Chapter

Country Surveys

Author(s):
International Monetary Fund. External Relations Dept.
Published Date:
September 1980
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Afghanistan

(Position on December 31, 1979)

Exchange Rate System

The currency of Afghanistan is the Afghani. Until May 21, 1979 Afghanistan maintained a multiple exchange rate system with differing rates being quoted by Da Afghanistan Bank (the central bank), the commercial banks, and by dealers in the money bazaar. On May 21, 1979 the exchange rate system was unified with a unitary rate fixed by Da Afghanistan Bank. This unitary rate is fixed in terms of U.S. dollars and is flexible. On December 31, 1979 Da Afghanistan Bank’s buying and selling rates were Af 42.25 and Af 43.25, respectively, per US$1. These rates are applied by Da Afghanistan Bank and by all other banks to all transactions of both the Government and the private sector. Da Afghanistan Bank posts rates for deutsche mark, French francs, Pakistan rupees, pounds sterling, and Swiss francs, which reflect their value relative to the U.S. dollar in international markets and the local bazaar foreign exchange market. Da Afghanistan Bank charges commissions ranging from 0.10 per cent to 0.375 per cent on exchange transactions. A number of transactions take place in the bazaar foreign exchange market, where the rates closely follow the unified rates.

Administration of Control

Foreign exchange is controlled by the Government through Da Afghanistan Bank. The control is facilitated by the existence of relatively large companies specializing in the export of such commodities as karakul, cotton, wool, and carpets. However, these companies do not exercise a monopoly over the export of such commodities, with the exception that the export of cotton is reserved for four authorized companies.

Prescription of Currency

Settlements with countries with which Afghanistan has bilateral payments agreements 1 must be made in the foreign currencies specified in the agreements. The proceeds from exports of karakul, wool, and cotton to other countries must be obtained in convertible currencies. There are no other prescription of currency requirements.

Imports and Import Payments

Imports are not subject to license, but import transactions must be registered before orders are placed abroad. Imports of a few items (e.g., some drugs, liquor, arms, and ammunition) are prohibited on grounds of public policy or for security reasons; in some instances, however, special permission to import these goods may be granted. The importation of certain other goods (e.g., a few textiles and selected nonessential consumer goods) also is prohibited. There are no quantitative restrictions on other imports. Most bilateral agreements, however, specify quantities (and sometimes prices) for commodities to be traded. Most of the trade with bilateral agreement countries is carried out on a compensation basis and usually both imports and exports are arranged by the same trader; imports against exports of cotton, natural gas, and wool are carried out by the Government or government agencies, or the proceeds of such exports are allocated for servicing of the Government’s external debt.

The present customs tariff structure was promulgated in June 1974 and has since then been modified in the annual budgets. Actual tariff rates, ad valorem and specific, vary considerably. Ad valorem duties are usually between 20 per cent and 35 per cent.

Payments for imports through the banking system to payments agreement countries may usually be made only under letters of credit. Payments to other countries may be made under letters of credit, against bills for collection, or against an undertaking by the importer to import goods at least equivalent to the payment made through the banking system. A deposit of up to 30 per cent of the c.i.f. value is required by banks from private enterprises upon establishment of a letter of credit.

Payments for Invisibles

There is an exchange allocation from the banks for tourist travel abroad equivalent to US$2,000 a trip. In addition, tourists are permitted to purchase their tickets locally, including tickets for package tours. On application, foreign exchange is also allocated for business travel, as well as for medical treatment abroad, the amounts being determined by the appropriate authorities. The fee for a passport valid for one year is Af 20,000 for tourist travel, Af 5,000 for business travel, and Af 1,000 to Af 2,500 for other types of travel. Export by travelers of foreign currency notes up to US$2,000 or its equivalent is permitted only if the foreign exchange has been bought from the banking system. Travelers are not allowed to take out more than Af 1,000 in domestic banknotes.

Exports and Export Proceeds

Exports (other than gold) are not subject to license but export transactions must be registered. Exports of a few commodities (e.g., opium and museum pieces) are prohibited. Otherwise, control is exercised only over exports to bilateral agreement countries (see section on Imports and Import Payments, above). Proceeds from exports of karakul to all countries, including payments agreement countries, are received in convertible currencies. Receipts from exports of karakul, wool, and cotton must be surrendered. Export taxes are levied on cotton, oilseeds, and raisins, and all other dried fruits.2

Proceeds from Invisibles

Forty per cent of the foreign currency salaries of foreign employees working in the Afghan public and private sectors must be converted into Afghanis. Travelers entering Afghanistan may bring in any amount of Afghan banknotes. They may also bring in any amount in foreign currency but should declare it when entering the country if they intend to take out any residue when leaving the country.

Capital

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

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

Gold

Residents may freely purchase, hold, and sell domestically gold in any form. Imports of gold are restricted. Exports of gold and silver in any form other than jewelry require licenses issued by the Council of Ministers; such licenses are not normally granted except for exports by or on behalf of the monetary authorities and industrial users. Commercial exports of gold and silver jewelry and of other articles containing minor quantities of gold or silver do not require a license and may be made freely. Customs duties are payable on imports and exports of silver in any form unless the import or export is made by or on behalf of the monetary authorities.

Changes during 1979

May 21. The exchange rate system was unified. A unitary rate, fixed by Da Afghanistan Bank, replaced the former multiple exchange rate system. Rates of Da Afghanistan Bank were set at Af 43 buying and Af 44 selling, per US$1. These rates were applicable to all transactions of both the Government and the private sector.

July 28. The proceeds from exports of karakul were to be subsidized to the extent of the difference between the prevailing unified exchange rate and a rate of Af 45 per US$1.

September 23. It was announced that a deduction of US$50 a ton should be made from the proceeds of exports of raisins in order to build up a price stabilization fund.

December 1. The foreign exchange allocation for tourist travel by Afghan nationals was raised from US$200 to US$2,000 a person a trip.

Algeria

(Position on December 31, 1979)

Exchange Rate System

The currency of Algeria is the Algerian Dinar. Since January 21, 1974 Algeria has followed an independent exchange rate policy. Daily buying and selling rates for the U.S. dollar, the intervention currency, and other specified currencies 1 are established by the Central Bank of Algeria on the basis of a fixed relationship between the dinar and a composite of currencies. The currencies included in the composite and their weights take into account the relative importance of payments, including capital transactions, that are made in these currencies. A margin of DA 0.015 has been established between the buying and selling rates of the dinar in terms of the U.S. dollar, and on December 31, 1979 the Central Bank’s buying and selling rates were DA 3.7480 and DA 3.7630, respectively, per US$1. An encouragement premium is granted on the conversion of convertible currencies repatriated by Algerians working abroad. The premium is adjusted so as to ensure that the exchange rate for such remittances is DA 1 = F 1.

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

Administration of Control

The Ministry of Finance and the Central Bank have general jurisdiction over exchange control. The Central Bank assists in the formulation of the exchange legislation and regulations and is responsible for their application by the authorized banks. Authority over many exchange control procedures has been delegated to three commercial banks and the Postal Administration. Import and export licenses and global import quotas are issued by the Ministry of Commerce within the limits of a general import program. Import and export licenses require the visa of the Central Bank. The Société Nationale pour la Recherche, la Production, le Transport, la Transformation et la Commercialisation des Hydrocarbures (Sonatrach), has a monopoly over imports and domestic sales of petroleum and petroleum products, and handles most exports of these commodities. Investment of foreign capital in excess of DA 500,000 in Algeria requires approval by a National Investment Committee in order to obtain the benefits of the Investment Code.

Prescription of Currency

Settlements with countries with which no payments agreements are in force are made in convertible currencies. Settlements with countries with which Algeria has concluded bilateral payments agreements 2 are made through special accounts under the terms of the agreements. Some of these accounts are denominated in Algerian dinars and others in U.S. dollars of account.

Nonresident Accounts

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

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

Foreign Accounts in Convertible Dinars (Cedac accounts) may be opened by individuals or juridical persons of foreign nationality. Such accounts may be credited only with deposits that, under the regulations applicable when the deposit is made, are free from any restrictions on transfer. They may not be credited with amounts that are transferable to the bilateral area. They may be debited for payments to any foreign country, for payments in Algeria, or for the provision of foreign banknotes which the account holder intends to take out of Algeria. These accounts bear interest and may not show a net debit position.

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

Emigrant workers may maintain certain accounts in Algeria that are fed with the proceeds from the conversion of convertible currencies (comptes épargne-devises). Depositors receive a premium equivalent, in principle, to one eighth of the amounts deposited; in practice, the premium is a flexible one ensuring an effective conversion rate of DA 1 = F 1. Withdrawals may be made only in Algerian dinars.

Imports and Import Payments

Imports from Israel, Rhodesia, and South Africa are prohibited. Certain imports are prohibited regardless of origin. Law No. 78-02 of February 11, 1978 gives the Government a monopoly over foreign trade. All imports are permitted, in principle, in accordance with an annual import program. This is implemented mainly through global import authorizations (autorisations globales d’importation or AGI) granted to public enterprises. Imports made “without payment” (sans paiement), i.e., imports which do not involve compensation of any kind and are not subject to any specific prohibition, are exempt from all exchange and trade control formalities when valued at DA 5,000 or less. The Government’s monopoly over the importation of commodities is effected through the Office National de Commercialisation (Onaco), the Office Algérien Interprofessionnel de Céréales (OAIC), the Office National de Commercialisation des Produits Vitivinicoles (ONCV), the Société Nationale des Tabacs et Allumettes (SNTA), the Société Nationale d’Edition et de Diffusion (SNED), the Société Nationale de Sidérurgie (SNS), the Société Nationale de Constructions Mécaniques(Sonacome), Sonatrach, and other similar organizations.

All imports must be domiciled with an authorized bank, to which the necessary import documents must be presented and through which all payments related to the transaction must be made. Unless the Central Bank approves otherwise, advance payments may not exceed DA 5,000 or 20 per cent of the import value, whichever is smaller.

Payments for Invisibles

All payments for invisibles to all countries require the approval of the Central Bank. When supporting documents are presented, however, approval may be granted by authorized banks, or sometimes by the Postal Administration, either freely or up to specified limits for certain payments such as (1) those relating to approved trade transactions and maritime contracts, (2) travel expenses, (3) transfers of salaries and wages, (4) educational expenses, and (5) advertising expenses. For payments for which the approval authority has not been delegated, the granting of exchange must be authorized by either the Central Bank or the Ministry of Finance. Certain public enterprises, which receive special exchange allocations (budget devises), may use these freely for payments for specified invisibles, including transportation and other services contracted abroad. The transfer of family remittances is suspended.

Residents of other countries working in Algeria under the programs for technical cooperation or for public enterprises and agencies or for certain mixed companies may transfer abroad a percentage of their net salaries, as follows: 55 per cent for single persons and married persons having their families in Algeria; 75 per cent for persons having their families abroad; and 85 per cent for employees of mines and the hydrocarbon sector working in the southern regions. For other workers who have contracts with other employers and hold the necessary employment documents, the amounts that may be transferred are 35 per cent for single persons and married persons having their families in Algeria and 55 per cent for persons having their families abroad. The payments must be transferred once a month on the basis of the remuneration for the previous month. Persons making such transfers are not entitled to allocations for other personal transfers.

For residents (excluding those who may transfer a certain percentage of their net salary abroad) traveling by air or sea to foreign countries, including countries in the former French Franc Area, other than for medical reasons, the foreign exchange allocation is equivalent to DA 300 a person a trip (DA 150 for children under 15) and is delivered on presentation of a valid passport and travel vouchers; for overland travel, the allocation is DA 300 a person a calendar semester for adults and DA 150 for children under 15. For those traveling for medical reasons the allowance is DA 800 a person a trip and DA 400 for a child under 15. These allocations are not applicable to persons living in border areas. Foreign exchange for private business travel is subject to authorization by the Central Bank and allocations may not exceed DA 1,500 a trip. Algerian workers who have permission to emigrate are entitled to an exchange allocation upon departure. Emigrant Algerian workers who take their vacations in Algeria may upon return abroad repurchase foreign exchange equivalent to one fifth of the amount sold upon arrival, but not exceeding DA 1,000.

Pilgrims traveling to Saudi Arabia in 1979 obtained Saudi Arabian riyals up to the equivalent of DA 5,000 a person. The amount of this allowance is fixed for each pilgrimage and may be furnished in the form of checks that may be cashed on arrival for those traveling by sea or by air. Resident travelers may take out Algerian dinar banknotes up to DA 50 a person. Nonresident travelers may also re-export any foreign currency declared upon entry.

Exports and Export Proceeds

All exports to Israel, Rhodesia, and South Africa are prohibited. Certain exports, including used equipment and machinery, livestock, firearms, ammunition, explosives, and certain radio equipment, are prohibited regardless of destination. All other exports may, in principle, be effected freely, without an export license, with the exception of exports to countries with which Algeria has bilateral payments agreements. Some commodities may be exported, subject to individual prior approval, on the basis of linked transactions (transactions liées) involving at the same time an authorized import transaction.

Since the promulgation of Law No. 73-02 of February 11, 1978, which conferred upon the Government a monopoly over foreign trade, exports may only be effected by public sector entities, unless a waiver is granted for a transitional period on a case-by-case basis.

Exports must be domiciled with an authorized bank. Sales on consignment are subject to authorization by the Ministry of Finance, and registration must take place prior to customs clearance. Export proceeds must be repatriated immediately after collection; the due date of the export contract must be not later than 30 days following shipment, except when prior authorization from the Central Bank is obtained. Those petroleum companies that hold mineral rights must repatriate to Algeria the proceeds from their exports of hydrocarbons calculated on the basis of a contractual price per barrel that is fixed by agreement with the companies concerned. For one petroleum company holding mineral rights, however, there are different repatriation requirements.

Proceeds from Invisibles

Proceeds from invisibles must be repatriated and surrendered. Savings repatriated in the form of convertible currencies by Algerians working abroad are eligible for an encouragement premium. There are no restrictions on the import of foreign banknotes, coin (except gold coin), checks, and letters of credit, but nonresidents, including those of Algerian nationality, must declare such holdings when they enter Algeria. Resident travelers may reimport Algerian dinar banknotes up to DA 50 a person. Nonresident travelers are not permitted to bring in Algerian banknotes.

Capital

Residents are obliged to repatriate and surrender capital assets (or the sales proceeds thereof) held or acquired outside Algeria. Capital transfers to any destination are subject to individual license; residents are not normally permitted to acquire capital assets outside Algeria. All borrowing abroad or from nonresidents is subject to prior approval by the Minister of Finance or the Central Bank.

The Investment Code of September 15, 1966 provides for state guarantees in respect of foreign investments of more than DA 500,000 in the industrial and tourist sectors and for a retransfer guarantee in respect of the sale or liquidation proceeds of invested foreign capital. It also establishes that profit remittances on such investments will be permitted up to 15 per cent annually of the foreign capital originally invested. Tax facilities may also be granted, and investments of more than DA 5 million may be given exclusive rights in a specified geographic area and may be accorded tariff protection. Remittances of profits and retransfers of capital are permitted only in respect of investments approved under the code.

Gold

Residents may purchase, hold, and sell gold coins in Algeria for numismatic purposes. Under Ordinance No. 70-6 of January 16, 1970, unworked gold for industrial and professional use is distributed by the Agence Nationale pour la Distribution et la Transformation de l’Or et des Autres Metaux Précieux (Agenor). This agency is also authorized to purchase in Algeria, and to hold, process, and distribute any other precious metal, and within the exchange control regulations, to import and export any precious metal, including gold. Imports of gold for use by dentists and goldsmiths are made by Agenor, under import licenses issued by the Ministry of Finance and the Central Bank.

Changes during 1979

March 4. The State Office for Marketing and Development of Technologies (Sonacat) was given the monopoly for the import of several products, including electric razors, steam boilers and auxiliary appliances for such boilers, and other specified nonelectric appliances for nonindustrial use and their spare parts.

July 21. Law No. 79-07 introduced a new customs code.

Argentina

(Position on December 31, 1979)

Exchange Rate System

The currency of Argentina is the Argentine Peso. The authorities announce in advance a schedule of daily buying exchange rates for transfers.1 On December 31, 1979 the buying and selling rates for the U.S. dollar, the intervention currency, were $a 1,615 and $a 1,622, respectively, per US$1. Buying and selling rates for certain other currencies 2 are also officially quoted, with daily quotations based on the buying and selling rates for the U.S. dollar on markets abroad. Exchange transactions are subject to a tax of 0.6 per cent on purchases and sales of foreign exchange. Forward exchange operations are permitted in the private sector with maturities of up to 360 days and at rates agreed by buyers and sellers.

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

Administration of Control

All exchange transactions must be carried out through entities authorized expressly for this purpose. These authorized entities include banks, exchange agencies exchange houses, and exchange offices; each of these types of institution may be subject to separate regulation.

Prescription of Currency

Virtually all payments between Argentina and Bolivia, Brazil, Chile, Colombia, the Dominican Republic, Ecuador, Mexico, Paraguay, Peru, Uruguay, and Venezuela are made through accounts maintained by the Central Bank of Argentina and the central banks concerned, under reciprocal credit agreements within the framework of the multilateral clearing system of the Latin American Free Trade Association (LAFTA). Transactions with other countries must be settled in convertible currencies.

Nonresident Accounts

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

Imports and Import Payments

Imports are free of import and exchange licensing. Payments may be made in any convertible currency. However, certain import suspensions are in effect. All imports by the private or public sector valued at more than US$500 require a sworn Declaration of Need to Import (Declaración Jurada de Necesidad de Importación) submitted by the importer to the National Import Board. Registration of the declaration is automatic. Furthermore, public sector imports require approval by the Central Bank with regard to debt. Imports of monochromatic television sets are suspended.

In addition to customs duties, imports are subject to the following taxes: a consular fee of 3 per cent payable normally in foreign currency on most import invoices; a statistical tax of 3 per cent applicable to all imports; a stamp duty of 0.6 per cent; taxes ranging from 4 per cent to 10 per cent on imports of paper products, certain types of timber and timber products, and forest products; selective internal taxes ranging from 5 per cent to 22 per cent; and a tax of 12 per cent on maritime freight, unless the imports involved are transported in Argentine vessels.

Imports may be fully paid for in cash. For capital goods, advance payment of up to 20 per cent of the f.o.b. value is permitted. The liabilities incurred may be partially or entirely discharged prior to the originally agreed deadlines, regardless of the instrument used. Items not considered as capital goods may have up to 180 days’ financing, but this limitation does not apply in the case of suppliers’ credits.

Payments for Invisibles

Payments for invisibles may be made freely. Sales of foreign exchange without a written declaration of purpose are permitted up to US$20,000.

There are no limits with respect to purchases of foreign currency by Argentine residents for travel purposes. Travelers may take out any amount in domestic banknotes and coin, including gold coin and “good delivery” gold bars.

Exports and Export Proceeds

A number of exports are prohibited or restricted. Minimum export prices (reference prices) are established for many agricultural and livestock exports as a basis for the payment of duties and the surrender of export proceeds. The full f.o.b. proceeds from all exports must be repatriated and surrendered; the proceeds must not be less than the reference price or, if there is no reference price, the f.o.b. value declared on the shipping permit. Proceeds may be received in any convertible currency. The proceeds from traditional exports must be surrendered within 180 days of shipment. No such limit exists for the proceeds from promoted exports (listed in Central Bank Circular R.C. 704). Certain nontraditional exports are eligible for rebates (reintegro and reembolso).

Many products are subject to export taxes (derechos de exportación) calculated on the basis of the f.o.b. sales value or on reference prices. The tax must be paid before shipment of the merchandise, or within the following 31 days when there is a bank guarantee of payment. All exports are subject to a 2 per cent tax on maritime freight costs. Certain other taxes are also levied on specific exports. These include a 2 per cent tax on exports of agricultural and livestock products, the proceeds of which are destined for the National Institute for Agricultural and Livestock Technology, and a tax of 1 per cent or 2.5 per cent, depending on the product, levied on grain exports and earmarked for the National Grain Board.

Many exports, particularly nontraditional exports, are eligible for export incentives of various kinds. The Central Bank has established a system of special financing, to be granted to Argentine exporters through banks, with a view to promoting exports of certain goods and services.3 Certain products, mostly nontraditional exports, may be shipped “on consignment” for 360 days; if not sold within that period, the goods must be returned to Argentina.

Proceeds from Invisibles

Exchange derived from invisibles need not be surrendered. Travelers may bring in freely any amount in domestic or foreign banknotes and coin, as well as gold coin and “good delivery” gold bars.

Capital

Proceeds from foreign loans must be sold in the exchange market. In general, there are no limitations on inward capital transfers by residents or nonresidents, although residents may not borrow abroad for less than one year. Outward capital transfers are restricted. Foreign borrowing by the public sector is regulated by Decree-Law No. 19328 of October 29, 1971 and Decree No. 3532 of November 25, 1975.

The Foreign Investment Law (Law No. 21382 of August 13, 1976) and its implementing decree (Decree No. 283 of February 4, 1977) govern all aspects of investments of foreign capital. Investments may be made in freely convertible foreign currency; new or used capital goods and their spare parts and accessories; profits and capital in Argentine pesos belonging to foreign investors, provided that those pesos are transferable abroad; capitalization of external credits in freely convertible foreign currency; intangible assets (bienes inmateriales); and any other form acceptable to the implementing authority or covered by a special regime or a promotion regime.

For approval purposes investments are classified into three categories, as follows:

(1) Subject to prior approval by the National Executive are (a) investments in the defense and national security sectors, in public services in the field of health care, the postal system, electricity, energy, gas, transportation, and telecommunications, and in radio transmitters, television stations, newspapers, periodicals and magazines, education, banks, insurance, and financial institutions; (b) the transfer of capital to an existing local firm, when this implies its conversion into a “domestic firm with foreign capital”; (c) investments whose object is the acquisition of participations in the capital of existing local firms that belong to national investors (exceptionally, and when a clear benefit to the national economy is foreseen); and (d) investments in any sector when they are effected in the form of used capital goods, when special or promotional benefits are requested that can be granted only by the National Executive, when the amount of the investment exceeds US$5 million or its equivalent in other foreign currencies, and when the investor is a foreign state or a foreign juridical person under public law.

(2) No prior approval is required for (a) the reinvestment of profits from investments of properly registered foreign capital in the firms where the profits arise, provided that this does not result in the conversion of the receiving firm into a “domestic firm with foreign capital”; and (b) new investments in freely convertible foreign currency, provided that they do not exceed in any single year 10 per cent of the registered foreign capital of the receiving firm, that they are intended to foster the activities in which it is already engaged, and that they do not convert the firm into a “domestic firm with foreign capital.”

(3) All other foreign investments are subject to prior approval by the implementing authority, which must give its decision within 120 days from the date on which the investment proposal is submitted.

Foreign investments existing prior to the entry into force of the Foreign Investment Law are governed by its provisions, which include a special regime for their inscription and definitive recognition. Existing and new foreign investments, as well as all capital movements relating thereto, may be recorded in the Register of Foreign Investments, which is kept by the Central Bank.

Registered foreign investments may generally be repatriated three years after entry into Argentina, unless a longer period was fixed when the investment was approved. The right to transfer profits and to repatriate capital related to properly registered investments can be suspended only by the National Executive. In that event, registered foreign investors are entitled to receive, for the remittance of profits abroad, the equivalent of the sum to be transferred in external public debt securities denominated in foreign currency, at the rate of interest ruling in the international market, against provision of the equivalent in Argentine pesos.

Profits in money or in kind on registered foreign capital are subject to a special tax when they exceed 12 per cent of registered capital. This tax is 15 per cent on remitted profits of more than 12 per cent and up to 15 per cent of registered capital, 20 per cent for those of more than 15 per cent and up to 20 per cent of registered capital, and 25 per cent for those of more than 20 per cent of registered capital.

The extension of domestic credit to “domestic firms with foreign capital” is subject to special provisions, as set forth in Law No. 21382 (Article 17) and Decree No. 283/77 (Article 71).

Gold

Residents may hold gold coin 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 coin or “good delivery” bars among themselves or with customers in Argentina or abroad. Gold exports must be paid for in convertible currencies. Imports of gold by industrial users are subject to a statistical duty of 0.6 per cent, and those by other users are subject in addition to sales tax.

Changes during 1979

January 1. In accordance with a schedule of daily exchange rates issued on December 21, 1978, the peso would be depreciated from $a 1,000 per US$1 (buying) on December 31, 1978 to $a 1,418 per US$1 (buying) on August 31, 1979.

January 1. The 1979–84 tariff reform program under Resolution No. 1634/78 of the Ministry of Economy came into effect. Under the program, which would apply to all commodities except those covered under the program for imports of vehicles, imports were divided into seven broad categories. Within each category, three different scales of quarterly tariff reductions would apply, depending on the tariff rate applicable at the beginning of 1979. Tariffs for goods not produced domestically would remain at 10 per cent throughout the program period, but tariffs for all other goods would be reduced by up to 5 percentage points in 1979, 8 percentage points in 1980 and 1981, and 14 percentage points in 1982 and 1983. By the end of 1983, the range of import tariffs would be reduced to 10–40 per cent, compared with 10–85 per cent at the beginning of 1979.

January 1. The ad hoc program of tariff reductions under Resolution No. 6 of the Ministry of Economy came into effect. These reductions would be applied to imports whose domestic substitutes increased in price, for reasons not related to input costs, at a rate in excess of the percentage of nominal exchange rate depreciation, using December 15, 1978 as the base date. Tariffs would be reduced by the amount by which domestic product prices exceed the norm. Several sets of tariff reductions under this program were announced in the course of 1979.

January 31. Law No. 21932 relating to imports of vehicles took effect. This law allowed the importation of finished vehicles for the first time in 20 years. Moreover, import tariffs on passenger vehicles, certain chassis with motors, and certain vehicle bodies would be lowered from the present 95 per cent ad valorem to 85 per cent in 1980, 75 per cent in 1981, and 55 per cent in 1982. Official minimum f.o.b. import prices were set at US$4 a cubic centimeter of engine displacement for passenger vehicles and at US$7 a kilogram of vehicle weight for commercial vehicles; these base prices would be raised by 15 per cent to calculate the official minimum c.i.f. import price. Base prices for parts would range between US$0.91 a kilogram (for iron and laminated steel items) and US$15.33 a kilogram (for dashboard items).

The foreign input content allowance for domestic vehicle production also was raised, depending on the category of the vehicle. For passenger cars and transport vehicles weighing up to 1,500 kilograms (category A), the allowance would be raised from the present 4 per cent to 8 per cent by 1980, 10 per cent by 1981, and 12 per cent by 1982. For nonpassenger vehicles weighing up to 1,500 kilograms (category B), the allowance would rise from 7 per cent to 10 per cent by 1980, 14 per cent by 1981, and 18 per cent by 1982. For vehicles weighing more than 1,500 kilograms (category C), the allowance would rise from 10 per cent to 15 per cent by 1980, 20 per cent by 1981, and 25 per cent by 1982. These percentages would apply to total vehicle production within each category, thereby allowing for some flexibility to vary the foreign input content of the range of models.

March 2. Resolution No. 250/79 of the Ministry of Economy added 23 products to the list of exports destined to markets considered nontraditional for such exports. Under Decree No. 2863/72, exports of products included in the list were eligible for a 5 per cent additional rebate (reembolso adicional).

March 5. Central Bank Circular No. R.C. 824 raised the limit on maturities for operations in the forward exchange market from 180 days to 360 days.

March 16. Decree No. P.E. 643/79 set out rules and procedures to be followed in antidumping cases.

April 9. Central Bank Circular No. R.C. 832 extended the daily schedule of exchange rates to the end of 1979. According to this schedule, the peso would be depreciated from $a 1,418 per US$1 (buying) on August 31 to $a 1,615 per US$1 (buying) on December 31.

April 17. Resolution No. 367/79 of the Ministry of Economy exempted from import tariffs certain fertilizers not produced locally.

April 25. Resolution No. 493/79 of the Ministry of Economy lowered import tariffs of some 1,221 capital equipment items.

May 21. Central Bank Circular No. R.G. 836-R.F. 710 announced that the exchange proceeds of exports effected under the arrangements instituted by Decree No. 637 of March 6, 1979 would be handled in accordance with the general rules in effect on the date of the sale abroad. The decree permitted the export “on consignment” of certain specified goods, subject to the requirement that they be sold abroad within 360 days from the date of shipment; if not sold within that period, the goods would be returned to Argentina. An additional period of 60 days was allowed for that purpose only.

May 31. Resolution No. 639/79 of the Ministry of Economy extended the suspension of imports of monochromatic television sets until January 31, 1980.

June 1. Resolution No. 1193/79 of the State Secretariat of Commerce and International Economic Negotiations exempted imports valued at US$500 or less (excluding consular fees) from the requirement to file a Declaration of Need to Import.

June 19. Resolution No. 20684/79 of the National Grain Board announced a suspension of wheat and wheat flour exports until November 1979 to assure adequate domestic supplies.

June 29. Tariffs on imports of copper ore were eliminated.

July 12. It was announced that the tariff on imports of color television sets was reduced from 73 per cent to 60 per cent until the end of 1980; it would be reduced to 55 per cent in 1981 and would progressively decline to 35 per cent by January 1, 1984.

July 18. The importation of used vehicles was prohibited except if effected by returning Argentine citizens who had spent at least one year abroad, by returning government officials who had been assigned abroad, by foreign citizens on official missions to Argentina, by foreigners resident in Argentina, or if specially purchased through the National Customs Administration.

August 1. Resolution No. 20756/79 of the National Grain Board authorized the resumption of wheat flour exports at 10,000 tons a month for the period August-November 1979.

August 24. Resolution No. 909/79 of the Ministry of Economy lifted the ban on export of cattle hides with effect from October 1, 1979 and reduced the applicable export duties from 25 per cent to 20 per cent.

September 17. Resolution No. 1027/79 of the Ministry of Economy extended until the end of September 1980 the existing exemption from tariffs of cement imports. After September 1980 a rate of 10 per cent would be applied.

September 19. Central Bank Circular No. R.C. 847 permitted financial institutions, exchange houses, and exchange agencies to buy and sell gold in the form of coin or in “good delivery” bars among themselves or with customers in Argentina or abroad. Gold exports no longer required the prior approval of the Central Bank.

September 24. The regulations concerning authorization of commercial and investment banks to effect operations in foreign currency were reissued with some amendments (Central Bank Circular No. R.F. 863–R.C. 849).

October 1. The devaluation schedule of the peso against the U.S. dollar was set at 2.8 per cent for January 1980, to be reduced by 0.2 per cent each month thereafter (i.e., in February 1980 the peso would be devalued by 2.6 per cent).

October 1. Resolution No. 928/79 of the Ministry of Economy reduced export duties on various types of wool from 5 per cent to zero.

November 1. A mining promotion law was passed. It provided automatic tax benefits on exploration; other incentives would be granted on a case-by-case basis. Among the incentives offered were accelerated amortization, deferred income tax and capital tax payments for up to 5 years, exemption for up to 15 years on stamp tax payments, and tariff and custom duty exemption on the importation of certain capital goods.

November 26. Resolution No. 1163/79 of the Ministry of Economy extended until December 31, 1980 the application of zero tariffs on imports of certain capital goods and semifinished goods not manufactured in Argentina.

December 17. Central Bank Circular No. R.C. 860 permitted entities that were authorized to deal in foreign exchange to effect directly, through the exchange market, transfers relating to cover operations on cereal and oilseed futures markets abroad.

December 26. Central Bank Circular No. R.F. 957–R.C. 866 permitted banks to obtain loans abroad, subject to prior Central Bank authorization. Category C banks continued to be exempted from the prior authorization requirement.

Australia

(Position on December 31, 1979)

Exchange Rate System

The currency of Australia is the Australian Dollar.1 The exchange rate of the Australian dollar is determined by reference to a trade-weighted index of currencies. The level of the exchange rate in relation to the trade-weighted index is kept under review and is changed when assessment of all relevant economic factors indicates a need for movement of the rate. A mid-rate for the Australian dollar in terms of the U.S. dollar (the intervention currency) is announced each day by the Reserve Bank of Australia. Official limits are set at or within which banks are to effect spot transactions with the public in U.S. dollars. On December 31, 1979 the authorities set a middle rate for the U.S. dollar of $A 1 = US$1.1055 and the official limits were US$1.1079 and US$1.1031 for spot transactions. Exchange rates for other currencies are not officially posted, and banks are free to determine their own spot rates for all other currencies. There are no taxes or subsidies on purchases or sales of foreign exchange.

The trading banks, in conjunction with the Reserve Bank, provide forward exchange cover to residents for trade transactions and some trade-related transactions in invisibles. In respect of this facility, the Reserve Bank provides forward cover to the trading banks in U.S. dollars. In addition, there is a foreign currency hedge market in which the trading banks and some merchant banks match the currency hedge requirements of their customers at market determined rates. Forward cover on this market can be arranged for any type of current or capital transaction and may be obtained for any currency subject to market availability. The market is restricted to Australian residents and no arbitrage is permitted between the Australian and international markets. All settlements are effected in Australian dollars.

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

Administration of Control

Exchange control policy is determined by the Government with the advice of the Department of the Treasury and of the Reserve Bank. The Reserve Bank administers the exchange control in accordance with the Banking (Foreign Exchange) Regulations under the Banking Act, 1959 and delegates considerable discretionary powers to the trading banks authorized to handle foreign exchange transactions. Import and export controls are administered by the Department of Business and Consumer Affairs. Other departments are responsible for some policy aspects of controls on imports and exports.

Prescription of Currency

Where imports are invoiced in Australian dollars, payments may be made in Australian currency through the account of an overseas bank with a bank in Australia, or in any foreign currency;2 if imports are invoiced in foreign currency, payment must be made in foreign currency. Proceeds from exports may be received in Australian currency from an account of an overseas bank with a bank in Australia, or in any foreign currency.

Nonresident Accounts

All credits to the accounts of nonresidents are subject to approval, which is granted in the same circumstances and subject to the same conditions as if a transfer to the country of residence of the account holder were involved. Transfers are allowed freely, on application, between accounts of nonresidents, provided that for amounts of $A 250,000 or more any necessary Reserve Bank approval has been issued for the underlying transaction. The balance on an account held by any nonresident may be withdrawn in convertible currency. There are no blocked accounts. Nonresidents are generally not permitted to borrow in Australia.

Imports and Import Payments

Most goods may be imported without import licenses, and no restrictions are imposed on payments for imports. The latter normally must be made not earlier than the date of shipment or one month before the arrival of the goods in Australia, and not later than six months after the arrival of the goods in Australia; consent to longer periods is given only where it is established that longer periods are normal commercial practice. Import restrictions are imposed for a number of reasons, although not for exchange control purposes. Import restrictions are maintained on certain goods, mainly for reasons of industry assistance, health, community protection, or security, or to sustain quality standards.

Payments for Invisibles

All payments for invisibles are subject to exchange control, but they are not restricted. The control operates primarily to prevent unauthorized capital transfers; in addition, remittances to the New Hebrides are subject to a screening procedure to ensure that no tax minimization transactions are involved. Applications for outward transfers in connection with current invisibles are normally dealt with immediately by banks; forms do not generally have to be filled out for amounts up to $A 2,000, and banks generally need not report these smaller transfers to the Reserve Bank. There is no prescribed limit on travel funds. Banks may approve for each person up to $A 4,000 for any one journey plus, for journeys of more than two months, $A 1,500 for each additional month up to a total of $A 10,000 a person; additional amounts may be approved by the exchange control authorities if they are satisfied that the exchange is to be used for bona fide travel expenses. Similarly, no specific limits are placed on remittances for family maintenance and gifts, but beyond certain amounts, applications must be referred to the exchange control authorities; such applications are treated liberally.

Payment to overseas suppliers of services must be made no later than six months after the date when it is contractually due; consent to longer deferment is given only where it is established that longer periods are normal commercial practice. Dividends and interest due to overseas residents must be paid within one month of the date on which they become payable. Foreign exchange is not normally provided to enable residents to take out personal life insurance with foreign insurers. Travelers may take out, without special authorization, up to $A 250 in Australian currency notes plus $A 5 in Australian coin. Travelers who are not residents of Australia may take out any amount in foreign banknotes within six months of entry, provided that they brought the notes into Australia.

Exports and Export Proceeds

Export licenses are not required except in respect of goods covered by the Customs (Prohibited Exports) Regulations. The obligation to account for export proceeds rests directly on the exporter. Proceeds of exports of all commodities, unless otherwise authorized, must be received in Australia in a currency and within a period approved by the Reserve Bank. The approved period is defined as being as soon as practicable after the date on which payment is made to the exporter, and not later than six months after exportation nor earlier than one month before exportation. Longer periods are allowed only where the payment arrangements are in accordance with normal commercial practice. Under the Customs (Prohibited Exports) Regulations, the export of specified goods may be prohibited absolutely or may be permitted subject to prescribed conditions. Export controls apply to certain raw or semiprocessed minerals, metals, fuels and petroleum products, the fundamental objective being the protection of national interests. In particular, the controls are used (1) to ensure that fair and reasonable market prices are obtained; (2) to ensure that adequate supplies of raw materials are available to domestic industry; (3) to meet international and strategic obligations; and (4) in relation to uranium and nuclear materials, to ensure that the Government’s nuclear safeguards and physical protection requirements on exports are met. As a matter of policy, the Government leaves negotiations to the commercial interests involved and does not use its export control powers to interfere with normal commercial contracts, unless the outcome of such negotiations is unreasonable and against the national interest. Controls are available to facilitate the observance of Australia’s obligations under international commodity agreements, to complement orderly marketing arrangements under Australian legislation, and to provide that domestic needs for certain agricultural inputs are satisfied ahead of export demands. There are provisions for government control over the export of defense material. Controls also exist over exports of Australian-registered ships. These controls are exercised to ensure that an adequate fleet of vessels remains available for local purposes.

Proceeds from Invisibles

Earnings of invisibles in foreign currencies may be disposed of only with permission. Travelers may bring in any amount in foreign or domestic banknotes for travel expenditure.

Capital

All transfers of capital from Australia require approval. Lending overseas by residents is normally not permitted other than in association with direct investments. Proposals for direct investment overseas are considered on a case-by-case basis. Transfers abroad for direct investment involving the export of a significant measure of Australian managerial or technical skills are readily approved. Approval is also readily given for all types of investment which promote Australian exports or protect existing Australian investments abroad. Approval is normally granted for the repatriation of capital by nonresidents, but no advance commitments are given. Foreign securities owned by Australian residents need not be surrendered; approval is given to residents to reinvest the sales proceeds from foreign securities for their own account in other foreign securities, but they are not normally permitted to trade among themselves. The export of securities and certain transactions in foreign securities are subject to approval.

Applications by resident individuals for portfolio-type investment abroad in amounts up to $A 10,000 in any 12-month period normally are readily approved; institutional investors and public companies can expect to receive permission to make investments abroad of up to $A 1 million in any 12-month period. Applications for investments in larger amounts may be approved in special circumstances. Eligible investments include stocks and shares and investments in real estate; they do not include investments in loans or other fixed-interest securities. When exchange control approval is being sought, investment in and other transactions of a capital nature with countries designated for tax screening purposes3 require a tax clearance certificate from the Commissioner of Taxation.

Approval is required for residents to borrow Australian or foreign currency from any nonresident, or to incur a liability to a nonresident other than in cases associated with the purchase of goods. In addition, residents are required to obtain approval to draw, issue, or negotiate any bill of exchange or promissory note, to enter into contracts (except for the purchase of goods) or to acknowledge debts so that actual or contingent rights to payments or any other valuable consideration or services are created in favor of any nonresident, or to allot or transfer securities to or register securities in the name of any nonresident. Guarantees in Australian or foreign currency by or on behalf of Australian residents are authorized where the underlying transactions conform to exchange control policy. Australian banks are required to cite specific Reserve Bank approval for all inward capital remittances of $A 250,000 or more. Inward equity investment requires exchange control approval.

A distinction is made between exchange control obligations and foreign investment policy obligations. The Government’s policy on foreign investment is basically one of encouragement because of the contribution foreign investment has made, and is expected to make, to the development of Australia’s industries and resources. The Government is advised on individual proposals and on foreign investment matters generally by the Foreign Investment Review Board. Certain foreign investment proposals are examined to ensure that they harmonize with Australia’s interests. The foreign investment policy obligations apply to certain categories of foreign investment whether or not exchange control approval is required to transfer funds into Australia to finance such investment. The examination procedures recognize the need to avoid unnecessary interference with normal commercial processes. The types of proposals subject to examination are (1) proposals falling within the scope of the Foreign Takeovers Act, including any acquisition or issue of shares which would result in or increase a substantial foreign interest in an Australian company, even where there is no change of control; (2) all proposals to establish a new business or project, irrespective of size, in industries subject to special restrictions, namely, finance, insurance, the communications media, civil aviation, uranium and activities relating to uranium; (3) direct investments by foreign governments (excluding investments related to their official representation); (4) other proposals to establish new businesses where the total amount of the investment is $A 5 million or more (including diversification into activities not previously undertaken directly in Australia and new projects in mining or other natural resource industries); and (5) proposals to acquire real estate valued at $A 250,000 or more.

Each proposal is considered on its merits to assess whether it would produce net economic benefits in relation to such matters as competition and efficiency, the introduction of new technology or managerial or work force skills, improvements in the industrial or commercial structure of the economy, and access to new export markets. If the proposal is judged on the basis of these criteria to be in accord with the national interest, it is considered against other criteria such as the level of Australian equity participation, management, and control following participation, and conformity of the proposal with other government policies.

There are specific guidelines concerning Australian equity participation in proposals for investment in the natural resources sector. A proposed project for the mining and production of uranium should have a minimum of 75 per cent Australian equity and it should be Australian controlled. Only in cases where 75 per cent Australian equity is clearly unobtainable will alternative proposals be considered. In such cases it needs to be demonstrated that 75 per cent Australian equity is unavailable, that the project would be of significant economic benefit to Australia, that there would be at least 50 per cent Australian equity, and Australians would have the major role in determining the policy of the project. Where projects do not have 75 per cent Australian equity and control, arrangements may be required to increase the level of Australian participation over an agreed period.

For other projects in the natural resources sector, the goal is 50 per cent Australian equity with at least 50 per cent of the voting strength of the Board held by Australian interests. However, projects may be approved with less than 50 per cent Australian equity, provided they are not otherwise contrary to the national interest and Australian equity is not available on reasonable terms and conditions. In this event, the Government seeks, as appropriate, satisfactory arrangements for Australian equity to be increased to at least 50 per cent within an agreed period.

A framework and an incentive have been established for the “naturalization” of foreign-owned companies that have significant Australian shareholdings. Under the provisions, a company may be granted naturalized status (if it is at least 51 per cent Australian owned and has a majority of Australian citizens on its Board) or naturalizing status (if it has at least 25 per cent Australian equity, a majority of Australian citizens on its Board, and it makes a public commitment to the Government to increase its Australian equity to 51 per cent). A naturalizing company is given credit for achieving 51 per cent Australian ownership. Accordingly, either a naturalizing company or a naturalized company may undertake new projects in the natural resources sector, excluding uranium, on its own, or in any combination with other companies (provided the “mix” meets the 50 per cent Australian equity and control guidelines), without first seeking approval from the Government. The naturalization arrangements do not affect a company’s position under the provisions of the Foreign Takeovers Act. Also, the naturalization arrangements do not apply to investment in new projects in the areas of uranium, finance, insurance, the communications media, or civil aviation, where special restrictions apply.

Foreign-controlled companies incorporated in Australia, or operating in Australia as locally registered foreign companies, may raise funds for their local requirements in the Australian capital market. Such foreign companies proposing to borrow locally are invited to consider alternative sources of financing, including the raising of local equity by means of new share issues or other placements.

Gold

There are no restrictions on residents owning, buying, or selling gold and gold coin in Australia. Residents may export and import gold, subject to normal exchange control and customs procedures.

Changes during 1979

January 1. Temporary tariff quota restrictions on vises were extended to June 30, 1979 with a percentage factor of 28.9 per cent being applied over this period.

January 1. Import licensing requirements on imports of files and rasps were abolished. The 12.5 per cent additional duty was also abolished, so that such imports would be subject to customs duty at the basic rate of 30 per cent.

January 10. A 25 per cent preferential tariff was imposed on imports of writing, printing, and other inks.

January 15. Exchange control requirements were relaxed in respect of the remittance to Australia of net earnings from direct investments overseas. Earnings from direct investment might be retained overseas for financing increased working capital and for firmly planned future expansion without specific prior approval from the Reserve Bank. Specific prior approval would be required where the earnings were to be retained for other than the above purposes or where investment was contemplated in a country for which a tax clearance certificate was necessary. The Reserve Bank was to be informed annually of any newly established ventures or the purchase of companies or shares in joint ventures by overseas subsidiaries of Australian firms.

February 22. The temporary additional duty and tariff quota on imports of brandy was extended for six months beyond its expiry date of Febuary 21.

March 1. Annual quotas on wool and wool blend fabrics were introduced.

March 7. The surcharge on imports of forklift trucks with a load capacity of 1,500–4,000 kilograms was reduced to $A 1,500. It would be further reduced to $A750 from March 7, 1980. After January 1, 1981 only the basic 30 per cent customs duty would be payable on such items.

March 8. The Government announced steps to reduce quota trading, the practice whereby a quota holder would play no part in an import transaction other than allowing another party to use his quota for a fee or other consideration.

April 5. It was announced that the temporary additional duty of 15 per cent on radial passenger car tires and all truck and bus tires was to remain in effect until December 31, 1979 after which date duties would be reduced from 35 per cent on January 1, 1980 to 25 per cent on January 1, 1982.

April 12. Duties on nuts, bolts, and screws were reduced to 25 per cent. Iron and steel screw hooks and screw rings, certain cotters, and cotter pins were made duty free. The temporary duty on wood screens was discontinued.

April 13. A variable tariff was applied to imports of orange juice.

April 15. Australia agreed to hold tariffs on 91 items at existing levels as part of the Multilateral Trade Negotiations under the auspices of the GATT.

May 21. It was announced that with effect from January 1, 1981 all imports of whale products and goods containing them would be prohibited.

May 21. Quota allocations were announced for footwear and foundation garments for the period July 1-December 31, 1979. In addition, importers of footwear were authorized to use up to 15 per cent of their quota for footwear with leather uppers to import footwear with nonleather uppers.

May 23. The duty on injection moulding machines was reduced from 55 per cent to 15 per cent.

June 6. It was announced that duty of 235 per cent would apply to interrelated products of the acetyls complex and for oxo-alcohols, phthalic anhydride, and plasticizers.

June 6. Tariff quota restrictions on imports of vises were removed and a 230 per cent general and preferential tariff was imposed.

June 10. It was announced that the Government had re-examined the guidelines on foreign participation in new projects in the uranium mining sector and had decided that the policy of 75 per cent Australian ownership and control was realistic. However, it considered that inflexible applications of the policy might result in the rejection of worthwhile projects and, therefore, provisions were introduced to provide some degree of flexibility, while retaining the basic objective of 75 per cent Australian equity and control.

June 10. The final global import quota for passenger motor vehicles for 1979 was set at 93,000 vehicles.

June 11. A foreign currency hedge market was opened with 14 banks including 7 major trading banks participating. The market was restricted to Australian residents and no arbitrage was permitted between the Australian and international markets. The market’s objective was to meet demand by bank customers to cover foreign exchange risks. Hedge market transactions might be completed in any currency, subject to market availability. All types of transactions whether of a current or capital nature could be covered and there were no restrictions on the terms of the hedging contract.

June 28. Quota levels on imports of iron and steel sheets and plates were increased by 7.7 per cent for the quota year beginning July 1, 1979.

July 1. A 2 per cent ad valorem customs revenue duty was imposed on most goods that were previously imported duty free, provided this was in conformity with international commitments.

July 6. It was announced that tariff quotas on endless-chain hand-operated pulley tackle and hoists would be discontinued and duties on these goods would be phased down to 25 per cent over three years.

July 10. It was announced that the Government planned to issue a collectors’ gold coin and that it also had under consideration the possible issue of a “bullion” type gold coin containing one ounce of fine gold.

July 13. Duties on most travel goods, briefcases, etc., were reduced to 30 per cent by July 1, 1980.

August 21. It was announced that duties on most miscellaneous industrial machinery would remain at the minimum rates. Most remaining items would be subject to 15 per cent duty and duties on a small range of items currently liable for duties ranging from 17–25 per cent would be reduced to 15 per cent over five years.

August 23. The Government announced its response to the report of the Study Group on Structural Adjustment. As part of that response, it intended to seek advice from the Industries Assistance Commission on the general approach that it would adopt in pursuing its policy of gradual reductions in long-term protection, following the completion of the review of remaining tariffs at the end of 1981.

September 26. It was announced that U.K. preferences on some 513 tariff items would be removed with effect from November 12 and general rates of duty would become payable. The majority of items came under the general headings of textiles, apparel, and footwear. It was announced subsequently that implementation of this measure would be deferred until January 1, 1980.

October 25. Quantitative import restrictions on passenger motor vehicles were set at 95,000 vehicles for 1980. This quota level was designed to reserve 80 per cent of the passenger motor vehicle market for local producers.

November 9. The excise rate on brandy was reduced with an equivalent reduction in the rate of duty on brandy. Tariff quotas and additional temporary duties, which had been applied to imported brandy since August 1977, were removed.

December 24. Sanctions against Rhodesia were removed.

Austria

(Position on December 31, 1979)

Exchange Rate System

The currency of Austria is the Austrian Schilling. Without assuming any formal obligations in this respect, the authorities aim at staying close to either side of the cross parities for the currencies participating in the European Monetary System (EMS). Forward premiums and discounts are, in principle, left to the interplay of market forces. On December 31, 1979 the authorized banks’ buying and selling rates for the U.S. dollar were S 12.381 and S 12.481, respectively, per US$1. There are no exchange taxes or subsidies.

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

Administration of Control

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

The customs authorities issue freely and without delay licenses required for imports of liberalized goods. Licenses, if required, for other imports and for exports have to be obtained from the relevant ministry, viz., the Federal Ministry of Trade, Commerce, and Industry (Licensing Office) or the Federal Ministry of Agriculture and Forestry.

Prescription of Currency

Settlements with all countries may be made either in convertible currencies or through Free Schilling Accounts. The exchange control regulations generally are based on the distinction between “multilateral member countries” (IMF or OECD members with which settlements take place in convertible currencies) and “multilateral nonmember countries” (other countries with which settlements are made in convertible currencies).

Nonresident Accounts

There are three categories of nonresident accounts in schillings: Free Schilling Accounts, Interim Accounts for nonresidents residing in member countries of the IMF or the OECD, and Blocked Accounts for nonresidents residing in other countries.

Free Schilling Accounts may be freely credited with proceeds from the sale of gold coin or convertible currencies by a nonresident to the Austrian National Bank, or to an authorized bank, provided that the conversion serves to make a current payment to a resident, as well as with payments permitted by the National Bank on the basis of a general or individual authorization. The accounts may be freely debited for payments to Austrian residents, who must, however, apply for individual licenses if they are to receive loans from nonresidents or if the payment serves to finance direct investment in Austria or the purchase of real estate in Austria. Balances may be freely converted into any foreign currency. Transfers between these accounts are free.

Interim Accounts and Blocked Accounts consist of funds that are due to nonresidents. General licenses permit their use for payments for many current and some capital transactions. The transfer abroad of funds in Interim Accounts and Blocked Accounts is subject to an individual license. In most cases licenses are granted freely if the funds belong to residents of countries that are members of the IMF or the OECD.

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

Imports and Import Payments

All commodities not included in the Annexes to the Foreign Trade Law are free of import licensing and may be imported from any country without quantitative restriction. All goods included in the Annexes require licenses but most are free of quantitative restriction. For many goods licenses are granted by the customs, at the time of clearance, when they are imported from any country other than Rhodesia.1,2 Nearly all imports from GATT countries, their associated territories, and some other countries3 are liberalized. Austria’s GATT liberalization is applied worldwide, except in respect of certain textiles as defined in Article XII, Section 1, of the Arrangement Regarding International Trade in Textiles. Nonliberalized imports may be obtained under various procedures, namely, state trading, global quotas, bilateral quotas, discretionary licensing, and compensation (barter). State trading covers tobacco in any form, ethyl alcohol, and salt. Global quotas apply to specified imports from GATT countries. Discretionary individual licensing is applicable to all other private imports not covered by the procedures listed above, including imports of certain textiles from specified countries. Licenses are usually granted if the imports concerned do not adversely affect domestic industries.

Import licenses may not be granted for goods imported under compensation transactions, unless there is no other way of settling payment; at present, trade under such arrangements is negligible. Grains, milk and butter, and cattle, pigs, and horses for slaughter and products from these animals for human consumption are imported in accordance with a special system of controls and regulations maintained under the Agricultural Marketing Law and the law governing livestock farming and trading, and the marketing of livestock produce (Viehwirtschaftsgesetz). Certain agricultural products are subject to import levies.

In some cases, import licenses are issued only to importers who have received export certificates. Import licenses are not transferable and are valid for six months, but this period may be extended. Payments for imports from, and originating in, countries with which Austria makes settlements in convertible currencies do not require exchange licenses.

Payments for Invisibles

With few exceptions, residents are permitted to conclude transactions involving current invisibles with residents of countries that are members of the IMF or the OECD. Exceptions comprise certain transactions concerning transport and insurance. Most transactions in current invisibles that involve payments to residents of other countries (e.g., freight, commissions, and the cost of assembly and repairs) are covered by general licenses; for the remaining transactions, individual licenses are required.

Payments on account of generally authorized invisibles to nonresidents may be made freely, provided that no capital transfer is involved. Other payments abroad up to S 1,000 may be made freely and at any time. The remaining payments on account of invisibles to “multilateral nonmember countries” require special licenses.

Residents traveling to countries with which Austria makes settlements in convertible currencies may buy exchange from authorized banks or may obtain, as short-term advances from nonresidents in multilateral countries, up to the equivalent of S 26,000 for each trip. Should a resident require more foreign exchange for traveling, the increase may be authorized by the National Bank. In addition, Austrian residents may arrange for trips abroad through travel agents and pay in schillings to cover expenditures for hotels and food, as well as transportation. Persons leaving Austria may take with them S 15,000 in Austrian notes and coin and any amount in foreign notes and coin.

Exports and Export Proceeds

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

Export claims exceeding the equivalent of S 26,000 must be declared. Export proceeds may either be surrendered or be deposited in accounts with authorized banks. Such deposits in convertible currencies may be used freely for authorized payments abroad.

Proceeds from Invisibles

Exchange receipts from invisibles, if not surrendered or deposited in an account with an authorized bank, have to be declared within eight days from the date of collection. They may either be surrendered or be deposited with an authorized bank and subsequently are used in the same way as proceeds accruing from exports. Persons entering Austria may bring in Austrian or foreign banknotes and coin without limit.

Capital

Some inward capital transfers, some transactions that could lead to such inflows, and some private sector borrowing from nonresidents are at present restricted. The acquisition by nonresidents of Austrian securities from authorized banks is permitted freely, but the acquisition of shares or participations in Austrian companies or firms, and of most Austrian real estate not intended for personal use is subject to individual approval by the National Bank. Direct investments by nonresidents normally are permitted when they serve to create or maintain lasting economic relations and provided that they are financed from foreign currency accounts or Free Schilling Accounts, in freely convertible foreign currency, or from profit claims on the domestic firm concerned.

Loans and credits extended by nonresidents to residents, including those in schillings from Free Schilling Accounts, at present require prior approval by the National Bank and many are restricted. Approvals are granted generally, but not exclusively, for (1) investment credits for productive enterprises, (2) import and export finance, and (3) loans from nonresident relatives to residents up to S 260,000 a borrower a year (these are licensed freely). The granting of permission for commercial credits with a maturity of one to five years to finance imports of consumer goods, especially passenger automobiles, is restricted; import credit with a maturity customary in the trade concerned, but not exceeding one year for consumer goods, is licensed freely.

The short-term foreign assets and liabilities of authorized banks in convertible currencies are not subject to limitation, but an agreement with the National Bank provides that the domestic credit institutions are to refrain from increasing domestic liquidity by taking up foreign currency funds abroad and thus raising their schilling liabilities, and from calling in their foreign loans prior to maturity. A number of authorized banks are permitted to accept convertible currencies from abroad for interbank on-lending abroad at maturities of up to five years. In 1979 the National Bank licensed financial loans to nonresidents with maturities of more than one year only to the extent that funds were made available through the redemption of loans outstanding on December 31, 1978, plus 15 per cent. Mortgage loans, export finance credits, and loans to Austrian subsidiaries abroad were not subject to this limit.

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

The transfer of funds owned by emigrants, and payments due to nonresidents on account of dowries, inheritances, and settlements under certain agreements between heirs, are permitted. Residents may freely grant loans to nonresident relatives.

Residents are allowed, for purposes of direct investment, to acquire participation rights in foreign companies, associations, and other enterprises, and to establish, acquire, or extend foreign agencies or individually owned firms; earnings accruing from such investment usually may be reinvested. Residents also are permitted to acquire real estate abroad (provided that it is intended for the personal use of the buyer within one year), to grant commercial or investment credits, to grant direct investment loans (provided that the resident can actually exert influence on the management of the nonresident enterprise), and to grant credits secured by mortgages in Austria or abroad, provided that the proceeds of the credit are not used within Austria (except for commercial credits). Domestic insurance companies may conclude life insurance contracts in Austria with nonresidents.

Transactions and operations mentioned in the three preceding paragraphs are licensed upon documentation, provided that they are concluded with residents of countries that are members of the IMF or the OECD.

Residents are allowed to purchase from nonresidents, without restriction, foreign securities issued in “multilateral member countries” and registered on stock exchanges4 and Austrian securities; for foreign securities and Austrian external bonds, the transactions must be carried out on a spot basis through authorized banks and, with certain exceptions (e.g., in the case of securities listed on the Vienna Stock Exchange), the securities purchased must be kept with such banks. Payments for these purchases to nonresidents may be made in convertible currencies. Residents may sell foreign securities and Austrian external bonds to nonresidents only on a spot basis against payment in convertible currencies and, for securities deposited with Austrian authorized banks, only through such banks. The proceeds of the sale, as well as the foreign exchange obtained as a result of redemption of the foreign securities by the debtor, may be kept on account with an authorized bank.

Gold

Transactions in gold (excluding jewelry and medallions, which are considered jewelry) are governed by the Foreign Exchange Law. The National Bank is authorized by this law to deal in gold as defined therein; the Bank has granted a number of general permissions widely liberalizing the domestic gold trade, but does not itself buy or sell gold or gold coin, except in transactions with monetary authorities of other countries or with international financial institutions. The Bank has authorized credit institutions, exchange offices, and coin dealers to buy or sell in Austria gold coin that is not legal tender on their own behalf or on behalf of their customers (including nonresidents); the prices are based on those for coin and unmanufactured gold in free markets abroad. A general license also permits other residents to purchase and sell among themselves, in Austria and against payment in schillings, gold coin that is not legal tender.

The Mint releases certain types of gold coin (restrikes) to authorized credit institutions for resale to the public. It has also issued a commemorative gold coin with a face value of S 1,000, which is legal tender. Residents may hold gold in any form, including bars, in Austria, and they may acquire in Austria any gold coin that is not legal tender and any gold medals or medallions; furthermore, domestic trading between residents in gold with a fineness of less than 0.585 is unrestricted. With the exception of coin, medals, and gold with a fineness of less than 0.585, the acquisition from residents of gold subject to the Foreign Exchange Law is reserved for the monetary authorities, authorized industrial users, dentists, and jewelers; the Mint, gold refiners, and jewelers are permitted to trade or exchange gold in any form among themselves. Domestic sales of gold coins that are not legal tender are subject to value-added tax at the general rate of 18 per cent.

Where the Foreign Trade Law prescribes import licenses for gold imports (e.g., for gold sheets), the license is issued either by the Ministry of Trade, Commerce, and Industry to industrial users, or by the customs office concerned, which issues licenses automatically for certain gold imports within its jurisdiction. Where this law does not require an import license (e.g., for the import of gold bars), the Foreign Exchange Law prescribes a license issued by the National Bank covering the purchase of gold. Exports of gold in any form other than jewelry require authorization by the National Bank; the Bank has issued a general license permitting nonresident travelers to take out coin that is not legal tender up to a weight of 200 grams a person a trip, and allowing resident travelers to “multilateral member countries” to export such coin up to a value of S 1,000 a person a trip. The National Bank’s imports and exports do not require import, exchange, or export licenses. Commercial imports of jewelry and of articles containing a minor amount of gold, such as watches, are liberalized, licenses being issued automatically by the customs authorities; commercial exports of a number of such articles, however, must be licensed by the Ministry of Trade, Commerce, and Industry.

Changes during 1979

January 24. The National Bank announced, in conjunction with other measures designed to increase exports and to reduce interest rates, that the limit for refinancing export bills was raised from S 6 billion to S 7 billion.

September 7. The value of the Austrian schilling was appreciated by about 1.5 per cent.

September 24. The rate for the Austrian schilling against the deutsche mark remained unchanged when the value of the deutsche mark was raised vis-à-vis other EMS currencies.

November 2. Under a new gentlemen’s agreement, commercial banks undertook not to increase their net foreign position during the period up to mid-1980, except for hedging transactions to cover exchange risks.

December 31. The gentlemen’s agreement of August 18, 1971 expired. Under that agreement commercial banks undertook not to convert assets denominated in foreign currencies into Austrian schillings for the sole purpose of increasing their liquid schilling assets.

Bahamas

(Position on December 31, 1979)

Exchange Rate System

The currency of the Bahamas is the Bahamian Dollar, which is pegged to the U.S. dollar, the intervention currency, at B$1 = US$1. The U.S. dollar circulates concurrently with the Bahamian dollar. The official buying and selling rates for the U.S. dollar are B$1 and B$ 1.005, respectively, per US$1. Buying and selling rates for the pound sterling are also officially quoted, the buying rate being based on the New York market mid-rate, and the selling rate 0.5 per cent above the buying rate. The Central Bank of the Bahamas deals only with commercial banks. For transactions with the public commercial banks are authorized to charge a commission of 0.50 per cent buying and 0.75 per cent selling, per US$1, and 0.50 per cent buying or selling per £ stg. 1. These charges are additional to the Central Bank’s charges. A stamp tax of 7 cents is applied to all outward remittances where the amount is B$30 or less. A further tax of 7 cents is levied on every additional B$30 or fraction thereof.

There is also a market in which “investment currency” 1 may be negotiated between residents through an investment currency dealer at freely determined rates, usually attracting a premium over the official market rate. On December 31, 1979 the bid and offer rates reflecting this premium were 15 and 20 per cent, respectively.

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

Administration of Control

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

Prescription of Currency

The Bahamas’ exchange control system makes no distinction between foreign territories. Settlements with residents of foreign countries may be made in any foreign currency2 or in Bahamian dollars through an External Account.

Nonresident Accounts

Authorized banks may freely open External Accounts denominated in Bahamian dollars for winter residents and for persons with residency permits but without work permits. With the prior approval of the Central Bank, authorized banks may also open External Accounts for nonresident companies that have direct investments in the Bahamas and for nonresident investors. External Accounts are normally funded entirely from foreign currency originating outside the Bahamas, but income on registered investments may also be credited to these accounts with the Central Bank’s approval. Balances may be converted freely into foreign currency and transferred abroad.3

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

Imports and Import Payments

The importation of certain commodities is prohibited or controlled because of health, social, or humanitarian reasons. All other goods may be imported without a license. The prior approval of the Central Bank is required for making payments for imports, irrespective of origin; 4 this approval is normally given automatically upon submission of pro forma invoices or other relevant documents proving the existence of a purchase contract. Import duties vary from zero to 110 per cent, depending on the type of goods. Customs entries are subject to a stamp tax at a rate of 1 per cent.

Payments for Invisibles

There are no restrictions on current payments. Authorized dealers have been given authority to make payments to nonresidents on behalf of residents for certain services and other invisibles within specified limits. Such payments include freight, ships’ disbursements, commissions, royalties, and insurance payments. Residents are entitled, on application to the Central Bank, to a foreign currency travel allowance of the equivalent of B$ 1,000 a person a year for tourist travel and of B$5,000 a person a year for genuine business or professional travel. The allowance of B$ 1,000 for tourist travel excludes the cost of fares and travel services, which are normally obtained against payment in Bahamian dollars to a travel agent in the Bahamas. Applications for foreign exchange in excess of these amounts must be referred to the Central Bank, which approves all bona fide applications. Foreign exchange facilities obtained for travel may not be retained abroad or be used abroad for purposes other than travel; any unused balance must be surrendered within one month of issue or, if the traveler is still abroad, within one month of his return to the Bahamas. Subject to adequate documentary evidence, an education allowance of up to B$6,000 a person an academic year is normally granted upon application. Applications for facilities in excess of this amount are referred to the Central Bank. Temporary residents may remit up to 50 per cent of their wages and salaries but where commitments outside the Bahamas are larger than 50 per cent of wages and salaries additional amounts may be remitted.

A traveler may take out of the Bahamas Bahamian notes not exceeding B$70 in value, and notes of any other territory not exceeding US$1,000 in value.

Exports and Export Proceeds

No export licenses are required except for crawfish, conch, and arms and ammunition. The proceeds of exports must be offered for sale to an authorized dealer as soon as the goods have reached their destination or within six months of shipment; alternatively, export proceeds may be used in any manner acceptable to the Central Bank.

Proceeds from Invisibles

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

Capital

All capital transfers to countries outside the Bahamas require exchange control approval and outflows of resident-owned capital are restricted. Inward transfers do not require exchange control approval, although the subsequent utilization of the funds in the Bahamas may require authorization. The permission of the Central Bank is required in respect of any action whereby nonresidents acquire control of an incorporated company controlled by residents. Resident individuals and companies require the specific permission of the Central Bank to maintain bank accounts outside the Bahamas.5

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

In principle, inward investment by nonresidents is unrestricted. However, the consent of the Central Bank is required for the issue or transfer of shares in a Bahamian company to a nonresident and for the transfer of control of a Bahamian company to a nonresident. Where an investment takes the form of a purchase of real property, the nonresident must obtain permission. Such permission is normally granted, provided that a fair price is paid, and payment may be made either in Bahamian dollars from an External Account or in foreign currency. In October 1979, the Government announced that sales would not be permitted except in cases where land is to be used for residential purposes by approved persons and for approved industrial or development purposes.

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

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

The transfer of legacies and inheritances due to nonresident beneficiaries under wills or intestacies of persons who were Bahamian residents at the time of their deaths is permitted. However, permission is not normally given for Bahamian residents to settle any property, other than by will, for the benefit of nonresidents.

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

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

Nonresident buyers of Bahamian securities must pay for such purchases in Bahamian dollars from an External Account, in funds eligible for credit to an External Account, or in Bahamian dollars arising from the sale of foreign currency in the official foreign exchange market; interest, dividends, and capital payments on such securities may not be remitted outside the Bahamas unless the holdings have been properly acquired by nonresidents. Bahamian residents are not permitted to purchase foreign currency securities with official exchange or out of export proceeds or other current earnings; payment must be made with investment currency. All purchases, sales, and switches of foreign currency securities in the Bahamas and all switches in foreign currency securities by Bahamian residents, wherever the switch takes place, require permission from the Central Bank, and all transactions must take place through authorized agents.6 All foreign securities purchased by residents of the Bahamas must be held to the order of an authorized agent. Securities of other former Sterling Area countries are considered foreign currency securities, and sales proceeds of such securities held by residents, if registered at the Central Bank by December 31, 1972, are eligible for sale in the investment currency market; securities not so registered may be offered for sale at the official rate of exchange.

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

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

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

Gold

Residents of the Bahamas other than authorized dealers are not permitted to hold or deal in gold bullion. Those residents, however, who are known users of gold for industrial purposes may, with the approval of the Central Bank, meet their current industrial requirements. Import licenses are freely issued by the Central Bank to industrial users. Authorized dealers are not required to obtain licenses for bullion or coin. Commercial imports of gold jewelry do not require a license. There is no import duty on gold bullion or gold coin; however, an import duty of 30 per cent is imposed on imports of gold jewelry from all sources. A 7.5 per cent stamp tax payable to the customs is also levied on gold jewelry from any source. There is no restriction on the acquisition or retention by residents of gold coin. The Bahamas has issued commemorative gold coins in denominations of B$10, B$20, B$50, B$100, B$150, B$200, and B$2,500; these are legal tender but do not circulate. On the occasion of the fifth anniversary of Independence, the Bahamas issued commemorative coins of B$10 in silver and B$100 in gold, and to commemorate the two hundred and fiftieth anniversary of Parliament, commemorative coins of B$25 in silver and B$250 in gold.

Changes during 1979

February 2. Import duties were reduced for certain medicaments, public service motor vehicles, and private automobiles.

Bahrain

(Position on December 31, 1979)

Exchange Rate System

The currency of Bahrain is the Bahrain Dinar, which is pegged to the SDR at BD 0.476190 = SDR 1. Bahrain confines exchange rates for the Bahrain dinar within margins of 7.25 per cent, in terms of the fixed relationship between the Bahrain dinar and the SDR. The U.S. dollar is the intervention currency. The mid-rate of the Bahrain dinar for the U.S. dollar quoted by the Bahrain Monetary Agency is adjusted from time to time. The Monetary Agency also quotes daily rates for pounds sterling and deutsche mark based on the latest available rates for the U.S. dollar against those currencies. On December 31, 1979 the Monetary Agency’s buying and selling rates for the U.S. dollar were BD 0.37600 and BD 0.37800, respectively, per US$1. The Monetary Agency does not deal with the public. In their dealings with the public, commercial banks are required to use the Agency’s rates for U.S. dollars, pounds sterling, and deutsche mark but they are authorized to charge an exchange commission of 2 per mill (special rates of commission apply for transactions up to BD 1,000). The banks’ rates for other currencies are based on the Monetary Agency’s rates for the U.S. dollar and the New York market rate for the currency concerned against the U.S. dollar. There are no taxes or subsidies on purchases or sales of foreign exchange.

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

Administration of Control

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

Prescription of Currency

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

Nonresident Accounts

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

Imports and Import Payments

All imports from Israel and Rhodesia are prohibited, as are products manufactured by foreign companies that have been blacklisted by the Arab League. Imports of a few commodities are prohibited from all sources for reasons of health, public policy, or security. Imports of cultured pearls also are prohibited. Import licenses are required only for arms and ammunition, television cameras, and alcoholic beverages. Rice and sugar are in practice imported only by the Bahrain Import-Export Company. Exchange for payments in respect of permitted imports may be obtained freely.

Exports and Export Proceeds

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

Payments for and Proceeds from Invisibles

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

Capital

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

Gold

Residents may freely purchase, hold, and sell gold in any form, at home or abroad. Imports and exports of gold in any form are freely permitted and do not require a license. Imports of gold jewelry are subject to a 10 per cent customs duty but gold ingots are exempt.

Changes during 1979

May 5. Following the decision by Qatar to revalue its currency against the U.S. dollar, the arrangement establishing fixed exchange rates between the currencies of Bahrain, Qatar, and the United Arab Emirates lapsed.

Bangladesh

(Position on December 31, 1979)

Exchange Rate System

The currency of Bangladesh is the Bangladesh Taka. The value of the taka in terms of the pound sterling, the intervention currency, is determined on the basis of a weighted basket of currencies. Changes in the exchange rate for the pound sterling are generally made when fluctuations in the exchange rates between the pound sterling and the currencies in the basket exceed 2.5 per cent in either direction. On December 31, 1979 the middle rate of the official buying and selling rates (spot) was Tk 34.7118 = £ stg. 1. Exchange rates for currencies other than sterling are based on the London market rates for the currencies concerned. On December 31, 1979 the spot buying and selling rates of the Bangladesh Bank (the central bank) for authorized dealers were Tk 34.6868 and Tk 34.7368, respectively, per £ stg. 1. On the same date the spot buying and selling rates (telegraphic transfers) of authorized dealers were Tk 34.6712 and Tk 34.7680, respectively, per £ stg. 1. A different effective exchange rate arises through the operation of the Wage Earners’ Scheme, under which foreign exchange earnings remitted by workers abroad may be used for specified imports or for expenditure on foreign travel. On December 29, 1979 this rate was Tk 19.10 per US$1. There are no taxes or subsidies on purchases or sales of foreign exchange.

Forward transactions of the Bangladesh Bank are confined to purchases and sales of deutsche mark, Japanese yen, pounds sterling, and U.S. dollars. Forward facilities at authorized banks are available in deutsche mark, Japanese yen, pounds sterling, and U.S. dollars for export proceeds and for import payments, as well as for certain sterling payments of shipping companies and airlines. Forward transactions cover up to a maximum period of six months.

Administration of Control

Exchange control is administered by the Bangladesh Bank in accordance with general policy formulated in consultation with the Ministry of Finance. The six foreign and six domestic commercial banks have been appointed authorized dealers (authorized banks). The Chief Controller of Imports and Exports of the Ministry of Commerce (Foreign Trade Division) is responsible for the issuance of import licenses. Certain trade transactions are conducted through state trading agencies, including the Trading Corporation of Bangladesh (TCB).

Prescription of Currency

Settlements with all countries are subject to exchange control. Settlements with countries with which Bangladesh has bilateral payments agreements1 normally must be effected through clearing accounts specified in the agreements. Payments to, and receipts from, the other member countries of the Asian Clearing Union (Burma, India, Iran, Nepal, Pakistan, and Sri Lanka) in respect of current transactions (other than those relating to raw jute, jute goods, and tea and to petroleum and natural gas and their products) must be effected in Asian monetary units through the Clearing Union.2,3 As regards other countries, settlements normally take place in sterling and other convertible currencies or through Nonresident Taka Accounts. Payments for imports may be made to the country of origin of the goods or to any other country (with the exception of those countries from which importation is prohibited); they may be made (1) in takas for credit to a nonresident bank account in Bangladesh of the country concerned; (2) in the currency of the country concerned; or (3) in any freely convertible currency. Export proceeds must be received in freely convertible foreign exchange or in takas from a Nonresident Taka Account of a bank abroad. All settlements with Israel, Rhodesia,4 and South Africa are prohibited.

Nonresident Accounts

The accounts of individuals, firms, or companies resident in countries outside Bangladesh are designated Nonresident Accounts. All such accounts are regarded for exchange control purposes as accounts related to the country in which the account holder is permanently residing.5 Nonresident Accounts may be opened only with the prior approval of the Bangladesh Bank. Specified debits and credits to nonresident accounts may be made by authorized dealers without the prior approval of the Bangladesh Bank during the absence of the account holder from Bangladesh. Certain other debits and credits may be made without the prior approval of the Bangladesh Bank but are subject to reporting ex post.

All diplomatic missions operating in Bangladesh, their diplomatic officers, home-based members of the mission staffs, international nonprofit humanitarian organizations functioning in Bangladesh and their expatriate employees, foreign oil companies engaged in oil exploratory work, foreign contractors and consultants engaged in specific projects, and foreign nationals residing in Bangladesh regardless of their status are allowed to maintain Convertible Taka Accounts. These accounts may be credited freely with receipts of inward remittances in convertible foreign exchange, and may be debited freely and at any time for remittances abroad in convertible currencies and for transfers to Nonconvertible Taka Accounts. Transfers between Convertible Taka Accounts are freely permitted.

Under the Wage Earners’ Scheme, Bangladesh nationals and persons of Bangladesh origin who are working abroad are permitted to open Foreign Currency Accounts denominated in pounds sterling or U.S. dollars. These accounts may be credited with (1) remittances in convertible currencies received from abroad through normal banking channels and postal channels; (2) proceeds of convertible currencies (currency notes, travelers checks, drafts, etc.) brought into Bangladesh by the account holder while on a temporary visit to Bangladesh, provided they were declared to the customs upon arrival in Bangladesh; and (3) transfers from other Foreign Currency Accounts opened under the Wage Earners’ Scheme. The accounts may be debited, without restriction, but subject to reporting to the Bangladesh Bank, for the following purposes: (1) all local disbursements; (2) transfers to other Foreign Currency Accounts opened under the Wage Earners’ Scheme; (3) payment for imports of specified goods; (4) payment of bank commissions and other bank charges connected with the handling of the accounts; and (5) travel expenditures abroad for business or private purposes up to the equivalent of £ stg. 100 in a year for each country for travel to Burma, India, Nepal, Pakistan, and Sri Lanka, and up to the equivalent of £ stg. 300 a trip for travel to other countries.

Imports and Import Payments

Imports are financed either from Bangladesh’s own resources or with foreign aid, loans, and barter arrangements. Imports financed from Bangladesh’s own resources are licensed within the framework of an annual import policy (import budget). Under the import policy for the fiscal year 1979/80 (July 1979-June 1980), items that may be imported were classified into four broad categories: (1) goods imported by “commercial importers”; (2) raw materials and packing materials imported by “industrial units” recognized as such under an entitlement system; (3) items imported exclusively by the TCB and/or jointly by the TCB, other approved agencies, and private sector importers; and (4) items imported under the Wage Earners’ Scheme against payment from Foreign Currency Accounts.

All imports require licenses or approval on letter of credit authorization forms. Single country licenses or letter of credit authorization forms are issued for imports under bilateral trade or payments arrangements and for tied aid imports. Other import licenses are valid worldwide, except that imports from Israel, Rhodesia (see footnote 4), and South Africa are prohibited. Licenses and letter of credit authorization forms issued to importers generally remain valid for shipment for 6 months from the date of opening letters of credit, if the letter of credit is established within the period specified by the licensing authority. Licenses and letter of credit authorization forms issued for imports of machinery and spare parts, however, remain valid for 9 months from the date of opening the letter of credit. Licenses issued to industrial consumers are valid for 12 months. Licenses (other than those issued under the Export Performance License Scheme and the Wage Earners’ Scheme) are not transferable, and when they expire, are not normally revalidated except where, owing to circumstances beyond the control of importers, the letter of credit requirement could not be met or shipping arrangements could not be made.

Payment against imports is generally permissible only under cover of irrevocable letters of credit. Imports of books and periodicals, as well as drugs and medicines, up to specified limits are also permissible on a consignment basis. Public sector importers may, however, import on a cash against documents basis. Certain imports are reserved for the TCB, including certain chemical and metal products, cement, sugar, certain cotton textiles, and woolen fabrics. The importation of a number of items is reserved exclusively for public sector agencies; these include airplane parts, fire engines, coal and coke, cinematographic films, certain cotton textiles, edible oil, fertilizers, insecticides, and wood and timber. There are limited facilities outside the import program for minor imports by specified end-users, such as hospitals and educational or technical institutions.

The licensing of imports of specified raw materials and packing materials by industrial consumers is governed by an entitlement system, based on the requirements for various industries during each “import” period as established by the Director-General of Industries. Firms in the industrial sector are given an entitlement for importation of specified raw materials and packing materials, and licenses are issued on the basis of the entitlement. Separately, industrial consumers may be granted import licenses for parts and accessories of machinery. Goods imported against licenses issued to industrial consumers must be used in the industry concerned and must not be sold or transferred without prior approval.

Under an Export Performance License Scheme aimed at encouraging manufactured exports, industries engaged in export business (other than jute, jute goods, and loose tea), or with export potential, may receive licenses in excess of their normal entitlement for the importation of their raw material requirements or other specified items, on the basis of their export performance. Licenses issued under the scheme have to be claimed within six months of the realization of the export proceeds. These licenses are transferable.

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

Payments for Invisibles

Payments for invisibles connected with authorized trade transactions generally are not restricted. Payments for most other invisibles require prior approval and are restricted. Foreign exchange is not provided for tourist travel. Applications for foreign exchange for business travel, medical treatment, and education abroad are considered on an individual basis; as a rule, for business travel the amount granted is US$50 a day, subject to a maximum of US$3,000 a calendar year for exporters whose total export earnings in the preceding year were Tk 2.5 million or above and a maximum of US$1,500 for those whose export earnings were less than Tk 2.5 million; for medical treatment the amount granted is about £ stg. 400. A Bangladesh national proceeding abroad by air is allowed to purchase foreign exchange from a Foreign Currency Account under the Wage Earners’ Scheme, subject to a certain limit (see section on Nonresident Accounts, above). Foreign nationals working in Bangladesh must obtain approval before making remittances abroad for family maintenance purposes; such approval is usually granted up to 50 per cent of wages or salaries, subject to a maximum of £ stg. 200 a month (net of tax) if the terms of employment have been approved by the Government.

Nonresident travelers may take out the foreign currency and travelers checks they declared on entry less the amount sold to authorized dealers or money changers; they may also, without obtaining the approval of the Bangladesh Bank, reconvert taka notes up to Tk 500 or 25 per cent of the amount converted, whichever is smaller, into convertible foreign currencies at the time of their exit. Resident travelers may take out foreign currency and travelers checks up to the amount of any travel allocation they have been granted. Bangladesh nationals may take out Tk 20 in domestic currency; otherwise, the export of Bangladesh currency notes and coin is prohibited.

Exports and Export Proceeds

Exports to Israel, Rhodesia (see footnote 4), and South Africa are prohibited. The proceeds from exports must be received within four months of shipment.

Proceeds from Invisibles

All proceeds from invisibles must be surrendered, but Bangladesh nationals working abroad may retain their earnings in Foreign Currency Accounts. All Bangladesh nationals who are resident in Bangladesh must surrender any foreign exchange coming into their possession, whether held in Bangladesh or abroad, to an authorized dealer within one month of the date of acquisition. Foreign nationals residing in Bangladesh continuously for more than six months are required to surrender any foreign exchange representing their earnings abroad in respect of business conducted in Bangladesh or services rendered, within one month of the date of acquisition. The import of Bangladesh currency notes and coin exceeding Tk 20 is prohibited. Foreign currency travelers checks and foreign currency notes may be brought in by nonresident travelers without limit, provided that the total amount brought in is declared to the customs authorities upon arrival.

Capital

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

Authorized dealers may obtain short-term loans and overdrafts from overseas branches and correspondents for a period not exceeding seven days at a time, provided that they are obtained only in the currency of the country or monetary area in which the overseas bank branch or correspondent is situated. Borrowing abroad by resident nonbank firms of Bangladesh origin is prohibited. Borrowing by nonresident-owned or nonresident-controlled enterprises from commercial banks in Bangladesh, as well as from abroad, requires approval, and loans by authorized dealers in local currency against overseas guarantees or collateral outside Bangladesh also require approval. Authorized dealers may, however, approve loans, overdrafts, or credit facilities against goods intended for export from Bangladesh to companies controlled by persons resident outside Bangladesh. Authorized dealers must obtain approval before making any loans in foreign currencies to residents or nonresidents, whether secured or unsecured. They are not normally permitted to hold short-term foreign assets other than small working balances.

The permission of the Bangladesh Bank is required for nonresidents other than banks to establish or continue a business in Bangladesh. Foreign firms with branches in Bangladesh are required to submit statements of their foreign exchange receipts and local expenses at the end of each calendar quarter. Under the existing industrial investment policy, foreign private investment is permitted in collaboration with both the Government and private entrepreneurs. In the private sector, however, foreign participation is limited to those industries where technical know-how is not locally available, where the technology involved is very complicated, or where capital outlay is high, and to industries that are either based on local raw materials or that are wholly export oriented. For a new investment, foreign investors generally are required to provide as equity capital the entire amount of the project’s foreign exchange component. There is no ceiling on private investment, but investment above Tk 100 million needs special approval. Tax holidays are granted for periods of up to nine years, depending on location. All foreign investments require approval by the Investment Board. Dividends on foreign capital may be remitted net of tax.

Gold

The import and export of gold or silver in any form are prohibited without special permission, which is not normally granted. There are no restrictions on the internal sale, purchase, or possession of gold or silver ornaments (including coin) and jewelry, but there is a prohibition on the holding of gold and silver in any other form except by licensed industrialists or dentists.

Changes during 1979

January 15. The exchange rate of the taka for the pound sterling was changed to Tk 31.125 = £ stg. 1. There were two further changes in the exchange rate for sterling to Tk 32.025 = £ stg. 1 on April 16, and to Tk 33.00 = £ stg. 1 on May 28, before the pegging arrangements were changed on August 13 (see below).

April 27. The Bangladesh Bank introduced spot sales transactions with authorized dealers in deutsche mark and Japanese yen.

July 1. Under the import program for the fiscal year 1979/80, the level of imports was established at Tk 16.5 billion; this amount was to be financed by cash (Tk 9 billion), by commodity aid (Tk 4.1 billion), by the Wage Earners’ Scheme (Tk 2.2 billion), and by barter (Tk 1.2 billion). For 1978/79, the level of imports had been set at Tk 14.5 billion.

July 21. The bilateral trade and payments agreement with Viet Nam was extended by one year.

August 13. The exchange rate of the taka was pegged to a basket of major currencies within margins of 2.5 per cent. The middle rate of the official spot buying and selling rates for the pound sterling, the intervention currency, was changed to Tk 34.7118 = £ stg. 1.

August 15. It was announced that imports under the Wage Earners’ Scheme would be permitted only against payment from funds deposited in Foreign Currency Accounts or remitted to Bangladesh through regular banking channels. This regulation did not apply to imports of transport machinery and equipment by Bangladesh workers abroad, provided that evidence of earnings was submitted, or to imports shipped by workers returning to Bangladesh.

August 20. The foreign exchange allowance for pilgrims traveling to Mecca for hajj in 1979 was set at Saudi Arabian riyals 2,102 for travel by air and SRls 2,322 for travel by sea.

August 20. The bilateral trade and payments agreement with Bulgaria was extended by one year.

September 13. The bilateral trade and payments agreement with Poland was extended by one year.

October 29. The bilateral trade and payments agreement with Hungary was extended by one year.

Barbados

(Position on December 31, 1979)

Exchange Rate System

The currency of Barbados is the Barbados Dollar, which is pegged to the U.S. dollar, the intervention currency, at BDS$2 = US$1. On December 31, 1979 the official buying and selling rates for the U.S. dollar were BDS$ 1.9975 and BDS$2.0250, respectively, per US$1. Buying and selling rates for the Canadian dollar, the deutsche mark, and the pound sterling are also officially quoted. These rates include commission charges of 0.1875 per cent buying and 1.375 per cent selling. On December 31, 1979 the buying and selling rates of the Central Bank of Barbados for the Canadian dollar were BDS$1.7020 and BDS$1.7287, respectively, per Can$l; those for the deutsche mark were BDS$1.1572 and BDS$1.1754, respectively, per DM1; and those for sterling were BDS$4.4521 and BDS$4.5218, respectively, per £ stg. 1.

Under clearing arrangements with regional monetary authorities, the Central Bank sells currencies of the Caribbean Common Market (Caricom) countries1 at fixed rates (including a commission of 0.125 per cent) but purchases only East Caribbean and Trinidad and Tobago dollar notes. The rate applied mutually for the purchase of currency notes is the parity rate between each pair of currencies determined on the basis of the U.S. dollar rate. The Central Bank regulates the commission that may be charged by the commercial banks in dealings with their customers in Caricom currencies. There are no taxes or subsidies on purchases or sales of foreign exchange.

Administration of Control

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

Prescription of Currency

Settlements with residents of countries outside the Caricom area other than Rhodesia or South Africa may be made in any foreign currency,2 or through an External Account in Barbados dollars. Settlements with residents of Caricom countries must be made either through External Accounts (in Barbados dollars) or in the currency of the Caricom country concerned, except that commercial banks may issue travelers checks denominated in U.S. dollars to Barbadian residents traveling to other Caricom countries, within the approved limits for travel allowances.

Nonresident Accounts

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

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

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

Imports and Import Payments

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

Payments for authorized imports are permitted upon application and submission of documentary evidence (invoices and customs warrants) to authorized dealers. Advance payments for imports require prior approval by the Central Bank.

Payments for Invisibles

Payments for invisibles require exchange control approval. Except for transactions involving residents of Rhodesia and South Africa, payments for all commercial transactions are permitted freely when the application is supported by appropriate documentary evidence. Authority has been delegated to authorized dealers to provide basic allocations of foreign exchange for certain payments of a personal nature and for sundry payments. These include foreign travel (for which up to BDS$ 1,500 a person a calendar year may be allocated for private travel and BDS$200 a day, up to BDS$6,000 a person a calendar year for business travel), expenses of education abroad (BDS$5,000 a person a year), subscriptions to newspapers and magazines, income tax refunds, official payments, and life insurance premiums. Applications for additional amounts or for purposes for which there is no basic allocation are approved by the authorities, provided that no unauthorized transfer of capital seems to be involved. The cost of transportation to any destination may be settled in domestic currency and is not deducted from the travel allocation.

Residents traveling to any destination outside Barbados may take out foreign currency notes and coin up to the value of BDS$500 and Barbados notes up to BDS$100. Nonresident visitors are not permitted to take out any Barbados currency but may freely export any foreign currency they had previously brought in.

Exports and Export Proceeds

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

Proceeds from Invisibles

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

Capital

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

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

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

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

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

Gold

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

Changes during 1979

March 19. Wheat flour and maize flour were placed on the list of items requiring an import license.

March 19. Cornmeal was placed on the list of items requiring an import license.

April 5. Dried, dehydrated, or evaporated vegetables, whole, cut, sliced, broken, or in powder, but not further prepared, were placed on the list of items requiring an import license.

April 5. Frozen fried potatoes and frozen potato chips were placed on the list of items requiring an import license.

July 23. Instant mashed potatoes were placed on the list of items requiring an import license.

July 23. Boxes, bags, and other packing containers of paper and paperboard, paper bags, and cardboard boxes were placed on the list of items requiring an import license.

October 22. Fresh, chilled, or frozen fish were placed on the list of items requiring an import license.

December 19. The basic allocation of foreign exchange for business travel was raised from BDS$4,500 a year to BDS$6,000 a year. The daily allocation was also increased from BDS$150 to BDS$200.

Belgium and Luxembourg

(Position on December 31, 1979)

Exchange Rate System

The currency of Belgium is the Belgian Franc. The currency of Luxembourg is the Luxembourg Franc which, in accordance with a Luxembourg decree, is at par with the Belgian franc. Luxembourg is linked to Belgium in a monetary association. Belgium and Luxembourg participate with Denmark, France, the Federal Republic of Germany, Ireland, Italy, and the Netherlands in the exchange rate and intervention mechanism of the European Monetary System (EMS). In accordance with this agreement, Belgium and Luxembourg maintain the spot exchange rates between the Belgian franc and the Luxembourg franc and the currencies of the other participants within margins of 2.25 per cent (in the case of the Italian lira, 6 per cent) above or below the bilateral central rates.

The agreement implies that the National Bank of Belgium stands ready to buy or sell the currencies of the other participating states in unlimited amounts at specified intervention rates. On December 31, 1979 these rates were

Specified Intervention Rates Per:Belgian Francs or Luxembourg Francs
Upper limitLower limit
100 Danish kroner526.90503.75
100 French francs696.00665.375
100 deutsche mark1,639.551,567.40
1 Irish pound60.902058.2225
1,000 Italian lire36.49032.365
100 Netherlands guilders1,483.251,418.00

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

In Belgium-Luxembourg there are two spot exchange markets, the official (réglementé or regulated) market and the free market, which are separated; foreign currency acquired in one market may not be sold in the other. Most current transactions are settled in the official market: only authorized banks may carry out exchange transactions permitted in that market. Most capital transactions take place in the free market. In a few cases, however, there is freedom of choice as to the exchange market in which conversion is to be effected.

In the official market most convertible currencies are dealt.1 However, although Zaïrian currency (the Zaïre) is officially quoted, the Belgian-Luxembourg Economic Union (BLEU) does not permit the use of the Zaïre in settlements with countries other than Zaïre, or the exchange of the Zaïre for convertible Belgian francs or other convertible currencies. There are no taxes or subsidies on purchases of sales of foreign exchange.

Nonbank residents may not acquire or surrender convertible currencies in the official spot market until a foreign payment is due. Nonbank residents may make forward purchases and sales of convertible currencies in the official market through authorized banks, provided that any foreign currency purchased is used for the authorized settlement of obligations within 15 working days from delivery (on the delivery date itself if the maturity of the forward contract is less than 15 days); exchange not used within that period must be resold in the official market. Profits resulting from forward contracts not used to cover authorized inward or outward payments through the official market must be surrendered to the Treasury. On December 31, 1979 the buying and selling rates for the U.S. dollar in the official market were BF 27.9725 and BF 28.1225, respectively, per US$1.

In the free exchange market, all currencies (including domestic and foreign banknotes) may be bought and sold at freely fluctuating rates. On December 31, 1979 the free market rates between banks for the U.S. dollar were BF 28.99 buying and BF 29.01 selling, per US$1.

Any resident or nonresident, including banks, may deal in the free market. Forward transactions, whether by banks or nonbanks, are uncontrolled and do not require a permitted underlying transaction. There is normally no intervention in forward exchange in either exchange market.

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

Exchange Control Territory

There is no exchange control between Belgium and Luxembourg; the two countries constitute a single exchange control territory in relation to other countries.

Administration of Control

The ultimate responsibility for the administration of exchange control in the Belgian-Luxembourg Economic Union is exercised by the Belgo-Luxembourg Exchange Institute (IBLC). Exchange control powers for most payments and transfers are delegated to authorized banks. The Belgo-Luxembourg Administrative Commission has authority to license trade transactions; it determines import and export policy, but has delegated the issuance of import and export licenses to the licensing offices of the BLEU, one of which is located in each country.

Prescription of Currency

The prescription of currency requirements operate mainly to ensure that settlements with foreign countries are made through the appropriate exchange market or, where payments in Belgian or Luxembourg francs are involved, through the appropriate category of nonresident account. Foreign countries are divided into two groups: the bilateral countries (comprising Burundi, Rwanda, and Zaïre, although the BLEU is not a party to any bilateral payments agreement) and the convertible area (all other countries).

All inward and outward transactions are classified in four groups, which may be summarized as follows: List A covers merchandise, transport expenses, industrial expenses (e.g., costs of processing), and other commercial expenses, including insurance. List B covers settlements of travel firms, salaries, pensions, fees, subscriptions, taxes, and public administration payments. List C covers (1) sharing in administrative expenses of central offices, by branches or affiliates; (2) income on securities, loans, etc., rents, and operating profits, and (3) repatriation of certain foreign long-term investments and transfers by emigrants of foreign nationality. List D covers gifts, life insurance payments, family maintenance payments, capital investments, liquidation of investments, dealings in gold, transfers by emigrants of Belgian or Luxembourg nationality, transfers by immigrants, inheritances, forward covering of merchandise, private travel expenses (except when settled through travel agencies), and all transactions not in any of the other three lists.

The permissible methods of settlement for foreign payments are as summarized in the table below.

In addition to the general methods of settlement described above, individual licenses are granted in order to allow transfers through the official market for some of the transactions mentioned in List D. These cover essentially direct investment by enterprises and some capital transfers by individuals. Payments for goods of Egyptian origin (other than rice, raw cotton, and crude petroleum) are subject to special rules.

Summary of Permissible Methods of Settlement for Foreign Payments
Transaction ListCountry GroupForeign CurrencyExchange MarketNonresident Account in Francs
Outward Payments
A, BConvertibleConvertibleOfficialConvertible
CConvertibleAnyOfficial or FreeConvertible or Financial
DConvertibleAnyFreeFinancial
A,B,C,DBilateralBilateral*
Inward Payments
A,BConvertibleConvertibleOfficialConvertible
CConvertibleConvertible OtherOfficial or Free FreeConvertible or Financial
DConvertibleAnyFreeFinancial or Convertible
A,BBilateralConvertibleOfficialBilateral or Convertible*
CBilateralConvertible OtherOfficial or Free FreeBilateral or Convertible*
DBilateralAnyFreeBilateral or Convertible*

Nonresident Accounts

Belgian or Luxembourg franc accounts of nonresidents are classified as follows:

1. Convertible Accounts. Balances on these accounts are equivalent to currencies negotiated on the official market, and accounts may be opened freely in the name of any nonresident.2 They are not related to any country or monetary area. They may be used freely for settlements with residents which either must or may be made through the official market and for retransfer abroad through the official market, and they may be credited freely with proceeds from the sale by a nonresident of convertible currencies in the official market to authorized banks in Belgium and Luxembourg. Balances on Convertible Accounts may be transferred freely to other Convertible Accounts or be converted into any currency in the official market. Advances on Convertible Accounts other than mail-credit advances are subject to authorization by the IBLC. Convertible Accounts may be held in the form of sight accounts (demand deposits), prior notice accounts, and time deposits.

2. Financial Accounts. These accounts may be opened only for residents in convertible area countries.3 They may be used freely for settlements which either must or may be made through the free market and for retransfer abroad through the free market, and they may be credited with proceeds from the sale by a nonresident of gold or any currency in the free market. Domestic banknotes and proceeds from the sale in the free market of foreign banknotes, when deposited with authorized banks by foreign travelers in Belgium and Luxembourg or by persons residing abroad, may be credited to Financial Accounts. Transfers between Financial Accounts are free. Balances on these accounts may be used to purchase gold or any currency negotiated in the free market.

3. Bilateral Accounts. These accounts may be opened for residents of bilateral countries, and are related to the country of residence of the account holder. They are used for settlements with bilateral countries, and may be credited with proceeds from the sale of convertible currencies by a nonresident in the official market. Balances on Bilateral Accounts may be transferred to other Bilateral Accounts related to the same country. Transfers may also be made freely between Bilateral Accounts related to Burundi, Rwanda, and Zaïre. In practice, the authorities permit the conversion of balances on Bilateral Accounts of the central banks of these three countries into foreign currencies in the official market.

Imports and Import Payments

Individual licenses are required for (1) all imports from Albania, Bulgaria, the People’s Republic of China, Czechoslovakia, the German Democratic Republic, Hong Kong, Hungary, Japan, North Korea, Mongolia, Poland, Romania, the U.S.S.R., and Viet Nam,4 and (2) a number of imports from all other countries outside the BLEU.5 The commodities for which individual licenses are required include many textile products, certain agricultural products and foodstuffs, coal and petroleum products, and diamonds. All other commodities are free of license and quantitative restriction; the sole requirement is a form completed by the importer giving notification of the payment (payment declaration), which must be presented to an authorized bank. Many commodities subject to individual licensing are also admitted without quantitative restriction. Along with other EC countries, the BLEU applies quotas on a number of textile products from non-EC countries and on Greek wine; the BLEU also applies a system of minimum import prices to foreign steel products.

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

No exchange control documentation is required for imports not exceeding BF 100,000 in value. An authorized bank is required to make certain that payment is made by one of the methods laid down in the regulations (see section on Prescription of Currency, above) and that foreign exchange is not acquired until the import payment is due. Exchange control approval is required for payments for imports more than three months before or six months after the date of customs clearance; prior examination of supporting documents by the IBLC is required for payments exceeding BF 25 million and for payments made more than 30 days before the date of customs clearance. However, in the latter case, prior examination is not required if payment takes place either under a documentary credit or on a documentary collection basis, provided that documents are submitted to the authorized bank showing that the goods have already been shipped to the BLEU. Payments for transit transactions must be made not later than three months from the date of any advance payment collected from the foreign buyer, and may not be made earlier than three months before the date on which such payment is expected to be received.

Payments for Invisibles

Payments to convertible area countries for transactions included in Lists A and B must be made through the official exchange market or by crediting Belgian or Luxembourg francs to a Convertible Account. For payments exceeding BF 25 million and in other exceptional cases, prior examination of supporting documents by the IBLC is required. Payments to convertible area countries for items in List C may be made through either the official market (alternatively, by crediting Belgian or Luxembourg francs to a Convertible Account) or the free market (alternatively, by crediting Belgian or Luxembourg francs to a Financial Account, or in foreign or domestic banknotes); payments for items in List D must be made through the free market (alternatively, by crediting Belgian or Luxembourg francs to a Financial Account, or in foreign or domestic banknotes); payments to bilateral countries must be made by crediting Belgian or Luxembourg francs to a Bilateral Account related to the country concerned; payments to Zaïre, however, may also be made in Zaïres through a convertible account in Zaïre. Foreign and domestic banknotes may be exported freely.

Exports and Export Proceeds

Individual licenses are required for specified exports to all countries outside the BLEU.6 All other exports are free of license; only a form completed by the exporter and giving notification of the export is required.

Exchange control documentation is not required for exports of less than BF 100,000 in value. The authorized bank is required to verify that export proceeds are received in accordance with the regulations (see section on Prescription of Currency, above). Special authorization is required to collect export proceeds more than six months after the date of exportation. Export proceeds in convertible currencies must be surrendered to an authorized bank (i.e., sold in the official exchange market) within eight days of receipt or, alternatively, they may be deposited in a Controlled Resident Account in Foreign Currency with an authorized bank if they are to be used later for current payments authorized to be made in these currencies. Advance collection of export proceeds more than three months before the expected date of exportation requires prior authorization by the IBLC. Proceeds from transit transactions must be collected within three months from the date of payment to the foreign supplier.

Proceeds from Invisibles

Receipts in convertible currencies from invisibles connected with commercial transactions (Lists A and B—see section on Prescription of Currency, above) must be surrendered (i.e., sold in the official exchange market) within eight days of receipt or, alternatively, be credited to a Controlled Resident Account in Foreign Currency with an authorized bank if they are to be used later for authorized current payments. Receipts in convertible currencies from transactions included in List C may be retained or sold in the official or the free market. Receipts from other transactions (List D) and receipts in all other currencies may be retained or sold in the free market. Proceeds from transactions included in Lists C and D may also be collected in domestic or foreign banknotes. Foreign and domestic banknotes may be imported freely.

Capital

All capital transactions with convertible area countries may be carried out through the free market, by settlement in Belgian or Luxembourg francs through the Financial Account of a nonresident, or in domestic or foreign banknotes. Direct investments by enterprises and some capital transfers by individuals, including gifts, family maintenance payments, remittances by emigrants of Belgian or Luxembourg nationality, and inheritances, but not transactions of a financial nature, may also be made through the official market, subject to individual license. The exchange control authorities may guarantee the repatriation of approved foreign investments made in Belgium and Luxembourg. In that case, capital brought in through the official market (under special license and as an exception to the standard prescription of currency set out above) may be repatriated through that market.

Also eligible for outward transfer through the official market are the amortization and redemption proceeds of bonds denominated in Belgian or Luxembourg francs, quoted on a stock exchange in the BLEU, and owned by residents of convertible area countries, provided that such securities have been held at least six months prior to the maturity date. All transactions in securities by residents or nonresidents are free, but the financial settlement of such transactions must conform to the general regulations for capital transactions. The prior approval of the Ministry of Finance is required for issues of securities on the Belgian capital market by nonresidents; most of the Belgian franc bond issues on the domestic capital market have in practice been made by international organizations, while issues of Eurobonds denominated in Belgian francs are not normally permitted. The Luxembourg authorities have, from time to time, permitted Eurobond issues denominated in Luxembourg francs. Public bids by foreign companies or individuals for the purchase or exchange of shares issued by Belgian companies require the prior approval of the Ministry of Finance. Outward payments for capital transactions with bilateral countries may be made only in Belgian or Luxembourg francs through Bilateral Accounts or, in the case of Zaïre, in Zaïres; inward payments for capital transactions with bilateral countries may be made in Belgian or Luxembourg francs through Bilateral Accounts, in any currency through the free market or, in the case of Zaïre, in Zaïres.

Gold

Residents may freely purchase, hold, and sell gold in coin or bars, at home or abroad. Imports and exports of gold in these forms by residents and nonresidents are unrestricted and free of license. Settlements in respect of gold transactions with convertible area countries (other than payments for semiprocessed gold imported by professional users) may be made only through the free market, through Financial Accounts in Belgian or Luxembourg francs, or in domestic or foreign banknotes. No customs duties or other charges are levied on imports or exports of gold, except imports for industrial or handicraft purposes. Licenses are required for imports of semiprocessed gold; these are issued to professional users, who have to make payment through the official market. Transactions in monetary gold are exempt from value-added tax.

Changes during 1979

March 1. The upper limit of import payments and export receipts for which no exchange control documentation was required was raised from BF 50,000 to BF 100,000. It would no longer be necessary to present supporting documents to the authorized bank for most payments for invisibles. The limit above which prior examination of current payments by the IBLC was required was raised from BF 10 million to BF 25 million. The requirement of prior examination of supporting documents by the IBLC for current receipts exceeding BF 10 million was abolished.

March 13. The participation of Belgium and Luxembourg in the exchange rate mechanism of the EMS became effective.

March 15. The formal link between the Luxembourg franc and gold was abolished.

Benin

(Position on December 31, 1979)

Exchange Rate System

The currency of Benin is the CFA Franc,1 which is pegged to the French franc, the intervention currency, at the fixed rate of CFAF 1 = F 0.02. The official buying and selling rates are CFAF 50 = F 1. Exchange rates for other currencies are derived from the rate for the currency concerned in the Paris exchange market and the fixed rate between the French franc and the CFA franc. They include a bank commission. The BCEAO levies a commission of 0.10 per mill for transfers from countries outside the West African Monetary Union and one of 2.50 per mill for transfers to such countries.2 Banks levy a commission on transfers to all countries outside the West African Monetary Union, part of which must be surrendered to the Treasury. There are no taxes or subsidies on purchases or sales of foreign exchange.

Administration of Control

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

Exchange control is administered by the Directorate of External Commerce in the Ministry of Commerce and Tourism. The Ministry of Finance, however, has the main responsibility for drawing up the exchange control regulations. The BCEAO is authorized to collect, either directly or through banks, financial institutions, the Postal Administration, and notaries public, any information necessary to compile balance of payments statistics. All exchange transactions relating to foreign countries must be carried out by authorized intermediaries. Import licenses are issued by the Directorate of External Commerce. Exports of diamonds and other precious or semiprecious materials require prior approval in the form of a decree issued by the Council of Ministers.

Prescription of Currency

Since Benin is an Operations Account country, settlements with France (as defined above), Monaco, and the Operations Account countries are made in CFA francs, French francs, or the currency of any other Operations Account country. Current payments to or from The Gambia, Ghana, Guinea, Guinea-Bissau, Liberia, Nigeria, and Sierra Leone are normally made through the West African Clearing House. Settlements with all other countries are usually effected through correspondent banks in France, in any of the currencies of those countries, or in French francs through Foreign Accounts in Francs. Certain settlements with the People’s Republic of China, however, are made through special accounts.3 All settlements with Rhodesia and South Africa are prohibited.

Nonresident Accounts

The regulations pertaining to nonresident accounts are based on those applied in France. The crediting to nonresident accounts of CFA banknotes, Franch banknotes, or banknotes issued by any other institute of issue that maintains an Operations Account with the French Treasury is not permitted, except for BCEAO banknotes mailed direct to the BCEAO agency in Cotonou by an authorized bank’s foreign correspondent for credit to a Foreign Account in Francs opened by the latter with an authorized bank. Foreign Accounts in Francs may be debited, without prior authorization, with the value of BCEAO banknotes mailed by authorized intermediaries direct to their foreign correspondents.

Imports and Import Payments

All imports originating in or proceeding from Rhodesia and South Africa are prohibited. Certain imports, such as narcotics, are prohibited from all sources. The Société de l’Alimentation Générale du Bénin (AGB) has a monopoly over the importation of sugar, rice, wheat, wheat flour, condensed milk, alcoholic beverages, and tobacco. Certain other agencies have an import monopoly for other specified commodities. Imports of all other goods originating in countries in the former French Franc Area may be made freely without an import license. Imports of all other goods originating in EC countries other than France may also be made freely; these goods require a license, which is issued automatically. Certain imports are liberalized when originating in member countries of the Organization for Economic Cooperation and Development (OECD) other than Japan and require only an import certificate made out by the importer himself. Imports of nonliberalized commodities originating in OECD countries, all imports originating in Japan, and all imports originating in non-OECD countries are subject to licensing; they are admitted in accordance with an annual import program. Under this program, a global quota is established for imports from all countries outside the former French Franc Area except EC countries. Certain French textiles processed in foreign countries are licensed separately.

All imports originating in foreign countries, when valued at more than CFAF 500,000, must be domiciled with an authorized bank. The import licenses or import certificates entitle importers to purchase the necessary exchange, but not earlier than eight days before shipment if a documentary credit is opened, or one month before the payment is due if the commodities have already been imported.

Payments for Invisibles

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

For tourist travel, residents traveling to countries other than France (as defined above), Monaco, and the Operations Account countries may obtain an exchange allocation of an amount equivalent to CFAF 175,000 a trip for each person (CFAF 87,500 for children under ten) for any number of trips a year; any foreign exchange in excess of the equivalent of CFAF 5,000 remaining after return to Benin must be surrendered. For business travel, there is a special allocation of the equivalent of CFAF 20,000 a day, subject to a maximum of CFAF 400,000 a trip.

The transfer of the entire net salary of a foreigner working in Benin is permitted upon presentation of the appropriate pay voucher, provided that the transfer takes place within three months of the pay period. Travelers to foreign counries may take out up to a maximum of CFAF 25,000 in BCEAO banknotes, French banknotes, and banknotes issued by other Operations Account countries. Resident travelers to countries of the former French Franc Area may take out any amount in BCEAO banknotes, but if proceeding to a country that is not a member of the West African Monetary Union, they must declare to the customs the amount taken out if it exceeds CFAF 150,000.

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

Exports and Export Proceeds

All exports to Rhodesia and South Africa are prohibited. Exports to all foreign countries must be domiciled with an authorized bank when valued at more than CFAF 500,000. All exports, except gold and diamonds, are free of license but require an export application visaed by the Directorate of External Commerce. The due date for payment for exports to foreign countries may not be later than 180 days after the arrival of the commodities at their destination. The proceeds must be collected, and currencies other than those of the former French Franc Area must be sold on the exchange market within two months of the due date. Prior authorization is required for the retention, sale, import, or export of raw diamonds and of precious and semiprecious materials.

Proceeds from Invisibles

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

Capital

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

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

All investments abroad by residents of Benin require prior authorization by the Minister of Commerce and Tourism.4 Foreign direct investments in Benin5 must be declared to the Minister before they are made. The Minister may request the postponement of the operations, within a period of two months. The full or partial liquidation of either type of investment also requires declaration. Both the making and the liquidation of investments, whether these are Beninese investments abroad or foreign investments in Benin, must be reported to the Minister and to the BCEAO within 20 days following each operation. Direct investments are defined as investments implying control of a company or enterprise. Mere participation is not considered as direct investment, provided that it does not exceed 20 per cent in the capital of a company whose shares are quoted on a stock exchange.

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

The Investment Code (Ordinance No. 72-1 of January 8, 1972) provides for preferential status that may be granted to foreign and domestic investments in industry, mining, fisheries, agriculture, and tourism, when such investments are deemed to be of value to national development. Four preferential regimes are established. Plan A is intended for medium-sized investments and provides for exemption, during a period of up to 5 years, from import duties and taxes on materials necessary for the production of the proposed item, and from certain other taxation. Plan B, for larger projects, is granted for a maximum exemption period of 8 years and provides, in addition to the benefits of Plan A, certain other tax privileges. Plan C is intended for enterprises undertaking to invest more than CFAF 500 million and is granted for a period of up to 15 years. In addition to the benefits of Plan B, Plan C guarantees stability of tax status, free choice of suppliers, and certain other advantages. For Plans A, B, and C up to two years for installation time can be added to the period of the agreement. Plan D provides certain benefits for Beninese entrepreneurs investing at least CFAF 10 million. The method of application of the Investment Code is set out in Decree No. 72-7 of January 17, 1972.

Gold

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

Changes during 1979

May 15. A special customs tax equivalent to 0.75 per cent of the c.i.f. value was introduced on all imported goods except for certain food products and raw materials.

May 25. Import quotas on a range of goods including beverages, clothing, fertilizers, linens, mopeds, perfumes and toilet articles, pesticides, and shoes were reduced to 50 per cent of the previous year’s consumption.

Bolivia

(Position on December 31, 1979)

Exchange Rate System

The currency of Bolivia is the Bolivian Peso. On November 30, 1979 the authorities announced the abolition of the fixed exchange rate regime for the peso and the adoption of a fluctuating exchange rate system to be administered by the Central Bank in accordance with market conditions. Until the end of the year, however, the official buying and selling rates for the U.S. dollar, the intervention currency, were maintained at $b 24.51 and $b 24.53, respectively, per US$1. Buying and selling rates for certain other currencies1 are also officially quoted, with daily quotations based on the buying and selling rates for the U.S. dollar in markets abroad. Sales of foreign exchange by the commercial banks and exchange houses are subject to an exchange tax of 1.6 per cent and a stamp tax of 0.2 per cent and, in addition, the selling rate is subject to a banking commission of 0.1 per cent. Accordingly, the effective selling rate of the commercial banks and exchange houses is $b 25 per US$1.

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

Administration of Control

The exchange control system is administered by the Central Bank of Bolivia.

Prescription of Currency

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

Imports and Import Payments

All imports by public sector agencies require the prior authorization of the Ministry of Industry and Commerce; these agencies are not permitted to import commodities that are available in Bolivia. Private imports of certain commodities also require prior authorization; these include live cattle, various foodstuffs, specified motor vehicles, and petroleum and petroleum products. The import of goods that are produced locally is prohibited, in particular, articles of clothing and detergents. All other goods may be imported freely. Foreign exchange to pay for imports may be purchased from commercial banks. Most foreign credits, including officially guaranteed suppliers’ credits, are subject to authorization by the National Council for Planning and Economy and to control by the Central Bank.

Most private sector imports are subject to an advance deposit of either 5 per cent, 10 per cent, or 25 per cent ad valorem, which must be lodged 120 days prior to the anticipated release from customs.

Most private sector imports are subject to a customs surcharge of 1 per cent ad valorem. Most imports also are subject to an “additional tax,” to an import surcharge of 3 per cent, and to a tax on services rendered of 1 per cent to 8 per cent.

Payments for Invisibles

Payments for invisibles may be made freely. Residents of Bolivian or foreign nationality must pay a travel tax when leaving the country. The tax is $b 200 for air travel to neighboring countries, $b 100 for overland travel to such countries, $b 450 for air travel to other Latin American countries, and $b 600 for air travel to countries outside Latin America.

Exports and Export Proceeds

Exports are not normally subject to licensing, although certain exports may be prohibited or restricted from time to time owing to domestic demand and supply factors. All proceeds from exports of the public and private sectors must be sold to the Central Bank within 15 days of receipt, with the exception of reasonable amounts deducted for foreign exchange expenditures undertaken to effect the export. As regards minerals, Comibol and the medium-sized mines export their own production, and the Mining Bank that of the small mines of the private sector.

Proceeds from Invisibles

Exchange derived from invisibles may be retained or sold in the exchange market.

Capital

Outward capital transfers by residents or nonresidents are free of control and may be made freely; inward capital transfers also may be made freely, but government receipts of transfers and grants and all proceeds of borrowings from foreign public sector agencies must be surrendered to the Central Bank. All foreign credits, including suppliers’ credits, to government agencies and autonomous entities, and credits to the private sector with official guarantees, are subject to prior authorization by the National Council for Planning and Economy and to control by the Central Bank. Most foreign loans must be registered with the National Investment Institute.

Foreign investments in Bolivia, except those involving petroleum and mining, are governed by the provisions of the Investment Law (Decree-Law No. 10045) of December 16, 1971. The law is administered by the National Investment Institute. Investments in petroleum and mining are governed by the General Hydrocarbons Law and the Mining Code. Certain foreign investments are subject to Decisions Nos. 24 and 103 of the Cartagena Agreement.

Gold

Imports and exports of gold and domestic trading in gold are regulated by the Central Bank. The Central Bank also purchases, for its use or for export in the form of gold bars, the total national production of gold. Without affecting these powers of the Central Bank, the Mining Bank may purchase at home and sell abroad, in unworked form, the output of gold, silver, and platinum. The Mining Bank also sells gold, silver, and platinum on the domestic market subject to conditions that it establishes jointly with the Central Bank. The Central Bank is empowered to purchase its full requirements of gold from the Mining Bank. Cooperatives and other producers must sell the gold they produce to the Central Bank. The Mining Bank is authorized to sell a specified quantity of gold annually to domestic jewelers and dentists and is obliged to sell the remainder to the Central Bank. Residents may freely purchase, retain, hold, and sell gold in any form other than bars in Bolivia.

Changes during 1979

January 12. Supreme Decree No. 16106 authorized the free importation of school textbooks in general (scientific, technical, and literary), provided they were not objectionable on social grounds, with the sole exception of reading books for elementary grades.

February 1. Supreme Decree No. 16143 prohibited exemptions from the ad valorem charge of 1 per cent on imports approved by Supreme Decree No. 07283 of August 18, 1975.

February 1. Supreme Decree No. 16154 extended until December 31, 1979 the exemption from customs duties and taxes and from taxes on services rendered to cover the list of essential consumer goods (including milk, maté, lard, fats, margarine, and canned tuna, salmon, and sardines) itemized in Supreme Decree No. 14716 of July 1, 1977 and Supreme Resolution No. 186326 of March 2, 1978. These products were also exempted from the prior deposit requirement.

February 16. Decree-Law No. 16198 determined that with effect from February 15, 1979 all imports by agencies of the Central Government, the decentralized sector, and public enterprises would be required to pay all customs duties and taxes established by the import tariff; there would be no exemptions from such duties and taxes, although imports effected under special customs regulations regarding product specification and nomenclature were excluded from this requirement.

February 22. Supreme Decree No. 16231 revoked Supreme Decree No. 08610 of December 30, 1968, eliminating the provisions pertaining to heading 3.01 of the import tariff and permitting the importation of three million fertilized eggs for breeding purposes.

April 5. Supreme Decree No. 16327 established that automotive vehicles already in the country under temporary import regulations and imports that were not supported by the relevant import permit could be definitively imported upon cash payment of the current customs duties and taxes, without being subject to the 25 per cent prior deposit or the certified commercial documentation requirements. The regularization process had to be completed within 90 days.

June 20. Decree-Law No. 16602 exempted imports of armaments and military supplies not produced domestically and imported by the Ministry of National Defense for the exclusive use of the Air Force from the obligation to pay customs duties and taxes established in Decree-Law No. 16198 of February 16, 1979.

June 28. An additional ad valorem charge of 2 per cent was established for imports of products listed in the current tariff (Supreme Decree No. 16640).

June 28. Imports of armaments and military supplies not produced domestically and intended for use by the Navy were exempted from the tax obligations of Decree-Law No. 16198 of February 16, 1979 (Supreme Decree No. 16685).

July 11. Supreme Decree No. 16755 modified the import tariff for cargo vehicles (pickup trucks) and passenger vehicles (jeep-type vehicles and ambulances). The prohibition on imports was lifted for these vehicles but retained for all others.

July 25. Imports of armaments and military supplies not manufactured in the country and intended for the use of the Armed Forces were exempted from the tax obligations of Decree-Law No. 16198 of February 16, 1979 (Supreme Decree No. 16891).

September 18. Supreme Decree No. 17055 introduced, with effect from October 1, 1979, a 180-day prior import deposit at the rate of 500 per cent of the c.i.f. value of products corresponding to about 600 tariff positions. Among the products affected were codfish, lobsters, caviar, preserves, biscuits, cheese, confectionery, alimentary pastes, ecclesiastical wafers, coffee extract, sauces and condiments, prepared soups, wine, whiskey and other spirits, live cattle, perfumes, toilet soap, furs, wallpaper, writing paper, registry books, notebooks, albums, rugs, tapestry, neckties, shoes, hats, porcelain, crystal, fine pearls, silverware, flatirons, foodmixers, typewriters, calculators, exhaust and ventilator fans, shavers, hair dryers, water heaters, refrigerators, ovens, radios, television sets, motorcycles, eyeglasses, projectors, magnetic tape, accordions, musical instruments, dance accessories, Christmas decorations, toys, and firearms. Some of the products mentioned in this decree were previously subject to a 120-day prior import deposit of either 5 per cent, 10 per cent, or 25 per cent (under Supreme Decrees Nos. 12929 and 12984 of October 3 and October 22, 1975 and under Supreme Decree No. 13707 of June 13, 1976).

November 12. The Central Bank temporarily suspended purchases and sales of foreign exchange (see entry for November 30, below).

November 30. Supreme Decree No. 17122 created the National Council on Monetary Policy, charged with studying proposals for monetary and financial policy measures and recommending their adoption to the Government.

November 30. Supreme Decree No. 17123 prohibited banks and exchange houses from maintaining deposits on their own account, either abroad or locally, with foreign exchange provided by the Central Bank. Exporters of goods and services in both the public and private sectors continued to be subject to a 100 per cent surrender requirement of export proceeds less deductions for processing costs and royalties paid for in foreign exchange. The Central Government, local governments, state universities, decentralized agencies, state and mixed enterprises, social security agencies, and, in general, all public and private entities receiving public contributions, assistance, and subsidies continued to be prohibited from maintaining deposits or other assets in foreign exchange abroad or locally.

New ceilings on short-term and medium-term foreign exchange liabilities of the banking system were adopted, as follows: (1) liabilities with terms up to one year, US$75 million for private banks and US$25 million for state banks; (2) liabilities with terms greater than one year and up to five years, US$70 million for private banks and US$45 million for state banks. Ceilings for each bank would be determined by the Central Bank, and liabilities in excess of these limits would be subject to 100 per cent reserve requirement. The dollar value guarantee clause on peso-denominated savings and time deposits was eliminated.

It was announced that the Central Bank and the banking system would honor the exchange rate guarantees on these deposits within the first 15 days of March 1980. Also, banks registering foreign exchange assets in excess of foreign exchange liabilities were required to surrender the excess to the Central Bank at the rate of exchange at the time of acquisition, no later than December 30, 1979.

November 30. The fixed exchange rate regime was replaced by a fluctuating rate system. The Central Bank resumed purchases and sales of foreign exchange and, in the opening quotation, the peso was devalued from $b 20.00 to $b 24.51 per US$1 buying, and from $b 20.40 to $b 25.00 per US$1 selling.

November 30. Supreme Decree No. 17127 canceled the 500 per cent prior import deposit established by Supreme Decree No. 17055 of September 18, 1979. Supreme Decrees Nos. 12929 and 12984 of October 3 and October 22, 1975 and Supreme Decree No. 13707 of June 13, 1976 were fully restored.

November 30. Supreme Decree No. 17133 transferred all the functions and facilities of the National Institute of External Finance (INDEF) from the Ministry of Finance to the Central Bank.

Botswana

(Position on December 31, 1979)

Exchange Rate System

The currency of Botswana is the Botswana Pula, which is pegged to the U.S. dollar, the intervention currency, at P 1 = US$1.2679. At present, the Bank of Botswana (the central bank) quotes buying and selling margins of 0.125 per cent (US$0.00158) around this middle rate, although Botswana avails itself of wider margins of 2.25 per cent. On December 31, 1979 the official buying and selling rates for the U.S. dollar were P 0.7877 and P 0.7897, respectively, per US$1. Exchange rates for certain other currencies1 are quoted on the basis of their rates against the U.S. dollar in international markets. There are no taxes or subsidies on purchases or sales of foreign exchange.

Administration of Control

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

Prescription of Currency

Payments to or from residents of foreign countries must normally be made or received in a foreign currency or through a nonresident-held pula account in Botswana. There are no bilateral payments agreements.

Imports and Import Payments

Botswana is a member of a customs union with Lesotho, South Africa, and Swaziland, and there are generally no import restrictions on goods moving between the four countries. Import permits are required, however, for most goods imported directly into Botswana from outside the customs union. Certain imported goods, including firearms, ammunition, fresh meat, and some agricultural and horticultural products, require permits, regardless of the country of supply. Goods of domestic origin may move freely between Botswana, Malawi, and Rhodesia by virtue of a customs agreement of 1956, provided they are not intended for re-export; imports of Rhodesian beer, tobacco, and cigarettes are not permitted.2

Exports and Export Proceeds

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

Payments for and Proceeds from Invisibles

Payments to nonresidents for current transactions, while subject to control, are not restricted. Authority to approve some types of current payments is delegated to commercial banks up to established limits—such as the basic exchange allowance for tourist travel, which is the equivalent of P 3,000 in a calendar year for an adult and P 1,000 for a child. The allowance for business travel is P 130 a day. The annual limit on remittances by temporary residents is P 6,000 or 50 per cent of eligible salary, whichever is greater. Travelers may freely bring in any amount of domestic banknotes and coin, and take out P 75 in such banknotes and coin. The Bank of Botswana may authorize the maintenance of “Retained Accounts” at banks abroad for residents who make frequent foreign payments; these accounts are subject to ceilings.

Capital

Applications for outward transfers of capital are decided according to their merits, but are generally granted favorable consideration. The rulings on applications for inward and outward capital transfers may depend on whether the applicant is temporarily a resident foreign national, a nonresident, or a resident. There is a terminal allowance of P 6,000 for departing temporary residents.

Changes during 1979

March 28. The common import surcharge levied by the customs union was reduced from 12.5 per cent to 7.5 per cent.

September 5. Several changes were introduced in Botswana’s payments arrangements: (1) the basic exchange allowance for tourist travel was raised to P 3,000 for an adult and P 1,000 for a child in a calendar year; (2) the allowance for business travel was increased from P 100 a day to P 130 a day; (3) the annual limit on remittances by temporary residents was raised from P 5,000 to P 6,000 or 50 per cent of eligible salary, whichever was greater; (4) full documentation in support of applications for payments for imports was waived in respect of imports valued at less than P 100 (the limit had previously been P 50); and (5) the limit on remittances abroad through postal orders and money orders was raised from P 50 to P 75.

Brazil

(Position on December 31, 1979)

Exchange Rate System

The currency of Brazil is the Brazilian Cruzeiro. Since August 1968 Brazil has followed a flexible exchange rate policy by which the exchange rate for the Brazilian cruzeiro is adjusted at relatively short intervals in terms of its intervention currency, the U.S. dollar. These adjustments take into account (1) the movement in prices in Brazil relative to that in its main trading partners, (2) the level of foreign exchange reserves, (3) export performance, and (4) the overall balance of payments position.1

Exchange transactions are carried out by the Central Bank, the Bank of Brazil, the authorized banks, and the exchange houses. The exchange houses deal only in banknotes and travelers checks in a “manual market.” Uniformity between the rates quoted by the monetary authorities and the effective rates of the authorized banks is ensured by the practice of the monetary authorities of standing ready to purchase exchange from the banks and to sell it to the banks at the official rate for approved transactions. On December 31, 1979 the buying and selling rates quoted by the monetary authorities to the public were Cr$42.330 and Cr$42.530, respectively, per US$1. The same exchange rates are applicable 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 New York and Europe. With specified exceptions, foreign exchange transactions are subject to brokerage fees, calculated on a sliding scale, which result in effective rates within 1 per cent on either side of the rates set by the monetary authorities.

On the buying side, other effective rates result from the following arrangements: (1) the National Monetary Council can impose an export levy in the form of a tax at the rate of 10 per cent; this rate can be lowered or be raised up to 40 per cent; (2) special regulations apply to coffee exports (see section on Exports and Export Proceeds, below); (3) a 10 per cent levy (“contribution quota”) is applied on proceeds from exports of cocoa beans and cocoa products, except for those in respect of exports of sweetened cocoa powder containing up to 50 per cent of cocoa cake as raw material, for which the contribution quota is 5 per cent; (4) a contribution quota of 10 per cent is applied to proceeds from exports of raw hides of wild animals, and one of 5 per cent on proceeds from exports of tanned or processed hides of wild animals; (5) a contribution quota of 10 to 20 per cent, varying according to quality, is applied to proceeds from exports of quartz chips; and (6) export taxes collected at the point of exchange settlement at the banks, in respect of a wide range of primary exports, including coffee.

On the selling side, a different effective rate arises from the provision of the Foreign Investment Law, which specifies that the sum of net profits and dividends effectively remitted to persons and companies resident abroad is subject to a supplementary income tax when the average of actual remittances in any three-year period is in excess of 12 per cent of registered capital and reinvestment.2

The Bank of Brazil, acting on its own behalf or on behalf of the Central Bank, carries out a considerable proportion of all exchange transactions, including those of all public sector agencies. The Bank of Brazil sells foreign exchange for the requirements of the Government at the exchange rate prevailing on the date of the transaction. Exchange transactions in the currencies of bilateral partner countries are effected by the authorized banks, which settle them with the Central Bank.

Global limits are fixed for the authorized banks’ bought and sold positions in foreign exchange. For the bought position the limit is US$500,000 for each bank. The limit on the sold position is fixed in relation to the capital and unencumbered reserves of each bank; a bank having capital and unencumbered reserves of up to Cr$150 million may maintain a sold position of up to US$500,000; over and above that amount a bank is allowed an overall sold position of up to US$5 million. Banks that are authorized to operate exclusively in the “manual market” and exchange houses are permitted to maintain a bought position of up to US$25,000 for each authorized branch, but may not maintain a sold position. The Central Bank supplies foreign exchange to authorized banks in amounts not exceeding those needed to eliminate an oversold position and limited to 90 per cent of the exchange sold by the bank concerned to its customers during the same day or on the previous day; included in this limit is their “manual market” position (banknotes and travelers checks). The banks are permitted to sell foreign exchange to each other; transfers between branches of the same bank are also allowed, subject to certain conditions. Such transactions may be carried out either by cable on a spot basis or on a forward basis and must be executed within 2 working days for spot transactions or not later than after 180 days for forward transactions.

Administration of Control

The National Monetary Council is responsible for the formulation of overall foreign exchange policy. In accordance with the guidelines established by the Council, exchange control is operated by the Central Bank’s Exchange Department (Decam), while the control over foreign capital is operated by the Department for the Control and Registration of Foreign Capital (Firce); the latter processes the registration of foreign capital. Certain borrowing abroad requires the prior approval of the Central Bank.

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

Coffee exports are regulated by the Brazilian Coffee Institute (IBC). The Customs Policy Commission (CPA), established within the Ministry of Finance, is responsible for formulating guidelines for tariff policy. The CPA also decides on changes in customs duties under the provisions of existing legislation. The import policy of the public sector is coordinated by the Secretariat for Control of State-Owned Enterprises (Sest).

Prescription of Currency

In principle, prescription of currency is related to the country of origin of imports or the country of final destination of exports, unless otherwise prescribed or authorized. Settlements with bilateral payments agreement countries 3 are made in clearing dollars through the relevant agreement account. Payments between Brazil and Argentina, Bolivia, Chile, Colombia, the Dominican Republic, Ecuador, Mexico, Peru, Uruguay, and Venezuela must be made through accounts maintained with each other by the Central Bank of Brazil and the other central banks concerned, within the framework of the multilateral clearing system of the Latin American Free Trade Association (LAFTA).

Imports and Import Payments

The import of commodities originating in or shipped from Cuba and Rhodesia is prohibited. Cacex has suspended the issuance of import licenses for a large number of “superfluous” imports. The importation of a small number of commodities is prohibited. There is also a limitation on the direct import of consumer goods (and on the purchase on the domestic market of any imported consumer goods) by the public and semipublic sector (direct organs of the Government, autonomous agencies, public enterprises, and companies with mixed public and private participation). Also, the importation, leasing, or purchasing in the domestic market by the public sector of machinery, equipment, vehicles, and spare parts of foreign origin is limited in 1980 to 80 per cent of the levels established for 1979.

All other imports may be grouped into the following two broad categories: (1) imports that are free of any requirement to secure prior administrative documentation, e.g., samples without commercial value and certain educational materials, and (2) imports that require an import certificate, which is issued subject to the presentation of data on the foreign price of the commodity and other relevant information Cacex may require. Import certificates are issued on an f.o.b. basis. Cacex is authorized to make a processing charge of up to 0.9 per cent on the value of import certificates; as a rule, certificates are valid for 90 days or 180 days, depending on the commodity (60 days for goods subject to price controls). For special bonded warehouse importers, Cacex establishes half-yearly foreign currency quotas and issues clearance certificates based on these importers’ semiannual import programs. For a number of specified imports, the import certificate may be obtained after the commodity has been landed but before customs clearance.

For certain other imports the prior approval of Cacex is required; these include goods imported by public bodies,4 imports for which tariff concessions are being sought, goods to be brought in with foreign financing with terms between 180 days and 360 days, certain imports without exchange cover, goods for use in fairs and trade exhibitions, and used instruments, machinery, and equipment. All importers must be registered with Cacex, and imports can be effected only by registered firms or persons. Importers are required to submit to Cacex a forecast of their expected import operations. The Minister of Finance may, on a temporary basis, and in accordance with the directives of the Economic Development Council (EDC) and without prejudice to commitments under LAFTA, authorize Cacex to reject applications for import certificates where (1) imports are for speculative stock building purposes; (2) imports are causing or are threatening to cause serious damage to the national economy; or (3) imports originate in or are shipped from countries that impede Brazilian exports.

Goods imported into the Manaus free zone are subject to an annual quota. The transfer to other parts of Brazil (as a passenger’s baggage) of foreign goods originally imported into the Manaus free zone is restricted to the equivalent of US$300 free of import taxes.

As a general rule, imports may be cleared through customs before an exchange contract is closed. However, Cacex may approve applications for the payment of imports of any goods at terms of up to 360 days from the date of shipment, provided that no import duty concessions or other tax concessions are involved. External financing at terms in excess of 360 days for imports of capital goods, intermediate products, raw materials, and other merchandise, regardless of the classification of the importer and the purpose of the merchandise, must be registered with the Central Bank, which will evaluate them in the light of foreign debt policy, before a request can be made for registration with Firce. Registration with Firce is also dependent on a ruling by Cacex that Brazilian firms are unable to supply the imports. Payment of the amount financed, and the interest thereon, may be made only upon presentation of a certificate of authorization issued by the Central Bank. Prior to shipment of the goods, total payments to suppliers for the nonfinanced amount may not exceed 20 per cent of the import value. Spot exchange contracts may be closed if the contract is intended to settle drafts, at sight or on maturity, and the appropriate shipping documents are presented.

Spot exchange contracts must be settled on maturity of the draft; this may take place 2 working days in advance of the maturity date if the exchange transfer is processed by telegram or telex, or 10 working days in advance if processed by air mail or check. Forward contracts, for up to 180 days, may be closed when a letter of credit is being opened. A deposit requirement equivalent to 100 per cent of the value of the exchange operation is applied, with some exceptions, to the contracting of forward exchange for the opening of letters of credit. Such deposits must be transferred to the Central Bank on the working day following the contracting of the exchange operation and are released on the date of settlement or the date of cancellation of the contract.5 Letters of credit must be opened within 5 working days from the date of the exchange contract. Letters of credit for more than 360 days may be opened without prior closing of an exchange contract.

Commercial banks ordinarily require a guarantee deposit for their own protection for forward exchange contracts; the amount of the deposit varies with the credit standing of the customer. When the contracts are liquidated, guarantee deposits may be used in payment for the foreign exchange.

Special procedures are applicable to certain imports of petroleum and petroleum products and of wheat. For petroleum and specified petroleum by-products, Petrobras concludes for each import transaction an individual foreign exchange contract. At the same time, the Bank of Brazil concludes a foreign exchange contract with the Central Bank, to cover its position for an amount equivalent to the value of the individual contract at the exchange rate at which the Central Bank sells foreign exchange to commercial banks.

For some commodities, eligibility for exemption from import duties may be precluded by the existence of satisfactory domestic equivalents (similares nacionais); application of such duties may also be affected by the establishment of a minimum import price (pauta de valor mínimo) or of a reference price.

Payments for Invisibles

Payments for current invisibles related to income from foreign capital, royalties, and technical assistance are governed by the provisions of the Foreign Investment Law. In addition to certain restrictions on remittances stipulated in that law, limits are placed on remittances of all royalties and technical assistance fees (see below). Subject to certain conditions, authorized banks may sell foreign exchange up to the equivalent of US$300 a month for personal remittances abroad. Payments for other current invisibles require the approval of Decam or Firce, which authorize remittances freely, subject to the presentation of supporting documents as evidence that a bona fide current transaction is involved.

Sales of foreign exchange to meet personal expenses connected with travel abroad are permitted up to US$1,000 a person a trip, without the prior approval of the Central Bank. Applications for purchases of travel exchange in excess of US$1,000 must be submitted to the Central Bank, which considers each case on its merits; amounts in excess of US$1,000, when authorized, may be taken up in the form of payment orders only. Foreign residents in transit in Brazil are permitted to purchase foreign currency up to the equivalent of the amount they sold during the period of their stay in Brazil; however, purchases in excess of 30 per cent of the amount previously sold require the approval of the Central Bank.

Remittances abroad of income from foreign direct investments and reinvestments and remittances in respect of royalties and technical assistance are governed by Decree No. 55762 of February 17, 1965, which contains the regulations implementing the Foreign Investment Law. Remittances are allowed only when the foreign capital concerned, including reinvestments, and the contracts for patents and trademarks, and for technical, scientific, and administrative assistance, are registered at Firce in accordance with the established rules (see section on Capital, below). The registration of contracts or deeds for technical assistance or the use of patents or trademarks is subject to approval by the National Institute of Industrial Property. Remittances are normally authorized in the currency of the country of domicile or of the head office of the beneficiaries. Remittances of interest on loans and credits and of related amortization payments are permitted freely in accordance with the terms stipulated in the respective contract and recorded in the certificate of registration. Remittances are subject to withholding tax at a rate of 25 per cent. However, the remitter is entitled to a rebate on the tax paid; during most of 1979 the rebate was 50 per cent of the tax, but in December it was raised to 95 per cent.

A progressive supplementary income tax is levied on remittances to persons and companies resident abroad of earnings on foreign capital (other than capital invested in Brazilian securities) if their average over a three-year period exceeds 12 per cent of the registered capital and reinvestments. For registered portfolio capital, the supplementary income tax is levied if remittances of dividends, bonuses, and capital gains in each fiscal year exceed 12 per cent of the registered investment. For foreign capital that produces goods or services for luxury consumption, remittances of profits are limited to 8 per cent per annum of the registered capital.

Remittances of royalties by a branch or subsidiary established in Brazil to its head office abroad are not permitted when 50 per cent or more of the local firm’s voting capital is directly or indirectly held by the foreign principal firm or when the majority of the firm’s capital in Brazil belongs to the recipients of the royalties abroad. Remittances of technical assistance fees (either with or without the use of trademarks and patents) are not permitted, as a rule, when remuneration for such services exceeds specified percentages, ranging from 1 per cent to 5 per cent, of net receipts from the sale or manufacture of the products. The percentages are the same as those established in Brazil’s taxation laws for determining the maximum permissible deductions for such expenses.

Travelers may take out domestic and foreign banknotes freely.

Exports and Export Proceeds

Exports are free of licensing requirements but require an export certificate issued by Cacex to ensure compliance with exchange and trade regulations. Some exports are free of controls, but exports of many commodities require prior approval of Cacex, while exports of specified commodities, including certain primary products and raw materials required for domestic consumption, are prohibited or suspended and exports of certain other commodities are conditional on prior domestic sales. Exports requiring approval include those effected through bilateral accounts, exports without exchange cover, exports on consignment, re-exports, commodities for which minimum export prices are fixed by Cacex, and exports requiring prior authorization by government agencies. Exports of certain commodities, including beef, are subject to an annual quota. Exports of coffee are subject to authorization by the IBC.

The IBC does not grant an authorization to export coffee unless the sale contract is based on a price per pound that is at least equal to the minimum registration price (in U.S. dollars a pound, f.o.b.) fixed from time to time by the IBC for the various types of coffee, although discounts are also authorized. Exporters of coffee are required to surrender, without compensation, a portion of their foreign exchange proceeds in the form of a contribution quota which varies according to the type of coffee. The cruzeiro proceeds from the contribution quota are transferred to the Export Product Protection Fund for Coffee. The contribution quotas are set from time to time by the IBC and are fixed in terms of foreign currency; on December 31, 1979 they were US$147.00 for green or decaffeinated raw-hulled coffee (a bag of 60.5 kilograms) and for ground-roasted coffee (a bag of 48 kilograms), US$2.50 a pound for spray-dried soluble coffee, and US$2.45 a pound for freeze-dried soluble coffee.

Exporters of coffee may convert foreign exchange proceeds, after deduction of the contribution quotas, at the prevailing official market rate. Thus, the proceeds received by coffee exporters depend on (1) the amount of the contribution quota, (2) the actual price received (f.o.b. Brazil, in U.S. dollars), and (3) the official market rate of exchange. During 1979, the IBC continued to make periodic announcements of new minimum registration prices, as well as contribution quotas for exports of soluble coffee and green, ground-roasted, and decaffeinated coffee.

The foreign exchange proceeds from all other exports are also sold at freely negotiated exchange rates, within the limits of the official market, but exporters of cocoa beans and cocoa products are required to surrender without compensation 10 per cent of their exchange proceeds.6 The cruzeiro equivalent of these deductions is used to finance a program of price support and plantation improvement for cocoa. Furthermore, a contribution quota of 10 per cent is applied to proceeds from exports of unprocessed hides of wild animals, 5 per cent on export proceeds from tanned or processed hides of wild animals, and 10 per cent to 20 per cent on export proceeds from quartz chips.

A number of export incentives are in operation, principally for manufactured commodities. Various lines of credit for exporters, some at preferential rates of interest, are provided by the Bank of Brazil and the commercial banks. These financing facilities include both export financing and the financing of production and warehousing for export, particularly for manufactures. In addition, assistance is provided to exporters in the field of export credit insurance and by way of guarantees.

Proceeds from Invisibles

Exchange proceeds from current invisibles must be sold through the Bank of Brazil or the authorized banks at the prevailing market rate. Travelers checks and foreign banknotes are sold in the “manual market.” Brazilian enterprises rendering services to tourists (e.g., hotels, restaurants, travel agencies) may receive income tax rebates in proportion to their earnings from tourism, provided that the service is paid for in foreign exchange and that the tourist enterprise converts the exchange into cruzeiros at the official rate.7 Travelers may bring in domestic and foreign currency notes freely.

Capital

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

Foreign capital other than capital invested in Brazilian securities is classified, for purposes of registration, as direct investments or loans, whether imported in the form of money or of goods, and it includes reinvested profits from foreign capital. Direct investment is defined as that foreign capital which constitutes part of the corporate capital and participates directly in the risk inherent in an economic undertaking. Foreign capital that is not part of the corporate capital of any enterprise is considered to be a loan. Any loan obtained to purchase capital goods abroad, whether contracted by the manufacturer himself or by a third party, is considered to be financing (mostly suppliers’ credit). Foreign-owned companies may convert foreign loans into nonvoting equity capital if the loans were registered with the Central Bank before December 31, 1978. Applications must have been lodged by December 31, 1979.

Persons domiciled or resident abroad may make portfolio investments in Brazilian commercial and industrial securities, provided that transactions are channeled through a Brazilian investment company” and are effected on Brazilian stock exchanges. Such capital is subject to registration with the Central Bank and must remain in the country for at least two years, following which repatriation may be effected free of income taxes at an average rate of up to 20 per cent every six months. The minimum participation in portfolio investment companies by foreign firms or individuals is US$ 1,000.

For financial imports and for investments made in the form of goods, the registration is in the currency of the country of domicile of the creditor or investor (or of its head office) or, in special circumstances, in the currency of the country of origin of the goods or of the credit. To register loans that are made in foreign currency it is necessary to certify that the interest rate corresponds to that prevailing in the original market of the loan, that the amortization schedule is not disproportionately heavy in the early stages of repayment, and, in the case of import financing loans, that the prices of the imported goods correspond to the prices of comparable goods in the country of origin. If the terms of financing are approved, Cacex examines the applications for some foreign borrowing in the light of the price and essentiality of the proposed import and of the availability of satisfactory domestic equivalents.

Capital entering Brazil is registered in foreign currency. Reinvestments are defined as profits of companies established in Brazil and accruing to persons or companies resident or domiciled abroad. Such profits must have been reinvested in the same companies that produced them or in another sector of the Brazilian economy. The registration of reinvested profits is made simultaneously in Brazilian currency and in the currency of the country to which the profits could have been remitted. The conversion is calculated at the average exchange rate prevailing between the date on which the profits appeared on the balance sheet of a company and the date of their reinvestment.

Special regulations govern borrowing abroad. Under Central Bank Resolution No. 63, as amended, private commercial and investment banks and the National Bank for Economic Development may be authorized to take up foreign currency credits abroad for domestic relending for purposes of financing working capital. Safeguards against excessive use of such credits include limitations on the foreign obligations that each bank may assume (related to the terms of the credit and the size of the bank) and the provision that the ultimate borrower must agree to bear the exchange risk. The Central Bank assures the availability of cover for the repatriation of the loan at maturity. All other financial loans in foreign currency are effected under the general provisions of the Foreign Investment Law (Law No. 4131). Loans under this law also require prior Central Bank authorization, but the Central Bank does not undertake to provide exchange cover for them. Loans under Resolution No. 63, as well as those under Law No. 4131, must have a minimum term of eight years but no maximum term is set. Foreign loans are subject to mandatory deposit at the Central Bank. The deposit is applicable to 100 per cent of the loan proceeds converted into cruzeiros and it is released, as follows: 20 per cent within 150 days, 40 per cent in 180 days, and the balance in 210 days.8

In addition to these mandatory deposit regulations, on June 23, 1977 the Central Bank authorized voluntary deposits at the Central Bank by financial and nonfinancial institutions of the outstanding balances of their foreign loans with a provision that the operation could be reversed after 30 days. For as long as the deposit remains with the Central Bank, the Central Bank covers all costs on these loans, including the exchange cost. As part of the measures announced on December 7, 1979, these provisions were modified as follows: (1) existing voluntary deposits at the Central Bank in respect of nonfinancial loans (under Law No. 4131) were frozen for an indefinite period, except for funds required for related interest and amortization payments, for transformation of such loans into direct investment or, in certain special cases, depending upon the approval of the Central Bank; and (2) a mandatory waiting period of 180 days was established for the withdrawal of deposits made in the Central Bank under Resolution No. 63.

Under a program for the management of external debt, the National Monetary Council imposes quantitative limits on the amount of financial loans for which authorization may be given by the Central Bank. Loans are authorized only if maturities conform with minimum requirements established from time to time by the Central Bank, which permits the total of loans outstanding to rise only to the extent that the servicing commitments on Brazil’s total external indebtedness do not depart from the guidelines set by the National Monetary Council. At the end of 1979 the Central Bank’s minimum acceptable maturity was at eight years. However, provided that the full amount of the foreign exchange remains committed to Brazil for the minimum specified maturity, loans to the final borrower in Brazil, as well as loans to banks under Resolution No. 63, may be made at terms shorter than the final maturity of the debt abroad and these funds may subsequently be re-lent to the same or a second borrower.

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

Gold

Residents may freely purchase, hold, and sell gold coin in Brazil. Gold mining is conducted under Law No. 4425 of October 8, 1964. Residents other than the monetary authorities and licensed industrial users are not permitted to purchase, hold, or sell gold abroad (other than alloys for dental use) unless special permission is obtained from the Central Bank. The monetary authorities do not deal in gold. The domestic negotiation of newly mined gold, which takes place at free market prices, is subject to a mining tax of 1 per cent. The mining tax may be offset against the other tax liabilities if and when gold is manufactured. The import of gold is subject to the issuance of an import certificate by Cacex; imports of native gold and of gold in the form of powder are free of customs duty. Exports of gold coin and gold bars are prohibited and the export of gold in any other form (except jewelry constituting the personal effects of a traveler) requires an export certificate.

Changes during 1979

January 22. The existing import prohibition on certain luxury goods was extended until December 31, 1979 (Cacex Communication No. 79/3).

January 24. The National Monetary Council announced, with immediate effect, the following measures: (1) an immediate reduction of the advance import deposit requirement from 100 per cent to 90 per cent, together with a scheduled phasing out of the requirement at a semiannual rate of 10 percentage points, to end by June 1983; (2) a 10 per cent reduction of the tax credits (in respect of federal and state value-added taxes) given to exporters of manufactured goods, together with a plan to phase out these tax credits at a quarterly rate of 5 per cent beginning on March 30, 1979 and ending on June 30, 1983; (3) as an offset to the expected effects of the two preceding measures, an acceleration of the rate of minidevaluation by an additional rate of 4.5 per cent (in terms of cruzeiros per foreign currency) in any 12-month period until June 30, 1983; and (4) as an incentive to inward direct investment, foreign-owned companies might convert foreign loans into nonvoting equity capital.

February 14. The minimum financing period for imports of certain types of capital goods was extended from five to eight years (Central Bank Circular No. 416).

April 18. The restrictions on the domestic monetization of foreign loan funds were tightened, as follows: 50 per cent of the proceeds of the loan borrowed by a private sector enterprise was to remain frozen in the Central Bank until amortization payments were undertaken; from then on the deposit would be refunded in proportion to the payments. The other 50 per cent of the proceeds of the loan would be refundable in stages, i.e., 10 per cent after 150 days, 20 per cent after an additional waiting period of 30 days, and the remaining 20 per cent after a further period of 30 days.

June 21. The National Monetary Council announced certain exemptions to the 50 per cent mandatory deposit on foreign borrowing; in addition to borrowings by official entities, the exemptions included loans from international organizations.

November 29. The National Monetary Council reduced the contribution quotas on export proceeds from quartz chips from 20 per cent and 40 per cent to 10 per cent and 20 per cent.

December 7. In combination with a 30 per cent devaluation of the cruzeiro vis-à-vis the U.S. dollar, the authorities announced a package of external and internal measures. On the external side the measures comprised (without any legislative change): (1) abolition of the tax credits relating to exports of manufactured products; (2) suspension of the prevailing advance import deposit requirement; (3) suspension of the deposit requirement for purposes of foreign travel; (4) reduction of the scope of the system of “national similars”; (5) limitation of public sector non-oil imports to 80 per cent of the foreign exchange value of imports in the preceding year; (6) reduction from 12.5 per cent to 1.25 per cent in the income tax on remittances of interest earnings on foreign loans; (7) elimination of the 50 per cent deposit requirement pending amortization for new external loans and confirmation of the temporary compulsory freezing scheme of 150, 180, and 210 days for conversion of external loans into cruzeiros, applicable to 100 per cent of the loan proceeds; (8) imposition of a 180-day freeze on the voluntary deposits with the Central Bank of the proceeds from foreign borrowing by domestic banks (i.e., loans under Resolution No. 63); (9) imposition of an indefinite freeze on the voluntary deposits with the Central Bank of the proceeds from foreign borrowing by nonbanks (i.e., loans under Law No. 4131), except for funds required for related interest and amortization payments for transformation of such loans into direct investments, or, in special cases, depending upon the approval of the Central Bank; and (10) introduction of new export taxes on primary products, including coffee.

Burma

(Position on December 31, 1979)

Exchange Rate System

The currency of Burma is the Burmese Kyat, which is pegged to the SDR at K 8.50847 = SDR 1. Burma applies margins of 2 per cent in respect of spot exchange transactions, based on the fixed kyat-SDR rate. The buying and selling rates of the kyat for the deutsche mark, the French franc, the Japanese yen, the pound sterling, the Swiss franc, and the U.S. dollar, quoted by the Myanma Foreign Trade Bank, are determined on the basis of the daily calculations of the value of these currencies against the SDR. On December 31, 1979 the buying and selling rates for the U.S. dollar were K 6.454 and K 6.5831, respectively, per US$1. Buying and selling rates for the Belgian franc, the Italian lira, and the Netherlands guilder are determined on the basis of appropriate cross rates in the New York market; buying and selling rates for the Hong Kong dollar and the Malaysian ringgit are determined weekly on the basis of appropriate cross rates in the Hong Kong and Kuala Lumpur markets, respectively; and buying and selling rates for other currencies are based on appropriate cross rates in local markets (e.g., Bombay, for the Indian rupee). There are no taxes or subsidies on purchases or sales of foreign exchange.

Administration of Control

Exchange control is administered by the Exchange Control Board, through the Myanma Foreign Trade Bank, in accordance with instructions from the Ministry of Planning and Finance. A Foreign Exchange Control Committee headed by the Minister of Planning and Finance is in charge of the allocation of foreign exchange to the public sector.

Prescription of Currency

Burma has no bilateral payments agreements. Certain settlements with Bangladesh are channeled through a nonresident bank account at the Myanma Foreign Trade Bank, and certain settlements with India are channeled through special rupee accounts in that country. Payments to other countries may be made in any foreign currency or by crediting kyats to an External Account in Burma. Receipts must be collected in convertible currencies or to the debit of an External Account in Burma.

Nonresident Accounts

Foreign exchange accounts may be kept with the Myanma Foreign Trade Bank by international organizations, diplomatic personnel, or other foreign residents, subject to approval by the Exchange Control Board. Such accounts are normally held in deutsche mark, Indian rupees, pounds sterling, or U.S. dollars. They may be credited and debited freely but no interest is payable on them. Foreign nationals temporarily resident in Burma are entitled to hold foreign exchange utilization cards for use in diplomatic shops. Nonresidents may be authorized to hold external accounts in kyats; all debits and credits to such accounts require prior authorization.

Imports and Import Payments

All imports from Rhodesia and South Africa are prohibited. Also prohibited are imports of a few commodities from any source—principally opium and other narcotics, monkeys, playing cards, and gold and silver bullion. An import program is prepared annually as part of the foreign exchange budget drawn up by the Ministry of Planning and Finance. All imports are made by, or in the name of, the Myanma Export-Import Corporation (MEIC). The MEIC imports goods for the use of the private sector, whose requirements are estimated by the Central Trade Council. In general, government agencies and departments import goods for their own use, including imports under loan and aid agreements, in the name of the MEIC.1 Most imports are purchased on an f.o.b. basis, and shipments are made on vessels owned or chartered by the Burma Five Star Shipping Corporation whenever possible. All payments for imports are made through the Myanma Foreign Trade Bank.

Payments for Invisibles

All payments for invisibles are subject to licensing. In general, payments for items connected with foreign trade are allowed automatically, and payments for most other purposes are considered on a case-by-case basis. Payments for membership fees to educational or technical institutions abroad and payments for subscriptions to certain foreign periodicals are, as a rule, allowed freely. Family remittances are permitted only for foreign technicians employed under contract by the Government, the limit being one half of the net salary if the wife is living abroad, and one third of the net salary if the wife is living in Burma. Remittances of insurance payments are considered on a case-by-case basis. The remittance of pension payments to retired government employees who served the Government as Burmese nationals but took up foreign citizenship before departure from Burma is not permitted. Most personal money order remittances to neighboring countries through post offices are not permitted.

Foreign exchange allocations for tourist travel by residents have been suspended. However, residents who have been granted an official permit to travel abroad for any other purpose may take out freely the equivalent of K 100 in the currency of the country of destination or, if that currency is not available, in U.S. dollar notes. Travel for medical reasons is authorized on a case-by-case basis. Travel for educational purposes is authorized only in connection with state scholarships. Otherwise, Burmese nationals are not allowed to travel abroad except on official missions or for employment abroad. On leaving, nonresident travelers who have stayed in the country for less than six months may take out any foreign currency they still hold and may also reconvert the remaining balance of the kyats obtained by conversion of foreign currency. The export of Burmese currency is prohibited.

Exports and Export Proceeds

All exports to Rhodesia and South Africa are prohibited. There is also a list of prohibited exports comprising iron and steel, brass, copper, and aluminum and scrap thereof, foreign manufactures, and commodities of domestic origin which need to be conserved for domestic requirements. Exports are generally effected by the MEIC, although timber, rubber, jute, fish and fish products, coffee, hides and skins, minerals, and petroleum and petroleum products may be exported directly by other government agencies and departments. Rice is exported by the Agriculture and Farm Produce Trade Corporation in the name of the MEIC. Export proceeds must be obtained in a manner satisfactory to the exchange control authorities and surrendered to the Myanma Foreign Trade Bank within six months from the date of shipment. Certain exports are subsidized through the Export Price Equalization Fund Account. When exports are made on an f.o.b. basis, buyers are free to choose the carrier, but exports on a c.i.f. basis are usually shipped by the Burma Five Star Shipping Corporation or on vessels chartered or nominated by it.

Proceeds from Invisibles

Exchange receipts from invisibles must be surrendered. Travelers may bring in, subject to declaration, any amount in foreign currency; foreign nationals who intend to stay for more than six months must surrender all foreign exchange in their possession unless special permission is given to the contrary. The import of Burmese currency is prohibited.

Capital

In principle, investment proposals are considered by an Investment Committee to ascertain whether the proposed enterprise will utilize domestic raw materials, increase domestic employment, conserve foreign exchange, and generally conform to the economic plans of the Government. However, permission has not been granted for any foreign private investment in Burma since 1963.

All outward transfers of capital require prior approval. Residents are not permitted to remit funds abroad for investment. The repatriation of personal assets and the making of family remittances have been suspended, with minor exceptions, for foreign nationals employed in the private sector; those employed in the public sector may remit their personal savings when leaving the service. When the transfer abroad of payments in favor of nonresidents is not permitted, the authorities can allow such payments to be credited to external accounts in kyats. All debits and credits to these accounts require prior permission. The import, export, and transfer of securities involving nonresident interests require individual licenses.

Gold

Residents may hold and trade in gold jewelry, gold coin, and unworked gold in Burma. Licenses for imports and exports of gold are not granted unless they are effected by or on behalf of the monetary authorities. Jewelry for personal wear may be brought into Burma subject to customs declaration at the port of arrival. The export of personal jewelry is permitted under license, subject to the condition that the jewelry will be repatriated. No conditions are attached, however, to the taking out of personal jewelry that was declared to the customs when it was brought into Burma.

Changes during 1979

No significant changes took place.

Burundi

(Position on December 31, 1979)

Exchange Rate System

The currency of Burundi is the Burundi Franc, which is pegged to the U.S. dollar, the intervention currency, at FBu 90.00 = US$1. The official buying and selling rates for the U.S. dollar on December 31, 1979 were FBu 89.55 and FBu 90.45, respectively, per US$1. The Bank of the Republic of Burundi (the central bank) quotes buying and selling rates for the Belgian franc based on its fixed rates for the U.S. dollar and the official market rates for the U.S. dollar in Brussels. Buying and selling rates for certain other currencies1 are also officially quoted, with quotations based on either the quoted rates for the Belgian franc and the official market rates in Brussels for the currencies concerned or, for the Kenya shilling, the Uganda shilling, and the Zaïre, on their official values in terms of SDRs. For the Tanzania shilling the rate quoted is based on the Bank of Tanzania’s rate for the U.S. dollar. The Rwanda franc is also officially quoted by the Bank of the Republic of Burundi at the rate of FBu 96.94 per RF 100, the official buying and selling rates being FBu 96.45 and FBu 97.43, respectively, per RF 100. Authorized banks must carry out permitted exchange transactions at the buying and selling rates established by the Bank of the Republic for currencies quoted by that Bank. A charge of 2 per mill is collected on purchases or sales of foreign exchange.

Administration of Control

Control over foreign exchange transactions and foreign trade is vested in the Bank of the Republic; authority to carry out some transactions is delegated to three authorized banks.

Prescription of Currency

Settlements with neighboring countries including Kenya, Rwanda, Uganda, and Zaïre are effected through special clearing accounts with the Bank of the Republic. With this exception, outgoing payments may be made and receipts may be obtained in any currency quoted by the Bank of the Republic.

Nonresident Accounts

Nonresident Accounts in Burundi Francs may be maintained, subject to the approval of the Bank of the Republic, by (1) physical persons of foreign nationality, such as diplomats, who are temporarily established in Burundi and are not considered as residents, and (2) juridical persons of foreign nationality with special status, such as foreign embassies and international organizations. These accounts may be credited freely with the proceeds of foreign currencies quoted by the Bank of the Republic, and they may be debited freely for withdrawals of Burundi francs for any normal current payments in Burundi and for conversion into foreign exchange (except banknotes). All other debits and credits require the prior approval of the Bank of the Republic. These accounts do not bear interest and must not be overdrawn.

Certain nonresidents may maintain Nonresident Accounts in Foreign Currencies with an authorized bank. The opening of such accounts requires the approval of the Bank of the Republic and is restricted to (1) physical persons of foreign nationality who are resident abroad and (2) juridical persons having branches or subsidiaries abroad. These accounts may be credited freely with any foreign currency quoted by the Bank of the Republic that is received from abroad. They may be debited freely for (1) conversion into Burundi francs for any payments in Burundi and (2) payments abroad for travel and representation or for the purchase of foreign goods. These accounts cannot bear interest and must not be overdrawn; the related bank charges and commissions may be settled in Burundi francs.

Imports and Import Payments

All imports originating in or shipped from Rhodesia and South Africa are prohibited. All imports except trade samples and merchandise not intended for sale, whose declared consumer value c. & f. Bujumbura is FBu 50,000 or less, require licenses; these licenses are generally issued freely, but importers have been instructed not to order abroad certain goods of which domestic stocks are adequate or that are produced locally. Applications for licenses must be submitted to the Bank of the Republic through an authorized bank. The approval of such an application constitutes an authorization also to obtain foreign exchange. With certain exceptions, applications for amounts under FBu 500,000 are approved by the authorized banks. A license is valid for 12 months starting on the first day of the month following its validation. An administrative tax amounting to 1 per cent of the f.o.b. value of the goods is collected at the time of validation of the license. All goods imported into Burundi must be insured by the approved Burundi insurer (Socabu) and premiums must be paid in Burundi francs. All consignments of imports exceeding FBu 500,000 in value are subject to preshipment inspection with regard to quality, quantity, packing, and price comparison by the General Superintendence Company of Geneva acting for the Burundi authorities.

In principle, foreign exchange is made available at the time of shipment of the goods. For goods under global licenses, foreign exchange is not made available until after customs clearance. All imports are subject to a statistical tax of 3 per cent ad valorem, in addition to any applicable customs duties and fiscal duties.

Payments for Invisibles

All payments for invisibles require approval. Shipping insurance on coffee exports normally must be taken out in Burundi francs with Socabu. Upon payment of taxes, transfers of earnings of foreign nationals are freely permitted at the uniform rate of 60 per cent of net annual income. Private joint-stock companies may freely and immediately transfer a portion of the return on foreign capital and of the share allocated to foreign directors not exceeding 50 per cent of the profits for the budget year, net of corporation tax. The balance of the profits may be transferred subsequently, depending on the savings made in Burundi by those concerned. However, enterprises that have obtained approved status under the Investment Code may obtain a guarantee of full transferability of net declared profits.

Persons leaving Burundi permanently are authorized to transfer abroad their holdings of Burundi francs that consist of unremitted savings or the sale proceeds of their personal effects. Transfer of income from rental properties to nonresident owners of foreign nationality is permitted up to 50 per cent of net rental income (after payment of taxes and deduction of 20 per cent for maintenance expenses). Amounts not remitted immediately may be transferred subsequently, depending on the length of time the savings were held in Burundi. Resident owners of foreign nationality may remit the same proportion of such income. Residents of Burundi nationality may apply for exchange needed for foreign travel. There is no fixed limit on the amount that may be allocated, which depends on the nature of the travel. All travelers may take out up to FBu 2,000 in Burundi banknotes. In addition, residents may freely purchase foreign travel tickets, up to reasonable amounts, against payment in Burundi francs.

Exports and Export Proceeds

All exports to Rhodesia and South Africa are prohibited. All exports valued at over FBu 5,000 are subject to a prior declaration. The declaration must be presented for certification by the Bank of the Republic through an authorized bank. Declarations are valid for six months, but extensions may be granted by the Bank of the Republic. Payments must be collected not later than 45 days after the goods have left the country, when they are sold to neighboring countries or to Kenya, Malawi, Uganda, or Zambia, and not later than 90 days for goods shipped to other destinations. All exchange proceeds from exports must be surrendered to an authorized bank within 8 days from their collection. Exports of arabica and robusta coffee and of cattle, sheep, and goatskins are the monopoly of the Burundi Coffee Company and of Burundi Tanneries, respectively. Virtually all exports, including coffee, are subject to export taxes and a statistical tax. Exports of manufactured goods may receive a refund of 3 per cent of the f.o.b. value, provided that they incorporate raw materials on which import duty has been paid.

Proceeds from Invisibles

Exchange receipts from invisibles must be surrendered to authorized banks. Travelers may bring in any amount of foreign banknotes and up to FBu 2,000 in Burundi banknotes.

Capital

The Investment Code of August 25, 1967 provides fiscal and other benefits for domestic and foreign private investors. A new Investment Law, adopted on April 4, 1979, revised some of the investment procedures. Under the Investment Code new investments that fulfill specified conditions as to amount and economic importance may be granted priority status to which specified privileges are attached, mainly in the form of exemptions from import duties and from taxes on income from the investment. Import duties and taxes may be reduced or suspended for goods and equipment needed for starting a particular project and, during a period of 5 years, for other merchandise needed for the manufacturing operation or for the upkeep of the original investment. Taxes on profits and real estate may likewise be reduced or suspended. Enterprises granted priority status may obtain protection against foreign competition, priority in the allocation of government contracts, and a guarantee from the Bank of the Republic for the free transfer of profits and dividends and the repatriation of the invested capital. In addition to these privileges, companies undertaking investments that are considered to be of prime importance to Burundi’s economic development may be granted, under a separate convention, a guarantee that direct taxes on their activities will not be increased for a period of up to 15 years. An investment commission under the Ministry of Planning is charged with examining requests for priority status and granting the necessary authorization. In addition, under the new law, Burundi guarantees each foreign investor freedom of settlement; foreign investors are also assured an allocation of foreign exchange for the purchase of raw materials and products abroad as well as for the repayment of loans taken out under the investment agreement.

Capital transfers by residents require individual authorization, as does foreign capital on which a repatriation guarantee has been granted. The guarantee is furnished for foreign exchange imported by resident enterprises for working capital purposes, in any of the currencies quoted by the Bank of the Republic, and is valid for a one-year period, which is renewable. The guarantee provides for the transfer of the original amount surrendered at the official rate ruling on the day of transfer. Under the new law, Burundi also guarantees the repatriation of invested capital in the event of sale or shutdown of the business.

Gold

Dealings in gold coin must be conducted through the Bank of the Republic, since all private dealing in gold is prohibited. The Bank purchases unrefined gold from domestic producers at FBu 500 a gram. After refining abroad, this gold is included in the official monetary reserves. Imports and exports of gold may be made only by the Bank of the Republic, with the exception that private firms may be licensed to import gold for dental use.

Changes during 1979

January 2. The rate of permissible transfer for earnings of foreign nationals, which formerly varied from 18 per cent to 60 per cent of net annual income depending on the amount of such income, was made uniform at 60 per cent.

April 4. A new Investment Law (Decree-Law No. 1/8) was adopted, which revised certain investment procedures. Under the new law, Burundi guaranteed freedom of settlement; foreign investors were assured an allocation of foreign exchange for the purchase of raw materials and products abroad, as well as for the repayments of loans taken out for investment purposes; the repatriation of invested capital was also guaranteed in the event of sale or shutdown of the business.

Cameroon

(Position on December 31, 1979)

Exchange Rate System

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

Administration of Control

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

Exchange control is administered by the Directorate of Economic Controls and External Finance in the Ministry of Finance. Exchange transactions relating to all countries must be effected through authorized intermediaries, i.e., the Postal Administration and authorized banks. Import licenses are issued by the Ministry of Economy and Planning, while the arrangements for domiciliation of exports require the visa of the Ministry of Finance.

Prescription of Currency

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

Nonresident Accounts

The regulations pertaining to nonresident accounts are based on those applied in France. BEAC banknotes may be credited to Foreign Accounts in Francs when mailed to the National Directorate of the BEAC in Yaoundé by the foreign correspondents of authorized banks.

Imports and Import Payments

Imports from Rhodesia and South Africa are prohibited. The import from all sources of certain “controlled” goods requires a special authorization (autorisation spéciale d’importation), in addition to an import license. All other imports, irrespective of origin, are subject to licensing when valued at CFAF 500,000 or more, but licenses are issued freely.

All import transactions must be domiciled with an authorized bank when their value exceeds CFAF 50,000. Import licenses entitle importers to purchase the necessary exchange, provided that the shipping documents have been submitted to the authorized bank.

Payments for Invisibles

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

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

Nonresident travelers may take out foreign banknotes and coin up to the amount declared by them on entry, or up to CFAF 50,000 if no declaration were made.

Exports and Export Proceeds

All exports to Rhodesia and South Africa are prohibited. Export transactions valued at CFAF 50,000 or more must be domiciled with an authorized bank. Exports to all countries are subject to domiciliation arrangements requiring the visa of the Ministry of Finance. Proceeds from exports to all countries must be collected within 30 days of the date of arrival at their destination, and proceeds received in currencies, other than those of France or an Operations Account country, must be surrendered within a month after collection.

Proceeds from Invisibles

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

Capital

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

Special controls (additional to any exchange control requirements that may be applicable) are maintained over borrowing and lending abroad, over inward and outward direct investment, and over the issuing, advertising, or offering for sale of foreign securities in Cameroon; these controls relate to the transactions themselves, not to payments or receipts. With the exception of controls over the sale or introduction of foreign securities in Cameroon, the measures do not apply to relations with France (as defined above), Monaco, and the Operations Account countries. All foreign securities, foreign exchange, and titles embodying claims on nonresidents must be deposited with an authorized intermediary, whether they belong to residents or nonresidents.

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

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

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

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

An Investment Code promulgated in 1960 and revised in April 1964 established four categories of fiscal and other benefits which may be granted to both foreign and domestic firms undertaking approved new industrial or agricultural projects in Cameroon. The scope and duration of the benefits vary depending on the size of the investment, the degree to which it helps implement the economic and social development plan, and its importance to national economic growth. Category A permits mainly duty-free entry of capital goods and raw materials required for manufacturing and processing. Under Category B, firms may be entitled to the benefits of Category A and also to exemption for 5 years from the tax on industrial and commercial profits and from various other taxes and fees. Under Category C, large companies may conclude an “establishment agreement” with the Government, under which special conditions for the operations of the company are agreed and the nature and extent of tax concessions are determined. An “establishment agreement” is normally valid for 25 years and defines the legal, economic, and financial guarantees granted to the company, including the assurance of stable conditions for financial transfers and marketing of goods. Category D enables firms making investments of particular significance to the national economy to enjoy the benefits of Category C, as well as a guarantee of stability of taxation for up to 25 years. Ordinance No. 73/27 of August 30, 1973 provided that public entities should hold at least one third of the share capital of each banking institution and that the headquarters of each banking institution should be in Cameroon. This ordinance also required banks with foreign majority participation to submit to the monetary authorities information on all their current transactions abroad and to obtain prior approval for any changes in the structure of their equity holdings.

Gold

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

Changes during 1979

No significant changes took place.

Canada

(Position on December 31, 1979)

Exchange Rate System

The currency of Canada is the Canadian Dollar. The authorities of Canada do not maintain margins in respect of exchange transactions, and exchange rates are determined on the basis of demand and supply conditions in the exchange market; however, the authorities intervene from time to time to maintain orderly conditions in that market. The principal intervention currency is the U.S. dollar. The closing interbank market rate for the U.S. dollar on December 31, 1979 was Can$1.1666 per US$1. Forward exchange rates are similarly determined in the market and it is not the practice of the authorities to intervene. There are no taxes or subsidies on purchases or sales of foreign exchange.

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

Prescription of Currency

No prescription of currency requirements are in force.

Imports and Import Payments

Import licenses are required only for certain drugs, a few agricultural items, certain textile products, clothing, and footwear, certain endangered species of fauna and flora, natural gas, and material and equipment for the production or use of atomic energy. For some agricultural items, such as certain dairy products, licenses are generally not being issued. Commercial imports of certain commodities from any source are tightly controlled; these include oleomargarine, used automobiles, secondhand aircraft, and certain periodicals.

Exports and Export Proceeds

The surrender of the proceeds from exports is not required, and exchange receipts are freely disposable. For supply reasons, the export of a few commodities to all destinations is under export control. These include crude petroleum, certain petroleum products, and natural gas, most of which are sold to the United States. For security reasons, there is export control on strategic goods to all destinations except the United States. All exports to Albania, Bulgaria, the People’s Republic of China, Czechoslovakia, the German Democratic Republic and East Berlin, Hungary, North Korea, Mongolia, Poland, Romania, the U.S.S.R., and Viet Nam are subject to control, although certain goods of Canadian origin may be exported to these destinations under the authority of a general export permit. In addition, certain goods of a commercial nature are subject to control for supply and distribution purposes (e.g., specialty steel and beef to the United States and blood products to all countries).

Payments for and Proceeds from Invisibles

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

Capital

No exchange control requirements are imposed on capital receipts or payments by residents or nonresidents. Apart from specific restrictions in the financial, broadcasting, and uranium sectors, inward direct investment is governed by the Foreign Investment Review Act. This stipulates that the acquisition of control over a Canadian business enterprise by persons other than Canadians, or the establishment of a new business by such persons not previously established in Canada, or whose proposed new business is unrelated to their existing business in Canada, will be allowed if it is assessed that such investments are of significant benefit to Canada. A Foreign Investment Review Agency is charged with the review of proposed takeovers and the screening of the establishment of new businesses. There are no controls over outward direct investment, nor over inward or outward portfolio investment.

Gold

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

Changes during 1979

January 1. Canada extended most-favored-nation treatment to Jordan and the Mariana Islands. The list of beneficiaries of the General Preferential Tariff was extended to include the Caroline Islands, Jordan, the Mariana Islands, the Marshall Islands, Niue, and the Tokelau Islands. At the same time, St. Pierre and Miquelon were withdrawn from the list of beneficiaries.

January 1. The global quotas on clothing were replaced by individual export restraint arrangements with the People’s Republic of China, Hong Kong, Korea, the Philippines, Poland, and Romania. These arrangements covered a number of textile and clothing items and would extend until December 31, 1981.

January 26. A restraint arrangement on acrylic yarn was signed with Brazil under the International Textiles Agreement for the period January 1, 1979 to December 31, 1980.

May 12. The restraint arrangement on textiles and clothing with the People’s Republic of China was extended to December 31, 1981.

May 15. A textile agreement between Japan and Canada for 1978 and 1979 was signed.

July 1. A range of customs duty concessions that were to expire on June 30, 1979 were extended through June 30, 1980. The concessions applied to commodities used for specified purposes in Canada and were to be effected in the form of drawbacks equivalent to 66.66 per cent or 99 per cent of the import duty. Moreover, exemptions were extended to customs duties applied to most commodities imported from most-favored nations through June 1980.

July 1. The minimum value of imports not subject to Canadian customs was increased from Can$200 to Can$500.

July 12. As a result of the Multilateral Trade Negotiations (MTN), it was announced that tariffs on industrial imports would be lowered to about 9–10 per cent, a reduction of about 40 per cent from previous levels. The smallest reductions applied to textiles, clothing, footwear, and ships.

August 31. The Canadian Textile and Clothing Board announced its intention to conduct a review of the prevailing measures of protection in order to decide whether they should be maintained, modified, or removed after 1981 (see entry for November 23, below).

September 4. The annual import quota for cheese was continued at 45 million pounds for 1979. The quota for April 1–December 31, 1979 was set at 33.75 million pounds.

September 6. A new gold coin, the Maple leaf (containing 1 ounce of gold), was issued by Canada. The Canadian Mint was authorized to produce one million of these coins during 1979 and two million a year in 1980 and 1981.

September 12. A restraint arrangement with Bulgaria on clothing imports covering January 1, 1979–December 31, 1981 was signed.

September 15. A restraint arrangement with Macao for the period January 1, 1979 to December 31, 1981 was signed.

September 29. The restraint arrangement with Singapore on clothing imports covering the period July 1, 1979–June 30, 1982 was formally ratified.

October 9. The global quota on double-knit fabrics was eliminated.

October 19. A restraint arrangement with Hungary on imports of ready-made suits from January 1, 1979 to December 31, 1981 was signed.

October 22. An import quota on chicken was established in support of a supply management program. The quota for 1979 was set at 45 million pounds, prorated over the period October 22–December 31, 1979, and would continue in the calendar year 1980 at 48.5 million pounds.

October 24. The restraint arrangement with Sri Lanka on clothing imports covering the period July 1, 1979–December 31, 1981 was formally ratified.

November 18. A restraint arrangement with Pakistan on imports of terry towels from July 1, 1979 to December 31, 1981 was signed.

November 23. The Textile and Clothing Board announced its intention to proceed with an inquiry rather than the review procedures announced on August 31, 1979.

December 17. The MTN nontariff agreements were signed.

December 28. All sanctions against Rhodesia, previously established in accordance with the relevant UN Security Council Resolutions, were lifted.

Cape Verde

(Position on December 31, 1979)

Exchange Rate System

The currency of Cape Verde is the Cape Verde Escudo, which is pegged to a weighted basket of currencies representing 11 important trading partners. The exchange rate of the Cape Verde escudo in terms of the U.S. dollar, the intervention currency, is fixed daily on the basis of quotations for the U.S. dollar and the other currencies included in the basket. On December 31, 1979 the buying and selling rates for the U.S. dollar were C.V. Esc 38.017 and C.V. Esc 38.609, respectively, per US$1. There are no taxes or subsidies on purchases or sales of foreign exchange.

Administration of Control

All foreign exchange transactions are under the control of the Directorate of Foreign Relations and Exchange Control (DRECC), which is a department of the central bank, the Bank of Cape Verde. All imports, exports, and re-exports are subject to licensing, except for transactions not exceeding C.V. Esc. 2,500. Foreign exchange transactions, including the surrender of foreign exchange proceeds, are effected through the central bank.

Prescription of Currency

The central bank determines the currency in which export proceeds should be repatriated. Cape Verde has bilateral payments agreements with Angola, Guinea-Bissau, and São Tomé and Principe.

Nonresident Accounts

Nonresidents may open demand deposit accounts in local currency. These accounts may be credited only with the proceeds from the sale or receipt of convertible currencies and may be debited for payment of any obligations in Cape Verde. Embassies and foreign officials of embassies are required to open special accounts in foreign currency and in local currency.

Imports and Import Payments

All imports are subject to licensing, except for transactions not exceeding C.V. Esc 2,500. Licenses, which are issued by the General Directorate of Commerce in the Ministry of Economic Coordination, require the visa of the central bank and are generally valid for 180 days, but are renewable. The provision of foreign exchange is guaranteed when the license is approved by the central bank. Licenses are granted liberally for imports of medicines, capital goods, and other development-related equipment. Imports of nonessentials are restricted.

Payments for Invisibles

All payments for invisibles require prior authorization. Transfers for tourism are limited to a maximum of C.V. Esc 6,000 a person a year (C.V. Esc 3,000 for children under 15). When traveling accompanied by his family, a resident of Cape Verde may take out in foreign currency the equivalent of C.V. Esc 6,000 plus C.V. Esc 4,000 for each family member under 15, but the total transfer for each family may not exceed the equivalent of C.V. Esc 20,000. Cape Verdean nationals going on tourist trips abroad are required to buy round-trip tickets in advance and have to make a deposit equivalent to a one-way ticket to the country of destination. This deposit is refunded upon return to Cape Verde. Cape Verdean nationals studying abroad are allowed up to a maximum of C.V. Esc 6,000 on leaving the country, and students who do not hold scholarships are, in addition, entitled to C.V. Esc 5,000 a month. The equivalent of C.V. Esc 20,000 is authorized for each business trip and C.V. Esc 15,000 a trip for medical treatment; these latter amounts may be increased upon presentation of evidence of need.

Transfers by foreign technical assistance personnel working in Cape Verde are authorized within the limits specified in the individual contracts. Requests by other foreigners are examined on a case-by-case basis. The export of domestic currency by travelers is prohibited. Foreign travelers may bring in any amount of foreign currency but may re-export only the amount of currency declared upon entry.

Exports and Export Proceeds

All exports are subject to licensing, except for transactions not exceeding C.V. Esc 2,500. Export proceeds must be repatriated within three months from the date of issuance of the license, but this period may be extended.

Proceeds from Invisibles

Receipts from invisibles must be surrendered to the central bank. The import of Cape Verdean banknotes is prohibited.

Capital

Any private capital transaction must be approved in advance by the DRECC, but legally imported capital may be re-exported without limitation. The export of resident-owned capital is not normally permitted.

Gold

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

Changes during 1979

No significant changes took place.

Central African Republic

(Position on December 31, 1979)

Exchange System

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

Administration of Control

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

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

Prescription of Currency

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

Nonresident Accounts

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

Imports and Import Payments

All imports from Portugal, Rhodesia, and South Africa are suspended. The import from all countries of a few commodities that are also produced domestically is prohibited. The import of certain foodstuffs is not authorized unless local production of these commodities is inadequate. Imports of certain goods, when not originating in a member country of the Central African Customs and Economic Union (UDEAC), may be made only in given ratios to purchases of the local product. The import of firearms is prohibited irrespective of origin. All other imports from countries in the former French Franc Area may be made freely and without an import license. All other imports from EC countries (the original member states) also are free from quantitative restrictions. Imports from all countries outside the former French Franc Area are subject to licensing within the framework of an annual import program. All import transactions relating to foreign countries must be domiciled with an authorized bank. The import license entitles importers to purchase the necessary exchange, provided that the shipping documents are submitted to the authorized bank. There has been some accrual of arrears on external payments owing to the imposition of statutory ceilings on central bank credit to the Government and an ensuing shortage of domestic currency with which to purchase foreign exchange.

Payments for Invisibles

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

Resident tourists traveling to countries other than France (as defined above), Monaco, and the Operations Account countries may obtain an exchange allocation of an amount equivalent to CFAF 50,000 a year for each person; of this allocation, an amount equivalent to CFAF 25,000 may be taken out in foreign banknotes. Any exchange in excess of the equivalent of CFAF 5,000 that remains after return to the Central African Republic must be surrendered. For business travel to foreign countries, there is a special allocation of the equivalent of CFAF 10,000 a person a day, subject to a maximum of CFAF 100,000 a trip, for travel to certain listed countries; the allocation for business travel to any other foreign country is CFAF 15,000 a day, up to CFAF 150,000 a trip; of this allocation, an amount equivalent to CFAF 5,000 may be taken out in foreign banknotes.

The transfer of the entire net salary of a foreigner working in the Central African Republic is permitted upon presentation of the appropriate pay voucher, provided that the transfer takes place within three months of the pay period. Travelers to foreign countries may take out up to a maximum of CFAF 10,000 in BEAC banknotes, French banknotes, and banknotes issued by any other institute of issue maintaining an Operations Account with the French Treasury. Travelers to other countries may take out any amount in BEAC banknotes.

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

Exports and Export Proceeds

All exports to Portugal, Rhodesia, and South Africa are suspended. All exports of cotton, coffee, corn, tobacco, peanuts, palm oil, meat, and diamonds require a license. All other exports to countries in the former French Franc Area may be made freely. All exports to countries outside this area require licenses, which are issued freely.

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

Proceeds from Invisibles

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

Capital

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

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

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

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

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

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

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

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

Gold

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

Changes during 1979

No significant changes took place.

Chad

(Position on December 31, 1979)

Exchange Rate System

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

Administration of Control

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

The Office of the Minister of Finance, Buildings, and Supply supervises borrowing and lending abroad, the issuing, advertising, or offering for sale of foreign securities in Chad, and inward and outward direct investment; it also issues import and export authorizations for gold. Exchange control is also administered by the Minister of Finance, who has delegated his approval authority in part to the authorized banks. All exchange transactions relating to foreign countries must be effected through authorized banks. Import and export licenses are issued by the Foreign Trade Office in the Ministry of Economy, Planning, and Transportation.

Prescription of Currency

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

Nonresident Accounts

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

Imports and Import Payments

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

The import program contains global quotas for imports from non-EC countries outside the former French Franc Area and a special quota for imports of cotton textiles from countries with abnormal competitive advantages. In addition, the program contains global quotas for imports of wheat, wheat flour, and sugar from EC countries, countries in the former French Franc Area, as well as other countries. Specified imports from neighboring countries not belonging to the former French Franc Area (the Libyan Arab Jamahiriya, Nigeria, and Sudan) up to a value of CFAF 3 million a year in each direction for a single importer may be made through compensation transactions.

All import transactions valued at CFAF 100,000 or more and relating to foreign countries must be domiciled with an authorized bank. Import licenses entitle importers to purchase the necessary exchange, provided that the shipping documents are submitted to the authorized bank. Forward cover for imports from foreign countries is permitted only for specified commodities and requires the prior approval of the Office of the Minister of Finance, Buildings, and Supply. There has been some accumulation of arrears on external payments owing to the imposition of statutory ceilings on central bank credit to the Government and an ensuing shortage of domestic currency with which to purchase foreign exchange.

Payments for Invisibles

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

For tourist travel, residents traveling to countries other than France (as defined above), Monaco, and the Operations Account countries may obtain an exchange allocation of an amount equivalent to CFAF 200,000 a person a trip, for any number of trips a year. For pilgrimage to Mecca, an additional allocation of the equivalent of CFAF 200,000 may be granted. For business travel to foreign countries, there is a daily allocation of the equivalent of CFAF 60,000, with a maximum allocation of the equivalent of up to CFAF 500,000 a person a trip; the Office of the Minister of Finance, Buildings, and Supply may approve additional amounts. Travelers to foreign countries may take out up to a maximum of CFAF 30,000 in BEAC banknotes. Travelers to other countries may take out any amount in BEAC banknotes.

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

Exports and Export Proceeds

Exports to Rhodesia and South Africa are prohibited. All exports to non-EC countries outside the former French Franc Area require licenses. Specified exports to the Libyan Arab Jamahiriya, Nigeria, and Sudan may be made through compensation transactions. Exports of cotton are the monopoly of the Société Cotonnière du Tchad (Cotontchad).

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

Proceeds from Invisibles

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

Capital

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

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

Direct investments abroad2 require the prior approval of the Minister of Finance, Buildings, and Supply, irrespective of the method of financing; the full or partial liquidation of such investments also requires the prior approval of the Minister. Foreign direct investments in Chad3 require the prior approval of the Minister of Finance, Buildings, and Supply unless they take the form of a mixed-economy enterprise. The full or partial liquidation of direct investments in Chad must also be declared to the Minister. Both the making and the liquidation of direct investments, whether these are Chadian investments abroad or foreign investments in Chad, must be reported to the Minister within 20 days following each operation. Direct investments are defined as investments implying control of a company or enterprise.

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

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

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

Under the Investment Code of August 26, 1963, any enterprise established in Chad, whether domestic or foreign, is granted, under certain conditions, reduced duties and taxes on specified imports, as well as exemption from direct taxes on specified income. The Code also provides for three categories of preferential treatment, in accordance with which certain fiscal and other privileges may be accorded to firms investing in specified new industries or in the expansion of existing ones. Requests for preferential treatment must be submitted to the Minister of State in Charge of the Economy, Planning, and Transportation, who, after examining the documents, transmits them to the Investment Commission. After an opinion has been given by that Commission, the project is submitted to the Council of Ministers.

Gold

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

Changes during 1979

No significant changes took place.

Chile

(Position on December 31, 1979)

Exchange Rate System

The currency of Chile is the Chilean Peso. Since June 30, 1979, the exchange rate of the Chilean peso has been set by the Central Bank of Chile at Ch$39 per US$1. The Central Bank may apply an exchange differential of up to 0.5 per cent of the official rate on purchases and sales of exchange. On December 31, 1979 the Central Bank’s buying and selling rates for the U.S. dollar were Ch$38.805 and Ch$39.195, respectively, per US$1. The Banco del Estado, commercial banks, exchange houses, brokers, and other authorized entities may establish freely their exchange rates and commissions; their commissions are subject to a value-added tax of 20 per cent. Exchange rates for currencies other than the U.S. dollar are not officially quoted. Exchange rates for the currencies of Argentina, Bolivia, Brazil, Colombia, Ecuador, Paraguay, Peru, Uruguay, and Venezuela are established freely. Banks and authorized entities operate in other currencies with quotations based on the buying and selling rates for the U.S. dollar in markets abroad. No taxes or subsidies are applied to purchases or sales of foreign exchange.

Chile formally accepted the obligations of Article VIII, Sections 2, 3, and 4, of the Fund Agreement, with effect from July 27, 1977.

Administration of Control

The Foreign Trade and Exchange Division of the Central Bank is responsible for the operation of the exchange control system. The Chilean Copper Commission supervises copper exports and all imports of the copper industry; this supervision is exercised in accordance with the general rules enacted by the Central Bank.

Prescription of Currency

Settlements with Argentina, Bolivia, Brazil, Colombia, Ecuador, Mexico, Paraguay, Peru, Uruguay, and Venezuela (except those in respect of specified commodities and any imports valued at less than US$3,000 f.o.b. which are effected under a simplified registration procedure) may be made through accounts maintained with each other by the Central Bank of Chile and the central bank of the country concerned, within the framework of the multilateral clearing system of the Latin American Free Trade Association (LAFTA). Settlements with the Dominican Republic may be made through clearing accounts established under a reciprocal credit agreement. Settlements with other countries take place in specified convertible currencies.

Imports and Import Payments

There is a List of Prohibited Imports, which contains only five commodities. Prior to shipment, all imports valued at over US$3,000 f.o.b. must be registered with the Central Bank, which is empowered to reject import applications that are not in compliance with the regulations.

Importers may purchase spot exchange as soon as their import applications have been approved and the shipping documents have been received. Imports on deferred payment terms (cobertura diferida) require prior authorization of the credit terms by the Central Bank. Virtually all imports are subject to a registration tax of up to 3 per cent of the c.i.f. or f.o.b. value, which is offset against the applicable import duty. Maritime freights are subject to a 3 per cent surcharge. A value-added tax of 20 per cent is levied on the sum of the c.i.f. value and the import duty.

Payments for Invisibles

Central Bank authorization is required only for those payments for invisibles that are in excess of the established limits, and for transactions for which no basic allocation has been set. The authorization is provided upon presentation of appropriate documentation. Natural or legal residents may purchase up to US$3,000 each 30 days for “extraordinary remittances”; this amount, as a general rule, is not cumulative. The established limit for tourist travel (in addition to fares) is the equivalent of US$3,000 a trip for travel to all countries. Insurance activities are reserved to Chilean companies or foreign companies authorized to operate in Chile. Transfers of insurance premiums by companies that are not authorized are permitted only exceptionally. There are allowances of up to US$3,000 a month for study abroad, and for medical purchases of a noncommercial character.

Exports and Export Proceeds

All commodities may be freely exported. All exports valued in excess of US$3,000 must be registered with the Foreign Trade and Exchange Division of the Central Bank (with the Chilean Copper Commission for copper), and the proceeds of exports are subject to surrender requirements. Commercial banks are authorized to purchase certain foreign exchange proceeds spot from exporters. Receipts from exports of the large copper mines must be deposited in a special foreign currency account at the Central Bank, and sales of foreign exchange to meet expenses in local currency must also be effected with the Central Bank.

Most export proceeds subject to surrender requirements must be repatriated within 300 days from the date of shipment, and surrendered within 10 days thereafter, depending on the commodity being exported, but for specified goods this period may be extended. However, exporters are permitted to repurchase up to 10 per cent of export proceeds for travel expenses and certain other purposes, within a ceiling of US$100,000.

Proceeds from Invisibles

In general, foreign exchange proceeds from invisibles must be surrendered when required by a legal disposition. Such is the case for commissions, proceeds from insurance, and other benefits related to foreign trade. There are no similar rules concerning the proceeds from royalties and copyright fees, family remittances, the surplus foreign exchange from travel allocations, proceeds from insurance unrelated to trade, and other income earned abroad.

Capital

Capital inflows are free, but most outflows are restricted. All new foreign borrowing or refinancing of existing credits by commercial banks requires prior approval by the Central Bank, with the exception of the taking up of lines of credit with foreign correspondents. Foreign capital may enter Chile under one of three different arrangements depending on the purpose and type of the investment, as follows:

(1) Article 14 of Decree No. 471 of October 17, 1977 stipulates that capital brought into the country in the form of foreign exchange (aporte de capital) may be sold freely through authorized banks when the investor (individual or corporation, national or foreign) has registered the transaction with the Central Bank. Capital can be repatriated after three years but if it originated in a foreign borrowing, it may be repatriated if it has remained in Chile for an average duration of at least 24 months.1 The interest rate must not exceed specified limits. Repatriation normally is allowed only in accordance with the amortization schedule established at the time of registration. Accelerated payments or extensions of payment are subject to special authorization.

Foreign borrowing in maturities of less than five and a half years is subject to reserve requirements, as follows: 25 per cent for maturities of two years to under three years, 15 per cent for maturities of three years to under four years, and 10 per cent for maturities of four years to under five and a half years.

(2) Article 15 of the same decree authorizes the Central Bank to make exemptions to its general rules concerning the inflow and outflow of capital or credits.

(3) Decree-Law No. 600 of July 7, 1974 (modified by Decree-Law No. 1748 of March 18, 1977), the Foreign Investment Law, establishes a regime both for foreign exchange transfers and long-term capital investment. Authorization to make a foreign investment in Chile is granted by the Foreign Investment Committee through a fixed-term contract containing undertakings regarding the phasing of the investment program that will normally not exceed eight years for mining and three years for other projects. Investments of less than US$5 million may be approved by the Executive Secretary of the Committee, except in connection with public utilities, communications, and areas usually reserved for state enterprises. There are no limitations on profit remittances. Capital may be repatriated after three years. Foreign investors can opt for a guaranteed 49.5 per cent per annum total corporation income tax over a period of ten years, or may subject themselves to the tax system applicable to domestic corporations (currently 48.5 per cent). Any foreign credits involved must be authorized by, or registered with, the Central Bank. Foreign capital that entered Chile prior to the promulgation of Decree-Law No. 600 and which did not opt to be subject to that law continues to be subject to the regulations prevailing on the date of entry.

Gold

Chile has issued three gold coins, which are not legal tender. Residents may freely hold and negotiate gold in any form in Chile. Imports and exports of gold are unrestricted, subject to compliance with the normal formalities for import and export transactions, including registration with the Central Bank.

Changes during 1979

January 1. The 1979 schedule of daily exchange rates announced on December 21, 1978 took effect. The schedule would require a depreciation of the peso from Ch$33.97 per US$1 on January 1 to Ch$38.96 per US$ 1 on December 31.

January 1. Import duties on sedan-type cars and vans were reduced from 115 per cent to 105 per cent; it was announced that these duties would be lowered to 95 per cent, 80 per cent, 70 per cent, and 55 per cent at the beginning of the subsequent four years. In addition, import duties on trucks were reduced from 80 per cent to 75 per cent; at the beginning of the subsequent four years, these duties would decline by 5 percentage points each year. By the beginning of 1983, therefore, import duties for motor vehicles would be unified at 55 per cent.

January 9. Decree No. 8 of the Ministry of Economy and Development lifted the ban on exports of copper scrap. Ferromolybdenum and oxide of molybdenum were removed from the list of exports not eligible for domestic credits for preshipment.

January 10. Circular No. 1589 of the Superintendency of Banks and Financial Institutions permitted all institutions authorized to engage in foreign exchange transactions to set commissions freely for exchange purchases and sales and to incorporate such commissions in the buying and selling spread.

January 10. Circular No. 1590 permitted all institutions authorized to engage in foreign exchange transactions to set their buying and selling prices freely. However, in transactions with the Central Bank, the latter may continue to apply an exchange differential of 0.5 per cent of the official exchange rate for either purchases or sales.

January 18. Circular No. 3009 prohibited the importation from free zones of all types of station wagons and minibuses, regardless of value; previously, only those vehicles with a value in excess of US$3,500 f.o.b. had been prohibited.

January 18. Circular No. 3011 discontinued the sale by the Central Bank of bearer certificates denominated in U.S. dollars (certificados para cobertura en mercado bancario or Cepacs) which were previously used for import payments or as collateral for the opening of letters of credit.

March 8. Circular No. 3035 added the currencies of Colombia, Ecuador, and Venezuela to the list of currencies which authorized institutions might buy, sell, or transfer freely, without any obligation by the Central Bank of Chile to participate in these transactions.

March 22. Circular No. 3040 permitted banking institutions to submit import documents to the Central Bank within 60 days (instead of 10 days) from the date of payment of the relevant foreign exchange.

April 5. Circular No. 3013-8 increased the limit on total external indebtedness of banks from 215 per cent to 225 per cent of capital and reserves; the limit on borrowing under Article 14 was raised from 60 per cent to 70 per cent of capital and reserves.

April 5. Circular No. 3046 required natural and juridical persons contracting external credits under Articles 14 and 15 of the Law of International Exchange or direct investment loans under Decree Law No. 600 to deposit in the Central Bank of Chile the equivalent of 25 per cent of these credits and loans with maturities of 24 months to less than 36 months; for longer maturities the deposit rate would be 15 per cent. These deposits would be effected in the same currency as the credits and loans and would not earn interest. Borrowings by the Central Bank and the Central Government, long-term suppliers’ credits, and special credit lines for the financing of capital goods imports were exempted from this requirement.

April 12. Circular No. 3051 exempted proceeds of exports valued up to US$3,000 from surrender requirements.

May 2. Decree No. 393 prescribed further tariff reductions on imports of motor vehicles and spare parts: (1) tariffs on nonoptional parts incorporated in national production were reduced from 25 per cent or 35 per cent to 10 per cent, with retroactive effect to January 1, 1979; (2) tariffs on passenger automobiles or passenger-cargo vehicles and jeeps with seating capacity of up to 15 seats and with engine capacity of up to 850 cubic centimeters were reduced from 105 per cent to 10 per cent; (3) tariffs on trucks with cargo capacities of more than 5,000 kilograms or with passenger capacities of more than 15 seats were reduced from 75 per cent to 10 per cent; (4) tariffs on passenger automobiles or passenger-cargo vehicles with seating capacity of up to 15 seats and with engine capacity in excess of 850 cubic centimeters were reduced from 105 per cent to 90 per cent: it was announced that at the beginning of each of the following seven years, this rate of tariff duty would be reduced by 10 percentage points (20 percentage points in 1984), bringing the duty rate to 10 per cent in 1986; (5) tariffs on vehicles with cargo capacity of up to 1,672 kilograms and with engine capacity in excess of 850 cubic centimeters were reduced from 75 per cent to 65 per cent; this rate also would be reduced progressively to 10 per cent in 1986; and (6) tariffs on cargo vehicles with cargo capacity of more than 1,672 kilograms and up to 5,000 kilograms were reduced from 75 per cent to 45 per cent; this rate would be reduced to 10 per cent by 1984.

The minimum national content requirements for the domestic production of motor vehicles were reduced from 50 per cent to 30 per cent for passenger or passenger-cargo vehicles with seating capacity of up to 15 seats and with engine capacity in excess of 850 cubic centimeters, and from 40 per cent to 15 per cent for vehicles with cargo capacity of up to 5,000 kilograms. All other passenger automobiles and cargo vehicles were exempted from these requirements.

May 2. A luxury tax was imposed on the purchase of vehicles, whether imported or nationally produced, whose final cost exceeded US$12,000 f.o.b. (excluding the value of optional accessories). The tax, which took effect on June 30, 1979, was set initially at 100 per cent of the amount in excess of US$12,000 up to 50 per cent of the value of the vehicle, and was scheduled to decline by 5 percentage points on April 1, 1980 and every six months thereafter to 60 per cent by October 1, 1983. The threshold of US$12,000 f.o.b. would be adjusted annually beginning July 1, 1980 in accordance with variations in the U.S. wholesale price index.

May 2. Circular No. 3059 required that exchange cover be secured for import payments classified under cobertura corriente (i.e., not on a deferred basis) within 120 days generally, and within 90 days for automobiles. Previously, the permissible delay was 180 days. Exemptions for a total permissible delay of 360 days continued to be available for imports of certain machinery and parts, and certain raw materials.

May 17. Circular No. 3074 modified the reserve requirements imposed on foreign borrowing. While the rate of 25 per cent continued to apply to maturities of two years to under three years, a rate of 15 per cent would apply to maturities of three years to under four years and a rate of 10 per cent would apply to maturities of four years to under five and a half years. Maturities of five and a half years or longer were totally exempted. Renewals of existing loans would be subject to these requirements.

June 7. Circular No. 3083 abolished the 10,000 per cent prior import deposit requirement that had been applied to used motor vehicles and parts.

June 22. Exchange houses were permitted to provide exchange cover for imports valued up to US$3,000 f.o.b. without prior authorization, a privilege granted to financial institutions on December 14, 1978.

June 30. The exchange rate of the peso was adjusted from Ch$36.89 to Ch$39 = US$1; it was announced that the new exchange rate would be maintained until February 29, 1980.

July 4. Circular No. 3109 widened the margin within which the Central Bank may intervene in the exchange market from 0.5 per cent to 2 per cent on either side of the exchange rate, thereby defining the intervention points as Ch$38.22 and Ch$39.78 per US$1.

July 25. Circular No. 3121 added ships, airplanes, books, and magazines to the list of imports that might be exempted from the rule that exchange cover must be secured within 120 days for import payments classified under cobertura corriente. For imports of capital goods (and spare parts for such goods valued up to 10 per cent of the total shipment) included in this list, exchange cover might be secured without Central Bank approval up to 360 days after shipment.

August 9. Circular No. 3013-17 eliminated the limit on the external indebtedness of commercial banks (see entry for April 5, above). With effect from August 1, the limit on the monthly rate of liquidation of foreign loans was lowered to US$1 million or 5 per cent of capital and reserves, whichever was greater; previously, this limit had been US$2 million or 5 per cent of capital and reserves, whichever was greater. Development banks were required to adhere to this liquidation limit.

August 18. Decree No. 379 prohibited the export of copper scrap until the end of 1979.

September 6. Circular No. 3149 eliminated the special regulations relating to the importation and exportation of gold, making it subject to the general regulations on imports and exports.

September 27. Circular No. 3160 authorized banking institutions to transact arbitrage operations with their foreign correspondents, provided that the maturities did not exceed 180 days and that the amounts involved were no greater than 100 per cent of each institution’s capital and reserves.

September 27. Circular No. 3165 unified the foreign exchange allowance for travel at US$3,000 a trip. Monthly allowances for studies abroad, attendance at conferences, studies by correspondence, purchases of books without commercial value, subscriptions to books and magazines, remittances to students abroad, purchases of medicine without commercial value, costs of medical treatment, payments to pension funds and funds for widows and orphans, payments of foreign taxes, and rent on housing abroad were each raised from US$1,500 to US$3,000. Furthermore, the circular raised the permissible amount of “extraordinary remittances” from US$1,500 to US$3,000 a month.

November 29. By Circular No. 3206 the Central Bank reduced from 2 per cent to 0.5 per cent the margin which it could apply to purchases and sales of foreign exchange.

Colombia

(Position on December 31, 1979)

Exchange Rate System

The currency of Colombia is the Colombian Peso. The authorities of Colombia follow a policy of adjusting the peso in small amounts at relatively short intervals, taking into account: (1) the movements of prices in Colombia relative to those in its major trading partners; (2) the level of Colombia’s foreign exchange reserves; (3) export performance; and (4) Colombia’s overall balance of payments position. Exchange surrender and foreign payments are generally effected through the medium of exchange certificates, which are traded in the official market at the official rate and in the stock exchange at varying rates of discount. On December 31, 1979 the buying and selling rates in the official market for the U.S. dollar, the intervention currency, were Col$44.00 and Col$44.18, respectively, per US$1. On the same date newly issued exchange certificates were traded on the stock exchange at Col$40.57 per US$1. Buying and selling rates for certain other currencies1 are also officially quoted, with daily quotations based on the buying and selling rates for the U.S. dollar in markets abroad. All exchange transactions are effected through the Bank of the Republic (the central bank) or the authorized banks.

There are other effective exchange rates which result from (1) a 16 per cent tax on coffee export proceeds; (2) tax credit certificates being granted at four different percentages for most export proceeds; (3) a discount of 8 per cent on surrender of exchange certificates issued against proceeds from exports of coffee and other merchandise and invisibles, prior to the 120-day redemption period; and (4) the imposition of remittance tax at two different rates on certain service payments. The peso equivalent of the Government’s exchange receipts from the export tax on coffee is credited to the Treasury’s Special Exchange Account at the Bank of the Republic’s accounting rate of Col$43.00 per US$1; the Government purchases exchange for all public debt payments and other expenditures included in the national budget at the same exchange rate.

The Bank of the Republic stands ready to sell exchange warrants (títulos canjeables por certificados de cambio, títulos de divisas, or certificados de futuro) to the public, against payment in pesos at the certificate market selling rate on the date of issue. These warrants, which are expressed in U.S. dollars and have a maturity of six months or one year, are negotiable and may also be exchanged for exchange certificates, provided that the holder presents an exchange license. Within their period of validity, warrants may also be sold to the Bank of the Republic for pesos, at the certificate market buying rate on the date of repurchase. Warrants bear interest at 14 per cent per annum. Warrants held until after maturity cease to bear interest and can no longer be converted into exchange certificates but may be resold to the Bank at the certificate market rate on the maturity date.

Administration of Control

All imports and exports require prior registration at the Colombian Institute of Foreign Trade (Incomex). Exchange for payments must be purchased through the Bank of the Republic or the commercial banks, with an approved exchange license issued by the Exchange Office of the Bank of the Republic; however, payments for specified current transactions, when made through credit institutions, do not require prior exchange licenses but must be submitted to the Bank of the Republic for ex post authentication. The Monetary Board is authorized periodically to draw up a foreign exchange budget, but has not exercised that power in recent years. It can also establish priorities within that budget for the delivery of exchange, after setting aside the amounts necessary to cover the obligations of the Bank of the Republic and to service the external debt of the public agencies and the National Federation of Coffee Growers. Overall import and export policy is determined by the Foreign Trade Council (FTC). Incomex, through its Import Board, controls those imports that are subject to prior licensing. The National Council for Economic and Social Policy issues directives concerning direct investment in Colombia to the Exchange Office and the National Planning Department. The Exchange Office keeps an accounting record both of foreign investment in Colombia and of debts abroad, and controls the movement of foreign capital as well as the transfer of profits, dividends, commissions, and royalties for trademarks, patents, etc. The sale of proceeds from certain current invisibles is also subject to prior registration with the Exchange Office. The Superintendency of Exchange Control, which is an autonomous agency reporting to the Presidency of the Republic, enforces the control and supervision over exchange transactions and is responsible for applying penalties for any violation of the exchange regulations.

Prescription of Currency

The Monetary Board establishes the list of currencies which it accepts for exchange surrender and provides for import payments. Payments and receipts are normally effected in U.S. dollars, but importers and exporters are also free to use quoted currencies.1 Settlements for commercial transactions with countries with which Colombia has bilateral payments agreements2 must be made through clearing accounts in accordance with the provisions of the particular bilateral payments agreement.

Settlements between Colombia and Argentina, Bolivia, Brazil, Chile, Ecuador, Mexico, Paraguay, Peru, Uruguay, and Venezuela are made through accounts maintained within the framework of the multilateral clearing system of the Latin American Free Trade Association (LAFTA). There are also reciprocal credit agreements with Cuba, the Dominican Republic, Spain, and member countries of the Central American Common Market (CACM).

Nonresident Accounts

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

Imports and Import Payments

There is no prohibited import list. Imports are classified either as goods whose import is subject to prior licensing by Incomex, or as goods that may be imported freely without license although subject to registration. In the latter category, there is a global free list applicable to all countries, a National List applicable to LAFTA countries only, and special lists applicable only to less developed LAFTA member countries and to members of the Andean Pact. A distinction is drawn between reimbursable and nonreimbursable imports. The term reimbursable imports covers imports that must be paid for within certain time limits, i.e., for raw materials and consumer goods, 150 days, and for capital goods, from three to five years; they include imports under bilateral payments agreements and those that are settled through multilateral clearing accounts and those financed by long-term loans. Nonreimbursable imports consist mainly of aid imports under grants and commodities constituting part of a direct investment. All import registrations by public sector agencies are screened by Incomex to determine whether local substitutes are available. Some imports are subject to price control applied by the Division of International Prices of Incomex. Import licenses for certain items are not normally issued; these include arms and habit-forming drugs, certain foodstuffs, certain textiles and clothing, and jewelry. Both import licenses and registrations are valid for six months, except for imports of agricultural and livestock products where the validity period is three months. Import licenses can be extended for successive three-month periods, whereas registrations of free imports can be extended only once for up to three months.

Prior registration of the import transaction at Incomex is required for all imports other than those classified as “minor imports” or shipments with an f.o.b. value of less than US$500. The charge for import registration is Col$200 plus a consular invoice tax of 1 per cent of the f.o.b. value (with a minimum of US$4). In order to obtain exchange licenses, advance import payments deposits (depósitos anticipados para pago de importaciones) of 35 per cent of the registered amount must be made in Colombian currency with an authorized bank before customs clearance. Importers then receive nonnegotiable, interest-free deposit certificates for foreign payments (títulos de depósito para pagos al exterior) denominated in foreign currency and valid for 36 months. These may be used to purchase foreign exchange for partial payment of the import transaction (within any maximum payment terms specified by the Monetary Board for the type of transaction concerned). Unused certificates may be sold to the Bank of the Republic at the original exchange rate.

The following are exempt from advance import deposits: imports brought into Colombia under special import-export arrangements (the Vallejo Plan); foodstuffs for direct consumption; direct imports for the military and the police; imports from Eastern Europe; imports from countries with which reciprocal credit arrangements are in force (LAFTA countries, CACM countries, the Dominican Republic, Cuba, and Spain); imports financed with loans from international organizations; books, newspapers, and magazines; and gasoline.

There is also an advance exchange license deposit (consignación) which has to be lodged, at the official rate for exchange certificates, prior to applying for an exchange license. The rate of deposit is 95 per cent of the value of the import. If the transaction is also subject to the advance import payment deposit of 35 per cent, this is counted as part of the deposit for the advance exchange license. Imports financed with special credit lines from the Bank of the Republic or with funds from the national budget are exempt from advance import payment deposits. The Department of Development Credit in the Bank of the Republic can approve payment terms of up to seven years in special cases.

Import duties are calculated at the “Ministry of Finance exchange rate” (the average selling rate for exchange certificates for the previous month, as determined by the Ministry of Finance). In addition to customs duties, there is an ad valorem tax on imports equal to 5 per cent of the c.i.f. value, the proceeds of which go to the Export Promotion Fund. Exempt from this tax are imports by public entities; goods of LAFTA origin; imports under the Vallejo Plan; diplomatic, consular, and similar imports; gifts; and imports destined for the free port of San Andrés y Providencia or effected through the port of Leticia. With the above exemptions, imports are also subject to a tax of 1.5 per cent of the c.i.f. value, whose proceeds accrue to the ordinary budget of the National Government. All imports are subject to a consular invoice tax of 1 per cent of the f.o.b. value.

Payments for Invisibles

Payments for invisibles are made at the exchange certificate rate. Advance deposits must be made prior to applying for exchange licenses at a rate of 80 per cent for freight payments for imports. An advance exchange license deposit for payments for invisibles, amounting to 95 per cent of the transaction, must be effected in local currency prior to the issuance of an exchange license. The deposit requirement on freight payments for imports can be counted as part of the advance exchange license deposit.

In principle, all payments for invisibles are subject to exchange licenses; however, the Bank of the Republic may make payments abroad on behalf of credit institutions without prior exchange license. Commercial banks in cities where Exchange Offices are located may sell exchange directly for the purpose of foreign travel. Banks may also transfer without prior approval payments for certain other current invisibles, including freight payments, banking commissions, interest on suppliers’ credit, medical expenses, support of technical staff abroad, and the monthly allowances of students studying abroad with government support, and for the service on registered foreign loans taken up by the private sector. Exchange allocations for travel abroad do not exceed US$6,000 a year (half of these amounts for children under 12), but the limit may be raised to US$30,000 a year when the travel may be especially beneficial to the country. Transfers to professional and technical persons undertaking courses abroad are generally restricted to US$450 a month for up to 12 months, while for other students the ceilings range up to US$500 a month, depending on the cost of living in the country concerned. Remittances for the support of relatives abroad are limited to US$250 a month for each beneficiary, although the Exchange Office grants larger allocations for bona fide payments. The transfer of profits accruing to foreign investors is limited to 20 per cent of the investment per annum. An additional 7 per cent may be reinvested. Profits in excess of 27 per cent may be capitalized as direct investment, whenever at least 50 per cent of the investment is in the form of bonds issued by the Industrial Promotion Institute. Foreign tourists who have stayed in Colombia for a period not exceeding three months may, on leaving the country, purchase foreign currency not exceeding US$60 on presentation of their boarding pass. A remittance tax of 12 per cent is applicable to a number of current payments; for profits transferred by branches of foreign companies, the tax is 20 per cent.

Colombian nationals and resident foreigners are required to pay a travel tax of Col$500 whenever they leave the country.

Exports and Export Proceeds

Exports of crude oil and certain other commodities are prohibited, and exports of certain foodstuffs are subject to quotas. Exports of certain other items, such as beef, are reserved for the Instituto de Mercado Agropecuario (Idema). No export licenses are required. Prior application for registration is required, however, for all exports except crude oil, samples, and Colombian products in noncommercial quantities. When registering an export transaction, exporters must provide Incomex with either a personal guarantee in pesos (but without depositing any funds) or a bank guarantee corresponding to 20 per cent of the registered amount, calculated at the Ministry of Finance exchange rate. The periods for surrendering export proceeds normally are as follows: (1) for coffee, within 20 days from the date of registration of the export; and (2) for other goods, generally within 270 days of registration. However, longer terms are permitted for goods sold on a commission basis, that is, books, magazines, and other printed matter, capital goods, and other goods that normally require more extended payment terms.

The Bank of the Republic is empowered in certain cases to retain a portion of the exchange proceeds surrendered by the exporter of any product to repay debts for imports under the Vallejo Plan. All exchange proceeds from exports, except those from the export of crude oil not produced by the Empresa Colombiana de Petróleo (Ecopetrol), must be surrendered to the Bank of the Republic; Ecopetrol and exporters of minerals associated with state enterprises also are permitted to retain part of their export proceeds abroad for the settlement of their import costs.

On surrendering their export proceeds to the Bank of the Republic, exporters of commodities other than coffee, raw cattle hides, or petroleum and petroleum products receive tax credit certificates (certificados de abono tributario or CATs) in an amount corresponding to a specified percentage of the total earnings surrendered, converted at the Ministry of Finance exchange rate. This ratio is 0.1 per cent, 5 per cent, 9 per cent, or 12 per cent, depending on the commodity; the rates are calculated on domestic value added for specified assembly operations. These certificates, which are freely negotiable and are quoted on the stock exchange, are accepted at par by tax offices three or six months after issuance for the payment of income tax, customs duties, and sales taxes.

The surrender of foreign currency earned by exports is effected by exchanging the foreign currency for exchange certificates that are negotiable on the stock exchange. In the case of exchange certificates issued against proceeds from exports of coffee, certain textiles and leather manufactures, clothing, shoes, guns, and furniture, a discount of 8 per cent is applied if the certificates are presented to the banking system for redemption within 120 days of issue. Certificates issued against export proceeds from other exports are redeemed by the Fondo de Promoción de Exportaciones (Proexpo) without that discount.

Minimum surrender prices for coffee, bananas, and a few other exports are set from time to time by the Monetary Board.3 Exports of coffee are subject to the following regulations: (1) A minimum surrender price (reintegro) is fixed after deduction for freight and insurance at US$251 per 70-kilogram bag. (2) Exporters pay a tax in foreign exchange at the rate of 16 per cent ad valorem. Of this tax, 3.2 percentage points are paid to the National Coffee Fund and 0.8 percentage points are paid to the Departmental Committees of Coffee Growers, while the remainder provides revenue for the Treasury’s Special Exchange Account. (3) Exporters must either surrender without payment (in the form of untreated coffee) the equivalent of 58 per cent of the volume of excelso coffee that they wish to export (retención cafetera) or pay the National Federation of Coffee Growers the peso equivalent. (4) Exports of coffee are subject to an additional tax of 6 per cent ad valorem (pasilla y ripio tax); the tax must be paid to the Federation either in kind or in pesos. (5) A committee composed of the Ministers of Finance and Agriculture and the Managing Director of the Federation establishes a domestic buying price for export-type coffee, expressed in pesos per carga of 125 kilograms.

Proceeds from Invisibles

All exchange receipts from invisibles must be surrendered; they are converted against exchange certificates which can be sold in the stock exchange. If they are sold to the banking system within 120 days of issue, a discount of 8 per cent is applied. For surrenders in respect of gifts and the rendering of professional services other than medical, hospital, or educational services, prior authorization from the Exchange Office is required.

Capital

All inward and outward capital transfers are effected at the certificate market rate. There is a 95 per cent advance payment deposit on all outflows, which must be lodged prior to applying for an exchange license.

All foreign investment in Colombia, all new foreign loans, direct lines of foreign credit obtained by nonbank residents,4 and the movement of capital previously imported (except loans previously registered under Decree No. 2322 of September 2, 1965) must be registered with the Exchange Office. Capital imports require prior approval by the National Planning Department, and capital for the petroleum industry or for other mineral exploration in addition requires approval by the Ministry of Mines and Energy. Capital registration entitles the investor to export profits and to repatriate capital at the certificate market rate on certain conditions specified in Decree No. 1900 of September 15, 1973. The transfer of profits is limited to 20 per cent of the net capital value in any one year (beginning with profits earned in 1968), except for profits resulting from investments of outstanding importance or involving special risks in view of the circumstances prevailing in the international money market. If in any year the earnings remitted are less than 20 per cent, the balance may be remitted in subsequent years; where the profits were earned (and not remitted) prior to the coming into force of Decree-Law No. 444 of 1967, the additional remittances must not exceed 3 per cent a year. New investments may be granted exemptions from import duty and from advance deposit requirements. Capital invested in the petroleum industry is subject to special rules and to contractual provisions. All foreign banks and their branches must have Colombian’ majority participation. In this respect, “subregional” participations (i.e., from member countries of the Andean Pact) are treated as Colombian participations. New direct foreign investment in banks, insurance companies, and other financial institutions is restricted to investors from member countries of the Andean Pact and to “national” or “mixed” companies. Foreign participation is also restricted in new or established companies engaged in the international resale of imported and domestic products or in activities related to tourism.

Foreign loans contracted by private Colombian individuals or firms are generally subject to a minimum maturity of five years and to an interest rate ceiling of 2 per cent over the New York prime rate or the London interbank offered rate. Such loans normally are permitted only when mining companies are involved or juridical persons who are established in Colombia as representatives of foreign firms and are contributing to the construction of public works of national interest. Special regulations govern the periods for which resident banks may provide import financing from foreign currency borrowed abroad. Foreign loans for national or governmental entities in excess of Col$10 million or US$500,000 require prior authorization by the Ministry of Finance and the National Planning Department. For loans to the Government, or guaranteed by the Government, the following are also required: prior authorization by the National Council for Economic and Social Policy and by the Monetary Board, prior consultation with the Interparliamentary Committee on Public Credit, and ex post approval by the President of the Republic.

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

Colombian nationals who have invested abroad must surrender to the Bank of the Republic, against exchange certificates, not only the interest, profits, commissions, and royalties but also the proceeds of the sale or liquidation of the investment. Exports of capital by residents are restricted, and such exports by private individuals are not normally permitted.

Gold

Natural and juridical persons may trade in Colombia in gold coins for numismatic purposes only. With this exception, the Bank of the Republic alone is entitled to purchase, sell, hold, import, or export gold. Imports of nonmonetary gold are not normally undertaken. The Bank of the Republic purchases locally produced gold at the average price prevailing in the London and Zürich markets during the preceding week; mining companies with foreign capital participation are paid 50 per cent in foreign currency on presentation of exchange licenses entitling them to make payments abroad for services, dividends, capital repayments, taxes, etc.; the remaining 50 per cent and all payments to domestic producers are paid at the certificate market exchange rate. When selling their gold to the Bank of the Republic, the producers receive tax credit certificates equivalent to 5 per cent of the value of the gold sold. The certificates held by small producers are bought by the Bank of the Republic in pesos at their market value. In addition, the Bank of the Republic levies an ad valorem tax of 2 per cent on the total payment received by the miner.

The Bank of the Republic makes domestic sales of gold for industrial use either direct or through the Colombian Mining Association at a price equivalent to the average quotation in gold markets abroad during the previous month; this price is converted into pesos at the prevailing selling rate of exchange certificates on the date of sale.

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

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

Changes during 1979

January 12. A 15,000 ton export quota for cotton was authorized (FTC-Incomex Resolution No. 003/79).

January 16. A 10,000 ton export quota for white rice was authorized for the first two months of 1979 (FTC-Incomex Resolution No. 004/79).

January 24. The minimum surrender price for coffee exports was reduced from US$259 to US$243 per 70-kilogram bag (MBR No. 1/79).

January 24. The Foreign Exchange Department of the Bank of the Republic was empowered to authorize the issuance of foreign exchange licenses to domestic financial institutions to cover their foreign exchange position, whenever this had been affected by payments related to import financing, and when reimbursement could not be effected using normal procedures. Banks were also able to obtain foreign exchange licenses at the beginning of their foreign exchange operations. Rules were liberalized for entities that might open and operate deposits denominated in foreign exchange, subject to prior authorization of the Foreign Exchange Department. Previously, only credit institutions, insurance companies, transportation and export firms, and other specified entities could open and hold these accounts. Moreover, wider use of the accounts was also authorized, without the specific approval of the Monetary Board (MBR No. 4/79).

January 31. With effect from February 1, the minimum surrender price for coffee exports was reduced from US$243 to US$217 per 70-kilogram bag (MBR No. 5/79).

January 31. The 35 per cent advance import payment deposit was henceforth to be met in local currency, at the exchange rate prevailing on the transaction date. Previously, the deposit could be fully constituted with exchange certificates (MBR No. 6/79).

February 7. Foreign currency liabilities contracted by public sector financial institutions were exempted from the minimum reserve requirement of 18 per cent when linked to the financing of approved mining projects, and when this financing would not exceed 15 per cent of total costs (MBRNo. 7/79).

February 7. The Institute of Industrial Promotion was authorized to issue bonds that could be used for the reinvestment of profits on foreign capital, in excess of the maximum permissible limits on such profits established in accordance with the regulations of the Cartagena Agreement (MBR No. 8/79).

February 9. Imports financed by foreign loans were reclassified as reimbursable, and would require a license issued by Incomex (Foreign Exchange Department, General Circular No. 8).

February 21. With effect from February 22, the minimum surrender price for coffee exports was reduced from US$217 to US$188.40 per 70-kilogram bag (MBR No. 15/79).

February 23. Special lamps for surgery rooms and for use in dentistry were included among the capital goods imports required to be paid within 36 months (FTC Resolution No. 012/79).

February 26. Coffee Savings Bonds were abolished (Ministry of Finance and Public Credit, Decree No. 429/79).

February 26. The coffee surrender requirement applicable to exporters of excelso coffee was reduced from 80 per cent to 45 per cent of the volume to be exported (Ministry of Finance and Public Credit, Decree No. 430/79).

February 26. With effect from April 1, the minimum redemption period of 120 days without discount for exchange certificates was effectively eliminated for export proceeds from coffee, cotton, flowers, live cattle, beef, gems, and precious metals. Proexpo was granted a special rediscount facility to purchase promptly the certificates originating from those transactions without the discount of 9 per cent. Only foreign exchange accrued from services and tourism remained subject to the discount (MBRNo. 17/79).

February 26. The interest rate on exchange warrants (títulos canjeables por certificados de cambio) was increased from 7 per cent to 14 per cent (MBR No. 18/79).

February 26. The rate of advance exchange license deposit (consignación) was increased to 95 per cent, from 40 per cent for products for immediate use (including raw materials and consumer goods) and from 60 per cent for all other import payments and also remittances. The rate was also increased from 80 per cent to 95 per cent for freight payments for imports. The advance import payment deposit (equivalent to 35 per cent) was henceforth to be counted as part of the required advance deposit; (previously, the advance payment deposit had been computed on the value of the import net of the advance import deposit). The deposit was to be made entirely in local currency. Advance payments on foreign loans made at least four months prior to maturity, and payments for imports of capital goods within 32 months of the importation, previously exempt from the advance deposit, were made subject to the 95 per cent rate (MBR No. 19/79). Guidelines for implementation were provided by General Circular No. 18 of 1979, issued by the Foreign Exchange Department and by Circular No. DE/394/79 of March 7 of the Bank of the Republic.

March 5. Colombia approved the Articles of Agreement of the Latin American Economic System (SELA) established in October 1975 (Law No. 15/79).

March 7. With effect from March 8, the minimum surrender price for soluble coffee was lowered from US$8 to US$6.50 a kilogram (MBR No. 26/79).

March 7. All increases in the outstanding level of foreign liabilities of banks and financial corporations that occurred after February 28 were exempted from the minimum reserve requirements of 18 per cent (MBR No. 27/79).

March 7. Advance payment deposits for exchange license applications for travel expenses abroad were reintroduced at the rate of 95 per cent (MBR No. 28/79).

March 13. Donations and transfers abroad in amounts smaller than US$50,000 could be authorized by the local offices of the Foreign Exchange Department (FED General Circular No. 20/79).

March 22. The text of a new contract between the National Federation of Coffee Growers and the Colombian Government, signed on December 20, 1978, appeared in the National Gazette, effectively extending the prior existing contract through December 31, 1988.

March 23. Imports of airplanes and airplane spare parts and engines were made subject to prior authorization by the National Drug Council (Administrative Department of Civil Aeronautics, Resolution No. 1592/79).

March 27. Certain assembled automobiles were excluded from the category of capital goods. The cost of imports of such automobiles must be paid within 150 days to 18 months, according to specified characteristics (FTC Resolution No. 030/79).

April 17. Prior approval by Incomex was required for exports of sesame (FTC Resolution No. 042/79).

April 18. The minimum surrender price for coffee exports was increased from US$188 to US$202 per 70-kilogram bag (MBR No. 33/79).

April 30. Import duties on specified types of wire were modified (Ministry of Finance and Public Credit, Decree No. 879/79).

May 3. The import duty on sorbitol was increased to 45 per cent (Ministry of Finance and Public Credit, Decree No. 959/79).

May 4. With effect from May 5 the coffee surrender requirement applicable to exporters of excelso coffee was increased from 45 per cent to 55 per cent of the volume to be exported (Ministry of Finance and Public Credit, Decree No. 963/79).

May 4. With effect from May 5 the minimum surrender price for coffee exports was increased from US$202 to US$206 per 70-kilogram bag (MBR No. 36/79).

May 9. The discount on advance redemption of exchange certificates within 120 days of issuance was reduced from 9 per cent to 8 percent (MBRNo. 37/79).

May 23. New regulations were issued for foreign investment within the context of the Cartagena Agreement. The National Planning Department was required to determine the maximum time limit for completion of any authorized investment, and new authorizations would be required if the investment did not take place during this period. For export-related projects, Incomex was to establish export agreements and supervise the fulfillment of the contracts. The new legislation also provided for classification by the Planning Department of certain foreign nationals as domestic investors if they relinquished their rights to re-export capital and transfer profits abroad. In addition, certain nationals of the other member countries of the Cartagena Agreement were to be considered as Colombian nationals for the purpose of the legislation. Any corporation with participation of foreign nationals would be subject to surveillance by the Superintendencia de Sociedades and would require prior authorization for its operations (National Planning Department, Decree No. 1161/79).

May 23. With effect from May 24, the minimum waiting period of 120 days for the redemption of exchange certificates without discount was reinstated for certain leather manufactures, and also for specified textiles, clothing, shoes, gems, and wooden furniture (MBR No. 38/79; see also MBR No. 17/79).

May 23. Banks were authorized to prepay external loan obligations that had been contracted to provide financing for the purchase of shares and bonds in foreign banks and similar foreign financial institutions or for the purpose of opening new branches or agencies abroad. Resources used for such repayments would be counted against the banks’ minimum reserve requirements on net foreign liabilities (MBR No. 40/79).

June 4. With effect from June 5 the coffee surrender requirement applicable to exporters of excelso coffee was increased from 55 per cent to 58 per cent of the volume to be exported (Ministry of Finance and Public Credit, Decree No. 1302/79).

June 4. With effect from June 5 the minimum surrender price for coffee exports was increased from US$216 to US$251 per 70-kilogram bag (MBR No. 41/79).

June 4. With effect from June 5 the discount on certificates of exchange issued against proceeds of coffee exports was reinstated. It was announced that the Bank of the Republic was ready to purchase certificates of exchange at a discount of 8 per cent, when presented within 120 days of issue (MBR No. 42/79; see also MBR No. 17/79).

June 13. New regulations were issued concerning import payments. The maximum term for effecting payment was reduced from 60 months to 36 months for imports of those capital goods that were not covered by a global license or the Vallejo Plan. A new advance import payment deposit requirement, equivalent to 20 per cent of the value of the import license, was established for imports of capital goods which previously had been exempted from the deposit. Gasoline imports were included among those commodities not subject to the prior import payment deposit. Importers would continue to receive a nonnegotiable deposit certificate for foreign payments, valid for 36 months for the amount of the deposit. Special warranty requirements on the amount of the payment due in excess of the prior deposit were established for all imports. Commercial banks were made liable for any deficiency of payment by the importer (MBR No. 45/79).

June 13. The minimum reserve requirement on foreign obligations of commercial banks was reduced to 3 per cent for the first US$2.5 million and 9 per cent thereafter. Previously, the requirement had been 6 per cent for the first US$4 million and 18 per cent thereafter. The reduction from 18 to 9 per cent was to be made in three monthly steps of 3 per cent each, starting July 1 (MBR No. 46/79).

June 13. Banks were allowed to retain for their foreign exchange position the equivalent of up to 10 per cent of their total liabilities in foreign exchange (instead of 6 per cent). The Bank of the Republic was still authorized to establish deposits in foreign exchange with local commercial banks up to twice the foreign exchange reserves of each of those institutions; the reserve requirement for such deposits was reduced from Col$5 to Col$2 per US$1 (MBR No. 47/79).

June 15. Import duties were modified for a variety of commodities, including tires and capital goods imports. Further adjustments affecting transport equipment were announced on June 18 (Ministry of Government, Decrees Nos. 1409/79, 1415/79, and 1417/79).

June 18. Regulations were issued concerning the time limits for payments for imports of vehicles. Imports of vehicles that were classified as capital goods under global license were to be paid for within five years, while all other vehicles classified as capital goods were to be paid for within three years. Certain vehicles and spare parts were to be paid for within 24 months, while certain other automobiles were classified as consumer goods and were to be paid for within the terms established for imports for immediate use (150 days). Parts for such automobiles would be paid for within 18 months (FTC Resolution No. 051/79).

June 26. Exports for several items, previously classified as freely exportable, were made subject to prior approval by Incomex. The list included leather goods, shoes, clothing, chairs, and unworked gems. Prior Incomex registration was required for polished gems, precious stones, and tropical fish (FTC Resolution No. 057/79).

June 28. The 5 per cent import duty on capital goods for certain specified industries, established in May 1976, was extended through June 30, 1980. The industries comprised agriculture, textiles, steel and machinery, food processing, chemical, printing, electrical, and construction. The import duty applied also to machinery and related materials for use in plant expansion, with prior authorization by the National Council of Customs Policies (Ministry of Finance and Public Credit, Decree No. 1551/79).

July 6. The granting of credits by Colombian credit institutions for import financing purposes was restricted. The role of banks would be limited to the issue of warranties and the negotiation of the payment of principal and interest with a financial entity abroad (Bank Supervisory Committee, External Circular No. DC DR-981/79).

July 27. Imports of animal feed of agricultural origin were included in the list of freely importable commodities (FTC Resolution No. 66/79).

August 3. The General Customs Directorate issued detailed regulations for the operation of free zones in Colombian ports, expanding Decree No. 1366 of 1977 of the Ministry of Finance and Public Credit (Customs Directorate, General Regulation No. 0329/79).

August 16. The system of payments for invisibles was liberalized. Individual foreign exchange license requirements were eliminated for specific service payments abroad. For certain expenses only a certified request would be necessary, while for others a receipt of payment would be required. Prior authorization was required for press and radio-related expenses, payments for film rentals and imports, and for other specified items. The foreign exchange allocation for travel abroad was increased from US$2,800 to US$6,000 for adults and from US$1,400 to US$3,000 for children under 12. The ceiling on travel considered especially beneficial to the country was increased from US$23,400 a year to US$30,000 a year.

August 16. The advance import payment deposit for imports of capital goods was increased from 20 per cent to 35 per cent (MBR No. 52/79; see also MBR No. 45/79, above).

August 16. The special arrangements for refinancing the foreign exchange obligations of Idema were abrogated. Industrial and commercial enterprises that had special credit lines included in those arrangements were nonetheless required to obtain prior authorization from the Monetary Board for their import and external debt repayment plans (MBR No. 55/79).

August 21. The External Trade Council issued a list of 626 items that would be added to the list of commodities to be imported freely, without prior licensing by Incomex (FTC Resolution No. 075/79).

September 5. Exporters of mineral products in association with state enterprises were authorized to retain part of their export proceeds for the payment of foreign obligations, subject to prior authorization by the Monetary Board (MBR No. 56/79).

September 5. Importers of specified vehicles under bills of lading dated prior to March 27, 1979 were required to pay for the value of the import within five months. A prior deposit of 35 per cent was required for these payments (MBR No. 58/79).

September 10. It was announced that rental payments for television movies would not be subject to the special remittance tax (Foreign Exchange Department, General Circular No. 46).

September 12. Capital goods to be imported by the public sector were exempted from the 35 per cent advance import payment deposit whenever the Ministry of Finance had given prior authorization for the foreign financing of the purchase (Foreign Exchange Department, General Circular No. 49; see also MBR No. 45/79, above).

September 12. Import duties were reduced on a wide range of commodities covering about 2,600 entries. The policy change reflected the intention of the authorities to reduce import duties gradually to the levels agreed under the Cartagena Agreement. The full adjustment was to be effected within three years, to avoid disruption of the operations of domestic producers. The reduction of import duties amounted to 5 percentage points whenever the difference between the former rate and the target rate did not exceed 10 points. Whenever the difference exceeded 10 points, the adjustment amounted to 5 percentage points and 25 per cent of the remaining difference. The indicative duty levels under the Cartagena Agreement for the glass, paper, and plastic sectors were adopted (Ministry of Finance and Public Credit, Decrees Nos. 2255/79, 2256/79, and 2257/79).

September 25. Prior approval by Incomex and Inderena was reintroduced for exports of wooden electrical poles having specified characteristics (FTC Resolution No. 87/79).

September 29. The validity of CAT rates established for 1979 was extended through 1980. Moreover, it was decided that with effect from January 1, 1980 exports under the official export-import regimes were to be subject to a reduced CAT reimbursement rate of 0.1 per cent. Exports subject to special assembly contracts with Incomex were exempted from the reduction and continued to benefit from the CAT rates previously in operation (Ministry of Finance and Public Credit, Decree No. 2380/79).

September. Certification requirements on the distribution of capital of companies exporting to the Andean Group were announced, on the basis of Decision No. 24 of the Andean Group, requiring such certification if domestic enterprises were to benefit from the reduction in import duties in the Andean Market (Superintendencia de Sociedades, External Circular No. 0-011/79).

October 17. Imports of equipment and capital goods financed by financial institutions were exempted from the 35 per cent advance import payment deposit and warranty requirements. Previously, only imports of capital goods financed by international organizations and imports by the public sector with approved financing had been exempted from the requirement (MBR No. 63/79; see also MBR No. 45/79, above).

October 23. Fifty-eight items previously included in the list of freely importable commodities were transferred to the list of items subject to prior licensing (FTC Resolution No. 99/79; see also FTC Resolution No. 057/79).

November 28. The bilateral payments agreement with Spain was terminated with effect from December 31 and was replaced by a reciprocal credit arrangement.

Comoros

(Position on December 31, 1979)

Exchange Rate System

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

Administration of Control

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

Exchange control is administered by the Institute of Issue. The Ministry of Finance, Economy, and the Plan supervises borrowing and lending abroad, inward direct investment, and all outward investments. Part of the approval authority in respect of exchange control has been delegated to an authorized bank—the sole commercial bank—and to the Postal Administration. All exchange transactions relating to foreign countries must be effected through the authorized bank or the Postal Administration. Import licenses are issued by the Director of Foreign Trade, and those for exports are issued by the Director of Economic Affairs.

Prescription of Currency

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

Imports and Import Payments

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

Payments for Invisibles

All payments to Rhodesia and South Africa are prohibited. Payments for invisibles to France (as defined above), Monaco, and the Operations Account countries are permitted freely. Those to other countries are subject to approval; with the exception of travel, for which there are maximum allocations, such approvals are generally given liberally.

For tourist travel, residents traveling to countries other than France (as defined above), Monaco, and the Operations Account countries may obtain up to CFAF 250,000 in foreign currency a person a trip. The maximum that may be allocated in banknotes is CFAF 125,000; the remainder may be in the form of a bank transfer, travelers checks, a certified check, or any other means of payment. For business travel, a special allocation may be authorized by the Institute of Issue upon the request of the authorized bank.

Exports and Export Proceeds

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

Proceeds from Invisibles

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

Capital

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

Special controls (additional to any exchange control requirements that may be applicable) are maintained over borrowing abroad, over inward direct investment, and all outward investments; these controls relate to the transactions themselves, not to payments or receipts.

Gold

Imports and exports of gold in any form require prior authorization and are not normally permitted.

Changes during 1979

No significant changes took place.

People’s Republic of the Congo

(Position on December 31, 1979)

Exchange System

The currency of the People’s Republic of the Congo is the CFA Franc,1 which is pegged to the French franc, the intervention currency, at the fixed rate of CFAF 1 = F 0.02. Exchange transactions in French francs between the Banque des Etats de l’Afrique Centrale (BEAC) and commercial banks take place at the rate of CFAF 50 = F 1. Buying and selling rates for certain other foreign currencies are also officially posted, with quotations based on the fixed rate for the French franc and the rates for the currencies concerned in the Paris exchange market.

Payments to France and its Overseas Departments and Territories, Monaco, and the Operations Account countries (see section on Administration of Control, below), as well as the purchase of those countries’ banknotes and travelers checks, are subject to a commission of 0.75 per cent, with a minimum charge of CFAF 75; exempt are payments of the State, the Postal Administration, and the BEAC, salaries of Congolese diplomats abroad, expenditures of official missions abroad, scholarships of persons studying or training abroad, and debt service payments due from companies that have entered into an agreement with the Congo. Most payments to other foreign countries and credits to Foreign Accounts in Francs are subject to a commission of 1 per cent or, for foreign exchange purchased by the Diamond Purchase Office, 0.50 per cent; these commissions are subject to a minimum of CFAF 100. A commission of 0.25 per cent is levied on all capital transfers to countries that are not members of the BEAC. There are no taxes or subsidies on purchases or sales of foreign exchange.

Administration of Control

Payments to the following countries, although subject to declaration, are unrestricted: (1) France (and its Overseas Departments and Territories) and Monaco; and (2) all other countries whose bank of issue is linked with the French Treasury by an Operations Account (Benin, Cameroon, the Central African Republic, Chad, the Comoros, Gabon, Ivory Coast, Mali, Niger, Senegal, Togo, and Upper Volta). Settlements and investment transactions with all foreign countries, however, are subject to control. Foreign countries are defined as all countries other than the Congo.

The Office of External Financial Relations in the Ministry of Finance supervises borrowing and lending abroad. Exchange control is administered by the Minister of Finance, who has delegated his approval authority to the Office of External Financial Relations. All exchange transactions must be effected through authorized banks or the Postal Administration. Import and export licenses are issued by the Foreign Trade Office in the Ministry of Commerce, except those for gold, which are granted by the Office of External Financial Relations.

Prescription of Currency

Since the Congo is an Operations Account country, settlements with France (as defined above), Monaco, and the Operations Account countries are made in CFA francs, French francs, or the currency of any other institute of issue that maintains an Operations Account with the French Treasury. Settlements with the People’s Republic of China are made through special accounts established under a bilateral payments agreement.2 Settlements with all other countries are usually made in any of the currencies of those countries or in French francs through Foreign Accounts in Francs. All settlements between the Congo and Rhodesia are prohibited.

Nonresident Accounts

The regulations pertaining to nonresident accounts are based on those applied in France. The crediting of BEAC banknotes to Foreign Accounts in Francs is permitted when they have been mailed to the BEAC agency in Brazzaville by the foreign correspondent of an authorized bank.

Imports and Import Payments

Imports from all sources require prior authorization. All imports of Rhodesian origin are prohibited. There is an indicative annual import program which distinguishes between five zones: (1) the countries of the Central African Customs and Economic Union (UDEAC); (2) France; (3) other countries of the former French Franc Area; (4) EC countries other than France; and (5) all remaining countries. All imports under this program require licenses. The import program does not include petroleum imports, for which a joint quota is set for the countries of the UDEAC. Also outside the program are imports for the Government under foreign aid and bilateral payments agreements, and imports made by the Office National du Commerce (Ofnacom). Ofnacom has a monopoly over certain imports, including hardware, rice, canned tomatoes, salt, and salted fish from all sources, certain cotton piece goods from Japan, and certain other textiles from the People’s Republic of China. The quotas for non-EC countries may be used to import goods originating in any country outside the former French Franc Area.

All import transactions relating to countries other than France (as defined above), Monaco, and the Operations Account countries must be domiciled with an authorized bank. Licenses for imports from countries other than France (as defined above), Monaco, and the Operations Account countries require the visa of the Foreign Trade Bureau and the Office of External Financial Relations. The approved import license entitles importers to purchase the necessary exchange, provided that the shipping documents are submitted to the authorized bank.

All imports must be insured with the state insurance company, Société d’Assurances et de Réassurances du Congo (SARC). To implement this measure, the Congolese Customs Service releases imports only after an insurance certificate issued by the SARC has been produced. There has been some accumulation of arrears on external payments owing to the imposition of statutory ceilings on central bank credit to the Government and an ensuing shortage of domestic currency with which to purchase foreign exchange.

Payments for Invisibles

Payments for invisibles to France (as defined above), Monaco, and the Operations Account countries are permitted freely provided they have been declared and are made through an authorized intermediary; those to other foreign countries are subject to approval. For many types of payment the approval authority has been delegated to authorized banks. Payments for invisibles related to trade are permitted freely when the basic trade transaction has been approved or does not require authorization. Transfers of income accruing to nonresidents in the form of profits, dividends, and royalties are also permitted freely when the basic transaction has been approved. At the end of 1979 certain current payments were in arrears.

Residents traveling as tourists to foreign countries other than France (as defined above), Monaco, the Operations Account countries, or Zaïre may obtain an exchange allocation of an amount equivalent to CFAF 175,000 a person a trip (CFAF 87,500 for children under ten), or CFAF 10,000 if the duration of the trip is less than 24 hours, for any number of trips a year; any foreign exchange in excess of CFAF 5,000 remaining after return to the Congo must be surrendered.

For business travel, there is a special allocation of the equivalent of CFAF 20,000 a person a day, subject to a maximum of CFAF 400,000 a trip; additional amounts may be authorized in appropriate cases. The use of credit cards abroad by residents is prohibited. There are special facilities for travelers to Kinshasa who request no foreign means of payment other than Zaïrian banknotes. The transfer of the entire net salary of a foreigner working in the Congo is permitted upon presentation of the appropriate pay voucher, provided that the transfer takes place within three months of the pay period. Residents traveling to France (as defined above), Monaco, or an Operations Account country may take out CFAF 25,000 (CFAF 12,500 for children under ten) in BEAC banknotes. Resident and nonresident travelers going to foreign countries other than France (as defined above), Monaco, the Operations Account countries, or Zaïre may freely take out up to a maximum of CFAF 10,000 in BEAC banknotes, French banknotes, and banknotes issued by any other institute of issue maintaining an Operations Account with the French Treasury.

Exports and Export Proceeds

Exports to Rhodesia are prohibited. All exports require prior authorization. Most exports to countries in the former French Franc Area may be made freely; among the exceptions are commodities exported by the National Marketing Office for Agricultural Products (Office National de Commercialisation des Produits Agricoles) and by the National Marketing Office for Timber (Office Congolais du Bois).

Proceeds from exports to foreign countries must be collected and repatriated, generally within 180 days of arrival of the commodities at their destination. Export proceeds must be surrendered within a month of the due date. All export transactions relating to countries other than France (as defined above), Monaco, and the Operations Account countries must be domiciled with an authorized bank.

Proceeds from Invisibles

All amounts due from residents of foreign countries in respect of services and all income earned in those countries from foreign assets must be collected when due and surrendered within a month of the due date. Resident and nonresident travelers may bring in any amount of banknotes and coin issued by the BEAC, the Bank of France, or any other bank of issue maintaining an Operations Account with the French Treasury, as well as any amount of foreign banknotes and coin (except gold coin).

Capital

All capital movements between the Congo and Rhodesia are prohibited. Movements of funds between the Congo and France (as defined above), Monaco, and the Operations Account countries are free, though ex post declarations are required. Such movements to countries that are not members of the BEAC are subject to a commission of 0.25 per cent. Most international capital transactions are subject to prior authorization. Capital transfers abroad require exchange control approval and are restricted, but capital receipts from abroad generally are permitted freely. All foreign securities, foreign currency, and titles embodying claims on foreign countries or nonresidents that are held in the Congo by residents or nonresidents must be deposited with authorized banks in the Congo.

Special controls (additional to any exchange control requirements that may be applicable) are maintained over borrowing and lending abroad, over inward and outward direct investment, and over the issuing, advertising, and offering for sale of foreign securities in the Congo; these controls relate to the transactions themselves, not to payments or receipts.

Direct investments abroad3 require the prior approval of the Minister of Finance; the full or partial liquidation of such investments also requires the prior approval of the Minister. Foreign direct investments in the Congo4 require prior approval by the Minister of Finance, unless they involve the creation of a mixed-economy enterprise. The full or partial liquidation of direct investments in the Congo must be declared to the Minister. Both the making and the liquidation of direct investments, whether these are Congolese investments abroad or foreign investments in the Congo, must be reported to the Minister within 20 days. Direct investments are defined as investments implying control of a company or enterprise.

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

Borrowing by residents from nonresidents requires prior authorization by the Minister of Finance. However, loans contracted by registered banks and small loans, where the total amount outstanding does not exceed CFAF 10 million for any one borrower, are exempt from this requirement. The contracting of loans that are free of authorization, and each repayment thereon, must be reported to the Office of External Financial Relations within 20 days of the operation.

Lending by residents to nonresidents is subject to exchange control, and all lending in CFA francs to nonresidents is prohibited unless special authorization is obtained from the Minister of Finance. The following are, however, exempt from this authorization: (1) loans in foreign currencies granted by registered banks; (2) other loans in foreign currencies when the total amount outstanding of these loans does not exceed the equivalent of CFAF 5 million for any one lender; and (3) foreign currency loans whose interest rate does not exceed 5 per cent a year and whose maturity is two years or less. The making of loans that are free of authorization, and each repayment thereon, must be reported to the Office of External Financial Relations within 20 days.

Under the Investment Code of April 26, 1973, a number of privileges may be granted to approved foreign investments. The Code provides for four categories of preferential treatment.

Gold

By virtue of Decree No. 66/236 of July 29, 1966, as amended by Decree No. 66/265 of August 29, 1966, residents are free to hold gold in the form of coin, art objects, or jewelry; however, they require the prior authorization of the Minister of Finance to hold gold in any other form or to import or export gold in any form, from or to any other country. Exempt from the latter requirement are (1) imports and exports by or on behalf of the Treasury or the BEAC and (2) imports and exports of manufactured articles containing a minor quantity of gold (such as gold-filled or gold-plated articles). Both licensed and exempt imports of gold are subject to customs declaration. There are no official exports of gold.

Changes during 1979

No significant changes took place.

Costa Rica

(Position on December 31, 1979)

Exchange Rate System

The currency of Costa Rica is the Costa Rican Colón, which is pegged to the U.S. dollar, the intervention currency, at Ȼ 8.57 = US$1. The official buying and selling rates for the U.S. dollar are Ȼ 8.54 and Ȼ 8.60, respectively, per US$1. Buying and selling rates for certain other currencies1 are also officially quoted, with daily quotations based on the relationship of those currencies against the U.S. dollar expressed in Costa Rican colones at buying and selling rates of Ȼ 8.57 and Ȼ 8.60, respectively, per US$1. The Canadian dollar also is officially quoted; daily quotations for transactions in banknotes and checks expressed in that currency are based on the buying and selling rates for the U.S. dollar in markets abroad. The Central Bank stands ready, in principle, to buy U.S. dollars forward at 90 days, at Ȼ 8.39055 per US$1. Many private sector transactions in foreign exchange, including settlements for current and capital transfer transactions, are effected through the San José stock exchange at rates close to the official market rate. On December 31, 1979 the buying and selling rates for the U.S. dollar in that market were Ȼ 8.65 and Ȼ 8.71, respectively, per US$1. This exchange rate cannot vary by more than six points from the effective average rate recorded for transactions on the previous day; moreover, the maximum variation in any given day also cannot exceed six points. There are no taxes or subsidies on purchases or sales of foreign exchange.

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

Administration of Control

Exchange controls are operated by the Central Bank. No licenses are required to buy or sell foreign exchange that is not subject to mandatory sale to the banking system.

Prescription of Currency

In practice, nearly all exchange transactions in Costa Rica are expressed in U.S. dollars. Payments to Poland may be made through special U.S. dollar accounts established under a payments agreement with that country. Payments to other member countries of the Central American Common Market (CACM)2 in respect of trade and trade-related invisibles must be made in Costa Rican colones through the Central American Clearing House. Payments to and from Colombia in respect of commercial operations, services, and capital may be made in U.S. dollars through a reciprocal credit arrangement between the member central banks of the Central American Clearing House and the Bank of the Republic of Colombia. Payments to Mexico in respect of trade, invisibles, and capital may also be made in U.S. dollars under an agreement between the member central banks of the Central American Clearing House and the Bank of Mexico.

Imports and Import Payments

There is no import licensing and all import payments may be made freely, subject to submission of evidence of prior registration (see below), except for goods originating in CACM countries or Panama. However, certain imports from CACM countries require prior authorization, and imports made on a barter basis require a barter license (licencia de trueque) issued by the Ministry of Economy, Industry, and Commerce. To be eligible for foreign exchange, orders for imports valued at over US$300 must be registered with the Central Bank upon confirmation by the foreign supplier, unless the goods originate in CACM countries or Panama. Imports from South Africa are prohibited.

In addition to any applicable customs duty, the following taxes are levied on imports: (1) a stamp tax of 3 per cent of the customs duty on commodities not covered by the common external tariff of the CACM; (2) a sales tax of 8 per cent ad valorem, from which certain essential items are exempt; and (3) a selective consumption tax with a range of 10–100 per cent ad valorem on imports from outside the CACM and at lower rates on many CACM imports. There is also a small consular tax on certain imports. Furthermore, most imports originating outside the CACM are subject to an import surcharge of 30 per cent of the applicable import duty, and a temporary import surcharge of 10–50 per cent ad valorem is levied on many imports from countries other than the CACM countries and Panama.

Under the provisions of the Central American Agreement on Fiscal Incentives, Costa Rica grants duty exonerations on imports of raw materials and capital goods to approved industrial firms.

Payments for Invisibles

The prior approval of the Central Bank is required for all sales of official foreign exchange for current invisibles; for certain travel exchange this approval is given by the Central Bank’s representatives in the commercial banks, while in all other cases the approval must be sought from the Central Bank’s Department of International Transactions.

Any physical or juridical person may purchase, subject to prior approval by the Central Bank, exchange up to the equivalent of US$500 a remittance for any purpose and at any time, but not more often than once every three months. Foreign exchange for private travel may be purchased at agent banks up to US$1,000 a person a trip for trips of ten days (US$100 a day for shorter trips), upon presentation of passport and travel tickets; agent banks may sell additional amounts of US$75 a person a day, up to a total additional amount of US$3,000 a person a trip, subject to presentation of evidence of the length of the stay abroad. Travel exchange in excess of US$3,000 a person a trip must be approved by the Department of International Transactions. Withholding taxes of 15 per cent and 10 per cent, respectively, are levied on remittances abroad of dividends and interest; interest on certain borrowing abroad (e.g., from government banks) is exempt. Residents traveling abroad by air must pay a travel tax of 5 per cent of the value of the tickets plus Ȼ 20 a trip; government officials, diplomats, minors, and students are exempt.

Exports and Export Proceeds

The Central Bank supervises exports to ensure that exchange proceeds are surrendered as prescribed. Surrender must take place by sale to the Central Bank or an agent bank. Exporters of nontraditional commodities are entitled to tax credit certificates (CATs) corresponding to 15 per cent of the f.o.b. value, which are freely negotiable. In addition, exporters of nontraditional commodities eligible for CATs may also receive certificates for increases in exports (CIEX) for 10 per cent of the increase in the f.o.b. value of exports over the preceding calendar year; the certificates are redeemable against cash at the Central Bank.

Licenses from the Central Bank are necessary for the exportation of merchandise. In addition to the export license from the Central Bank, other export licenses are required as follows: strategic materials, such as armaments, munitions, scrap iron, and scrap of nonferrous base metals (from the Ministry of Economy, Industry, and Commerce); sugar (from the Agricultural Industrial Board for Sugarcane); beans, rice, potatoes, onions, cotton, meat, and purebred and other cattle (from the National Council of Production); airplanes (from the Civil Aviation Board); Indian art objects made of gold, stone, or clay (from the National Museum); tobacco (from the Tobacco Defense Board); lumber, root of ipecacuanha, certain livestock, and animals and plants of forest origin (from the Ministry of Agriculture and Livestock); and coffee (from the Coffee Office); in addition, when there is a lien on coffee in favor of a bank, that bank’s approval is required before the Central Bank grants an export license. Exports to South Africa are prohibited.

The exchange proceeds of all exports must be surrendered within 15 days of receipt or, if the goods were sold on credit, upon expiry of the term of the credit. Foreign-owned banana companies that have contracts with the Government must surrender their net export proceeds, which are calculated by deducting from their gross export proceeds (1) profits obtained during the year from their transactions in Costa Rica; (2) the allowance for depreciation on their investment in Costa Rica that is acceptable to the U.S. Internal Revenue Service; (3) the export tax on bananas payable in foreign currency; and (4) the cost of imports made during the year that were necessary for their normal business in Costa Rica. There are taxes on most exports.

Proceeds from Invisibles

Exchange receipts from invisibles must be surrendered at the official rate within 15 days of accrual, with the exception of the following, which may be retained and used as “free market exchange”: diplomatic and similar salaries and expenses; tourist expenditures; family remittances and other personal remittances; settlements on insurance claims, provided that the premium was paid through the free market; and commissions received by agents and representatives of foreign firms.

Capital

All capital transfers between residents and nonresidents may be made freely. Most such transactions are carried out in the free exchange market, since the Central Bank has discontinued the registration of capital for all new transactions involving capital investments, credits, or loans, except those of the public sector (the Central Government, the banking system, and other official institutions). Foreign currency receipts from new private sector operations may be sold in the free exchange market and foreign exchange may be purchased in that market for the servicing of amortization and interest in connection with such operations.

Credits granted by suppliers abroad for imports of commodities that fall due within not more than 180 days may be registered with the Central Bank, and foreign exchange from the official market is made available to settle the credit. Guarantee endorsements and payment guarantees granted by banks within the national banking system are handled in the free market, and such exchange operations are for account and risk of the particular borrower. Loans granted by international financial agencies in whose capital Costa Rica holds a share, may be registered with the Central Bank, so that their debt servicing may be effected with resources from the official market. Likewise, undertakings which had access to official exchange for servicing purposes prior to December 19, 1978 continue to be entitled to purchase foreign currency from the official market; where foreign loans were granted on an installment basis, additional amounts being disbursed continue to enjoy the benefit of registration at the Central Bank until they are fully paid.

The National Council of External Financing is in charge of coordinating and negotiating all new foreign loans on behalf of the Central Government, the centralized agencies, and enterprises of the public sector. Foreign and domestic capital transferred from abroad may be deposited as time deposits with agent banks in the form of specified foreign currencies3 or be invested in certificates of deposit denominated in colones; such funds, when they mature, are repaid in the currency in which the deposits were made.

The sale of foreign exchange from the official market for the purpose of transferring national capital abroad is restricted. Agent banks have authority to sell exchange for certain investments approved by the Ministry of Economy, Industry, and Commerce, as well as the Central Bank. All other transfers of national capital abroad require that the foreign exchange outlay be authorized by the Central Bank. Such authorization is not granted for transfers of capital not required by actual liabilities abroad and for actual liabilities which in the opinion of the Central Bank constitute an unjustified transfer of national capital.

Gold

The Central Bank may purchase, sell, or hold gold coin or bars as part of the monetary reserves in accordance with regulations established by its own Board. Private physical and juridical persons may negotiate freely, at home or abroad, domestically produced gold (except national archaeological treasures), provided there is no infraction of international agreements. They may also hold gold in any form in Costa Rica. The Central Bank does not supply gold to artistic or professional users.

Changes during 1979

January 15. Decree No. 9486-H exempted certain electrical household appliances, agricultural chemicals, toys and games, and agricultural tools and equipment from the selective consumption tax. This concession applied to 28 import classifications.

March 20. Decree No. 10353-MEIC abolished the provisions in Executive Decree No. 2 (January 6, 1964) restricting the free exportation of coconuts and coconut derivatives.

March 27. Decree No. 9510 of the Ministry of Economy, Industry, and Commerce added fish (fresh or frozen), shrimp, octopus, scallops, clams, snails, and other seafood to the list of products eligible for CATs under the export promotion law.

July 31. The Central Bank established the interest rates to be paid by commercial banks on foreign currency deposits. For sight deposits the annual rate would be 8 per cent; for time deposits the rate would be the London Interbank Offered Rate (Libor) of comparable maturity plus 0.25 per cent.

August 28. The Central Bank approved an export financing program involving the commercial banks which were authorized to contract foreign financing in order to give credit direct to agricultural or industrial producers, or to local export agents. Maturities of the foreign loans might not exceed one year (for exports of machinery, five years) and the rate of interest might not exceed 1 per cent above the cost of the external funds. Regardless of maturity, however, exporters were required to repay the credit immediately following receipt of the relevant foreign exchange.

September 10. The ad valorem duty on sugar exports was modified, eliminating the former rate of 7.5 per cent and establishing in its place five categories of duty, ranging from 1–9 per cent, depending on world market price levels (Decree No. 6392-H).

September 18. Twenty-three import classifications, including bicycles, footwear, metal cylinders, and electric lamps, were exempted from selective consumption taxes (Decree No. 10540-H).

November 2. By Decree No. 10780-H the ad valorem duty on cocoa exports was lowered from 16 per cent to 7 per cent.

Cyprus

(Position on December 31, 1979)

Exchange Rate System

The currency of Cyprus is the Cyprus Pound. Cyprus follows a flexible exchange rate policy. The exchange rate for the Cyprus pound is adjusted daily with the aim of maintaining its effective relationship with the currencies of the main trading partners. On December 31, 1979 the official buying and selling rates for the U.S. dollar, the intervention currency, were US$2.8950 and US$2.8920, respectively, per £C 1. The Central Bank of Cyprus also quotes daily buying and selling rates for the deutsche mark, the Greek drachma, and the pound sterling. It also quotes indicative rates for other foreign currencies.1 There are no taxes or subsidies on purchases or sales of foreign exchange. The Central Bank offers authorized dealers facilities for forward purchases and sales of U.S. dollars and pounds sterling for periods of up to six months, in respect of trade transactions only.

Administration of Control

Exchange controls are administered by the Central Bank, and trade controls by the Ministry of Commerce and Industry. Authority to approve certain applications for the allocation of foreign exchange, within the scope of instructions issued by the Central Bank, has been delegated to authorized dealers. Authority to introduce, adapt, and supervise controls on exports of potatoes has been delegated to the Cyprus Potato Marketing Board, while exports of cereals are licensed by the Cyprus Grain Commission.

Prescription of Currency

Payments to countries other than the People’s Republic of China and Rhodesia may be made by crediting Cyprus pounds to an External Account, or in any foreign currency2 other than Rhodesian currency; the proceeds of exports to such countries may be received in Cyprus pounds from an External Account, or in any foreign currency except Rhodesian currency. Settlements with the People’s Republic of China must be made through the appropriate clearing account denominated in U.S. dollars. Settlements with Rhodesia are subject to special regulations; payments for exports to Rhodesia must be received in any foreign currency other than Rhodesian currency.

Nonresident Accounts

Residents of countries outside Cyprus other than Rhodesia may maintain with authorized banks nonresident accounts in Cyprus pounds, designated External Accounts, or foreign currency accounts. These may be credited with authorized payments from residents of Cyprus, with transfers from other External Accounts or foreign currency accounts, and with the proceeds from sales by nonresidents of any foreign currency other than Rhodesian currency. External Accounts and foreign currency accounts may be debited for payments to residents and nonresidents, for transfers to other External Accounts or foreign currency accounts, and for purchases of any foreign currency other than Rhodesian currency; however, the delivery of foreign currency notes to nonresidents in Cyprus against External Accounts or foreign currency accounts is prohibited, with the exception of sales for travel purposes to nonresident individuals, to members of foreign embassies, and to members of the UN forces in Cyprus (up to the equivalent of £C 50 a trip).

Rhodesian Accounts are held by residents of Rhodesia and are subject to separate rules.

Blocked Accounts are maintained in the name of a nonresident for certain funds of a capital nature which may not be transferred outside Cyprus under the existing exchange control regulations. Blocked funds may either be held as deposits or be invested in government securities or government-guaranteed securities. Income earned on blocked funds so invested may be remitted to the nonresident beneficiary or be credited to an External Account without prior reference to the Central Bank. Funds can be released from Blocked Accounts in the following circumstances: on application by the authorized bank concerned acting on behalf of the nonresident account holder, the Central Bank may authorize the release of blocked funds for (1) reasonable educational expenses in Cyprus of the account holder’s children; (2) reasonable living expenses of the account holder while on a visit to Cyprus; and (3) donations to charitable institutions in Cyprus. In addition to any releases under (1), (2), and (3), amounts up to a level determined from time to time may become eligible for release. The Central Bank is prepared to permit the release of blocked funds to each nonresident holder up to £C 1,000 in any calendar year.

Imports and Import Payments

All imports from Rhodesia and South Africa are prohibited. Imports of virtually all commodities may be made freely from any other country except Albania, Bulgaria, the People’s Republic of China, Czechoslovakia, the German Democratic Republic, Hungary, North Korea. Poland, Romania, Tibet, and Viet Nam for which import licenses are required. For protective reasons, certain goods (such as some agricultural and textile products, footwear, metal manufactures, and industrial machinery) may not be imported freely; for a few of these items, no licenses are granted, while for most of them licenses are granted liberally. Imports from Bulgaria, the People’s Republic of China, Czechoslovakia, the German Democratic Republic, Hungary, Poland, and Romania are licensed in accordance with the terms of bilateral trade and/or payments agreements. With respect to Albania, North Korea, Mongolia, Tibet, and Viet Nam, no formal trading arrangements exist but certain barter transactions take place from time to time.

Individual import licenses are not required for bona fide unsolicited gifts (which may not be sold) up to £C 10 in value, for return goods, or for certain special import transactions.

Payments for all permitted imports may be made without prior approval from the Exchange Control Section of the Central Bank after arrival of the goods or after receipt of a full set of shipping documents. Advance payments require prior approval from the Exchange Control Section, except for imports whose value does not exceed £C 100. Payments for imports free from licensing requirements effected after 200 days from the date of shipment require the prior approval of the exchange control authorities. Payments for imports requiring a license must be made within the time limits specified on the license, except with the approval of the Central Bank. An import surcharge of 2 per cent ad valorem is levied on all imports except food, feedstuff, pharmaceuticals, and goods imported by the Government.

Payments for Invisibles

Payments for invisibles to nonresidents require the approval of the exchange control authorities. Profits, dividends, and interest from approved foreign investments may be transferred abroad, after payment of any charges and taxes due. Insurance premiums due to foreign insurance companies are remittable after deduction of all expenses and contingencies in respect of any claims. Family maintenance remittances are allowed on application accompanied by documentary evidence. For certain categories of payments, limits are imposed, generally only for the purpose of preventing illicit capital outflow. For study abroad, allowances normally are granted only for study at colleges, universities, and other educational institutions recommended by the Ministry of Education. The lower limit is £C 1,200 a year, and the upper limit is £C 2,600 a year; the amount allowed depends on the cost of living and the cost of tuition in the country concerned—e.g., for study in countries in the Eastern Mediterranean and the Middle East (defined as Egypt, Greece, Israel, Lebanon, etc.), £C 1,200; in Canada, the United Kingdom, and the United States, £C 2,600; and in all other countries, £C 2,400. Higher amounts may be granted on presentation of documentary evidence. For tourist travel, the limit is £C 300 a person annually; for business travel, £C 20 to £C 80 a day is granted in addition to the tourist allowance. The basic tourist allowance is not available for travel to Rhodesia. Resident travelers may take out Cyprus currency notes up to £C 10 and foreign currency notes up to the equivalent of £C 75, the latter as part of their annual basic travel allowance. Nonresident travelers may take out £C 10 in Cyprus currency notes and any amount of foreign currency notes that they brought into Cyprus.

Exports and Export Proceeds

Exports of potatoes are subject to control by the Cyprus Potato Marketing Board, and those of wheat and barley, to control by the Cyprus Grain Commission. Exports of cement are subject to a license for the purpose of ensuring adequate domestic supply. All exports are subject to licensing when the f.o.b. value exceeds £C 100 to ensure repatriation of the sales proceeds in an appropriate manner (see section on Prescription of Currency, above). Export proceeds must be surrendered without delay.

Proceeds from Invisibles

Receipts from invisibles must be sold to an authorized bank without delay. Persons entering Cyprus may bring in any amount in foreign currency notes and up to £C 10 in Cyprus currency notes.

Capital

Exchange control is exercised over all capital receipts or payments. Capital receipts must be offered for sale to an authorized dealer; payments of a capital nature to any destination require prior approval. Outward portfolio investment is not normally permitted, and only specified types of outward direct investment (e.g., for export promotion) are approved.

Foreign investments in Cyprus by nonresidents require the prior approval of the exchange control authorities. In considering applications due regard is given to the purpose of the investment, the extent of possible foreign exchange savings, the number of persons to be employed, the extent of the foreign exchange liability which might arise from the investment, and possible competition with existing industries. Proceeds from the liquidation of approved foreign investments may be repatriated in full at any time, after payment of any charges and taxes due.

Residents of Cyprus (Cypriots or foreign nationals) who take up residence outside Cyprus may transfer abroad up to £C 5,000. Any excess amount is deposited in a Blocked Account. The transfer abroad of funds resulting from estates and intestacies and of the sales proceeds of real estate is limited to £C 1,000, with any excess amount to be credited to a Blocked Account.

Transactions in foreign securities owned by residents require prior permission from the authorities. In principle, all securities held abroad by residents are subject to registration. Foreign life insurance policies not covered by the Insurance Law must be deposited with an authorized dealer.

Gold

Residents may hold and acquire gold coins in Cyprus for numismatic purposes. With this exception, residents other than the monetary authorities, authorized dealers in gold, and industrial users are not allowed to hold or acquire gold in any form other than jewelry, at home or abroad. Authorized dealers in gold are permitted to import gold only for the purpose of disposing of it to industrial users. The export of gold requires the permission of the exchange control authorities.

Changes during 1979

March 1. The excise duty on imported motor vehicles with an engine capacity exceeding 1,500 cubic centimeters was increased by 20 per cent.

March 1. The bilateral payments agreement with Romania was replaced by a trade agreement. After a transitional period of one year, all payments between Cyprus and Romania would be effected in freely convertible currencies.

October 25. The bilateral payments agreement with Hungary was terminated with effect from December 31, 1979 and was replaced by a trade agreement from January 1, 1980. After a transitional period of six weeks all payments between Cyprus and Hungary would be effected in freely convertible currencies.

November 20. The Council of the EC decided to extend, until the end of 1980, the “first phase” of the Agreement Establishing an Association between the Economic Communities and the Republic of Cyprus, which was due to expire at the end of 1979. The commercial regime with respect to the importation of certain agricultural products into the EC would continue to be applied in 1980.

Denmark

(Position on December 31, 1979)

Exchange Rate System

The currency of Denmark is the Danish Krone. Denmark participates with Belgium, France, the Federal Republic of Germany, Ireland, Italy, Luxembourg, and the Netherlands in the exchange rate and intervention mechanism of the European Monetary System (EMS). In accordance with this agreement, Denmark maintains the spot exchange rates between the Danish krone and the currencies of the other participants within margins of 2.25 per cent (in the case of the Italian lira, 6 per cent) above or below the cross rates based on the central rates expressed in European Currency Units (ECUs).

The agreement implies that the National Bank of Denmark (the central bank) stands ready to buy or sell the currencies of the other participating states in unlimited amounts at specified intervention rates. On December 31, 1979 these rates were

Specified Intervention Rates Per:Danish Kroner
Upper limitLower limit
100 Belgian or Luxembourg francs19.852018.9785
100 deutsche mark318.26304.23
100 French francs135.095129.15
100 Netherlands guilders287.90275.245
100 Irish pounds1,182.141,130.13
100 Italian lire0.708300.62825

The participants in the EMS are not maintaining the exchange rates for other currencies within fixed limits. However, in order to ensure a proper functioning of the system, they intervene in concert to smooth out fluctuations in exchange rates, the intervention currencies being each other’s and the U.S. dollar. Selling rates for 18 foreign currencies are quoted daily on the basis of market rates.1 On December 31, 1979 the buying and selling rates for the U.S. dollar were DKr 5.3615 and DKr 5.3685, respectively, per US$1. There are no taxes or subsidies on purchases or sales of foreign exchange.

Authorized exchange dealers may engage in arbitrage both spot and forward. Spot transactions are defined as transactions where actual delivery takes place within two banking days; transactions which mature in three banking days or more are defined as forward transactions. Spot transactions in all currencies, including Danish kroner, and forward transactions involving purchases of foreign currencies against sales of foreign currencies, may be concluded freely with domestic and foreign banks. Forward transactions which involve Danish kroner may also be concluded, but for not more than two years; furthermore, special rules apply for the forward sale of foreign currencies against Danish kroner to foreign correspondents and for forward dealings against Danish kroner with nonresident customers. Forward premiums and discounts are generally left to the interplay of market forces. Forward transactions with residents which involve Danish kroner must cover contractual payments for goods and services or payments on authorized loans and credits, the payments covered being due not more than two years from the date of the forward contract. Forward transactions with resident customers, which do not involve Danish kroner, must also cover either claims or liabilities in one of the two currencies concerned, but the requirements with respect to contractual payments are less strict in this case.

Denmark formally accepted the obligations of Article VIII, Sections 2, 3, and 4, of the Fund Agreement, as from May 1, 1967.

Exchange Control Territory

The Danish Monetary Area comprises Denmark, Greenland, and the Faroe Islands.

Administration of Control

Exchange control is administered by the National Bank and the authorized exchange dealers, i.e., most banks, some savings banks, and some stock exchange brokers who are members of the Copenhagen Stock Exchange. The exchange regulations generally do not apply to individual transactions and transfers of DKr 5,000 or less. Transfers of up to DKr 5,000 may, in any case, be made without delivery of forms. Permission, when required, for foreign direct investments in Denmark has to be obtained from the Ministry of Industry. Licenses for imports and exports, when required, are issued by the Ministry of Industry, the Ministry of Agriculture, or the Ministry of Fisheries.

Prescription of Currency

Payments to or from foreign countries may be made in any foreign currency or in Danish kroner.

Nonresident Accounts

Nonresident krone accounts are convertible. The only exceptions are Emigrant Accounts.

Krone Accounts may be opened by authorized banks for foreign banks, insurance companies, and shipping companies, and for specified official institutions of the EC. They may also be opened for other nonresidents, provided that the total credit balance of the accounts of an individual nonresident does not exceed DKr 200,000; any amount in excess of DKr 200,000 must be transferred abroad within three days. Special accounts not subject to a maximum balance may be opened for nonresidents, provided they are credited only with the liquidation proceeds or capital earnings from certain investments in Denmark and some other funds.

Emigrant Accounts are kept by authorized exchange dealers for holding liquid assets owned by or accruing to Danish emigrants, to the extent that the amounts exceed the exchange allowance of DKr 40,000 available to each person at the time of departure. Certain payments to residents may be made freely from these accounts and the balances are in any case made convertible one year after departure.

Imports and Import Payments

Most commodities, except for textiles, are free of licensing from all sources. For textiles, a common EC system of export/import licenses has now been established for almost all countries exporting low-priced textiles. The only commodities that require a license when originating in or purchased from member countries of the EC are agricultural products, alcohol, and unwrought and semimanufactured gold. A few items require a license when originating in Japan, the Republic of Korea, or any other non-state-trading, non-EC country. A larger number of items require a license when originating in or purchased from Albania, Bulgaria, the People’s Republic of China, Czechoslovakia, the German Democratic Republic, Hungary, North Korea, Mongolia, Poland, Romania, the U.S.S.R., or Viet Nam.

Payments for imports and the related shipping expenses may be made freely within five years (seven years for ships and eight years for heavy machinery and major installations purchased for an amount of DKr 1 million or more) from the end of the month in which the goods were cleared through customs, provided that the terms of payment conform to normal commercial practice in the trade concerned. Repayments of debts must not be made more than 30 days before the day stipulated as the latest in the contract (or before the latest customary date in the trade). However, commercial credits can be repaid at any time if a discount is obtained as a result, provided the payment is made to the supplier and conforms to normal commercial practice in the trade concerned. Prepayments linked to trade in goods and services that are in conformity with normal commercial practice may be granted to nonresidents up to one year prior to the expected date of import or the expected date of performance of the service; the permitted period is up to five years for capital goods (ships, aircraft, heavy machinery, and major installations) when purchased for an amount of DKr 1 million or more. All other advance payments for imports require prior approval by the National Bank.

Payments for Invisibles

Payments by residents for most invisibles may be made freely; only a few cases require approval from the National Bank. Authorized banks are empowered to allow the transfer up to DKr 40,000 a person a year of foreign nationals’ wages and salaries earned in Denmark, provided that the person concerned has not resided in Denmark for more than three years and the transfer is made to the remitter’s own account abroad. Foreign exchange for travel is allocated freely and may be obtained for travel to any country, but not earlier than 30 days before the trip if the amount applied for exceeds the equivalent of DKr 5,000.

Travelers may take out freely DKr 5,000 in Danish banknotes and coin, and any amount in foreign banknotes or other means of payment. Nonresidents may, in addition, export any amount of Danish banknotes and coin derived from sales of foreign currency in Denmark or brought in by them when they entered Denmark.

Exports and Export Proceeds

Gold is the only commodity that requires a license when exported to member countries of the EC. With respect to other destinations, except for certain items subject to strategic controls, export licenses are required only for waste and scrap of certain metals and monetary gold.

Export proceeds must be transferred to Denmark without undue delay unless the National Bank permits otherwise. However, this obligation does not apply to amounts which are to be used within 30 days to settle or to offset certain commercial and capital payments; otherwise, foreign exchange receipts must either be offered for sale to the National Bank or to an authorized exchange dealer without undue delay, or kept in an account with an authorized exchange dealer for a maximum period of 30 days.

Proceeds from Invisibles

Foreign exchange derived from invisibles must be transferred to Denmark, unless the National Bank permits otherwise, and offered for sale to the Bank or to an authorized exchange dealer without undue delay, with exceptions similar to those that apply to export proceeds (see section on Exports and Export Proceeds, above). Travelers may bring in any amount of Danish banknotes and coin, foreign banknotes, and other Danish or foreign means of payment.

Capital

Both inward and outward transfers of capital and all borrowing and lending between residents and nonresidents are subject to exchange control and may be restricted. Licensing practice vis-à-vis residents of member countries of the EC is based on EC directives on capital movements, subject to certain exceptions, and licensing practice in respect of residents of the rest of the world as a rule is similar. Residents have an obligation to repatriate proceeds realized from the sale or liquidation of assets abroad.

Transfers abroad may be made by residents to pay interest on, or to redeem upon maturity, or to repurchase any Danish securities denominated exclusively in Danish kroner as well as the transferor’s own bonds irrespective of denomination (provided these bonds are quoted on an authorized stock exchange abroad). Residents may lend amounts not exceeding DKr 200,000 in a calendar year to subsidiary companies (direct investments of loan capital) or to a member of the resident’s family. Contributions from a parent enterprise to a branch may not be made as loans or grants but are treated as direct investment of equity capital. Portfolio investment abroad is generally not allowed. However, residents may buy foreign securities that do not represent direct investments in foreign commercial or industrial enterprises, provided that these are acquired on the basis of a subscription right to shares or the like owned by the resident concerned, or that the resident furnishes proof that he has sold foreign securities to a nonresident for a corresponding amount within the last 12 months. Residents may subscribe to or purchase foreign bonds with an original maturity above two years, listed on a stock exchange and issued by specified international organizations of which Denmark is a member. The purchases have to be made through an authorized exchange dealer against cash, and sale or redemption does not entitle the seller to reinvest the proceeds in other foreign securities.

No special permission is required for residents to make transfers abroad, within certain limits, in connection with most direct investments or with private acquisitions of real estate abroad. The limits are DKr 200,000 a year for each foreign enterprise for direct investments of equity capital2 and DKr 60,000 a person for private acquisition of real estate for noncommercial purposes (DKr 150,000 for health reasons). Direct investments abroad by residents are normally approved in accordance with Denmark’s obligations as a member of the EC and the OECD. The private acquisition of real estate in excess of DKr 60,000 normally is approved in accordance with Denmark’s obligations as a member of the EC. Authorized exchange dealers do not need special permission to grant loans to nonresidents for the financing of payments to residents for purchases of Danish goods and services, provided normally that the loan is granted directly to the foreign purchaser; in those cases where the National Bank’s approval is required, this is generally given when the loans are customary in the trade concerned. Permission from the National Bank is required for most other transfers abroad of a capital nature by residents.

Danish emigrants are granted an exchange allowance of up to DKr 40,000 for each person at the time of departure. The remaining liquid assets must be credited to an Emigrant Account in the name of the owner and may be transferred abroad one year after departure, or earlier if the emigrant can show that he has taken up permanent residence abroad with the approval of the relevant foreign authorities.

Inward direct investment in the form of equity capital may be made without any special license if the investment does not increase total direct foreign investment in the enterprise concerned by more than DKr 1 million in each calendar year. However, investments in firms that are engaged exclusively or largely in capital investments abroad or the financing of nonresidents continue to be subject to license. In addition, a license is required if the investment is undertaken by a foreign firm in which a resident directly or indirectly owns an interest representing a direct investment. Direct investments must be notified to the National Bank if they are made without a special license. Inward direct investments in the form of loans with a maturity of at least five years also are exempt from special licenses within certain limits. Contributions from a parent enterprise to a branch may not be made as a loan or a grant but are treated as direct investment of equity capital. Other direct investments by nonresidents require permission from the exchange control authorities, which is granted liberally in accordance with Denmark’s obligations as a member of the EC and the OECD. The purchase by a nonresident of real property in Denmark normally requires a special license from the Ministry of Justice; permission is usually granted readily where real estate is to be used for industrial or similar enterprises.

The sale to nonresidents of Danish bonds listed on a stock exchange does not require a special license, except that nonresidents are not permitted to purchase Danish Government krone bonds issued since 1975 without permission from the National Bank. Such permission is not normally granted. Bonds denominated only in Danish kroner may be resold to residents. Nonresidents may freely purchase or subscribe to shares that are quoted on the Copenhagen Stock Exchange, provided the purchase does not represent a direct investment; this liberalization does not apply to certificates of investment companies, etc., whose latest balance sheet shows that more than 10 per cent of their assets are securities other than stock exchange securities.

Residents may take up loans for up to five years (seven years for ships and eight years for heavy machinery and major installations valued at DKr 1 million or more) from nonresidents to finance imports of commodities and services and the granting of credits for exports of commodities and services, provided the credit is in conformity with normal commercial practice. Enterprises in most industries may take up loans of up to DKr 20 million a borrower in a calendar year, provided that the maturity is at least five years and that the entire proceeds are used only to finance fixed investment either in the borrower’s own business in Denmark or in a business undertaking in Denmark which is controlled by the borrower. Most business investments may form the basis of such loans, i.e., investments in business or industrial premises, and the acquisition of plant, machinery, and most transport equipment,3 and provided that the assets are delivered within 6 months prior to the date the loan is repatriated, or contracted to be delivered within 12 months following that date. Finally, a resident may take up loans of up to DKr 200,000 a borrower in a calendar year from members of his own family. Foreign borrowing by municipalities and public utility companies is subject to control by the appropriate department of the Government.

Transfers of proceeds from the sale or liquidation of all types of investments and transfers of all other liquid funds in Denmark owned by nonresidents other than new emigrants are permitted freely, irrespective of when and how the original investment was acquired. Interest and repayment of principal on authorized loans, credits, and deposits received from persons and firms who are nonresidents at the time of receipt may be paid freely, with the proviso that loans and credits obtained from a nonresident generally must not be amortized or repaid in full more than 30 days before the amortization payment or repayment is due.

Inheritances and gifts to relatives may normally be transferred to any country without limitation. Individual payments above DKr 5,000 as gifts to persons other than relatives are subject to approval from the National Bank.

Imports and exports of securities are subject to regulation, the details of which are established by the National Bank. Bona fide imports of Danish securities payable only in Danish kroner are permitted. Exports of Danish and foreign securities owned by nonresidents are normally also permitted. Danish securities held in Denmark and belonging to nonresidents may, with the principal exception of bonds denominated wholly or partly in foreign currencies, be sold freely to residents. Foreign securities held in Denmark and belonging to nonresidents may, with certain exceptions, be sold to residents only with the permission of the National Bank. Foreign securities held in Denmark may be negotiated freely between residents, provided that the exchange control regulations are not circumvented.

Authorized foreign exchange dealers’ commercial net balances in accounts with foreign countries may be negative to the extent of an amount equal to the loans which the authorized dealer has granted to residents in foreign currency in conformity with the exchange control regulations, and for the purpose of financing Denmark’s foreign trade, within a limit of DKr 3 million, but for banks and savings banks the limit is up to 5 per cent of net worth. A positive net commercial foreign position is, in principle, allowed only so long as it does not exceed DKr 2 million or, for banks and savings banks, 15 per cent of the capital and reserves, whichever is higher.

Gold

Residents may freely buy, hold, and sell gold coin in Denmark; they may also import gold coin. Otherwise, residents other than the monetary authorities and authorized industrial users are not allowed to acquire gold abroad. Imports and exports of gold normally require licenses issued by the Ministry of Industry; such licenses are not normally granted except for imports and exports by or on behalf of the monetary authorities and industrial users. Imports of gold in bars or coin, unless made by or on behalf of the monetary authorities, are subject to value-added tax at a rate of 20.25 per cent; the customs duty is 7.5 per cent, unless the import is made from EFTA or EC countries, when it is duty free. Domestic transactions also are taxed at a rate of 20.25 per cent.

Changes during 1979

February 6. It was announced that nonresidents were no longer permitted to purchase from residents Danish Government krone bonds issued since 1975 except with permission from the National Bank. Such permission would not normally be granted.

March 13. Denmark’s participation in the exchange rate and intervention mechanism of the EMS became effective.

September 24. The EMS parities of the deutsche mark were increased by 5 per cent against the Danish krone and by 2 per cent against the other participating currencies. This implied a devaluation of the Danish krone by 4.76 per cent against the deutsche mark and by 2.86 per cent against the other participating currencies.

November 30. The EMS parities of the participating currencies against the Danish krone were increased by 5 per cent. This implied a devaluation of the Danish krone by 4.76 per cent against the other participating currencies.

December 22. Restrictions on transactions with Rhodesia were lifted in accordance with the relevant Resolutions of the UN Security Council.

Djibouti

(Position on December 31, 1979)

Exchange Rate System

The currency of Djibouti is the Djibouti Franc, which is pegged to the U.S. dollar, the intervention currency, at DF 177.721 = US$1. The buying and selling rates for the U.S. dollar are DF 176.84 and DF 179.48, respectively, per US$1. Buying and selling rates for certain other currencies 1 are set by local banks on the basis of cross rates for the U.S. dollar in international markets. The posted rates are subject to commission charges of 1.5–6 per cent set by the commercial banks, depending on the currency concerned. There are no taxes or subsidies on purchases or sales of foreign exchange.

Administration of Control

There is no exchange control and no prescription of currency. The Dijbouti franc is issued by the Djibouti Treasury, which operates in this respect as a currency board, issuing and redeeming the currency against receipts and payments of U.S. dollars.

Imports and Import Payments

Djibouti has a free trade zone in the port of Djibouti but the territory as a whole does not constitute a free zone. No customs duty is charged on imports, but in practice fiscal duties are levied by means of indirect taxes of 22 per cent of the c.i.f. value of imports. Only a limited number of foodstuffs, fertilizers, and books are exempt from tax. Certain commodities, including alcoholic beverages, hydrocarbons, kat, and tobacco, are subject to surtaxes at various rates.

Exports and Export Proceeds

There are virtually no restrictions on exports; only exports of live animals are prohibited. Export proceeds may be retained.

Payments for and Proceeds from Invisibles

No restrictions are imposed on payments for or proceeds from invisibles.

Capital

No restrictions are imposed on inward or outward capital transfers. Under the Investment Code of June 5, 1975, enterprises established or expanded to undertake certain specific economic activities are entitled to various tax exemptions.

Changes during 1979

No significant changes took place.

Dominica

(Position on December 31, 1979)

Exchange Rate System

The currency of Dominica is the East Caribbean Dollar,1 which is issued by the East Caribbean Currency Authority. The East Caribbean dollar is pegged to the U.S. dollar, the intervention currency, at EC$2.70 = US$1. On December 31, 1979 the buying and selling rates for the U.S. dollar were EC$2.68 and EC$2.717, respectively, per US$1. The Currency Authority also quotes daily rates for the Canadian dollar and the pound sterling. There are no taxes or subsidies on purchases or sales of foreign exchange.

Dominica informed the Fund on December 13, 1979 that it formally accepted the obligations of Article VIII, Sections 2, 3, and 4, of the Fund Agreement.

Administration of Control

Exchange control is administered by the Ministry of Finance and applies to all countries outside the East Caribbean Currency Authority area.

Prescription of Currency

Settlements with residents of member countries of the Caribbean Common Market (Caricom) 2 must be made either through External Accounts (in East Caribbean dollars) or in the currency of the Caricom country concerned. Settlements with residents of other countries may be made in any foreign currency3 or through an External Account in East Caribbean dollars.

Nonresident Accounts

External Accounts may be opened with the permission of the Ministry of Finance. They are maintained in East Caribbean dollars and may be credited with proceeds from the sale of foreign currencies, with transfers from other External Accounts, and with payments by residents for which general or specific permission has been given by the Ministry of Finance. They may be debited for payments to residents and for the cost of foreign exchange required for travel purposes.

Imports and Import Payments

All imports from Rhodesia and South Africa are prohibited. Most goods may be freely imported under open general license. Certain other commodities require individual licenses, unless imported from Caricom countries.

Payments for authorized imports are permitted upon application and submission of documentary evidence. Advance payments for imports require prior approval by the Ministry of Finance. Most imports are subject to a stamp tax of 5 per cent of the c.i.f. value.

Payments for Invisibles

Under the Exchange Control Ordinance of 1973, payments for travel, medical treatment, education, subscription and membership fees, gifts, and the transfer of profits abroad are subject to quantitative limitations. All other payments exceeding EC$50 require approval by the Ministry of Finance. Similarly, all transactions with Rhodesia also require prior approval by the Ministry of Finance. Residents of Dominica may purchase foreign exchange from authorized banks up to the equivalent of EC$5,000 a trip for travel outside the East Caribbean Currency Area, subject to presentation of evidence of intention to travel. The amount of local currency that may be taken out by travelers is limited to EC$50 a trip. For business travel, additional allowances of foreign exchange may be made available at a rate not exceeding EC$250 a day up to a maximum of EC$7,500 a trip. Residents traveling abroad for medical treatment are eligible for an allowance of EC$350 a day up to a maximum of EC$20,000, as a supplement to the basic travel allowance, provided that a medical certificate is presented. Education allowances up to a maximum of EC$ 15,000 an academic year are permitted to cover the cost of enrollment, tuition, accommodation, and books. Residents may also make cash gifts to nonresidents not exceeding a total value of EC$ 1,000 a donor a year. Applications for additional amounts, or for purposes for which there is no basic allocation, are normally approved by the Ministry of Finance, provided that no unauthorized transfer of capital is involved. Profits may be remitted in full, subject to confirmation of registration by the Commissioner of Inland Revenue for income tax purposes.

Exports and Export Proceeds

Exports to Rhodesia and South Africa are prohibited and specific licenses are required for the export of certain goods to any destination. The collection of export proceeds is mandatory. Export duties are levied on bananas, citrus fruits, and other selected agricultural products.

Proceeds from Invisibles

The collection of the foreign currency proceeds from transactions in invisibles is mandatory. Travelers to Dominica may bring in freely notes and coin denominated in East Caribbean dollars or in any foreign currency.

Capital

All outward capital transfers require exchange control approval. The purchase by residents of foreign currency securities and of real estate situated abroad for private purposes is not normally permitted. Personal capital transfers, such as inheritances, to nonresidents require approval which normally is granted subject to the payment of any taxes due. Emigrants leaving Dominica to take up residence outside the East Caribbean Currency Area may transfer up to EC$20,000 (in respect of a husband, wife, and children under 18) from their assets, subject to income tax clearance. The Ministry of Finance will consider applications for remittance of amounts in excess of EC$20,000.

Direct investment in Dominica by nonresidents may be made with exchange control approval. The remittance of earnings on, and liquidation proceeds from, such investment is permitted, subject to the discharge of any liabilities related to the investment. The approval of the Ministry of Finance is required for nonresidents to borrow in Dominica. Any borrowing abroad by authorized dealers to finance their domestic operations requires the approval of the Ministry.

Gold

Residents are permitted to acquire and hold gold coin for numismatic purposes only. Imports of gold, under license by the Ministry of Finance, are permitted for industrial purposes only.

Changes during 1979

February 26. Dominica acceded to the Lomé Convention.

September 1. The basic allowance for travel outside the East Caribbean Currency Area was raised from EC$ 1,500 to EC$5,000 a trip. For business travel the allowance was raised to a maximum of EC$250 a day and EC$7,500 a trip. The allowance for medical treatment abroad was increased from EC$200 to EC$350 a day up to a maximum of EC$20,000, as a supplement to the basic travel allowance. The limit on education allowances was raised to EC$ 15,000 an academic year and emigrants leaving Dominica might transfer EC$20,000 from their assets (previously EC$5,000) on departure, subject to income tax clearance.

December 10. The 2.5 per cent exchange tax on sales of foreign exchange by commercial banks was abolished.

December 13. Dominica formally accepted the obligations of Article VIII, Sections 2, 3, and 4, of the Fund Articles of Agreement.

Dominican Republic

(Position on December 31, 1979)

Exchange Rate System

The currency of the Dominican Republic is the Dominican Peso, which is pegged to the U.S. dollar, the intervention currency, at RD$1 = US$1. Exchange transactions in U.S. dollars between the Central Bank of the Dominican Republic and other banks take place at RD$1 = US$1, plus a commission of 0.03125 per cent. Exchange transactions by commercial banks with the public also take place at the rate of RD$1 = US$1, subject to banking commissions of 0.25 per cent buying and 0.5 per cent selling; minor exchange transactions with tourists and other travelers from abroad are free of any banking commissions or other service charges. Buying and selling rates for certain other currencies are also quoted, based on the buying and selling rates for the U.S. dollar in markets abroad.

All payments abroad at the official exchange rate must be made through banks; all exchange received must be sold to banks and banks are required to transfer to the Central Bank all exchange purchased. Payments for which foreign exchange is not sold at the official exchange rate are made through a tolerated free market, in which the exchange rate fluctuates freely; this market is supplied by foreign exchange receipts that are not surrendered at the official exchange rate. On December 31, 1979 the buying and selling rates in this parallel market were RD$ 1.2225 and RD$ 1.2375, respectively, per US$1. Different effective exchange rates also arise from the requirement of a fully prepaid letter of credit for certain imports.

On August 1, 1953 the Dominican Republic notified the Fund that it formally accepted the obligations of Article VIII, Sections 2, 3, and 4, of the Fund Agreement.

Administration of Control

Exchange and trade control policy is determined by the Monetary Board. Foreign exchange control is administered by the Central Bank. The Monetary Board establishes import quotas, which are administered and controlled by the Foreign Exchange Department of the Central Bank. Certain releases of foreign exchange require the express authorization of the President of the Republic. Export controls are administered by the Dominican Center for Export Promotion (Cedopex).

Prescription of Currency

Imports from the United States that are financed by the U.S. Agency for International Development must be made under special letters of credit. Certain import commissions must be paid in local currency only. Settlements with Argentina, Brazil, Chile, Colombia, Ecuador, El Salvador, Mexico, and Venezuela may be made through special accounts established under reciprocal credit agreements within the framework of the Latin American Free Trade Association (LAFTA).1 Import payments in currencies other than the U.S. dollar must be made through a letter of credit. Otherwise, no obligations are imposed on importers, exporters, or other residents regarding the currency to be used for payments to or from nonresidents.

Imports and Import Payments

Imports may be classified broadly into the following categories: (1) imports for which the banking system sells foreign exchange in unrestricted amounts at the official exchange rate; (2) imports for which the banking system sells foreign exchange only up to annual quotas; and (3) all other imports for which foreign exchange is purchased in the tolerated free market. All payments for imports at the official exchange rate require the approval of the Central Bank. Licensing controls are maintained over a few commodities for reasons of health or security. Insurance on imports must be contracted with companies authorized to operate in the Dominican Republic.

Commodities subject to annual quotas may be imported and settled with official exchange only against a fully prepaid letter of credit. The same requirement applies to some other goods that are not subject to quantitative restrictions, including specified canned fish, olives and capers, alcoholic beverages, and certain types of plywood and doors. Some other import items not subject to restrictions must be covered by regular letters of credit. The commercial banks transmit to the Central Bank each day a list of applications for all imports against letters of credit. After the Central Bank approves an application, the letter of credit may be opened by the commercial bank. For prepaid letters of credit the Central Bank debits the account of the commercial banks for the peso equivalent at the time of approval of the letter of credit. The peso equivalent of other letters of credit is forwarded to the Central Bank after these have been negotiated and exchange is requested by the commercial bank.

At times, the Central Bank may delay payment of foreign exchange to commercial banks for previously approved requests for exchange. If the request was made for an import for which a commercial bank had opened a letter of credit, the commercial bank provides the foreign exchange and extends a credit to the Central Bank for the amount involved. If the request was for a direct payment, a bank draft, or a transfer of foreign exchange, the delay in payment represents a commercial arrear. At the end of 1979 such arrears represented about four weeks of applications.

Imports are classified according to the Brussels tariff nomenclature. Ad valorem and specific import duties are levied on imports according to three general and numerous specific laws. Ad valorem import duties range from 20 per cent to 200 per cent, but the maximum import duty is considerably higher (about 700 per cent) if specific duties are taken into account. An internal consumption tax of 20 per cent ad valorem and a 4 per cent surcharge on the total amount of all customs charges also are applied to all imports except those subject to the minimum duty of 20 per cent.

Payments for Invisibles

All payments for invisibles require the prior approval of the Central Bank which ensures that the application is for a bona fide transaction. However, foreign exchange at the official rate is sold only for a limited number of payments for current invisibles. For some of these invisibles, official foreign exchange is sold up to specified limits. Thus, nonresident foreign nationals working in the Dominican Republic in industries and firms that contribute to the country’s economic development may remit abroad at the official exchange rate up to 40 per cent of their salaries. For students pursuing approved courses, exchange requests for monthly maintenance allowances are approved up to US$240 for Puerto Rico, up to US$250 for Spain, up to US$300 for other European countries, and up to US$270 for all other countries; an additional allocation of US$50 a month, irrespective of country, is available for postgraduate students. Exchange is also sold for remittances to authorized students to meet expenses for tuition, books, and other fees.

Applications for exchange for contractual payments, such as interest and amortization payments on loans registered with the Central Bank, are approved in conformity with the terms of the contract. Transfers of profits and dividends are permitted only for foreign investments that have been registered in the Central Bank and may not exceed 18 per cent a year of the net value of the original and any additional investment, including reinvested profits. Dividends remitted or credited to nonresidents are subject to a tax of 18 per cent and a surtax of 3 per cent of the amount of the tax. Some delays have occurred in the provision of foreign exchange to commercial banks by the Central Bank for approved requests for payments for invisibles. At the end of 1979 there was an accumulation of about five weeks of such applications.

Payments for invisibles for which foreign exchange is not sold at the official rate, or in excess of the limits specified, are made through the free exchange market. Such transactions include, in particular, expenses for tourist and business travel abroad, insurance premiums, and remittances for family living expenses.

All commissions due to domestic agents or representatives of foreign firms arising from imports must be paid in Dominican pesos. Airline tickets also must be paid in local currency and are subject to a tax of 15 per cent when the price of the ticket is over RD$200, or from RD$5 to RD$25 when the price is RD$200 or less.

In principle, exchange for payments for invisibles is made available within five days from receipt of the application. Travelers are not permitted to take with them any domestic currency.

Exports and Export Proceeds

Exports of 28 products or subproducts, mainly foodstuffs, are prohibited, and 38 others, mainly intermediate goods, require export licenses. All exports of sugar and sugar by-products are subject to prior authorization by a special committee. Within two working days of receiving payment, exporters of Dominican products must surrender to the Central Bank, through the commercial banks, foreign exchange equal to 100 per cent of the f.o.b. or c.i.f. value of their exports. For the purpose of exchange surrender, declared export prices must equal or exceed the minimum export prices established by Cedopex. Exempt from the exchange surrender requirements are firms operating in industrial free zones, which are required to convert only the foreign exchange that is needed to cover local costs and taxes. Exporters may not extend credit for more than 90 days from the date of shipment without authorization by the Central Bank.

Proceeds from Invisibles

The foreign exchange proceeds from invisibles must be surrendered to the Central Bank through the commercial banks. The import of Dominican banknotes and coin is prohibited.

Capital

Inward capital remittances are subject to authorization by the Directorate of Foreign Investment and must be converted into pesos through commercial banks. Law No. 861 of July 22, 1978 consolidated and amplified the regulations governing direct foreign investments issued under Law No. 251 (and accompanying Regulation No. 1679) of May 11, 1964, and created the Directorate of Foreign Investment. Such investments must be registered with the Central Bank for the investor to be able to remit dividends through the official exchange market; remittances are limited to an annual maximum of 18 per cent of the registered value and are converted into foreign exchange at the prevailing rate of exchange. Dividends in excess of the annual limit may be reinvested but are not registered with the Central Bank as increased foreign capital; alternatively, in accordance with Law No. 861, they may be loaned in local currency to enterprises undertaking approved economic activities, provided that the loan maturity is not less than eight years, that the interest rate is not more than 6 per cent, and that the yearly amortization does not exceed more than 20 per cent of the amount of the loan. Furthermore, dividends from reinvestments of amortization and interest payments on the loans mentioned above may not exceed 30 per cent of the foreign exchange earnings of the recipient enterprises.

Law No. 861 assigns priority to investments in the export sector or in any other sector which would contribute to an improvement in the balance of payments; it also reserves certain sectors (defense and national security, all means of mass communication, internal land and air transportation, and forestry) for domestic enterprises; certain other sectors (agriculture, poultry and livestock raising, fishery, financial intermediation, and insurance) are reserved for domestic enterprises or “mixed enterprises” (i.e., where national ownership is between 51 and 70 per cent). Registration may cover, besides the foreign exchange involved, the value of machinery and equipment, tools, instruments, accessories, and spare parts. Upon the liquidation of a direct foreign investment, capital gains may be remitted up to a limit of 2 per cent per annum for a cumulative total of 20 per cent of the registered amount. Applications for approval of outward capital remittances must be submitted to the Directorate of Foreign Investment. Applications by residents to transfer capital abroad to make portfolio investments, purchase real estate, etc., are not normally approved.

Foreign debt can be contracted directly by the Central Government with the prior authorization of the Congress. According to Law No. 251 of 1964, new loans by other public and private entities are authorized by the Monetary Board in order to guarantee the provision of official foreign exchange for service of the loans. Foreign contracts by the private bank and nonbank sectors are approved by the Central Bank according to the following scale of priorities: export promotion, import substitution, expansion of local production, and import financing. For the second and third categories, foreign loans are not authorized if the repayment schedule is less than four years. For import financing, the repayment term of foreign loans must be less than 180 days, except for capital goods.

Gold

Residents may purchase, hold, and sell gold coins in the Dominican Republic for numismatic purposes. With this exception, residents other than the monetary authorities and authorized industrial users are not allowed to hold or acquire gold in any form other than jewelry, in the Dominican Republic or abroad. Imports and exports of gold in any form other than jewelry constituting the personal effects of a traveler require licenses issued by the Central Bank; such licenses are not normally granted except for imports and exports by or on behalf of the monetary authorities and industrial users.

Changes during 1979

April 3. The prohibition on imports of automobiles valued at more than US$4,000 per unit was extended through January 22, 1981.

April 3. The importation of certain products was prohibited in order to protect domestic industries. The following items were added to the prohibited list: men’s and boys’ clothing, shoes, and belts; noodles and spaghetti; canned vegetables; fresh or frozen fish; fruit juices; sauces (except mayonnaise); cocoa and cocoa by-products; butter; yogurt and cream; certain biscuits; soap and detergents.

April 24. The list of prohibited imports was extended to include girls’ clothing, furniture, mattresses, cards, and calendars.

May 10. The Monetary Board added to the list of imports, for which foreign exchange is not supplied at the official exchange market rate, a range of products up to an estimated value of US$50 million of annual imports.

August 23. The Monetary Board permitted the earmarking of foreign exchange at the official foreign exchange rate for imports of certain goods, including some iron and steel intermediate items. Also, quotas were established for two other categories of imports.

October 4. In order to maintain supplies to the domestic market after the disruption caused by hurricanes, Cedopex temporarily prohibited exports of most agricultural products, including all kinds of meat.

November 8. Congress approved a law providing special incentives for exporters of nontraditional products, including a tax credit certificate of up to 15 per cent of the f.o.b. value of the exported product (or the c. & f. value when insurance is provided by Dominican enterprises or the c.i.f. value when both insurance and transportation are provided), and an exemption from the obligation to surrender foreign exchange earnings to the Central Bank at the official exchange rate.

Ecuador

(Position on December 31, 1979)

Exchange Rate System

The currency of Ecuador is the Ecuadoran Sucre. There are two exchange markets, the official market and the free market. In the official market, the Central Bank of Ecuador maintains rates of S/ 24.80 buying and S/ 24.95 selling, per US$1. The buying and selling rates for other currencies 1 are officially quoted on the basis of daily buying and selling rates against the U.S. dollar in foreign markets. Export proceeds, import payments, certain settlements of invisibles, government and public sector transactions, and some capital transactions of the private sector are negotiated in the official market. With some exceptions (see below), all other transactions are conducted in the free market, in which the exchange rate fluctuates but where the Central Bank intervenes mainly for the purpose of avoiding sharp exchange rate fluctuations. The free market buying and selling rates on December 31, 1979 were S/26.72 and S/27.03, respectively, per US$1. A few transactions (such as payments for printed material) may be made in either of the two markets.

In addition, loan capital from international agencies and foreign governments to the Government and public institutions is converted at the rate of S/ 25 per US$1. Exchange transactions of oil companies are also effected at the rate of S/ 25 per US$1. Private oil companies are subject to an exchange tax of 1 per cent applied to both purchases and sales, but state oil companies are exempt with respect to purchases and sales of foreign currencies for compensation operations.

External loans are subject to a tax that varies between 0.5 per cent and 2 per cent for maturities of 6 months to 24 months. Exempted from this tax are (1) loans of more than 24 months; (2) loans from foreign governments and international agencies; (3) loans to the public sector; and (4) suppliers’ credits involving no inflow of foreign exchange.

Ecuador formally accepted the obligations of Article VIII, Sections 2, 3, and 4, of the Fund Agreement, with effect from August 31, 1970.

Administration of Control

The Monetary Board has authority to shift transactions between the two exchange markets and has extensive powers with respect to import policy. The official exchange market is under the control and supervision of the Central Bank. The Central Bank also issues import and export licenses and registers foreign capital. Imports entering the country as part of a direct investment and imports by foreign enterprises which have contracts with the Government require prior authorization by the Ministry of Industry, Commerce, and Integration and, when exemptions from fiscal charges are sought, by the Ministry of Finance. However, all applications for import licenses by industrial firms must be submitted to the Central Bank. Foreign investment in Ecuador is supervised by the Foreign Investment Council.

Prescription of Currency

Most settlements with the German Democratic Republic, Hungary, Poland, and Romania take place through bilateral accounts. There is a reciprocal credit agreement with Argentina. Payments between Ecuador and Bolivia, Brazil, Chile, Colombia, Cuba, the Dominican Republic, Mexico, Paraguay, Peru, Uruguay, and Venezuela must be made through accounts maintained with each other by the Central Bank of Ecuador and the other central banks concerned, within the framework of the multilateral clearing system of the Latin American Free Trade Association (LAFTA). Exchange proceeds from other countries must be received in convertible currencies. Whenever possible, import payments must be made in the currency stipulated in the import license.

Imports and Import Payments

Permitted imports are divided into two categories: List I, consisting of essential goods (Group A) and semiessential goods (Group B), and List II, consisting of less essential and luxury goods. All goods not included in these two lists are prohibited.

Prior import licenses are required for all permitted imports, with the following exceptions: books, newspapers, periodicals, and printed or recorded music may be imported freely without a license against payment through the free market; if the importer applies for a license, exchange will be made available at the official rate but only when the items are for educational or scientific purposes. These imports are subject to payment of the applicable taxes and charges regardless of their purpose. Medicines and spare parts for machinery and automotive vehicles are free of license when valued at US$500 f.o.b. or less, but all applicable charges and taxes must be paid on them. In addition, the State Petroleum Corporation may import supplies, materials, and equipment necessary for the conduct of its business during emergency situations without obtaining a prior import license. A few goods may be imported only from LAFTA countries, and some only from Paraguay. With these exceptions, import licenses are issued freely irrespective of the origin of the goods, provided that the appropriate import taxes (including import surcharges) have been paid, that the required prepayment of 80 per cent of import duties has been made, that an advance deposit has been paid, and that a certificate is submitted showing that insurance has been arranged in Ecuador. The license automatically entitles the holder to obtain exchange at the official rate to cover the c. & f. value of the import upon presentation of the shipping documents.

The Central Bank may authorize advance import payments with official exchange up to 100 per cent of the c. & f. value, provided the importer has paid the corresponding amount in local currency and has deposited, as a guarantee, an additional 15 per cent of the value in sucres. The guarantee deposit is returned at the time of customs clearance. Import licenses which do not entitle the importer to foreign exchange at the official rate (permisos de importación no reembolsables) may be issued for goods financed from the proceeds of certain international loans, provided that these have been registered at the Central Bank, but such licenses are not required to import the goods concerned.

Many imports are subject to advance deposit requirements. The deposit, which must be maintained for 180 days, is 50 per cent for barley and automobiles and certain other vehicles, 30 per cent of the c.i.f. value for goods on List II, and 10 per cent for goods on List I-B. There are various exemptions.2 All imports are subject to a tax of 5 per cent levied on commercial transactions. Furthermore, all goods are subject to a tax of 1 per cent of the c.i.f. value, unless they represent gifts or foreign loans. Many goods in List II are subject to an import surcharge of 30 per cent ad valorem.

Payments for Invisibles

Exchange for payments in respect of certain current invisibles may be obtained from the Central Bank at the official rate. These transactions in invisibles are, in principle, limited to interest on foreign loans that have been registered at the Central Bank, dividends and profits on foreign investments registered at the Central Bank (provided the foreign exchange was sold at the Central Bank), payments by the Government and public entities, and the necessary expenses of Ecuadorans studying at universities abroad, medical expenses, and advertising costs. Exchange for private sector interest payments can be obtained at the official rate for interest rates not exceeding 10 per cent; exchange for private sector payments of interest in excess of this limit must be purchased in the free market. There is no ceiling for interest payments by the public sector. With respect to loans to petroleum companies, interest, commission, and other financial charges on foreign loans may not exceed the equivalent of 2 per cent above the rates of interest of the creditor country; moreover, annual amortization may not exceed the sum of undistributed profits, depreciation of fixed assets and liquidated assets, and any variation in working capital. There are also limits on student allowances, travel expenditures, and “other” invisibles eligible for the official rate, but amounts in excess of these limits may be purchased in the free market.

Most other payments for current invisibles must be settled in the free market and are unrestricted. There are no limitations on the amounts of domestic and foreign banknotes that travelers may take out. Residents traveling abroad by air must pay a tax of S/ 700 for each exit visa. Airline tickets for foreign travel are taxed at 10 per cent, while tickets for travel by ship are subject to tax at the rate of 8 per cent for departure from Ecuador and 4 per cent for the return trip.

Exports and Export Proceeds

All exports require licenses to ensure the full surrender of the exchange proceeds to the Central Bank; licenses are issued freely, subject to guarantee. No surrender is required for exports effected under licensed barter transactions. However, barter transactions require a prior contract. Minimum reference prices are established for exports of bananas, coffee, cacao, and semifinished products of cacao to help ensure the full surrender of the exchange proceeds. Reference prices are also established for exports of crude petroleum; these serve as the basis for the calculation of taxes, royalties, etc. Certain commodities are subject to export taxes, payable at the time the export license is received, with the exception of the export tax on coffee which is payable at the time the export permit is liquidated. An export tax of 25 per cent ad valorem is levied on cocoa beans; exports of coffee beans are subject to a sliding-scale tax, which ranges from 26.5 per cent to 35 per cent. Sugar is exempted from the ad valorem export tax and receives a subsidy based on the f.o.b. value. The subsidy is received in the form of a tax credit certificate (certificado de abono tributario) on the basis of customs documentation. There are other export taxes in addition to those mentioned above.

Proceeds from Invisibles

Receipts from specified invisibles must be sold to the Central Bank at the official rate. All other receipts, including those from travelers, may be sold in the free market. Travelers may bring in any amount of foreign or domestic banknotes.

Capital

Capital may freely enter or leave the country through the free market. Most borrowing abroad is subject to an exchange tax ranging from 0.5 per cent to 2 per cent (see section on Exchange Rate System, above).

All foreign investments in Ecuador must be registered with the Central Bank. New investments require the prior authorization of the Ministry of Industry, Commerce, and Integration and/or the Foreign Investment Council. In the case of investments for which exchange was sold to cover local costs, the investor must show that the exchange was sold to the Central Bank in order to be entitled to foreign exchange at the official rate for remittances of interest, profits, dividends, and amortization. For foreign capital entering in the form of machinery and equipment, the investor must show that the merchandise has been cleared through customs and that it took the form of a “nonreimbursable” import. Additionally, the investor must present to the Central Bank the certification from the appropriate ministry that the declared value conforms to the actual value of the machinery and equipment. The Exchange Department of the Central Bank must submit a recommendation to the General Management of the Central Bank within 30 days from receipt of the request for registration in the official market and all pertinent documentation. Thereafter, taking into account the interests of the Ecuadoran economy and priorities established in the country’s development plans, the General Management of the Central Bank must approve or deny the registration for foreign exchange purposes within an additional 30 days. In certain cases, where all documentation has been submitted, the Central Bank can provisionally register the investment for a period of up to 90 days.

Similarly, loans in foreign exchange granted to the Government or to official entities may be registered for foreign exchange purposes with the Exchange Department of the Central Bank; for all foreign loans, registration is mandatory for statistical purposes. In the case of suppliers’ credits, no special registration procedure is required. Foreign nationals are prohibited from owning rural properties and from owning or operating mining industries within 30 miles of Ecuador’s coastline or borders. The participation of foreign capital as a direct investment in domestic wholesaling and retailing, in construction, and in real estate development is restricted. The Ministry of Industry, Commerce, and Integration does not authorize direct foreign investment for establishing publicity firms, commercial broadcasting stations, television stations, newspapers, and magazines.

Foreign exchange may be obtained at the official rate for the withdrawal of foreign investment from Ecuador five years after the date of registration, on the basis of a schedule agreed by the Central Bank. Profits accumulated in previous years may be repatriated also on the basis of a schedule agreed by the Central Bank for investments for which the registration procedure for foreign exchange purposes has been completed. For investments registered on a provisional basis, profits may not be repatriated through the official market. Profit remittances may not exceed the limit (20 per cent a year) specified in the Foreign Investment Code of the Andean Pact.

Residents who are private individuals are not granted official foreign exchange to purchase securities or real estate abroad. Commercial banks are authorized to maintain accounts with correspondent banks abroad in convertible currencies.

Gold

Residents other than the Central Bank may export gold only in the form of filigree work, the gold content of which does not represent more than 25 per cent of its market value. Imports of monetary gold are reserved for the Central Bank; such imports are treated as List I imports, payable through the official market. Imports of nonmonetary gold in bars may be made by the Central Bank or by any other resident and are also treated as List I imports eligible for the official rate. Gold bars are exempt from import duty, while the duty on semiworked gold is 40 per cent ad valorem; semiworked gold is treated as a List II import.

Changes during 1979

January 17. Monetary Board Regulation No. 1021 modified Regulation No. 173 by including public financial development institutions in the list of institutions for which loan capital from foreign governments and international agencies would be converted at the rate of S/ 25 per US$1.

February 7. Monetary Board Regulation No. 1023 liberalized sales of foreign exchange in the official exchange market to students already abroad or proceeding abroad.

February 7. Certain import items, including hand tools and fixtures, were shifted from List I-B to List II (Monetary Board Regulations Nos. 1024, 1026, 1027, and 1028).

March 6. Imports of agricultural production aids, such as machinery, tools, spare parts, and fertilizers, were fully exempted from tariff duties (Executive Decree No. 792).

March 13. Tax credit certificates were abolished for exports of cocoa butter, powder, and liquor (Decree No. 3321).

April 4. Importation of certain agricultural implements required prior authorization from the Ministry of Industry, Commerce, and Integration (Monetary Board Regulation No. 1033).

April 25. Prior authorization of the Ecuador Institute of Electrification was required for the importation of electric generators on List I-B (Monetary Board Regulation No. 1034).

May 8. Imports of electricity generating equipment were exempted from payment of duty during 1979 (Decree No. 3427).

May 23. Imports of fertilizer classified under List I-A no longer required prior authorization from the Ministry of Agriculture and Livestock (Monetary Board Regulation No. 1036).

June 20. Sales of foreign exchange in the official market for medical treatment abroad were liberalized (Monetary Board Regulation No. 1038).

July 5. Imports of purebred poultry under List I-B were subjected to prior authorization from the Ministry of Agriculture and Livestock (Monetary Board Regulation No. 1039).

September 3. A legislative decree exempted imports of drugs and baby food from all duties, with effect from January 24, 1980. Drugs not produced domestically would be imported and marketed by the Ministry of Health.

September 27. Imports of drilling rods were made subject to prior authorization by the Ministry of Industry, Commerce, and Integration and those of preserved fruit by the Ministry of Agriculture and Livestock (Monetary Board Regulations Nos. 1042 and 1043).

September 27. Monetary Board Regulation No. 1044 exempted imports of goods on List I-B made by the public sector from the 10 per cent advance deposit requirement.

October 15. Imports of lighting equipment under List I-B were made subject to prior authorization of the Ministry of Industry, Commerce, and Integration (Monetary Board Regulation No. 1045).

October 24. Imports of iron, steel, and steel billets were shifted from Group B to Group A of List I (Monetary Board Regulation No. 1050).

November 12. Imports of oils and fats (List I-B) were subjected to prior approval of the Ministry of Industry, Commerce, and Integration (Monetary Board Regulation No. 1053). This regulation was annulled by Regulation No. 1059 of November 28.

November 12. Imports of outfits for firemen were included in List II (Monetary Board Regulation No. 1054).

November 28. Imports of containers for compressed or liquefied gases under List II were subjected to prior authorization by the Ministry of Natural Resources and Energy (Monetary Board Regulation No. 1057).

December 27. Monetary Board Regulation No. 1062 reduced from 120 days to 60 days the period for surrender to the Central Bank of foreign exchange receipts from sales of petroleum and petroleum derivatives by private companies to third parties. The fine on delays in surrendering foreign exchange was increased from 100 per cent to 150 per cent of the interest rate on term deposits prevailing in New York.

Egypt

(Position on December 31, 1979)

Exchange Rate System

The currency of Egypt is the Egyptian Pound, which is pegged to the U.S. dollar, the intervention currency, at LE 1 = US$1.42857. The established buying and selling rates of the Central Bank of Egypt for the U.S. dollar on December 31, 1979 were LE 0.700 and LE 0.707, respectively, per US$1. Established rates for 14 other convertible currencies are based on cross rates quoted in New York.1 A special exchange rate, equivalent to LE 1 = US$2.55555, applies to transactions under bilateral payments agreements with countries that are not members of the International Monetary Fund and to liquidation accounts related to past bilateral payments agreements. In addition, certain transactions take place at freely negotiated exchange rates. Forward cover is available for foreign trade transactions. Banks do not require prior exchange control approval for dealings or transactions in foreign currencies.

Administration of Control

Exchange control is supervised by a Committee for Foreign Exchange, under the Ministry of Economy, Foreign Trade, and Economic Cooperation, and is implemented under the supervision of the Under Secretary for Foreign Exchange Affairs. A foreign exchange budget is established annually. Banks are authorized to execute foreign exchange transactions, within the framework of a general authorization, without the need to obtain specific exchange control approval. The Ministry of Economy, Foreign Trade, and Economic Cooperation supervises imports and exports, but controlled imports are governed by exchange allocations rather than by import licenses. Certain imports and exports are reserved for public sector companies. Port Said City is a free zone.

Prescription of Currency

Payments to and from countries with which Egypt does not have bilateral payments agreements may be made in any convertible currency, in Egyptian pounds or in a convertible currency to the debit or credit of the appropriate Free Account (see section on Nonresident Accounts, below), or in any other manner prescribed or permitted by the foreign exchange regulations manual. However, by a decision of the Central Bank, the proceeds from exports of raw cotton to convertible currency countries must be received in deutsche mark, Swiss francs, or U.S. dollars (in addition, for exports to Austria, Belgium, France, Japan, and the United Kingdom, in the currencies of those countries).

Settlements with countries with which Egypt has bilateral payments agreements are made according to the terms of those agreements.2 However, payments to such countries for “own exchange” imports and various other purposes may be made in convertible currency. Certain settlements with countries with which indemnity agreements concerning compensation for nationalized property are in force are made through special accounts in Egyptian pounds with the Central Bank of Egypt. Suez Canal dues are expressed in SDRs and may be paid by debiting Canal Dues Accounts, Advance Payment Canal Dues Accounts, Free Accounts in Foreign Currency, or Free Accounts in Egyptian Pounds. Canal Dues Accounts must be opened in foreign currency and balances are retransferable abroad.

Nonresident Accounts

In addition to the special accounts related to Egypt’s bilateral payments agreements or to the indemnity agreements concluded with certain countries, there are four main types of accounts: Free Accounts, Special Accounts, D Accounts, and Canal Dues Accounts.

Free Accounts may be opened in the name of any person other than the Egyptian Government, public authorities, and public sector entities. They may be opened either in a foreign currency or Egyptian pounds; the latter are freely convertible. Free Accounts may be credited with transfers of convertible currency or with the proceeds from the sale of such currency; with transfers from other Free Accounts; with proceeds from the sale of foreign banknotes which the holder has declared upon entry into Egypt; with interest on the accounts; and with the equivalent of any payment authorized in convertible currency. They may be debited for payments abroad in a convertible currency; for transfers to other Free Accounts and to Special Accounts; for purchases of foreign banknotes or other means of payment; for any payments in Egypt, including those for exports; and for bank charges and commissions.

Special Accounts in foreign currency may be opened in the name of any person other than the Egyptian Government, public authorities, and public sector entities. They may be credited with proceeds from the sale of acceptable foreign banknotes; with transfers from Free Accounts or other Special Accounts; and with interest on the accounts. They may be debited for payments for imports; for either transfers abroad or purchases of foreign banknotes or other means of payment to cover the expenses abroad of the account holder or his family (within a limit of LE 3,500 a year); for other authorized payments abroad; for local foreign currency payments; and for purchases of foreign banknotes or other means of payment for use in Egypt.

D Accounts may be opened in the name of any resident of a country with which Egypt has a bilateral payments agreement. The accounts must be designated by the name of the partner country concerned. These accounts may be credited with receipts under the respective payments agreement and with the equivalent of transfers authorized from the country of the account holder. They may be debited for transfers to the country of the account holder and for local payments (including those for Egyptian exports) authorized by the implementing regulations and within the scope of the relevant payments agreement.

There are also Nonconvertible Capital Accounts, to which must be credited any payment of a capital nature to a foreigner living outside of Egypt that is not remittable under the exchange control regulations. Banks may debit these accounts for charges legally due from the account holder. Accounts held by individuals may be debited up to a limit of LE 2,000 a year for use by the account holder. Accounts held by juridical persons may be debited for settlement of obligations due to the Egyptian authorities and for payments to residents for services rendered, and up to a limit of LE 2,000 a year for expenses incurred in connection with the activities or residence of the holder’s employees in Egypt.

All accounts held by residents of Rhodesia also are nonconvertible; no transactions on these accounts may take place without prior approval.

Foreign Exchange Retention Accounts may be opened in the name of authorized recipients of the proceeds from certain exports and nonfactor services, and may be credited with the proceeds of such transactions. They may be debited for payments in respect of trade and invisibles related to the account holder’s economic activities or for surrender of the foreign currency. With certain exceptions, any balances in such accounts on June 30 or December 31 of any year must be used within three months or surrendered.

Imports and Import Payments

All imports from Israel, Rhodesia, and South Africa are prohibited. No exchange is allocated in practice for many goods that are considered nonessential or that are produced locally, although most types of commodities may be imported, provided the necessary foreign exchange is acquired outside the official market. All imports are financed at the established rates with the exception of imports under bilateral payments agreements with countries that are not members of the IMF, which are financed at a special rate equivalent to the former official rate, and imports that take place under the “own exchange” arrangements.

Most imports from payments agreement countries (except those made under the “own exchange” arrangements), as well as imports of specified goods from any source, are reserved for the public sector. Private sector importers of “own exchange” or “open license” imports must be Egyptians, born of Egyptian fathers.

A Supreme Council for the Planning of Foreign Trade is entrusted with establishing long-term policy for exports and imports, controlling the annual export and import plan, and supervising the execution of the foreign exchange budget. The ministries concerned are responsible for setting priorities regarding imports and their timing. For purposes of administration, the economy is divided into several sectors (agriculture, industry, transportation, etc.). The annual foreign exchange budget provides for a specific quota for each sector, and the authorities in charge of the sector decide upon the goods to be imported within that quota. Approval by a foreign trade committee constitutes the necessary authorization for the implementation of import transactions. Private sector imports through the official market require approval by the Commercial Agency. Imports are regulated by exchange allocations rather than by import licenses. Banks are authorized to provide foreign exchange at the established rate for the importation of certain commodities without restriction. Such “open license” imports do not require any prior approval and do not count against foreign exchange budget quotas.

All commodities except those appearing on a special list may be imported, provided that no purchase of foreign exchange in the official market is involved. In the case of certain specified items, a special Determination Committee must first approve the transaction. Certain imported goods may be sold for foreign currency to Egyptians and foreigners at special shops.

An economic development tax of 10 per cent of the c.i.f. value is payable on imports; the tax is 5 per cent for certain essential foodstuffs imported by the Ministry of Supply. A statistical tax of 1 per cent of the c.i.f. value is payable on all imports except wheat.

Payments for Invisibles

Banks are authorized to provide foreign exchange for payments for certain invisibles in accordance with general authorizations and instructions and up to specific quotas. Residents may purchase, through local banks and up to specified amounts, the foreign exchange required for travel expenses and certain other purposes, at established rates. Egyptian nationals are entitled to retain their earnings in foreign exchange (except those accruing from exports and tourism) in Free or Special Accounts and may use this foreign exchange freely for payments abroad. They may also acquire additional foreign exchange through the medium of Free or Special Accounts (see section on Nonresident Accounts, above). Travelers may carry with them foreign banknotes acquired through other channels that have not previously been declared up to LE 200 a trip or LE 2,000 a year.

Travelers may not export more than LE 20 in Egyptian banknotes. Egyptian travelers may take with them any foreign exchange which they have acquired legitimately; foreign travelers leaving Egypt may reconvert their remaining Egyptian pounds after deduction of LE 20 for each night spent in Egypt.

Exports and Export Proceeds

Apart from exports to Israel, Rhodesia, and South Africa, which are prohibited, and commodities required for the national economy that may be restricted, exports may be made free of license. Exports of many products are organized and supervised by foreign trade committees. Cotton, rice, and petroleum are exported by the public sector only.

Export proceeds other than those from books, newspapers, and other publications must be repatriated within three months from the date of shipment of the goods. Export proceeds may be retained in Foreign Exchange Retention Accounts. Proceeds from exports to bilateral payments agreement countries must be obtained in accordance with the provisions of the relevant agreement. Some exports to specified countries may be settled through indemnity accounts.

Proceeds from Invisibles

Earnings abroad by persons other than the Egyptian Government, public authorities, and public sector entities may be held abroad or retained indefinitely in Free Accounts. Receipts from the provision of local hotel, transport, or travel agency services to tourists may be retained in Foreign Exchange Retention Accounts. Many public sector and other entities are permitted to retain all or part of their receipts from invisibles in Foreign Exchange Retention Accounts, and in many instances are exempt from the periodic surrender requirements applied to these accounts. Certain travel in Egypt by foreigners may be financed from various special accounts, such as those under indemnity agreements with certain countries.

Persons arriving in Egypt from abroad may import up to LE 20 in Egyptian banknotes and are permitted to bring in, and to use locally, unlimited amounts in foreign exchange; a customs declaration is required if the traveler wishes to re-export foreign currency or use it to open a Free Account. Foreign travelers must convert into Egyptian currency the equivalent of LE 100 to obtain an entry visa.

Capital

Egyptian nationals who have deposited foreign earnings in Free Accounts in Egyptian banks may use this foreign exchange for any purpose, including transfer abroad. With this exception, outward capital transfers are restricted. Egyptian emigrants are authorized to transfer abroad funds up to LE 900 a person or LE 3,500 a family, to take out jewelry and other valuables up to LE 200 a person or LE 500 a family, and to export other personal effects and furniture up to LE 200 a person or LE 500 a family.

Authorized banks are empowered to import, export, and negotiate securities and to effect transfers related to the sale or purchase of either Egyptian or foreign securities. Brokers registered on the stock exchanges of Cairo and Alexandria are authorized to intermediate in the transfer of ownership of securities, whether at home or abroad, and to undertake the local collection or payment in foreign currency of the value of the securities. Transfers of accrued alimony are permitted in accordance with court orders.

An amount not exceeding LE 5,000 a family—irrespective of whether the sum is made up of capital or income—may be released from a family’s assets in Egypt to persons of foreign nationality who leave the country permanently after a period of residence of at least five years. Any amount above this limit is credited to a Nonconvertible Capital Account. Any payment of a capital nature not remittable under the exchange control regulations must be credited to a Nonconvertible Capital Account.

Law No. 43 of June 19, 1974 (amended by Law No. 32 of June 9, 1977) Concerning the Investment of Arab and Foreign Funds and the Free Zones defines the treatment of new foreign investments. Requests for transfers of profits not covered by this law are considered on an individual basis.

Gold

Authorized banks are empowered to buy, sell, and keep abroad gold (including gold coin) and other precious metals for the account of customers entitled to hold Free Accounts. Authorized banks may import such gold and other precious metals for local deposit and may subsequently re-export them. Certain persons other than the monetary authorities, including authorized industrial users, are allowed to import precious metals and stones for industrial and local market requirements. Exports of gold and silver fabrics are permitted, provided that the sales proceeds are repatriated in convertible currency. Travelers are permitted to take out and bring in gold jewelry within specified limits. There is a free market for gold coin in Cairo.

Changes during 1979

January 1. The following remaining groups of transactions were shifted from the official rate to the parallel rate: exports of raw cotton, rice, petroleum and petroleum products; imports of wheat, wheat flour, sugar, fertilizers, insecticides, and noncapital imports of the petroleum sector; and all remaining transactions in invisibles. The unification of the official and parallel exchange rates at the previously prevailing parallel rate was then complete although a special exchange rate continued to apply to transactions under bilateral payments agreements with countries that were not members of the IMF, and to liquidation accounts related to past bilateral payments agreements.

January 1. The bilateral payments arrangement with Czechoslovakia was terminated. Settlements with Greece were placed on a convertible currency basis.

February 15. Ministerial Decree No. 1775 was published. New items were added to the open general license system bringing imports covered by the scheme to approximately 15 per cent of total imports. The provisions of the decree were given retroactive effect to December 31, 1978.

May 6. Following the economic boycott of Egypt by countries implementing the decisions of the Baghdad conference in March, Egypt imposed restrictions on some current payments and transfers relating to certain loans and deposits by those countries.

June 30. The bilateral payments arrangement with Mali was terminated.

September 1. Customs duties on certain consumer durable and intermediate goods imported under the “own exchange” system became effectively payable in foreign currency. The importer was required to convert foreign exchange in an amount equivalent to the customs duty payable on the goods; he would then receive a certificate from the commercial bank recording the transaction with a check made payable to the Customs and Excise Department. Approval by a Special Determination Committee would no longer be required for “own exchange” imports, except for certain specified items.

El Salvador

(Position on December 31, 1979)

Exchange Rate System

The currency of El Salvador is the Salvadoran Colón, which is pegged to the U.S. dollar, the intervention currency, at Ȼ 02.50 = US$1. The rates of the Central Reserve Bank for transactions with the public are Ȼ 2.49 buying and Ȼ 2.51 selling, per US$1. Exchange transactions by commercial banks with the public take place within these limits. Buying and selling rates for other currencies are based on the daily quotations for the U.S. dollar in markets abroad. A stamp tax of 0.1 per cent is applicable to all sales of exchange; on amounts below Ȼ 100,000 the tax is levied at fixed amounts that may be slightly in excess of 0.1 per cent.

On November 6, 1946, El Salvador notified the Fund that it was prepared to formally accept the obligations of Article VIII, Sections 2, 3, and 4, of the Fund Agreement.

Administration of Control

Subject to any directives issued by the Monetary Board, exchange control authority is exercised by the Central Reserve Bank through its Exchange Control Department. Authority to approve certain payments, including most import payments not exceeding US$20,000 (US$2,000 for imports from other Central American Common Market (CACM)1 countries), is delegated to the commercial banks. Exchange licenses for imports must be obtained from the Exchange Control Department. Exports of a number of commodities require licenses issued by the Ministry of Economy or the Ministry of Agriculture. Exports of coffee are supervised by the Salvadoran Coffee Company and require licenses issued by the Ministry of Economy.

Prescription of Currency

Payments to other member countries of CACM in respect of trade and specified invisibles must be settled in the currencies of those countries or in Salvadoran colones through the Central American Clearing House. Payments to Mexico are also settled through the Clearing House. Otherwise, residents are free to make authorized payments in any currency they choose.

Nonresident Accounts

Accredited diplomatic missions and other foreign institutions or persons established in El Salvador may hold nonresident accounts in foreign currency with authorized banks provided that such accounts are credited with foreign exchange received from abroad. Banks may also freely open foreign currency accounts, for any period of time and in any amount, in the names of physical persons (whether of foreign or Salvadoran nationality) who reside abroad and, for a maximum period of six months, in the names of foreign persons staying in El Salvador for a period not exceeding six months. All nonresident accounts may be utilized freely, but the commercial banks must make periodic reports to the Central Reserve Bank of the movements on such accounts.

Imports and Import Payments

Import licenses are issued by the Ministry of Economy and are required for only a few items, including airplanes, firearms, ammunition, military equipment, dynamite, cotton for industrial use, jute sacks, skins, leather, some chemical and pharmaceutical products, coffee for seeding, sugar, and saccharin.

Imports from all countries must be registered with the Central Reserve Bank before orders are placed; orders for imports from countries outside Central America must be approved by the Exchange Control Department.

For certain goods that are considered luxury commodities (including airplanes, boats, alcoholic beverages, tobacco, perfumes, cosmetics, watches, jewelry, automobiles, furniture, domestic appliances, rugs, photographic equipment, and furs), and representing about 4 per cent of the total value of imports, the Exchange Control Department cannot authorize importation, unless an advance deposit requirement, equivalent to 100 per cent of the c.i.f. value, is met in local currency. In addition, the c.i.f. value of the goods being imported must be paid at the time of import registration.

Imports from countries outside the CACM that apply discriminatory restrictions against exports from El Salvador must be paid for before customs clearance, with the exception of industrial raw materials, which may be paid for within three years (medicines from Mexico may be paid for within 90 days; this applies also to imports of spare parts from Mexico by importers who are regarded as small enterprises).

For commercial imports, the commercial banks are authorized to provide exchange for all import payments up to US$20,000 (US$2,000 for imports originating in CACM countries) for each order. When suppliers abroad request payment in advance, a prior deposit of 10 per cent, calculated on the value of the advance payment, is required from the importer as a guarantee, but those goods subject to the 100 per cent prior import deposit, goods valued at US$500 or less, and imports by industrial and agricultural firms may be exempted. Guarantee deposits are refunded when the goods arrive in the country, provided that payment has been made in full to the exporter. In addition, all imports exceeding US$2,000 that are paid for by letters of credit or drafts (cobranzas) are subject to a 10 per cent prior deposit. The deposit may be made in cash at the Central Bank or any authorized bank. If the importer so desires, a bond issued by a financial institution in an amount equal to 10 per cent of his average monthly imports may be deposited instead of cash.

Imports from other Central American countries, when covered by the Free Trade Agreement, are exempt from the exchange control regulations described above. Imports from Panama that are covered by the Free Trade Agreement of June 2, 1970 also are exempt.

Under the provisions of the Central American Agreement on Fiscal Incentives, El Salvador grants duty exonerations on imports of raw materials and capital goods to approved industrial firms.

Imports originating outside the CACM are subject to an import surcharge of 30 per cent of the applicable import duty; the surcharge is not applied to certain industrial equipment and raw materials that are free of duty under the Industrial Incentive Law. Many nonessential goods are subject to a selective consumption tax, at rates of 5, 10, 20, 25, or 30 per cent. Goods of Central American origin are exempt.

Payments for Invisibles

The commercial banks are authorized to sell foreign exchange, without prior authorization from the Central Reserve Bank, for subscriptions to foreign literary societies, correspondence courses, and memberships in professional clubs and organizations. They are also authorized to sell foreign exchange for travel for tourism, or business, as indicated below.

The basic exchange allocation which banks may make available for travel outside the Central American area (interpreted to mean the CACM countries) is US$800 a person a trip for both adults and children. This allocation also applies to travel within the Central American area if the person is traveling by air; if the person is traveling by land the basic exchange allocation that banks may make available is US$500 a person a trip for both adults and children. Additional amounts up to a maximum of US$2,000 may be authorized by the Exchange Control Department, provided that a guarantee deposit in local currency corresponding to 20 per cent of the excess over the basic allocation is lodged with the Central Reserve Bank; the deposit is released upon the traveler’s return provided he has spent at least 20 days abroad. In addition to the basic exchange allocation, foreign exchange is made available to cover medical and hospital expenses abroad up to US$3,000 if the patient buys the exchange in El Salvador and up to US$6,000 if the funds are directly remitted abroad. The US$6,000 limit also may be exceeded with the approval of the Central Reserve Bank, provided that proof of additional medical expenses is submitted.

Local banks are authorized to sell foreign exchange up to US$600 a person a month for family remittances to Salvadoran nationals abroad and for study abroad. Local banks are also authorized to sell exchange for study purposes in addition to the above quota, upon presentation of evidence of installation expenses, tuition costs, and other expenses. For Salvadoran nationals traveling to Central American countries, the commercial banks have authority to provide exchange up to the amounts mentioned above in Costa Rican colones, Honduran lempiras, Nicaraguan córdobas, or Guatemalan quetzales, or a cashier’s check in Salvadoran colones (for settlement through the Central American Clearing House). Requests for larger amounts must be submitted for approval to the Central Reserve Bank. International sea and air passages are subject to a travel tax of 10 per cent of the price of the ticket; official or diplomatic travel is exempt.

Insurance and reinsurance premiums may be paid in foreign exchange, provided that the insurance contract was registered with the Exchange Control Department at the time it took effect. Alternatively, insurance companies may receive premiums in colones and periodically obtain from the Exchange Control Department authorization to purchase the foreign currencies they are obliged to transfer abroad. Foreign currencies derived from insurance or reinsurance contracts must be surrendered to the Central Reserve Bank or to an authorized commercial bank. Travelers may take out (2 200 in domestic notes and coin. This limit is subject to modification, however, to facilitate border trade with other Central American countries. Nonresident travelers may upon departure reconvert Ȼ 200 into foreign currency.

Exports and Export Proceeds

Export licenses are not required except for some foodstuffs and other items for which the authorities wish to ensure an adequate local supply, but the proceeds of all exports in excess of US$6,000 must be received through a bank in El Salvador and the foreign exchange must be surrendered to the Central Reserve Bank or an authorized commercial bank. Export transactions must be declared to the Exchange Control Department within 15 days of shipment. The collection term normally must not exceed 90 days, but longer credit terms may be authorized by the Exchange Control Department. With the exception of sales to “new markets,” exports of coffee and sugar are subject to export tax.

Proceeds from Invisibles

All exchange receipts from invisibles must be surrendered to the Central Reserve Bank or an authorized commercial bank. Travelers may bring in Ȼ 200 in domestic notes and coin. This limit is subject to modification, however, to facilitate border trade with other Central American countries.

Capital

All exchange receipts resulting from capital transactions must be surrendered to the monetary authorities. Payments abroad representing capital movements require exchange licenses; such licenses are not granted for resident-owned capital except for investments by private individuals in Costa Rica, Guatemala, Honduras, and Nicaragua. The entry of capital with a maturity in excess of one year in the form of foreign investment must be registered with the Ministry of Economy. Registration ensures (1) free remittance of net profits on foreign capital invested in industrial enterprises, enterprises engaged in the extraction of nonrenewable natural resources, and enterprises in the field of tourism; (2) the remittance of net profits of enterprises engaged in other activities up to a limit of 10 per cent a year of the registered capital (larger amounts may be authorized in special cases by the Ministry of Economy); (3) repatriation of the proceeds from the total or partial liquidation of the enterprise (after payment of taxes) in proportion to the participation of foreign capital in the total capital; (4) remittance of the sales proceeds of shares and other instruments representing investments or participations, including capital gains; and (5) payment of interest and amortization as determined at the time of registration. In the cases under (3) and (4), in addition to the approval of the Exchange Control Department, the prior approval of the Ministry of Economy is required. Foreign investments made in El Salvador prior to June 1, 1961 must also be registered by the Ministry of Economy or the Exchange Control Department.

The Exchange Control Department authorizes, without restriction, the remittance abroad of foreign currency for the payment of interest and amortization on short-term loans from abroad; foreign loans with a maturity of up to one year must be authorized by the Central Reserve Bank, while foreign loans with a maturity of more than one year must be authorized by the Ministry of Economy.

Decree No. 279 of March 27, 1969 sets certain minimum capital requirements for businesses that are owned by foreign nationals and for those in which foreign nationals have a shareholding interest. For purposes of this decree, foreign nationals are defined as persons who are not citizens of one of the five CACM countries.

Gold

Gold coins in denominations of Ȼ 25, Ȼ 50, Ȼ 100, and Ȼ 200 have been issued as legal tender, but do not circulate. Residents may hold and acquire gold coins in El Salvador for numismatic purposes. With this exception, residents other than the monetary authorities are not allowed to hold or acquire gold in any form other than jewelry, at home or abroad. Imports and exports of gold in any form other than jewlery require licenses issued by the Central Reserve Bank; such licenses are granted for imports and exports by or on behalf of the monetary authorities and industrial users. In practice, imports of nonmonetary unworked gold are made only by jewelers’ cooperatives acting on behalf of their members and other users.

Changes during 1979

September 17. The basic exchange allowance for travel expenses was reduced from US$2,000 to US$800 a person a trip. However, additional amounts up to a total of US$2,000 could be made available subject to the lodging of a guarantee deposit of 20 per cent of the additional amount with the Central Reserve Bank.

September 17. It was announced that a 10 per cent prior import deposit requirement would be levied on all imports exceeding US$2,000 in value paid for by letter of credit or bank draft (cobranza). The deposit would be returned to the importer upon presentation of proof that the goods had entered the country.

September 17. The power to authorize payments of foreign exchange to pay for direct imports not exceeding US$20,000 in value (US$2,000 for goods originating in CACM countries) was delegated by the Central Reserve Bank to commercial banks. For larger amounts, foreign exchange could be purchased only with the approval of the Central Reserve Bank.

Equatorial Guinea

(Position on December 31, 1979)

Exchange Rate System

The currency of Equatorial Guinea is the Equatorial Guinean Ekuele, which is issued by the Bank of Equatorial Guinea (the central bank) and is defined as equivalent to 0.0126953 gram of fine gold. The ekuele replaced the Equatorial Guinean peseta and was at par with the Spanish peseta, which was Equatorial Guinea’s intervention currency until July 12, 1977, when the Spanish peseta was devalued. Following the Spanish exchange rate action Equatorial Guinea suspended exchange operations with the exception of some small transactions that took place on the basis of a fixed relationship between the ekuele and a currency basket. From April 9, 1979 to August 5, 1979 the ekuele was pegged to the SDR at the rate of EK 90 = SDR 1. From August 6, 1979, the ekuele is pegged at par to the Spanish peseta, i.e., EK 1 = Pta 1. There are no forward exchange facilities. There are no bank charges or commissions, but exchange taxes of 10, 17.5, 20, 25, and 35 per cent are levied on certain transfers abroad.

Administration of Control

Exchange control authority is exercised by the Bank of Equatorial Guinea, and exchange transactions must be carried out through that Bank. Import and export licenses are issued by the Directorate-General of Foreign Commerce in the Ministry of Commerce; import licenses also require the approval of the Presidency.

Prescription of Currency

Settlements with Spain must be made through payments agreement accounts denominated in U.S. dollars, and payments to the People’s Republic of China must be made through an account denominated in Swiss francs. Settlements with other countries are made in convertible currencies.

Imports and Import Payments

All commercial imports require an import license. Licenses normally are issued within the framework of an annual import program. They do not entitle importers to the necessary foreign exchange until approved by the Presidency, after which, in principle, exchange is automatically made available upon the arrival of the goods in Equatorial Guinea; most import payments are effected under irrevocable letters of credit. Until August 1979, state enterprises had a monopoly on all imports; since then, some imports by private firms have been allowed.

Payments for Invisibles

All payments for current invisibles require the prior approval of the Bank of Equatorial Guinea. Residents 1 are, in principle, granted foreign exchange up to the equivalent of EK 10,000 a person a calendar year for tourist travel abroad. The standard allocation for business travel is the equivalent of EK 2,000 a person a day, subject to a maximum of EK 50,000 a trip. For study abroad, foreign exchange is, in principle, granted to cover tuition costs. The allowance for living expenses is up to the equivalent of EK 5,000 a month. For travel abroad for health reasons, foreign exchange is made available only for expenses covered by original bills.

In principle, the transfer of wages and salaries by alien residents, and of professional earnings as well as dividends by all residents, is freely permitted up to 60 per cent of taxable earnings when the transfer is made to Spain and up to 40 per cent for other countries, provided that annual earnings do not exceed EK 50,000. Larger transfers are permitted when annual earnings exceed EK 50,000. Transfers abroad of professional earnings by nonresidents are, in principle, freely permitted, but any amounts in excess of 60 per cent of taxable earnings are subject to a tax of 35 per cent on the amount transferred. In addition, nonresidents as well as Equatorial Guinean nationals residing abroad temporarily are permitted, in principle, to withdraw up to EK 5,000 a month from their savings accounts for remittance abroad.

In principle, enterprises classified as “of national interest” (see section on Capital, below) may transfer abroad freely up to 25 per cent per annum of the net investment income generated by their exporting activities. Any additional transfer is subject to a tax of 20 per cent. The transfer abroad of net investment income by enterprises classified as “of preferential interest” is subject to a 20 per cent tax. Any other enterprise with foreign capital participation may transfer net investment income, but such transfers are subject to a tax of 35 per cent on the amount transferred. In the event of at least 30 per cent of such net investment income being reinvested in Equatorial Guinea, the incidence of tax is reduced to one third its normal level. Interest on foreign loans utilized for direct investment may be remitted semiannually, subject to a tax of 8 per cent. Transfers abroad in respect of patents, trademarks, and royalties are, in principle, permitted freely, subject to a tax of 25 per cent of the amount remitted.

Travelers may take out EK 3,000 a person in domestic banknotes.

Exports and Export Proceeds

All exports require an export license. Both specific and general export licenses are granted; the latter are available only to registered exporters. Licenses are normally valid for one year. All export proceeds must be surrendered to the Bank of Equatorial Guinea. The Chamber of Agriculture, Commerce, and Industry, a private, nonprofit, cooperative association, has jurisdiction over the marketing of most agricultural exports.

Proceeds from Invisibles

All exchange receipts from invisibles must be surrendered to the Bank of Equatorial Guinea. Travelers may bring in any amount of foreign banknotes and coin, but the import of domestic currency by travelers is prohibited.

Capital

All imports and exports of capital require approval. Capital receipts in foreign currency must be surrendered to the Bank of Equatorial Guinea.

Under the Foreign Investment Law of November 17, 1979 three categories of foreign investment are recognized: (1) investments “of national interest” (mainly in industrial or forestry enterprises engaged in the export trade); (2) investments “of preferential interest” (mainly in enterprises engaged in import substitution); and (3) nonqualified investments. Investments by nationals of or entities domiciled in Rhodesia and South Africa are prohibited. All foreign investments require the approval of the Presidency. If authorization is given by the Presidency, the Government or citizens of Equatorial Guinea may own stocks of foreign enterprises established in Equatorial Guinea not exceeding 25 per cent of the capital. Foreign loans and capital utilized for financing direct investment may be repatriated annually up to the amortization of fixed assets, free of taxes. The transfer abroad of funds from the sale of fixed assets and financial assets by alien residents or by nonresidents is, in principle, permitted as follows: 50 per cent of the total amount realized net of taxes may be remitted abroad immediately and the balance in 24 equal monthly installments. The sale of real estate, however, requires prior approval.

Gold

All purchases and sales of minted gold and gold bars are centralized in the Bank of Equatorial Guinea, which also has a monopoly over the import and export of minted gold and gold bars. Commemorative gold coins in denominations of Equatorial Guinean pesetas 250, 500, 750, 1,000, and 5,000 are legal tender. Except for these coins and jewelry, residents are not permitted to hold gold.

Changes during 1979

April 19. The ekuele was pegged to the SDR at the rate of EK 90 = SDR 1.

August 6. The ekuele was pegged to the Spanish peseta at par, i.e., EK 1 = Pta 1.

November 17. A new foreign investment law was published, liberalizing existing provisions, as follows: (1) the foreign share in Equatorial Guinean enterprises might exceed 50 per cent of the capital; (2) foreign loans and capital utilized for financing direct investment could be repatriated annually up to the amortization of fixed assets, free of taxes; (3) interest on foreign loans utilized for financing direct investment could be remitted semiannually subject to a tax of 8 per cent; (4) net investment income might be remitted freely after payment of remittance taxes as specified in the tax law; and (5) the remittance tax on profits realized would be reduced to one third (formerly one half) of its normal level if net investment income were reinvested in Equatorial Guinea.

Ethiopia

(Position on December 31, 1979)

Exchange Rate System

The currency of Ethiopia is the Ethiopian Birr, which is pegged to the U.S. dollar, the intervention currency, at the official rate of Br 2.07 = US$1. Buying and selling rates for certain other currencies are also officially posted, with daily quotations by the National Bank of Ethiopia (the central bank) on the basis of the official rate for the U.S. dollar and the previous day’s closing rate of the currency concerned against the U.S. dollar in London. The National Bank does not deal with the public; its dealings in U.S. dollars with the authorized banks take place at the official rate. In dealing with the public, authorized banks must observe the official rate for the U.S. dollar and prescribed commission charges, which accrue to the National Bank, of 0.50 per cent buying and 1.50 per cent selling; in addition, they are authorized to levy service charges for their own account of 0.25 per cent buying and 0.75 per cent selling and, for currencies other than the U.S. dollar, to include the margins charged them by correspondents abroad. These commissions are applied also to the National Bank’s dealings with the Government and certain public sector entities. The commissions levied on transactions with the public result in a spread of approximately 3 per cent between buying and selling rates for all currencies quoted. There are no taxes or subsidies on purchases or sales of foreign exchange. Authorized banks require the approval of the National Bank to undertake forward exchange transactions.

Administration of Control

All transactions in foreign exchange must be carried out through authorized banks under the control of the National Bank. All payments abroad require licenses issued by the Exchange Controller, whose office is a division of the National Bank. All exports are licensed by the Exchange Controller to ensure the surrender of the foreign exchange proceeds, and shipments require permits issued by that office. The Minister of Foreign Trade has statutory authority to prohibit, restrict, or regulate imports and exports.

Prescription of Currency

Outgoing payments are normally made in convertible foreign exchange appropriate to the country of the recipient or in U.S. dollars.1 The net proceeds of exports must be received in a foreign currency that is freely convertible, or in any other acceptable foreign currency.

Nonresident Accounts

Nonresidents may, subject to exchange control approval, open nonresident accounts either in birr or in foreign currencies at authorized banks. Deposits to these accounts can only be made in foreign exchange. Balances on nonresident foreign currency accounts may be freely transferred abroad. Transfers between nonresident accounts do not require prior approval. Members of the diplomatic community must use transferable birr accounts for payments of local expenses. No resident Ethiopian national may maintain a bank account abroad.

Blocked accounts of nonresidents are maintained with authorized banks and are used to retain funds in excess of Br 20,000 arising from disinvestments in Ethiopia (see section on Capital, below).

Imports and Import Payments

All imports from Rhodesia2 and South Africa are prohibited. Payments abroad for imports require exchange licenses, which are obtainable upon presentation of a valid importer’s license. Approval of applications for exchange licenses is conditional upon the provision of satisfactory information on costs and payment terms, and the submission of evidence that adequate insurance has been arranged with the Ethiopian Insurance Corporation, particularly for goods imported under letters of credit. Foreign exchange is not made available for imports of goods (including alcoholic beverages and other consumer goods) considered to be nonessential or readily substitutable by domestic products. Exchange licenses are granted in the currency appropriate to the country of origin, or in any convertible currency that may be requested. Payments by letter of credit, mail transfer, telegraphic transfer, or cash against documents at sight are all normally acceptable. However, the National Bank must be consulted regarding imports on a cash against documents basis. Goods which were previously subject to advance deposit requirements (about 100 items, mostly consumer goods) may not be financed on an acceptance basis, and virtually no imports take place on this basis. Importation on suppliers’ credit is prohibited except for goods such as raw and intermediate materials, pharmaceuticals, and machinery and transport equipment, in which case prior approval of the terms and conditions of the credit is required.

Payments for Invisibles

Payments for invisibles require exchange licenses. Invisibles connected with trade transactions are treated on the same basis as the goods to which they relate. Foreign employees may remit monthly up to 30 per cent of their net earnings (but only for the first three years of their contract if employed by the private sector); they may remit a maximum ranging between 40 per cent and 50 per cent of total net earnings during the period of service and upon final departure. Other expatriate employees may on final departure take out the same maximum amount, but not more than Br 20,000 in any one year. Foreign nationals who are not entitled to remittance facilities may, however, remit up to 30 per cent of their net earnings for the education of their children. Persons traveling abroad are allowed foreign exchange equivalent to Br 125 a day for a maximum period of 30 days in any one calendar year if the journey is made for business purposes; for tourism, persons 18 years of age or over are allowed up to the equivalent of Br 600 a year. Students are allowed foreign exchange up to the equivalent of Br 500 for study abroad and Ethiopian nationals having dependents pursuing higher studies in accredited institutions abroad are allowed to remit funds to meet school fees and reasonable expenses. Residents may remit premiums on insurance policies taken out before April 1962. Subject to certain limits and to submission of evidence, persons may obtain foreign exchange for medical treatment and travel abroad. After providing for payment of local taxes, foreign companies may, in principle, remit dividends on their invested and reinvested capital in any currency. Travelers may take with them a maximum of Br 50 in Ethiopian banknotes.

Exports and Export Proceeds

All exports to Rhodesia (see footnote 2) and South Africa are prohibited. Exports of most cereals to any destination other than Djibouti also are prohibited. Exports of horsebeans are suspended. All commodity exports require permits from the Exchange Controller and some require in addition the approval of specified public bodies. When applying for a permit, an exporter must specify the goods to be exported, the destination, and the value. For exports on a c.i.f. basis, exporters must obtain full insurance from the Ethiopian Insurance Corporation. The granting of a permit by the Exchange Controller enables the goods to pass through customs. The licensing system is used to ensure that foreign exchange receipts are surrendered to the National Bank, generally within three months, and that export proceeds are received in an appropriate currency (see section on Prescription of Currency, above).

Proceeds from Invisibles

Foreign exchange receipts from invisibles must be surrendered. Travelers may bring in Br 50 in Ethiopian currency. Foreign exchange must be declared by travelers on entry, and its re-export is subject to authorization, except for temporary visitors. Reconversion of birr must be supported by documentary evidence of prior exchange of foreign currency.

Capital

Controls over capital movements are designed to restrict outflows, to preclude an unwarranted accumulation of external debt, and to keep the authorities informed of the country’s external debt position.

All receipts of capital in the form of foreign exchange must be surrendered. Exchange control authorization is required, and registration of capital inflows with the exchange control authorities establishes evidence of receipt, which is required for repatriation. Foreign capital may participate with the Government in specified areas, such as large-scale construction, tourism, and the exploration for and production of hydrocarbons and most other minerals. All recognized and registered foreign investments may be terminated on presentation of documents regarding liquidation and payment of all taxes and other liabilities. Subject to appropriate documentation, foreign businessmen having nonregistered investments may transfer their capital abroad on liquidation and final departure from Ethiopia, but may not transfer more than Br 20,000 in any one calendar year; funds in excess of this amount must be deposited in a blocked account with an authorized bank. Transfers by emigrants who had operated their own businesses are restricted to Br 20,000 in any one calendar year.

Borrowing abroad requires exchange control approval and is restricted. Authorized banks may freely place their funds abroad, except on fixed-term deposit, but they may not acquire securities denominated in foreign currency without National Bank permission. Also, they need the prior approval of the National Bank to overdraw their accounts with foreign correspondents, to borrow funds abroad, or to accept deposits in foreign currency.

Gold

The ownership of personal jewelry of which gold or platinum forms a part is permitted. Unless specifically authorized by the Minister of Mines, Energy, and Water Resources, the possession or custody of 50 ounces or more of raw or refined gold or platinum, or of gold or platinum in the form of nuggets, ores, or bullion, constitutes an offense. Newly mined gold is sold by the Treasury to the National Bank. Imports and exports of gold in any form other than jewelry require exchange licenses issued by the National Bank. Such licenses are not normally granted except for imports and exports by or on behalf of the monetary authorities.

Changes during 1979

April 25. A directive of the Ministry of Foreign Affairs instructed members of diplomatic missions and international organizations in Addis Ababa to effect payments for all their local expenses in foreign exchange after May 15, 1979. Members of the diplomatic community were to open foreign currency accounts for payments to other nonresident accounts or abroad and a transferable birr account for payments of local expenses. These two accounts could be credited only with foreign exchange.

May 1. The facility whereby residents could accumulate the foreign exchange entitlement for tourism of Br 600 a year for two years was abolished.

Fiji

(Position on December 31, 1979)

Exchange Rate System

The currency of Fiji is the Fiji Dollar, the value of which is determined on the basis of the fixed relationship between the Fiji dollar and a weighted basket of currencies of Fiji’s most important trading partners. The exchange rate of the Fiji dollar in terms of the U.S. dollar, the intervention currency, is fixed daily on the basis of quotations for the U.S. dollar and other currencies included in the basket. On December 31, 1979 buying and selling rates for the U.S. dollar were F$0.8349 and F$0.8470, respectively, per US$1. The Central Monetary Authority of Fiji provides official quotations only for the U.S. dollar. There are no taxes or subsidies on purchases or sales of foreign exchange.

On August 4, 1972, Fiji formally accepted the obligations of Article VIII, Sections 2, 3, and 4, of the Fund Agreement.

Administration of Control

Exchange control is administered by the Central Monetary Authority, acting as agent of the Government. The Central Monetary Authority delegates to authorized dealers the authority to approve normal import payments. Except with the specific permission of the Central Monetary Authority, residents of Fiji are required to offer for sale to an authorized dealer all foreign currencies they receive.1 The Ministry of Commerce, Industry, and Cooperatives is responsible for the issue of import licenses, with the exception of those for gold, which are issued by the Ministry of Finance. Export licenses are issued by the Comptroller of Customs.

Prescription of Currency

Transactions with all countries are subject to exchange control. Settlements with residents of any country may be made in Fiji currency through an External Account or in any foreign currency. Payments for exports to any destination outside Fiji may be made in Fiji currency from an External Account or in any foreign currency.

Nonresident Accounts

A nonresident2 may maintain an External Account in Fiji currency or a foreign currency account with an authorized bank; such accounts may be opened without the specific approval of the Central Monetary Authority. These accounts may be credited freely with interest payable on the account, with payments from other External Accounts, with the proceeds of sale of foreign currency or foreign coin by the account holder, and with Fiji currency notes which the account holder brought into Fiji or acquired by debit to an External Account or by the sale of foreign currency in the country during a temporary visit. External Accounts also may be credited with payments by residents for which either a general or a specific authority has been given. External Accounts may be debited for payments to residents of Fiji, transfers to other External Accounts, payments in cash in Fiji, and purchases of foreign exchange for travel purposes.

Imports and Import Payments

Imports of most goods are under open general license, although imports of a number of goods, including certain foodstuffs, cement, seed potatoes, PVC pipes, polypropylene ropes, deodorants, and cars and vehicles, are subject to individual import licensing; licenses for some of these items are issued restrictively. Import prohibitions are imposed on a few commodities from all sources, mainly for security, health, or public policy reasons.

Payments for authorized imports are permitted upon application and submission of documentary evidence to authorized dealers who may allow payments for goods which have been imported under either a specific import license or an open general license. Authorized banks may allow advance payments for all imports provided the goods are imported into Fiji within 90 days of the date the payment is made.

Payments for Invisibles

Payments for invisibles originating in any country are permitted either under a delegated authority to banks or, where large amounts or nondelegated payments are involved, upon application to the Central Monetary Authority. Payments may be made freely for all bona fide current transactions. Residents of Fiji traveling to other countries may obtain from a bank, without reference to the Central Monetary Authority, a foreign currency travel allowance for private or business travel up to the equivalent of F$2,000 a person a journey. For an extended visit, a traveler may apply before his departure to the Central Monetary Authority for funds in excess of F$2,000 a person; applications may also be made from abroad through the traveler’s bank. There is no restriction on the number of trips a resident may make in any one year. Each traveler may take with him F$50 in Fiji currency and the equivalent of F$200 in other currencies, provided that these amounts are not in addition to travel allowances approved by a bank and/or the Central Monetary Authority.

Exports and Export Proceeds

Specific licenses are required only for exports of rice, sugar, wheat bran, copra meal, certain lumber, scrap metals, certain animals, and a few other items. Irrespective of any export licensing requirements, however, exporters are required to produce an export permit for commercial consignment of all goods with an f.o.b. value exceeding F$ 1,000; this permit is required for exchange control purposes. Exporters are required to collect the proceeds of exports within six months of the date of exportation of the goods from Fiji, irrespective of the currency in which the payment is being made, and may not grant credit to a nonresident buyer in excess of six months without specific permission. All foreign currencies must be offered for sale to an authorized dealer within one month of receipt.

Proceeds from Invisibles

All receipts from invisibles must be surrendered to authorized dealers. Travelers may bring in freely any amount in Fiji notes or foreign currency notes. Resident travelers are required to sell their foreign currency holdings to an authorized dealer within one month of return.

Capital

The inflow of capital in any form requires specific permission of the Central Monetary Authority. Foreign investment in Fiji normally is expected to be financed from a nonresident source. Such foreign investment may be given “approved status,” which guarantees the right to repatriate dividends and capital. All capital outflows are subject to prior approval. Capital transfers by residents to finance direct investments require the specific permission of the Central Monetary Authority and are permitted only where benefits will accrue to Fiji within. a reasonably short period.

All authorized banks operating in Fiji are required to obtain prior authorization from the Central Monetary Authority for transactions involving F$50,000 or more arising from (1) the conversion of foreign currency into Fiji currency whether for credit to a resident account or an External Account and (2) the crediting of an External Account with Fiji currency emanating from another External Account (including Fiji currency accounts of overseas banks). Banks also require the approval of the Central Monetary Authority before granting any loans to a company or branch in Fiji (other than a bank) which is controlled, whether directly or indirectly, by persons resident outside Fiji or by individuals designated as nonresidents; however, banks do not require such approval to lend up to F$5,000—for any period and any purpose—to individual nonresident customers. Banks may not lend foreign currency to any resident of Fiji without the specific permission of the Central Monetary Authority, and residents require permission from the Central Monetary Authority before they may borrow foreign currency within Fiji or outside.

The transfer of inheritances and dowries due to nonresidents is permitted, as is the transfer of the proceeds from the sale of a house owned by a nonresident. Residents of Fiji are allowed to make cash gifts to nonresidents equivalent to F$500 a donor a year; additional funds are permitted in compassionate cases. Emigrants may take out their entire net assets on departure.

With the prior approval of the Central Monetary Authority, residents are permitted to purchase foreign currency up to a maximum of F$5,000 a person a year to acquire foreign currency securities. The purchase of personal real property outside Fiji is not permitted. Portfolio investment in Fiji by nonresidents requires approval by the Central Monetary Authority; the proceeds of the sale or realization of such investment may be repatriated. Banks require exchange control permission to borrow abroad; they may accept deposits from nonresidents.

Gold

Residents may freely hold gold coin but not gold bullion in Fiji. The export of gold coin, except numismatic coins and collectors’ pieces, requires the specific permission of the Central Monetary Authority. Gold imports from all sources require a specific import license issued by the Ministry of Finance; these are restricted to authorized gold dealers. Gold coin is free of customs duty and fiscal tax, while gold bullion is exempt from customs duty but is subject to a fiscal tax of 7.5 per cent. Gold jewelry is subject to a fiscal duty of 10 per cent but does not require any license when valued at less than F$200; samples of gold and gold jewelry sent by foreign manufacturers require import licenses if over F$200 in value.

Exports of gold jewelry do not require licenses and are free of export duty. All newly mined gold is sold in Australia at free market prices. A commemorative gold coin of F$100 has been issued. It is legal tender but does not normally circulate.

Changes during 1979

April 1. Imports of weighing and measuring instruments, graduated in imperial units or in both imperial and metric units, were prohibited.

May 25. Export licensing was introduced for certain endangered species of animals.

December 28. Sanctions against Rhodesia were lifted.

Finland

(Position on December 31, 1979)

Exchange Rate System

The currency of Finland is the Finnish Markka. The external value of the markka is defined as a currency index number (1974 = 100) reflecting the average change in the exchange rates of the currencies most important for Finland’s foreign trade. These currencies are defined as the currencies of those countries which have accounted for not less than 1 per cent of the total of Finland’s commodity imports and exports in each of the last three calendar years. At the end of 1979 the upper fluctuation limit was 121.0 and the lower limit was 114.0. The Bank of Finland publishes the monthly average for the index after the end of each month. The fluctuation limits are set at 3 per cent on each side of the theoretical arithmetic mean. The average value of the currency index was 115.4 in December 1979. The buying and selling rates of the Bank of Finland for the U.S. dollar, the intervention currency, on December 31, 1979 were Fmk 3.702 and Fmk 3.720, respectively, per US$1. The rates for the U.S. dollar are applicable also to clearing dollars. Buying and selling rates for the clearing ruble are based on the rates of the State Bank of the U.S.S.R. for the U.S. dollar against the ruble. Quotations for other currencies are based on market cross rates. There are no exchange taxes or subsidies.

The Bank of Finland quotes daily forward rates for the U.S. dollar and the clearing ruble at which authorized banks may cover their contracts with resident customers relating to any type of transaction permitted by the exchange control regulations; otherwise, forward premiums and discounts reflect international forward quotations. Authorized banks may deal among themselves, with resident customers, and with nonresident banks in U.S. dollars and other convertible or externally convertible currencies. The Bank of Finland concludes forward transactions for periods ranging from 3 to 12 months.

Finland formally accepted the obligations of Article VIII, Sections 2, 3, and 4, of the Fund’s Articles of Agreement, as from September 25, 1979.

Administration of Control

The Bank of Finland operates the exchange control system, delegating authority to the authorized exchange dealers (mainly commercial banks). Import and export licensing is administered by an office subordinate to the Ministry of Trade and Industry, the Imports and Exports Office, which is headed by a Board composed of government officials, including a representative of the Bank of Finland.

Prescription of Currency

For prescription of currency purposes, countries are divided into two groups: the bilateral countries1 and the convertible currency countries (all others). Settlements with the bilateral countries must be made in the currency of the agreement (the clearing ruble for the U.S.S.R., the clearing Finnish markka for the People’s Republic of China, and the clearing U.S. dollar in all other cases).2 Settlements with the convertible currency countries may be made in any convertible currency or through Convertible Accounts.

Nonresident Accounts

There are three categories of nonresident accounts: Convertible Accounts, Restricted Accounts, and Capital Accounts.

Convertible Accounts are held by nonresidents in Finnish markkaa or in convertible currencies. These accounts may be credited by an authorized bank with amounts transferred from other Convertible Accounts, with Finnish currency received direct from a foreign bank or imported into Finland, with amounts which the bank would be authorized to transfer abroad, with amounts of convertible currency received by the bank, and with interest accrued on funds held in the accounts. These accounts may be debited freely and balances may be transferred abroad to any country.

Restricted Accounts are held by residents of countries with which Finland has bilateral payments arrangements, and are designated according to the holder’s country of residence. They may be held in Finnish markkaa or the appropriate bilateral agreement currency. They may be credited by an authorized bank with amounts transferred from Convertible Accounts and from Restricted Accounts related to the same country. The accounts may also be credited with Finnish currency received from a bank in the country indicated on the account, with amounts which the bank is authorized to receive to the credit of a Restricted Account related to the country indicated on the account, with currency surrendered to the bank and restricted to the country indicated on the account, and with interest accrued on funds held in the accounts. These accounts may be debited freely and balances may be transferred to the bilateral country concerned.

Capital Accounts comprise all other nonresident accounts. They are held in markkaa and are intended primarily for payments of a capital nature. The assignment of a Capital Account to another nonresident and the transfer abroad of funds held in such an account may be effected (with some minor exceptions) only with the permission of the Bank of Finland. A monetary institution may credit a Capital Account with the purchase price of assets other than foreign securities bought from the holder by a resident, with funds received as an inheritance, and with redemption payments and interest on matured bonds and debentures quoted on the Helsinki Stock Exchange. These accounts may also be credited with rent on property owned in Finland by the holder of the account, proceeds from other assets belonging to the holder of the account and managed by the monetary institution with which the account is held, the amount of a loan based on a contract granting to a nonresident a loan not exceeding Fmk 50,000 in value to be utilized in Finland, and interest accrued on funds held in the account.

Capital Accounts may be debited freely for noncommercial current expenses in Finland of and for account of the holder, and funds in Capital Accounts may be used for capital payments when the transaction does not require authorization or is authorized for transferable funds. The Bank of Finland generally grants permission for transfer abroad of funds deposited in Capital Accounts to an account holder who has resided abroad during the last calendar year and who continues to do so.

Imports and Import Payments

All imports from Rhodesia are prohibited.3 Most goods may be imported free of license from the multilateral countries, provided that the goods are purchased from and originate in those countries. Certain goods4 may be imported from the multilateral area under a global quota system, which provides for import licenses to be issued at least up to the amounts of 11 value quotas for specified commodity groups. The total value of the global quota imports for 1979 was 0.8 per cent of total 1979 imports. Certain other goods requiring individual licenses when imported from the multilateral area are set out in the discretionary licensing list. The only commodities still subject to quantitative restriction for the multilateral area are certain agricultural commodities and fuels and petroleum products; the specified consumer durable goods which are subject to surveillance licensing are licensed freely. Minimum import prices are imposed on some consumer goods.

Import licenses are not required for most commodities originating in and purchased from the U.S.S.R., or originating in and purchased from the five countries with which agreements on the reciprocal removal of obstacles to trade have been concluded (Bulgaria, Czechoslovakia, the German Democratic Republic, Hungary, and Poland). All imports of commodities originating in countries not classified in either the multilateral area or the bilateral area5 require individual licenses. The State Granary is the main agency for the import of wheat, rye, barley, oats, and products of these grains for human consumption, but individual importers may also import these commodities under license. There is a state monopoly for imports of alcoholic beverages.

Exchange is granted by authorized banks for all permitted imports on presentation of an application form, the import license if required, and the original commercial invoice, provided that the goods are already in the country or there is sufficient evidence to guarantee their importation. Payment for imports must be made within 12 months after the date of customs clearance of the goods; if the period of suppliers’ credit exceeds 6 months, the credit is subject to an “overtime fee,” unless specially authorized by the Bank of Finland; if the payment is made to the seller through an import financing credit, the credit period may not exceed 3 months.

Payments for Invisibles

Payments in respect of authorized invisibles are not restricted. The authorized banks have general permission to effect payments for most current invisibles, with a few exceptions relating to insurance, subject in some cases to a maximum allowance or other conditions; for amounts in excess of the standard allowances and for purposes for which no standard allowances have been set, exchange licenses are granted freely by the Bank of Finland. All contracts involving payments to nonresidents for which general permission has not been granted must be submitted to the Bank of Finland for approval. For minor payments, authorized banks may provide foreign exchange equivalent to Fmk 1,000 a calendar month for each remitter.

A Finnish resident traveling abroad may purchase from commercial banks foreign exchange equivalent to Fmk 5,000 a trip. Once abroad a traveler may withdraw foreign exchange on a bank account passbook or check issued by a Finnish monetary institution, provided that the utilized amount of his travel allocation does not exceed a total of Fmk 5,000. A resident traveler may use a credit card abroad for travel services and settle the transaction after his return. Nonresident travelers may take out Fmk 5,000 a trip in Finnish notes and coin and any amount in foreign notes and coin declared upon entry; resident travelers may take out foreign or domestic currency, or any combination of these, up to Fmk 5,000, but in neither case may notes of a denomination higher than Fmk 100 be exported. For all types of travel, bona fide applications for additional amounts of foreign exchange are approved by the Bank of Finland.

Exports and Export Proceeds

All exports to Rhodesia are prohibited (see footnote 3). Export licenses are required only for exports of scrap metal. Exports of some commodities in the agricultural sector and raw timber, as well as exports to countries not in the convertible area, require an export control declaration, which is approved automatically by the Imports and Exports Office, except in a few specified cases. Sales of arms are strictly controlled. Exports to countries that are not in the convertible area and that are outside the scope of agreements on the reciprocal removal of obstacles to trade are allocated by means of bilateral trade arrangements. Foreign exchange acquired through commodity exports need not be surrendered to the Bank of Finland or to an authorized exchange dealer. Exporters are required to repatriate foreign exchange proceeds within eight days of collection, which may then be held in a foreign currency account with an authorized bank in Finland or be converted into domestic currency.

Proceeds from Invisibles

Foreign exchange receipts from current invisibles need not be surrendered but must be repatriated within eight days of collection. The funds may be held in a foreign currency account in Finland. Any unutilized foreign banknotes and travelers checks must be repatriated, but these are exempt from the surrender requirement up to Fmk 5,000 for each resident holder. The import of Finnish and foreign means of payment is unrestricted except that the import of notes with a nominal value above Fmk 100 is prohibited.

Capital

Most outward transfers of nonresident capital are subject to approval by the Bank of Finland. Inheritances are transferred automatically to the beneficiaries. Persons who have resided outside Finland during the last calendar year and continue to do so may transfer abroad their assets in Finland in one lump sum, subject to the prior approval of the Bank of Finland, which generally is granted.

Nonresidents may purchase bonds, debentures, or shares quoted on the Helsinki Stock Exchange through an authorized bank, against convertible currencies, or by debiting a Convertible Account. When the securities so acquired by a nonresident are deposited in the custody of the authorized bank, the nonresident purchaser is permitted to sell the securities on the Helsinki Stock Exchange through the authorized bank and to repatriate the proceeds of the sale in a convertible currency. The acquisition of shares, bonds, and debentures quoted on the Helsinki Stock Exchange with funds from Capital Accounts is also permitted automatically if they are acquired by an authorized bank, but proceeds from the sale of such securities may not be transferred abroad without the permission of the Bank of Finland. Any other transactions in securities, and the export of securities that involve nonresident interests, require approval. If the securities were acquired with convertible foreign exchange or with markkaa from a Convertible Account, approval for their export can be obtained freely.

Inward direct investments must be approved by the Bank of Finland. The Bank usually grants permission, unless the investment is judged to be exceptionally detrimental to the national interest or to be of a purely financial character. Repatriation of authorized direct investments is subject to the approval of the Bank of Finland, which is freely given. Foreign investments that involve a participation of more than 20 per cent in the share capital of an enterprise require the approval of the Council of State. This approval is usually granted. Direct foreign investment in the forest and mining industries and in certain traditionally regulated activities is not normally permitted.

On demand of the Bank of Finland, residents must declare their foreign assets, including property owned abroad. Proceeds from the sale of securities and real property must be repatriated under the general rule of repatriation. Authorized banks are given permission to purchase specified foreign and Finnish securities issued abroad. Outward transfers of capital, including transfers for direct investment by residents, require individual approval. Since September 1, 1979 purchases of real estate abroad have been authorized up to a limit of Fmk 150,000 subject to the approval of the Bank of Finland, which is granted liberally.

Finnish emigrants are generally permitted an exchange allowance of up to Fmk 150,000 a person, in addition to the basic tourist travel allowance. There is an automatic exchange allowance of up to Fmk 2,000 a calendar month for each donor for gifts and contributions to nonresidents.

Foreign currency borrowing by Finnish residents, in the form of short-term or medium-term financial credits or by bond issues abroad, requires the specific approval of the Bank of Finland, which exercises surveillance over the terms and timing. Lending to nonresidents is normally restricted to export credits. No permission is needed for customary export credits. Medium-term and long-term borrowing abroad, other than borrowing by the State or import credits, is subject to a selective deposit requirement, the terms of which are set by the Bank of Finland.

Gold

Residents may freely hold, buy, and sell gold in any form in Finland. Imports of gold in any form other than jewelry require licenses issued by the Licensing Office; such licenses are not normally granted except for imports by or on behalf of the monetary authorities and industrial users. The global quota list contains a quota for industrial gold, for which licenses are granted freely. Exports of gold are subject to the same regulations as exports of other commodities, i.e., an export control declaration approved by the Licensing Office is usually sufficient.

Changes during 1979

January 24. An agreement was signed with Malaysia for the voluntary restraint by Malaysia of exports of men’s and boys’ shirts to Finland during March 1, 1979-December 31, 1981.

March 1. The cash payment scheme for imports was abolished.

March 1. The maximum amount of foreign exchange that residents were permitted to take out of the country without the approval of the Bank of Finland was raised from the equivalent of Fmk 3,000 to Fmk 5,000 a person a trip. The export and import of notes with a nominal value of more than Fmk 100 was prohibited.

April 26. Finland informed the Contracting Parties of the GATT that it had ceased to invoke the provisions of Article XII of the General Agreements as justification for the application of quantitative restrictions on imports.

September 1. Residents were permitted to buy real estate abroad up to a limit of Fmk 150,000. Such purchases would be subject to approval by the Bank of Finland, which would be granted liberally.

September 21. The external value of the markka was appreciated by 2 per cent against a trade-weighted basket of currencies. The fluctuation limits of the currency index were fixed at 121.0 and 114.0, implying a widening of the fluctuation margin from 4.5 to 6 per cent.

September 25. Finland and the U.S.S.R. signed a framework agreement for bilateral trade during 1981–85, allowing for an increase in trade of 40 per cent over the level set in the previous framework agreement. Almost 80 per cent of Finnish imports under the agreement would be represented by energy products; exports of crude oil by the U.S.S.R. to Finland would be increased to 7–7.5 million tons during 1981–82 and to 7.5–8 million tons a year during 1983–85. The bilateral trade agreement for 1980 envisaged crude oil deliveries of 7 million tons.

September 25. Finland accepted the obligations of Article VIII, Sections 2, 3, and 4, of the Fund’s Articles of Agreement.

December 4. Finland and the U.S.S.R. signed the bilateral trade protocol for 1980, envisaging a 20 per cent increase in trade over 1979.

December 31. The valuation of gold was changed to Fmk 35 per gram of fine gold (approximately US$290 per troy ounce).

France

(Position on December 31, 1979)

Exchange Rate System

The currency of France is the Franc. France participates with Belgium, Denmark, the Federal Republic of Germany, Ireland, Italy, Luxembourg, and the Netherlands in the exchange rate and intervention mechanism of the European Monetary System (EMS). In accordance with this agreement, France maintains the spot exchange rates between the franc and the currencies of the other participants within margins of 2.25 per cent (in the case of the Italian lira, 6 per cent) above or below the cross rates based on the central rates expressed in European Currency Units (ECUs).

The agreement implies that the Bank of France (the central bank) stands ready to buy or sell the currencies of the other participating states in unlimited amounts at specified intervention rates. On December 31, 1979 these rates were

Specified Intervention Rates Per:Francs
Upper limitLower limit
100 Belgian or Luxembourg francs15.029014.3680
100 Danish kroner77.42974.022
100 deutsche mark240.93230.34
100 Netherlands guilders217.96208.38
100 Irish pounds894.95855.55
100 Italian lire0.53620.4756

The participants in the EMS are not maintaining the exchange rates for other currencies within fixed limits. However, in order to ensure a proper functioning of the system, they intervene in concert to smooth out fluctuations in exchange rates, the intervention currencies being each other’s and the U.S. dollar. Buying and selling rates for 18 foreign currencies are quoted daily on the basis of market rates.1 On December 31, 1979 the buying and selling rates for the U.S. dollar were F 4.0145 and F 4.0255, respectively, per US$1. There are no taxes or subsidies on purchases or sales of foreign exchange.

Fixed conversion rates in terms of the franc apply to the currencies of the overseas territories, to the New Hebrides franc, and to the currencies of the countries that are linked to the French Treasury through an Operations Account,2 as follows: (1) In the overseas territories of French Polynesia, New Caledonia, and Wallis and Futuna Islands, the currency used is the CFP franc, which has a fixed parity with the franc of CFPF 1 = F 0.055. (2) In the Condominium of the New Hebrides, for which France has assumed the obligations of the Articles of Agreement of the International Monetary Fund pursuant to Article XXXI, Section 2(g), the currencies used are the New Hebrides franc, which has a fixed parity with the franc of NHF 1 = F 0.061875, and the Australian dollar. The official exchange rate of the New Hebrides franc in terms of the Australian dollar is adjusted from time to time to take account of changes in the exchange relationship between the French franc and the Australian dollar. On December 31, 1979 the rate was NHF 1 = $A 0.014. (3) Fixed conversion rates in terms of the franc apply to the currencies of the Operations Account countries.2 These rates are CFAF 1 = F 0.02 for the CFA franc, which circulates in Benin, Cameroon, the Central African Republic, Chad, the Comoros, the Congo, Gabon, Ivory Coast, Niger, Senegal, Togo, and Upper Volta, and MF 1 = F0.01 for the Mali franc.

Authorized banks in France and in Monaco, which may also act on behalf of banks established abroad or in Operations Account countries, are permitted to deal spot or forward in the exchange market in France. Authorized banks may also deal spot and forward with their correspondents in foreign markets in all currencies. Nonbank residents may purchase forward exchange only in respect of imports and of certain trade transactions, but their forward sales of foreign currency are free, whether or not there is an underlying transaction. For imports of some commodities, forward cover is available for 6 or 12 months, and for all others for 2 months.

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

Exchange Control Territory

The exchange control regulations are applicable in all territories of the French Republic, i.e., in continental France, Corsica, the Overseas Departments (Guadeloupe, Martinique, Guiana, Réunion, and St. Pierre and Miquelon), Mayotte, and the three Overseas Territories (Wallis and Futuna Islands, New Caledonia, and French Polynesia). No exchange control is applied in relation to Monaco or the Operations Account countries; 2 payments between France and these countries are free of restriction on the part of France and take place at fixed exchange rates. All other countries are considered foreign countries for exchange control purposes; all payments between France and foreign countries are subject to exchange control. The Condominium of the New Hebrides is considered a foreign country for exchange control purposes. For imports and exports of gold, the Operations Account countries are also considered foreign countries.

Certain controls that are independent of the exchange control regulations are maintained over inward and outward direct investment and over borrowing abroad; these transaction controls are not applicable to the Operations Account countries or Monaco, and those over direct investment do not apply to member countries of the EC. Privileged treatment in respect of trade transactions is accorded to the Operations Account countries and to Algeria, Guinea, Democratic Kampuchea, Madagascar, Mauritania, Morocco, Tunisia, and the Condominium of the New Hebrides.

Administration of Control

The Directorate of the Treasury of the Ministry of Economy is the coordinating agency in the field of financial relations with foreign countries. It is responsible for exchange control and all matters relating to inward and outward direct investment and to borrowing abroad, unless they relate to real estate companies, when the Bank of France screens applications. The Directorate of the Treasury also evaluates the balance of payments, together with the Bank of France, which collects the data for its compilation. Certain exchange control powers have been delegated to the Bank of France, including the authority to license imports and exports of gold. Other exchange control powers have been delegated to the Directorate-General of Customs and Indirect Taxes and in the Overseas Departments and Territories to the Caisse Centrale de Coopération Economique (CCCE).

The Directorate of Insurance of the Ministry of Economy has certain powers in respect of matters relating to insurance, reinsurance, annuities, etc. The material execution of all transfers has been delegated to authorized banks and stockbrokers and to the Postal Administration. The Directorate-General of Customs and Indirect Taxes establishes import and export procedures and controls, within the framework of commercial policy directives given by the Directorate of Foreign Economic Relations (DREE); the Directorate-General also issues import and export licenses, and is responsible for any litigation relating to the exchange regulations. Technical visas required for certain imports and exports are issued by the appropriate ministry or by the Directorate-General of Customs and Indirect Taxes. The Ministry of Industry has certain responsibilities in respect of licensing contracts and contracts relating to technical assistance.

Prescription of Currency

Settlements with the Operations Account countries may be made in francs or the currency issued by any institute of issue that maintains an Operations Account with the French Treasury.3 Settlements with all other countries may be made in any of the currencies of those countries or through nonresident Foreign Accounts in Francs. Settlements with Algeria, Morocco, and Tunisia, however, usually take place in francs. Importers and exporters are free to invoice in any currency.

Nonresident Accounts

A nonresident account in francs may be freely opened by an authorized bank for nonresidents, including French nationals (other than officials) who have been residing abroad for at least two years. All overdrafts and advances on nonresident-held franc accounts are subject to general or specific permission.

Foreign Accounts in Francs may be freely credited with (1) the franc proceeds of the spot or forward sale of foreign currencies on the exchange market by a nonresident; (2) the franc proceeds of the sale of foreign banknotes to an authorized bank by a nonresident bank or traveler; (3) the franc equivalent of an authorized bank’s arbitrage in foreign currencies on a foreign market; (4) French banknotes (and those of the Operations Account countries) mailed direct from abroad to the main office of the Bank of France by an authorized bank’s foreign correspondents; (5) transfers from other Foreign Accounts in Francs; (6) any authorized payment by a resident to a nonresident, including interest on balances in Foreign Accounts in Francs; (7) the sales proceeds, income, and amortization from French and foreign securities held in a foreign dossier in France, including securities held by authorized banks and accruing in France to a nonresident by donation or inheritance up to F 500,000; (8) liquidation proceeds of nonresident-held direct investments;4 and (9) the proceeds of the sale, through the intermediation of a notary public, of real estate belonging to nonresidents.

These accounts may be freely debited for (1) spot purchases of any foreign currency on the exchange market by a nonresident; (2) the purchase by a nonresident of foreign banknotes or withdrawals in French banknotes; (3) the equivalent in francs of arbitrage abroad in foreign currencies by an authorized bank; (4) French banknotes (and those of Operations Account countries) mailed by authorized banks direct to their foreign correspondents; (5) transfers to other Foreign Accounts in Francs; (6) approved direct investment in France by nonresidents;4 (7) purchases of real estate from residents, through the intermediation of a notary public; (8) purchases in France of listed French or foreign securities; (9) interest on and repayment of loans granted in accordance with the relevant regulations by residents; and (10) any payment by a nonresident to a resident.

If francs accruing to a nonresident are not transferable, or are not immediately transferable, they may be credited to a Suspense Account in Francs in the name of the beneficiary; balances up to F 50,000 that existed on August 9, 1973 have been released. The unremittable funds of emigrants of French nationality must be retained in resident accounts (comptes intérieurs) until they become nonresidents (i.e., until they have stayed in a foreign country for two years); emigrants of foreign nationality become nonresidents immediately and, therefore, may take out all of their assets upon departure.

Imports and Import Payments

Goods originating in and shipped from other countries that are accorded privileged treatment in respect of trade transactions (see section on Exchange Control Territory, above) are generally admitted free of quantitative restrictions and individual licenses. Imports of goods which originate in other countries and are not covered by French import liberalization require individual licenses. Some imports from EC countries and some other imports from non-EC countries are subject to minimum prices; these require an administrative visa and sometimes, exceptionally, an import license. Certain imports require certificates of origin.

For import control purposes, countries other than those that are accorded privileged treatment are divided into four groups according to the extent of import liberalization: (1) the former OEEC countries, their dependent territories and certain former dependent territories, Andorra, Canada, Egypt, Ethiopia, Fiji, Finland, Israel, Jordan, Lebanon, Liberia, Sudan, Syrian Arab Republic, the United States, Western Samoa, and Yugoslavia; (2) some specified countries;5 (3) the Eastern European countries (Albania, Bulgaria, Czechoslovakia, Hungary, Poland, Romania, and the U.S.S.R.), the People’s Republic of China, North Korea, and Mongolia; and (4) the German Democratic Republic. Goods covered by the import liberalization arrangements applicable to one country may be imported freely from another country, provided that the country of origin and the country of shipment both benefit from the same degree of liberalization.

Imports of practically all industrial products from countries in group (1) are free of quantitative restrictions, but restrictions are applied to a number of agricultural products; there is relatively little difference between the lists of goods which may be imported freely from different countries in this group, these differences relating mainly to Hong Kong. Imports of certain industrial products from countries in group (2) are restricted, and restrictions are applied to these and to certain additional industrial products from group (3) countries. For some commodities, there are global quotas that are allocated annually (petroleum and petroleum products) or semiannually and apply to all countries (other than those that have bilaterally negotiated quotas or receive privileged treatment). Imports from all countries of certain agricultural items and certain raw materials are free of quantitative restrictions.

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

Liberalized imports are not subject to trade controls, but do require a customs document that constitutes the customs declaration. However, as an exchange control measure, the domiciliation (registration) of the import transaction at an authorized bank may be prescribed. For some liberalized imports, an administrative visa issued by the Central Customs Administration or by the appropriate ministry is required on an import declaration. Imports of the products of the European Coal and Steel Community require such administrative visas when originating in non-ECSC countries.

Other imports generally require individual import licenses. These are granted up to quotas determined on an individual commodity basis or for a group of commodities and are applicable to specified countries or areas in accordance with trade agreements or an import plan drawn up for a definite period.

Payments for imports from foreign countries must be made by credit to a Foreign Account in Francs or with foreign currency purchased in the French exchange market. Import transactions relating to foreign countries and valued at F 50,000 or more must be domiciled with an authorized bank, to which the necessary import documents must be presented and through which all payments related to the import must be made. The amounts that may be transferred through postal channels are not subject to limitation, but in practice the Postal Administration does not make import payments valued at over F 50,000, as it does not undertake domiciliation.

Authorized banks may without special authorization allow advance payments to be made that are provided for in the commercial contract, up to 30 per cent of the price for capital goods and up to 10 per cent for all other goods. Higher advance payments require prior approval by the Customs Administration. For all imports, importers may purchase spot foreign currency eight working days before utilization; utilization cannot take place before the payment falls due. There is no restriction on the use of suppliers’ credit. Two months’ forward cover for import payments can be obtained for any commodity; for the import of specified raw materials and specified foodstuffs (unroasted coffee, corn, rice, etc.) forward cover for six months or one year is available. The foreign currency may be purchased forward at the time of domiciliation, but the maturity of the forward exchange contract must not be later than the date on which the commercial payment is due.

Payments for Invisibles

Payments for current invisibles to foreign countries are controlled but are not restricted as to amount. If justifying documents are presented and certain exchange control requirements are met, authorized banks are permitted to approve applications for payments for many categories of current invisibles without any limitation; for certain other categories of current invisibles, established limits have been set. Applications for all other payments for invisibles and for amounts in excess of established limits are referred to the Bank of France to prevent unauthorized capital transfers; such applications are approved if a genuine current payment is involved. Any resident may freely and at any time make remittances abroad up to the equivalent of F 1,500 a person, provided that the transfers do not constitute installments of payments exceeding F 1,500, are not for purposes subject to special allocation, and do not serve as a means of accumulating funds abroad.

Payments that may be authorized without limitation by authorized banks include those related to approved trade transactions; income accruing to nonresidents in the form of profits, dividends, and royalties; banking commissions, patent fees, and specified categories of taxes; specified insurance payments; fees to medical doctors, lawyers, etc.; alimony in accordance with court decisions; and net salaries or wages of foreigners employed in France, provided that the transfer takes place within three months from the date of payment.

Irrespective of the exchange control regulations, certain transactions between persons or firms in France and abroad are subject to restriction; these include certain transactions relating to insurance, reinsurance, and road and river transport.

The basic exchange allocation for tourist travel to foreign countries by residents (defined for this purpose as including residents of Operations Account countries) is the equivalent of F 5,000 a person a trip, which may be taken up for any number of trips a year. The basic allocation for business travel is the same plus the equivalent of F 500 a person a day. Applications for exchange in excess of the basic allowance for any type of travel are approved by the Bank of France, provided that no capital outflow is involved. Any unutilized foreign currency in excess of the equivalent of F 1,000 must be surrendered within one month upon return to France. Applications for travel exchange cannot be submitted earlier than one month before departure. The use abroad of credit cards issued in France is unrestricted for the settlement of travel expenditures; in addition, the holder may use them to obtain funds from banks abroad up to F 1,000 a week. All fares for trips starting in France may be paid in francs, as may hotel costs and other transportation expenses.

Resident travelers to foreign countries may take out F 5,000 in French banknotes. These banknotes may be used abroad, and any amount taken out is charged against the basic exchange allocation of F 5,000. Nonresident travelers may take out F 5,000 in French banknotes and may reconvert into foreign currency in the French exchange market any French banknotes up to F 5,000 obtained by the conversion in that market of foreign means of payment that they declared upon entry or obtained by debit to a Foreign Account in Francs; any remaining French banknotes must be deposited with the customs against issuance of a receipt.

Resident travelers may freely take out the equivalent of F 5,000 in means of payments acquired in the exchange market against a tourist travel allocation. Nonresident travelers may not, in principle, take out more than the equivalent of F 5,000 in foreign banknotes unless these were declared upon entry and the amount to be taken out does not exceed that imported minus any amounts exchanged for francs plus any reconversion of francs into foreign currencies. However, nonresident travelers may freely take out any other means of payment established in their name abroad; in addition, subject to the submission of an authorized bank’s declaration, they may take out any amount in foreign banknotes or foreign currency travelers checks acquired in France from an authorized bank by conversion of foreign exchange in the French exchange market, by debit to a Foreign Account in Francs, or by debit to a foreign currency account.

Exports and Export Proceeds

Certain goods on a prohibited export list may be exported only under a special license. Some other exports also require individual licenses, but if the total value does not exceed F 1,000 (F 5,000 for art objects or collectors’ items), these exports may be permitted without any formality, subject to certain exceptions.

Exports to foreign countries are subject to exchange control. Payment must be received through the exchange market. The repatriation6 and, where appropriate, the surrender by sale in the exchange market of proceeds from exports to foreign countries is required, normally within one month of the date on which the payment falls due but in any case within eight working days of receipt by a French bank. Authorized banks may freely extend foreign currency advances to exporters; such advances and their repayment may be settled in the exchange market, as may the proceeds from the discounting of foreign currency drafts presented by exporters. The due date of the commercial contract (and, therefore, the due date of the export receipt) may not be more than 180 days after arrival of the goods at their destination, except with special authorization, or, when a guarantee by the Compagnie Française d’Assurance pour le Commerce Extérieur (Coface) has been obtained. Export proceeds must not be received in French or foreign banknotes or banknotes issued by an institute of issue maintaining an Operations Account with the French Treasury, or by debit to a postal checking account in France. All export transactions related to foreign countries and valued at F 50,000 or more must be domiciled with an authorized bank; the Director-General of Customs and Indirect Taxes, however, may exempt certain approved firms from domiciliation requirements.

Certain goods purchased in France by persons not normally residing in France are considered as exports even when paid for in francs, and are exempt from taxes.

Proceeds from Invisibles

Proceeds from transactions in invisibles with Monaco and the Operations Account countries may be retained. All amounts due from residents of other countries in respect of services and all income earned in those countries from foreign assets must be repatriated and, where appropriate, surrendered within one month from the due date and in any case within eight working days of receipt. With minor exceptions for certain types of transactions, services performed for nonresidents do not require licenses.

Resident and nonresident travelers may bring in any amount of banknotes and coin (except gold coin) in francs, CFA francs, CFP francs, or any foreign currency; however, the exchange of banknotes issued by Algeria, Morocco, and Tunisia is prohibited at the request of those countries. Resident travelers must sell in the exchange market any foreign banknotes or travelers checks in excess of F 1,000 within a month of entry.

Capital

Capital movements between France and Monaco and the Operations Account countries are free of exchange control; capital transfers between France and all other countries are subject to exchange control approval. With the exception of purchases of French and foreign securities abroad, outward transfers of resident-owned capital generally are restricted; capital receipts from foreign countries are permitted freely, provided that the foreign exchange proceeds are surrendered by sale in the exchange market (but see below for special controls over borrowing abroad and over inward direct investment). Capital assets abroad of residents are not subject to repatriation. Residents are freely permitted to purchase real estate abroad for personal use as their principal or secondary residence, up to F 150,000 a family unit. The transfer abroad of nonresident-owned funds, including the sales proceeds of capital assets, is not restricted.

French and foreign securities held in France by nonresidents may be exported, provided that they have been deposited with an authorized bank in a foreign dossier (dossier étranger de valeurs mobilières); French and foreign securities held under a foreign dossier can also be sold in France and the sales proceeds can be transferred abroad. Foreign securities held in France by a nonresident must be deposited with an authorized bank; French securities held in France by nonresidents need not be deposited but cannot be dealt with or exported unless they have been deposited. Foreign securities held in France by residents must be deposited with a qualified bank or broker. Residents may hold French and foreign securities abroad under the control of a French authorized bank or broker. The export for the account of residents of French securities held in France is prohibited, except when they are to be sold abroad.

Subject to compliance with the special regulations concerning inward and outward direct investment that are summarized below, residents may freely purchase French and foreign securities on stock exchanges abroad, through authorized banks, except, however, equities with a maturity of less than five years issued by foreign governments.7 Such French and foreign securities may be held or sold abroad, but they may also be imported and then either be held or be sold on a French stock exchange. The proceeds of the sale abroad of French or foreign securities must be sold on the exchange market within two months of receipt, unless used within that period for reinvestment in securities abroad. Correspondingly, nonresidents holding French or foreign securities abroad (whether acquired before November 24, 1968 or later) may freely import them into France and hold them in a foreign dossier, or sell them on a stock exchange in France and repatriate the proceeds through the exchange market.

Special controls (additional to any exchange control requirements that may be applicable) are maintained over borrowing abroad and over inward and outward direct investment. In principle, these controls relate to the transactions themselves, not to payments or receipts. At present, however, their application is in many instances affected by exchange control requirements. With the exception of the controls over capital issues in France, the transaction controls do not apply to the Operations Account countries. Furthermore, the transaction controls over direct investment are not applicable to member countries of the EC, where direct investment transactions are subject to exchange control declaration and exchange control approval only.

Foreign direct investments in France and French direct investments abroad, including loans constituting a direct investment, require prior declaration to the Minister of Economy; as regards member countries of the EC, the declaration is required under the exchange control regulations rather than under the special transaction controls, and prior exchange control authorization is required for all direct investment operations liable to involve a capital movement. Direct investments are defined as investments leading to control of a company or enterprise. Mere participation is not considered as direct investment, provided that it does not exceed 20 per cent of the capital of a company whose shares are quoted on the stock exchange; any participation in any other firm may be considered a direct investment. The Directorate of the Treasury, in evaluating the degree of control, takes into account any special relationships resulting from stock options, patents and licenses, commercial contracts, etc. Loans granted by a parent company to its subsidiary are subject to the same regulations as direct investments. Except in respect of EC countries, the Minister may request the postponement of the projects submitted to him within two months from receipt of the declaration. If the amount involved is more than F 1 million, documentary evidence must be submitted to the Directorate of the Treasury before the liquidation proceeds of foreign direct investments in France may be transferred abroad, and the liquidation itself must be reported to the Minister within 20 days after it takes place.

As an exception to the declaration and approval requirements summarized above, the making or liquidation of direct investments abroad by residents is exempt from prior declaration or prior authorization when the amount involved does not exceed F 3 million a year for each beneficiary firm abroad, and provided that the transactions do not involve holding companies, investment companies, investment trusts, unit trusts, mutual funds, or companies whose purpose it is to facilitate the financing or treasury functions of enterprises belonging to one or more groups, as well as the financing of investments in agriculture and real estate. Certain inward direct investment up to F 3 million a transaction also is exempt from prior declaration or authorization.

Foreign issues on the French capital market are subject to prior authorization by the Minister of Economy. The requirement is applicable also to the Operations Account countries. Exempt from authorization, however, are operations in connection with (1) loans backed by a guarantee from the French Government and (2) shares similar to securities that already are officially quoted on a stock exchange in France.

Borrowing abroad by physical or juridical persons, whether public or private persons, whose normal residence or registered office is in France, or by branches or subsidiaries in France of juridical persons whose registered office is abroad, requires prior authorization by the Minister of Economy. The following types of borrowing are, in principle, exempt from this authorization: (1) borrowing by industrial firms for the execution of works abroad; (2) borrowing by any type of firm to finance imports or exports of goods; (3) loans related to certain international merchanting transactions; (4) borrowing related to the performance of services (other than income from labor or capital), when undertaken to finance operations executed abroad or transactions with foreign countries; (5) loans contracted by banks expressly permitted to borrow abroad (these include all authorized banks); and (6) foreign currency borrowing abroad by nonbank firms, when the total amount outstanding of these loans does not exceed F 10 million for any one borrower, provided that the interest rate is a “normal” market rate, that the borrowing is not for the purpose of direct investment, that the foreign exchange proceeds are surrendered, and that each drawing against the loan is separated by at least one year from the corresponding repayment. All borrowings in Eurofrancs are subject to prior authorization. The application of the controls over direct investment and borrowing is delegated to the Bank of France insofar as they relate to French firms that are mainly engaged in real estate business.

Lending abroad is subject only to exchange control authorization by the Bank of France, within the framework of directives issued by the Treasury. Since the imposition of exchange control in 1968, authorized banks have been virtually free to lend foreign currency to nonresidents, subject to certain reservations in respect of the granting of guarantees and varying limitations on their external position, and to resident importers and exporters. Lending to nonresidents in francs, however, is prohibited, with minor exceptions. Authorized banks’ foreign currency assets and their overall liabilities in francs and foreign currency to nonresidents are free from limitation. Nonresidents may freely purchase French short-term securities, including treasury bills, bons de caisse, and private drafts.

Gold

Residents are free to hold, acquire, and dispose of gold in any form in France. They may continue to hold abroad any gold they held there prior to November 25, 1968. There is a free gold market for bars and coin in Paris, to which residents have free and anonymous access and in which normally no official intervention takes place. Imports and exports of “monetary” gold (defined as gold having neither a fineness nor a weight that is recognized in the gold market) into or from the territory of continental France require prior authorization by the Bank of France. Imports or exports to or from the Bank of France itself, however, are exempted from that requirement. Imports and exports by private persons of gold objects (other than medals and bars, but including both personal and other jewelry) or numismatic gold coins, provided that their combined weight does not exceed 500 grams, are similarly exempt. Movements of industrial gold are subject to a simple declaration as are imports and exports of manufactured articles containing a minor quantity of gold, such as gold-filled and gold-plated articles. Collectors’ items of gold and gold antiques are subject to specific regulations.

A 20-franc gold coin, the napoleon, is traded on the Paris stock exchange. In domestic trading, purchases of bars and coin are not subject to value-added tax. Imports of monetary gold are exempt from customs duty and value-added tax. Domestic transactions in gold and gold coin are subject to capital gains tax.

Changes during 1979

February 16. Import and export arrangements for gold were changed. Only imports and exports of “monetary” gold (defined as gold having neither a fineness nor a weight that is recognized on the gold market) would require prior authorization. Imports and exports of “industrial” gold would require only a simple declaration. Imports and exports effected to or from the Bank of France were exempted from the prior authorization requirement, and imports and exports of gold objects by private persons were exempted from the prior declaration requirement, provided that their combined weight did not exceed 500 grams.

March 13. France’s participation in the EMS became effective.

July 31. The granting of licenses for imports of lamb from the United Kingdom was suspended temporarily.

August 13. It was announced that licenses would be required for the import of certain knitwear articles from all countries. The requirement was repealed on October 15.

October 1. It was announced that lending limits on certain forms of credit, including medium-term and long-term export financing, would be imposed for the period January–June 1980.

October 24. The ban on imports of lamb from the United Kingdom was lifted.

Gabon

(Position on December 31, 1979)

Exchange Rate System

The currency of Gabon is the CFA Franc,1 which is pegged to the French franc, the intervention currency, at the fixed rate of CFAF 1 = F 0.02. Exchange transactions in French francs between the Banque des Etats de l’Afrique Centrale (BEAC) and commercial banks at present take place at the rate of CFAF 50 = F 1. Buying and selling rates for certain foreign currencies are also officially posted, with quotations based on the fixed rate for the French franc and the rate for the currency concerned in the Paris exchange market, and include a commission. A commission of 0.25 per cent is levied on all capital transfers to countries that are not members of the BEAC, except those made for the account of the Treasury and for the expenses of students. There are no taxes or subsidies on purchases or sales of foreign exchange.

Administration of Control

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

The Directorate of Foreign Financial Relations in the Ministry of Economy and Finance supervises borrowing and lending abroad. Exchange control is administered by the Minister of Economy and Finance, who has delegated his approval authority for current payments to the authorized banks and that with respect to the external position of the banks to the BEAC. All exchange transactions relating to foreign countries must be effected through authorized intermediaries, i.e., the Postal Administration and authorized banks. Import authorizations or licenses, and export authorizations, where necessary, are issued by the Directorate of External Trade of the Ministry of Commerce and Industry.

Prescription of Currency

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

Nonresident Accounts

The regulations pertaining to nonresident accounts are based on those applied in France. BEAC banknotes may be credited to Foreign Accounts in Francs when they have been mailed to the BEAC agency in Libreville by an authorized bank’s foreign correspondent. Otherwise, the crediting to nonresident accounts of BEAC banknotes, French banknotes, or banknotes issued by any other institute of issue that maintains an Operations Account with the French Treasury is prohibited.

Imports and Import Payments

Imports from member countries of the Central African Customs and Economic Union (UDEAC) are free of all formalities. All imports from countries outside the UDEAC are subject to either an authorization to import (where the value is more than CFAF 500,000) or a license to import. All imports, of any origin, are subject to authorization. For perishables and spare parts a provisional authorization is given to avoid administrative delays. Imports from countries outside the UDEAC that are similar to, and compete with, domestic products2 are subject to licensing, but, in practice, licenses are granted liberally. Some imports are prohibited for security and health reasons. All imports of commercial goods must be insured through authorized insurance companies in Gabon.

All import transactions relating to foreign countries must be domiciled with an authorized bank. Authorizations to import entitle importers to purchase the necessary exchange, provided that the shipping documents are submitted to the authorized bank.

Payments for Invisibles

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

For tourist travel, residents traveling to countries other than France (as defined above), Monaco, and the Operations Account countries may obtain an exchange allocation equivalent to CFAF 200,000 a person a trip (CFAF 100,000 for children under ten) for any number of trips a year; any foreign exchange remaining after return to Gabon must be surrendered. For business travel to foreign countries, there is a special allocation equivalent to CFAF 25,000 a day, subject to a maximum of CFAF 500,000 a trip. Tourist and business travel allocations may not be combined. Travelers to foreign countries may take out up to a maximum of CFAF 25,000 in BEAC banknotes; the amount taken out is not deducted from the travel allocation. Travelers to France, Monaco, and the other Operations Account countries may not export CFA or French banknotes in excess of an amount equivalent to CFAF 200,000 (CFAF 100,000 for children under ten) for tourist travel; for business travel the amount of such banknotes that may be carried out is the equivalent of CFAF 25,000 a day and CFAF 500,000 a trip. Transfers may be effected without limit through the banking or postal systems.

Exports and Export Proceeds

There are no general regulations concerning exports. Exports of refined petroleum products, cacao, coffee, and crocodile skins require authorization, irrespective of destination.

Export transactions relating to foreign countries must be domiciled with an authorized bank. Export proceeds received in currencies other than those of France or an Operations Account country must be surrendered. Export proceeds normally must be received within 150 days after the arrival of the commodities at their destination. The proceeds must be collected and, if received in a foreign currency, surrendered, within one month of the due date.

Proceeds from Invisibles

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

Capital

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

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

Direct investments abroad3 must be declared to the Ministry of Economy and Finance unless they take the form of a capital increase resulting from reinvestment of undistributed profits; the full or partial liquidation of such investments also must be declared to the Ministry unless the operation involves the relinquishing of a participation that had previously been approved as constituting a direct investment abroad. Foreign direct investments in Gabon4 must be declared to the Ministry, unless they take the form of a capital increase resulting from reinvestment of undistributed profits; within two months from receipt of the declaration the Ministry may request the postponement of the project. The full or partial liquidation of direct investments in Gabon must also be declared to the Ministry unless the operation involves the relinquishing of a participation that had previously been approved as constituting a direct investment in Gabon. Both the making and the liquidation of direct investments, whether these are Gabonese investments abroad or foreign investments in Gabon, must be reported to the Ministry within 20 days following each operation. Direct investments are defined as investments implying control of a company or enterprise.

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

Borrowing abroad by physical or juridical persons, whether public or private persons, whose normal residence or registered office is in Gabon, or by branches or subsidiaries in Gabon of juridical persons whose registered office is abroad, requires prior authorization by the Ministry of Economy and Finance. The following are, however, exempt from this authorization: (1) loans constituting a direct investment abroad for which prior approval has been obtained, as indicated above; (2) loans directly connected with the rendering of services abroad by the persons or firms mentioned above, or with the financing of commercial transactions either between Gabon and countries abroad or between foreign countries, in which these persons or firms take part; (3) loans contracted by registered banks; and (4) loans other than those mentioned above, when the total amount outstanding does not exceed CFAF 50 million for any one borrower. The contracting of loans referred to under (4) that are free of authorization, and each repayment thereon, must be declared to the Directorate of Foreign Financial Relations within 20 days of the operation, unless the total outstanding amount of all loans contracted abroad by the borrower is CFAF 5 million or less.

Lending abroad by physical or juridical persons, whether public or private persons, whose normal residence or registered office is in Gabon, or by branches or subsidiaries in Gabon of juridical persons whose registered office is abroad, requires prior authorization by the Ministry of Economy and Finance. The following are, however, exempt from this authorization: (1) loans granted by registered banks and (2) other loans, when the total amount outstanding does not exceed CFAF 50 million for any one lender. The making of loans that are free of authorization, and each repayment thereon, must be declared to the Directorate of Foreign Financial Relations within 20 days of the operation, except when the total outstanding amount of all loans granted abroad by the lender does not exceed CFAF 5 million.

Under the Investment Code of December 4, 1961, as amended on March 23, 1967 and July 9, 1971, any enterprise to be established in Gabon, whether domestic or foreign, is granted, under certain conditions, reduced duties and taxes on specified imports, as well as exemption from direct taxes on specified income. A Minimum of 10 per cent state participation is required for any enterprise located in Gabon. The Code provides for four categories of preferential treatment. In addition to fiscal privileges, eligible companies may receive protection against foreign competition and may be given priority in the allocation of imports, of public credit, and of government contracts. A Presidential Decree of April 11, 1975 provides that foreign companies investing in Gabon must offer shares for purchase by Gabonese nationals. Non-Gabonese firms or individuals are not permitted to own land in Gabon.

Gold

Residents are free to hold, acquire, and dispose of gold in any form in Gabon. Imports and exports of gold require the authorization of the Ministry of Economy and Finance. Exempt from this requirement are (1) imports and exports by or on behalf of the monetary authorities and (2) imports and exports of manufactured articles containing a minor quantity of gold (such as gold-filled or gold-plated articles). The export of gold is the monopoly of the Société Gabonaise de Recherches et d’Exploitation Minières (Sogarem). Both licensed and exempt imports of gold are subject to customs declaration.

Changes during 1979

February 22. Importers of goods intended for use directly or indirectly in industry or trade were required to insure such goods with an authorized insurance company in Gabon.

The Gambia

(Position on December 31, 1979)

Exchange Rate System

The currency of The Gambia is the Gambian Dalasi, which is pegged to the pound sterling, the intervention currency, at D 4 = £ stg. 1. The Central Bank of The Gambia deals in pounds sterling at the fixed rate of D 4 = £ stg. 1, subject to a commission of 0.0625 per cent buying and 0.5 per cent selling. The commercial banks deal with customers for spot transactions in sterling at rates within 1 per cent of the Central Bank’s fixed rate and in other currencies at rates determined by the prevailing market rate in London for the currency concerned against sterling. There are no taxes or subsidies on purchases or sales of foreign exchange.

Administration of Control

Exchange control policy is determined by the Ministry of Finance and Trade. The day-to-day administration of exchange control is carried out by the Central Bank. The commercial banks, which have been appointed as authorized dealers, may authorize sales of foreign currencies for imports covered by specific licenses and, up to specified amounts, for travel expenses and sundry payments abroad. All other sales of foreign currencies are subject to the authorization of the Central Bank. The Ministry of Finance and Trade is responsible for the issue of import and export licenses.

Prescription of Currency

Settlements with other countries may be made and received in any foreign currency other than Rhodesian currency, or in dalasis or sterling from nonresident sources. Settlements with the Central Bank of West African States (for Benin, Ivory Coast, Niger, Senegal, Togo, and Upper Volta) and Ghana, Guinea, Guinea-Bissau, Liberia, Mali, Nigeria, and Sierra Leone are normally made through the West African Clearing House.

Nonresident Accounts

Bank accounts held by authorized dealers in The Gambia on behalf of residents of countries other than Rhodesia may be designated External Accounts. They may be credited with authorized payments from residents of other countries, with transfers from other External Accounts, and with the proceeds of sales of other currencies. They may be debited for any payments to residents of other countries, for transfers to other External Accounts, and for purchases of other currencies. In addition, there is legal provision for authorized dealers to maintain Blocked Accounts under the direction of the Central Bank.

Imports and Import Payments

The import of certain specified goods is prohibited from all sources, predominantly for social or health reasons or on grounds of public policy. The import from any country of rice and wheat flour is subject to specific licensing in order to ensure the adequacy of such imports and their fair domestic pricing. The Gambia Produce Marketing Board is responsible for rice imports. All other imports are freely permitted under an open general license if imported from the following countries: (1) all countries within the former Sterling Area; (2) Austria, Belgium, Canada, Denmark, France, the Federal Republic of Germany, Greece, Italy, Luxembourg, the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, Turkey, and the United States, together with the overseas territories of these countries; and (3) Argentina, Brazil, Chile, Egypt, Iran, Iraq, Lebanon, Mali, Morocco, Paraguay, Peru, Senegal, the Syrian Arab Republic, Thailand, Uruguay, Venezuela, and Yugoslavia. Imports are subject to specific licensing if imported from other countries.

Settlement for imports from other countries may be approved by an authorized dealer on production of evidence of importation for any commodity that is covered by a valid specific import license. For imports that do not require specific licensing, payment authorization is given by the Central Bank on production of evidence of importation or shipment. Advance payments for imports, whether or not these are covered by specific licenses, are approved by the Central Bank in all cases where the payment is considered genuine and in accordance with normal commercial practice. Payments for imports may be made in dalasis or sterling to an External Account or in any currency other than Rhodesian currency.

All goods are subject to an import tax of 1 per cent of the c.i.f. value unless otherwise specified. Imports made by the Government, diplomatic missions, and charitable organizations are exempt.

Payments for Invisibles

Payments for invisibles in foreign currencies require permission from the Central Bank, with the exception that authorized dealers have been delegated powers to authorize travel expenses and sundry payments. Permission is given in all genuine cases. Irrespective of the purpose of the journey, authorized dealers may grant a basic exchange allowance up to D 750 a person a trip but not exceeding D 1,500 in any one calendar year for travel abroad. For business, professional, or official purposes, authorized dealers may provide residents with exchange facilities up to D 1,750 for any one journey at a rate not exceeding D 125 a day, subject to a maximum of D 3,500 in any one calendar year. Any excess over these allowances requires permission from the Central Bank, but all such applications are approved provided that no capital outflow is involved. Of the above amounts, up to D 250 may be taken out in foreign currency notes and coin. Irrespective of destination, a traveler leaving The Gambia may take out D 75 in Gambian and/or sterling currency notes. Visitors to The Gambia may also take out with them on departure any other currency notes declared by them when entering the country.

Exports and Export Proceeds

Because of domestic requirements, the export of charcoal and firewood is subject to specific licensing. The export of all goods to Bulgaria, the People’s Republic of China, Czechoslovakia, the German Democratic Republic, Hungary, Poland, Romania, the U.S.S.R., and Yugoslavia also requires a specific license. The export of all other goods to any other destination is freely permitted under an open general license. The Gambia Produce Marketing Board is the sole exporter of groundnut products, oil palm kernels, cotton, and all derivatives of cotton. Payment for exports must be received within six months from the date of export in a currency other than Rhodesian currency, or in dalasis, or in sterling from an External Account.

Proceeds from Invisibles

Receipts from invisibles in foreign currencies must be offered for sale to authorized dealers. There is no restriction on the import of Gambian or other currency notes.

Capital

Inward transfers of capital are not controlled, but outward transfers are subject to control. At the time of making investments in The Gambia, nonresident investors may apply for a clearance from the Central Bank to facilitate subsequent repatriation of capital; the remittance of profits is allowed freely after provision has been made for local taxes and other legally incurred liabilities in The Gambia. All other applications to transfer capital abroad are dealt with by the Central Bank. Loans and advances by the commercial banks to nonresidents are subject to the authorization of the Central Bank. Such authorization is normally given freely for the purpose of providing working capital to companies registered outside The Gambia for their local operations.

Gold

The import of gold coin minted in the United Kingdom requires licensing by the Ministry of Finance and Trade; otherwise, gold coin and bullion may be imported freely. All internal dealings in gold and the export of gold require the permission of the Central Bank. Neither the Central Bank nor the commercial banks deal in gold.

Changes during 1979

No significant changes took place.

Federal Republic of Germany

(Position on December 31, 1979)

Exchange Rate System

The currency of the Federal Republic of Germany is the Deutsche Mark. Germany1 participates with Belgium, Denmark, France, Ireland, Italy, Luxembourg, and the Netherlands in the exchange rate mechanism of the European Monetary System (EMS), whereby each country maintains the value of its currency in relation to the currencies of the other participating countries. Under this agreement, spot exchange rates between the deutsche mark and the currencies of the other participants are maintained within margins of 2.25 per cent above or below the cross rates derived from the central rates expressed in European Currency Units (ECUs), except for the Italian lira for which the temporary intervention limit is plus or minus 6 per cent.

The agreement implies that the Deutsche Bundesbank (the central bank) stands ready to buy or sell the currencies of the other participating states in unlimited amounts at specified intervention rates. On December 31, 1979 these rates were

Specified Intervention Rates Per:Deutsche Mark
Upper limitLower limit
100 Belgian or Luxembourg francs6.3806.099
100 Danish kroner32.87031.420
100 French francs43.41541.505
1 Irish pound3.7993.632
1,000 Italian lire2.2762.019
100 Netherlands guilders92.52588.455

The participants in the EMS are not maintaining the exchange rates for other currencies within fixed limits. However, in order to ensure a proper functioning of the system, they intervene in concert with other participants to smooth out fluctuations in exchange rates. In principle, interventions are made in participating currencies but they may also take place in third currencies, such as the U.S. dollar.

Official middle, buying, and selling rates are quoted for 17 foreign currencies on the foreign exchange market of Frankfurt am Main.2 On December 31, 1979 the official middle rate for the U.S. dollar was DM 1.7315 per US$1. There are no taxes or subsidies on purchases or sales of foreign exchange.

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

Administration of Control

The administration of control in respect of imports and exports of goods and services is operated by the Federal Ministry of Economics, the Federal Ministry of Finance, the Federal Ministry of Transportation, the Federal Office for Trade and Industry, the Federal Ministry for Food, Agriculture, and Forestry, the Federal Office for Food and Forestry, the Federal Office for Agricultural Marketing Organization, and the Ministries of Economics of the Laender.

Article 23 of the Foreign Trade and Payments Law (Aussenwirtschaftsgesetz) of 1961 has been invoked to apply direct controls to certain inward capital transactions between residents and nonresidents.3 The Deutsche Bundesbank is in charge of the implementation of the capital controls. The Bundesbank’s prior approval is required for transactions involving the sale by residents to nonresidents of German money market paper and fixed-interest securities with a remaining maturity of up to four years4 or that are eligible for delivery under en pension transactions within the same maturity. All banks in Germany are permitted to carry out foreign exchange transactions. A voluntary coordinating body within the banking system, the Central Capital Market Committee, formulates recommendations with regard to the timing and the terms of domestic and foreign bond issues, except issues by those institutions that have recourse to the capital market on a permanent basis.

Imports and Import Payments

The Import List comprises a total of 8,437 statistical positions. Their treatment is as follows: some 7,602 items may be imported free of license from any country. Commodities corresponding to some 8,131 positions may be imported free of license from countries in Country List A/B.5 Certain petroleum products (7 positions) require a license irrespective of origin. Imports of coal from countries that are not members of the European Coal and Steel Community are permitted within the framework of an annual global quota. The Common Agricultural Policy of the EC covers 1,426 statistical items; most of these are subject to variable import levies which in most cases have replaced previous barriers to imports, but for some items an import license is still required by EC regulations.

De facto liberalization is applicable to certain commodities (330 statistical items) when originating in and purchased from Albania, Bulgaria, the People’s Republic of China, Cuba, Czechoslovakia, Hungary, North Korea, Mongolia, Poland, Romania, the U.S.S.R., or Viet Nam. Under these arrangements, import licenses are issued automatically upon application, provided that domestic production and prices are not affected adversely (AMLA6 procedure).

Imports of certain commodities among those not subject to licensing require, for surveillance purposes only, an import declaration stamped by the Federal Office for Trade and Industry. These import declarations are partly prescribed by the EC. For imports still subject to quantitative restriction (with certain exceptions, such as food items imported by tourists, samples, gifts, and small parcels), an individual import license is required. Applications are normally invited by tender (Ausschreibung) published in the Federal Official Gazette. Import licenses may be allocated to importers either on a first-come, first-served basis, or on the basis of the total value of applications in relation to the quotas established for specified commodities. Some tenders are permanently open (AMLA6 procedure).

Payments for imports are free, even if the underlying import transaction is still restricted. Commodity futures may be dealt in freely. Most transit trade transactions may also be carried out freely.

Payments for Invisibles

All payments for invisibles may be made freely without individual license. German and foreign notes and coin and other means of payment may be exported freely.

The following transactions—but not the related payments—between residents and nonresidents are subject to restriction: the chartering of foreign ships from residents of specified countries and the conclusion of related sea freight contracts; the use of foreign boats in certain inland waterway traffic; transactions with specified countries (which do not grant reciprocal treatment) for hull and marine liability insurance and aviation insurance, except passenger accident insurance; and the production of motion pictures in association with nonresidents.7

Exports and Export Proceeds

With few exceptions, export transactions may be carried out freely. For statistical purposes, an export notification is required for all goods. Certain exports (mostly strategic goods) are subject to individual licensing. The customs authorities exercise control over export declarations. Foreign exchange proceeds from exports do not have to be declared or surrendered, and they may be used for all payments.

Proceeds from Invisibles

With few exceptions, services performed for nonresidents do not require licenses. However, licenses are required for transactions related to specific sea services and for technical assistance through the delivery to residents of List C countries (see footnote 5) of constructional drawings, materials, and instructions for manufacture, if such assistance is for the production of goods whose export requires a license.

There are no restrictions on the receipt of payments for services rendered to nonresidents. However, receipts exceeding DM 1,000 on account of services have to be reported. German and foreign notes and coin and other means of payment may be imported freely.

Capital

Residents and nonresidents may export capital freely without a license. Foreign and international bond issues on the German capital market do not require official approval, although a system of voluntary coordination of issuing banks is operated by the Central Capital Market Committee. The placement abroad of bonds denominated in deutsche mark through the intermediation of subsidiaries of German banks in Luxembourg is banned under a gentlemen’s agreement between the banks and the Bundesbank. In principle, domestic and foreign securities of all types may be imported or exported freely.

Only a few types of capital inflows remain restricted. The prior approval of the Bundesbank is required for sales to nonresidents of specified domestic money market paper and of fixed-interest securities of German issuers with up to four years remaining to maturity, as well as for en pension transactions with nonresidents involving fixed-interest securities of German issuers where such securities are eligible for delivery in less than four years within the same maturity (see footnote 4). At present, such approval is not being given. Nonresidents’ direct investments in Germany, purchases of real estate in Germany for investment or personal use, and purchases of German or foreign equities do not require approval. Interest payable to nonresident holders of fixed-interest securities of German issuers is subject to a withholding tax of 25 per cent (“coupon tax”). There are no limitations on the disposal of legacies located in Germany and inherited by nonresidents or on legacies abroad and inherited by residents. Residents are not required to repatriate or surrender their foreign exchange earnings or holdings.

Banks are subject to minimum reserve requirements on the level of their foreign liabilities with maturities of less than four years; the rates of deposit at the end of 1979 were, in principle, the same as those applicable to domestic liabilities, i.e., 14.65 per cent, 10.3 per cent, and 6.5 per cent on demand, time, and savings deposits, respectively. The principal exemption is for banks’ foreign currency borrowings that are immediately reinvested abroad. Banks are free to pay interest on domestic or foreign currency balances held by nonresidents.

Gold

Residents may freely hold gold in any form at home or abroad and may negotiate gold in any form with residents or nonresidents, at home or abroad. There is a free gold market in Frankfurt. Imports and exports of gold in any form by residents and nonresidents are unrestricted and free of license; a customs declaration, however, is required.

Imports of gold bullion and coin, unworked gold, and gold alloys are free of customs duty but are subject to value-added tax at a rate of 13 per cent. In the case of imports of gold coin where the assessment basis exceeds 250 per cent of the fine gold value, the value-added tax is levied at a rate of 6.5 per cent. Imports of gold coin having legal tender status are exempt from value-added tax.8 Imports of monetary gold by the Bundesbank are exempt from value-added tax and from customs duty. Domestic purchases of gold are subject to value-added tax at the same rate as imports, but no value-added tax is levied on purchases of gold bullion effected on gold exchanges between brokers who are admitted to these exchanges. Commercial imports and exports of articles containing gold are subject to the general foreign trade regulations and in practically all cases are liberalized.

Changes during 1979

January 3. The Swiss National Bank announced that the three leading Swiss banks had extended for another two years a credit of DM 750 million to Germany which had been arranged in 1976 to support the deutsche mark against the Swiss franc. Another two-year extension was to be given by a fourth bank for its DM 200 million credit to Germany when it expired in March 1979.

February 1. Minimum reserve requirements were raised by 5 per cent on both domestic and foreign liabilities.

February 11. The 70th Ordinance Amending the Import List was issued. It contained, inter alia, the de facto liberalization of certain imports from the People’s Republic of China under permanently open tenders (AMLA procedure) in accordance with the general trade agreement between the People’s Republic of China and the EC. In addition, the licensing requirement was abolished for the import of 42 items from List C countries, which had previously been de facto liberalized under the AMLA procedure. The import of certain textiles originating in Portugal was subjected to an approval requirement so as to supervise the observation of quotas agreed between Portugal and the EC. Quotas were lifted on certain imports from state trading countries, while EC quotas were introduced on others.

February 21. DM 2.5 billion worth of U.S. Treasury notes with maturities of two and a half years and three and a half years were placed by the Bundesbank. The notes could not be sold or resold to nonresidents.

February-March. The Bundesbank and credit institutions concluded a six-month gentlemen’s agreement whereby the banks undertook not to place deutsche mark bonds abroad through the intermediation of their Luxembourg subsidiaries.

March 13. In accordance with the Resolution of the European Council of December 5, 1978, the EMS replaced the European common margins arrangement. Participating currencies were allowed to fluctuate by plus or minus 2.25 per cent around the bilateral central rates, except that the margin for the Italian lira was temporarily set at plus or minus 6 per cent. The upper and lower limits for the deutsche mark vis-à-vis the other participating currencies were

Specified Intervention Rates Per:Deutsche Mark
Upper limitLower limit
100 Belgian or Luxembourg francs6.5086.221
100 Danish kroner36.235034.6450
100 French francs44.28542.335
1 Irish pound3.8753.705
1,000 Italian lire2.3222.059
100 Netherlands guilders94.37590.225

March 15. The Bundestag adopted an amendment to the law on tax benefits to stimulate private investment in developing countries. It provided for more favorable conditions, in particular for investment in the 30 least developed countries and in raw materials and energy production. The amendment was passed by the Bundesrat in May 1979 and took effect retroactively from January 1, 1979.

May 9. Following a decision of February 19, 1979 by the Council of the EC to increase the 1979 import quota for ferrochromium from 80,000 tons to 330,000 tons, the Federal Office for Trade and Industry announced a quota of 57,690 tons for Germany.

May 31. The import of certain textiles from Malta was placed under EC surveillance.

June 27. The Reconstruction Loan Corporation initiated a lending program to promote investment by German firms in developing countries. The loans would be for up to 15 years, including a grace period of up to 5 years, with interest rates of 2.5 per cent and 3.5 per cent for investments in developing countries of country group 1 and 2, respectively (according to the classification of the Developing Countries’ Tax Law). (See also entry for March 15, above.)

June 30. The 71st Ordinance Amending the Import List contained the following provisions: (1) it adapted the import regulations to conform to textile export restraint agreements concluded by the EC with various textile exporting countries; (2) it lifted import licensing requirements for certain items already liberalized de facto and imported from within the EC; (3) it altered, in line with EC guidelines, the surveillance requirements on the import of certain steel products from outside the EC; and (4) it introduced adaptations reflecting the new International Coffee Agreement.

September 7. The six-month gentlemen’s agreement between the Bundesbank and banks whereby the banks undertook not to place deutsche mark bonds abroad through the intermediation of their Luxembourg subsidiaries was extended for another six months. Both parties also agreed to form a joint working group to devise criteria of conduct so as to avoid a prohibition on placements.

September 17. In implementation of EC import regulations for certain textiles from Bulgaria and Hong Kong as well as for wool and animal hair from Argentina and Brazil, Germany subjected these items to import licenses.

September 24. Following a realignment of EMS currency exchange rates representing an appreciation of the deutsche mark of 5 per cent against the Danish krone and of 2 per cent against all other EMS currencies participating in the exchange rate mechanism, new intervention limits for the deutsche mark against the other EMS currencies went into effect, as follows:

Specified Intervention Rates Per:Deutsche Mark
Upper limitLower limit
100 Belgian or Luxembourg francs6.3806.099
100 Danish kroner34.51032.995
100 French francs43.41541.505
1 Irish pound3.7993.632
1,000 Italian lire2.2762.019
100 Netherlands guilders92.52588.455

November 29. It was announced that in accordance with a new turnover tax law to become effective on January 1, 1980, the sale of gold coin having legal tender status would become subject to value-added tax.

November 30. Following the devaluation of the Danish krone of 4.76 per cent against all currencies within the EMS exchange rate mechanism, the Bundesbank fixed the upper and lower intervention points for the Danish krone at DM 32.870 and DM 31.420, respectively, per DKr 100.

December 19. Germany lifted the sanctions imposed on transactions and payments with Rhodesia.

Ghana

(Position on December 31, 1979)

Exchange Rate System

The currency of Ghana is the Ghanaian Cedi. In June 1978, Ghana introduced a flexible exchange system under which the exchange rate for the cedi in terms of the U.S. dollar, the intervention currency, was to be adjusted to reflect the underlying economic, financial, and balance of payments situation. Such adjustments were discontinued, however, in August 1978 and had not been resumed by December 31, 1979. On December 31, 1979 the official buying and selling rate for the U.S. dollar was Ȼ 2.75 per US$1. Rates are also quoted for certain other currencies,1 with daily quotations based on the buying and selling rates for the U.S. dollar in markets abroad. The authorized banks may exchange Ghanaian currency for any foreign currency but they do not maintain foreign exchange balances, receiving their requirements from the Bank of Ghana (the central bank) on a day-to-day basis. Different exchange rates for the cedi arise from the application of an export bonus scheme (10 per cent for all exports except cocoa) and from a 30 per cent surcharge on exchange allocations for foreign travel, as well as from mandatory cash margin deposits against import letters of credit.

Administration of Control

The Controller of Imports and Exports at the Ministry of Trade and Tourism is empowered to prohibit, regulate, or license all imports and exports. Applications by the industrial sector and certain state agencies for individual import licenses must be channeled through the appropriate ministry or government agency for endorsement. The Controller of Imports and Exports issues import licenses on the basis of an import program drawn up by a technical committee on imports, supervised by the Import License Allocation Commission on which the Bank of Ghana, various ministries, the armed forces, and the Chamber of Commerce are represented. All import licenses must be signed by the Director of Imports. The Exchange Control Department of the Bank of Ghana administers the allocation of exchange for payments for invisibles and capital. Permitted foreign exchange transactions must be made through authorized banks.

Prescription of Currency

Settlements between residents of Ghana and residents of other countries are 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 and/or the central or state banks of the countries concerned.2 Furthermore, proceeds from exports to countries with which Ghana does not have payments agreements must be received in the currency of the importing country (if that currency is among the currencies quoted by the Bank of Ghana) or in deutsche mark, pounds sterling, or U.S. dollars. Current payments to or from the Central Bank of West African States (for Benin, Ivory Coast, Niger, Senegal, Togo, and Upper Volta) and The Gambia, Guinea, Guinea-Bissau, Liberia, Mali, Nigeria, and Sierra Leone are normally made through the West African Clearing House.

Nonresident Accounts

Nonresident account status is granted to embassies, legations, consulates, and offices of high commissioners in Ghana and to the career and established members of their staffs. This facility is also available to international institutions and foreign registered companies operating in Ghana. These accounts in cedis held by nonresidents with authorized banks in Ghana are designated Foreign Accounts. The opening of these accounts is subject to approval by the Bank of Ghana. The accounts may be credited with authorized outward payments, with transfers from other Foreign Accounts, and with the proceeds from sales of any convertible currency, other than Rhodesian currency. They may be debited for inward payments, for transfers to other Foreign Accounts, and for purchases of external currencies, other than Rhodesian currency.

Nonresident accounts maintained under the provisions of bilateral payments agreements are called “Official Accounts” or “Territorial Accounts.” These accounts may be credited with authorized outward payments by residents, with transfers from Foreign Accounts, with payments received through the Bank of Ghana for settlements with bilateral payments agreement countries, and with proceeds from sales of external currencies, other than Rhodesian currency. They may 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 Bank of Ghana.

Funds not placed at the free disposal of nonresidents, e.g., certain types of capital proceeds, may be deposited in Blocked Accounts. These accounts may be debited for authorized payments, including the purchase of approved securities.

Imports and Import Payments

Imports from Namibia (South West Africa), Rhodesia, and South Africa are not permitted. Imports of some goods, including virtually all textiles and textile products, chocolate, and chilled or frozen fish, are prohibited. Imports of certain goods also produced in Ghana, certain luxury commodities, and certain goods deemed harmful to health or public order are severely restricted. These are specified in a List of Restricted Imports. Applications for the importation of items on the restricted list are normally not approved. There is an open general license which permits any importer to import freely from any country trade samples, personal or household effects, small gifts, single copies of publications, domestic pets, headloads of foodstuffs from neighboring countries, fish caught by Ghanaian-owned vessels, and reimports. All other items require a specific import license. There is a list of commercial imports eligible for specific licenses which are issued for items that are considered essential within the framework of an annual import program. Certain imports are channeled through a bulk purchasing agent, the Ghana National Procurement Agency, or for public sector imports, the Ghana Supply Commission.

Except for aid imports, import licenses do not specify the country from which the commodity has to be imported, but they do specify whether payment is to be made in convertible or inconvertible currency. Licenses for payment in inconvertible currencies may be used for imports from any payments agreement country. Licenses are issued on a c. & f. basis and are endorsed to the effect that insurance must be covered in Ghana.

Exchange for payment of approved imports is, in principle, granted freely by the Bank of Ghana. However, arrears exist with respect to both current import payments and the repayments of matured 180-day trade credits established before February 7, 1972. Most imports are effected with confirmed letters of credit established through Ghanaian banks, and usually on a sight basis. Cash margin deposits are prescribed on the opening of letters of credit for most imports. The rates applicable are nil for crude oil and fertilizers; 25 per cent for industrial raw materials, chemicals, spare parts, lubricants, drugs and other medical supplies, and building materials; 50 per cent for machinery and equipment (including transport equipment other than automobiles); and 65 per cent for all other goods, including private passenger automobiles. For imports valued at over US$2,000 f.o.b., banks are forbidden to make payments against a letter of credit or a bank draft unless the import documents include a clean report of findings issued by the General Superintendence Company Limited of Geneva, which inspects the goods and verifies the price, quality, and quantity in the country of origin or shipment.

Payments for Invisibles

All payments for invisibles require specific approval of the Exchange Control Department of the Bank of Ghana, and documentary evidence must support all applications. Certain payments and transfers are in arrears.

Transfers of normal bank charges payable to overseas bankers for import payments are generally authorized. The payment of buying commission on imports is not permitted. Freight 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. With few exceptions, insurance on all imports shipped to Ghana on f.o.b. or c. & f. terms must be arranged in Ghanaian currency with local insurance companies.

Remittances of income by non-Ghanaian employees are normally limited to 40 per cent of their net annual earnings, up to a maximum of US$2,600 a year plus leave pay; this personal remittance quota is intended to cover all personal and family requirements and commitments outside Ghana, including leave expenses, travel, education, gifts, insurance premiums, subscriptions, and donations. Expatriate employees in the mining and petroleum industries and in certain other industries are not affected by the limit and, furthermore, are allowed to transfer their savings at the end of each tour of duty. Remittances of income by non-Ghanaian self-employed persons are also limited to 40 per cent of their net annual earnings, up to a maximum of US$2,600.

With the exception of companies financed with locally raised capital, nonresident companies are, in principle, permitted to transfer abroad freely their net profits after tax; at present, however, transfers of profits are being authorized only on a limited basis. The transfer of profits by companies that have been financed with locally raised capital is not permitted.

The basic exchange allocation for tourist travel, which had been reintroduced on August 21, 1978, was suspended again on August 7, 1979; foreign exchange for business travel is granted once a year in an amount of US$85 a day for a maximum of two weeks. Additional allocations are permitted for business travel in connection with export promotion. All travel allocations are subject to a tax of 30 per cent. Residents of any nationality (except children under two years of age, diplomats, and UN personnel) who are leaving Ghana by air or sea for any purpose, whether temporarily or not, must pay a travel tax of 15 per cent of the price of the round-trip ticket.

Resident travelers may take with them foreign currency notes equivalent to Ȼ 100, provided that not more than the equivalent of Ȼ 20 is taken in any one currency. Ghanaian banknotes up to Ȼ 20 may be taken out by any traveler. Nonresident travelers may take out any unutilized foreign currency brought in and declared upon entry.

Exports and Export Proceeds

Exports to Namibia (South West Africa), Rhodesia, and South Africa are prohibited. Exports of iron and steel scrap also are prohibited. Cocoa and certain other agricultural products are exported through a state-owned export agency, the Cocoa Council, and diamonds are exported through the Diamond Marketing Corporation. Normally, specific export licenses are required.

Exporters are required to collect and repatriate the proceeds from their exports within 60 days of shipment; export proceeds in foreign exchange must be surrendered to a commercial bank in Ghana upon receipt. Exporters surrendering export proceeds in external African currencies or convertible currencies are granted an export bonus. This bonus is 10 per cent of the proceeds for all exports except cocoa.

Proceeds from Invisibles

All receipts from invisibles must be sold to an authorized bank. Under the Foreign Exchange (Cedi Voucher) Regulations, 1976, no visa or entry permit may be granted to travelers unless they have purchased in foreign exchange from Ghanaian embassies abroad, or on arrival in Ghana, vouchers corresponding to Ȼ 140 for the first day’s stay plus Ȼ 70 for each subsequent day of their stay in the country. Foreign currency notes may be imported freely. The import of Ghanaian currency notes in excess of Ȼ 20 is prohibited.

Capital

Foreign investment in Ghana requires prior approval by the Capital Investment Board if it is to benefit from the facilities available under the Capital Investments Decree of 1973. Investments approved under the Decree are guaranteed, in principle, the right to transfer profits and, in the event of sale or liquidation, capital proceeds; tax holidays, initial capital allowances, etc., are also available for such investments. The Decree stipulates that the assets of foreign investors may not be expropriated and that, when approved enterprises are nationalized, fair compensation is to be determined either by voluntary agreement of the parties or through arbitration by the International Centre for Settlement of Investment Disputes. Certain areas of economic activity are not open to foreigners. Government policy aims at the “Ghanaianization” of many economic activities. This policy is implemented primarily on the basis of the Investment Policy Decree, 1975, and the Ghanaian Enterprises Development Decree, 1975. The proceeds of the sales of foreign ownership to Ghanaian nationals are held in blocked, noninterest-bearing accounts with the Bank of Ghana; these accounts carry an exchange rate guarantee. Transfers of such funds are being effected gradually.

All outgoing capital movements must be approved; applications for such transfers must be supported by documentary evidence and are considered on their merits. Transfers to beneficiaries under wills and intestacies are approved, provided that all local indebtedness has been settled. Requests for the transfer of funds representing personal assets of foreign residents in Ghana who emigrate are considered individually on their merits. Applications must be supported by appropriate documentation showing that the savings are genuine and that no illegal transfer of capital is involved. Proceeds from the liquidation of the real assets of foreign nationals leaving Ghana may be approved for transfer in one lump sum or may be spread over a period of time, depending on the amount.

Loan and overdraft facilities to resident companies controlled by nonresidents require the individual approval of the Bank of Ghana. Residents who are private persons are not normally granted foreign exchange for the acquisition of securities or personal real estate abroad. Transactions in securities are controlled to ensure that capital is not transferred abroad. In respect of portfolio investments, residents must obtain approval for any switch in their holdings of securities issued by nonresidents. New borrowing abroad by the public sector is screened by the Parliament. Private sector and commercial bank borrowing require the approval of the Bank of Ghana as do private import credits in excess of Ȼ 100,000 for machinery and equipment. Lending to nonresidents is prohibited, except for export credits; these require exchange control approval and normally are limited to 60 days.

Gold

Residents may hold and negotiate in Ghana gold obtained domestically by washing or mining according to indigenous methods, gold coins that are collectors’ pieces, and gold jewelry. Other domestic transactions in gold, as well as imports and exports, may be authorized by the Ministry of Trade and Tourism in collaboration with the Bank of Ghana, and certain domestic sales may be carried out by permit under the Gold Mining Products Protection Ordinance. With these exceptions, Ghanaian 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 imports by or on behalf of the monetary authorities are not normally licensed. The import duty on bullion and partly worked gold is 10 per cent and that on other gold is 50 per cent. The gold mines export their output in semirefined form. Exports by any one person or firm in excess of 100,000 ounces are subject to export tax at a rate of Ȼ 3 per troy ounce.

Changes during 1979

January. A ban was imposed on exports of round logs, both as a conservation measure and to encourage domestic timber processing.

March 9. A currency exchange was introduced to reduce cash holdings of up to Ȼ 5,000 by 30 per cent and larger holdings by 50 per cent. It was also designed to cut off illegal banknote holdings abroad.

August 7. The basic foreign exchange allowance for tourist travel, which had been reintroduced in August 1978, was again suspended.

Greece

(Position on December 31, 1979)

Exchange Rate System

The currency of Greece is the Greek Drachma. The authorities of Greece operate a managed float for the drachma, and do not maintain margins in respect of exchange transactions. On December 29, 1979 the Bank of Greece quoted buying and selling rates for the U.S. dollar, the intervention currency, of Dr 37.90 and Dr 38.67, respectively, per US$1. Official quotations for certain other currencies 1 are determined daily on the basis of the official rates for the U.S. dollar and the rates for the currencies concerned in international markets. The Bank of Greece offers forward cover in U.S. dollars only. There are no taxes or subsidies on purchases or sales of foreign exchange.

Administration of Control

Exchange control policy is the responsibility of the Ministry of Finance, the Currency Committee, the Credit Subcommittee, the Foreign Exchange Control Subcommittee, and the Foreign Exchange Subcommittee for Financial Requirements. The Ministry of Commerce and the Bank of Greece are responsible for import policy. Exchange control is implemented, and import approvals are granted, by the Bank of Greece and authorized commercial banks. Import and export licenses are issued by the Bank of Greece, authorized banks, and the Ministry of Commerce and, in some cases, require the prior approval of the appropriate ministry. The authorized banks may make exchange settlements relating to permitted trade transactions and may grant residents a standard travel allowance. They may also make exchange payments for a number of specified transactions in invisibles.

Prescription of Currency

Settlements with countries with which Greece has bilateral payments agreements 2 are made through controlled accounts, with the U.S. dollar as the currency of account. Settlements with all other countries are made in any convertible currency or through External Sight Deposit Accounts in convertible drachmas.

Nonresident Accounts

Nonresidents may maintain accounts in Greece, as follows:

1. Deposits in foreign exchange under Legislative Decree No. 2687/53. Nonresidents may establish time deposit accounts in foreign currency for a minimum period of six months and with a minimum deposit in convertible currencies equivalent to US$10,000; balances on these accounts earn interest not exceeding 8 per cent a year. Interest rates vary according to the term of the account, but limits are fixed, as follows: for 6 months to 12 months, 7 per cent a year; for 12 months to 24 months, 7.5 per cent a year; and for 24 months and over, 8 per cent a year. Principal and interest are freely transferable at maturity in the currency of the deposit.

2. External Sight Deposit Accounts in convertible drachmas and in foreign currencies. Nonresidents are permitted to open External Sight Deposit Accounts in convertible drachmas or foreign currencies. Deposits in convertible drachmas are assigned by a bank to the Bank of Greece against drachmas at the official rate of exchange. Deposits in convertible foreign currency are held by the banks. Any withdrawal from drachma accounts for use in Greece and any conversion of withdrawals from foreign currency accounts into drachmas entails the loss of the reconversion right for the sums withdrawn. At the end of 1979, the maximum rate of interest on such accounts with the banks was 1.5 per cent a year. These accounts may be credited with (a) convertible foreign exchange or the proceeds from sales of convertible currencies; (b) authorized payments by residents of Greece for imports or services payable in convertible currencies; (c) transfers from other External Sight Deposit Accounts; and (d) accrued interest on these deposits. They may be debited for (a) payments to residents for current transactions, exports, and services; (b) the purchase and transfer abroad of any convertible currency; and (c) transfers to other External Sight Deposit Accounts.

3. Time Deposit Accounts in Convertible Foreign Exchange may be maintained, as follows:

(a) Nonresidents may make time deposits in convertible foreign exchange with banks that are authorized to deal in foreign exchange. The minimum period of this deposit is 3 months and the interest rate is determined freely by the banks according to rates obtaining abroad, provided that the banks hold the foreign currency and pay interest out of earnings derived from investing these deposits abroad.

(b) Greek nationals residing abroad may make time deposits in U.S. dollars or Canadian dollars of a maximum amount of US$200,000 (or the equivalent in Canadian dollars) for each depositor for a period up to 12 months. The interest rates are determined by the Currency Committee; at the end of 1979 the limits were for deposits of 3 months to 6 months, 12 per cent a year and for deposits of 6 months to 12 months, 13 per cent a year. For a deposit over the maximum amount and for more than 12 months, the interest rate is determined on a case-by-case basis under arrangements between individual banks and the Bank of Greece. When a depositor wishes to make a time deposit in a currency other than the U.S. dollar or the Canadian dollar, separate arrangements must be made between the bank and the Bank of Greece regarding the currency, the amount deposited, and the interest rate to be paid by the bank. The minimum period for such deposits is 6 months.

4. Greek citizens (including seamen) who are working abroad and certain Greek societies and associations operating abroad may establish, with funds originating abroad, convertible foreign currency accounts with authorized banks in Greece. At the end of 1979 the maximum interest rates payable on these accounts were (a) accounts in U.S. dollars, Canadian dollars, or pounds sterling: sight deposits, 3 per cent a year; savings deposits, 8 per cent a year; and time deposits of 3 months to 6 months, 12 per cent a year and of 6 months to 12 months, 13 per cent a year; and (b) accounts in deutsche mark and other currencies (except Japanese yen and French francs): sight deposits, 3 per cent a year; savings deposits, 7 per cent a year; and time deposits of 3 months to 6 months, 9 per cent a year and of 6 months to 12 months, 10 per cent a year. Balances on these accounts, including accrued interest, are freely convertible into foreign exchange. Withdrawals in drachmas entail the loss of the reconversion right for the sums withdrawn. Similar facilities for foreign currency accounts exist under a Housing Loan Deposit Scheme.

5. Blocked Accounts. All drachma assets of nonresidents other than those in External Sight Deposit Accounts must be declared, and are held in Blocked Accounts. Domestic banknotes in excess of Dr 1,500 brought in by nonresident travelers must also be credited to a Blocked Account, as must certain income accruing in Greece to nonresidents. Subject to the approval of the exchange control authorities, balances on Blocked Accounts held by residents of countries that have special agreements with Greece 3 may be used for such purposes as (a) personal expenses in Greece up to Dr 100,000 for each month of the visitor’s stay in Greece and up to Dr 50,000 for other members of his family, and travel expenses for each visit to Greece; (b) expenses for paying taxes and lawyers’ fees; and (c) investing in securities officially listed on the stock exchange in Greece, and purchasing real estate in Greece. Payments abroad from funds in Blocked Accounts may be released for remittance provided that (a) where the money deposited is derived exclusively from rents, amounts of up to US$1,000 (or its equivalent) may be transferred abroad semiannually and (b) where the money deposited is derived exclusively from pensions and the holder has been resident abroad since before December 31, 1974, up to US$300 a month, plus bonuses for New Year, Easter, and vacation, up to a total of US$4,200 annually may be remitted abroad. Funds derived from dividends of postwar public loans and loans of public organizations are freely transferable abroad, and other balances on Blocked Accounts may be transferred abroad if the prior approval of the Bank of Greece is obtained. All transfers between Blocked Accounts require prior approval. The amounts that may be withdrawn from Blocked Accounts differ in cases where the holders do not live in the countries listed in footnote 3.

Blocked balances may be deposited either with the Bank of Greece where they bear no interest, or with a commercial bank, the Consignations and Loans Fund, and the Postal Savings Bank, where they earn interest of 11.5 per cent a year.

Imports and Import Payments

All imports require approval (except those of goods on Lists F and P with an invoice value c.i.f. of the equivalent of US$1,100 or less, for which payment will be made through an authorized bank). The granting of an import approval implies that the necessary foreign exchange will be made available. Two general procedures (E and D) are applied to import approvals. Under procedure D, an approval issued by the Bank of Greece is required (1) for certain imports effected for the account of the State; (2) for imports for which the importer requests changes in the general provisions concerning the terms of shipment, method of settlement, terms of payment, etc.; and (3) for imports from certain countries. All other imports are made under procedure E and approval is granted by a commercial bank. Import approvals must be obtained prior to shipment and require the presentation of a certified pro forma invoice.

Import licenses are required only for imports of commodities in List A (including gold, jewelry, furs, textiles, television receivers, and certain foodstuffs) and List B (certain types of machinery and spare parts). For a few items on List A licenses are being issued restrictively, but for the remainder they are issued automatically. Special regulations govern imports of certain items, such as goods under monopoly control, medicines, narcotics, sulfur, and motion-picture films.

Private imports are subject to (1) restrictions on the method of payment, (2) controls over the time period required to make final settlement and the time of shipment, and (3) various advance deposit requirements. For the purpose of these regulations, all private imports are classified in six lists (F, F-50/1–2, F-100/1–2, and P).

Payments for imports may be made by letter of credit, by cash against shipping documents, or by acceptance of time drafts. Payment by time draft is permitted only for goods in List P; there is no restriction on maturity. For imports not included in List P, the Committee for Regulating Matters Concerning Imports at the Bank of Greece may authorize longer payment periods and may also approve deferred payments. Payments for imports may be made on the presentation of entry documents.

Various advance deposit requirements apply to imports included in Lists F-50/ 1–2 and F-100/1–2. In addition, as part of the measures that were implemented in December 1979, an advance deposit of 75 per cent is also required for imports in Lists P and F.4 Deposits are accepted by the intervening commercial bank, which redeposits them with the Bank of Greece. These deposits do not bear any interest. Certain companies, public agencies, and organizations that have been designated public service institutions are exempt from the advance deposit requirements. Also, duty-free imports and imports for processing and re-export are exempt from these requirements. The Committee for Regulating Matters Concerning Imports has authority to grant exemption. Different deposit requirements are stipulated, depending upon whether payments are made by letters of credit or cash against shipping documents. Advance deposits are not required for imports for which payment is to be made by acceptance of time drafts.

For imports paid for by letter of credit, there are three categories of advance deposits. First, when a letter of credit is opened, the importer is required to deposit in drachmas the entire amount of the credit with the intervening bank; this deposit is retained by the bank to safeguard against default, and the final settlement is made against this deposit. Second, a cash deposit related to the c.i.f. value is required as security for import duties and other taxes. For imports under procedure E, this deposit must be made when the import approval is obtained; for imports under procedure D, the deposit must be made within 20 days of the import approval. The deposit is retained for a period of two to four months from the date on which it was made. For goods not included in Lists F-50/1–2 and F-100/1–2, advance deposits are refunded upon delivery of the shipping documents and the customs clearance. Third, when a letter of credit is opened, for a number of goods the importer is required to deposit an additional 75 per cent of the c.i.f. value of imports at the intervening bank; this deposit is blocked for six months at the Bank of Greece.

For imports for which payments are made against sight drafts, there are three categories of advance deposit requirement. First, when the importer applies for an import approval, he is required to deposit in cash a certain proportion of the c.i.f. invoice value (prepayment). Second, a cash deposit of a certain proportion of the c.i.f. value is required as security for import duties and other taxes.5 Security deposits are not required, however, for capital goods and spare parts that are exempt from import duty by virtue of the laws governing investment of foreign or domestic capital. The deposit must be made with the intervening bank (1) at the time the import approval is obtained for imports under procedure E and (2) within 20 days of obtaining the import approval for imports under procedure D. The deposits of the first and the second category are retained for a period of two to four months; for goods not included in Lists F-50/1–2 and F-100/1–2, advance deposits are refunded upon delivery of the shipping documents and the customs clearance. Third, when the importer applies for an import approval, he is required for a number of goods to deposit an additional 75 per cent of the c.i.f. value; this deposit is blocked for six months at the Bank of Greece.

The rates of deposit in effect in 1979 are set out below:

PrepaymentSecurityTotal
(In per cent of invoice value)
List F-50/1502070
List F-50/220828
List F-100/110040140
List F-100/2401656

Goods must be shipped within six months and arrive in Greece within nine months after the date of import approval. Final settlement of the value of imported goods must take place within 60 days following the date of arrival at the first Greek port; however, for goods in List P settlement must take place within 120 days following the date of arrival.

Most imports are subject to a stamp tax of 2–6 per cent of the c.i.f. duty-paid and tax-paid value. Special regulations govern imports by state agencies, public entities, and public utility companies.

Payments for Invisibles

Payments for invisibles require approval, but this is granted freely for expenses incidental to authorized trade transactions and for certain other transactions.

Residents traveling abroad for family reasons or tourism are entitled to the equivalent of US$250 for one trip a year; instead of this allowance, tourists participating in group tours are granted an amount based on a cost declaration submitted by the travel agency. Requests for larger amounts or for other types of travel are submitted to the Foreign Exchange Subcommittee for Financial Requirements. The Bank of Greece normally provides foreign exchange for travel other than tourism, within the following limits: US$3,000 a trip for exporters; US$2,000 a trip for industrialists and hotel managers; US$650 a trip for other businessmen; US$1,000 a trip for scientists attending international meetings; and US$750 a trip for newspaper editors and reporters and travel agents. For medical treatment abroad the Subcommittee authorizes any amount for transfer direct to a foreign hospital, provided that the relevant accounts are submitted. For undergraduate and postgraduate studies, various allocations are authorized, depending on the country of study, such as US$390 and US$440 a month, respectively, for the United States and Canada, £ stg. 180 and £ stg. 220 a month, respectively, for the United Kingdom, and DM 700 and DM 830 a month, respectively, for the Federal Republic of Germany. Authorized banks are also empowered to grant foreign exchange up to US$200 for a limited number of other transactions.

Travelers may take with them a maximum of Dr 1,500 in Greek banknotes. Greek nationals, not including those resident abroad, are required to declare all domestic and foreign banknotes and other valuables taken with them upon leaving Greece. Nonresident travelers on leaving Greece may freely take with them up to US$500 in foreign banknotes without having declared them upon entry; the export of larger amounts after a visit of less than 12 months is also not subject to approval, provided that there was a declaration upon entry. Approval is required for larger sums that have been declared.

Exports and Export Proceeds

All exports require individual licenses, but most exports are free of quantitative limitation. Export proceeds must be surrendered within 180 days from the date of export of the goods; in special cases, however, the authorities are empowered to extend this period to two years for manufactures and to one year for other commodities.

Proceeds from Invisibles

Exchange receipts representing payments for services must be surrendered. Exchange proceeds from shipping are exempt from the surrender requirement, but shipowners have to pay for supplies, repairs, etc., and any taxes and fees, and must cover their disbursements and expenses in Greece in local currency obtained through the sale of foreign exchange to the Bank of Greece.

Travelers may bring in a maximum of Dr 1,500 in Greek banknotes. Any surplus is deposited in a blocked account with the Bank of Greece; subject to prior approval by the Bank, the surplus may be taken out on departure or spent in Greece on personal requirements. Greek residents returning to Greece must declare the foreign exchange in their possession if they wish to take it out for the next journey. Nonresident travelers of foreign nationality may import any amount of foreign currency and need not declare it at the time of entering the country, and nonresidents holding Greek passports are required to declare their foreign exchange only if they intend, when leaving Greece, to take out again foreign exchange in excess of US$500 or its equivalent.

Capital

Commercial banks and investment banks may borrow convertible currencies abroad, provided that they lend corresponding amounts as foreign currency loans (or drachma loans with a foreign exchange clause) for periods of at least five years to productive enterprises established in Greece. All other investments in Greece by nonresidents are subject to approval (mainly for securing repatriation of imported capital). Such approval is automatic for purchases of real estate for personal use. Under Legislative Decree No. 2687/53, approved foreign investments which aim at the promotion of national production or otherwise contribute to the economic advancement of Greece may be granted preferential treatment.6 Under Law No. 4171/61, as amended by Legislative Decree No. 4256/62, by Legislative Decree No. 916 of July 14, 1971, and by Law No. 159 of September 9, 1975, further privileges are provided for foreign capital participating in investment projects in Greece exceeding Dr 150 million in value. Moreover, Legislative Decree No. 4256/62 provides additional repatriation facilities for foreign investments which promote exports.

Repatriation requirements are as follows: (1) Approved investments may not be repatriated before one year from the date the enterprise begins to operate productively and in no case before one year from the date the capital was imported. (2) The repatriation of foreign capital may not exceed 10 per cent a year of the amount of capital imported. The repatriation of dividends on equity capital and of interest on loan capital may not exceed 12 per cent a year and 10 per cent a year, respectively. (3) Under the provisions of Law No. 4171/61, profits on approved foreign investments may be transferred abroad in amounts not exceeding 6 per cent a year of the repatriated portion of the capital, provided, however, that the amount of profits transferred shall not exceed 8 per cent of the foreign exchange earnings of the enterprise from the sale of its products abroad. (4) For investments made under Legislative Decree No. 2687/53 that are not covered by Law No. 4171/61, the transfer of profits is related to the residual capital remaining in Greece, and the transfer privilege expires as soon as all capital has been repatriated. (5) Article 33 of Law No. 849/78 provides for a higher percentage for the repatriation of capital (up to 15 per cent) and of dividends (up to 20 per cent), provided that the total amount does not exceed 30 per cent of the foreign exchange earnings of the firm from exports during the same year. Also, loans in foreign currency approved under Legislative Decree No. 2687/53 can be repatriated at an annual rate of up to 20 per cent, provided that the amount of the loan does not exceed twice the value of the share capital.

Deviations from the general regulations may be approved for foreign capital imported to develop exports of agricultural and mining products or invested in enterprises of special importance to the economy. Specified foreign short-term investment may also be granted preferential treatment in respect of the repatriation of capital and the transfer of interest.

Transfers of capital abroad by residents require approval. The purchase abroad of securities or of real estate for personal use is not normally permitted.

Gold

Residents may freely purchase specified gold coins (mainly sovereigns) from the Bank of Greece, through licensed stockbrokers, at prices set by the Bank of Greece; these coins may be resold only to the Bank of Greece or to licensed stockbrokers. Holders of gold coin acquired in the free market that existed prior to December 22, 1965 may sell these anonymously and without formality to the Bank of Greece or to an authorized bank at the official price. Residents may deal freely, however, in bullion. Imports of gold against payment in foreign exchange are on Import Lists A and F and require a special license; licenses are normally issued to reputable importers for distribution to recognized users, such as jewelers and dentists. Gold bars and gold coin may be imported freely by commercial banks and other residents as well as nonresidents when no payment in foreign exchange is involved. Exports of gold other than by the Bank of Greece are not approved, with the exception that gold bars or coin brought in by travelers and declared upon entry may, with the prior approval of the Bank’s Credit Subcommittee, be re-exported by the same person.

Changes during 1979

January 1. Transactions with Egypt were placed on a convertible currency basis.

January 1. The suspension of certain imports of Japanese origin, imposed on June 23, 1978, was lifted.

January 1. The period during which feedstuff might be imported duty free was extended to December 31, 1979.

January 11. It was announced that the reimbursement of interest for export credits for goods supplied to European countries other than members of the EC would be increased from 55 per cent to 60 per cent. (The reimbursement rate for exports to non-European countries remained at 75 per cent.)

March 2. An antidumping duty of Dr 6 a kilogram was introduced on live swine imported for slaughtering; the antidumping duty on calf liver was raised to Dr 58 a kilogram.

April 1. Foreign exchange allowances for students studying abroad were increased by 10 per cent.

May 28. The Accession Agreement between Greece and the EC was signed; the Act of Accession would enter into force on January 1, 1980.

June 30. All foreign trade legislation was consolidated in a new law designed to simplify the regulations and to facilitate harmonization with the members of the EC.

September 7. Used automobiles and trucks, with the exception of buses, might be imported regardless of their date of registration or year of manufacture.

September 28. Certain conditions were established for imports of secondhand machinery, excluding machinery for agricultural use. The machinery would not be intended for sale, would have been manufactured within the last five years, and would be imported only from a member of the EC. The value of the machinery would be less than 80 per cent of the price of equivalent new machinery, and the loss due to wear and tear might not exceed 20 per cent of its value.

November 21. Interest rates on nonresident accounts were increased.

December 1. With effect from December 3, 1979 and valid until June 30, 1980, the following measures were introduced to curb imports: (1) banks might not finance imports using goods as collateral except in the cases of mass consumption foodstuffs, basic raw materials, and fixed asset equipment for agriculture, fisheries, mining enterprises, industry, and handicrafts; (2) importers would be required to make an additional advance deposit equal to 75 per cent of the c.i.f. value of imported goods which would remain blocked with the Bank of Greece for six months; the deposit was to be made at the time when the irrevocable letter of credit was being established and would carry no interest (92 import items were exempted from this requirement); (3) an additional 25 per cent consumption tax was imposed on the value of some imported luxury commodities and other goods not considered vital for production purposes; (4) maximum profit limits were imposed on traders handling both imported and locally produced goods, 33 per cent for wholesalers, and 100 per cent for retailers; and (5) the first repayment on suppliers’ credit would have to be made within six months.

December 5. Law No. 936/79 streamlined administrative control over foreign trade matters. Issues affecting foreign currency and protection of domestic production were brought under the jurisdiction of the Bank of Greece. The Committee for Regulating Matters Concerning Imports was established at the Bank of Greece to assume responsibilities hitherto borne by the Minister of Trade, including authority to (1) extend deadlines for shipment and arrival of imports; (2) extend deadlines for settlement of payments for imports; (3) grant exemption from the advance deposit requirements; (4) authorize means of payments other than those in normal practice; and (5) authorize imports for commercial use without observance of currency formalities.

December 22. Trade sanctions against Rhodesia were revoked.

Grenada

(Position on December 31, 1979)

Exchange Rate System

The currency of Grenada is the East Caribbean Dollar,1 which is issued by the East Caribbean Currency Authority. The East Caribbean dollar is pegged to the U.S. dollar, the intervention currency, at EC$2.70 = US$1. The buying and selling rates for the U.S. dollar are EC$2.6882 and EC$2.7169, respectively, per US$1. The Currency Authority also quotes daily rates for the Canadian dollar and the pound sterling. A 5 per cent exchange tax is levied on all sales of foreign exchange by commercial banks, except for payments for imports of some basic foods and drugs.

Administration of Control

Exchange control applies to all countries. It is administered by the Minister of Finance, Trade, and Industry. The Ministry delegates to authorized dealers the authority to approve some import payments and certain other outward payments. The exchange control directives do not apply to transactions with Rhodesia or South Africa. Trade controls also are administered by the Ministry of Finance, Trade, and Industry.

Prescription of Currency

Settlements with residents of member countries of the Caribbean Common Market (Caricom)2 must be made either through External Accounts (in East Caribbean dollars) or in the currency of the Caricom country concerned. Settlements with residents of the former Sterling Area countries, other than Caricom countries, may be made in sterling, in any other former Sterling Area currency, or in East Caribbean dollars to and from External Accounts. Settlements with residents of countries outside the former Sterling Area other than Rhodesia may be made in any foreign currency 3 or through an External Account in East Caribbean dollars.

Nonresident Accounts

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

Imports and Import Payments

All imports from Rhodesia and South Africa are prohibited. Most goods may be freely imported under open general license from all other countries. Certain other commodities require individual licenses, unless they are imported from Caricom countries.

Payments for authorized imports are permitted upon application and submission of documentary evidence (invoices and customs warrants) to the Ministry of Finance, Trade, and Industry; however, the Ministry has delegated to authorized dealers powers to approve the payment of imports originating in Caricom countries. Advance payments for imports require prior approval by the Ministry of Finance, Trade, and Industry.

Imports not exempt from customs duty are subject to a stamp tax of 7.5 per cent of the c.i.f. value.

Payments for Invisibles

Payments for invisibles require exchange control approval. Authority has been delegated to authorized dealers to provide basic allocations of foreign exchange for a few types of payments. These include foreign travel (for which up to EC$3,000 a person a calendar year may be allocated for private travel and up to EC$7,000 a person for business travel), subscriptions to magazines and periodicals, and life insurance premiums on policies contracted before June 1975. With the exception of tourism, applications for additional amounts or for purposes for which there is no basic allocation normally are approved by the Ministry of Finance, Trade, and Industry, provided that no unauthorized transfer of capital is involved. Applications in respect of tourism in excess of EC$3,000 a person are considered on their merits. The cost of transportation to any destination may be settled in domestic currency and is not deducted from the travel allocation. There are certain arrears on payments for invisibles.

Resident travelers may take out foreign currency notes and coin up to the equivalent of EC$3,000 and East Caribbean currency notes without limit. Nonresident travelers may freely export any foreign currency previously brought in, as well as any amount in East Caribbean currency notes.

Exports and Export Proceeds

Exports to Rhodesia and South Africa are prohibited, and specific licenses are required for the export of certain goods to any destination. There are no formal regulations to ensure that export proceeds in foreign currencies are surrendered within a certain period from the date of shipment, but the collection of export proceeds is mandatory. Export duties are levied on bananas, cocoa, and nutmeg.

Proceeds from Invisibles

The collection of the foreign currency proceeds from invisibles is mandatory. Travelers may bring in freely notes and coin in East Caribbean currency or in any foreign currency.

Capital

All outward capital transfers require exchange control approval. The purchase by residents of foreign currency securities and of real estate situated abroad for private purposes is not normally permitted. Certificates of title to foreign currency securities held by residents must be lodged with an authorized depository in Grenada, and earnings on these securities must be repatriated.

Personal capital transfers, such as inheritances to nonresidents, require exchange control approval, which normally is granted subject to the payment of estate and succession duties. There are certain allowances for cash gifts (EC$500 a person a year) and for emigration purposes. The Minister of Finance, Trade, and Industry will also consider transfer applications from foreign nationals who have resided in Grenada and are proceeding to take up permanent residence abroad.

Direct investment in Grenada by nonresidents may be made with exchange control approval. The remittance of earnings on, and liquidation proceeds from, such investment is permitted, provided that any liabilities related to the investment have been discharged and that the original investment was registered with the Ministry of Finance, Trade, and Industry. Nonresidents may acquire in Grenada real estate for private purposes with funds from foreign currency sources; local currency financing is not ordinarily permitted. The repatriation of the proceeds from the realization of such investments requires the approval of the Ministry of Finance, Trade, and Industry.

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

Gold

Residents who are private persons are permitted to acquire and hold gold coins for numismatic purposes only. Residents other than the monetary authorities, authorized dealers, and industrial users are not permitted to hold or acquire gold in any form other than jewelry or coins for numismatic purposes. Imports of gold are permitted for industrial purposes only and are subject to customs duties and charges. Licenses to import gold are issued by the Ministry of Finance, Trade, and Industry. The export of gold is not normally permitted.

Changes during 1979

March 15. The authority of commercial banks to approve import and other outward payments was suspended. The approval authority was restored on July 6.

Guatemala

(Position on December 31, 1979)

Exchange Rate System

The currency of Guatemala is the Guatemalan Quetzal, which is pegged to the U.S. dollar, the intervention currency, at Q 1 = US$1. The official buying and selling rates for the U.S. dollar are Q 1.00 and Q 1.01, respectively, per US$1. Buying and selling rates for certain other currencies1 are also officially quoted, mainly on the basis of their rates in the New York market. There are no taxes or subsidies on purchases or sales of foreign exchange.

On January 27, 1947 Guatemala notified the Fund that it was prepared to formally accept the obligations of Article VIII, Sections 2, 3, and 4, of the Fund Agreement.

Administration of Control

There is no exchange control, but all inward and outward transfers are recorded for statistical purposes by the Bank of Guatemala. Foreign exchange transactions of the public sector are carried out exclusively through the Bank of Guatemala and those of the private sector are carried out through the medium of authorized banks appointed by the Monetary Board. Import and export licenses are issued by the Ministry of Economy.

Prescription of Currency

All foreign exchange transactions must be carried out through banks. Payments between Guatemala and Costa Rica, El Salvador, Honduras, and Nicaragua are normally made in the currency of the country concerned through the Central American Clearing House. There are no obligations prescribing the currency for payments to and from other countries.

Imports and Import Payments

Import licenses are not required except for imports of maps of Guatemala, explosives, lead, poultry, milk, eggs, sugar, cacao, butter, vegetable oil, wheat flour, basic food grains, cottonseed, and a few other goods. Imports of coffee beans, coffee plants, and tallow are prohibited from all sources. Imports from Honduras are regulated by a bilateral trade agreement. Payments for permitted imports may be made freely and in any currency.

Under the provisions of the Central American Agreement on Fiscal Incentives, Guatemala grants duty exonerations on imports of raw materials and capital goods to approved industrial firms.

Imports originating outside the Central American Common Market are subject to an import surcharge of 30 percent of the applicable import duty.

Payments for and Proceeds from Invisibles

There are no limitations on payments for and proceeds from invisibles. All international air passages are subject to a tax of 10 per cent. Residents and nonresidents may freely bring in or take out any amount in foreign or domestic banknotes and other means of payment.

Exports and Export Proceeds

Export licenses are required for a number of items. Exports of a few other items are prohibited, including the export of gold and silver in any form (unless the Bank of Guatemala issues a special export license). Travelers may, however, take out up to Q 25 in silver coin that is legal tender in foreign countries. The proceeds of exports are not subject to exchange control.

Capital

No exchange control requirements are imposed on inward or outward capital transfers by residents or nonresidents. All investment by foreign or foreign-controlled companies in the construction of private housing in Guatemala requires the prior approval of the Ministry of Economy. Investment in the petroleum sector is governed by special legislation.

Gold

The Bank of Guatemala is obliged to purchase all gold offered to it, either directly or through the banks, and is entitled to require the surrender, directly or through authorized banks, of the gold holdings of any resident. The Bank sells gold to domestic artistic or industrial users, in accordance with directives of the Monetary Board. The export of gold is prohibited except when the Bank of Guatemala issues a special export license. Gold is imported only by the Bank of Guatemala.

Changes during 1979

May 3. The Law of the Free Trade Zone exempted from import duties and some taxes all raw materials, intermediate goods, and spare parts used by firms in the free trade zone at Santo Tomás de Castilla.

June 12. The bill revising the Law of Drawbacks was passed, which temporarily suspended import duties on raw materials and intermediate goods to be used in the production of exports.

Guinea

(Position on December 31, 1979)

Exchange Rate System

The currency of Guinea is the Guinean Syli, which is pegged to the SDR at GS 24.6853 = SDR 1. Exchange rates for 14 currencies1 quoted by the Central Bank of the Republic of Guinea are determined on the basis of the value of the syli in terms of the SDR and the transaction value of these currencies in terms of the SDR. Exchange rates for the CFA franc and the Mali franc result from the relationship between these currencies and the French franc. Exchange rates for other currencies2 are determined in accordance with the appropriate cross rates in international markets. Transactions under the bilateral payments agreement with the U.S.S.R. are settled in U.S. dollars at the rate of GS 20.46 per US$1, and in respect of the bilateral payments agreement with the People’s Republic of China, in renminbi at the rate of GS 10.030 per renminbi 1. A single exchange rate for the U.S. dollar applies to transfer operations. On December 31, 1979 it was GS 18.763 = US$1. The official buying and selling rates for banknotes were GS 17.25 and GS 20.65, respectively, per US$1.

Administration of Control

Exchange control authority is vested in the Central Bank, which is under the direct supervision of the Presidency. The Bank has not delegated any of its exchange control powers. All settlements with foreign countries, including payments for imports, require approval by the Central Exchange Bureau of the Central Bank.

Foreign trade is a state monopoly. Import and export licenses are issued by Importex, a state enterprise, within the framework of annual import and export programs.

Prescription of Currency

Settlements on account of transactions covered by bilateral payments agreements are made in currencies prescribed by, and through accounts established under, the provisions of the agreements.3 Current payments to or from the Central Bank of West African States (for Benin, Ivory Coast, Niger, Senegal, Togo, and Upper Volta) and The Gambia, Ghana, Guinea-Bissau, Liberia, Mali, Nigeria, and Sierra Leone are normally made through the West African Clearing House. Settlements with other countries are made in designated “convertible” currencies quoted by the Central Bank.

Nonresident Accounts

There are two types of nonresident accounts: Nonresident Transferable Accounts in Foreign Currencies and Nonresident Accounts in Sylis. The opening of a nonresident account is subject to the prior approval of the Central Exchange Bureau.

Imports and Import Payments

All imports, other than those under the Five-Year Plan, require individual licenses, which are issued by Importex within the framework of the annual import program. Once an import license has been issued, authorization for the corresponding payment is granted by the Central Exchange Bureau. Imports by foreign concession holders require import licenses for statistical purposes only and are not restricted. The annual import program takes into consideration the sources of imports and the availability of convertible currencies and of balances under payments agreements.

Certain imports are effected outside the import program. These are goods for which foreign exchange is derived from sources other than the exchange reserves of Guinea (e.g., imports made by two “mixed-economy companies”—the Friguia Company and the Guinea Bauxite Company—and by foreign embassies), goods for the Five-Year Plan, and imports effected by authorized traders.

All commodities are subject to import surcharges, except when imported by the “mixed-economy companies.”

Payments for Invisibles

All payments for invisibles require the authorization of the Central Exchange Bureau, irrespective of the country to which the payment is to be made, unless financed from retained export proceeds (see below).

Payments for freight and insurance in connection with imports are authorized as part of the import license. No exchange is granted for other types of insurance with companies abroad. There is no basic allocation for tourist or business travel; each application is considered individually. Government officials on official missions are permitted an allowance of GS 600 a day. Pilgrims are granted exchange up to the equivalent of GS 16,351 for each pilgrimage and, in addition, up to GS 22,000 to pay for fares. In cases of serious illness, where a doctor’s certificate is submitted, residents are granted foreign exchange for medical care abroad or are permitted to transfer exchange for the care of relatives receiving medical treatment abroad. Individual authorization is required for the payment in Guinea of all fares for foreign travel.

Payments for family support may be made up to monthly amounts determined on the merits of the case. For officially recognized study abroad, the allocation is the equivalent of the amount of a government scholarship, i.e., GS 2,500 a month. Students beginning their studies abroad are granted an additional foreign exchange allowance of up to GS 4,000. The Foreign Investment Law guarantees that at least 20 per cent of the net annual profits of approved foreign investments may be transferred abroad; the percentage actually permitted depends on the agreement concluded between the enterprise concerned and the Government. Expatriate workers employed by the public sector in Guinea may transfer abroad 40 per cent of their net monthly salaries and those employed by the private sector are permitted to transfer Up to 30 per cent of their net monthly salaries. The export of Guinean currency is prohibited.

Exports and Export Proceeds

Importex establishes an annual export program for all exports except those of the “mixed-economy companies.”

All exports require individual licenses in order to (1) assure the implementation of the export program (particularly in respect of commitments under bilateral trade agreements); (2) permit the Treasury to levy certain duties (e.g., special taxes payable in foreign exchange are levied on the volume of bauxite and alumina exported); (3) prevent shortages of goods needed for domestic consumption; and (4) prevent the export of capital. Special authorization from designated agencies is required in addition to the export license for the following commodities: wild animals (dead or alive), edible animals, articles of historic or ethnographic interest, jewelry, articles made of precious metals, and plants and seeds. An export license is granted only when the exporter assumes the obligation to surrender the proceeds immediately after they are collected.

Other than those effected by the “mixed-economy companies,” most exports are made by three state exporting enterprises, Prominex, Proseco, and Frutex, which are subsidiaries of a holding company, Secomex. Foreign planters may be granted special transfer privileges related to the quantity of pineapples, bananas, or citrus fruits exported, and private traders may also be permitted to retain a part of their export proceeds in order to finance authorized imports. The “mixed-economy companies” are allowed to retain their export proceeds abroad, to pay for their imports and operating requirements, and to service their external debt. All other export proceeds must be surrendered.

Proceeds from Invisibles

Exchange proceeds accruing to residents in respect of invisibles must be surrendered. The import of foreign banknotes and travelers checks is permitted freely, subject to declaration on entry, but both must in principle be surrendered within 24 hours after entry. Nonresident travelers may repurchase and re-export the foreign exchange declared upon entry, after deduction of their local expenditures; this deduction may not be less than the equivalent of US$20 for each day of their stay, unless evidence can be produced to show that actual expenditure was less. The import of Guinean currency is prohibited.

Capital

All capital transfers require authorization. Outward capital transfers by Guinean nationals are prohibited.

The Foreign Investment Law of April 5, 1962 provides guarantees against the nationalization of foreign investments in the industrial and mining sectors. It also provides for preferential tax and customs treatment applicable to foreign investments and for the transfer of profits, interest, amortization, and liquidation proceeds of such investments. Small and medium-sized enterprises in which at least GS 15 million is invested over a 3-year period may receive tax exemptions for a period of 7 to 10 years; exemptions for up to 25 years may be granted on long-term investments of particular importance to the economy. The actual conditions under which foreign investments may be made are subject to negotiations within the terms of the Investment Law.

Gold

Guinea has issued four commemorative gold coins which are legal tender. Furthermore, residents may hold and acquire gold coins in Guinea for numismatic purposes. With these exceptions, residents other than the monetary authorities and authorized industrial users are not allowed to hold or acquire gold in any form other than jewelry, at home or abroad.

Changes during 1979

February 9. The Central Exchange Bureau was established by Decree No. 62 to replace the former Exchange Control Office.

November 13. A Foreign Debt Bureau was established by Decree No. 501. It would be responsible for the collation of data on the balance of payments and supervision of import and export licensing.

Guinea-Bissau

(Position on December 31, 1979)

Exchange Rate System

The currency of Guinea-Bissau is the Guinea-Bissau Peso which is pegged to the SDR at PG 44 = SDR 1. The authorities maintain the rate for the Guinea-Bissau peso within margins of 2.25 per cent from the fixed relationship between the peso and the SDR, i.e., between maximum and minimum rates of PG 44.99 and PG 43.01 respectively, per SDR 1. Daily buying and selling rates for the U.S. dollar, the intervention currency, and for other foreign currencies are fixed within limits of 1.8 per cent of the SDR rates for these currencies. On December 31, 1979 the buying and selling rates of the National Bank of Guinea-Bissau (the central bank) for the U.S. dollar were PG 33.124 and PG 33.776, respectively, per US$1. There are no taxes or subsidies on purchases or sales of foreign exchange.

Administration of Control

Foreign exchange transactions are under the control of the Foreign Exchange Department of the central bank. Foreign exchange proceeds must be surrendered to the central bank. Residents must declare to the central bank all their physical assets and foreign exchange holdings abroad.

Prescription of Currency

Settlements with all foreign countries must be made in foreign currency. The central bank may prescribe the currency in which export earnings shall be received. Guinea-Bissau maintains bilateral payments agreements with Algeria and Cape Verde. Settlements with the Central Bank of West African States (for Benin, Ivory Coast, Niger, Senegal, Togo, and Upper Volta) and The Gambia, Ghana, Guinea, Liberia, Mali, Nigeria, and Sierra Leone are normally made through the West African Clearing House.

Imports and Import Payments

All imports are subject to prior licensing. In principle, licenses are issued by the State Commissariat of Commerce, Industry, and Handicrafts on the basis of a monthly ceiling fixed by the central bank and are valid for the period of the import transaction. Licenses granted have to be presented to the central bank within 15 days. Only importers registered with the State Commissariat of Commerce, Industry, and Handicrafts may receive licenses. Each license specifies the quantity and value (c.i.f. and f.o.b.) of the product imported and a separate license is required for each product. Licenses for project-related imports financed by foreign loans or grants are granted automatically. Import licenses are normally provided within 8 to 15 days of a documented request. Imports of essential foodstuffs, such as rice and sugar, are state monopolies.

Since November 1977, the system of import licenses has been suspended and only those import operations considered urgent or essential are permitted. There are some arrears of payments for imports.

Payments for Invisibles

All payments for invisibles require the prior approval of the Committee of Foreign Exchange Control. Foreign exchange allocations for many payments for invisibles, including those for tourism and for the purchase of stocks, bonds, real estate, and profit remittances, have been temporarily suspended. Transfers of pension payments are authorized in accordance with specific criteria. Transfers of profits have been suspended and will be permitted only after the Investment Code, now in preparation, has been finalized and approved. Although no foreign exchange may be purchased for tourism, airplane tickets can be bought using domestic currency. Moreover, purchases of Cape Verde escudos for purposes of tourism in that country are permitted up to the equivalent of PG 10,000 a person. Airline companies may transfer in foreign exchange the difference between their payments and receipts in Guinea-Bissau pesos. These transfers are approved on an ad hoc basis.

Foreign exchange allowances for business travel are limited to PG 15,000 a trip. For study abroad foreign exchange is granted up to PG 6,000 in the first month and PG 3,500 in each of the following months (PG 5,000 for students enrolled in middle-level and higher-level courses). Allowances for travel for health reasons are permitted up to PG 20,000. Remittances to close relatives (parents and children) living abroad are permitted up to PG 2,500 a month. Foreign travelers may take out any remaining foreign currency declared upon entry.

Exports and Export Proceeds

All exports require an export license. Only exporters registered with the State Commissariat of Commerce, Industry, and Handicrafts may obtain export licenses, which are granted automatically in most cases. Exports of groundnuts are reserved for the Government and are effected by two state companies, the People’s Stores and Socomi. Other products exported only by the Government include palm kernels, sawn wood and logs, shrimp, fish, beer, soft drinks, groundnut oil, and parquet flooring.

All exports are subject to a general fee of 1 per cent. Most exports are also subject to export taxes, which range from 3 per cent for firewood to 15 per cent for crocodile hides, with most products in the 9–10 per cent range. All export proceeds must be surrendered to the central bank.

Proceeds from Invisibles

Travelers may bring in any amount of foreign currency. Foreign airline companies must cover the excess of their expenditures over revenues in Guinea-Bissau pesos by transfers from abroad or by the sale of their foreign exchange receipts for Guinea-Bissau pesos. All proceeds from invisibles must be surrendered to the central bank.

Capital

Exchange control is exercised over all capital receipts and payments. Capital transfers associated with emigration are authorized by the “transitory norms” within a monthly limit of PG 50,000 and up to 20 per cent of total taxable income earned during no more than ten years. At present, however, such transfers are suspended.

Gold

Exports and imports of gold are prohibited, except when authorized by the Chief State Commissar and the State Commissar for Finance.

Changes during 1979

May 29. A new customs tariff schedule, introducing wide-ranging increases in import duties, came into effect.

June 7. The authorization of foreign exchange for imports of vehicles and spare parts was suspended. In exceptional cases, authorization would be granted directly by the President of the Council of State or by the Principal Commissar of the Council of Commissars of State.

Guyana

(Position on December 31, 1979)

Exchange Rate System

The currency of Guyana is the Guyana Dollar, which is pegged to the U.S. dollar, the intervention currency, at G$2.55 = US$1. On December 31, 1979 the official buying and selling rates for the U.S. dollar were G$2.5484 and G$2.5612, respectively, per US$1. Buying and selling rates for certain other currencies1 are also officially quoted, with daily quotations based on the buying and selling rates for the U.S. dollar in markets abroad. The Bank of Guyana (the central bank) charges commissions at different rates on the purchase and sale of the officially quoted currencies. There are no taxes or subsidies on purchases or sales of foreign exchange.

Guyana formally accepted the obligations of Article VIII, Sections 2, 3, and 4, of the Fund Agreement, as from December 27, 1966.

Administration of Control

Exchange control authority is vested in the Minister of Finance who has entrusted its administration to the Bank of Guyana. Authority for approving current payments up to specified amounts is delegated to the banks authorized for this purpose; all other import payments and certain payments in respect of current invisibles of a personal nature require the approval of the Bank of Guyana. The Ministry of Trade is responsible for issuing import and export licenses, but import licenses require the endorsement of the Bank of Guyana.

Prescription of Currency

Exchange control applies to all countries, and all currencies other than the Guyana dollar are considered foreign currencies. Authorized payments, including payments for imports, by residents of Guyana to residents of countries outside Guyana may be made in any foreign currency or in Guyana dollars to the credit of an External Account in Guyana. Receipts from countries outside Guyana may be obtained in any foreign currency (in any listed specified currency2 for export proceeds) or in Guyana dollars from an External Account.

Nonresident Accounts

There are two categories of accounts for persons who are not residents of Guyana: External Accounts and Blocked Accounts.

External Accounts may be opened, with exchange control approval, for persons resident in any country outside Guyana, except Rhodesia. They may be credited freely with all authorized payments by residents of Guyana to nonresidents and with transfers from other External Accounts; other credits require approval. They may be debited freely for payments for any purpose to residents of any country, for transfers to other External Accounts, and for withdrawals by the account holder while he is in Guyana; other debits require approval.

Blocked Accounts may, in principle, be credited with funds that are not placed at the free disposal of nonresidents (e.g., certain capital proceeds); these accounts may be debited for certain authorized payments, including the purchase of approved securities. Since mid-1978 Blocked Accounts have been used to hold domestic currency deposits equivalent in value to pending applications for foreign exchange. Such deposits carry a market-related interest rate but no exchange rate guarantee.

Imports and Import Payments

All imports from Rhodesia and South Africa are prohibited. Imports of certain commodities are prohibited from all sources; for some goods, however, the prohibition is not enforced, while others are subject to quotas, if they qualify for duty-free access (under the rules of origin applicable to imports from countries of the Caribbean Common Market–-Caricom).3 All permissible imports (except parcel post items and trade samples up to a specified value), irrespective of origin, are subject to individual licensing. The granting of individual licenses and the conditions attached thereto depend on current policy; some goods are subject to quota while others are licensed freely. Import licenses for commodities originating in Albania, Bulgaria, the People’s Republic of China, Czechoslovakia, the German Democratic Republic, Hungary, North Korea, Poland, Romania, and the U.S.S.R. are generally granted freely, but such imports must be effected through public sector corporations. Public sector corporations have a monopoly over the import of specified commodities from all sources. Certain goods, primarily paper products, such as books and newsprint, may be imported only through the Guyana National Trading Corporation, while pharmaceuticals, other drugs, and surgical instruments may be imported only through the Guyana Pharmaceutical Corporation. Certain foodstuffs may be imported only by the Guyana Marketing Corporation, e.g., those that fall under the agricultural marketing protocol of the Carifta/Caricom Agreement.

Payments for authorized imports are generally permitted upon application and submission of documentary evidence, subject to the availability of foreign exchange. There has been some accumulation of commercial arrears.

Payments for Invisibles

Payments for invisibles to all countries require approval, which, except for tourist travel, is usually given freely, provided that no illegal capital transfer is involved but there has been some accumulation of arrears. The basic annual exchange allocation for tourist travel is G$200 a person and is not cumulative. Standard allocations are applied to certain payments of a personal nature on an annual basis, e.g., for education at schools abroad (G$3,360 for each child), for education at universities and comparable institutions (G$4,800 for each student), and for family maintenance (G$4,800 for each family). Resident and nonresident travelers are subject on departure to an exit tax of G$10 a person.

Persons traveling abroad may take with them Guyana currency notes not exceeding G$40; these notes do not form part of any allotment of exchange for travel. In addition, foreign currency notes up to the value of G$50 may be taken out without permission as part of any travel exchange allowance; any amount in excess of this is subject to approval by the Bank of Guyana. Nonresident travelers may, within one month of their last entry, freely take out any foreign currency notes declared upon entry.

Exports and Export Proceeds

All exports to Rhodesia and South Africa are prohibited. Rice may be exported only by the Guyana Rice Board, sugar only by the Guyana Sugar Corporation, and bauxite and alumina only by the Guyana Mining Enterprise Limited. Certain other exports also are channeled through official agencies. Most exports do not require export licenses, but transactions are supervised by the Bank of Guyana and the Customs and Excise Department to ensure that the exchange proceeds are repatriated and, if obtained in listed specified currencies (see footnote 2), surrendered. Exchange control forms have to be completed for all exports exceeding G$200 in value.

Proceeds from Invisibles

Specified currencies (see footnote 2) received on account of invisibles must be sold to an authorized bank, but other currencies may be retained by the recipient. Travelers may bring in freely any amount in foreign banknotes; domestic banknotes up to a value of G$40 may be brought in by returning travelers only.

Capital

Foreign investors must apply to the Bank of Guyana for “approved status” for new investments at the time of investment in order to be able to repatriate capital. Such approval is normally given for direct investments in new projects that would benefit the balance of payments or the economy of Guyana; “approved status” assures that profits may be remitted, and that upon liquidation of the investment, the proceeds, including any capital increments after payment of all taxes, may be repatriated in full in the currency of the original investment. For the time being, however, foreign-based companies (other than those based in the Caricom area) and their subsidiaries are prohibited from borrowing in Guyana.

The export of capital by residents is not normally permitted. Listed specified currencies (see footnote 2) obtained by residents through capital transactions must be surrendered to an authorized bank, but other currencies may be retained by the recipient. Emigrants of Guyanese nationality may not transfer abroad any part of their capital assets other than a settling-in allowance of G$100 for each member of a family unit; emigrants of foreign nationality may export all declared capital assets, an amount of G$24,000 a family unit at the time of emigration and G$17,300 in each successive calendar year.

Borrowing from nonresidents requires exchange control approval. However, publicly owned enterprises are encouraged to borrow abroad for the financing of specific projects and in some instances for working capital purposes. Since mid-1979 any borrowing by a public sector corporation is subject to prior approval by the Government Debt Committee.

Gold

Residents may hold and acquire gold coins in Guyana for numismatic purposes, and also jewelry. With these exceptions, residents other than the monetary authorities, authorized dealers, producers of gold, and authorized industrial users are not allowed to hold or acquire gold in any form, at home or abroad, without special permission. Neither the Bank of Guyana nor any other official institution purchases gold to supply domestic industry. Imports and exports of gold in any form by or on behalf of the monetary authorities, authorized dealers, producers of gold and industrial users, require licenses issued by the Ministry of Trade. Residents traveling abroad are allowed to take out with them jewelry up to a value of G$600, G$400, and G$200, for women, men, and children under 12 years of age, respectively.

Changes during 1979

April 18. A basic exchange allocation for tourist travel of G$200 a person a year was reintroduced. Unused portions of the allocation might not be carried over to future years.

November 24. Travelers were permitted to take abroad or bring in G$40 in Guyana currency notes. The former limit had been G$15.

December 31. The External Trade Bureau was abolished and its functions were taken over by the Guyana National Trading Corporation.

Haiti

(Position on December 31, 1979)

Exchange Rate System

The currency of Haiti is the Haitian Gourde, which is pegged to the U.S. dollar, the intervention currency, at G5 = US$1. The official buying and selling rates for the U.S. dollar are G 5 per US$1. The U.S. dollar is legal tender and circulates freely in Haiti. Purchases or sales of foreign exchange are subject to a local tax of 0.20 per cent. Commercial banks quote buying and selling rates for certain other currencies with daily quotations based on the buying and selling rates of the U.S. dollar in markets abroad.

On December 22, 1953, Haiti notified the Fund that it formally accepted the obligations of Article VIII, Sections 2, 3, and 4, of the Fund Agreement.

Administration of Control

There is no exchange control and there are no obligations prescribing the method or currency for payments to or from nonresidents. The administration of the foreign exchange system is under the control of the Bank of the Republic of Haiti (the central bank) and exchange transactions are implemented by that Bank and certain commercial banks.

Imports and Import Payments

Import licenses are required for certain foodstuffs, certain footwear, cotton textiles, paints, and iron rods. The importation of used cars is subject to the requirement that the vehicle is at most five years old and has been owned by the importer for a minimum of two years. Imports from member countries of the Council for Mutual Economic Assistance require prior authorization by the Ministry of Commerce and Industry. The Ministry’s prior authorization is also required for imports from any source of certain types of footwear and of a few other items that are controlled for other than balance of payments reasons. The domestic marketing of certain imports is controlled by the State Tobacco Monopoly. Certain imports are subject to surcharges of 4, 5, or 6 per cent of the c.i.f. value, in addition to the applicable import duty; goods subject to the 4 or 6 per cent tax are also subject to an additional tax of 2 per cent. Importers pay an “economic liberation tax” on the amount of the customs invoice; when this amount exceeds G 10,000, the tax is 1 per cent.

Exports and Export Proceeds

Exports of coffee require prior authorization from the Haitian Coffee Institute. All other exports require authorization from the Ministry of Commerce and Industry. Export authorization is usually granted freely but may be withheld when domestic supplies are low. Exports of essential oils are regulated by the Marketing Office for Essential Oils. The proceeds of exports are not subject to exchange control. Exporters must pay an “economic liberation tax” levied on the amount of the customs invoice; when this amount exceeds G 10,000, the tax is 1 per cent.

Payments for and Proceeds from Invisibles

Payments for invisibles are not restricted. No exchange control requirements are applied to proceeds from invisibles. Residents traveling abroad must pay a tax of G 20 on tickets and must buy a G 25,000 travel insurance policy by paying a premium of G 52; diplomats and staff members of international organizations are exempt.

Capital

Capital transfers abroad are not normally permitted but imports may be made freely. Foreign investment in Haiti is regulated by a law of 1949 and a decree of March 13, 1963 and requires prior government approval. Permission is not normally granted to nonresidents for investments in handicraft industries. Under a decree of April 6, 1973, private banks operating in Haiti are required to keep in the form of domestic assets a minimum of 85 per cent of their liabilities to local customers.

Gold

Residents may hold and acquire gold coins in Haiti for numismatic purposes. With this exception, residents other than the monetary authorities and authorized industrial users are not allowed to hold or acquire gold in any form other than jewelry, at home or abroad. The Bank of the Republic of Haiti has the exclusive right to purchase gold domestically and to export gold in the form of coin, mineral dust, or bars. Imports and exports of gold in any form other than jewelry carried as personal effects by travelers may be made only by the Bank of the Republic of Haiti; exports require in addition prior authorization by the Ministry of Finance, while imports for industrial use require prior authorization by the Ministry of Commerce and Industry and the Ministry of Finance, as well as an endorsement by the Ministry of Commerce and Industry before customs clearance. However, commercial imports of articles containing a limited amount of gold, such as gold watches, are freely permitted and do not require an import license or other authorization. Several gold coins have been issued, which are legal tender but do not circulate.

Changes during 1979

June 6. The licensing requirement for imports of automobiles was eliminated.

September 11. The National Bank of the Republic of Haiti was replaced by two independent financial institutions, the Bank of the Republic of Haiti, the central bank, and the National Bank of Credit, a state-owned commercial bank. A six-month transition period was allowed from the date of the partition.

Honduras

(Position on December 31, 1979)

Exchange Rate System

The currency of Honduras is the Honduran Lempira, which is pegged to the U.S. dollar, the intervention currency, at L 2 = US$1. The official buying and selling rates for the U.S. dollar are L 2.00 and L 2.02, respectively, per US$1. Banknotes in Costa Rican colones, Guatemalan quetzales, Nicaraguan córdobas, and Salvadoran colones are purchased at parity rates with a 1 per cent commission and are sold at parity rates. The buying and selling rates for other currencies that are of significance to the foreign trade of Honduras are fixed daily on the basis of the buying and selling rates of the currency concerned against the U.S. dollar in foreign markets. There are no taxes or subsidies on purchases or sales of foreign exchange.

On August 19, 1950, Honduras formally notified the Fund that it had assumed the obligations of Article VIII, Sections 2, 3, and 4, of the Fund Agreement, beginning on July 1, 1950.

Prescription of Currency

There are no obligations prescribing the method or currency for payments to or from nonresidents. Payments to the other member countries of the Central American Common Market (CACM)1 in respect of trade and invisibles may be settled in Honduran lempiras through the Central American Clearing House.

Imports and Import Payments

Import licenses are required for a few items. Payments and transfers abroad may be made freely; however, for statistical purposes, buyers of foreign exchange are required to file an application stating how the exchange will be used. Certain essential imports (List 1) require prior approval from the Central Bank of Honduras when they are to be made on credit terms. Certain nonessential imports (List 2) also are subject to Central Bank approval; the use of external credit to pay for these goods is prohibited. Imports of goods not appearing on either list do not require Central Bank approval, provided that payment is on sight terms. The import of corn, rice, sorghum, beans, and potatoes is the monopoly of the Honduran Institute of Agricultural Marketing.

Under the provisions of the Central American Agreement on Fiscal Incentives, Honduras grants duty exonerations on imports of raw materials and capital goods to approved industrial firms.

Most imports from countries outside the CACM are subject to a surcharge of 30 per cent of the applicable customs duty. Some goods are subject to a customs surtax of 12 per cent of the duty and to a consular charge of 8 per cent of the f.o.b. value. There is a duty free zone in Puerto Cortés.

Exports and Export Proceeds

Exports other than gold and sugar do not require licenses but must be registered. Exports of coffee are supervised by the Honduran Coffee Institute and exports of bananas by the Honduran Banana Corporation. The export of corn, rice, beans, and potatoes is controlled by the Honduran Institute of Agricultural Marketing, and lumber exports are channeled through the Honduran Forest Development Corporation (Cohdefor). The proceeds of exports must be repatriated to Honduras; those wishing to negotiate their foreign exchange in Honduras may do so only with the Central Bank or through the banking system for account of the Central Bank. There is an export tax on cattle, meat, and sugar and a general export duty of 1 per cent of the f.o.b. value of all other export items except bananas, coffee, and minerals.

Payments for and Proceeds from Invisibles

There are no restrictions on payments for invisibles and proceeds from invisibles may be retained. The import and export of domestic and foreign banknotes by travelers are permitted freely.

Capital

Capital payments are not subject to exchange control. However, the authorization of the Minister of Finance is required for all activities implying the receipt of resources and their transfer abroad for purposes of investment in mutual funds, housing developments, real estate, or similar activities. Foreign mutual funds and similar financial institutions require permission to collect funds in Honduras for deposit or investment abroad. The approval of the Ministry of Finance, the Council of Economic Planning, and the Central Bank is required for the public sector to contract any foreign indebtedness, whether for import financing or for other purposes. The contracting of external debt by the private sector requires approval by the Central Bank.

Gold

Residents may hold and acquire gold coins in Honduras for numismatic purposes. With this exception, residents other than the monetary authorities and authorized industrial users are not allowed to hold or acquire gold in any form other than jewelry, at home or abroad. Imports and exports of gold in any form other than jewelry require licenses issued by the Central Bank; such licenses are not normally granted except for imports and exports by or on behalf of the monetary authorities, industrial users, and producers of gold. All locally produced gold is exported in the form of ore for refining. Commercial imports and exports of jewelry and other articles containing gold require licenses issued by the Ministry of Economy; for most articles, these are granted freely. Exports of gold are subject to a tax of 5 per cent.

Changes during 1979

September 3. The Central Bank raised from 40 per cent to 45 per cent the commercial banks’ reserve requirements on foreign liabilities of all maturities. Net use by the public sector of foreign liabilities with maturities of less than ten years was limited to a maximum of US$25 million during the six-month period ended December 31, 1979.

December 26. As part of a general tax reform some import and export taxes were instituted or increased. Import taxes on alcoholic beverages were raised to an average of L 3.25 a liter and taxes on cigarettes were raised to the equivalent of 65 per cent of their c.i.f. value. Taxes of L 40 a head on exports of live cattle and of L 0.035 a pound on frozen meat were imposed. In addition, taxes were imposed on the production and consumption of beer and carbonated water. An export tax was imposed on cattle, meat, and sugar, and a general export duty of 1 per cent of the f.o.b. value was imposed on all other export items except bananas, coffee, and minerals.

Hong Kong1

(Position on December 31, 1979)

Exchange Rate System

The currency of Hong Kong is the Hong Kong Dollar. The authorities do not maintain margins in respect of exchange transactions in Hong Kong, and exchange rates for the Hong Kong dollar are determined largely on the basis of demand and supply conditions in the exchange market. The authorities intervene only when necessary in order to smooth out exceptional fluctuations in exchange rates so as to maintain orderly conditions in the exchange market. On December 31, 1979 the buying and selling rates in the interbank foreign exchange market for the U.S. dollar, the intervention currency, were HK$4.9240 and HK$4.9260, respectively, per US$1. There are no taxes or subsidies on purchases or sales of foreign exchange.

Administration of Control

There is no exchange control. Import and export licensing is carried out mainly by the Director of Trade, Industry and Customs.

Prescription of Currency

No prescription of currency requirements are in force. Settlements between residents of Hong Kong and nonresidents may be made and received freely in Hong Kong dollars or any other currency.

Nonresident Accounts

No distinction is made between resident and nonresident accounts.

Imports and Import Payments

Except for certain dutiable commodities and items that are controlled for health, safety, or security reasons, imports are free from licensing control. However, all goods originating in or consigned from Rhodesia are subject to import licensing control.2 With a few exceptions a trade declaration must be lodged with the Department of Trade, Industry and Customs within 14 days of importation in respect of each consignment of goods imported to or exported from Hong Kong. The import of rice is subject to a quota system operated by that Department. Payments for permitted imports may be made freely, at any time, and in any currency.

Exports and Export Proceeds

Export licenses are required only to enable Hong Kong to fulfill its international obligations and for health, safety, or security reasons. Textiles are also subject to licensing, partly because of a number of bilateral arrangements with specified countries under which the export of certain textiles is restricted. Export proceeds may be collected at any time and in any currency. They need not be repatriated or surrendered.

Payments for and Proceeds from Invisibles

There are no limitations on payments for or receipts from invisibles. Resident and nonresident travelers may freely bring in and take out any amount in domestic or foreign banknotes, travelers checks, and other means of payment.

Capital

No exchange control requirements are imposed on capital receipts or payments by residents or nonresidents.

Gold

There is a free market for gold in which dealings by residents and nonresidents are unrestricted. Imports and exports of gold in any form (including finished jewelry) are freely permitted and do not require licenses. Residents may hold gold in any form in Hong Kong or abroad. A gold coin of HK$ 1,000 is legal tender but does not circulate.

Changes during 1979

No significant changes took place.

Iceland

(Position on December 31, 1979)

Exchange Rate System

The currency of Iceland is the Icelandic Króna. There is no organized foreign exchange market in Iceland and official buying and selling rates for the U.S. dollar, the principal trading and reserve currency, are quoted by the Central Bank of Iceland. These rates are adjusted from time to time; on December 31, 1979 the buying and selling rates were IKr 394.40 and IKr 395.40, respectively, per US$1. Rates for other currencies1 are based on the official rates for the U.S. dollar and the dollar rates for the currencies concerned in international markets. The authorized banks are permitted to carry out exchange transactions among themselves and to engage in arbitrage in foreign markets. There are no taxes or subsidies on purchases or sales of foreign exchange except for a temporary tax of 10 per cent levied on foreign exchange sold to residents for tourist travel, which has been extended to December 31, 1980.

Administration of Control

The Ministry of Commerce, after consulting with the Central Bank, has the ultimate responsibility for matters concerning import and export licensing and payments for invisibles. The Central Bank is responsible for the regulation of foreign exchange transactions and of exchange control, including capital controls; it is also responsible for ensuring that all foreign exchange due to residents is surrendered to authorized banks and that such exchange is disposed of as authorized. Two commercial banks, the National Bank of Iceland and the Fisheries Bank, are the only authorized banks. The authorized banks issue import and exchange licenses in consultation with the Ministry of Commerce. Export licenses are issued by the Ministry of Commerce.

Prescription of Currency

As a general rule, exchange receipts must be obtained in convertible currencies. In practice, settlements with countries in the Dollar Area and with many other countries are made in U.S. dollars; with countries of the former Sterling Area and some other countries, in sterling; and with certain other countries, in their respective currencies.

Nonresident Accounts

There are two categories of nonresident króna accounts: Foreign Accounts and Special Accounts. The opening of nonresident accounts requires individual approval.

Foreign Accounts may be credited with the proceeds from the sale of foreign currency to authorized banks and with authorized payments due to nonresidents from residents. Balances on Foreign Accounts may be used freely for payments to residents and may without a license be converted into the currency of the country of residence of the account holder. These accounts are in practice seldom used, payments for international transactions generally being made in U.S. dollars, sterling, or other convertible currencies.2

Special Accounts in krónur or foreign currency may be opened by agreement with an authorized bank. The most important of these accounts are those of foreign banks and foreign insurance companies. They may be credited freely, up to certain limits, with approved payments from residents.

Imports and Import Payments

All goods not included in the restricted list may be imported freely without an import license from any country; some 90 per cent of total imports are liberalized. Some 30 commodities or groups of commodities are included in the restricted list and may be subject to quantitative restriction. Some of these commodities are admitted, subject to individual license, under global quotas. The remaining goods on the restricted list are admitted on the basis of individual licenses issued on a discretionary basis (“other licensing”). The principal items involved are petroleum products; the only other industrial goods on the list are brooms and brushes. Certain imports, including fertilizers, tobacco, matches, and alcoholic beverages, are admitted only under state trading arrangements. Fresh vegetables and potatoes are imported under the auspices of the Agricultural Production Board. None of these commodities, however, is subject to quantitative restriction.

For imports from all sources, when requiring a license, a fee of 1 per cent (minimum IKr 100) is charged as a license fee on the króna amount of the import license when the license is issued; for petroleum products, however, this fee is 0.1 per cent. The commercial banks require certain deposits for purposes of security in connection with certain import transactions. An advance deposit is required for imports of furniture and certain other wood manufactures. The deposit amounts to 35 per cent of the f.o.b. value of the products and is collected by the commercial bank on the basis of the foreign exchange purchased for payment of the goods. The deposits are held for 90 days in a blocked account with the Central Bank and earn interest at a rate equal to that paid on savings deposits. The scheme is due to expire on December 31, 1980.

Importers of goods not requiring licenses are not required to obtain a foreign exchange permit prior to shipment from abroad, provided that the purchase is payable at sight. However, the goods will not be cleared by the customs unless payment has already been made, or the importer has arranged with an authorized bank for payment. An importer may either open a letter of credit or obtain a payment certificate which enables him at any time to buy foreign exchange to pay for the goods. For imports that require an individual license, foreign exchange is granted in accordance with the terms stipulated in the license.

Importers may freely accept suppliers’ credit for up to 3 months from the date of arrival at an Icelandic port for listed goods corresponding to some 55 per cent of 1970 imports; the goods not listed are mainly building materials and nonessential goods (including motor vehicles for personal use). Credit in excess of 3 months and not exceeding 12 months requires permission by an authorized bank and the Ministry of Commerce. Approval is given only in exceptional circumstances, e.g., in connection with the import of industrial raw materials for which the production process is lengthy. Foreign credit in excess of 12 months is subject to government authorization.

Imports of motor vehicles and motorcycles are subject to an import surcharge of 50 per cent ad valorem; the surcharge is 25 per cent for a limited number of taxicabs. Buses, heavy trucks, ambulances, tractors, and public service vehicles are exempt. Certain nonessential goods, whether imported or of domestic origin, are subject to a temporary excise tax of 24 per cent and 30 per cent ad valorem.

Payments for Invisibles

No exchange license is required for government payments (such as interest and amortization on external loans, expenses of the foreign service, payments to international organizations, payments for postal, telegraphic, and telephone services), for banking commissions, or for bank charges on foreign exchange transactions.

Most other outgoing payments are licensed freely on the basis of bona fide documents. There is an exchange license fee of 1.75 per cent for the provision of tourist exchange; for other payments for invisibles the license fee is 1 per cent. The basic allocation for tourist travel is the equivalent of IKr 290,000 a person for one trip a year (IKr 145,000 for children); if a second trip is made in the same calendar year, a further amount of IKr 290,000 may be used to purchase foreign exchange. A temporary exchange tax of 10 per cent is levied on exchange provided for tourist travel. Applications for exchange for major repair of ships, repair of means of transport other than ships and aircraft, transactions and transfers in connection with direct insurance, and insurance operations abroad are considered on their merits. The chartering of foreign ships usually is not allowed when Icelandic vessels are available for charter on normal terms.

Resident and nonresident travelers may take out IKr 30,000 in Icelandic banknotes and coin, in denominations not exceeding IKr 1,000. Nonresident travelers may re-export any foreign exchange they brought in at the time of entry.

Exports and Export Proceeds

All commercial exports require licenses. The shipping documents must be lodged with an authorized bank. Exchange receipts accruing from exports must be surrendered without undue delay. All fish products are subject to export levies, which are returned to the fishing industry through special funds.

Proceeds from Invisibles

Exchange receipts from invisibles must be surrendered without undue delay. The owners of Icelandic ships and aircraft are, with the approval of the authorized banks, permitted to retain their foreign exchange receipts from freight, passenger tickets, or other charges, and to use them for operating purposes and for purchases of necessities. Icelandic insurance companies which reinsure abroad are permitted to retain foreign exchange earned from premiums and indemnities and to use it to pay reinsurance premiums, claims, and other regular expenditures in the country where the foreign exchange was earned.

Resident and nonresident travelers may bring in IKr 30,000 in Icelandic banknotes and coin, in denominations not exceeding IKr 1,000. There are no limitations on the import of foreign banknotes and coin.

Capital

All investments by nonresidents in Iceland are subject to individual approval. The participation by nonresidents in Iceland’s joint stock companies may not exceed 49 per cent, and is not allowed in the fishing industry. Nonresident-owned foreign capital entering in the form of foreign exchange must be surrendered. Nonresidents may be authorized to open nonresident accounts for these funds, in which case their retransfer abroad may be permitted.

Residents are obliged to surrender foreign exchange accruing to them on account of capital transactions and payments. Without the approval of the Government, residents may not obtain loans abroad, including loans for financing imports, for periods exceeding one year. Applications for the contracting of financial credits and loans abroad for a period of less than one year are considered on their merits and approved only in exceptional circumstances.

Transfers of capital abroad by residents require approval, which is granted only in exceptional cases. However, direct investment abroad for the purpose of assisting the marketing of Icelandic products is normally permitted. Portfolio investment abroad by residents is prohibited. Outward transfers of inheritances, legacies, and emigrants’ assets are considered on their merits and are restricted.

Nonresidents may acquire Icelandic securities and other assets with imported funds; the transfer abroad of the proceeds from their sale requires authorization. Securities held in Iceland by nonresidents must be registered, and all transactions concerning them are subject to licensing. The import and export of securities by residents require Central Bank approval.

Gold

A commemorative gold coin with a face value of IKr 10,000 is legal tender but does not circulate. Residents may hold and acquire gold in Iceland, subject to certain legal requirements. Imports and exports of gold in any form other than jewelry require licenses issued by the Central Bank; such licenses are not normally granted except for imports and exports by or on behalf of the monetary authorities and industrial users. However, citizens returning to Iceland after residing abroad may freely bring in any gold in their possession.

Changes during 1979

January 1. A reduction in tariffs took effect according to the terms of Iceland’s agreements with the EC and the EFTA.</