies only to the purchase of shares and other securities of a participating nature, which may be affected by laws on inward direct investment and establishment.
On money market instrumentsNo.
On collective investment securitiesNo.
Controls on derivatives and other instrumentsNo.
Controls on credit operationsNo.
Controls on direct investment
Inward direct investmentAcquisition of shares giving at least one-third of the voting rights in a Finnish defense enterprise to a single foreign owner requires prior approval by the Ministry of Defense; approval can be denied only if the safeguarding of the public defense is jeopardized.
Controls on liquidation of direct investmentNo.
Controls on real estate transactions
Purchase locally by nonresidentsThe controls apply only to the acquisition of real estate (1) for recreational purposes or secondary residences by nonresidents who have not previously been residents of Finland for at least five years and (2) in the Aaland Islands.
Provisions specific to commercial banks and other credit institutions
Differential treatment of nonresident deposit accounts and/or deposit accounts in foreign exchange
Open foreign exchange position limitsPrudential regulation harmonized with EU directives is applied.
Provisions specific to institutional investors
Limits (max.) on portfolio invested abroadYes.
Limits (min.) on portfolio invested locallyYes.
Currency matching regulations on assets/liabilities compositionYes.
Other controls imposed by securities lawsYes.

France

(Position as of December 31, 1995)

Status Under IMF Articles of Agreement
Article VIIIDate of acceptance: February 15, 1961.
Exchange Arrangement
CurrencyThe currency of France is the French franc.
Other legal tenderNo.
Exchange rate structureUnitary.
Classification
Cooperative arrangementFrance participates in the ERM of the 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% above and below the cross rates based on the central rates expressed in ECUs.

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 the two groups of African countries that are linked to the French Treasury through an Operations Account: Benin, Burkina Faso, Côte d’Ivoire, Mali, Niger, Senegal, and Togo (franc de la Communauté financière africaine, issued by the BCEAO); and Cameroon, Central African Republic, Chad, Congo, Equatorial Guinea, and Gabon (franc de la Cooperation financiere en Afrique Centrale, issued by the BEAC). These fixed parities are CFPF 1 per F0.055 and CFPF 1 per F0.01, respectively.

The Comorian franc, issued by the Central Bank of the Comoros, which holds an Operations Account with the French Treasury, is linked to the French franc by a fixed parity of FC 1 to F 0,0133.
Exchange taxNo.
Exchange subsidyNo.
Forward exchange marketRegistered 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.
Official cover of forward operationsNo.
Arrangements for Payments and Receipts
Prescription of currency requirementsNo.
Bilateral payments arrangementsNo.
Other payments arrangementsNo.
Administration of control
Exchange control authoritiesThe Directorate of the Treasury in 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.
International security restrictions
In accordance with UN sanctionsRestrictions on payments have been imposed on Iraq in accordance with the UN Security Council Resolution No. 986 (1995).
Payments arrearsNo.
Controls on trade in gold (coins and/or bullion)No.
Controls on exports and imports of banknotesAmounts exceeding the equivalent of F 50,000 must be declared to customs upon arrival or departure.
Foreign currencyAt the request of Algeria, Morocco, and Tunisia, banknotes issued by these countries may not be exchanged in France.
Resident Accounts
Eligibility to hold accountsJuridical and natural persons are eligible.
Foreign exchange accounts permittedYes.
Held domesticallyYes.
Approval requiredNo.
Held abroadYes.
Approval requiredNo.
Accounts in domestic currency convertible into foreign currencyYes.
Nonresident Accounts
Eligibility to hold accountsJuridical and natural persons are eligible.
Foreign exchange accounts permittedYes.
Approval requiredNo.
Domestic currency accountsYes.
Convertible into foreign currencyYes.
Approval requiredNo.
Blocked accountsNo.
Imports and Import Payments
Foreign exchange budgetNo.
Financing requirements for importsNo.
Documentation requirements for release of foreign exchange for importsA custom declaration is required.
Import licenses and other nontariff measures
Licenses with quotasLicenses are required for some countries and some products. Imports of goods that originate outside of the EU and are subject to quantitative restrictions require individual licenses. Common EU regulations are also applied to imports from non-EU countries.
Other nontariff measuresSome imports from non-EU countries are subject to minimum prices, these require an administrative visa issued by the Central Customs Administration or the appropriate ministry and sometimes, exceptionally, an import license. Imports of products of the ECSC require such administrative visas when originating in non-ECSC countries. Imports from non-EU countries of most products covered by the CAP are subject to variable import levies that have replaced previous barriers. Common EU regulations are also applied to imports from non-EU countries of most other agricultural and livestock products. Quantitative restrictions consist of EU-wide and national restrictions. The former includes textile and apparel limits under the MFA and voluntary export restraints. National measures are authorized under Article 115 of the EU Treaty.

For some commodities, such as petroleum and petroleum products, global quotas are allocated annually. In other cases, quotas are allocated semiannually and apply to all countries (other than those that have bilaterally negotiated quotas or receive privileged treatment).
Import taxes and/or tariffsDuties are collected at the time of the entry into the EU in relation to the origin of the products and a tariff nomenclature. An agricultural levy (within the CAP) and, if necessary, an antidumping levy can be added.
Taxes collected through the exchange systemNo.
State import monopolyNo.
Exports and Export Proceeds
Repatriation requirementsNo.
Surrender requirementsNo.
Financing requirementsNo.
Documentation requirementsA customs declaration is required.
Export licenses
Without quotasCertain prohibited goods may be exported only under a special license.
Export taxesThere are no export taxes, except for works of art, which are subject to the value-added tax.
Taxes collected through the exchange systemNo.
Payments for Invisible Transactions and Current Transfers
Controls on these paymentsNo.
Proceeds from Invisible Transactions and Current Transfers
Repatriation requirementsNo.
Surrender requirementsNo.
Restrictions on use of fundsNo.
Capital Transactions
Controls on capital and money market instrumentsCapital movements between France and Monaco and the Operations Account countries are free of exchange control. The French market is based on the principle of freedom of access and operation. The only restrictions apply to the issuance of certificates of deposit by nonresident banks and to Eurofranc issues, which are subject to rules set by the Eurofranc Committee which established that the majority of Eurofranc issues must be sold abroad.
On capital market securities
Purchase in the country by nonresidentsYes.
Sale or issue locally by nonresidentsYes.
On money market instruments
Sale or issue locally by nonresidentsNonresidents can only issue commercial papers.
Sale or issue abroad by residentsYes.
On collective investment securities
Sale or issue locally by nonresidentsControls do not apply to collective investment securities that are of EU origin and comply with EC Directive No. 85/611/EC.
Controls on derivatives and other instrumentsNo.
Controls on credit operationsNo.
Controls on direct investmentDirect investments are defined as investments leading to the control of a company or enterprise, that is, where foreign investors hold more than one-third of the capital. In the case of firms whose shares are quoted on the stock exchange, the threshold is reduced to 20% 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.
Inward direct investmentInvestments exceeding F 5 million must be reported to the Bank of France within 20 days. Investments are prohibited in areas pertaining to public order and defense.
Controls on liquidation of direct investmentThe 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. The liquidation of direct investments abroad is free from any prior application, provided that the corresponding funds have been reported to the Bank of France.
Controls on real estate transactionsNo.
Provisions specific to commercial banks and other credit institutionsNo.
Provisions specific to institutional investors
Currency matching regulations on assets/liabilities compositionEuropean insurance companies are required to cover their technical reserves by assets expressed in the same currency.

Germany

(Position as of December 31, 1995)

Status Under IMF Articles of Agreement
Article VIIIDate of acceptance: February 15, 1961.
Exchange Arrangement
CurrencyThe currency of Germany is the deutsche mark (DM).
Other legal tenderNo.
Exchange rate structureUnitary.
Classification
Cooperative arrangementGermany participates in the ERM of the EMS within margins of ± 2.25. The arrangements imply that the Deutsche Bundesbank (the central bank) stands ready to buy or sell the currencies of the other participating states in unlimited amounts at specified intervention rates. In principle, interventions within the EMS are made in participating currencies but may also take place in third currencies, such as the U.S. dollar. Participants in the EMS do not maintain exchange rates for other currencies within fixed limits but do intervene from time to time to smooth out erratic fluctuations in exchange rates.
Exchange taxNo.
Exchange subsidyNo.
Forward exchange marketResidents and nonresidents may freely negotiate forward exchange contracts for both commercial and financial transactions in all leading convertible currencies in the domestic exchange market and at major international foreign exchange markets. Germany has no officially fixed rates in the forward exchange market. All transactions are negotiated at free market rates.
Official cover of forward operationsNo.
Arrangements for Payments and Receipts
Prescription of currency requirementsNo.
Bilateral payments arrangementsNo.
Other payments arrangementsNo.
Administration of controlNo.
International security restrictions
In accordance with IMF Executive Board Decision No. 144-(52/51)Germany notified the IMF on November 5, 1992 that, in compliance with UN Security Council Resolution No. 757(1992), certain restrictions had been imposed on payments and transfers for current international transactions regarding the Federal Republic of Yugoslavia (Serbia/Montenegro).
In accordance with UN sanctionsIn compliance with UN resolutions, restrictions have been imposed on the making of payments and transfers for current international transactions regarding Iraq and Libya.
Payments arrearsNo.
Controls on trade in gold (coins and/or bullion)No.
Controls on exports and imports of banknotesNo.
Resident Accounts
Eligibility to hold accountsJuridical and natural persons are eligible.
Foreign exchange accounts permittedYes.
Held domesticallyYes.
Approval requiredNo.
Held abroadYes.
Approval requiredNo.
Accounts in domestic currency convertible into foreign currencyYes.
Nonresident Accounts
Eligibility to hold accountsJuridical and natural persons are eligible.
Foreign exchange accounts permittedYes.
Approval requiredNo.
Domestic currency accountsYes.
Convertible into foreign currencyYes.
Approval requiredNo.
Blocked accountsYes.
Imports and Import Payments
Foreign exchange budgetNo.
Financing requirements for importsNo.
Documentation requirements for release of foreign exchange for importsNo.
Import licenses and other nontariff measuresImports of brown coal are subject to import licensing from Albania, China, the former member countries of the CMEA except Bulgaria, China, Hungary, the Democratic People’s Republic of Korea, and Vietnam, and from the Czech Republic, Poland, Ro-mania, and the Slovak Republic. (These requirements were eliminated in January 1996.)
Negative listYes.
Licenses with quotasImports of pit coal from countries that are not members of the EU and EFTA are permitted within the framework of an annual global quota (this quota was eliminated in January 1996). The importation of certain nontextile goods from China is subject to the EUs annual global quota.
Other nontariff measuresImports of numerous textile products are subject to bilateral agreements and regulations of the EU with various supplier countries. Most goods covered by the CAP are subject to variable import levies. Imports of rolled steel products from Russia and Ukraine are subject to an annual quota under a voluntary restrictions agreement.
Import taxes and/or tariffsNo.
State import monopolyNo.
Exports and Export Proceeds
Repatriation requirementsNo.
Surrender requirementsNo.
Financing requirementsNo.
Documentation requirementsFor statistical purposes, an export notification is required for all goods.
Export licenses
Without quotasCertain exports (mostly strategic goods) are subject to individual or general licensing. The customs authorities exercise control over export declarations.
With quotasNo.
Export taxesNo.
Payments for Invisible Transactions and Current Transfers
Controls on these paymentsNo.
Proceeds from Invisible Transactions and Current Transfers
Repatriation requirementsNo.
Surrender requirementsNo.
Restrictions on use of fundsNo.
Capital Transactions
Controls on capital and money market instruments
On capital market securities
Purchase in the country by nonresidentsThe purchase of federal savings bonds by nonresident entities that are of benefit to the public (gemeinnutzige Einrichtungen) is not allowed.
Sale or issue locally by nonresidentsThe sale or issue of bonds denominated in deutsche mark issued by banks with a maturity of less than two years is prohibited.
Purchase abroad by residentsNo.
Sale or issue abroad by residentsThe sale or issue of securities denominated in deutsche mark is prohibited.
On money market instrumentsThe sale or issue of money market securities and instruments denominated in deutsche mark issued by banks, both by residents and nonresidents, is prohibited.
On collective investment securitiesNo.
Controls on derivatives and other instrumentsNo.
Controls on credit operationsNo.
Controls on direct investmentNo.
Controls on liquidation of direct investmentNo.
Controls on real estate transactionsNo.
Provisions specific to commercial banks and other credit institutions
Differential treatment of nonresident deposit accounts and/or deposit accounts in foreign exchange
Reserve requirementsBanks are subject to minimum reserve requirements on the level of their foreign liabilities with maturities of less than four years of 2% on sight deposits and 1.5% on savings and time deposits; the requirements in principle are the same as those applied to domestic liabilities.

Book liabilities to nonresidents in foreign currency are exempt from reserve requirements to the extent of the book claims on nonresidents in foreign currency with maturities of less than four years.
Open foreign exchange position limitsYes.
Provisions specific to institutional investorsNo.
Other controls imposed by securities lawsYes.

Ghana

(Position as of December 31, 1995)

Status Under IMF Articles of Agreement
Article VIIIDate of acceptance: February 2, 1994.
Exchange Arrangement
CurrencyThe currency of Ghana is the cedi.
Other legal tenderNo.
Exchange rate structureUnitary.
Classification
Independent floatingThe exchange rate of the cedi is determined in the interbank foreign exchange market. The average exchange rate in the interbank market is used for official valuation purposes but is not always applied by authorized banks in their transactions with each other or with their customers. Rates are quoted by authorized dealers for certain other currencies with daily quotations based on the buying and selling rates for the U.S. dollar in markets abroad.
Exchange taxNo.
Exchange subsidyNo.
Forward exchange marketNo.
Arrangements for Payments and Receipts
Prescription of currency requirementsSettlements between residents of Ghana and residents of other countries may be made in permitted currencies. However, settlements related to transactions covered by bilateral payments agreements are made through clearing accounts maintained by the Bank of Ghana (BOG) and the central or state banks of the countries concerned. Proceeds from exports to countries with which Ghana does not have bilateral payments agreements must be received in the currency of the importing country (if that currency is quoted by the BOG) or be debited for authorized inward payments to residents of Ghana for transfers to other official accounts related to the same country and for transfers to the related clearing account at the BOG.
Bilateral payments arrangements
InoperativeThere are arrangements with Bulgaria, China, Cuba, the Czech Republic, Poland, Romania, and the Slovak Republic. The clearing balances on these agreements are being settled.
Other payments arrangementsNo.
Administration of control
Exchange control authoritiesThe Foreign Transactions Examinations Office (FTEO) of the BOG records and confirms foreign capital inflows and administers foreign exchange for official payments and travel. All foreign exchange transactions by the private sector are approved and transacted by authorized banks without reference to the BOG.
International security restrictionsNo.
Payments arrearsNo.
Controls on trade in gold (coins and/or bullion)
Controls on domestic ownership and/or tradeDomestic transactions in gold, as well as imports and exports, may be authorized by the State Gold Mining Corporation in collaboration with the BOG, and certain domestic sales may be carried out by permit under the Gold Mining Products Protection Ordinance.
Controls on external tradeGhanaian residents may not buy or borrow any gold from, or sell or lend any gold to, any person other than an authorized dealer. Imports of gold other than those by or on behalf of the monetary authorities are not normally licensed. The import duty on gold, including bullion and partly worked gold, is levied at a uniform rate of 30%. The gold mines export their output in semirefined form.
Controls on exports and imports of banknotes
On exports
Domestic currencyThe exportation of Ghanaian banknotes is permitted up to $5,000.
Foreign currencyResidents traveling abroad are permitted to carry a maximum of $3,000 or its equivalent.
On imports
Domestic currencyTravelers may re-import up to $5,000, which they were allowed to export.
Resident Accounts
Eligibility to hold accountsJuridical and natural persons are eligible.
Foreign exchange accounts permittedYes.
Held domesticallyYes.
Approval requiredNo.
Nonresident Accounts
Eligibility to hold accountsJuridical and natural persons are eligible.
Juridical personsNonresident account status is granted to embassies, legations, consulates, and offices of high commissioners in Ghana and to the non-Ghanaian members of their staffs. It is also available to international institutions and foreign-registered companies operating in Ghana and to nonresident Ghanaians. The opening of these accounts must be approved by the BOG. The accounts may be credited with authorized outward payments, with transfers from other foreign accounts, and with the proceeds from sales of convertible currency. They may be debited for inward payments, for transfers to other foreign accounts, and for purchases of external currencies.
Foreign exchange accounts permittedYes.
Approval requiredYes.
Domestic currency accountsYes.
Convertible into foreign currencyYes.
Approval requiredYes.
Blocked accountsFunds not placed at the free disposal of nonresidents, e.g., certain types of capital proceeds, may be deposited in blocked accounts, which may be debited for authorized payments, including for purchases of approved securities.
Imports and Import Payments
Foreign exchange budgetNo.
Documentation requirements for release of foreign exchange for imports
Preshipment inspectionYes.
Letters of creditMost imports are effected with confirmed letters of credit established through authorized banks on a sight basis.
Import licenses and other nontariff measures
Negative listYes.
Import taxes and/or tariffs
Taxes collected through the exchange systemNo.
State import monopolyNo.
Exports and Export Proceeds
Repatriation requirementsExporters are required to collect and repatriate in full the proceeds from their exports within 60 days of shipment; proceeds from exports of nontraditional products may be sold in a foreign exchange bureau upon receipt.
Surrender requirementsExporters are generally allowed to retain up to 35% of their export proceeds in foreign exchange accounts. However, the retention ratio is 60% for the Ashanti Gold Mining Company, 20% for log exporters, and 2% for the Cocoa Board. The retention ratio for nontraditional exports is 100% and proceeds are generally channeled through banks other than the BOG.
Financing requirementsNo.
Documentation requirements
Letters of creditLetters of credit are required except for nontraditional exporters.
GuaranteesYes.
DomiciliationYes.
Preshipment inspectionAn inspection is required, except for nontraditional exporters.
Export licensesNo.
Export taxesYes.
Taxes collected through the exchange systemNo.
Other export taxesCocoa exports are subject to an export tax that is calculated as the difference between export proceeds and payments to farmers together with the Cocoa Board’s costs if proceeds exceed payments.
Payments for Invisible Transactions and Current Transfers
Controls on these payments
Freight/insuranceFreight charges may be paid to the local shipping agents; the transfer of funds to cover such charges is normally permitted, provided that the application is properly documented.
Prior approvalNo.
Quantitative limitsNo.
Indicative limits/bona fide testYes.
Unloading/storage costsNo.
Administrative expensesNo.
Commissions
Prior approvalNo.
Quantitative limitsYes.
Indicative limits/bona fide testNo.
Interest paymentsNo.
Profit/dividendsNo.
Payments for travel
Prior approvalNo.
Quantitative limitsResidents traveling abroad are permitted to carry a maximum of $3,000 or its equivalent in other foreign currencies. In addition, resident travelers are permitted to carry a maximum of $5,000 or its equivalent in other foreign currencies for direct purchases abroad.
Indicative limits/bona fide testAll bona fide applications in excess of the specified limits are approved.
Medical costsNo.
Study abroad costsNo.
Subscriptions and membership feesNo.
Consulting/legal feesNo.
Foreign workers’ wagesNo.
PensionsNo.
Gambling/prize earningsNo.
Family maintenance/alimonyNo.
Credit card use abroadNo.
Proceeds from Invisible Transactions and Current Transfers
Repatriation requirementsYes.
Surrender requirementsAll receipts from invisibles must be sold to authorized dealers.
Restrictions on use of fundsNo.
Capital Transactions
Controls on capital and money market instruments
On capital market securities
Purchase in the country by nonresidentsNonresidents may purchase securities listed on the Ghana Stock Exchange (GSE) and may hold up to 10%. Total holdings of all nonresidents in one security listed on the GSE may not exceed 74%. For companies not listed on the stock market, nonresident participation requires the following minimum equity injections to acquire shares: (1) $10,000 or its equivalent worth in capital goods where the enterprise is wholly owned by a non-Ghanaian; (2) $450,000 or its equivalent worth in capital goods where the enterprise is wholly owned by a non-Ghanaian; and (3) $300,000 or its equivalent worth in capital goods, and in the case of trading enterprises involving only the purchasing and selling of goods which is either wholly or partly owned by a non-Ghanaian, the obligation to employ at least 10 Ghanaians.
Sale or issue locally by nonresidentsThe sale requires prior approval from the BOG and the Ministry of Finance. The transfer or repatriation of proceeds from sales needs the notification of the BOG.
Purchase abroad by residentsThere are no controls on the purchase of securities abroad by residents. However, transfer of funds for the purchase of securities require the prior approval of the BOG.
Sale or issue abroad by residentsThe sale requires the prior approval of the BOG.
On money market instruments
Purchase in the country by nonresidentsNonresidents cannot bring in foreign exchange for the purpose of investing in local money market instruments (BOG and government securities). However, nonresidents holding local currencies can invest in these instruments.
Sale or issue locally by nonresidentsThese sales are not allowed.
Purchase abroad by residentsNo controls apply to the purchase of money market instruments abroad by residents. However, the transfer of funds for purchases of these instruments is not allowed.
Sale or issue abroad by residentsThese sales are not allowed.
On collective investment securities
Purchase in the country by nonresidentsThe purchase of collective investment securities on domestic markets by nonresidents requires prior approval of the BOG.
Sale or issue locally by nonresidentsThese sales are subject to the approval by the BOG. The transfer abroad of proceeds associated with these sales requires the prior approval of the BOG.
Purchase abroad by residentsThere are no controls on the purchase of collective investment securities on foreign securities markets by residents, but the transfer of funds needs prior approval from the BOG.
Sale or issue abroad by residentsThese sales are not allowed except with the consent of the Minister of Finance.
Controls on derivatives and other instrumentsCurrently, derivatives and other instruments do not exist in the local market. There are no controls, but the transfer of funds requires BOG’s approval.
Purchase in the country by nonresidentsYes.
Sale or issue locally by nonresidentsYes.
Purchase abroad by residentsYes.
Sale or issue abroad by residentsYes.
Controls on credit operations
Commercial credits
To residents from nonresidentsThere are no controls on residents’ receiving commercial credits from nonresident entities, but prior approval is required. Credits must be channeled through the banking system. Transactions must be supported by relevant documents.
Financial credits
To residents from nonresidentsCredits require the BOG’s approval.
Controls on direct investment
Outward direct investmentAll capital outflows must be approved by the BOG; applications for such transfers must be supported by documentary evidence and are considered on their merits.
Inward direct investmentForeign investments in Ghana require the prior approval of the Ghana Investment Center if they are to benefit from the facilities available under the Investment Code of 1981, under which approved investments are guaranteed, in principle, the right to transfer profits and, in the event of sale or liquidation, capital proceeds. Tax holidays and initial capital allowances are also available for such investments. The code stipulates that the assets of foreign investors may not be expropriated. Disputes over the amount of compensation are settled in accordance with the established procedure for conciliation—e.g., through arbitration by the International Center for Settlements of Investment Disputes or the United Nations Commission on International Trade and Law. The proceeds from sales of foreign ownership to Ghanaian nationals are permitted to be transferred by authorized dealer banks.

Certain areas of economic activity are not open to foreigners. Under the Ghana Investment Promotion Centre Act 1994 (Act 478), the minimum qualifying amounts of investment by a non-Ghanaian are as follows: (1) $10,000 or its equivalent worth in capital goods by way of equity participation in a joint-venture enterprise with a Ghanaian partner, (2) $450,000 or its equivalent worth of capital goods by way of equity where the enterprise is wholly owned by a non-Ghanaian; and (3) $300,000 or its equivalent in capital goods by way of equity capital where the enterprise must employ at least 10 Ghanaians in trading enterprises involving the purchasing and selling of goods, which is either wholly or partly owned by a non-Ghanaian.
Controls on liquidation of direct investmentNo.
Controls on real estate transactions
Purchase abroad by residentsResident individuals are not normally granted foreign exchange for the acquisition of personal real estate abroad.
Purchase locally by nonresidentsThe purchase of local real estate by nonresidents requires the prior approval of an Implementing Committee through the Minister of Foreign Affairs.
Sale locally by nonresidentsYes.
Provisions specific to commercial banks and other credit institutions
Borrowing abroadBOG notification is required.
Maintenance of accounts abroadBOG notification is required.
Lending to nonresidents (financial or commercial credits)Yes.
Purchase of locally issued securities denominated in foreign exchangePurchases within certain limits are allowed.
Differential treatment of nonresident deposit accounts and/or deposit accounts in foreign exchange
Open foreign exchange position limitsBased on the volume of foreign exchange transactions of dealer banks. This is subject to periodic review.
Provisions specific to institutional investorsNo.

Greece

(Position as of December 31, 1995)

Status Under IMF Articles of Agreement
Article VIIIDate of acceptance: July 22, 1992.
Exchange Arrangement
CurrencyThe currency of Greece is the Greek drachma.
Other legal tenderNo.
Exchange rate structureUnitary.
Classification
Managed floatingThe exchange rate for the drachma is determined in daily fixing sessions in which the Bank of Greece (BOG) and authorized commercial banks participate. Greece is a member of the EMS. The drachma is included in the ECU basket, but Greece does not participate in the ERM of the EMS.
Exchange taxNo.
Exchange subsidyNo.
Forward exchange market
Official cover of forward operationsThe BOG provides credit institutions forward foreign exchange transactions including currency swaps and options.
Arrangements for Payments and Receipts
Prescription of currency requirementsSettlements with all countries may be made in any convertible foreign currency or through nonresident deposit accounts in drachmas.
Bilateral payments arrangementsNo.
Other payments arrangementsNo.
Administration of control
Exchange control authoritiesSince May 1994 when foreign exchange regulations were abolished, commercial banks have been authorized to carry out the necessary formalities for the settlement of all transactions with nonresidents; banks must provide all the necessary information for the compilation of the balance of payments. In addition, natural and juridical persons must report to the BOG, for statistical purposes, transactions of sums greater than ECU 2,000 if a domestic banking institution is not involved.
International security restrictionsNo.
Payments arrearsNo.
Controls on trade in gold (coins and/or bullion)
Controls on domestic ownership and/or tradeResidents may freely purchase new gold sovereigns from the BOG through licensed stockbrokers at a price set by the BOG. These gold coins may be resold only to the BOG or to the Athens Stock Exchange. Holders of gold coins acquired in the free market that existed before December 22, 1965 may sell them without any formality to the BOG or to an authorized bank at the official price.
Controls on external tradeGold bars or coins brought in by travelers and declared upon entry may be reexported after approval by the BOG.
Controls on exports and imports of banknotes
On exportsResidents and nonresidents leaving Greece must declare exported banknotes and personal checks in domestic and foreign currency if the total amount exceeds the equivalent of ECU 2,000.

Residents exporting the equivalent of ECU 10,000 or more in banknotes and personal checks in domestic and foreign currency must provide in the declaration their fiscal number and the purpose of the transfer. If the total amount is the equivalent of ECU 20,000 or more, they must also provide a copy of their tax certificate. Exports of banknotes and personal checks in domestic and foreign currency above the equivalent of ECU 20,000 must be carried out through resident credit institutions.
On importsResidents and nonresidents entering Greece must declare imported banknotes and personal checks in domestic and foreign currency if the total amount exceeds the equivalent of ECU 10,000.
Resident Accounts
Eligibility to hold accountsJuridical and natural persons are eligible.
Foreign exchange accounts permittedYes.
Held domesticallyAccounts may be credited with foreign exchange brought into Greece and with foreign banknotes brought into Greece and declared upon entry. Principal and interest on these accounts are freely transferable abroad. Residents may also open accounts in foreign exchange with undeclared foreign banknotes; principal and interest on these accounts may be withdrawn in drachmas and in foreign exchange but may not be transferred abroad.
Approval requiredNo.
Held abroadYes.
Approval requiredNo.
Accounts in domestic currency convertible into foreign currencyNo.
Nonresident Accounts
Eligibility to hold accountsJuridical and natural persons are eligible.
Foreign exchange accounts permittedYes.
Approval requiredNo.
Domestic currency accountsYes.
Convertible into foreign currencyYes.
Approval requiredNo.
Blocked accountsNo.
Imports and Import Payments
Foreign exchange budgetNo.
Financing requirements for importsNo.
Documentation requirements for release of foreign exchange for importsNo.
Import licenses and other nontariff measuresImports from the member countries of the EU are not subject to approval or clearance procedures. Special import licenses are required for textiles and iron and steel products from certain low-cost countries under EU surveillance. Special regulations govern imports of certain items such as medicines, narcotics, and motion picture films.
Negative listImports of certain products from the former Yugoslav Republic of Macedonia are prohibited.
Licenses with quotasYes.
Import taxes and/or tariffsNo.
State import monopolyNo.
Exports and Export Proceeds
Repatriation requirementsNo.
Surrender requirementsNo.
Financing requirementsNo.
Documentation requirementsNo.
Export licenses
Without quotasExports of certain products to the former Yugoslav Republic of Macedonia are prohibited.
Export taxesNo.
Payments for Invisible Transactions and Current Transfers
Controls on these payments
Payments for travel
Prior approvalNo.
Quantitative limitsNo.
Indicative limits/bona fide testThe limit is ECU 2,000 a person a trip in banknotes; additional amounts are permitted upon presentation of the relevant documentation.
Study abroad costs
Prior approvalNo.
Quantitative limitsNo.
Indicative limits/bona fide testThe limit is ECU 2,000 a person a trip in banknotes; additional amounts are permitted upon presentation of the relevant documentation.
Foreign workers’ wages
Prior approvalRemittances of earnings by foreign workers are permitted, subject to documentary requirement regarding proof of need and source of income.
Gambling/prize earnings
Prior approvalApproval is subject to relevant documentation.
Credit card use abroad
Prior approvalNo.
Quantitative limitsThe limit on withdrawal in foreign banknotes is the equivalent of ECU 1,000 a month.
Indicative limits/bona fide testYes.
Proceeds from Invisible Transactions and Current Transfers
Repatriation requirementsNo.
Surrender requirementsNo.
Restrictions on use of fundsNo.
Capital Transactions
Controls on capital and money market instruments
On capital market securities
Purchase in the country by nonresidentsThe purchase of shares and other securities of a participatory nature in the broadcasting and maritime sectors, which may be affected by the laws on inward direct investment and establishment, are prohibited.
Controls on derivatives and other instrumentsNo.
Controls on credit operationsNo.
Controls on direct investment
Inward direct investmentInvestments in border regions by non-EU residents require approval for reasons of national security. There are also restrictions on the acquisition of mining rights and participation in new or existing enterprises if these are engaged in radio and television broadcasting or maritime and air transport.
Controls on liquidation of direct investmentNo.
Controls on real estate transactionsNo.
Provisions specific to commercial banks and other credit institutionsAs of September 1995, foreign exchange accounts receive the same treatment as domestic currency accounts.
Open foreign exchange position limitsOnly consumers’ credit is subject to a limit, but it is so large that it is not binding.
Provisions specific to institutional investorsNo.
Other controls imposed by securities lawsTransactions in nonorganized capital markets are not allowed.

Iceland

(Position as of December 31, 1995)

Status Under IMF Articles of Agreement
Article VIIIDate of acceptance: September 19, 1983.
Exchange Arrangement
CurrencyThe currency of Iceland is the Icelandic króna (plural: krónur).
Other legal tenderA commemorative gold coin with face value of ISK 100 is legal tender, but it does not circulate.
Exchange rate structureUnitary.
Classification
PeggedThe external value of the króna is pegged to a basket of 16 currencies: Belgian franc, Canadian dollar, Danish krone, deutsche mark, Finnish markka, French franc, Italian lira, Japanese yen, Netherlands guilder, Norwegian krone, Portuguese escudo, the pound sterling, Spanish peseta, Swedish krona, Swiss franc, and the U.S. dollar. The Central Bank of Iceland (CBI) intervenes in the exchange market to keep the exchange rate within a margin of ± 6% around the central rate.
Exchange taxNo.
Exchange subsidyNo.
Forward exchange marketIceland has no organized forward market and the króna has no quoted forward exchange rate. However, forward contracts can be freely negotiated in all currencies.
Arrangements for Payments and Receipts
Prescription of currency requirementsNo.
Bilateral payments arrangementsNo.
Other payments arrangementsNo.
Administration of control
Exchange control authoritiesThe Ministry of Industry and Commerce has ultimate responsibilities for imports, capital movements, and foreign exchange regulation according to provisions of the Exchange Act No. 87/1992. The CBI licenses the foreign exchange dealers on a commercial basis and sets the reporting requirements for statistical purposes and for implementation of control on inward foreign direct investment.
International security restrictions
In accordance with IMF Executive Board Decision No. 144-(52/51)Iceland notified the IMF on July 31,1992 that, in compliance with UN Security Council Resolution No. 757 (1992), certain restrictions had been imposed on payments and transfers for current international transactions with respect to the Federal Republic of Yugoslavia (Serbia/Montenegro).
In accordance with UN sanctionsOn December 1, 1995, Iceland notified the IMF that exchange restrictions against Libya had been imposed in accordance with UN Security Council Resolution No. 883 (1993).
Payments arrearsNo.
Controls on trade in gold (coins and/or bullion)No.
Controls on exports and imports of banknotesNo.
Nonresident Accounts
Eligibility to hold accountsJuridical and natural persons are eligible.
Foreign exchange accounts permittedBanks must report to the CBI the monthly positions of nonresident accounts. All ac-counts in domestic banks must be identified by name and identification number.
Approval requiredNo.
Blocked accountsNo.
Imports and Import Payments
Foreign exchange budgetNo.
Financing requirements for importsNo.
Documentation requirements for release of foreign exchange for importsNo.
Import licenses and other nontariff measuresMost goods can be imported freely without a license. A fee of 1% was assessed on the króna value of the import license when it was issued until July 1, 1995, date on which it was abolished.
Negative listLive animals and certain other products require health certificates (Act No. 28/1993).
Open general licensesImports by tourist and foreign visitors.
Import taxes and/or tariffsAutomobiles are subject to a special import tax up to 32%, depending on the weight of the vehicle and its engine capacity. Buses, heavy trucks, ambulances, and public service vehicles are exempt. Certain goods, whether imported or domestic, are subject to a special excise tax of 24% or 30% ad valorem. A specific import tax applies to wines and spirits, with the amount of tax depending on the alcohol content and volume.
State import monopolyTobacco can only be imported under state trading arrangements. The monopoly on fertilizer imports was lifted on January 1, 1995. On September 1, 1995, restrictions on alcoholic beverages were lifted; retail sales, however, remain under a state trading arrangement. Some fresh vegetables and plants, including potatoes and flowers, are subject to periodic import control.
Exports and Export Proceeds
Repatriation requirementsNo.
Surrender requirementsNo.
Financing requirementsNo.
Documentation requirementsNo.
Export licenses
Without quotasExports of military, fisheries, and agricultural products require licenses from the Ministry of Foreign Affairs and Foreign Trade in accordance with Export Act No. 4/1988 and regulation No. 70/1993.
Export taxesNo.
Payments for Invisible Transactions and Current Transfers
Controls on these paymentsNo.
Proceeds from Invisible Transactions and Current Transfers
Repatriation requirementsNo.
Surrender requirementsNo.
Restrictions on use of fundsNo.
Capital Transactions
Controls on capital and money market instrumentsThe purchase of shares or other securities of a participating nature which may be affected by laws on inward direct investment and establishment (Code, IV/C1.) is not allowed.
Controls on derivatives and other instrumentsNo.
Controls on credit operationsNo.
Controls on direct investment
Outward direct investmentAll foreign exchange transactions related to outward direct investment must go through a resident bank for tax control and statistical purposes. If an outward direct investment is to be financed with funds borrowed abroad, then a license is needed from the Minister of Commerce if the loan exceeds the amounts specified below.
Inward direct investmentForeign direct investments in Iceland are regulated in accordance with special legislation No. 34/1991, as follows: (1) nonresidents are free to market investments in Iceland, subject to the conditions laid down in general legislation governing foreign investment or sector-specific legislation; (2) only resident Icelandic citizens or domestically registered companies wholly owned by resident Icelandic citizens may fish within the Icelandic fishing limit or operate primary fish processing facilities; (3) only Icelandic state and local authorities, resident Icelandic citizens, and domestically registered Icelandic companies wholly owned by resident Icelandic citizens may acquire the right to harness waterfalls and geothermal energy; the restriction applies to power production and distribution companies; (4) investment by nonresidents in domestic airlines is restricted to 49%; (5) investment by nonresidents in domestic incorporated commercial banks is restricted to 25%, but foreign commercial banks are allowed to open branches in Iceland; and (6) total investment by single nonresidents, or by financially linked nonresidents, in excess of ISK 250 million a year is subject to authorization by the Minister of Commerce. This financial limit is subject to change according to the price index.

In some sectors of the economy, sectoral legislation stipulates that either some or all of the founders or managing directors of a company must be residents. The legislation on joint-stock companies stipulates that the majority of founders must be residents before the company is established. The managing director and a majority of the members of the board of directors of a company must be residents. Citizens of the EEA are exempted from this restriction, and the Minister of Commerce may grant exceptions to this requirement.
Controls on real estate transactions
Purchase locally by nonresidentsThe ownership and uses of real estate in Iceland are governed by the provision of Act No. 19/1966 which was amended in 1991 and 1993. The conditions to own real estate in Iceland are: (1) individual owners must be Icelandic citizens; (2) in the case of unlimited companies, all owners must be Icelandic citizens; and (3) joint-stock companies must be registered in Iceland, with at least 80% owned by Icelandic citizens, and all of the members of the board of directors being Icelandic citizens. Icelandic citizens must control the majority of the voting power at annual meetings. The same conditions apply if the real estate is to be leased for more than three years or if the lease agreement cannot be terminated with less than one year’s notice. However, a company that is granted an operating license in Iceland may acquire real estate for its own use as long as the license does not carry with it the right to exploit natural resources. Citizens of the European Economic Area and other foreign citizens who have been domiciled in Iceland for at least five years are exempted from these restrictions. The Minister of Justice may grant others exemption from these requirements.
Sale locally by nonresidentsYes.
Provisions specific to commercial banks and other credit institutions
Differential treatment of nonresident deposit accounts and/or deposit accounts in foreign exchange
Open foreign exchange position limitsCBI regulates the net foreign exchange position of banks that participate in the foreign market exchange market.
Provisions specific to institutional investorsNo limits are imposed on portfolios invested locally or abroad.
Other controls imposed by securities lawsNo.

India

(Position as of December 31, 1995)

Status Under IMF Articles of Agreement
Article VIIIDate of acceptance: August 20, 1994.
Exchange Arrangement
CurrencyThe currency of India is the Indian rupee.
Other legal tenderNo.
Exchange rate structureUnitary.
Classification
Independent floatingThe exchange rate of the rupee is determined by demand and supply conditions in the interbank market. The Reserve Bank of India (RBI) purchases spot U.S. dollars from authorized persons at their designated offices or branches at the rate determined on the basis of the market exchange rate.
Exchange taxNo.
Forward exchange marketAuthorized dealers are allowed to deal spot or forward in any permitted currency. Forward purchases or sales of foreign currencies against rupees with banks abroad are prohibited. The RBI has on occasion purchased or sold forward U.S. dollars. The RBI may enter into swap transactions, under which it buys spot U.S. dollars and sells forward for up to six months.
Official cover of forward operationsThe Export Credit Guarantee Corporation of India, Ltd. (ECGC) provides protection against exchange fluctuation with respect to deferred receivables from the date of a bid up to 15 years after the award of a contract; exchange cover is offered in Australian dollars, deutsche mark, French francs, Japanese yen, pounds sterling, Swiss francs, U.A.E. dirhams, and U.S. dollars. For payments specified in other convertible currencies, cover is provided at the discretion of the ECGC.
Arrangements for Payments and Receipts
Prescription of currency requirementsFor prescription of currency purposes, countries are divided into two groups: member countries of the ACU (except Nepal) and the external group (all other countries). Payments to countries other than ACU member countries may be made in Indian rupees to the accounts of a resident of any of these countries or in any permitted currency. Receipts from countries other than member countries of the ACU may be obtained in Indian rupees from accounts maintained with an authorized dealer or in banks situated in any of the countries in the external group or in any permitted currency. Receipts from the external group of countries may be obtained in rupees from the accounts of banks situated in any country in the group. These accounts must be maintained with an authorized dealer or in any permitted currency. Payments relating to current transactions financed with loans from international institutions are settled outside the ACU mechanism. However, special rules may apply with respect to exports under lines of credit extended by the Government of India to the governments of certain foreign countries. All payments on account of eligible current international transactions between India and other members of the ACU except Nepal are required to be settled through the ACU arrangement, as are transactions effected on a deferred basis with the ACU countries. However, settlement of payments toward import of sugar, fertilizer, and pulses from any of the ACU countries may be made outside the ACU mechanism in any permitted currency. Indian exporters are also permitted to accept payment in free foreign exchange in respect of their exports to ACU countries provided such payment is voluntarily offered by the importer in ACU country.
Bilateral payments arrangementsNo.
Other payments arrangements
Regional arrangementsYes.
Clearing agreementsThe RBI stands ready to purchase and sell spot and sell forward currencies of the member countries of the ACU—Bangladesh, Islamic Republic of Iran, Myanmar, Pakistan, and Sri Lanka; Nepal is a member of the ACU, but the RBI does not deal in Nepalese rupees.
Administration of control
Exchange control authoritiesExchange control is administered by the RBI in accordance with the general policy laid down by the government in consultation with the RBI. Much of the routine work of exchange control is delegated to authorized dealers. Import and export licenses, where necessary, are issued by the Director General of Foreign Trade (DGFT).
International security restrictions
In accordance with IMF Executive Board Decision No. 144-(52/51)Yes.
In accordance with UN sanctionsYes.
Payments arrearsNo.
Controls on trade in gold (coins and/or bullion)
Controls on domestic ownership and/or tradeThere are no restrictions on internal trade in gold. However, gold mines continue to sell gold to industrial users through the distribution network of the State Bank of India (SBI) as well as through market sales. Forward trading in gold or silver is prohibited.
Controls on external tradeExports of gold in any form other than jewelry produced in India for exportation with a gold value not exceeding 10% of total value and jewelry constituting the personal effects of a traveler, subject to certain monetary limits, are prohibited unless effected by or on behalf of the monetary authorities. The net exportation of gold from India is not permitted. Exporters of gold and silver jewelry may import their essential inputs such as gold, silver mountings, findings, rough gems, precious and semiprecious synthetic stones and unprocessed pearls, and the like, with import licenses granted by the licensing authority. Under this scheme, the foreign buyer may supply gold or silver, in advance, free of charge, for manufacture and ultimate export of gold or silver jewelry and articles thereof.

Under the Gold Jewelry and Articles Export Promotion and Replenishment Scheme, exporters of gold jewelry and articles are entitled to replenishment of gold through the designated branches of the SBI or any other agency nominated by the Ministry of Commerce at a price indicated in the certificate issued by the SBI after purchase of gold. The scheme is limited to exports that are supported by an irrevocable letter of credit, payment of cash on a delivery basis, or advance payment in foreign exchange. Exports of gold jewelry may also be allowed on a collection basis (documents against acceptance). The exporter has the option to obtain gold from the SBI in advance. On presentation of required documents, the appropriate release order and gem replenishment license may be issued by the licensing authority, provided that the exporters satisfy value-added and other requirements under the scheme.

Special permission for imports of gold and silver is granted only in exceptional cases where either no foreign exchange transaction is involved or the metals are needed for a particular purpose. Special permission is also granted when the gold or silver is imported for processing and reexportation, provided that payments for the importation will not be required, the entire quantity of metal imported will be reexported in the form of jewelry, and the value added will be repatriated to India in foreign exchange through an authorized dealer.
Controls on exports and imports of banknotes
On exports
Domestic currencyIn general, the exportation of Indian currency notes and coins, except to Bhutan and Nepal, is, prohibited. The exportation to Nepal of Indian currency notes in denominations higher than Rs 100 is also prohibited. However, resident Indians may take with them Indian currency notes not exceeding Rs 1,000 a person at any one time to countries other than Nepal when going abroad on a temporary visit.
Foreign currencyAuthorized dealers, exchange bureaus, and authorized money changers are permitted to sell foreign currency, notes and coins, up to the equivalent of Rs 100 to travelers going to Bangladesh and up to $50 or its equivalent to those going to other countries except Bhutan and Nepal. Nonresidents may take out the foreign currency that they brought in (and declared on entry if it exceeded $2,500), less the amounts sold to authorized dealers and authorized money changers in India.
On imports
Domestic currencyThe importation of Indian currency notes and coins is prohibited. However, any person may bring in Indian currency notes (other than notes of denominations larger than Rs 100) from Nepal. Indian travelers may bring in up to Rs 1,000 a person if they previously took out this amount when traveling abroad on a temporary visit.
Foreign currencyForeign currency notes may be brought in without limit, provided that the total amount is declared to the customs authorities upon arrival if the value of foreign notes, coins, and traveler’s checks exceeds $10,000 or its equivalent and/or the aggregate value of foreign currency notes brought in at any one time exceeds $2,500 or its equivalent.
Resident Accounts
Eligibility to hold accountsJuridical and natural persons are eligible. The accounts of Indians and of Bhutanese and Nepalese nationals residing in Bhutan and Nepal, as well as the accounts of offices and branches of Indian, Bhutanese, and Nepalese firms, companies, or other organizations in Bhutan and Nepal, are treated as resident accounts; however, residents of Nepal obtain their foreign exchange requirements from the Nepal Rastra Bank.
Foreign exchange accounts permittedYes.
Held domesticallyYes.
Approval requiredNo.
Held abroadYes.
Approval requiredYes.
Nonresident Accounts
Eligibility to hold accountsJuridical and natural persons are eligible. Accounts related to all other foreign countries are treated as nonresident accounts. Accounts of banks in the external group of countries may be credited with payments for imports, interest, dividends, and other authorized purposes with authorized transfers from the nonresident accounts of persons and firms (including banks), and with proceeds from sales of permitted currencies. They may be debited for payments of exports and for other payments to residents of India. These accounts may also be debited for transfers to nonresident accounts of persons and firms (including banks) and transfers to nonresident external rupee (NRER) accounts. The balances in the accounts of banks may be converted into any permitted currency. All other entries on bank accounts require prior approval from the RBI.
Foreign exchange accounts permitted“Ordinary nonresident rupee accounts” of individuals or firms may be credited with: (1) the proceeds of remittances received in any permitted currency from abroad through normal banking channels, balances sold by the account holder in any permitted currency during his or her visit to India, or balances transferred from rupee accounts of nonresident banks; and (2) legitimate dues paid in rupees by the account holder in India. For credits exceeding Rs 10,000, the authorized dealers are required to ascertain the bona fide nature of the transaction before crediting the account. Authorized dealers may debit the ordinary nonresident rupee accounts for all local disbursements, including investments in India that are covered by the general or special permission of the RBI.

“Nonresident external rupee accounts” may be opened by authorized dealers in India for persons of Indian nationality or origin who reside outside India or for overseas companies and partnership firms of which at least 60% is owned by nonresidents of Indian nationality or origin. In addition to authorized dealers holding licenses under the 1973 Foreign Exchange Regulation Act, some state cooperative banks and certain urban cooperative banks and scheduled commercial banks not holding such licenses have also been permitted by the RBI to open and maintain nonresident rupee accounts subject to certain conditions. Such accounts may also be opened for eligible persons during temporary visits to India against the tender of foreign currency traveler’s checks, notes, or coins. They may be credited with new funds remitted through banking channels from the country of residence of the account holder or from any country. They may also be credited with the proceeds of foreign currency traveler’s checks, personal checks, and drafts in the name of the account holder, as well as foreign currency notes and coins tendered by the account holder while in India and also with income on authorized investments. The transfer of funds from other NRER accounts or foreign currency nonresident (FCNR) accounts is also allowed for bona fide personal purposes. The accounts may be debited for disbursement in India and for transfers abroad. Debiting is also permitted for any other transaction if covered under general or special permission granted by the RBI.

Balances may also be used to purchase foreign currency, rupee traveler’s checks, or traveler’s letters of credit for the use of the account holder, his or her family and dependents, and, in the case of corporate entities, for the use of directors and employees. Investments in the shares of Indian companies or in partnership firms and the like or in immovable property may be made with the specific or general approval of the RBI. Interest on deposits in nonresident external accounts in any bank in India is exempt from the personal income tax, although juridical persons are not entitled to this exemption. Interest earnings are transferable. The balances held in such accounts by natural and juridical persons are exempt from the wealth tax; gifts to close relatives in India from the balances in these accounts are exempt from the gift tax.

FCNR accounts denominated in deutsche mark, Japanese yen, pounds sterling, or U.S. dollars may be held in the form of term deposits by persons of Indian nationality or origin and by overseas companies specified above. These accounts may be credited with amounts received through normal banking channels, including interest. Balances may be repatriated at any time without reference to the RBI. Balances may also be used for the purposes for which debits to NRER accounts are allowed. Effective May 15, 1993, a new FCNR (Banks) Scheme was introduced, and the previous FCNR (A) scheme was abolished, effective August 15, 1994; however, the exchange rate guarantees (issued by the RBI) on existing deposits under the scheme will remain in effect until the deposits mature. The FCNR (B) operates in the same manner as the existing FCNR accounts, except that the issuing bank (not the RBI) provides the exchange rate guarantee on deposit balances.

“Nonresident (nonrepatriable) rupee deposit accounts” may be opened by nonresident Indian nationals, overseas corporate bodies predominantly owned by nonresident Indian nationals, and foreign citizens of non-Indian origin (except Pakistani and Bangladeshi nationals). These accounts may be opened with funds in freely convertible foreign exchange remitted from abroad or funds transferred from existing NRER or FCNR accounts. The funds in these accounts may not be repatriated abroad at any time. Since October 1994, accruing interest has been permitted to be transferred abroad.

“Foreign currency ordinary (nonrepatriable) deposit accounts” may be maintained by nonresidents. These accounts may be denominated in U.S. dollars and credited with funds received from abroad in freely convertible foreign exchange or transferred from existing NRER or FCNR accounts. On maturity of deposits, the rupee value of the principal and accrued interest may be credited to the ordinary nonresident rupee accounts of the depositor.
Approval requiredNo.
Domestic currency accountsNonresident (nonrepatriable) rupee deposit accounts may be opened by nonresident Indian nationals, overseas corporate bodies predominantly owned by nonresident Indian nationals, and foreign citizens of non-Indian origin (except Pakistani and Bangladeshi nationals). These accounts may be opened with funds in freely convertible foreign exchange remitted from abroad or funds transferred from existing NRER or FCNR accounts. The funds in these accounts may not be repatriated abroad at any time. Since October 1994, accruing interest has been permitted to be transferred abroad.
Convertible into foreign currencyYes.
Approval requiredNo.
Blocked accountsNo.
Imports and Import Payments
Foreign exchange budgetNo.
Import licenses and other nontariff measures
Positive listThe importation of certain specified precious, semiprecious, and other stones; safety, security, and related items; seeds, plants, and animals; insecticides and pesticides; drugs and pharmaceuticals; chemicals and allied items relating to the small-scale sector, and certain other items is restricted.
Negative listThe prohibited items are tallow, fat and/or oils, rendered or unrendered, of any animal origin, animal rennet, wild animals (including their parts and products), and ivory. Imports from Fiji and Iraq are also prohibited.
Import taxes and/or tariffsNo.
State import monopolyCertain specified types of petroleum products, fertilizers, edible and nonedible oils, seeds and cereals are canalized for import through the state trading enterprises, i.e., Indian Oil Corporation Ltd., Minerals and Metals Trading Corporation of India Ltd., State Trading Corporation of India Ltd., and the Food Corporation of India.
Exports and Export Proceeds
Repatriation requirementsExport proceeds must be repatriated by the due date of receipt or within six months of shipment, whichever is earlier, and surrendered to authorized dealers, as required, unless specifically permitted by the RBI to retain them either with authorized dealers in India or with banks abroad. Regarding exports made to Indian-owned warehouses abroad established with the permission of the RBI, a maximum period of 15 months is allowed for realization of export proceeds. Exporters are required to obtain permission from the RBI through authorized dealers in the event that the export value is not realized within the prescribed period. The RBI also administers a scheme under which engineering goods (capital goods and consumer durables) may be exported under deferred credit arrangements, so that the full export value is paid in installments over more than six months.
Surrender requirementsExporters are permitted to retain up to 35% of foreign exchange receipts in foreign currency accounts with banks in India; in the case of 100% export-oriented units, units in export processing zones, and units in hardware/software technology parts, up to 50% of foreign exchange receipts may be retained.
Export licensesLicenses are required for exports of mineral ores and concentrates and chemicals including those specified in the UN Chemical Weapon Convention.
Export taxesYes.
Payments for Invisible Transactions and Current Transfers
Controls on these payments
Freight/insurance
Prior approvalNo.
Quantitative limitsNo.
Unloading/storage costs
Prior approvalNo.
Quantitative limitsNo.
Indicative limits/bona fide testNo.
Interest paymentsRemittance of interest earned by nonresidents is allowed after all tax and other liabilities in India have been paid.
Prior approvalYes.
Quantitative limitsYes.
Indicative limits/bona fide testYes.
Profit/dividendsRemittances of profits and dividends to nonresident beneficiaries are allowed subject to certain conditions and provided that all current tax and other liabilities in India have been cleared.
Prior approvalYes.
Quantitative limitsNo.
Indicative limits/bona fide testNo.
Payments for travel
Prior approvalUnder the Basic Travel Quota Scheme, foreign exchange up to $2,000 a person a year may be released by authorized dealers for one or more trips abroad, except visits to Bhutan and Nepal.
Quantitative limitsYes.
Indicative limits/bona fide testThe indicative limits for various categories of business travel are as follows: (1) the per diem for senior executives under the Special Scale is $500 and for the others under the General Scale $350; (2) Indian firms participating in trade fairs/exhibitions and private printers and publishers wishing to participate in overseas book fairs and exhibitions abroad can obtain up to $20,000 or its equivalent; (3) the limit for remittances by Indian shipping companies toward fees for solicitors and adjusters is $10,000; and (4) the limit for remittances to foreign data service vendors for the use of international data bases is $10,000.
Medical costs
Quantitative limitsYes.
Indicative limits/bona fide testYes.
Foreign workers’ wages
Prior approvalYes.
Quantitative limitsYes.
Indicative limits/bona fide testForeign nationals temporarily residing in India on account of their employment are permitted to make reasonable remittances to their own countries to pay insurance premiums, to support their families, and for other expenses. Authorized dealers may allow such remittances of up to 75% of net income by foreign nationals, other than those from China, Pakistan, and South Africa, provided that they hold valid employment visas.
Pensions
Prior approvalYes.
Quantitative limitsYes.
Proceeds from Invisible Transactions and Current Transfers
Repatriation requirementsProceeds from invisibles must be repatriated.
Surrender requirementsRecipients of foreign exchange are permitted to retain up 25% of receipts.
Capital Transactions
Controls on capital and money market instruments
On capital market securitiesRBI permission is required for acquiring, holding, or disposing of any security. Granting permission for acquisition, transfer of funds from India is also permitted, where necessary, those transactions require RBI permission.
Purchase in the country by nonresidentsForeign institutional investors (FIIs) are permitted to make investments in all securities traded on the primary and secondary markets, including equity and other securities and instruments of companies listed on the stock exchange in India. FIIs are required to register initially with the Securities and Exchange Board of India (SEBI) and with the RBI. Authorization from the RBI enables FIIs to (1) open accounts denominated in foreign currency; (2) open nonresident rupee accounts for the purposes of operating securities investments; (3) transfer balances between foreign currency accounts and the rupee account; and (4) transfer abroad capital, capital gains, dividends, and interest income. There is no restriction on the value of investments by FIIs in the primary and secondary markets, but investment in debt instruments may not exceed 30% of total investment. Portfolio investments in primary or secondary markets are subject to a ceiling of 5% of the issued share capital for individual FIT holdings and 24% of issued share capital for the total holdings of all registered FII in any one company, with the exception of: (1) foreign investments under financial collaboration, which are permitted up to 51%; and (2) investments through offshore single and regional funds, global depository receipts, and convertibles in the Euromarket.
Sale or issue locally by nonresidentsNonresidents are not permitted to issue securities in the local market. In regard to securities of Indian companies held by nonresidents, transfer to a resident is required to be confirmed by the RBI. Transfer of sale proceeds is permitted subject to tax provided no restrictions were imposed about repatriation of sale proceeds while approving the original investment. Transfer between two nonresidents does not require such confirmation but nonresident transferee requires permission for purchase of shares of an Indian company.
Purchase abroad by residentsIn the case of sale of foreign securities, repatriation of sale proceeds to India is required, unless otherwise specified. Indians who return to India after a minimum continuous stay of one year abroad are exempted from the requirement of obtaining RBI permission for continuing to hold the securities already purchased prior to their return to India out of incomes earned by them while abroad. They are also free to utilize sales proceeds of such securities for acquisition of further securities without permission of the RBI.
Sale or issue abroad by residentsThe same regulations as for purchases abroad by residents apply.
On money market instruments
Purchase in the country by nonresidentsThese transactions require RBI approval.
Sale or issue locally by nonresidentsThese transactions require RBI approval.
Purchase abroad by residentsResidents are not permitted to purchase such instruments abroad without authorization of the RBI.
Sale or issue abroad by residentsThese transactions are not permitted.
On collective investment securities
Purchase in the country by nonresidentsThese transactions require RBI prior approval.
Sale or issue locally by nonresidentsIssue of collective investment securities by nonresidents on local markets in India is not permitted. No resident can also acquire any foreign security without authorization from the RBI.
Purchase abroad by residentsResident companies are not permitted to issue any security to nonresidents without approval of the RBI.
Sale or issue abroad by residentsThese transactions require permission from the RBI; the Unit Trust of India has been granted permission for issue of certain securities abroad.
Controls on derivatives and other instruments
Purchase in the country by nonresidentsResident companies have not permitted to issue rupee-based derivatives and other instruments in India.
Sale or issue locally by nonresidentsThese transactions are not allowed.
Purchase abroad by residentsThese transactions require RBI permission.
Sale or issue abroad by residentsThese transactions require RBI permission.
Controls on credit operations
Commercial credits
By residents to nonresidentsA commercial credit of up to six months can be allowed regarding exports on documents-against-acceptance terms. Contracts for exports involving payments to be realized beyond the normal period of six months are treated as deferred payment exports. Such exports are permitted keeping in mind the credit terms offered, commodity to be exported, and other related considerations. This applies to turnkey/construction/service contracts undertaken by Indian exporters on credit terms. Under the Buyer’s Credit Scheme, the Export-Import Bank of India (Eximbank) offers credits to foreign buyers in connection with the export of capital goods and turnkey projects in India in participation with commercial banks in India. These are considered by the Eximbank depending upon creditworthiness, standing and financial position of the overseas borrower, economic viability of the project, standing of the Indian exporter, etc.
To residents from nonresidentsShort-term loans/credits maturing within one year are considered by RBI on their terms and conditions comparable with the terms offered in overseas markets. Proposals for raising foreign currency loans/credits, such as buyer’s credits, supplier’s credits or lines of credit by firms, companies or lending institutions, for financing the cost of goods, technology or for any other purpose require approval from the government of India, the Ministry of Finance.
Financial credits
By residents to nonresidentsThese transactions require prior permission from the RBI.
To residents from nonresidentsPersons residing in India may not borrow any foreign exchange from persons residing inside or outside India without prior permission from the RBI. The contracting of all foreign currency loans and credits secured from nonresident persons and companies (including banks) as well as repayment of such loans and credits and payments of interest and other charges on such loans require prior permission from the RBI. The procedure prescribed for raising foreign currency loans by Indian entities envisages that borrowing proposals, except when loans are for less than one year, must be cleared by the Ministry of Finance before they may be approved by the RBI.
Guarantees, sureties, and financial backup facilitiesThese transactions require authorization from the RBI.
By residents to nonresidentsYes.
To residents from nonresidentsRBI has permitted authorized dealers to grant loans to residents against guarantees from nonresidents subject, inter alia, to the condition that no direct or indirect outflow should be involved by way of guarantee commission or otherwise.
Controls on direct investmentForeign equity up to 51% is permitted by the RBI in specified high-priority industries on an automatic basis. The RBI also allows foreign equity holdings up to 51% in trading companies primarily engaged in export activities. Other applications require clearance from the government of India. A liberal policy is followed for investments in India by nonresidents of Indian origin or overseas corporate bodies predominantly owned by such persons. FIIs are permitted to invest in all securities in primary or secondary markets in India within the guidelines issued by the government of India and the Ministry of Finance. Foreign companies are also permitted to set up liaison offices in India for carrying on liaison activities provided their entire expenses are remitted from abroad.
Outward direct investmentOutward direct investments are subject to approval of the RBI. Proposals for participation in overseas joint ventures, setting up wholly owned subsidiaries, or opening of offices abroad which involve remittance of cash, export of goods from India, etc., are considered in light of the financial position and track record of the applicant Indian company, the past export performance, and the benefits likely to accrue in terms of foreign exchange earnings by way of exports, technology transfer, profits, dividends, and so forth.
Inward direct investmentApplications for investments in areas that do not fall within the authority of the RBI but that are covered by the foreign investment policy are approved by the Foreign Investment Promotion Board (FIPB). Such investments may be approved up to 100% of capital on a case-by-case basis. The Ministry of Industry is the relevant agency for all issues related to foreign direct investment, including approvals. Nonresidents, noncitizens, and nonbank companies not incorporated under Indian law must have permission from the RBI to initiate, expand, or continue any business activity in India and to hold or acquire shares of any company carrying on a trading, commercial, or industrial activity in India. Persons of Indian nationality or origin who reside abroad may invest freely in any public or private limited company engaged in any activity except agricultural or plantation activities and real estate business (excluding real estate development, that is, construction of houses, etc.), or in any partnership or proprietary concern engaged in any activity other than real estate business and agricultural or plantation activity, provided that (1) funds for investment are either remitted from abroad through normal banking channels or are drawn from their nonresident accounts; (2) that repatriation of the capital invested or the profits and dividends arising therefrom will not be requested; and (3) that overall limits on holdings of shares and convertible debentures bought through the stock exchange by nonresident Indians (see below) are adhered to.

Overseas companies, societies, and partnership firms of which at least 60% is owned by nonresidents of Indian nationality or origin, and overseas trusts in which at least 60% of the beneficial interest is irrevocably held by nonresident Indians are also allowed to invest in any public or private limited companies in accordance with the above provisions.

Nonresident Indians and overseas companies, as defined above, may use funds derived from fresh remittances or held in their nonresident (external) or foreign currency (nonresident) accounts to (1) make portfolio investments with repatriation benefits up to 1% of the capital, provided that their total holdings of shares and convertible debentures held on either a repatriable or nonrepatriable basis by all nonresident investors do not exceed 5% of the paid-up capital of the company concerned or of the total paid-up value of each series of convertible debentures issued by the company concerned. However, if a company so resolves through a general body resolution, then purchases of shares or debentures of such a company could be made up to 24% as against 5% mentioned above; (2) invest freely in national savings certificates with full repatriation benefits; (3) invest up to 40% of the new equity capital issued by a company setting up industrial manufacturing projects, hospitals (including diagnostic centers), hotels of at least a three-star category, and shipping, software, and oil exploration services with repatriation rights for capital and income, subject to deduction of applicable Indian taxes; and (4) invest up to 100% of new investments, including expansion of existing industrial undertakings in specified priority industries with free repatriation of such investment. Trading companies must be registered with the Ministry of Commerce and must obtain a certificate of their status as either export, trading, star trading, or super star trading house before applying to the RBI for remittances or dividends. Foreign direct investment is permitted in trading companies. The RBI has the authority to permit foreign investment of up to 51% of the paid-up capital of such Indian companies. A higher percentage is considered for approval by the FIPB, and even 100% foreign equity may be approved, provided that the funding company is primarily engaged in exports. Existing joint-venture companies may raise the ratio of foreign equity shares to 51% of their capital through expansion of their capital base or through preferential allocation of shares to the foreign investor. Firms in certain manufacturing industries and tourist industries obtain RBI automatic approval for the expansion.
Controls on liquidation of direct investmentSale of shares/securities/immovable property requires approval of the RBI. Repatriation of net (less of taxes) sale proceeds is generally permitted provided no condition about nonrepatriation was imposed while approving the original investment.
Controls on real estate transactionsThese transactions require RBI permission.
Purchase abroad by residentsIndians who have returned to India after a minimum continuous stay of one year abroad are, however, permitted to hold immovable property acquired with funds earned while they are abroad. They are also free to dispose of such properties or acquire new properties from sale proceeds of such properties.
Purchase locally by nonresidentsNonresident Indians and overseas companies (predominantly owned by nonresident Indians) may invest in companies engaged in real estate development (e.g., construction of houses, etc.). Up to 100% of new investments may have to be locked in for a period of three years for disinvestment. After three years, remittances of disinvestment will be allowed up to the original investment in foreign exchange. In case of overseas corporate bodies, profits will be allowed to be repatriated up to 16%.
Sale locally by nonresidentsRepatriation of net (less of taxes) sale proceeds is generally permitted provided no condition about nonrepatriation was imposed while approving the original investment.
Provisions specific to commercial banks and other credit institutions
Borrowing abroadThe raising of foreign currency loans or lines of credit abroad is subject to approval by the government of India, the Ministry of Finance, and the Department of Economic Affairs. Authorized dealers are permitted to avail themselves of loans, overdrafts, and other types of fund-based credit facilities from their overseas branches/correspondents up to $500,000 or its equivalent for meeting requirements of normal exchange business. They may obtain loans or overdrafts from their overseas branches or correspondents in excess of this limit solely for the purpose of replenishing their rupee resources in India without prior approval from the RBI; repayment of such borrowings requires prior approval from the RBI or may be accorded only when the debtor bank has no outstanding borrowings in India from the RBI or any other bank or financial institution and is clear of all money market borrowings for a period of at least four weeks before the repayment.
Maintenance of accounts abroadAuthorized dealers in foreign exchange are permitted to maintain with their overseas branches and correspondents foreign currency balances at levels which are commensurate with their normal business needs. In all other cases, specific permissions are granted by the RBI on merits of each case (e.g., airlines/shipping companies maintaining foreign currency abroad).
Lending to nonresidents (financial or commercial credits)Such applications are considered by the RBI on a case-by-case basis. However, authorized dealers have been permitted to invest their temporary surplus funds in foreign treasury bills/deposits with banks abroad.
Lending locally in foreign exchangeBanks are permitted to lend locally in foreign currency to residents meeting genuine foreign exchange requirements toward preshipment credit in foreign currency for financing domestic inputs or for granting foreign currency loans to Foreign Currency Nonresident (Banks) FCNR(B) account holders. There is, however, no scheme as yet for issue of local security denominated in foreign exchange.
Purchase of locally issued securities denominated in foreign exchangeNo scheme is in place allowing for these transactions.
Differential treatment of nonresident deposit accounts and/or deposit accounts in foreign exchange
Reserve requirementsWhile resident deposit liabilities are subject to statutory reserve requirements, nonresident deposits under FCN(RB) and Nonresident (Nonrepatriable) Rupee Deposit [NR(NR)RD] schemes are completely exempted and liabilities under Nonresident (External) Rupee Accounts [NR(E)RA] scheme are subject to concessional reserve requirements.
Interest rate controlsWhile interest on resident deposits for maturity of over two years has been completely deregulated, interest rates on FCNR(B) (which need to be aligned to the international rates) are decided by the RBI. Interest rates on NR(NR)RD are, however, deregulated for all maturities.
Open foreign exchange position limitsBanks are required to maintain on an ongoing basis tier I capital at 5% of the open position limit approved by the RBI. Further, overall open position limits should have a reasonable relation to the capital of the bank.

Indonesia

(Position as of December 31, 1995)

Status Under IMF Articles of Agreement
Article VIIIDate of acceptance: May 7, 1988.
Exchange Arrangement
CurrencyThe currency of Indonesia is the Indonesian rupiah.
Other legal tenderTwo commemorative gold coins are also legal tender.
Exchange rate structureUnitary.
Classification
Managed floatingThe exchange rate is determined by the Bank Indonesia (BI) under a system of managed float, by which the bank announces an intervention rate and a conversion rate. The intervention rate introduced on December 29, 1995 is computed on the basis of a basket with lower and upper bands of ± Rp 33. The U.S. dollar is the intervention currency. The conversion rate is determined on the basis of the market rate with a spread of buying and selling rates of ± Rp 22; this rate is used for transactions with foreign exchange banks, government, as well as supranational institutions.
Exchange taxNo.
Exchange subsidyNo.
Forward exchange marketForward exchange transactions are conducted at rates fixed bilaterally between the BI and the banks concerned. The BI does not accept investment swaps with a maturity of more than two years offered at the initiative of banks and only provides liquidity swaps on its initiative.
Official cover of forward operationsYes.
Arrangements for Payments and Receipts
Prescription of currency requirementsNo.
Bilateral payments arrangementsNo.
Other payments arrangements
Barter agreements and open accountsThere are countertrade arrangements as part of the bids for government-sponsored construction or procurement projects whose import component is valued at more than Rp 500 million.
Administration of control
Exchange control authoritiesBI, the Ministry of Finance, and foreign exchange banks exercise exchange controls.
International security restrictionsRestrictions against Israel are in place.
In accordance with UN sanctionsRestrictions against countries for which the UN has imposed a trade embargo are in effect.
Payments arrearsNo.
Controls on trade in gold (coins and/or bullion)
Controls on external tradeTravelers may freely take out up to Rp 65,000 a person in Indonesian commemorative gold and silver coins issued in August 1970, and up to Rp 130,000 a person in gold and silver coins issued in October 1974. Amounts in excess of these limits require the prior approval of the BI. Gold may be imported freely. Imports are subject to a levy of Rp 25 per $l.
Controls on exports and imports of banknotes
On exports
Domestic currencyTravelers may take out Indonesian notes and coins up to Rp 50,000 a person; repatriation in excess of this amount requires prior approval from the BI or must be done through specified banks.
On imports
Domestic currencyTravelers may bring in Indonesian notes and coins up to Rp 50,000 a person; repatriation in excess of this amount requires prior approval from the BI or must be done through specified banks.
Resident Accounts
Eligibility to hold accountsJuridical and natural persons are eligible.
Foreign exchange accounts permittedYes.
Held domesticallyIf holders of accounts in foreign exchange wish to withdraw funds, they must send a letter to the bank; no checks may be drawn on foreign currency accounts.
Approval requiredNo.
Accounts in domestic currency convertible into foreign currencyIf holders of these accounts wish to withdraw funds, they must send a letter to the bank; no checks may be drawn on foreign currency.
Nonresident Accounts
Eligibility to hold accountsJuridical persons are eligible.
Foreign exchange accounts permittedYes.
Approval requiredIf holders of accounts in foreign exchange wish to withdraw funds, they must send a letter to the bank. No checks may be drawn on foreign currency accounts.
Domestic currency accountsNo.
Blocked accountsNo.
Imports and Import Payments
Foreign exchange budgetNo.
Financing requirements for importsRequirements are set by commercial banks on the basis of their assessment.
Documentation requirements for release of foreign exchange for imports
Preshipment inspectionImports are subject to preshipment inspection in the exporting country by agencies designated by the government of Indonesia; inspection expenses are borne by the Indonesian government. Following inspection, Surveyor Indonesia in Jakarta is required to issue on behalf of its agency in the exporting country a survey report (LPS) specifying the type, quality, quantity, and estimated cost of the goods; the applicable tariff code; freight charges; import duties; and value-added taxes. The LPS must be sent by the agency in Jakarta directly to the bank that has opened letters of credit or, for imports not covered by letters of credit, to the bank designated by the importer.
OtherCement-asbestos sheets, dry batteries, steel slabs, low-voltage electric cord, and electric light bulbs are subject to quality control.
Import licenses and other nontariff measures
Negative listImports from Israel and the countries against which the UN has imposed a trade embargo are prohibited, as are imports from all sources of most secondhand goods and of certain products. In addition, secondhand engines and their parts and other capital goods may be imported by industrial firms for their own use or for the reconditioning of their industry, in accordance with the guidelines of the Ministries of Trade and of Industry. Certain categories of agricultural imports, including foodstuffs, beverages, and fruits, may be imported only by registered importers designated by the Minister of Trade. The procurement policies of companies approved for the importations of fruit, alcoholic beverages, and chickens are evaluated annually by the government, although explicit quantiative restrictions are not placed on these products.
Open general licensesThere is a registry of authorized importers that includes only Indonesian nationals, although foreign investors are permitted to import the items required for their own projects. Although all imports into Indonesia are subject to licensing requirements, most are classified under the nonresident license (also called General Importer License).
Import taxes and/or tariffsCertain products are granted preferential duties within the framework of the ASEAN.
Taxes collected through the exchange systemImport taxes are collected through foreign exchange banks authorized by the Ministry of Finance.
State import monopolyImports of certain goods remain restricted to approved importers, most of which are state enterprises. Petramina has a monopoly on the importation of lubricating oil and lubricating fats, and Dahana, on the importation of ammunition and explosive gelatin. The Board of Logistics (BULOG) has the sole right to import rice, fertilizer, and sugar. the monopoly rights of approved importers (sole agents) also remain in effect for the importation of certain heavy equipment and motor vehicles, although this right may be transferred to general importers. The importation of trucks is subject to restriction.
Exports and Export Proceeds
Repatriation requirementsNo.
Surrender requirementsNo.
Financing requirementsNo.
Documentation requirements
Letters of creditExports with sight letters of credit conditions must be settled not later than 30 days from the date the exports are registered with the foreign exchange bank.
Preshipment inspectionAll exports of rattan, leather, wood, and wood products must be examined before shipment. Quality controls are also maintained on certain products, including fish, manioc (cassava), shrimp, coffee, tea, pepper, spices, vegetable oil, and cocoa beans.
Export licensesExports to Israel and the countries against which the UN has imposed a trade embargo, are prohibited, as are exports to all countries of certain categories, of unprocessed or low-quality rubber, brass and copper scrap (except from the island of Irian Jaya), iron scrap, steel scrap, and antiques of cultural value. Exporters are required to possess trade permits, which are issued by the Ministry of Trade.
Without quotasExports of certain domestically produced commodities must have prior authorization from the Ministry of Trade in order to maintain supplies to meet domestic demand and to encourage domestic processing of certain raw materials. Items affected by such controls include clove seeds, logs, fertilizer, cement, construction reinforcements of iron, automobile tires, paper, asphalt, stearin, cattle, salt, wheat flour, maize, soybeans, rice, copra, olein, raw rattan, meat, and all goods produced from subsidized raw materials. Concern about domestic price stability sometimes leads to suspension of exports of various items in this category.
With quotasManioc (cassava) may be exported only by approved exporters. Textiles and textile products subject to import quotas in the consuming countries may be exported only by approved textile exporters, who may transfer their allocated quotas to other approved exporters through the Commodity Exchange Board.
Export taxesExport taxes ranging from $250 to $4,800 a cubic meter are applied to sawed and processed timber. Exports of logs are subject to taxes ranging from $500 to $4,800 a cubic meter. Certain processed wood products are not taxed. Certain other products are subject to export taxes ranging from 5% to 30%.
Payments for Invisible Transactions and Current Transfers
Controls on these paymentsNo.
Proceeds from Invisible Transactions and Current Transfers
Repatriation requirementsNo.
Surrender requirementsNo.
Capital Transactions
Controls on capital and money market instruments
On capital market securities
Purchase in the country by nonresidentsThe purchase of shares in the country by nonresidents is limited to a maximum of 49% of total shares issued by an individual company listed on the Indonesian Stock Exchange.
Sale or issue locally by nonresidentsAccording to the Capital Market Act No. 8/1995, both resident or nonresident issuers have to comply with the public offering requirements as stated in the Act. There is no explicit restriction on the public offering by nonresidents of their own securities on the Indonesian market.
Sale or issue abroad by residentsThere is no restriction applied to the sale or issue of shares abroad by residents as long as those shares are not listed on the Indonesian Stock Exchange. If those securities are listed on the Indonesian Stock Exchange, they initially should comply with the Capital Market Act, especially on public offering, and Ministry of Finance Decree No. 1055/KMK.0.13/1989 concerning the maximum percentage of foreign ownership of shares. Indonesian companies do not issue shares, but they issue American Depository Receipts (ADRs) in the U.S. capital market and Global Depository Receipts (GDRs) on the London Stock Exchange.
On collective investment securities
Purchase in the country by nonresidentsNo person may purchase more than 1% of any fund.
Sale or issue locally by nonresidentsThe sale or issue of collective investment securities on local markets by nonresidents or the transfer abroad of the proceeds associated with sales of these issues are not prohibited, as long as such sales comply with Indonesian laws and regulations.
Sale or issue abroad by residentsThe sale and issue of collective instruments securities abroad by Indonesian residents must comply with laws and regulations in the country where the issues are organized and the country to whose citizens it is sold: (1) if a collective investment vehicle is organized in Indonesia, it must be licensed in Indonesia and comply with Indonesian laws and regulations; (2) if such a vehicle is organized offshore and sold to non-Indonesians, it does not require compliance with Indonesian regulations; and (3) if it is organized offshore and sold in Indonesia, it must be licensed in Indonesia and comply with all Indonesian rules and regulations.
Controls on derivatives and other instrumentsBanks may deal with derivative transactions as long as they are associated with foreign exchange and interest rates. However, derivative transactions in equities are only allowed with prior permission from the BI on a case-by-case basis. Derivative transactions other than these specific kinds of transactions are prohibited. In the case of transactions by residents, banks are obliged to enter into a written agreement with their clients and explain the risks involved. Losses over 10% of their capital must be reported to the BI.
Purchase abroad by residentsThe regulation on derivative transactions has been issued by the BI through Decree No. 28/119/DEP/DIR dated December 29, 1995. Foreign exchange banks may deal with derivative transactions as long as they are associated with foreign exchange and interest rates. However, derivative transactions in equities are only allowed with prior permission from the BI on a case-by-case basis. Derivative transactions other than these specific kind of transactions are prohibited.
Sale or issue abroad by residentsSee previous entry above.
Controls on credit operations
Commercial credits
By residents to nonresidentsIn general, there are no restrictions on the granting of commercial credits by residents (excluding banks) to nonresident entities.
To residents from nonresidentsResident entities, especially in the nonbank private sector, are not restricted from receiving offshore borrowing from nonresidents. However, based on Presidential Decree No. 39/1991, they have to submit periodic reports to the Commercial Offshore Loan Team (COLT) of the BI on the implementation of the foreign commercial borrowings that they have obtained. The following commercial borrowings are subject to authorization by the COLT: (1) borrowings related to development projects using nonrecourse, limited recourse, advance payment, trustee borrowing, leasing, and similar financing; (2) borrowings related to development projects with financing based on build-operate-transfer, build and transfer, and similar schemes; and (3) borrowings related to the government or a state company (including State Bank of Pertamina) in the form of government equity participation, guarantee for provision of feed stock supply, guarantee for products offtaker, or any relation in any form whatsoever.
Financial credits
By residents to nonresidentsIn general, there are no restrictions on the granting of financial credits by residents (excluding banks) to nonresident entities.
To residents from nonresidentsYes.
Guarantees, sureties, and financial backup facilities
By residents to nonresidentsSince March 18, 1996, residents are allowed to provide sureties and guarantees to non-resident entities only under the following conditions: (1) when there is sufficient contraguarantee from a bona fide overseas bank (excluding overseas branches of the relevant bank), and (2) when there is cash deposit valued at 100% of the guarantee granted.
Controls on direct investment
Inward direct investmentSeveral sectors are restricted: (1) foreign investment companies in infrastructure projects, such as sea ports, generation, transmission and distribution of electricity for public use, telecommunications, shipping, airlines, potable water supply, public railways, and nuclear electric power generation, should be established by way of joint venture between foreign and Indonesian partners, and the share of the Indonesian partner should be at least 5% of the total capital issued when the company is started; and (2) a foreign investment company may be established as a straight investment, which means that 100% of the shares may be owned by a foreign citizens and/or entities. However, some of the company’s shares must be sold to Indonesian citizens and/or entities through direct placement and/or indirectly through the domestic capital market no later than 15 years after commencement of commercial operations.

Foreign ownership of direct investment must begin to be divested by the eleventh year of production. For investments above $50 million, divestment of 50% must be completed within 20 years. For smaller investments, the divestment requirement is less stringent.

All foreign enterprises are eligible to receive preferential customs duty treatment for imports of required raw materials for the first two years of production activity. Raw materials may be imported with no time limit. In addition, an enterprise exporting more than 65% of its production is free to hire foreign experts as needed to maintain its export commitments.
Controls on liquidation of direct investmentInvestors are granted the right to repatriate capital, to transfer profits (after settlement of taxes and financial obligations in Indonesia), and to make transfers relating to expenses connected with the employment of foreign nationals in Indonesia and relating to depreciation allowances. The law provides that no transfer permit shall be issued for capital repatriation as long as investment benefits from tax relief are being received; at present, however, foreign payments do not require a transfer permit.
Controls on real estate transactions
Purchase locally by nonresidentsAccording to Agrarian Law No. 5 of 1960, nonresidents are only allowed to buy land with the land title status “the right to use land (Hak Pakai)”. Nonresidents are not allowed to buy real estate since the land title of real estate in Indonesia is “the right to build on land (HGB)”. Also, according to the Presidential Decree No. 31/1995, nonresidents are permitted to engage in inward direct investment in local real estate, but are not permitted to purchase local real estate.
Sale locally by nonresidentsYes.
Provisions specific to commercial banks and other credit institutions
Borrowing abroadForeign exchange banks are subject to BI directives with respect to borrowing abroad. A COLT (consisting of the State Secretary, the ministers of all economic portfolios, and the governor of the BI), established in September 1991, supervises all foreign commercial loan transactions. The prior approval of the team is required before any public enterprise, commercial bank, or public sector body may accept a loan from abroad. Resident banks or credit institutions, specifically the ones that deal with international trade and financial activities, are allowed to borrow abroad within a limit. An annual borrowing ceiling is imposed by the BI for foreign commercial borrowing of more than two years maturity. In addition, the prospective borrowers obtain COLT decisions for queuing on the international capital market from the COLT before soliciting for such borrowings.

Moreover, banks may receive foreign commercial borrowing with maturities of no more than two years on a bilateral basis without prior approval from the BI, but the banks should maintain the total amount of such borrowing to a maximum of 30% of bank’s capital. Trade finances such as issuance of letters of credit, red clause letters of credit, supplier’s credit, and buyer’s credit with maturity not exceeding one year, are not considered borrowings requiring approval from the COLT. Foreign commercial borrowings received by financial company institutions, such as a leasing company, factoring company, and consumer finance company, may not exceed five times the company’s net worth less its equity share.
Lending to nonresidents (financial or commercial credits)Banks are not allowed to grant loans or financial and commercial credits, neither in rupiah nor foreign exchange, to nonresidents, including those accepting authorization from residents to obtain credit.
Lending locally in foreign exchangeBanks are permitted to lend locally in foreign exchange, subject to the requirement that 80% of the foreign exchange loans must be provided for export activity. Banks can also purchase locally issued securities denominated in foreign exchange, subject to the requirement that the securities must be investment grade and should not be issued by their groups. To do this, banks should take into account other exchange regulations, namely the regulation on net open position (NOP) aimed at prudential control, with the limits as follows: (1) the average of total NOP, both on and off balance sheet, in a week must not exceed 25% of the bank’s capital; and (2) the average NOP of off balance sheet in a week must not exceed 25% of the bank’s capital.
Purchase of locally issued securities denominated in foreign exchangeThis is however limited by open position limits.
Differential treatment of nonresident deposit accounts and/or deposit accounts in foreign exchange
Interest rate controlsBanks are free to set their interest rates on both deposits and loans. In the case of taxes, revenues gained from the interest of nonresident deposit accounts are taxed at 20% or at a percentage stipulated on the tax agreement between the government of Indonesia and the government of a nonresident entity, while the revenues gained from the interest of resident deposit accounts are taxed at 15%.
Credit controlsForeign exchange banks are required to allocate at least 60% of all foreign exchange credits to export-oriented businesses that earn foreign exchange.
Open foreign exchange position limitsBanks must maintain the NOP of foreign exchange within the following limits: (1) the average of total NOP, both on and off balance sheet, in a week must not exceed 25% of the bank’s capital, and (2) the average NOP off balance sheet in a week must not exceed 25% of the bank’s capital.
Provisions specific to institutional investorsInsurance and reinsurance companies licensed in Indonesia are not allowed to invest abroad except for private placement in companies conducting insurance business overseas (such as insurance companies, reinsurance companies, insurance brokers, loss adjusters, and the like).
Limits (max.) on portfolio invested abroadAccording to Article 7 of Decree No. 224 concerning financial soundness of insurance and reinsurance companies, the excess of liabilities denominated in foreign currency over admitted assets denominated in foreign currency may not exceed 10% of shareholders’ equity.
Other controls imposed by securities lawsForeign investors as a group may purchase up to 49% of the authorized and outstanding shares of an Indonesian company that has had a public offering.

Ireland

(Position as of December 31, 1995)

Status Under IMF Articles of Agreement
Article VIIIDate of acceptance: February 15, 1961.
Exchange Arrangement
CurrencyThe currency of Ireland is the Irish pound.
Other legal tenderNo.
Exchange rate structureUnitary.
Classification
Cooperative arrangementIreland participates in the ERM of the EMS. In accordance with this mechanism, Ireland maintains spot exchange rates between the Irish pound and the currencies of the other participants within margins of 15% above or below the cross rates based on the central rates expressed in ECUs.
Exchange taxNo.
Exchange subsidyNo.
Forward exchange marketBanks are free to provide forward exchange facilities.
Official cover of forward operationsNo.
Arrangements for Payments and Receipts
Prescription of currency requirementsNo.
Bilateral payments arrangementsNo.
Other payments arrangementsNo.
Administration of controlNo.
International security restrictionsRestrictions regarding the Federal Republic of Yugoslavia (Serbia/Montenegro) and Serb-controlled areas of Bosnia and Herzegovina were suspended in accordance with UN Security Council Resolution 1022 of November 22, 1995.
In accordance with IMF Executive Board Decision No. 144-(52/51)Yes.
In accordance with UN sanctionsRestrictions were imposed on financial transfers in respect of Iraq in August 1990, and in respect of Libya in December 1993. Restrictions regarding Haiti were revoked in December 1994.
Payments arrearsNo.
Controls on trade in gold (coins and/or bullion)No.
Controls on exports and imports of banknotesNo.
Resident Accounts
Eligibility to hold accountsJuridical and natural persons are eligible.
Foreign exchange accounts permittedYes.
Held domesticallyYes.
Approval requiredNo.
Held abroadYes.
Approval requiredNo.
Accounts in domestic currency convertible into foreign currencyYes.
Nonresident Accounts
Eligibility to hold accountsJuridical and natural persons are eligible.
Foreign exchange accounts permittedYes.
Approval requiredNo.
Domestic currency accountsYes.
Convertible into foreign currencyYes.
Approval requiredNo.
Blocked accountsThese are accounts blocked in accordance with UN sanctions.
Imports and Import Payments
Foreign exchange budgetNo.
Financing requirements for importsNo.
Documentation requirements for release of foreign exchange for importsNo.
Import licenses and other nontariff measures
Negative listFor reasons of national policy, imports of certain goods (for example, specified drugs, explosives, and firearms and ammunition) are prohibited without special licenses.
Licenses with quotasImports of certain goods (including textiles, steel, footwear, and ceramic products) originating in certain non-EU countries are subject to either quantitative restrictions or surveillance measures. Imports from non-EU countries of products covered by the CAP are subject to a system of access quotas.
Import taxes and/or tariffsThe EU system of customs duties apply to imports.
Taxes collected through the exchange systemNo.
State import monopolyNo.
Exports and Export Proceeds
Repatriation requirementsNo.
Surrender requirementsNo.
Financing requirementsNo.
Documentation requirementsNo.
Export licensesExports of dual-use goods to both EU and non-EU countries may require export licenses.
Export taxesNo.
Payments for Invisible Transactions and Current Transfers
Controls on these paymentsNo.
Proceeds from Invisible Transactions and Current Transfers
Repatriation requirementsNo.
Surrender requirementsNo.
Restrictions on use of fundsNo.
Capital Transactions
Controls on capital and money market instrumentsNo.
Controls on derivatives and other instrumentsNo.
Controls on credit operationsNo.
Controls on direct investment
Inward direct investmentInvestment by foreign-controlled enterprises does not require authorization except for some sectors subject to special conditions.
Controls on liquidation of direct investmentNo.
Controls on real estate transactionsNo.
Provisions specific to commercial banks and other credit institutionsNo.
Provisions specific to institutional investorsNo.
Other controls imposed by securities lawsNo.

Israel

(Position as of December 31, 1995)

Status Under IMF Articles of Agreement
Article VIIIDate of acceptance: September 21, 1993.
Exchange Arrangement
CurrencyThe currency of Israel is the new sheqel (plural new sheqalim).
Other legal tenderNo.
Exchange rate structureUnitary.
Classification
Managed floatingThe exchange rate of the new sheqel is managed with regard to a basket of currencies comprising the deutsche mark, the French franc, the Japanese yen, the pound sterling, and the U.S. dollar. The market exchange rate fluctuates within margins of ± 7% around the midpoint rate in response to market forces and intervention policy. Since December 17, 1991, both the midpoint and the band have been adjusted gradually at a daily rate (“slope” of the band) that reflects the annual difference between the domestic inflation target and the projected inflation in the main trading partners. The slope of the band has been 6% on an annual basis, since July 26, 1993.
Exchange taxNo.
Exchange subsidyNo.
Forward exchange marketForward exchange transactions between foreign currencies are permitted. Transactions in futures and options, including traded contracts, on foreign currencies, foreign interest rates, commodities, and securities prices by both resident companies and individuals are allowed. However, resident firms may only enter such contracts in order to cover commercial risks arising from permitted transactions; transactions in commodities may only be entered into in order to cover risks; and transactions, other than in traded contracts, must be done against an authorized dealer bank, or, through it, against a foreign bank or broker. Forward transactions in new sheqalim may only be conducted for hedging purposes provided that the transaction is carried out with an authorized dealer in foreign exchange and up to a period of one month.
Arrangements for Payments and Receipts
Prescription of currency requirementsPayments and receipts must be effected in the currency and manner prescribed by the exchange control authorities.
Bilateral payments arrangementsNo.
Administration of control
Exchange control authoritiesExchange control is the responsibility of the Controller of Foreign Exchange; it is administered by the Bank of Israel (BOI), in cooperation with other government agencies and is carried out through authorized banks that are permitted to deal in foreign exchange; other institutions (e.g., securities brokers and foreign exchange dealers) possess, or may obtain, a limited license to deal in foreign exchange.
Payments arrearsNo.
Controls on trade in gold (coins and/or bullion)
Controls on external tradeResidents are allowed to import and export gold, subject to the same regulations as those applied to merchandise trade, and to transact in gold bullion and coins. Gold certificates are treated as foreign securities.
Controls on exports and imports of banknotes
On exports
Domestic currencyResident travelers may take out Israeli banknotes not exceeding the equivalent of $200 a person a trip. Nonresident travelers leaving Israel are permitted to take out Israeli banknotes up to the equivalent of $100, and to repurchase, through an authorized dealer at the port of departure, foreign currency up to the equivalent of $500.
Foreign currencyNonresidents may purchase foreign currency on presentation of documents showing previous conversion of foreign currency into Israeli currency, with a limit for each visit of $5,000 a person over 18 years and of $2,000 a person under 18 years (a temporary leave of less than two weeks during the visit does not affect the person’s right). Only commercial banks are authorized to export foreign currency to foreign banks.
On importsNo.
Resident Accounts
Eligibility to hold accountsNatural persons are eligible.
Foreign exchange accounts permittedYes.
Held domesticallyThere are two main types of accounts: (1) Foreign Currency Deposit Accounts (PAMAH). The period during which foreign currency may be held in a resident transferred position (PAMAH) was extended from 14 to 30 days. Export proceeds and unilateral transfers directly received from abroad, as well as unused travel allowances, may be deposited in these accounts. The liquidity requirements are 6% for a current account and 3% for a time deposit account with a maturity of up to one year, and zero for a time deposit account with a maturity exceeding one year. Resident restitution deposit accounts may be maintained under PAMAH. These accounts may be held only by recipients of restitution payments or certain disability pensions. The liquidity requirement for these accounts was 25.5% on December 31, 1995 (it has been gradually and automatically reduced at a fixed monthly rate since November 1991 when the rate was 90%). Funds deposited in these accounts are tax free and may be used up to a limit of $1,800 for additional travel allowances; (2) Exempt Resident Deposit Accounts. Certain residents (mostly immigrants) may deposit funds brought from abroad in these accounts. Certain regulations stipulate the types of funds that may be deposited in these accounts. Balances on these accounts may be freely transferred abroad. In addition, a resident may open a deposit account linked to a foreign currency (PATZAM) with a maturity period of not less than one month.
Approval requiredNo.
Held abroadYes.
Approval requiredCertain residents (mostly immigrants) may hold accounts abroad.
Accounts in domestic currency convertible into foreign currencyNo.
Nonresident Accounts
Eligibility to hold accountsNatural and juridical persons are eligible.
Foreign exchange accounts permittedAccount holders may freely effect transfers from their foreign currency account and may also convert funds held in the account into local currency at the market exchange rate. There are no restrictions on the opening of convertible local currency accounts by nonresidents; funds in these accounts may be used in permitted transactions, including transfers between nonresidents.
Approval requiredNo.
Domestic currency accountsYes.
Convertible into foreign currencyDeposits linked to foreign currency or the CPI are not convertible.
Approval requiredYes.
Blocked accountsNo.
Imports and Import Payments
Foreign exchange budgetNo.
Financing requirements for imports
Advance payments requirementAdvance payments for imports of goods to be supplied within one year are allowed.
Documentation requirements for release of foreign exchange for importsBanks automatically grant foreign exchange to pay for authorized imports when the relevant documents (import documents, bills of lading, and letters of credit) are presented. Foreign exchange is also provided automatically for repayment of suppliers’ credits. Importers are allowed to use foreign currency proceeds of loans obtained abroad directly for import payments without first depositing the funds with an authorized Israeli bank.
Import licenses and other nontariff measures
Other nontariff measuresWith the exception of agricultural products, imports are free of quantitative restrictions. A special regime applies to imports from countries that restrict or prohibit imports from Israel.
Import taxes and/or tariffsNo.
State import monopolyNo.
Exports and Export Proceeds
Repatriation requirementsExport proceeds in foreign currencies must be received within 12 months of the date of export.
Surrender requirementsProceeds may be held in a PAMAH account or sold to authorized banks. However, exporters may retain in a bank account abroad up to 10% of export proceeds received over the previous 12-month period and use the funds to pay for imports and other authorized payments abroad. In cases where the exporter is a firm with limited liabilities, the amount allowed to be deposited in a bank account abroad is also part of the overall limit on the portfolio investment abroad of the firm. For inputs directly imported by an exporter, there is a system of rebates of customs duties, wharf charges, and other related charges.
Financing requirementsNo.
Documentation requirementsNo.
Export licensesMost exports do not require licenses. Exports of oil and certain defense equipment require licensing.
Export taxesNo.
Payments for Invisible Transactions and Current Transfers
Controls on these paymentsForeign exchange for payments on account on invisibles, including tourism expenses, is provided automatically upon proof of the nature of the transaction. Some indicative limits, however, apply.
Freight/insuranceNo.
Unloading/storage costsNo.
Administrative expensesNo.
CommissionsNo.
Interest paymentsNo.
Profit/dividendsNo.
Payments for travel
Prior approvalNo.
Quantitative limitsUp to $7,000 a person a trip in cash, traveler’s checks, and cash withdrawals on credit cards. Additional cash allowances may be granted on request. Residents holding PAMAH restitution accounts may withdraw an additional amount of $1,800.
Indicative limits/bona fide testYes.
Medical costs
Prior approvalNo.
Quantitative limitsA resident going abroad for medical treatment who requires hospitalization is permitted to pay up to the equivalent of $30,000 in advance. While abroad, he is permitted to pay the remainder of expenses on submission of receipts.
Indicative limits/bona fide testYes.
Study abroad costs
Prior approvalNo.
Quantitative limitsThe exchange allowance for students studying at institutions of higher education abroad is $1,000 a month in addition to tuition expenses.
Indicative limits/bona fide testYes.
Subscriptions and membership feesNo.
Consulting/legal feesNo.
Foreign workers’ wagesNo.
PensionsNo.
Gambling/prize earningsNo.
Family maintenance/alimony
Prior approvalNo.
Quantitative limitsResidents may make support or gift remittances of up to $2,000 a year.
Indicative limits/bona fide testYes.
Credit card use abroad
Prior approvalApproval is limited to purchasing tourist services abroad.
Quantitative limitsResidents, while in Israel, are permitted to make credit card payments abroad, of up to $5,500 a year. The limit for cash withdrawals is $7,000 a trip.
Indicative limits/bona fide testYes.
Proceeds from Invisible Transactions and Current Transfers
Repatriation requirementsYes.
Surrender requirementsExchange proceeds from invisibles may, in general, be kept in foreign exchange in PAMAH accounts or sold to authorized banks. For 30 years after entering Israel, immigrants are exempt from the requirement to surrender their foreign exchange to authorized banks, and they may hold these foreign currencies freely with authorized banks in Israel or with banks abroad.
Restrictions on use of fundsRestrictions are in accordance with general rules pertaining to the use of foreign currency.
Capital Transactions
Controls on capital and money market instruments
On capital market securities
Purchase in the country by nonresidentsNonresidents may purchase any security traded on the stock exchange.
Sale or issue locally by nonresidentsProceeds may be freely transferred.
Purchase abroad by residentsHouseholds may purchase freely securities abroad provided the security is listed on an exchange or issued by a government. Both the exchange and the government that issues the securities must be of one of the countries listed in the First Schedule of the General Permit (the list includes the U.S., Canada, most of Western Europe, Australia, New Zealand, Japan, and Singapore). The business sector may purchase securities abroad under the same conditions as households but with a limit (up to 5% of sales or 10% of capital). All transactions and transfer of funds abroad must usually be conducted through an authorized dealer in foreign exchange (usually a bank).
Sale or issue abroad by residentsThe proceeds of these issues must usually be transferred to Israel. Special permits are provided for holding the issues abroad. The transfer of funds required to service the security issues is allowed.
On money market instruments
Purchase in the country by nonresidentsNonresidents may purchase money market instruments traded on the stock exchange (such as treasury bills).
Purchase abroad by residentsHouseholds may purchase freely money market instruments that are traded on an ex-change abroad. The business sector may purchase market instruments abroad with a limit (percent of sales or capital).
Sale or issue abroad by residentsResidents may issue money market instruments that are traded on an exchange abroad. The proceeds of these issues must usually be transferred to Israel; however, special permits for holding these proceeds abroad are granted to all issuers. The transfer of funds required to service the security issues is allowed.
On collective investment securities
Purchase in the country by nonresidentsNonresidents may purchase certificates of participation in mutual funds. Nonresidents are not allowed to purchase certificates of deposit in provident funds.
Sale or issue locally by nonresidentsThe sale or issue of collective instrument securities on local markets is allowed provided that the securities are traded on the stock market. However, the issue of such securities requires authorization from the authorities.
Purchase abroad by residentsHouseholds may buy certificates of participation in mutual funds that are either traded on an exchange or authorized by the appropriate authority in the issuing country. The business sector may purchase such certificates within a limit.
Sale or issue abroad by residentsThe sale or issue of collective instrument securities abroad by residents is not allowed.
Controls on derivatives and other instruments
Purchase abroad by residentsResidents may purchase derivatives and other securities abroad. However, the business sector is restricted to hedging, while households may purchase for both hedging and for speculation.
Sale or issue abroad by residentsResidents may purchase derivatives and other securities abroad. However, the business sector is restricted to hedging, while households may purchase for both hedging and for speculation.
Controls on credit operations
Commercial credits
By residents to nonresidentsResidents may grant commercial credit to nonresidents up to a period of one year. In the case of capital goods, long-term credit may also be granted.
Financial credits
By residents to nonresidentsNonbanks are generally not allowed to grant financial credit to nonresidents; there are two exceptions: an Israeli company may grant financial credit to its subsidiary abroad (provided it holds at least 5% of its equity), and an Israeli company controlled by a nonresident (at least 75% of its shares) may grant credit to the nonresident up to the amount of the equity held by this nonresident (requires a permit). Direct loans from nonresidents to Israeli residents are not restricted.
Guarantees, sureties, and financial backup facilities
By residents to nonresidentsA resident may provide sureties, guarantees, or financial backup facilities to a nonresident if they are related to a permitted transaction. Guarantees may also be granted to an agent in an export transaction.
Controls on direct investment
Outward direct investmentThe business sector (active corporations) is allowed to invest freely in direct investments. Only active incorporated Israeli companies are permitted to undertake direct investment abroad (e.g., in subsidiaries and real estate) without any quantitative limit on the size of the investment and to hold foreign securities and deposits (exporters only) abroad, provided that the investment does not amount to more than 10% of its equity or 5% of their sales turnover, whichever is larger. Individuals are not allowed to make such investments.
Controls on liquidation of direct investmentNonresidents may repatriate the proceeds from the sale or liquidation of direct foreign investment if the original source of the investment was foreign currency or a nonresident local currency account.
Controls on real estate transactions
Purchase abroad by residentsOnly the business sector is permitted to purchase real estate abroad.
Provisions specific to commercial banks and other credit institutions
Differential treatment of nonresident deposit accounts and/or deposit ac-counts in foreign exchange
Reserve requirementsThe same reserve ratios apply to all bank accounts, both resident and nonresident, de-nominated in foreign or local currency. Interest is currently paid only on reserve requirements that are due to nonresident foreign currency accounts. All foreign currency accounts (resident and nonresident) are subject to additional “secondary” reserve ratios (half of which must be deposited with the central bank in an interest paying account).
Open foreign exchange position limitsThere are limits on the open foreign currency positions of banks. The size of the limit for each bank is a proportion of the bank’s equity (with a minimum position size granted to small banks) and the limits are applied on the basis of weekly averages.
Provisions specific to institutional investors
Limits (max.) on portfolio invested abroadRegular mutual funds may invest up to 10% of their assets in securities abroad. Special mutual funds intended for investing abroad may invest up to 50% of their assets abroad. Mutual funds intended for nonresidents may invest up to 75% of their assets abroad. Provident funds may invest up to 2% of their assets abroad in recognized foreign securities. Pension funds and insurance companies are not allowed to invest abroad. Income and profits earned in foreign currency by institutional investors from these investments, including capital gains, are taxed at the rate of 35%.
Other controls imposed by securities lawsForeign underwriters must comply with the same criteria as those of domestic under-writers as stated by the Securities Law.

Italy

(Position as of December 31, 1995)

Status Under IMF Articles of Agreement
Article VIIIDate of acceptance: February 15, 1961.
Exchange Arrangement
CurrencyThe currency of Italy is the Italian lira.
Other legal tenderNo.
Exchange rate structureUnitary.
Classification
Independent floatingThe exchange rate of the lira is determined on the basis of supply and demand. The Italian authorities generally do not intervene in the exchange market. Rates for 20 foreign currencies are monitored every working day by the Bank of Italy (BOI) exclusively for informational purposes. On September 17, 1992, Italy suspended its exchange rate intervention obligations of the EMS.
Exchange taxNo.
Exchange subsidyNo.
Forward exchange marketPremiums and discounts in the forward exchange market are normally left to the interplay of market forces.
Official cover of forward operationsNo.
Arrangements for Payments and Receipts
Prescription of currency requirementsSettlements with foreign countries are normally made in quoted currencies or in lire on foreign accounts.
Bilateral payments arrangementsNo.
Other payments arrangements
Clearing agreementsItaly maintains clearing accounts with Croatia and Slovenia. The accounts are used for trade in cross-border areas. The balances in these accounts may be used only to finance trade between certain districts of Croatia and Slovenia and the Italian provinces of Trieste and Gorizia. The balances are not transferable. There is no automatic mechanism through which outstanding balances are settled within 90 days. Only Italy is al-lowed to maintain a debit balance on these accounts.
Administration of control
Exchange control authoritiesResidents are allowed to conduct foreign exchange transactions freely, with settlements to be effected either through authorized intermediaries (BOI, authorized banks, and the Postal Administration) or directly, by drawing on external accounts or by offsetting debts and credits vis-à-vis other residents or nonresidents. Operators and authorized intermediaries must, for statistical purposes, transmit data to the Italian Foreign Exchange Office on their foreign transactions that exceed the equivalent of Lit 20 million by filling out a foreign exchange statistical return.
International security restrictions
In accordance with IMF Executive Board Decision No. 144-(52/51)Italy notified the IMF on August 28, 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). The above restrictions have been suspended according to UN Security Resolutions 1021 and 1022 of November 22, 1995. Similar restrictions are in force against Iraq, Libya, and the movement UNITA in Angola.
Payments arrearsNo.
Controls on trade in gold (coins and/or bullion)
Controls on domestic ownership and/or tradeNo.
Controls on external tradePurchases and sales of gold abroad are legally reserved for the monetary authorities. Residents may purchase and import unrefined gold under ministerial license for industrial purposes. Loans for the importation of gold are freely assumable. The exportation of unrefined gold is subject to licensing by the Ministry of Foreign Trade. The importation and exportation of gold coins, including coins that are legal tender in a foreign country, are unrestricted. Imports of unrefined gold are not subject to VAT tax, whereas imports of gold coins are subject to a VAT tax at 19%.
Controls on exports and imports of banknotesIn the case of material delivery of means of payment in Italy or abroad, Italian residents are allowed to take with them into or out of the country Italian or foreign banknotes and bearer securities of any denomination up to the equivalent of Lit 20 million. For fiscal and anti-money-laundering purposes, transfers exceeding this amount must be carried out through authorized intermediaries. Residents are allowed to enter and leave the country carrying securities denominated in lire or in foreign currencies worth Lit 20 million, provided that they are not bearer securities and that they are declared to customs. Nonresidents may take up to Lit 20 million in banknotes and securities of any denomination into and out of Italy without formalities. If they bring in banknotes and securities in an amount in excess of Lit 20 million, they must declare the excess amount to customs on a special form upon entering Italy. Nonresidents may reexport larger sums but only up to the amount in excess of Lit 20 million that they have imported and declared. No limit applies to exports of nonbearer securities; nonresidents need only submit the above-mentioned form to customs. The limitations described above do not apply to transfers effected by banks when they act as senders or beneficiaries.
On exports
Domestic currencyYes.
Foreign currencyYes.
On imports
Domestic currencyYes.
Foreign currencyYes.
Resident Accounts
Eligibility to hold accountsJuridical and natural persons are eligible.
Foreign exchange accounts permittedYes.
Held domesticallyYes.
Approval requiredNo.
Held abroadYes.
Approval requiredNo.
Accounts in domestic currency convertible into foreign currencyYes.
Nonresident Accounts
Eligibility to hold accountsJuridical and natural persons are eligible.
Foreign exchange accounts permittedYes.
Approval requiredNo.
Domestic currency accountsYes.
Convertible into foreign currencyYes.
Approval requiredNo.
Blocked accountsThose accounts affected in compliance with UN Security Council Resolutions.
Imports and Import Payments
Foreign exchange budgetNo.
Financing requirements for importsNo.
Documentation requirements for release of foreign exchange for importsNo.
Import licenses and other nontariff measuresImports are governed by EC regulations according to which imports of most products, except for textiles and some products originating from China, are free of licensing and quantitative restrictions. Imports from non-EU countries of most products covered by the CAP are subject to variable 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 imports are not regulated, beyond the general rules cited in Administration of Control, above.
Negative listYes.
Licenses with quotasYes.
Import taxes and/or tariffsYes.
Taxes collected through the exchange systemNo.
State import monopolyNo.
Exports and Export Proceeds
Repatriation requirementsNo.
Surrender requirementsNo.
Financing requirementsNo.
Documentation requirementsNo.
Export licenses
Without quotasExports to non-EU countries are free with the exception of high-technology products included in EC Regulation 3381/94 and of oil extracted from the seabed, which are subject to ministerial authorization.
Export taxesNo.
Payments for Invisible Transactions and Current Transfers
Controls on these paymentsNo.
Proceeds from Invisible Transactions and Current Transfers
Repatriation requirementsNo.
Surrender requirementsNo.
Restrictions on use of fundsNo.
Capital Transactions
Controls on capital and money market instruments
On capital market securitiesNo.
On money market instrumentsNo.
On collective investment securities
Sale or issue locally by nonresidentsHowever, the issue by EU residents of UCITS (Undertakings for Collective Investments in Transferable Securities) that are of EU origin and comply with EC Directive 85/611/EC; and the sale of collective investment securities where concluded strictly through private negotiations, are allowed.
Controls on derivatives and other instrumentsNo.
Controls on credit operationsNo.
Controls on direct investmentNo.
Controls on liquidation of direct investmentNo.
Controls on real estate transactionsNo.
Provisions specific to commercial banks and other credit institutions
Differential treatment of nonresident deposit accounts and/or deposit accounts in foreign exchange
Open foreign exchange position limitsA capital ratio of 8% of the position applies.
Provisions specific to institutional investors
Currency matching regulations on assets/liabilities compositionAt least 80% of liabilities in any currency must be matched with assets in the same currency except if the assets to be held in that currency do not exceed 7% of total assets.
Other controls imposed by securities lawsNo.

Japan

(Position as of December 31, 1995)

Status Under IMF Articles of Agreement
Article VIIIDate of acceptance: April 1, 1964.
Exchange Arrangement
CurrencyThe currency of Japan is the Japanese yen.
Other legal tenderNo.
Exchange rate structureUnitary.
Classification
Independent floatingThe exchange rate of the Japanese yen is determined on the basis of supply and demand. However, the authorities intervene when necessary in order to counter disorderly conditions in the markets. The principal intervention currency is the U.S. dollar.
Exchange taxNo.
Exchange subsidyNo.
Forward exchange marketForward exchange contracts may be negotiated against foreign currencies quoted on the Tokyo exchange market and in other major international foreign exchange markets. There are no officially set rates in the forward market, and forward exchange transactions are based on free market rates.
Official cover of forward operationsNo.
Arrangements for Payments and Receipts
Prescription of currency requirementsNo.
Bilateral payments arrangementsNo.
Other payments arrangementsNo.
Administration of control
Exchange control authoritiesThe exchange and trade control system is operated mainly by the Ministry of Finance, the Ministry of International Trade and Industry, and the Bank of Japan (BOJ) acting as the government’s agent. Most of the authority for verifying normal payments is, however, delegated to authorized banks, referred to as foreign exchange banks. Import- and export-reporting requirements are handled by the the Ministry of International Trade and Industry.
International security restrictions
In accordance with UN sanctionsImports from Croatia, Bosnia and Herzegovina, the Federal Republic of Yugoslavia (Serbia/Montenegro), Iraq, and Libya require permission from the Ministry of International Trade and Industry. For transactions that involve payments from Japan to residents of Bosnia and Herzegovina, the Federal Republic of Yugoslavia (Serbia/Montenegro), Iraq, and Libya or by residents of these countries to foreign countries through Japan, permission from the Ministry of Finance is required. Intermediary trade of petroleum and its products destined for Angola require permission from the Ministry of International Trade and Industry. All other payments for invisibles from Japan to residents of the Federal Republic of Yugoslavia (Serbia/Montenegro), Iraq, and Libya require permission from the ministry. Exports to Croatia, Bosnia and Herzegovina, the Federal Republic of Yugoslavia (Serbia/Montenegro), Iraq, and Libya require permission from the ministry.
Payments arrearsNo.
Controls on trade in gold (coins and/or bullion)No.
Controls on exports and imports of banknotes
On exports
Domestic currencyThe exportation of domestic banknotes exceeding ¥5 million requires ministerial approval.
Resident Accounts
Eligibility to hold accountsJuridical and natural persons are eligible.
Foreign exchange accounts permittedYes.
Held abroadYes.
Approval requiredOverseas deposits by residents up to the equivalent of ¥100 million are not restricted. Qualified Japanese enterprises in insurance, transportation, and securities are permitted to maintain overseas deposits under blanket licensing.
Accounts in domestic currency convertible into foreign currencyYes.
Nonresident Accounts
Eligibility to hold accountsJuridical and natural persons are eligible.
Foreign exchange accounts permittedNo.
Domestic currency accountsYes.
Convertible into foreign currencyPayment of interest on balances in such accounts may be restricted when it is deemed necessary to prevent drastic fluctuations in the exchange rate of the yen.
Approval requiredNo.
Blocked accountsNo.
Imports and Import Payments
Foreign exchange budgetNo.
Financing requirements for importsNo.
Documentation requirements for release of foreign exchange for importsNo.
Import licenses and other nontariff measuresThe Import Restriction System covers 77 items (four-digit Harmonized Commodity Description and Coding System (HS) base), which are subject to import restrictions falling under the state trading, national security, public health, and moral protection provisions of the GATT. For the restricted items, once importers obtain authorization from the Ministry of International Trade and Industry, they receive an import quota certificate that entitles them to receive an import license from an authorized foreign exchange bank automatically upon application. For the importation of certain other goods from certain countries or shipping areas, individual authorization must be obtained from the ministry. Import settlements effected under the special methods (i.e., those effected by means of open accounts or those involving payments made more than two years before import declaration or after more than two years of shipment) require authorization from the ministry.
Negative listYes.
Open general licensesYes.
Licenses with quotasYes.
Import taxes and/or tariffsNo.
State import monopolyNo.
Exports and Export Proceeds
Repatriation requirementsNo.
Surrender requirementsNo.
Financing requirementsNo.
Documentation requirementsNo.
Export licensesExport restraint may be exercised by virtue of the Export and Import Transactions Law and the Export Trade Control Order issued under the Foreign Exchange and Foreign Trade Control Law. Export restraint may be applied either globally or to certain destinations, and it may cover export volume, export prices, or other conditions. At the end of 1993, voluntary restraints were applied to exports of certain textile items to the United States and the EU, to exports of passenger cars to the United States, and to exports of forklift trucks to the EU. In addition, exports of some other products, including passenger cars, light commercial vehicles, and videocassette recorders to the EU, were subject to monitoring by the government. At the end of 1995, 27 export cartels were operating under the provisions of the Export and Import Transactions Law. In addition, 228 items were subject to a license under the Foreign Exchange and Foreign Trade Control Law to control their exportation to specified destinations either because of short supply in the domestic market (e.g., nickel) or to forestall the imposition of import restrictions by other countries (e.g., certain textiles). Exports under processing contracts and exports for which settlements are effected under the special methods described above require authorization from the Ministry of International Trade and Industry. Exports of specified raw materials for foreign processing and reimportation require individual licenses.
Without quotasYes.
With quotasYes.
Export taxesNo.
Payments for Invisible Transactions and Current Transfers
Controls on these paymentsNo.
Proceeds from Invisible Transactions and Current Transfers
Repatriation requirementsNo.
Surrender requirementsNo.
Restrictions on use of fundsNo.
Capital Transactions
Controls on capital and money market instruments
On capital market securitiesCapital transactions, in principle, can be conducted freely unless certain procedures are specifically required. Such procedures may take the form of requiring: (1) prior approval; (2) prior notice with a waiting period, during which the Ministry of Finance or the Ministry of International Trade and Industry may request or order that the transaction be suspended or that its particulars be modified on the basis of prescribed criteria; or (3) prior notice without a waiting period. Acquisition of securities for portfolios may be made freely through designated securities firms, and foreign exchange banks and designated institutional investors may freely acquire securities for portfolio investments. However, acquisition of such securities through securities firms other than the designated ones and borrowings by residents require prior notice without a waiting period.
Sale or issue locally by nonresidentsThe restriction applies only to yen-denominated securities issued abroad, which cannot be resold to Japanese residents until after the expiration of a 90-day waiting period and yen-related dual currency bonds issued abroad, which cannot be resold to Japanese residents until after the expiration of a 180-day waiting period.
On money market instruments
Sale or issue locally by nonresidentsThe restriction applies only to yen-denominated securities issued abroad, which cannot be resold to Japanese residents until after the expiration of a two-week waiting period.
On collective investment securitiesNo.
Controls on derivatives and other instrumentsNo.
Controls on credit operations
Commercial creditsNo.
Financial credits
By residents to nonresidentsOutward investments by residents in the form of loans are subject to prior notice with a 20-day waiting period. Transactions requiring prior notice with a 20-day waiting period may be subject to suspension or modification by the Ministry of Finance if, in the Minister’s opinion, the transaction might adversely affect: (1) international financial markets or Japan’s international credit standing; (2) domestic and financial capital markets; (3) business activities of a sector of Japanese industries or the smooth performance of the national economy; and (4) implementation of Japan’s international agreements, international peace and security, or the maintenance of public order. The ministry may shorten the waiting period when the transaction under consideration is deemed without adverse consequences.
Guarantees, sureties, and financial backup facilitiesNo.
Controls on direct investment
Inward direct investmentA distinction is made between direct investments in Japan and other capital transactions. Besides majority equity ownership of enterprises or establishment of branch operations, investments that come under the direct investment regulations include: (1) any acquisition of shares in unlisted companies; (2) acquisition by a foreign investor of the shares of a listed company (including individual companies for which the stock price in over-the-counter transactions is made public by the Securities Dealers Association) that reach 10% or more when added to those owned by related persons; and (3) acquisition of loans of more than one-year maturity or securities privately placed in Japan, under certain circumstances.

Any change of business objectives of a company with one-third or more foreign ownership is also subject to the direct investment provisions. Requests or orders for suspension or modification of specific aspects of the transaction may be made if the minister or ministers concerned consider the transaction to have adverse implications for national security, public order, public safety, the activities of Japanese enterprises in related lines of activities, the general performance of the economy, or the maintenance of mutual equality of treatment of direct investment with other countries. In April 1991, an amendment to the law governing foreign direct investment was introduced. Under the revised law, foreign investors are required to report only after undertaking investment unless concerns mentioned above, such as national security interest arise.
Controls on liquidation of direct investmentNo.
Controls on real estate transactionsNo.
Provisions specific to commercial banks and other credit institutions
Maintenance of accounts abroad(1) A ceiling on the investment by credit cooperatives in foreign-currency-denominated bonds, excluding corporate bonds issued by nonresidents equivalent to 30% of their net worth; and (2) a ceiling of 5% of assets for investment in foreign-currency-denominated securities by the loan trust accounts of trust banks.
Lending to nonresidents (financial or commercial credits)Foreign loans by banks are legally subject to prior notice with a waiting period but, in most cases, may be made upon notification. The banks are free to lend yen on a long-term basis overseas to borrowers of their choice and may accept foreign currency deposits from residents and nonresidents and make foreign currency loans to residents.
Lending locally in foreign exchangeThis lending requires permission, except when the lender is an authorized foreign exchange bank.
Purchase of locally issued securities denominated in foreign exchangePurchases of these securities from a resident requires permission; but purchases from nonresidents is subject to a prior notification requirement.
Provisions specific to institutional investors
Limits (max.) on portfolio invested abroad(1) A limit on the holding by insurance companies of securities issued by nonresidents equivalent to 30% of total assets; (2) the same ratio applied to purchases of foreign-currency-denominated assets; (3) a limit on the holdings by the Post Office Insurance Fund of bonds equivalent to 20% of the reserve funds issued by nonresidents; and (4) a ceiling on foreign-currency-denominated assets purchased by pension funds equivalent to 30% of pension trust assets (for the new money deposited from April 1, 1990, effective December 27, 1991, the ceiling was relaxed to 50% on the basis of each institutional account, and the ceiling for foreign-affiliated companies was raised to 70%).
Other controls imposed by securities lawsYes.

Kazakstan

(Position as of December 31, 1995)

Status Under IMF Articles of Agreement
Article VIIIDate of acceptance: July 16, 1996.
Exchange Arrangement
CurrencyThe currency of Kazakstan is the Tenge.
Other legal tenderNo.
Exchange rate structureUnitary.
Classification
Independent floatingThe exchange rate of the Tenge against the U.S. dollar and other foreign currencies is determined at auctions that are held three times a week at the Kazakstan Interbank Currency Exchange (KICE). The official exchange rate is determined on the basis of auction rates and is announced each Friday by the National Bank of Kazakstan (NBK). Official rates for more than 30 other currencies are set on the basis of the Tenge-dollar rates in the auction and the cross rates in international markets. Banks may participate in auctions on their own account or on behalf of their clients. In between auctions, banks and enterprises are permitted to engage at spot and cash transactions at freely negotiated rates. Purchases of foreign exchange are subject to a commission of 0.02% fixed by the Board of the KICE. There are more than 2,000 licensed exchange bureaus.
Exchange taxNo.
Exchange subsidyNo.
Forward exchange marketNo.
Arrangements for Payments and Receipts
Prescription of currency requirementsNo.
Bilateral payments arrangements
OperativeSettlements with the Baltic countries, Russia, and the other countries of the FSU are made through a system of correspondent accounts of the NBK and commercial banks.
Other payments arrangementsNo.
Administration of control
Exchange control authoritiesThe NBK controls exchange transactions, supervises authorized banks, regulates open foreign exchange positions, and has the authority to reintroduce surrender requirements.

The Ministry of Finance supervises the issuing of a limited number of import and export licenses, monitors transactions in precious metals and stones, monitors capital transactions, i.e., external debt, and supervises the payment of export and import duties. Authorized banks are agents for monetary control.
International security restrictionsNo.
Payments arrearsNo.
Controls on trade in gold (coins and/or bullion)
Controls on domestic ownership and/or tradeAll gold produced in Kazakstan must first be offered on the primary market, where the NBK and the Ministry of Finance have the first right to sell and buy. Thereafter, the gold can be sold on the secondary market, including international markets. Licensed banks are also allowed to participate in the primary market.
Controls on external tradeUntil the primary market was established, the NBK alone could export and import gold.
Controls on exports and imports of banknotesNo.
Resident Accounts
Eligibility to hold accountsJuridical and natural persons are eligible.
Foreign exchange accounts permittedYes.
Held domesticallyYes.
Approval requiredResident individuals and enterprises may maintain convertible foreign exchange accounts at authorized banks. These accounts, which bear interest, may be credited with retained export earnings and foreign exchange transferred from abroad, and balances in these accounts may be freely used for any purpose.
Held abroadResidents may also maintain convertible currency accounts abroad with permission from the NBK.
Approval requiredYes.
Accounts in domestic currency convertible into foreign currencyYes.
Nonresident Accounts
Eligibility to hold accountsJuridical and natural persons are eligible.
Foreign exchange accounts permittedYes.
Approval requiredYes.
Domestic currency accountsNonresidents may hold “T accounts” used for servicing export-import operations, “I accounts” for investment activities, and nonresident accounts for natural persons. Funds in I accounts can be used to sell or buy foreign exchange and thus repatriate profits with some restrictions.
Approval requiredYes.
Imports and Import Payments
Foreign exchange budgetNo.
Financing requirements for imports
Minimum financing requirementsAdvances of more than 30% of the value of imported goods and services require per-mission from the NBK.
Advance payments requirementPrepayment before 180 days requires permission from the NBK.
Advance import depositsNo.
Import licenses and other nontariff measures
Negative listFor health and safety reasons, the importation of 11 product groups is prohibited.
Other nontariff measuresTrade with the Baltic countries, Russia, and the other countries of the FSU is conducted through financially independent state trading organizations as well as other trading organizations. Trade with other countries is effected through a system of intergovernmental agreements, quotas, and licenses.
Import taxes and/or tariffsImport duty rates for most products fall in the range of 5% to 30%, with a 50% rate for pearls, gems, precious and semiprecious stones, and a maximum rate of 100% for alcoholic drinks, weapons, and ammunition.
Taxes collected through the exchange systemNo.
State import monopolyThe monopoly rights of 14 state trading agencies were canceled in February 1995.
Exports and Export Proceeds
Repatriation requirementsThe same regulations as for proceeds from invisible transactions apply.
Surrender requirementsNo.
Export licenses
Without quotasA negative list based on security reasons requires export licenses for nine commodity groups.
With quotasYes.
Export taxesExport duty rates range up to 25% for 27 major product groups, including military equipment.
Payments for Invisible Transactions and Current Transfers
Controls on these payments
Freight/insuranceNo.
Unloading/storage costsNo.
Administrative expensesNo.
CommissionsNo.
Interest paymentsNo.
Profit/dividends
Prior approvalYes.
Quantitative limitsNo.
Indicative limits/bona fide testNo.
Payments for travel
Prior approvalNo.
Quantitative limitsThe limit is $500 a person; there are no limits on withdrawals from convertible currency accounts for the same purpose. Business travel is, in principle, subject to country-specific limits, but these are not officially enforced.
Indicative limits/bona fide testNo.
Study abroad costsNo.
Subscriptions and membership feesNo.
Consulting/legal feesNo.
Foreign workers’ wagesNo.
PensionsNo.
Proceeds from Invisible Transactions and Current Transfers
Repatriation requirementsThe repatriation ratio is 100% unless the NBK and the Ministry of Finance issue a license. Repatriation should be effected before 180 or 30 days of the transaction. Transfers of foreign currency to accounts of authorized banks must be done within 10 days after payment is made.
Surrender requirementsNo.
Capital Transactions
Controls on direct investmentCapital transactions between residents and nonresidents require approval from the NBK.
Controls on liquidation of direct investmentNo.
Controls on real estate transactions
Purchase locally by nonresidentsBoth residents and nonresidents are permitted to own land, but nonresidents cannot own agricultural land.
Provisions specific to commercial banks and other credit institutions
Differential treatment of nonresident deposit accounts and/or deposit ac-counts in foreign exchange
Open foreign exchange position limitsThe open position in one currency is limited to 30% of a bank’s capital, and the total open position is limited to 50% of a bank’s capital.

Kenya

(Position as of July 31, 1996)

Status Under IMF Articles of Agreement
Article VIIIDate of acceptance: June 30, 1994.
Exchange Arrangement
CurrencyThe currency of Kenya is the Kenya shilling.
Other legal tenderNo.
Exchange rate structureUnitary.
Classification
Independent floatingThe exchange rate is determined in the interbank market. Foreign exchange bureaus are authorized to deal in cash and buy foreign traveler’s checks. The official exchange rate is set at the previous day’s average market rate. The U.S. dollar is the principal intervention currency. The official exchange rate applies only to government and government-guaranteed external debt-service payments and to government imports for which there is a specific budget allocation.
Exchange taxNo.
Exchange subsidyNo.
Forward exchange marketCommercial banks are authorized to enter into forward exchange contracts with their customers at market-determined exchange rates in currencies of their choice. There are no limits on the amount or period of cover.
Official cover of forward operationsNo.
Arrangements for Payments and Receipts
Prescription of currency requirementsNo.
Bilateral payments arrangementsNo.
Other payments arrangementsNo.
Administration of control
Exchange control authoritiesOn December 29, 1995, the Exchange Control Act was repealed. The Central Bank Act was amended on the same date, giving the Central Bank of Kenya (CBK) powers to license and regulate foreign exchange transactions.
International security restrictionsNo.
Payments arrearsKenya is negotiating to reschedule arrears amounting to $72 million that accrued to commercial banks prior to end-1993.
Controls on trade in gold (coins and/or bullion)No.
Controls on exports and imports of banknotes
On exports
Domestic currencyThe exportation of banknotes exceeding K Sh 300,000 must be reported to customs for statistical purposes only.
On imports
Foreign currencyThe importation of banknotes exceeding $5,000 must be declared to customs for statistical purposes.
Resident Accounts
Eligibility to hold accountsJuridical and natural persons are eligible.
Foreign exchange accounts permittedYes.
Held domesticallyKenyan residents who have foreign exchange earnings are allowed to open foreign currency accounts with local banks without limitations.
Approval requiredNo.
Held abroadEnterprises operating in export processing zones are permitted to hold foreign currency accounts abroad or with authorized banks in Kenya and may use the balances on these accounts to pay business-related expenses.
Approval requiredYes.
Accounts in domestic currency convertible into foreign currencyYes.
Nonresident Accounts
Eligibility to hold accountsJuridical and natural persons are eligible.
Foreign exchange accounts permittedForeigners with work permits in Kenya may open foreign currency accounts with Kenyan banks and may credit their local earnings to these accounts whose utilization is not restricted.
Approval requiredNo.
Domestic currency accountsYes.
Convertible into foreign currencyYes.
Approval requiredYes.
Blocked accountsNo.
Imports and Import Payments
Foreign exchange budgetNo.
Financing requirements for importsNo.
Documentation requirements for release of foreign exchange for importsAuthorized banks in Kenya may not issue shipping guarantees for the clearance of imports until they receive a clean report of findings for imports with a f.o.b. value of more than $500. Additionally, all goods purchased by importers in Kenya must be insured with companies licensed to conduct business in Kenya.
Preshipment inspectionThe inspection is required for all imports with a f.o.b. value of more than $1,000. These are subject to inspection for quality, quantity, and price, and require a clean report of findings.
OtherA copy of the import declaration, a final invoice, and a copy of the customs entry must be submitted.
Import licenses and other nontariff measures
Negative listThe list includes a few items for health, security, and environmental reasons.
Import taxes and/or tariffsYes.
State import monopolyNo.
Exports and Export Proceeds
Repatriation requirementsNo.
Surrender requirementsNo.
Financing requirementsNo.
Documentation requirementsNo.
Export licenses
Without quotasCoffee, tea, and horticultural produce may be exported only if a sales contract is registered with the Coffee Board, Tea Board, and Horticultural Crops Development Authority, respectively. Exports of minerals, precious stones, and other essential strategic materials are also subject to special licensing.
Export taxesNo.
Payments for Invisible Transactions and Current Transfers
Controls on these paymentsNo.
Proceeds from Invisible Transactions and Current Transfers
Repatriation requirementsNo.
Surrender requirementsNo.
Restrictions on use of fundsNo.
Capital Transactions
Controls on capital and money market instruments
On capital market securities
Purchase in the country by nonresidentsNonresidents are allowed to purchase a maximum of 40% of shares of primary or secondary issues. A nonresident cannot purchase more than 5% of the total of secondary or primary issues.
Sale or issue locally by nonresidentsThere is no restriction on the sale of securities by nonresidents. However, issuance of securities by nonresidents require prior approval from the Capital Markets Authority (CMA).
Sale or issue abroad by residentsSale or issue of securities abroad by residents requires prior approval from the CMA.
On money market instruments
Sale or issue locally by nonresidentsThere are no restriction on sales, but the issuing requires prior approval from the CBK.
Sale or issue abroad by residentsThe sale or issuance of money market instruments abroad by residents requires prior approval by the CBK.
On collective investment securitiesThe same regulations as for capital market securities apply.
Purchase in the country by nonresidentsYes.
Sale or issue locally by nonresidentsYes.
Controls on derivatives and other instruments
Sale or issue locally by nonresidentsCBK’s approval is required for these transactions.
Sale or issue abroad by residentsCBK’s approval is required for these transactions.
Controls on credit operationsNo.
Controls on direct investmentNo.
Controls on liquidation of direct investmentNo.
Controls on real estate transactions
Purchase locally by nonresidentsPurchases are subject to government approval.
Provisions specific to commercial banks and other credit institutions
Differential treatment of nonresident deposit accounts and/or deposit ac-counts in foreign exchange
Open foreign exchange position limitsForeign exchange exposure is limited to a maximum of 3% of paid-up capital (assigned).
Provisions specific to institutional investorsNo.
Other controls imposed by securities lawsNo.

Republic of Korea

(Position as of June 30, 1996)

Status Under IMF Articles of Agreement
Article VIIIDate of Acceptance: November 1, 1988.
Exchange Arrangement
CurrencyThe currency of Korea is the Korean won.
Other legal tenderNo.
Exchange rate structureUnitary.
Classification
Managed floatingThe exchange rate of the Korean won against the U.S. dollar is determined on the basis of the weighted average of interbank rates for the Korean won-U.S. dollar spot transactions of the previous day. During each business day, the Korean won rate against the U.S. dollar in the interbank market is allowed to fluctuate within margins of ±2.5% against the average market rate of the previous day.
Exchange taxNo.
Exchange subsidyNo.
Forward exchange marketForeign exchange banks may conduct forward transactions, futures transactions, swaps, and options between foreign currencies, as well as between the Korean won and foreign currencies. There are no specific restrictions on the terms of forward contracts in respect of interbank transactions. However, the terms of forward contracts between foreign exchange banks and nonbank customers must be based on a bona fide transaction, with the exception of those subject to specific restrictions.
Official cover of forward operationsNo.
Arrangements for Payments and Receipts
Prescription of currency requirementsAll settlements between Korea and other countries may be made in any convertible currency except the Korean won. Residents are permitted to carry out current transactions denominated in Korean won, provided that remittances will be made in foreign currencies. For this purpose, nonresidents are allowed to open settlement accounts in Korean won (free-won accounts) for current transactions as well as for reinsurance contracts and investments in domestic stocks.
Bilateral payments arrangementsNo.
Other payments arrangementsNo.
Administration of control
Exchange control authoritiesThe Ministry of Finance and Economy (MFE) initiates policy with respect to prescription of currency and method of settlement, foreign exchange operations, payments for current transactions, and capital transactions and transfers. The Bank of Korea (BOK) executes most of the above functions; it also regulates the operations of the exchange market and is authorized to intervene in it.
International security restrictionsNo.
Payments arrearsNo.
Controls on trade in gold (coins and/or bullion)
Controls on domestic ownership and/or tradeResidents may freely buy, sell, or hold gold in any form in Korea.
Controls on external tradeResidents are allowed to import and export gold other than gold coins in circulation, subject to the same regulations as those applied to merchandise trade (Foreign Trade Act).
Controls on exports and imports of banknotes
On exports
Domestic currencyKorean currency notes in excess of W 8 million may not be exported without permission from the BOK.
Foreign currencyForeign currency banknotes in excess of the equivalent of $10,000 may not be exported without specific permission. Upon leaving Korea, nonresidents may purchase foreign currency up to the amount they have sold during their stay in Korea.
On imports
Domestic currencyThe importation of Korean currency in excess of W 8 million is restricted.
Foreign currencyResidents and nonresidents must register domestic or foreign currency they bring into Korea at the customs office if the amount exceeds the equivalent of $10,000.
Resident Accounts
Eligibility to hold accountsJuridical and natural persons are eligible.
Foreign exchange accounts permittedYes.
Held domesticallyAll residents are allowed to open foreign currency deposit accounts. The foreign currency composition of these accounts may be changed without restriction.
Approval requiredNo.
Held abroadInstitutional investors are permitted to hold deposits abroad for asset diversification purposes without a quantitative ceiling. General corporations and individuals are permitted to hold deposits abroad up to $3 million and $50,000, respectively, a year.
Approval requiredNo.
Accounts in domestic currency convertible into foreign currencyNo.
Nonresident Accounts
Eligibility to hold accountsJuridical and natural persons are eligible.
Foreign exchange accounts permittedNonresidents may maintain foreign currency deposit accounts with foreign exchange banks. Remittances from such accounts and withdrawals in foreign currency are free. The approval of the bank where the account is held is not required for remittances abroad or transfers to other foreign currency accounts for purchases and withdrawals of foreign means of payment or for payments relating to approved transactions.
Approval requiredNo.
Domestic currency accountsYes.
Convertible into foreign currencyNonresidents are allowed to hold free-won accounts through which they may convert the funds in won into foreign currency and transfer them abroad.
Approval requiredNo.
Imports and Import Payments
Foreign exchange budgetNo.
Financing requirements for importsNo.
Documentation requirements for release of foreign exchange for importsNo.
Import licenses and other non tariff measures
Negative listYes.
Open general licensesAll imports require licenses; for most imports, licenses are issued upon application. All commodities may be imported freely (i.e., applications for import licenses are automatically approved) unless they are on the restricted list. As of July 1, 1996, 81 of the 10,859 basic items in the Harmonized System were classified as restricted. Imports of raw materials for the production of exports are normally approved automatically, irrespective of their classification. Import licenses are granted only to registered traders, who are required to have exported and/or imported a minimum value of $500,000 in any one of the last two calendar years. Of the 81 items restricted under the GATT balance of payments provision, 73 items are scheduled to be liberalized by 1997. However, quantitative restrictions will be applied for rice, subject to Annex 5 of the WTO Agreement on Agriculture.
Licenses with quotasSafeguards against excessive imports are provided under the Foreign Trade Act of 1987. A seven-member trade commission established under this act determines whether imports have harmed domestic industries, and if its finding is affirmative, it recommends the form of import relief to be provided, including quotas and quality standards.
Other nontariff measuresThere are 152 items under the Imports Diversification Program, which was introduced to promote a geographically balanced import structure in 1978; the reduction in the number of items under the program is being accelerated, and the program will be abolished by the end of 1999.
Import taxes and/or tariffsNo.
State import monopolyNo.
Exports and Export Proceeds
Repatriation requirementsExport earnings exceeding $50,000 must be repatriated to Korea within six months except in specific cases. However, general trading companies licensed under the Foreign Trade Act and enterprises whose trade value of the previous year exceeds $5 million, are allowed to retain overseas deposits up to 50% of this value within the limit of $500 million.
Surrender requirementsNo.
Financing requirementsNo.
Documentation requirementsNo.
Export licenses
Without quotasThere are ten items, two agricultural and fishery products, and eight industrial products, that are currently subject to voluntary export restraints on the basis of HS 6 digits, and that are made public through the Export-Import Notice.
With quotasThere are quotas under the ATC, and other bilateral agreements.
Export taxesNo.
Payments for Invisible Transactions and Current Transfers
Controls on these payments
Freight/insuranceNo.
Unloading/storage costsNo.
Administrative expensesNo.
Commissions
Prior approvalApproval of the BOK is required for the remittance of commissions not directly linked with trade.
Quantitative limitsApproval is required for commissions exceeding $50,000 and 10% of the value of underlying transactions.
Indicative limits/bona fide testYes.
Interest payments
Prior approvalThe transfer of income from securities acquired through inheritance is subject to prior approval.
Quantitative limitsNo.
Indicative limits/bona fide testNo.
Profit/dividendsNo.
Payments for travel
Prior approvalNo.
Quantitative limitsThe monthly allowance for residents staying abroad for over 30 days is $10,000. For those staying abroad over one year, remittance of $50,000 (including basic travel allowances) is allowed within two weeks after the time of departure.
Indicative limits/bona fide testResidents traveling abroad may, in general, purchase foreign exchange up to the equivalent of $10,000 a trip as their basic travel allowance; additional foreign exchange may also be purchased for specified expenses, including transportation costs.
Medical costsNo.
Study abroad costs
Prior approvalNo.
Quantitative limitsThe basic monthly allowance allowed to be remitted for students under 20 years of age is $3,000; students with a dependent family are allowed an additional allowance of $500 for a spouse and for each child.
Indicative limits/bona fide testYes.
Subscriptions and membership feesNo.
Consulting/legal fees
Prior approvalThe remittance of management advisory consulting fees not related to financial or insurance businesses requires approval from the BOK, and the remittance of management advisory consulting fees related to financial or insurance businesses requires approval from the MFE.
Quantitative limitsNo.
Indicative limits/bona fide testNo.
Foreign workers’ wages
Prior approvalNo.
Quantitative limitsForeigners employed by Korean firms and expatriate firms in Korea may remit their salaries, except for basic living expenses, and retirement allowances to their home countries.
Indicative limits/bona fide testNo.
PensionsNo.
Gambling/prize earningsNo.
Family maintenance/alimony
Prior approvalNo.
Quantitative limitsKorean residents are allowed to remit up to $5,000 a transaction to their parents and children living abroad for living expenses, and to their relatives abroad for wedding gifts or funeral donations, with no restrictions on the number of remittances.
Indicative limits/bona fide testYes.
Credit card use abroad
Prior approvalNo.
Quantitative limitsResidents can make payments abroad by credit cards for expenditures relating to travel and tourism; for amounts exceeding $5,000 a month, the foreign exchange authorities must verify the authenticity of the payments.
Indicative limits/bona fide testYes.
Proceeds from Invisible Transactions and Current Transfers
Repatriation requirementsKorean residents are permitted to hold foreign currency earned from invisible transactions, but once converted into won, a limit applies to reconversion. Residents and nonresidents must register domestic and foreign exchange they bring into Korea at customs if the amount exceeds the equivalent of $10,000. The importation by travelers of Korean currency in excess of W 2 million is restricted. The proceeds received by construction companies from construction activity abroad must be deposited in foreign currency accounts at the domestic foreign exchange banks, and profits may be converted into won following the completion of each project. Domestic firms engaged in international construction and service businesses may deposit abroad up to 30% of the balance of their overseas contracts or $3 million, whichever is greater.
Surrender requirementsKoreans are allowed to hold foreign exchange freely; however, once these balances are converted into won, a limit applies to reconversion.
Capital Transactions
Controls on capital and money market instruments
On capital market securities
Purchase in the country by nonresidentsNonresidents may invest in listed stocks; nonguaranteed listed convertible bonds issued by small- and medium-sized enterprises (SMEs); and public bonds designated by the Securities Exchange Commission according to the “Securities Act” subject to the following: (1) foreigners can acquire listed stocks up to 4% individually and 18% collectively of the local number of shares issued; (2) foreigners can acquire convertible bonds issued by SMEs up to 5% individually and 30% collectively of the total value of convertible bonds; and (3) other than the cases stated above, nonresidents require approval from the MFE prior to the acquisition of securities or the rights thereof from residents.
Sale or issue locally by nonresidentsInternational organizations may issue won-denominated bonds in the domestic capital market in accordance with the securities-related regulations. However, other nonresidents require prior approval from the ministry in order to issue securities in the domestic capital market. Sale of securities or the rights thereof, which are allowed to be acquired by nonresidents, is permitted.
Purchase abroad by residentsAll investors, including institutional investors, individual investors, and general corporate investors, are permitted to invest freely in any foreign securities that are deemed to have investment values, not confined to the listed securities on foreign stock exchanges.
Sale or issue abroad by residentsThe issue of won-denominated securities abroad requires prior approval of the MFE. The issue of foreign-currency-denominated securities abroad by residents must be reported to the MFE; the report of issuance is assumed to be accepted seven days after submission of the report, unless other notification is made by the MFE.
On money market instruments
Purchase in the country by nonresidentsForeign investment funds and international beneficiary certificates established with the approval by the ministry can purchase domestic money market securities without approval of the authorities. For transactions of money market securities between residents and nonresidents other than the above-mentioned, approval of the ministry is required.
Sale or issue locally by nonresidentsRequires the ministry’s approval.
Sale or issue abroad by residentsCertificates of deposits and commercial papers may be regarded as securities like equities and bonds according to the Foreign Exchange Management Act (FEMA), Decree (FEMD), and Regulation (FEMR). These money market securities may be issued in won or foreign currencies. The issue of foreign-currency-denominated securities on a foreign money market must be filed with the MFE. Investors who have been approved to purchase foreign money market securities are allowed to sell such securities.
On collective investment securities
Purchase in the country by nonresidentsSame restrictions apply as on capital market securities.
Sale or issue locally by nonresidentsThe issuance of beneficiary certificates by trust companies, either in the domestic or the foreign market, is subject to the approval of the MFE. The approval system on the issuance of beneficiary certificates is designed especially to protect investors and may be regarded as a kind of prudential regulation. The size of the issuance of beneficiary certificates is established at an appropriate amount in consideration of the volume of the capital inflow resulting from the capital market opening.
Purchase abroad by residentsSuch purchase is subject to approval by the MFE.
Sale or issue abroad by residentsIssuance and sale of collective investment securities by foreign trust companies in the domestic market require the approval by the MFE. Although the purchase of domestic collective investment securities by nonresidents requires approval by the MFE, nonresidents may sell domestic collective investment securities they have lawfully acquired.
Controls on derivatives and other instruments
Purchase in the country by nonresidentsIt is not necessary for foreign investment funds or international beneficiary certificates established with permission from the MFE to report when they purchase domestic instruments and claims. Also foreign banks can purchase domestic instruments and claims from domestic foreign exchange banks. For other transactions of the instruments and claims between residents and nonresidents than the above-mentioned, permission from the MFE is required. Effective May 1996, stock index futures began to be traded on the existing stock exchange, and nonresidents’ access to the market was allowed within certain limits.
Sale or issue locally by nonresidentsThe issue of foreign instruments and claims on the domestic financial market require the approval by the MFE. It is not necessary for nonresidents to obtain permission or submit a report when selling domestic instruments and claims once they are permitted to purchase them.
Purchase abroad by residentsResidents other than foreign exchange banks may trade through a foreign exchange bank within certain limits equivalent to actual demand.
Sale or issue abroad by residentsA sale or issue abroad requires approval by the MFE.
Controls on credit operations
Commercial credits
By residents to nonresidentsDeferred-receipt exports on a letter-of-credit basis, in which the settlement period is less than three years, are allowed without restriction. Deferred-receipt exports on a letter-of-credit basis, in which the settlement period is more than three years after the shipment of goods or the signing of its export bill of exchange, are allowed in the following cases with validation from a foreign exchange bank: (1) where payment is guaranteed by the importing country’s central government agency or central bank; (2) where it is covered by export insurance; and (3) where qualified foreign banking institutions, as designated by the BOK, open letters of credit and guarantee payment. Imports exceeding 360 days are allowed with validation from a foreign exchange bank in cases where a refund guarantee must be provided by the exporting country’s central government agency, central bank, or qualified banking institution. Residents wishing to enter into lease contracts for assets other than real estate from nonresidents shall obtain validation from a foreign exchange bank.
To residents from nonresidentsSince September 1992 when a negative list system was introduced to the FEMA, all methods of settlement for trade in goods and services have been liberalized except for those methods specified on the negative list under the FEMR.
Financial credits
By residents to nonresidentsLoans by residents to nonresidents require prior approval from the MFE.
To residents from nonresidentsThe credits are restricted to foreign exchange banks, but, since May 1995, commercial loans have been allowed for SMEs, firms engaged in social overhead capital (SOC) projects, foreign-invested firms with high technology, and domestic firms that wish to repay overseas borrowing earlier than contracted. Foreign borrowing by these firms of more than $1 million and with a maturity of more than three years is governed by the Foreign Capital Inducement Act. Foreign-financed companies are, in principle, subject to the same regulations governing foreign borrowing as other enterprises. However, the borrowing by high-technology, foreign-financed manufacturing companies is allowed up to 100% of the foreign-invested capital; also, maturity is limited to three years or less, and limitations are imposed on the use of funds. Foreign borrowing repayable within three years is governed by the Foreign Exchange Act. The maximum maturity period permitted for deferred payments is 180 days for imports of raw materials for export production.
Guarantees, sureties, and financial backup facilities
By residents to nonresidentsExcept for banks, other residents shall obtain approval from the BOK, except for the following cases: (1) where a foreign importer is granted an offshore loan by a foreign exchange bank to finance imports from a resident, and the said resident pledges a guarantee in foreign currency; (2) where a resident concludes a contract guaranteeing or bearing the performance of liabilities assumed by the nonresident, who in turn is providing a guarantee, such as bid bonds or other sureties, related to international bids or contracts entered into by a resident; and (3) where residents provide guarantees to serve as collateral for spot financing. There are no restrictions on the provision of underwritten backup facilities by the domestic institutional investors when they participate in an international underwriting syndicate.
To residents from nonresidentsAny resident may freely accept a guarantee relating to an overseas borrowing to finance an overseas investment from another resident, in which the surety for the guarantee is pledged by nonresidents. Other transactions related to the creation of credits arising from liability guarantee contracts between residents and nonresidents require approval from the BOK. Therefore, residents are free to take up financial backup facilities offered by nonresidents as long as the issuance of overseas securities has been properly reported.
Controls on direct investment
Outward direct investmentIf the amount of investment is less than or equal to $10 million, validation of a foreign exchange bank is needed. If the amount is more than $10 million but less than or equal to $50 million, notification of the BOK is needed. If the amount exceeds $50 million, approval of the BOK is needed, and the Overseas Investment Advisory Committee must examine the investment plan to analyze the effects of the investment on the domestic economy prior to issuing an approval.
Inward direct investmentForeign investment refers to when foreigners acquire shares or rights held by the nationals of Korea and the juridical persons of Korea in accordance with the Foreign Capital Inducement Act. As such, equity participation is possible by increasing the amount invested in newly established or existing enterprises. Direct investment by means of mergers and acquisitions is not allowed. For the establishment and extension of a domestic branch of a foreign enterprise, approval from the MFE is required; for financial institutions and, in the case of nonfinancial institutions, approval of the BOK is required for the establishment and extension of a branch and notifications for establishment of an office. Investments in public utilities, radio, and television are restricted.

Direct investments are allowed in all industries, except those specified on a “negative” list. In December 1995, the negative list consisted of 195 industries out of 1,148 industries listed in the Korean standard industrial classification, resulting in a liberalization ratio of 90.7%. In the manufacturing sector, the negative list consists of 25 industries out of 585 industries, resulting in a liberalization ratio of 98.3%. In the nonmanufacturing sector, the negative list consists of 170 industries out of 563 industries, resulting in a liberalization of 82.7%.

In general, foreign-financed companies are no longer required to set up partnerships with local firms. There are no restrictions on the maximum value of foreign investment. Tax privileges may be granted to foreign-financed projects that are accompanied by advanced technology. Tax privileges have been continuously reduced, and post-investment controls have also been relaxed to treat foreign and local companies equally.

All foreign direct investments, except those in industries on the negative list, are subject to a notification requirement. A notification is deemed accepted by foreign exchange banks unless otherwise notified. The notification system has gradually been expanded since the beginning of January 1993.
Controls on liquidation of direct investmentThe repatriation of foreign capital is freely permitted.
Controls on real estate transactions
Purchase abroad by residentsOverseas direct investments in the fields of the lease and sale of real estate, construction, and the operation of golf courses are prohibited. With regard to operations in real estate, no approvals or notifications are required for acquisition of overseas real estate by foreign exchange banks, government authority, and for residents if given as gifts or through inheritance from nonresidents. However, approval from or notification to the BOK is required for acquisitions of overseas real estate by residents as follows: (1) notification is required for the acquisition of real estate costing $10 million or less, which is necessary for approved business activities; and (2) permission is required for the acquisition of real estate costing no less than $10 million, which is necessary for approved business activities.
Purchase locally by nonresidentsThe following are not restricted: the acquisition of domestic land or mortgages, pursuant to the Foreigner’s Acquisition and Management of Land Act; leasing of domestic real estate by nonresidents; and acquisition of real estate or associated rights other than land by nonresidents from other nonresidents in Korea. Notification of the BOK is required for acquisition of real estate and its associated rights, including real estate acquired through inheritance or gift from nonresidents and establishment of fixed collateral not assuming the transfer of ownership. Approval of the MFE is required for real estate acquisitions other than those specified above.
Sale locally by nonresidentsApproval from the BOK is also required for nonresidents for remittance of proceeds accrued from sales of their domestic properties.
Provisions specific to commercial banks and other credit institutions
Borrowing abroadFor reference, the foreign exchange banks are required to submit reporting to the ministry for funding maturities of one year or more and for amounts exceeding $10 million.
Lending to nonresidents (financial or commercial credits)Foreign exchange banks may extend credits without restriction to nonresidents in foreign currency. Other credit institutions may extend credits up to $10 million. The latter will be allowed to extend foreign currency credits to nonresidents without restriction in 1996. Foreign currency loans by resident banks to nonresidents of less than $2 million are permitted freely; loans ranging from $2 million to $20 million require ex post notification to the ministry, and loans exceeding $20 million require prior notification to the ministry. Other credit institutions may extend credits up to $10 million.
Lending locally in foreign exchangeThere are loan ceilings according to economic sector.
Differential treatment of nonresident deposit accounts and/or deposit ac-counts in foreign exchange
Reserve requirementsIn relation to reserve requirements on foreign currency deposit accounts, the ratio of resident deposit accounts is 9%, and that of nonresident deposit accounts, 1%.
Open foreign exchange position limitsThe limits are as follows: (1) overall overbought position: an amount equivalent to 15% of the total equity capital at the end of the previous month; (2) overall oversold position: an amount equivalent to 10% of the total equity capital at the end of the previous month or $20 million, whichever is greater; and (3) spot oversold position: an amount equivalent to 3% of the total equity capital or $5 million, whichever is greater.
Provisions specific to institutional investorsBeside the foreign exchange laws or foreign exchange controls, all institutional investors have their own rules for asset operations. For example, securities companies must keep their proportion of the portfolio invested within 30% of their total asset, which is set out in the Rules on Asset Operations for Securities Companies by the Securities Exchange Commission (SEC). Insurance companies and securities investment trust companies can maintain their portfolio abroad within 10% and 30% of their total assets, respectively, by the Rules on Asset Operations for Insurance Companies and the Rules on Asset Operations for Securities Investment Trust Companies established by the MFE.
Limits (max.) on portfolio invested abroadInstitutional investors are permitted to hold deposits abroad for asset diversification purposes without a quantitative ceiling. General corporations and individuals are permitted to hold deposits abroad of up to $3 million and $50,000 a year, respectively.
Other controls imposed by securities lawsRestrictions imposed by Securities Laws are as follows: (1) domestic securities investments by foreigners are regulated by the Rules on Sales and Purchases of Securities by Foreigners established by the SEC. The rules include investment ceilings, investment procedures, and the management of foreign investors, etc.; (2) overseas securities investments by residents are regulated by the Rules on Sales and Purchases of Overseas Securities established by the SEC. The rules include eligibility of the securities for investment and transaction procedures, etc. (3) issuance of overseas securities by residents are regulated by the Rules on Issuance of Overseas Securities and the Rules on Management of Listed Companies on Overseas Securities Markets established by the SEC. The rules include the eligibility of issuers, the use of funds raised by issuance, and the obligation of issuers on reporting, etc.; and (4) international securities transactions by residents are regulated by the Rules on Securities Business by Domestic Branches of Foreign Securities Companies established by the SEC. The Rules on Securities Business by Domestic Branches of Foreign Securities Companies include the accumulation of retained earnings and the obligation of submitting financial statements, etc. The Rules on Overseas Securities Business by Domestic Securities Companies include the restriction on the investment of domestically listed stocks by overseas branches of securities companies.

Lithuania

(Position as of December 31, 1995)

Status Under IMF Articles of Agreement
Article VIIIDate of Acceptance: May 3, 1994.
Exchange Arrangement
CurrencyThe currency of Lithuania is the litas.
Other legal tenderNo.
Exchange rate structureUnitary.
Classification
PeggedThe litas is pegged to the U.S. dollar at LTL 1 per U.S. dollar since April 1994 when the currency board arrangement was established.
Exchange taxNo.
Exchange subsidyNo.
Forward exchange marketNo.
Arrangements for Payments and Receipts
Prescription of currency requirementsNo.
Bilateral payments arrangements
OperativeCorrespondent accounts exist between the Bank of Lithuania (BOL) and the central banks of the Baltic countries, Russia, and the other countries of the FSU. These ac-counts need not be used for payments originating after October 1992.
InoperativeRuble-denominated correspondent accounts maintained with the central banks of the Baltic countries, Russia, and the other countries of the FSU have been closed and are in the process of being settled.
Administration of control
Exchange control authoritiesParliament has the legislative authority in foreign exchange and trade matters; it has adopted a banking law delegating to the BOL the authority to issue regulations governing foreign exchange transactions. All foreign exchange transactions must be effected through authorized banks licensed by the BOL. Authorized banks are allowed to transact among themselves, as well as with residents and nonresidents of Lithuania, and are divided into four categories, depending on the types of transactions they are permitted to conduct. The simplest type of license limits the operations to buying and selling foreign exchange (cash and traveler’s checks). Banks that are granted a general license are allowed to offer a full range of banking services in foreign exchange operations, including issuing letters of credit and opening correspondent accounts with banks abroad.
Controls on trade in gold (coins and/or bullion)No.
Controls on exports and imports of banknotesNo.
Resident Accounts
Eligibility to hold accountsJuridical and natural persons are eligible.
Foreign exchange accounts permittedYes.
Held domesticallyYes.
Approval requiredNo.
Nonresident Accounts
Eligibility to hold accountsJuridical and natural persons are eligible.
Foreign exchange accounts permittedYes.
Approval requiredNo.
Domestic currency accountsYes.
Convertible into foreign currencyYes.
Approval requiredNo.
Imports and Import Payments
Foreign exchange budgetNo.
Financing requirements for importsNo.
Import licenses and other nontariff measuresThere are no quantitative restrictions or licensing requirements on imports, except for health and national security reasons.

Certain agricultural goods and alcoholic beverages are subject to duties, and certain quantitative restrictions are used to control trade in strategic goods and technology to protect Lithuania’s cultural heritage, and to prevent illegal trade in copper and other nonferrous metals, alloys, and scrap. Alcoholic beverages and tobacco can be imported only by traders registered with the government, but import quantities are unrestricted.
Import taxes and/or tariffsA three-tier tariff structure exists consisting of: (1) a “conventional” rate applied to countries granted MFN status; (2) a “preferential” rate applied to countries with which Lithuania has a foreign trade agreement; (3) an “autonomous” rate that is 5% to 10% points greater than the MFN rate applied to all other countries. For most imports, a 10% tariff rate applies. Higher tariff rates are levied on certain products (e.g., live animals, agricultural products, alcohol and tobacco, and a few manufactured goods), some exceeding 30%. The majority of agricultural products (and certain other items such as alcohol) are subject to zero tariff rates, but tariffs on certain such items remain quite high, and the tariff structure remains highly dispersed.

A tax at the uniform rate of 0.01% is imposed on imports (and exports) for the sole purpose of collecting statistical information on trade.
Taxes collected through the exchange systemNo.
Exports and Export Proceeds
Repatriation requirementsNo.
Surrender requirementsNo.
Export licensesFrom November 1, 1994 to May 1, 1996, the following products were subject to temporary export prohibitions: red clover seeds, feathers and down used for stuffing, raw hides and skins, unprocessed pine and birch timber with thin-end diameter not less than 20 cm., unprocessed oak and ash timber, and glands and other organs used for pharmaceutical products and organotherapeutical uses without quotas issued by the Ministry of Health Care. This prohibition served to protect a small number of domestic processors of primary products. The export bans were not binding for countries that have signed a foreign trade agreement with Lithuania. In the case of products, banned exports accounts for only 20% of total exports, because wood is mostly exported to Finland, Switzerland, and Germany, all of which have foreign trade agreements with Lithuania. Regulations governing trade in strategic goods and technology, cultural objects, nonferrous scrap, and waste apply to exports as well as imports.
Export taxesExport duties are levied on certain raw materials and selected products.
Taxes collected through the exchange systemNo.
Payments for Invisible Transactions and Current Transfers
Controls on these paymentsNo.
Proceeds from Invisible Transactions and Current Transfers
Repatriation requirementsNo.
Surrender requirementsNo.
Restrictions on use of fundsNo.
Capital Transactions
Controls on capital and money market instrumentsNo.
Controls on derivatives and other instrumentsNo.
Controls on credit operations
Commercial creditsYes.
Financial credits
To residents from nonresidentsResident firms may borrow foreign exchange from authorized banks or borrow directly from banks abroad with the approval of the BOL.
Guarantees, sureties, and financial backup facilitiesNo.
Controls on direct investment
Inward direct investmentThere are no restrictions, except in fields that are subject to prohibition under the Law on Foreign Capital Investments in the Republic of Lithuania (state defense, production and sale of narcotic substances, lottery business). The law permits the state to sell shares to nonresidents, guarantees nondiscriminatory national treatment to foreign investors, and protects investments against nationalization and expropriation. The purchase of state-owned enterprises is subject to authorization from the Central Privatization Committee. One of the main conditions in this process is that the company must remain involved in the same type of business for at least one year under the new ownership. While firms with 100% foreign capital ownership are allowed to operate in Lithuania, the government reserves the right to establish limits on foreign investment in Lithuanian enterprises. In joint ventures in the transportation and communication sectors, the domestic partner is required to hold the majority of the shares. Wholly owned ventures in the alcoholic beverage or tobacco industries are prohibited. Enterprises with foreign investment must be insured by Lithuanian insurance companies, even if the company retains other insurance services outside Lithuania.

Tax incentives are provided as follows: if the foreign investment was made before the end of 1993, the profit tax is reduced by 70% (to a range of 8.7% to 29%) for five years; for another three years, the profit tax is reduced by 50%; and for investments made between January 1994 and December 1995, profits will be taxed at a rate reduced by 50% for six years. For joint ventures, these reductions are proportional to the foreign capital invested.
Controls on liquidation of direct investmentNo.
Controls on real estate transactions
Purchase locally by nonresidentsThe ownership of land by nonresidents in Lithuania is prohibited, but lease contracts with limits to two hectares of land in Vilnius and 10 hectares outside the capital are permitted for up to 99 years and may be renewed thereafter. In the near future, according to EU requirements, nonresidents of certain foreign countries will be allowed to purchase land.
Sale locally by nonresidentsYes.
Provisions specific to commercial banks and other credit institutions
Maintenance of accounts abroadResident banks or other credit institutions must inform the BOL about their accounts with foreign banks.
Purchase of locally issued securities denominated in foreign exchangeLocally issued securities must be denominated in national currency.
Differential treatment of nonresident deposit accounts and/or deposit accounts in foreign exchange
Open foreign exchange position limitsA bank’s overall open position may not exceed 30% of its capital, and the open position in individual currencies may not exceed 20% of the bank’s capital. The open position does not apply to the U.S. dollar.
Provisions specific to institutional investorsNo.
Other controls imposed by securities lawsNo.

Malaysia

(Position as of December 31, 1995)

Status Under IMF Articles of Agreement
Article VIIIDate of acceptance: November 11, 1968.
Exchange Arrangement
CurrencyThe currency of Malaysia is the ringgit.
Other legal tenderNo.
Exchange rate structureUnitary.
Classification
Managed floatingThe exchange rate of the ringgit is determined by supply and demand. The Bank Negara Malaysia (BNM) intervenes only to maintain orderly market conditions and to avoid excessive fluctuations in the value of the ringgit. The BNM also monitors the exchange rate against a basket of currencies weighted in terms of Malaysia’s major trading partners and the currencies of settlement. The commercial banks are free to determine and quote exchange rates, whether spot or forward, to all customers for all currencies other than those of Israel and the Federal Republic of Yugoslavia (Serbia/Montenegro).
Forward exchange marketForward exchange contracts may be effected for both commercial and financial transactions. For financial transactions, prior approval is required. For commercial transactions, forward cover for imports is provided for up to 12 months from the intended date of import, while for export purposes the forward cover would be up to six months from the export date.
Official cover of forward operationsNo.
Arrangements for Payments and Receipts
Prescription of currency requirementsSpecial rules apply to settlements with Israel and the Federal Republic of Yugoslavia (Serbia/Montenegro).
Bilateral payments arrangements
OperativeThere are 12 arrangements: 5 Palm Oil Credit and Payment Arrangements (POCPAs), 1 revolving credit, and 6 with the LAIA.
InoperativeThere are 10 arrangements: 1 POCPA and 9 with the LAIA.
Administration of control
Exchange control authoritiesThe Controller of Foreign Exchange, who is also the Governor of the BNM, administers exchange control throughout Malaysia on behalf of the Malaysian government.
International security restrictions
In accordance with IMF Executive Board Decision No. 144-(52/51)On June 23, 1993, Malaysia notified the Fund that it had imposed certain restrictions on payments and transfers for current international transactions with respect to the Federal Republic of Yugoslavia (Serbia/Montenegro).
In accordance with UN sanctionsYes.
Payments arrearsNo.
Controls on trade in gold (coins and/or bullion)No.
Controls on exports and imports of banknotes
On exports
Domestic currencyThere is no restriction on the exportation of currency notes in a traveler’s immediate possession. The exportation of ringgit by any other means requires prior approval from the Controller of Foreign Exchange.
Foreign currencyExportation of foreign currency notes, other than on the person or in the baggage of a traveler, requires prior approval.
On imports
Domestic currencyNo limitation is imposed on a traveler’s importation of currency notes. The importation of domestic banknotes by other than commercial banks, or by any other means, requires prior approval from the Controller of Foreign Exchange.
Resident Accounts
Eligibility to hold accountsJuridical and natural persons are eligible.
Foreign exchange accounts permittedYes.
Held domesticallyExporters are allowed to retain a portion of their export proceeds in foreign currency accounts with authorized banks in Malaysia up to $5 million. Seven banks, designated as “first-tier banks,” are permitted to offer foreign currency accounts to residents. All other domestic banks must continue to obtain permission from the Controller of Foreign Exchange before offering currency accounts to residents.
Approval requiredThese accounts can be opened only with tier 1 commercial banks.
Held abroadResidents with no domestic borrowing are allowed to open foreign currency accounts with an overseas branch of Malaysian-owned banks.
Approval requiredResidents with domestic borrowing require prior approval to open any overseas account.
Accounts in domestic currency convertible into foreign currencyResidents with domestic borrowing require prior approval to open any overseas account.
Nonresident Accounts
Eligibility to hold accountsJuridical and natural persons are eligible.
Foreign exchange accounts permittedYes.
Approval requiredAll commercial and merchant banks are allowed to open foreign currency accounts for nonresidents.
Domestic currency accountsNonresident ringgit accounts in Malaysia are designated external accounts. There are no restrictions on debits to external accounts. Credits to these accounts are freely permitted, subject only to the completion of statistical forms for amounts exceeding RM 100,000, if residents make such payments. Proceeds from the sale of any foreign currency may be credited to external accounts, and the balances may be transferred to any other resident or nonresident account or converted into any currency, except those of Israel and the Federal Republic of Yugoslavia (Serbia/Montenegro). All debits and credits to the latter accounts require prior approval.
Convertible into foreign currencyYes.
Approval requiredNo.
Blocked accountsAll debits and credits to accounts of residents of Israel and the Federal Republic of Yugoslavia (Serbia/Montenegro) require prior approval.
Imports and Import Payments
Import licenses and other nontariff measuresThe authority for import control rests with the Royal Customs and Excise Department of the Federal Ministry of Finance. Import licensing throughout Malaysia is administered daily by the Ministry of International Trade and Industry together with other specified authorities, such as the Ministry of Primary Industries, the Malaysian Timber Board, and the Veterinary Department, on behalf of the Royal Customs and Excise Department.
Negative listImports from Israel require licenses. Finished motor vehicle imports are subject to nonautomatic import licensing, which is administered by the Ministry of International Trade and Industry. The movement of live animals between peninsular Malaysia, Sabah, and Sarawak is subject to a permit issued by the Veterinary Department. Imports of the meat, bones, hides, hooves, horns, and offal of any animal or any portion of an animal from all countries require an import license. Imports of primates, whether dead or alive, require an import license, subject to approval from the Department of Wildlife and National Parks. Imports from Haiti are prohibited.
Licenses with quotasCertain imports are subject to quantitative restrictions, which are reviewed periodically, to protect local industries temporarily when required.
Other nontariff measuresYes.
Import taxes and/or tariffsYes.
Exports and Export Proceeds
Repatriation requirementsProceeds from exports must be received and repatriated according to the payment schedule specified in the commercial contract, but no longer than six months after the date of exportation.
Surrender requirementsExporters are allowed to retain a portion of their export proceeds in foreign currency accounts with authorized banks in Malaysia up to $5 million.
Documentation requirementsExports of rubber from peninsular Malaysia require a certificate issued by the Malaysian Rubber Exchange and Licensing Board.
Export licensesExports to Israel and the Federal Republic of Yugoslavia (Serbia/Montenegro) require import licensing from the Ministry of International Trade and Industry. Exports of logs are restricted and require licensing from the Malaysian Timber Industries Board. Exports of petroleum and petroleum products, arms and related materials, military vehicles and equipment, and police equipment to Haiti are prohibited. Exports of roofing tiles, bricks, minerals, rice and paddy in any form, milk and specified milk products, textiles, and all other goods as specified in the second schedule of Customs (Prohibition of Exports) Order No. 1988 of the 1967 Customs Act are subject to permits.
Export taxesExport incentives are provided to companies that export Malaysian products. The primary incentives include a double deduction of expenses incurred in overseas promotion, export credit refinancing, and duty drawbacks.
Payments for Invisible Transactions and Current Transfers
Controls on these paymentsPayments for invisibles to all other countries other than Israel and the Federal Republic of Yugoslavia (Serbia/Montenegro) may be made without restriction. Remittances to nonresidents of profits on all bona fide investments are permitted, subject only to the completion of statistical forms for amounts exceeding RM 100,000. Remittances of interest payments do not require prior approval as long as such payments are in accordance with the terms of the loan obtained.
Proceeds from Invisible Transactions and Current Transfers
Repatriation requirementsProceeds from invisibles must be repatriated according to the proceeds schedule specified in the agreement.
Surrender requirementsIf received in foreign currency, proceeds may be retained in permitted foreign currency accounts.
Capital Transactions
Controls on capital and money market instruments
On capital market securities
Sale or issue locally by nonresidentsMalaysia has no controls for nonresidents selling Malaysian securities in the country, nor does it require them to repatriate the proceeds of the sale. However, nonresidents must obtain approval to issue securities in the country.
Purchase abroad by residentsNo controls apply for transactions valued at less than RM 100,000. Where an individual payment amounts to RM 100,000 or more or its equivalent in foreign currency, a resident is permitted to purchase foreign securities and transfer funds associated with these purchases, provided that the following requirements are met: (1) the payment is made in foreign currency; (2) the resident has no domestic borrowing; and (3) for corporate residents with domestic credit facilities, the total payment to nonresidents for the purpose of investment abroad does not exceed the aggregate amount of RM 10 million equivalent in a calendar year. The prior approval of the Controller of Foreign Exchange is required for transactions that do not comply with the above requirements.
Sale or issue abroad by residentsNo controls apply to a resident for the sale of securities abroad. However, a resident must obtain approval to issue securities abroad. Approval is given if the proceeds associated with these issues are used to finance productive activities in Malaysia, particularly for projects that generate foreign exchange earnings for Malaysia or save on the future outflow of foreign exchange from Malaysia through the production of import substitution goods. The proceeds from the sale or permitted issuance of securities are required to be transferred to Malaysia.
On money market instruments
Sale or issue locally by nonresidentsSame regulations as for securities apply.
Purchase abroad by residentsSame regulations as for securities apply.
Sale or issue abroad by residentsWhen residents issue money market instruments abroad, it is considered obtaining credit facilities. Residents are permitted freely to obtain credit facilities in foreign currency only up to RM 5 million. For amounts exceeding their figure, residents must acquire prior approval of the Controller of Foreign Exchange. Approval is given readily for all foreign currency credit facilities raised on reasonable terms to finance productive activities in Malaysia, particularly for projects that generate sufficient foreign exchange to service the external debt so created.
On collective investment securities
Sale or issue locally by nonresidentsThere is no control on the sale of Malaysian securities in the country by nonresidents and for the latter to repatriate the proceeds of the sale. However, approval is required for nonresidents to issue securities in the country.
Purchase abroad by residentsSame regulations as for securities apply.
Sale or issue abroad by residentsSame regulations as for securities apply.
Controls on derivatives and other instruments
Purchase abroad by residentsA resident must obtain permission to make payment to a nonresident for any spot or forward contract or interest rate futures not transacted at a futures exchange in Malaysia.
Sale or issue abroad by residentsResidents must obtain permission to issue and to sell financial instruments abroad.
Controls on credit operations
Commercial credits
By residents to nonresidentsNo controls apply to other residents (other than authorized dealers) to extend credit terms to nonresidents for the export of goods from Malaysia up to a maximum period of six months from the date of export.
To residents from nonresidentsA resident is permitted to obtain credit facilities in foreign currency up to the equivalent of RM 5 million in the aggregate from licensed banks, licensed merchant banks, and nonresidents. Any amount exceeding the permitted limit would require the prior approval of the Controller of Foreign Exchange. Residents are not allowed to obtain loans in ringgit from nonresidents. There is no restriction for residents to obtain commercial credits from nonresidents for the importation of capital goods for a period not exceeding 12 months.
Financial credits
By residents to nonresidentsResidents (other than authorized dealers) lending in foreign currency to nonresidents have to comply with the exchange control rules. Under current exchange control rules, no restrictions apply to transactions valued at less than RM 100,000. Where an individual payment amounts to more than that amount or its equivalent in foreign currency, a resident is allowed to pay any sum of money to a nonresident for the purpose of lending to nonresidents, provided that: (1) the payment is made in foreign currency; (2) the resident has no domestic borrowing; and (3) for corporate residents with domestic credit facilities, the total payment to nonresidents for the purpose of investment abroad does not exceed the aggregate amount of RM 10 million equivalent in a calendar year. The Controller of Foreign Exchange must give prior approval for any payments for such purpose that does not comply with the above requirements.
To residents from nonresidentsA resident is permitted to obtain credit facilities in foreign currency up to the equivalent of RM 5 million in the aggregate from licensed banks, licensed merchant banks, and nonresidents. Any amount exceeding the permitted limit would require the prior approval of the Controller of Foreign Exchange. Residents are not allowed to obtain loans in ringgit from nonresidents.
Guarantees, sureties, and financial backup facilities
By residents to nonresidentsResidents are permitted to provide sureties, guarantees, or financial backup facilities to nonresidents for any purpose. However, any payment to a nonresident in relation to or consequential to the guarantee must be made in foreign currency.
To residents from nonresidentsResidents are permitted to obtain financial guarantees of any amount in ringgit or foreign currency only from: (1) a licensed offshore bank in the Labuan International Offshore Financial Center; or (2) nonresident individuals or nonresidents who are shareholders, subsidiaries, related or associate companies, and are not financial institutions, provided all payments related to the guarantees are made in foreign currency. Otherwise, approval is required.
Controls on direct investment
Outward direct investmentYes.
Inward direct investmentThere are no controls. However, the following inward investments, covered by the guidelines issued on February 20, 1974 regarding the acquisition of assets, mergers, and takeovers, require prior approval from the Foreign Investment Committee (FIC):

(1) proposed acquisition of any substantial fixed assets by foreign interests; (2) proposed acquisition of assets or interests, mergers, and takeovers of companies and businesses in Malaysia by any means that will cause ownership or control to pass to foreign interests; (3) proposed acquisition of 15% or more of the voting power (equity interests) by any foreign interest or associated group or by a foreign interest in the aggregate of 30% or more of the voting power of a Malaysian company or business; (4) control of Malaysian companies and businesses through any form of joint-venture agreement, management agreement, or technical assistance or other arrangement; (5) merger or takeover of any company or business in Malaysia; and (6) any other proposed acquisition of assets or interests exceeding RM 5 million in value.

Incorporation of a Malaysian company by a foreign entity does not require the approval of the FIC. However, increases in the paid-up capital of a Malaysian company that involve any foreign entity require the approval of the FIC under the following circumstances: (1) the total value of the foreign entity’s new subscription exceeds RM 5 million; (2) the total of the foreign entity’s new subscription exceeds 15% of the voting power in the relevant company, (3) as a result of the increase in paid-up capital, any foreign entity increases its voting power to more than 15% in the relevant company; (4) the total of the new subscription by several foreign entities increases their joint voting power to 30% or more of the voting power in the relevant company; (5) as a result of the increase in paid-up capital, the aggregate holding of several foreign entities increases to 30% or more of the voting power in the relevant company; and (6) an increase in the paid-up capital of any Malaysian company that raises the holding of individual foreign entities to more than 15% of the voting power, or the joint holding of several foreign entities to 30% or more of the voting power of the company concerned.

In addition, the permitted percentage of equity held by foreigners also depends on the percentage of production exported, whether high-technology products are purchased or whether priority products are produced for the domestic market. For projects involving extracting, mining, and processing mineral ores, a majority foreign equity participation of up to 100% is permitted.
Controls on liquidation of direct investmentNo exchange controls apply to the repatriation abroad of the proceeds from the sale or liquidation of direct foreign investment or sale of real estate (including capital gains) held by nonresidents.

The proceeds of investments may be repatriated freely on resale, subject to the completion of a statistical form for amounts of RM 100,000 or more.
Controls on real estate transactions
Purchase abroad by residentsSame regulations as for purchases of securities abroad by residents apply.
Provisions specific to commercial banks and other credit institutions
Borrowing abroadOnly authorized dealers and tier 1 merchant banks are freely allowed to borrow in foreign currency from nonresidents. Other financial institutions have to comply with the exchange control rules on foreign currency loans.
Maintenance of accounts abroadOnly authorized dealers in foreign currencies are freely permitted to maintain foreign accounts abroad. Other credit institutions are generally not permitted to operate nor maintain any foreign currency accounts, except for: (1) any licensed merchant banks to facilitate acceptance of time deposits in foreign currency from nonresidents; and (2) tier 1 merchant banks to facilitate their permitted foreign exchange activities.
Lending to nonresidents (financial or commercial credits)Authorized dealers are freely allowed to extend loans in foreign currency to nonresidents. A banking institution is, however, allowed to extend credit facilities in ringgit to:

(1) a nonresident up to an aggregate of RM 200,000 for any purpose except to finance the acquisition or development of immovable property in Malaysia; and

(2) a nonresident bank or a nonresident stockbroking company that maintains an external account, provided that: (a) the total credit facilities of the nonresident stockbroking company or nonresident bank from all banking institutions does not exceed the aggregate of RM 5 million; and

(b) the credit facilities are used by (i) the nonresident stockbroker to finance funding gaps if there is a delay in receipt of funds from its nonresident clients for the payment of securities purchased on the Kuala Lumpur Stock Exchange; and (ii) the nonresident correspondent bank to finance unforeseen or inadvertent funding gaps arising from the mismatching of receipts and payments through the external account. The extension of loans in ringgit to nonresidents exceeding the amounts or for purposes other than stipulated above, requires the prior permission of the Controller of Foreign Exchange. The prior permission of the Controller of Foreign Exchange is required for banks to remit amounts exceeding the equivalent of RM 10 million each calendar year.
Lending locally in foreign exchangeAuthorized dealers and tier 1 merchant banks are allowed to lend in foreign currency to residents.
Purchase of locally issued securities denominated in foreign exchangeThe government freely permits the purchase and sale of Malaysian-registered securities denominated in foreign currency, provided that the issuance has been approved.
Differential treatment of nonresident deposit accounts and/or deposit accounts in foreign exchange
Open foreign exchange position limitsAll commercial banks are required to observe a specific limit on their net overnight open position in foreign currencies, long or short, spot or forward. The criteria in determining banks’ net overnight foreign currency open position limits are based on a matrix that takes into account their shareholders’ funds and dealing capacity. The limits are also subject to a maximum cap of 50% of shareholders’ funds.
Provisions specific to institutional investors
Limits (max.) on portfolio invested abroadInsurance companies are prohibited from holding foreign assets except under the following circumstances: (1) such investment funds would be derived only from premiums received from the insurer’s offshore business; (2) such foreign assets are maintained solely to meet foreign liabilities arising from an insurer’s insurance or reinsurance business overseas; (3) the foreign assets should not be more than the amount reasonably required for meeting liabilities in foreign currency after taking into account expected cash flow, and (4) the Controller of Foreign Exchange approves the transactions.
Limits (min.) on portfolio invested locallyUnder the Insurance Act 1963, insurance companies are required to invest at least 80% of the total value of assets of their insurance funds in the form of authorized Malaysian asset as specified in the Second Schedule of the Act. Employee Provident Fund (EPF) investment in foreign securities is subject to the approval of the Minister of Finance. There are no specific regulations governing foreign investment of the EPF. However, the EPF Act, 1991, requires the EPF to invest a minimum of 50% of its annual investible funds in securities issued or guaranteed by the federal government, provided that the total amount of funds invested in such securities is not less than 70% of its total investment. Unit trust funds can invest up to a maximum of 10% of their net asset value in securities listed on foreign stock exchanges. Prior approval from the Securities Commission is required before such investment can be undertaken.
Other controls imposed by securities lawsThere are no controls on foreign firms trading in the corporate debt, equity, and derivative market. However, the following guidelines, as set out by the Foreign Investment Committee, should be observed: (1) any proposed acquisition of 15% or more of the voting power by any one foreign interest or associated group, or foreign interests in the aggregate of 30% or more of the voting power of a Malaysian company or business; (2) a company or business in any merger and takeover in Malaysia, whether by Malaysian or foreign interests; and (3) any other proposed acquisition of assets or interests exceeding in value RM 5 million, whether by Malaysians or foreign interests. Foreign companies with no substantial business operations in Malaysia are not normally granted listing on the local stock exchange.

Mexico

(Position as of December 31, 1995)

Status Under IMF Articles of Agreement
Article VIIIDate of acceptance: November 12, 1946.
Exchange Arrangement
CurrencyThe currency of Mexico is the Mexican peso.
Other legal tenderNo.
Exchange rate structureUnitary.
Classification
Independent floatingThe exchange rate of the Mexican peso is determined by supply and demand conditions in the interbank foreign exchange market.
Exchange taxNo.
Exchange subsidyNo.
Forward exchange marketForward cover is available from authorized commercial banks. An over-the-counter market in forwards and options in foreign exchange has been introduced. In April 1995, the Chicago Mercantile Exchange started trading future contracts on the peso of certain Latin American Countries.
Official cover of forward operationsNo.
Arrangements for Payments and Receipts
Prescription of currency requirementsIn accordance with payments agreements with central banks of Argentina, Bolivia, Brazil, Chile, Colombia, the Dominican Republic, Ecuador, Paraguay, Peru, Uruguay, and Venezuela, payments to these countries may be made through the Bank of Mexico (BOM) and the central bank of the country concerned within the framework of the multilateral clearing system of the LAIA. Similar payments arrangements exist with the central banks of Costa Rica, El Salvador, Guatemala, Honduras, Malaysia, and Nicaragua.
Bilateral payments arrangements
OperativeYes.
Other payments arrangements
Regional arrangementsYes.
Administration of controlNo.
International security restrictionsNo.
Payments arrearsNo.
Controls on trade in gold (coins and/or bullion)No.
Controls on exports and imports of banknotesNo.
Resident Accounts
Eligibility to hold accountsJuridical persons are eligible.
Foreign exchange accounts permittedYes.
Held domesticallyCommercial banks are permitted to open checking accounts denominated in U.S. dollars payable in Mexico only for: (1) residents in the northern border area of Mexico, (2) firms domiciled in Mexico in any part of the country, and (3) official representatives of foreign governments and international organizations and foreigners working in these institutions.

In case of time deposits denominated in U.S. dollars, commercial banks are permitted to open accounts for firms established in Mexico but are payable only abroad.
Approval requiredNo.
Held abroadYes.
Approval requiredNo.
Accounts in domestic currency convertible into foreign currencyNo.
Nonresident Accounts
Eligibility to hold accountsJuridical and natural persons are eligible.
Foreign exchange accounts permittedNo.
Domestic currency accountsMexican banks are prohibited from receiving domestic currency deposits from foreign financial institutions abroad or from non-Mexican exchange houses, except in cases (1) where such funds represent the counterpart of foreign currency sold to the Mexican bank where the account is held; (2) where the funds represent the counterpart of foreign currency sold to other Mexican banks; (3) where the funds represent the redemption, sale, or interest payments of securities held in custody in the Mexican bank in which the account is held, only if the securities were bought with the proceeds from any of the transactions defined in (1) or (2); (4) where funds represent the counterpart of a peso contract concluded in a market recognized by the BOM; and (5) where authorized on a case-by-case basis by the BOM.
Imports and Import Payments
Foreign exchange budgetNo.
Financing requirements for importsNo.
Documentation requirements for release of foreign exchange for importsNo.
Import licenses and other nontariff measuresImport licenses from the Secretary of Commerce and Industrial Promotion are required for only 149 of the 10,065 items on which Mexico’s general import tariff is levied, except for temporary imports of raw materials and intermediate goods for export industries. On average, import licenses cover the applicant’s import needs for nine months and may be extended for three months. Import needs are estimated at 20% above the amount of previous actual imports but may be increased when justified. New licenses are issued only if the applicant can demonstrate that at least 70% of earlier licenses have been effectively used. For some commodities, “open-ended” import licenses may be granted, allowing imports to be effected during a period of six months to one year, subject to an overall limit. Depending on the importer’s performance, the license may be renewed repeatedly.
Negative listYes.
Open general licensesYes.
Licenses with quotasYes.
Import taxes and/or tariffsImport tariffs range from zero to 20%, with rates on some products higher. Imports from members of LAIA are granted preferential duty treatment and there are free trade zones in place in certain regions. Free trade agreements exist with Bolivia, Chile, Costa Rica, Colombia, and Venezuela. Trade with the United States and Canada takes place under NAFTA. Mexico has utilized antidumping duties on a variety of products: corrugated rod from Brazil, doorknobs from China, and seamless tubes and pipes from the United States.
Taxes collected through the exchange systemNo.
State import monopolyNo.
Exports and Export Proceeds
Repatriation requirementsNo.
Surrender requirementsNo.
Financing requirementsNo.
Documentation requirementsNo.
Export licensesMost exports do not require licenses. Exports of a few specified items related to endangered species and archaeological pieces are prohibited.
Export taxesYes.
Taxes collected through the exchange systemNo.
Payments for Invisible Transactions and Current Transfers
Controls on these paymentsThe contracting of personal insurance policies abroad is not restricted, but casualty insurance policies intended to cover events that will take place in Mexico may be contracted only with Mexican companies, including subsidiaries of foreign insurance companies established in Mexico. Reinsurance may be contracted with foreign reinsurance companies.
Proceeds from Invisible Transactions and Current Transfers
Repatriation requirementsNo.
Surrender requirementsNo.
Restrictions on use of fundsNo.
Capital Transactions
Controls on capital and money market instruments
On capital market securities
Purchase in the country by nonresidentsThere are restrictions on shares and other securities of a participating nature and debt securities denominated in domestic currency.
Sale or issue locally by nonresidentsYes.
Purchase abroad by residentsThere are restrictions on the purchase by securities firms for their own account and by financial institutions if the security is denominated in domestic currency.
Sale or issue abroad by residentsThere are restrictions on debt securities denominated in domestic currency.
On money market instruments
Purchase in the country by nonresidentsThe restriction is applied only to debt securities denominated in domestic currency.
Sale or issue locally by nonresidentsPursuant to the Securities Exchange Act, only documents registered in the National Registry of Securities and Intermediaries may be offered publicly. To obtain the afore-mentioned register one must comply with the requisites established in the Securities Exchange Act.
Purchase abroad by residentsThere are restrictions on the purchase by securities firms for their own account and by financial institutions if the security is denominated in domestic currency.
Sale or issue abroad by residentsThe sale to nonresident financial institutions of debt securities issued in domestic currency by resident banks is not allowed. The sale or issue abroad of securities, issued in Mexico or by Mexican corporations, is subject to the National Registry of Securities and Intermediaries.
On collective investment securities
Purchase in the country by nonresidentsThe purchase of securities denominated in domestic currency by financial institutions is not allowed.
Sale or issue locally by nonresidentsPursuant to the Securities Exchange Act, only documents registered in the National Registry of Securities and Intermediaries may be offered publicly. To obtain the afore-mentioned register one must comply with the requisites established in the Securities Exchange Act.
Sale or issue abroad by residentsThe purchase of securities denominated in domestic currency is not allowed.
Controls on derivatives and other instruments
Purchase in the country by nonresidentsThe holder, who is the beneficiary of the right consigned in the document, may be foreign persons or corporations. In this case, the aforementioned persons may only acquire warrants when the underlying securities are of the free subscription type or related to a neutral investment trust authorized by the National Banking and Securities Commission (NBSC).
Sale or issue locally by nonresidentsThe warrants should be issued with reference to shares registered at the Mexican Stock Exchange and portfolios of representatives; shares of the capital of corporations should be registered at that stock exchange. In addition, NBSC provisions require that the issuer of the above-mentioned derivative be a corporation with shares registered at the National Registry of Securities and Intermediaries.
Purchase abroad by residentsThe restrictions are as follows: (1) securities firms for their own account; and (2) financial institutions if the security is denominated in domestic currency.
Sale or issue abroad by residentsThese instruments can only be negotiated on the Mexican Stock Exchange, and therefore residents cannot sell or issue these instruments abroad.
Controls on credit operations
Commercial credits
By residents to nonresidentsCredits must not be denominated in domestic currency.
To residents from nonresidentsCredits denominated in foreign exchange are restricted.
Financial credits
By residents to nonresidentsCredits must not be denominated in domestic currency.
To residents from nonresidentsCredits denominated in foreign exchange are restricted.
Guarantees, sureties, and financial backup facilities
By residents to nonresidentsThe restriction is applied to guarantees granted by resident banks in connection with lending by nonresidents to residents.
To residents from nonresidentsIn accordance with Recommendation 1/85 issued by the BOM, residents may not receive sureties, guarantees, or financial backup facilities denominated in domestic currency from nonresident entities. Nevertheless, this only remains a recommendation and does not have any obliging force.
Controls on direct investment
Outward direct investmentAlthough there exists no restriction in this respect, the Mexican government reserves the right to introduce foreign exchange control measures, thus affecting the outward direct investment.
Inward direct investmentForeign direct investments are normally allowed up to 100% of equity without prior authorization, with certain exceptions:

(1) Investments in the following sectors are reserved for the state: oil and other hydro carbons; basic petrochemicals; electricity; nuclear energy generation; radioactive minerals; communication via satellite; telegraph; radiotelegraphy; postal service; railroads; issue of paper money; minting of coins; and the control and supervision of ports, airports, and heliports;

(2) Investments in the following sectors are reserved exclusively for Mexican nationals or Mexican corporations with a foreign exclusion clause: retail trade of gasoline and liquefied petroleum gas; radio and television broadcasting, with the exception of cable television; road transport (excluding courier and packaged goods transport services); credit unions and development banks; and certain professional and technical services. However, foreign investors wishing to invest in these activities may acquire shares in companies engaged in these sectors through the Neutral Investment Mechanism;

(3) Investments in the following sectors require prior authorization: acquisition of more than 49% of the equity in a Mexican corporation if the total value of assets exceeds US$25 million; maritime transport and certain port services; administration of air terminals; cellular telephones; construction activities, including the construction of pipelines for oil and its derivatives; oil and gas drilling; legal services; private education; credit information; securities rating institutions; and insurance agents. In order to obtain prior authorization, investors must submit their proposals to the National Commission of Foreign Investment. Approval is automatic if a formal response is not made within 45 working days of the date of application. In reaching its decision, the Commission takes into account the impact of investments on employment and training of workers, the technological contribution, compliance with environmental provisions in relevant laws, and the contribution to the economy; and

(4) Ceilings on foreign ownership are applied to the following sectors: financial institutions; air transportation; manufacturing of explosives and firearms; printing and publication of domestic newspapers; agricultural land; cable television and basic telephone services; video text and packet-switching services; and transportation by air and land, and certain activities related to maritime transport.
Controls on real estate transactions
Purchase locally by nonresidentsThe restrictions are the following: (1) the acquisition by foreign nonresidents of real estate outside a 100-kilometer strip alongside the Mexican land border and a 50-kilometer strip inland from the Mexican coast, provided the investor agrees to consider himself Mexican and to refrain from invoking the protection of his government regarding the property thus acquired; and (2) the acquisition by foreign nonresidents of real estate through a real estate trust within the zone defined above.
Provisions specific to commercial banks and other credit institutions
Borrowing abroadIt is a general rule under the regulations issued by the BOM that resident banks or credit institutions may not contract on any liability which may be expressed in domestic currency with foreign entities. On commercial and financial credits, banks must not register a monthly average of daily balances that should not be any higher than the result of any of the three following options: (1) the equivalent to 10% of the sum of the three-month average of the daily balance of the liabilities in domestic currency; (2) an additional amount to the one mentioned above is permitted in an amount of 4% of the three-month average of the daily balance of the sum of the liabilities mentioned above and registered three months previously; and (3) the equivalent of multiplying 1.6 times the amount of net capital the bank has shown in the two previous months, including the liabilities corresponding to the temporary capacity of admission of liabilities in foreign currency.

There is also a restriction when: (1) credits and loans are granted in domestic currency by nonresident financial institutions to resident financial institutions, and (2) credits are granted by nonresident financial institutions to resident banks.
Maintenance of accounts abroadResident banks can maintain accounts abroad with the only restriction being that they must maintain an equilibrium between their positions in foreign exchange and domestic currency.
Lending to nonresidents (financial or commercial credits)The existing limit is established in Provision 2019/95 issued by the BOM so that banks may not register a monthly average of daily balances that should not be any higher than the result of any of the two following options: (1) the equivalent to 10% of the sum of the three-month average of the daily balance of the liabilities in domestic currency. An additional amount to the one mentioned in the paragraph above is permitted in an amount of 4% of the three-month average of the daily balance of the sum of the liabilities in the paragraph above and registered three months previously; and (2) the equivalent of multiplying 1.6 times the amount of net capital the bank has shown in the two previous months, including the liabilities corresponding to the temporary capacity of admission of liabilities in foreign currency.
Lending locally in foreign exchangeBanks are permitted to lend locally in foreign currencies but the debt may be fulfilled by delivering the equivalent amount in accordance to the rate of exchange in domestic currency.
Purchase of locally issued securities denominated in foreign exchangeBanks can purchase, in the primary market, locally issued securities denominated in foreign currency but payable in pesos at the current foreign exchange rate, called Tesobonos. The foreign exchange rate used to calculate the equivalent amounts in Mexican pesos of principal and interests, is the selling foreign exchange rate of U.S. dollars. Provision 2019/95 regulates the operations of the credit institutions with governmental securities and primary and secondary markets.
Differential treatment of nonresident deposit accounts and/or deposit ac-counts in foreign exchange
Open foreign exchange position limitsThe liabilities of commercial banks denominated in foreign currencies must not exceed the larger amount of either (1) 10% plus an additional 4% of their liabilities in domestic currency, or (2) 1.6 times their net capital. Commercial banks must balance their positions subject to exchange rate risk on a daily basis. Short and long positions are acceptable as long as they do not exceed 15% of the bank’s net capital.
Provisions specific to institutional investors(1) Insurance companies: In compliance with the Insurance Companies Act, insurance companies can operate with nonresidents in the following areas among others: (a) administer the reserves retained from domestic or foreign insurance companies corresponding to reinsurance operations; (b) foreign investment of technical reserves corresponding to operations that take place abroad; and (c) constitute banking deposits abroad.

(2) Mutual Funds: There are three types of mutual funds: (a) variable-income mutual funds; (b) fixed-income mutual funds; and (c) capital-risk mutual funds. Depending on the type of mutual fund, the NBSC established certain restrictions concerning the foreign investment in their respective shares: variable-income mutual funds: foreign persons and corporations can acquire representative shares of mutual funds as well as foreign financial entities and groups of foreign persons. Fixed-income mutual funds: representative shares of this type of mutual fund can be acquired by foreign persons and corporations, foreign financial entities, and groups of foreign corporations. Capital risk mutual funds: the representative shares of this kind of mutual fund may be acquired by foreigners, persons, and corporations, provided that this participation does not exceed 49% of the shares of the respective mutual fund.
Limits (max.) on portfolio invested abroadCapital risk mutual funds may only invest in the representative shares or documents issued by the Mexican promoted corporations; consequently, they may not invest abroad.
Other controls imposed by securities lawsNo.

Morocco

(Position as of December 31, 1995)

Status Under IMF Articles of Agreement
Article VIIIDate of acceptance: January 21, 1993.
Exchange Arrangement
CurrencyThe currency of Morocco is the Moroccan dirhani.
Other legal tenderCommemorative gold coins with a face value of DH 250 and DH 500, and commemorative silver coins with a face value of DH 50, DH 100, DH 150 and DH 200 are also legal tender.
Exchange rate structureUnitary.
Classification
PeggedThe exchange rate of the Moroccan dirham is pegged to a basket of currencies comprising Morocco’s principal trading partners, weighted in accordance with the geographic distribution of Morocco’s foreign trade and the pattern of currencies of settlement. Bank Al-Maghrib (BAM) fixes daily rates for the rated currencies on the basis of variations in the value of the basket.

Rates for most currencies quoted in Morocco are established on the basis of the daily dirham-French franc rate and the cross rates for those currencies in relation to the French franc in the international exchange markets. All sales and purchases of foreign currency are centralized in the BAM, but authorized banks are permitted to offset purchases and sales on behalf of private customers in each separate currency. Each day, authorized banks must purchase from or sell to the BAM the balances of their purchases and sales in each currency; transactions are effected at rates fixed by the BAM. Clearing operations between banks are not permitted; thus, no interbank foreign exchange market exists in Morocco.
Exchange taxNo.
Exchange subsidyNo.
Forward exchange market
Official cover of forward operationsA forward foreign exchange cover facility is available for exports and imports of items benefiting from special customs arrangements. Forward contracts for the purchase or sale of foreign exchange that have been concluded between banks and their customers result in reverse contracts between the banks and the BAM. They may be concluded in any foreign currency quoted by the BAM for maturity periods ranging from a minimum of one month to a maximum of 12 months; the guaranteed exchange rate corresponds to the spot exchange rate, against the payment of a commission of 2% a year, of which a share amounting to 0.25% is retained by authorized banks; provisions are made for extending contract terms, revising contracts in part, or canceling them in whole or in part.
Arrangements for Payments and Receipts
Prescription of currency requirementsNo.
Bilateral payments arrangements
InoperativeArrangements with Mali and Guinea have been inoperative since the 1960s.
Other payments arrangements
Regional arrangementsThere is a regional payments arrangement operated by the central banks of Algeria, Libya, Mauritania, Morocco, and Tunisia.
Administration of control
Exchange control authoritiesExchange control is administered by the Foreign Exchange Office (FEO), an agency under the Ministry of Finance and Foreign Investment. This office has delegated the execution of the main exchange control measures to authorized banks. Import and export licenses, when required, are issued by the Ministry of Foreign Trade.
International security restrictions
In accordance with UN sanctionsMorocco maintains restrictions for security reasons against Iraq and the Federal Republic of Yugoslavia (Serbia/Montenegro) pursuant to UN Security Council resolutions.
Payments arrearsNo.
Controls on trade in gold (coins and/or bullion)
Controls on domestic ownership and/or tradeResidents may purchase, hold, and sell gold coins in Morocco for numismatic or in-vestment purposes. Ten different types of foreign gold coins are traded on the Casablanca Stock Exchange, which does not, however, deal in gold bars.
Controls on external tradeImports of gold are subject to authorization from the Directorate of Customs and Indirect Taxes Administration. Each year, the Ministry of Finance fixes a quota for the importation of gold ingots. The quota is then allocated among jewelers and industrial users of precious metals. Exports of gold are prohibited.
Controls on exports and imports of banknotes
On exports
Domestic currencyThe exportation of domestic banknotes is prohibited.
Foreign currencyVisitors to Morocco are permitted to repurchase foreign exchange against presentation of exchange certificate(s) up to the amount remaining from the original conversion of foreign exchange into dirhams.
On imports
Domestic currencyThe importation of domestic banknotes is prohibited.
Foreign currencyNonresident travelers may freely bring in foreign banknotes, traveler’s checks, and other means of payment denominated in foreign currency. Resident travelers may also bring in foreign banknotes in any amount as well as any other means of payment in foreign exchange but must surrender them within 30 days of their return to Morocco.
Resident Accounts
Eligibility to hold accountsJuridical and natural persons are eligible.
Foreign exchange accounts permittedYes.
Held domesticallyYes.
Approval requiredNo.
Held abroadYes.
Approval requiredNo.
Accounts in domestic currency convertible into foreign currencyYes.
Nonresident Accounts
Eligibility to hold accountsYes.
Foreign exchange accounts permittedYes.
Approval requiredThe following accounts may be opened:

(1) Foreign currency accounts in the name of foreign nationals may be maintained by natural or juridical persons of foreign nationality, who are either residents or nonresidents. These accounts may be freely credited with transfers from abroad with foreign banknotes, checks, traveler’s checks, or any other means of payment denominated in foreign currency and with foreign currency withdrawn from the BAM, following general or special authorization from the FEO. They may be freely debited for transfers abroad in favor of the account holder, to a foreign third party, for the surrender of foreign currency to the BAM, or for the payment of checks denominated in foreign currency.

(2) Foreign currency accounts in the name of Moroccan residents living abroad may be opened by individuals of Moroccan nationality residing abroad. These accounts may be credited freely with transfers from abroad, checks or any other means of payment denominated in foreign currency, foreign currency withdrawn from the BAM following general or special authorization from the FEO, the return on investments effected on the basis of these accounts, and transfers from another foreign currency account or from an account in convertible dirhams. They may be freely debited for transfers abroad, transfers to another account in foreign currency or in convertible dirhams, foreign currency subscriptions for notes issued by the Moroccan Treasury, and for surrender of foreign currency to the BAM.

(3) Foreign currency accounts of exporters may be opened freely by Moroccan exporters of goods and services who are already holders of convertible accounts for export promotion. Those who do not hold such an account must have the prior consent of the FEO. These accounts may be freely credited with 20% of foreign exchange receipts. The recording of foreign currency amounts corresponding to these rates must be effected simultaneously with the surrender to the BAM of the remaining 80%. These accounts may also be credited freely with the return on invested funds lodged therein and with transfers from another foreign currency account of the same holder. They may be debited for professional expenses covered by exchange regulations, investment with authorized intermediary banks, subscriptions for notes issued by the Moroccan Treasury, for credit of another foreign currency account or a convertible dirham account for exporters (CCPEX) opened in the name of the same holder, and for surrender of foreign currency to the BAM.

(4) Foreign accounts in convertible dirhams may be opened by natural or juridical persons of foreign nationality, who may be residents or nonresidents. These accounts may be credited freely with generally or specifically authorized transfers in favor of the account holder and with dirhams obtained from the sale to the BAM of foreign exchange, including banknotes. They may be debited freely for payments in Morocco and for purchases of foreign exchange from the BAM. Transfers between foreign accounts in convertible dirhams may be made freely, and there are no restrictions on the interest rate payable. Holders of these accounts may obtain international credit cards to settle their bills in Morocco and abroad. Deep-sea fishing companies may maintain convertible dirham or foreign currency accounts with Moroccan banks. Convertible dirham accounts may be credited with the full dirham equivalent of foreign exchange earnings, and foreign currency accounts may be credited with 25% of foreign exchange earnings. The operating expenses of these companies, including travel expenses of employees, may be financed from these accounts.
Domestic currency accountsYes.
Convertible into foreign currencyConvertible dirham accounts may be freely opened in the name of nonresident Moroccans residing abroad. Overdrafts are not allowed, and there are no restrictions on the interest rate payable. These accounts may be credited freely with (1) dirhams from the sale of convertible currencies, including banknotes, to the BAM; (2) transfers authorized by the FEO; (3) payments of interest accrued on these accounts; (4) transfers from foreign accounts in convertible dirhams; and (5) transfers from term deposits in convertible dirham accounts. They may be debited freely for (1) the purchase of foreign exchange from the BAM; (2) dirham payments in Morocco; (3) transfers to foreign accounts in convertible dirhams; and (4) transfers to term deposits in convertible dirham accounts.

These accounts may also be debited freely, either for the benefit of the account holder or for other nonresidents, for the purchase of foreign banknotes, traveler’s checks, or other foreign-currency-denominated means of payment. Convertible dirham accounts for exporters may be opened by exporters of goods or services with Moroccan banks. These accounts may be credited with the equivalent of 20% of the foreign currency repatriated and surrendered to the BAM.

Balances on these accounts may be used to finance expenditures contracted abroad and linked to the professional activity of those concerned. Fishing companies may credit to these accounts up to 100% of the foreign currency repatriated. Exporters have the choice of maintaining either foreign currency accounts or convertible dirham accounts for exporters. They may also hold both accounts simultaneously, provided that the overall percentage of export earnings to be credited to both accounts does not exceed 20% of foreign exchange earnings. Convertible term accounts are designed to attract funds from nonresident foreigners who are not entitled to guaranteed transfers.

These funds may be transferred henceforth within a maximum period of five years. The holders of such accounts may use the available funds, without prior authorization from the FEO, to fund investments in Morocco; buy treasury bonds; purchase Moroccan marketable securities; settle expenses incurred in Morocco; and, in the case of foreign corporations, provide their Moroccan subsidiaries with current account advances. They may also freely transfer the balances to resident or nonresident foreigners or to Moroccan nationals residing abroad. The beneficiaries of the proceeds of these accounts may use them to cover expenses incurred by foreign companies shooting films in Morocco; to purchase secondary residences under certain conditions; and to finance up to 50% of an investor’s participation in investments in Morocco (the remainder must be financed with funds transferred from abroad). Funds invested with the proceeds of convertible term accounts may be transferred abroad without restriction in the event of liquidation or transfer, except for certain categories that are subject to a three-year waiting period.
Approval requiredNo.
Blocked accountsNo.
Imports and Import Payments
Foreign exchange budgetNo.
Financing requirements for imports
Minimum financing requirementsFor all imports, the importer must subscribe to a security in the form of an import license that must be lodged with an authorized bank, which may then make payments related to goods and incidental costs upon submission of the required documents. Special procedures are applicable to specified imports financed with foreign aid or loans. Imports used for the production of export goods may be financed directly from the proceeds of foreign exchange claims of the same exporter within the framework of special lines of credit that Moroccan commercial banks are authorized to contract with their foreign correspondents. Moroccan commercial banks may make advance payments abroad for imports of capital goods up to 25% of the f.o.b. value of the goods.
Documentation requirements for release of foreign exchange for imports
Domiciliation requirementsYes.
OtherImports of a relatively small number of items representing about 8% of industrial production are subject to minimum import prices (reference prices) for antidumping or safeguarding purposes. Except for goods imported by air, insurance policies for imports must be taken out with insurance companies in Morocco. However, for a limited group of goods, insurance policies may be underwritten abroad; this group includes externally funded imports, if the financing terms include foreign insurance; capital goods and equipment under turnkey contracts or duly authorized investment programs; crude oil; gas; cattle; and wood.
Import licenses and other nontariff measures
Positive listSugar, edible oil, cereals and products derived from these, arms, explosives, and certain vehicles require licenses.
Negative listImports of products that affect public security, morale, and health may be prohibited.
Other nontariff measuresA small number of imported items are subject to minimum import pricing.
Import taxes and/or tariffsCustoms duties are levied on an ad valorem basis, with minimum and maximum rates of 2.5% and 35% respectively. Consumer goods not produced in Morocco are subject to a 5% duty. In addition, fiscal levies of 10%, 12.5%, or 15% are levied on imports. Imports used for production of exports are exempt from customs duties and other restrictions. Preferential tariff treatment is also given to certain imports under the Industrial Investment Code.
Taxes collected through the exchange systemNo.
State import monopolyThere are monopolies for a very limited number of products.
Exports and Export Proceeds
Repatriation requirementsAll exporters must sign a guarantee to repatriate and surrender foreign exchange proceeds. Export proceeds collected abroad may be used directly abroad to finance imports of goods and raw materials of goods for export.
Surrender requirementsForeign exchange must be surrendered within one month of the date of payment by foreign buyers specified in the commercial contract; in principle, this date must not be more than 150 days from the date of arrival of the merchandise. This deadline may be extended if warranted by business conditions and approved by the FEO. Residents of Moroccan nationality, including individuals and corporations, must repatriate foreign exchange receipts accruing from all their noncommercial claims and surrender them to an authorized bank. Other residents must surrender noncommercial receipts only if the receipts result from their activities in Morocco. Exporters are authorized to hold a portion of export receipts (up to 20% for goods exporters and to 10% for service exporters) in convertible dirhams or foreign exchange accounts. Moroccans working abroad must surrender within one month all foreign exchange in their possession, but on departure from Morocco, they may export without restriction foreign banknotes obtained by debiting their accounts in convertible dirhams. If they do not have such an account, they may take out 15% of the foreign exchange repatriated and surrendered 12 months before to Moroccan banks up to a limit of DH 20,000. If these facilities are not available, Moroccan residents living abroad may take advantage of the same DH 5,000 tourist allocation that applies to residents.
Financing requirementsNo.
Documentation requirements
Preshipment inspectionYes.
Export licenses
Without quotasFlour, charcoal, certain animals, plants, and archaeological items are subject to authorization.
Export taxesMineral products are subject to an ad valorem export tax of 0.5%, except for hydrocarbons, for which the tax is 5%, and phosphates, for which a tax on phosphate exploration equivalent to DH 34 per ton of gross phosphates has been levied since 1992. A 1% quality control tax is levied on exports of foodstuffs.
Taxes collected through the exchange systemNo.
Payments for Invisible Transactions and Current Transfers
Controls on these payments
Freight/insuranceAuthorized banks are permitted to make payments and settle expenses incidental to commercial transactions covered by the relevant import or export documents without authorization from the FEO. Moroccan enterprises are permitted to settle in dirhams the expenses incurred by their foreign managers and nonresident foreigners working for or on behalf of these enterprises. Foreign airlines operating in Morocco may transfer, without prior authorization from the FEO, any surplus revenue from the proceeds of ticket sales, excess baggage, and air freight. Transfers with respect to sea and road transportation may be made directly to authorized banks.
Prior approvalYes.
Quantitative limitsYes.
Indicative limits/bona fide testYes.
Unloading/storage costsNo.
Administrative expensesNo.
CommissionsNo.
Interest payments
Prior approvalNo.
Quantitative limitsYes.
Indicative limits/bona fide testYes.
Profit/dividendsNo.
Payments for travel
Prior approvalYes.
Quantitative limitsCommercial banks are authorized to provide Moroccan residents with a travel allowance in foreign exchange equivalent to a maximum of DH 5,000 a person a year for travel purposes without FEO approval. This allowance may be increased by DH 1,500 for a minor child on the passport of the beneficiary parent and accompanying said parent at the time of travel abroad. The same allocation may also be granted to Moroccan residents living abroad upon their return to their home country, provided they have not benefited from the 15% allocation on remittances effected 12 months previously up to a limit of DH 20,000. Residents of foreign nationality who wish to travel abroad may be granted foreign exchange equivalent to all of their savings from income. Business travel by exporters of goods and services may be financed without restriction by debiting convertible export promotion accounts or foreign currency accounts maintained with Moroccan banks. In the case of business travel allowances for others, annual foreign exchange allowances are approved by the Exchange Office on the basis of need, with a daily maximum limit of DH 2,000. These banks have been empowered to provide advance allowances of up to DH 40,000 to small- and medium-size enterprises and of up to DH 20,000 a year for business travel by individuals not belonging to either of these categories. In all cases, business travel allowances cannot be added to allowances for tourist travel. The foreign exchange office grants exemptions as needed.
Indicative limits/bona fide testYes.
Medical costs
Prior approvalApproval by the Ministry of Health is required.
Quantitative limitsCommercial banks are authorized to sell foreign exchange for medical treatment abroad up to the equivalent of DH 20,000 and to make transfers on patients’ behalf for treatment abroad in favor of hospitals and medical institutions concerned.
Indicative limits/bona fide testYes.
Study abroad costs
Prior approvalNo.
Quantitative limitsA foreign exchange allocation equivalent to a maximum of DH 2,000 a month may be granted to foreign nationals residing in Morocco to cover the cost of higher education for a child studying abroad. Commercial banks are authorized to sell foreign exchange to individuals studying abroad without prior FEO authorization as follows: (1) an annual installation allowance equivalent to DH 10,000 and the same amount for a person accompanying a minor student leaving Morocco for the first time; (2) school fees to foreign academic institutions, upon submission of documentary evidence and without limit; and (3) a monthly allowance for living expenses amounting to the equivalent of DH 6,000 a month for nonscholarship holders and DH 4,000 for scholarship holders. In addition to these funds, banks are authorized to effect the transfer of rent and corresponding charges in favor of the foreign landlord once the student or his or her legal guardian has submitted a properly drawn-up lease and a certificate of residence or any other equivalent document.
Indicative limits/bona fide testApplications for additional amounts must be referred to the FEO for approval, which is granted on proof of need.
Subscriptions and membership fees
Prior approvalNo.
Quantitative limitsNo.
Indicative limits/bona fide testNo.
Consulting/legal fees
Prior approvalNo.
Quantitative limitsYes.
Indicative limits/bona fide testYes.
Foreign workers’ wages
Prior approvalYes.
Quantitative limitsForeigners residing in Morocco and employed in either the private or public sector or engaged in professions in industry, commerce, and agriculture may transfer up to 50% of their income, whether or not their spouses reside in Morocco.
Indicative limits/bona fide testYes.
PensionsCommercial banks are authorized to transfer retirement pensions provided by public and private agencies in favor of persons residing abroad permanently.
Prior approvalNo.
Quantitative limitsRetired persons and foreign spouses of Moroccans may transfer up to 50% of their income. They may also freely contribute to their retirement or social security funds in their country of origin.
Indicative limits/bona fide testNo.
Gambling/prize earnings
Prior approvalYes.
Quantitative limitsYes.
Indicative limits/bona fide testYes.
Family maintenance/alimonyTransfers relating to remittances for family maintenance are approved upon presentation of documentary evidence.
Prior approvalYes.
Quantitative limitsYes.
Indicative limits/bona fide testYes.
Credit card use abroad
Prior approvalNo.
Quantitative limitsYes.
Indicative limits/bona fide testYes.
Proceeds from Invisible Transactions and Current Transfers
Repatriation requirementsResidents of Moroccan nationality, including individuals and corporations, must repatriate foreign exchange receipts accruing from all their noncommercial claims and surrender them to an authorized bank. Other residents must surrender noncommercial receipts only if the receipts result from their activities in Morocco. Moroccans working abroad must surrender within one month all foreign exchange in their possession, but on departure from Morocco, they may export without restriction foreign banknotes obtained by debiting their accounts in convertible dirhams. If they do not have such an account, they may take out 15% of foreign exchange repatriated and surrendered 12 months before to Moroccan banks up to a limit of DH 20,000. If these facilities are not available, Moroccan residents living abroad may take advantage of the same DH 5,000 tourist allocation that applies to residents. Nonresident travelers may freely bring in foreign banknotes, traveler’s checks, and other means of payment denominated in foreign currency. Resident travelers may also bring in foreign banknotes in any amount, as well as any other means of payment in foreign exchange but must surrender them within 30 days of their return to Morocco. The importation of domestic banknotes is prohibited.
Surrender requirementsYes.
Restrictions on use of fundsNo.
Capital Transactions
Controls on capital and money market instruments
On capital market securities
Sale or issue locally by nonresidentsProceeds from such sales may also be freely transferred, provided that the relevant purchases are financed by foreign exchange inflows or any comparable means.
Purchase abroad by residentsPurchases of foreign securities by residents of Moroccan nationality and transfers of the funds required for such purchases are subject to the prior approval of the FEO. Residents of foreign nationality are free to purchase securities abroad or, generally speaking, to constitute assets abroad.
Sale or issue abroad by residentsPurchases of securities abroad and, generally speaking, the constitution of assets abroad by residents of Moroccan nationality are subject to the approval of the FEO. Sales of such assets are also subject to approval; proceeds of such sales may be reused abroad or repatriated to Morocco.
On money market instruments
Purchase in the country by nonresidentsWhere the purchase of such instruments or securities is financed by a foreign exchange inflow or by the proceeds of the sale of other securities previously purchased through the surrender of foreign exchange, the convertibility arrangements are applicable. This facilitates the free transfer of disinvestment proceeds, including capital gains, and of income generated by such investment.
Purchase abroad by residentsPurchases require the prior authorization of the FEO, which is granted under certain conditions. On the other hand, residents of foreign nationality are free to engage in operations abroad financed with their foreign exchange holdings.
Sale or issue abroad by residentsThe same regulations as for purchases abroad apply.
On collective investment securitiesThe same regulations as for money market instruments apply.
Controls on derivatives and other instruments
Purchase in the country by nonresidentsThe settlement system between Morocco and other countries has not yet developed derivatives such as options, futures, swaps, and so forth.
Purchase abroad by residentsResidents of Moroccan nationality may subscribe to such instruments abroad only with the prior approval of the FEO.
Controls on credit operations
Commercial credits
By residents to nonresidentsMerchandise exporters are free to grant commercial credits to nonresidents for up to 150 days; longer terms may be granted with the approval of the FEO, as required for business purposes.
Financial credits
By residents to nonresidentsThe granting of financial loans by residents to nonresidents is subject to the approval of the FEO.
Guarantees, sureties, and financial backup facilities
By residents to nonresidentsMoroccan banks may issue or accept in favor of residents, sureties issued on behalf of nonresidents, in support of the participation of said nonresidents in public or private contracting, the supply of goods or services, the refund of downpayments, and the substitution of guarantee withholdings, subject to prior approval of the FEO. Similarly, they may issue sureties on behalf of nonresidents, in support of tax liabilities or financial obligations. A counterguarantee from a foreign bank is required for sureties issued by Moroccan banks on behalf of nonresidents. Where claims are entered under sureties issued or accepted in favor of residents on behalf of nonresidents, the relevant amounts must be repatriated to Morocco.
To residents from nonresidentsProvisions of guarantees are allowed on the condition that they are contracted through resident Moroccan banks.
Controls on direct investment
Outward direct investmentOutward direct investments are subject to the prior approval of the FEO, but residents of foreign nationality are free to invest abroad.
Controls on liquidation of direct investmentUnder the convertibility arrangements introduced in favor of inward investment, there are no restrictions on transfers made directly with the banking system of the proceeds of the liquidation or sale of foreign investment, including capital gains. These convertibility arrangements support investment financed by foreign exchange inflows or by other similar means. For the liquidation of any investment not falling under these arrangements, the relevant proceeds must be deposited in a convertible time deposit account denominated in dirhams. Funds placed therein may be transferred over a five-year period in equal annuities.
Controls on real estate transactions
Purchase abroad by residentsYes.
Purchase locally by nonresidentsForeigners cannot purchase properties outside of urban limits.
Provisions specific to commercial banks and other credit institutions
Borrowing abroadCommercial banks can only borrow abroad to finance foreign trade or investment operations.
Lending to nonresidents (financial or commercial credits)A counterguarantee from a foreign bank is required for sureties issued by Moroccan banks on behalf of nonresidents. Where claims are entered under sureties issued or accepted in favor of residents on behalf of nonresidents, the relevant amounts must be repatriated to Morocco.
Lending locally in foreign exchangeThe granting of loans abroad by Moroccan banks is subject to the approval of the FEO. However, banks may use cash held in foreign exchange accounts (maintained by foreigners, Moroccan nationals residing abroad, and exporters) to finance foreign trade operations and, in particular, the granting of buyer loans in favor of nonresident foreign customers of Moroccan exporters.
Purchase of locally issued securities denominated in foreign exchangePurchases are subject to the prior approval of the FEO.
Differential treatment of nonresident deposit accounts and/or deposit ac-counts in foreign exchange
Reserve requirementsConvertible dirham and foreign exchange accounts are excluded from reserve requirements.
Liquid asset requirementsAll deposits are taken into account for the calculation of liquid asset requirements.
Provisions specific to institutional investors
Limits (max.) on portfolio invested abroadPrior approval by the FEO is required for portfolio investment abroad.

Netherlands

(Position as of December 31, 1995)

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Status Under IMF Articles of Agreement
Article VIIIDate of acceptance: February 15, 1961.
Exchange Arrangement
CurrencyThe currency of the Netherlands is the Netherlands guilder.
Other legal tenderNo.
Exchange rate structureUnitary.
Classification
Cooperative arrangementThe Netherlands participates in the ERM of the EMS. In accordance with this agreement, the Netherlands maintains the spot exchange rates between the Netherlands guilder and the currencies of the other participants within margins of 15% above and below the cross rates based on the central rates expressed in ECUs. Under a special bilateral agreement, the spot exchange rate of the Netherlands guilder and the deutsche mark is maintained within a fluctuation band of ±2.25%.
Exchange taxNo.
Exchange subsidyNo.
Forward exchange marketForward exchange contracts are not limited as to delivery period nor is an underlying trade transaction required.
Official cover of forward operationsNo.
Arrangements for Payments and Receipts
Prescription of currency requirementsNo.
Bilateral payments arrangementsNo.
Other payments arrangementsNo.
Administration of controlNo.
International security restrictions
In accordance with IMF Executive Board Decision No. 144-(52/51)In compliance with the relevant UN Security Council resolutions, certain restrictions are imposed on financial transactions with Iraq, Libya, and areas of Bosnia and Herzegovina under the control of Bosnian Serb forces.
In accordance with UN sanctionsYes.
Payments arrearsNo.
Controls on trade in gold (coins and/or bullion)No.
Controls on exports and imports of banknotesNo.
Resident Accounts
Eligibility to hold accountsJuridical and natural persons are eligible.
Foreign exchange accounts permittedYes.
Held domesticallyYes.
Approval required