Chapter

Explanatory Note on Coverage of Individual Countries

Author(s):
International Monetary Fund. External Relations Dept.
Published Date:
September 1982
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Part Two gives a detailed description of the exchange and trade system of individual member countries, including two nonmetropolitan territories. The exchange and trade system of one other country, which is not a member of the Fund, is also described.

In general, the description relates to the exchange and trade systems as at the end of 1981, but in appropriate cases reference is made to significant developments that took place early in 1982.

A standardized approach has been followed, under which the description of each system is broken down into similar headings, and the coverage for each country includes a final section that lists chronologically the more significant changes during 1981.

The description of the restrictive system is not necessarily confined to those aspects involving exchange restrictions or exchange controls. As in previous Reports, questions of definition and jurisdiction have not been raised, and an attempt has been made to describe restrictive systems in their entirety, except for the tariff structure and, in most cases, direct taxes on exports and imports. Thus, the coverage extends to such features as import licensing, advance deposit requirements, import surcharges, travel taxes, export licensing, and export incentive schemes. Similarly, the section “Changes during 1981” includes references to certain developments that may have a direct impact on international transactions but are not reflected in the body of the survey, such as major revisions of import tariffs or developments relating to regional cooperation.

The description given in the section Exchange Arrangement is in line with the notification of exchange arrangements that member countries have furnished to the Fund under Article IV, Section 2(a). The structure of exchange markets is described, and the official exchange rate is given. The rates quoted are those effective on December 31, 1981, unless stated otherwise.

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

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

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

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

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

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

Under Proceeds from Invisibles, any conditions governing exchange derived from transactions in invisibles are given, and any limitations on the import of foreign and domestic banknotes are described.

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

The section on Gold gives a summary of the principal regulations that govern the holding, negotiation, import, and export of gold coin and gold in other forms.

Afghanistan

(Position on December 31, 1981)

Exchange Arrangement

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, 1981 Da Afghanistan Bank’s buying and selling rates were Af 50.00 and Af 51.20, 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 (see below). Da Afghanistan Bank charges commissions ranging from 0.10 per cent to 0.375 per cent on exchange transactions and levies a 5 per cent surcharge on its sales of foreign exchange. Proceeds of raisin exports to the U.S.S.R. (other than those by agricultural cooperatives) that are sold to the Da Afghanistan Bank are subject to an exchange surcharge of 7 per cent; the surcharge is refunded if the exporter should within one year buy back the foreign exchange to pay for imports from the U.S.S.R. A number of transactions take place in the bazaar foreign exchange market, where the rates are generally more depreciated.

Administration of Control

Foreign exchange transactions are 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 agreements1 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 usually range 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. Generally, a deposit of up to 40 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 natural gas, karakul, wool, and cotton must be surrendered. Da Afghanistan Bank also buys foreign exchange from exports to bilateral payments agreement countries, up to 50 per cent of exports by individuals and 70 per cent in the case of commercial institutions. An export tax of Af 50 a ton is levied on exports of raisins to the People’s Republic of China and Czechoslovakia.

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 in 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 1981

January 12. A 3 per cent surcharge was imposed by Da Afghanistan Bank on its sales of foreign exchange.

March 24. With specified exceptions, an exchange tax of 7 per cent was levied on proceeds of raisin exports to the U.S.S.R. that are sold to the Da Afghanistan Bank.

March 24. A provision was introduced for exporters to sell to Da Afghanistan Bank up to 70 per cent of the proceeds from exports to the U.S.S.R.

June 8. The surcharge on foreign exchange sales by Da Afghanistan Bank was raised from 3 per cent to 5 per cent.

Algeria

(Position on December 31, 1981)

Exchange Arrangement

The currency of Algeria is the Algerian Dinar. Daily buying and selling rates for the U.S. dollar, the intervention currency, and other specified currencies1 are established by the 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. 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 agreements2 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. Payments under foreign supply contracts (contrats de fournitures) can be made in either the currency in use at the headquarters of the supplier or that of the country of origin of the merchandise. Foreign holders of servicing contracts are required to open local nonresident accounts to which payments are made by the Algerian contracting party; such accounts must be closed within six months from the end of the contract, beyond which date outward transfers of the funds or their use for purposes unrelated to the contracts is not permitted.

Nonresident Accounts

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

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

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

(3) Final Departure Accounts may be opened, without prior authorization, in the name of any physical person residing in Algeria, not of Algerian nationality, who intends to leave Algeria to return to the country of origin, 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 credited 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.

(4) Convertible Dinar Accounts for Nonresident Algerians were introduced in January 1980 as a means of attracting deposit funds from Algerian workers abroad.

Imports and Import Payments

Imports from Israel 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. There are three types of import authorizations: (1) AGI Monopole, issued to enterprises holding monopoly rights to import specified commodities; (2) AGI de fonctionnement interne, issued to individual enterprises for import requirements relating to their production activity; and (3) AGI objectif planifié, issued to enterprises for imports relating to their investment program. Imports not involving use of official foreign exchange (sans paiement) and not subject to any specific prohibition are exempt from all exchange and trade control formalities when valued at DA 5,000 or less.

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. In accordance with Law No. 80-07 of August 3, 1980, imports must be insured domestically.

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. Insurance on all risks arranged in Algeria by Algerian residents must be purchased in Algeria.

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 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 years) 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 years. For those traveling for medical reasons (including accompanying persons) the allowance is DA 800 a person a trip and DA 400 for a child under 15 years. 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 receive an allocation in Saudi Arabian riyals; 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 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 (see footnote 2). 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 a 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 Precieux (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 1981

March 18. The state enterprise Société Nationale des Constructions Metallurgiques (SNMETAL) was given monopoly over the importation of a wide range of metal construction materials.

May 5. The Minister of Commerce introduced Circular No. 21 DG G1-DMP, specifying, inter alia, the financial and management requirements that foreign firms must meet to qualify for the supply of material and services to Algeria.

July 12. The state enterprise in the chemical industry, Société Nationale des Industries Chemiques (SNIC), was given monopoly over the importation of specified chemical products.

Antigua and Barbuda1

(Position on December 31, 1981)

Exchange Arrangement

The currency of Antigua and Barbuda is the East Caribbean dollar,2 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 per US$1. On December 31, 1981 the buying and selling rates for the U.S. dollar were 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. All foreign exchange transactions are subject to a levy of 1 per cent; the minimum levy is EC$1 a transaction.

Administration of Control

Exchange control is administered by the Ministry of Finance and applies to all currencies. Export licensing is required for a range of products, particularly those subject to export duties. Import licenses are issued by the Commission of Inland Revenue under the Ministry of Finance.

Prescription of Currency

Settlements with residents of member countries of the Caribbean Common Market (Caricom)3 must be made either in the currency of the Caricom country concerned or in East Caribbean dollars. Settlements with residents of other countries may be made either in any foreign currency or in East Caribbean dollars. Settlements involving South African currency are not permitted.

Nonresident Accounts

External accounts may be opened for nonresidents with the approval of the Ministry of Finance and may be maintained in any currency requested, but American servicemen and employees of the U.S. Government and international agencies only need the authorized commercial bank’s approval. A few residents—firms and individuals—are also allowed to open external accounts. External accounts can be credited only with proceeds from the sale of foreign currencies and with transfers from other External Accounts but not with payments by residents. Commercial banks are required to report external accounts operations to the Ministry of Finance on a quarterly basis.

Imports and Import Payments

All imports from South Africa are prohibited. Most goods may be freely imported under open general license granted by the Ministry of Finance. Certain other commodities require individual licenses, unless imported from Caricom countries. Antigua and Barbuda follows the new Caricom rules of origin adopted in June 1981. Payments for authorized imports are permitted upon application and submission of documentary evidence. Authority is delegated to commercial banks to endorse application forms for import licenses after confirming sight of documents.

Imports that are exempt from import duties include basic foods and agricultural imports. All other exemptions, for machinery, equipment, and raw materials, are granted on a case-by-case basis and generally under the Fiscal Incentives Act and the Hotel Incentives Act. Import duties range from 5 per cent to 40 per cent and are scheduled to be brought into line with the 35 per cent Caricom common external tariff by the end of 1982. All imports are subject to a stamp duty.

Payments for Invisibles

Residents may purchase foreign exchange from authorized banks up to the equivalent of US$750 a trip outside the East Caribbean Currency Area; however, this limit may be exceeded with permission from the Ministry of Finance. In terms of Caricom travelers checks (which are denominated in Trinidad and Tobago currency), the basic allowance is TT$500 a trip for holiday travel, TT$2,500 a trip for business, and TT$3,000 a trip for medical expenses. Official authorization is required beyond these limits. There are no limits on the amount of local currency that may be taken out of the country. Profits may be remitted in full, subject to confirmation by the Commission of Inland Revenue of registration for corporate income tax purposes. Student remittances are usually exempted from the foreign exchange levy.

Exports and Export Proceeds

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

Proceeds from Invisibles

Travelers to Antigua and Barbuda may bring in freely notes and coins denominated in East Caribbean dollars or in any foreign currency. Foreign currency coin is not normally exchanged. U.S. and Canadian currency for checks and drafts for U.S. or Canadian currency can be tendered up to US$1,000 without restriction and with no levy; for amounts over US$1,000 Ministry of Finance approval must be obtained. Levy exemptions for transfers for charity purposes are exempted from all other levies.

Capital

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

Gold

There are no restrictions on imports of gold.

Changes during 1981

No significant changes occurred in the exchange and trade system.

Argentina1

(Position on December 31, 1981)

Exchange Arrangement

The currency of Argentina is the Argentine Peso. Since December 24, 1981 the authorities have adopted an arrangement under which the Argentine peso is allowed to float in the foreign exchange market. On December 31, 1981 the closing rate for the U.S. dollar was $a 10,600 per US$1 (selling). Transactions are allowed in certain other currencies,2 with daily quotations based on the buying and selling rates for the U.S. dollar on markets abroad.3 Purchases and sales of foreign exchange are subject to a tax of 0.6 per cent. Forward exchange operations are permitted in the private sector with maturities of up to 180 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 institutions 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 Integration Association (LAIA). Argentina and Cuba maintain a reciprocal credit arrangement by means of special accounts in each central bank, through which transactions between the two countries are settled; the limit under these accounts is US$10 million. Transactions with other countries must be settled in freely usable 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

Import payments may be made in any convertible currency. All imports by the private sector valued at US$1,000 or more (f.o.b.) require a sworn Declaration of Need to Import (Declaración Jurada de Necesidad de Importación) submitted by the importer to the National Import Directorate. Registration of the declaration is automatic. Public sector imports require approval by the Central Bank with regard to debt.

In addition to customs duties, imports are subject to the following taxes: a stamp duty of 0.6 per cent and selective internal taxes ranging from 5 per cent to 22 per cent.

Imports of merchandise in general may be fully paid for against shipment. 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.

Payments for Invisibles

Payments for invisibles may be made freely. Sales of foreign currency, notes, and gold with a sworn declaration of purpose may be freely effected up to US$20,000 a person a day.

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

Exports and Export Proceeds

Minimum export prices (reference prices) are established for many agricultural and livestock exports as a basis for the payment of duties 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. Proceeds of traditional exports must be received before shipment, by means of advance payments or irrevocable letters of credit payable against shipping documents in Argentina. Proceeds from promoted exports must be repatriated within 180 days from the date of shipment. In both cases, export proceeds must be surrendered within 15 working days from the respective time limits. Certain nontraditional exports are eligible for rebates (reintegro and reembolso).4

An export tax of 10 per cent of the f.o.b. value or reference price (valor índice), as appropriate, is levied on products classified as traditional exports, pursuant to Resolution No. 2 of the Ministry of Economy.

Many exports, particularly nontraditional exports, are eligible for export incentives of various kinds.5 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.6 Certan iproducts, mostly nontradtional 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. The inflow of financial loans undertaken by local foreign-owned enterprises and originating from foreign enterprises which either directly or indirectly control the borrowing enterprises or are their subsidiaries require the prior approval of the Central Bank. Loans endorsed or guaranteed by the State also require prior authorization from the Central Bank. Banks may accept foreign currency deposits with minimum maturities of 7 days and lend the proceeds domestically at freely determined rates of interest. 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. Outward capital transfers are subject to prior authorization by the Central Bank.

The foreign investment regime is regulated by Law No. 21382 (Decree-Regulation No. 283 of February 4, 1977) and by amendments introduced by Law No. 22208 promulgated by Decree No. 1062 of June 30, 1980, as well as by Decree No. 103 of January 19, 1981. 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 they are legally 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 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 service sectors including the postal system, electricity, gas, and telecommunications, and in radio transmitters, television stations, newspapers, periodicals and magazines, energy, education, and financial and insurance institutions; (b) transfers of capital and the acquisition of shares (the latter being permissible only in exceptional cases when it is manifestly beneficial to the national economy), which involve changing the national ownership structure of a local firm belonging to national investors and having net assets exceeding US$10 million; (c) acquisition of goodwill belonging to national investors and having a value exceeding the above-mentioned amount; (d) investments that exceed US$20 million; (e) investments where the investor is a juridical person under public law; and (f) investments where special or promotional benefits are requested that can be granted only by the National Executive and the proposed investment is contingent on them.

(2) No prior approval is required for (a) total or partial reinvestment of a registered foreign investor’s profits (even in the sectors referred to in item (1) above), provided that they do not involve changing the national ownership structure of the receiving firm and are intended to foster the activities for which the original investment was approved or which the firm was developing when the law entered into force; (b) new investments in freely convertible foreign currency made for the same purposes as mentioned in item (1) above and not exceeding 30 per cent of the registered capital in the receiving firm and which do not involve converting it into a “domestic firm with foreign capital,” or new investments that are made pursuant to a preferential right and in order to maintain an interest equal to or lower than what was held up to the time; (c) new transfers of freely convertible foreign currency not exceeding US$5 million and not involving a change in the national ownership structure of an existing local firm; and (d) investment in any of Argentina’s stock markets, provided that the amount does not exceed US$2 million for each foreign investor and so long as total foreign investment does not exceed 2 per cent of the capital of the company involved.

(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 on after-tax profit when they exceed 12 per cent of registered capital on an annual basis. This tax is 15 per cent on 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, as amended in 1980).

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 1981

January 19. Regulations on inward foreign investment were relaxed as follows: (a) examination and approval of foreign investments were centralized in the Under Secretariat for Foreign Investment in the Ministry of Economy; (b) preference would be given to new investment in priority sectors and to ventures involving at least 51 per cent of local participation; and (c) repatriation of capital would be allowed after an initial three-year period, provided that the continuity of the local firm was assured (Decree No. 103 of the Ministry of Finance).

February 3. The Argentine peso was devalued by 10 per cent against the U.S. dollar and at the same time a schedule of daily buying and selling regulation rates was announced for the period February 3-August 31, 1981. The Central Bank was to intervene in the foreign exchange market if the buying or selling rates exceeded the band created by the announced regulation rates (Circular No. R. C. 929 of the Central Bank of Argentina).

March 20. Foreign exchange purchases exceeding US$20,000 in each case were made subject to a written declaration of purpose (Telephone Communication No. 4486 of the Central Bank of Argentina).

April 1. The tariff reform program initiated in January 1979 was suspended.

April 2. The following changes were made in the exchange arrangement: (a) the practice of pre-announcing the exchange rate was discontinued, and it was decided that the Central Bank would determine daily the spot selling and buying regulation rates of the Argentine peso for the U.S. dollar; (b) the rates would be adjusted by small amounts at frequent intervals in the future; and (c) the spot selling rate of the peso against the U.S. dollar was adjusted by 30.1 per cent and the spot buying rate by 32.4 per cent. (Foreign exchange earnings on exports declared to the Junta Nacional de Granos by April 1, 1981 that either paid export taxes or received rebates would be converted at the exchange rate prevailing on April 1, 1981—Communication A, No. 16 of the Central Bank.)

April 2. The following measures were introduced in conjunction with the depreciation of the peso: (a) a 12 per cent tax was imposed on exports of cereals, meat, and other products, to be gradually reduced for cereals beginning May 1, 1981, eliminated for grain cereals by November 1, 1981, and for coarse grain cereals by March 1, 1982; (b) a 10 per cent tax was levied on exports of various food products including wheat flour, vegetable oils, and cereal products; (c) export rebates for specified products, including fruits, tomatoes, cotton, tea, milk, and wool, were reduced by 3 percentage points; and (d) with the exception of those for motor vehicles, import duties at the maximum levels were reduced by 12 percentage points but to levels which may not be below 43 per cent (Communication A, No. 16 of the Central Bank).

April 2. The declaration requirement for foreign exchange purchases exceeding US$20,000 was eliminated (Communication B, No. 35 of the Central Bank).

May 29. Authorization was granted for risk-contract exploration and development of uranium by foreign private companies in joint ventures with the Argentina Nuclear Agency on a 50–50 basis; a maximum of 25 per cent of the production must be exported and the balance would be required to be sold to the Nuclear Agency.

June 2. The following changes were made in the exchange arrangement: (a) the regulation spot selling and buying rates of the Argentine peso against the U.S. dollar were changed from $a 3,284 to $a 4,269 per US$1 and from $a 3,274 to $a 4,249 per US$1, respectively, representing a depreciation of about 30 per cent in terms of pesos per U.S. dollar; (b) it was announced that the Argentine peso would be depreciated by 6 per cent in terms of pesos per U.S. dollar during June, and thereafter the exchange rate would be adjusted to maintain the real exchange rate of the peso at its June 30, 1981 level; (c) the Central Bank would continue to determine daily the spot selling and buying regulation rates and to intervene in the foreign exchange market if the band was exceeded; (d) the declaration requirement for purchases of foreign exchange was reinstated, irrespective of amounts involved; and (e) the maximum delay for repatriating foreign exchange receipts from traditional merchandise exports was shortened from 180 calendar days to 30 calendar days from the date of shipment (Communication A, No. 30 of the Central Bank).

June 4. It was decided that private holders of foreign financial debt contracted after January 1, 1981, which fell due after May 29 but not later than December 31, 1981, and which was renewed for a period of at least one year, would be entitled to the difference in pesos between the exchange rates in effect on May 29, 1981 and June 2, 1981, adjusted on the basis of the U.S. dollar exchange rate on the latter date and the maturity date of the new obligation (Communication B, No. 69 of the Central Bank).

June 4. Financial assistance for the production of eligible goods under the system of prefinancing for specified exports was increased, and the credit terms were extended in certain cases; the period of financing for foreign sales of specified products was also extended to one year (Central Bank Circular No. R.F. 1422).

June 5. To encourage new foreign borrowing as well as longer maturities, changes were made in existing regulations as follows: (a) an exchange rate guarantee scheme for amortization payments only was introduced, under which private financial loans contracted or renewed from this date would be eligible for guarantee provided that the proceeds were surrendered by financial intermediaries to the Central Bank at the official exchange rate and the loans were contracted or renewed for at least 540 days; (b) exchange rate guarantees for loans with maturities exceeding two years would be considered on a case-by-case basis; and (c) a premium would be charged by the Central Bank for the exchange rate guarantee (Communication A, No. 31 of the Central Bank).

June 22. Changes were made in export and import regulations as follows: (a) the proceeds from traditional exports with shipping permits validated after June 22, 1981 would be required to be received before shipment, by means of advance payments or irrevocable letters of credit payable against the shipping documentation; (b) proceeds from promoted exports would be required to be repatriated within 180 days from the date of shipment; and (c) payments for imports of general merchandise should not be made before 180 days from the date of shipment, with the exception of payments for printed matter, fresh fruits received on consignment, and imports of inputs for export industries (Communication A, No. 39 of the Central Bank).

June 22. The foreign exchange market was split into a commercial market and a financial market, with the following features: (a) the Central Bank would quote daily the exchange rate between the peso and the U.S. dollar in the commercial market; (b) transactions eligible for the commercial market were specified as payments for nongold imports, the f.o.b. value of traditional exports, and 90 per cent of the f.o.b. value of “promoted exports”; amortization payments on foreign loans, the proceeds of which were sold in the foreign exchange market on or before June 19, 1981, provided that such loans falling due on or after this date were renewed for a term of at least one year, and were registered with the Central Bank; and (c) determination of the exchange rate in the financial market would be left to market forces (Communication A, No. 40 of the Central Bank).

July 23. The limit on the repatriation of proceeds of export of dried vegetables, fuels, quebracho extracts, tobacco, and scoured wool was extended to 90 days. In addition, imports from countries of the Latin American Integration Association, imports of printed matter, and imports for use in the Antarctic zones were excluded from the minimum waiting period of 180 days for payment (Communication A, No. 48 of the Central Bank).

August 5. Changes were made in export taxes and export regulations as follows: (a) export taxes were eliminated and various agricultural export products were made eligible for reembolsos (i.e., reimbursement of levies on imported inputs for export production); (b) most of the export taxes introduced on April 2, 1981 were abolished, with the exception of those on coarse grain shipments, which were scheduled to be removed by March 1, 1982; and (c) reembolsos were introduced at a rate of 4 per cent for exports of meat products, 5 per cent for flour and other foodstuffs, and 10 per cent for exports of edible oils, bakery products, and oilseed products (Resolution No. 284 of the Ministry of Economy).

August 14. Facilities were improved regarding exchange rate guarantee 180 days prior to maturity of obligations, subject to rollover for a period of not less than 540 days.

September 24. The exchange rate guarantee scheme for private financial debt was modified as follows: (a) the guarantee would be given for a maximum of 50 per cent of the foreign financial loans of private sector enterprises, provided that the funds had entered the country by June 19, 1981, where debt was outstanding on June 30, 1981, would mature on or before December 31, 1983, and were rolled over for a period of at least 540 days and a maximum of three years; and (b) in addition to amortization payments, interest payments (current and future) could be covered by the guarantee as long as such payments were postponed until the final amortization payment was due, which would be thus coterminous with the liquidation of the guarantee (Communication A, No. 61 of the Central Bank).

October 6. Imports of fertilizers, pesticides, herbicides, and veterinary products were exempted from the minimum waiting period of 180 days for payment (Communication A, No. 63 of the Central Bank).

October 20. An additional reembolso of 15 per cent was granted to increases exceeding US$10,000 in specified industrial exports above levels reached between July 1, 1980 and June 30, 1981 (Decree No. 1691).

October 23. Automobile imports under international automobile trade and investment agreements approved by the Ministry of Industry and Mining were exempted from the minimum 180-day waiting period for payment (Communication A, No. 66 of the Central Bank).

November 30. It was announced that individual buyers could freely purchase foreign exchange from authorized banks only up to the equivalent of US$ 1,000 a day; the same limit would apply to sales of gold coin and bars (Communication A, No. 73 of the Central Bank).

November 30. Facilities for forward transactions were expanded as follows: authorized banks were permitted to effect sales of foreign exchange for any purpose prior to the maturity of contract or after, using foreign exchange obtained from abroad or acquired on the market for offsetting purposes; in addition, forward sales could be made for all purposes for which spot sales are authorized (i.e., excluding sales for purposes of investment loans, advances, or foreign exchange deposits within or outside Argentina), and to offset forward purchases (Communication A, No. 74 of the Central Bank).

November 30. The Central Bank was authorized to carry out swap operations in the financial market for the purpose of enabling agricultural, mining, and manufacturing enterprises to cover their foreign exchange loans; such swap operations would be required to be conducted for a period of 180 days at an exchange rate to be determined by the Central Bank (Communication A, No. 75 of the Central Bank).

November 30. The exchange rate guarantee scheme was extended to cover all interest payments on private financial debt outstanding on June 30, but the scheme continued to be limited to 50 per cent of the amortization payments (Communication A, No. 76 of the Central Bank).

December 24. Changes were made in the exchange arrangement as follows: (a) the commercial and financial foreign exchange markets were unified, and the peso was allowed to float; (b) unrestricted sales of foreign exchange and gold (for which the obligation to complete a sworn declaration of purpose was retained) were increased from US$1,000 to the equivalent of US$20,000 a person a day; (c) the swap arrangements instituted by the Central Bank on November 30, 1981 were rescinded, but the operations already negotiated would be honored; (d) transactions in foreign exchange futures would continue in the unified market; (e) the exchange rate guarantee scheme was discontinued but existing contracts would be honored by the Central Bank; and (f) the obligatory postponement of payment for 180 days for imports of general merchandise was abolished (Communication A, No. 84 of the Central Bank).

December 24. Minimum and maximum import duty rates were reduced from 5 per cent and 48 per cent to 10 per cent and 43 per cent, respectively (Resolution No. 1 of the Ministry of Economy).

December 24. A 10 per cent export duty was introduced on all exports not receiving reembolsos, and existing reembolsos rates exceeding 10 per cent were reduced to 10 per cent, with the exception of reembolsos given under special regimes (Resolution No. 2 of the Ministry of Economy).

December 29. Changes were made in existing regulations as follows: (a) proceeds from exports registered with the customs before December 24, 1981 would be required to be sold to the Central Bank at the exchange rate prevailing on December 23, 1981; (b) in the case of export products for which 10 per cent of proceeds could previously be negotiated in the financial market and which had been shipped by December 23, 1981, 10 per cent of the proceeds were allowed to be converted at the unified exchange rate; and (c) the Central Bank was authorized to announce daily the conversion rate for grain exports which had been declared to the Junta Nacional de Granos up to December 23, 1981 (Communication A, No. 86 of the Central Bank).

Australia

(Position on December 31, 1981)

Exchange Arrangement

The currency of Australia is the Australian Dollar.1 The exchange rate of the Australian dollar is determined by reference to a trade-weighted basket of currencies. The level of the exchange rate as measured by the index of the value of the Australian dollar in terms of the trade-weighted basket is kept under review and is changed when assessment of all relevant economic factors indicates a need for movement of the rate. A middle 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, 1981 the authorities set a middle rate for the U.S. dollar of $A 1 = US$1.1279 and the official limits were US$1.303 and US$1.255 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 imposed on certain commodities pursuant to the Customs Act. These controls are administered by the relevant Ministers and Departments according to regulations under that Act.

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, on application, between accounts of nonresidents. However, special rules apply to overseas banks, central banks, governments, and government agencies; basically, they may hold essential working balances and are not permitted to invest at interest. 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. Payments for imports 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 on certain goods, although not for exchange control purposes; the restrictions are maintained 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 Vanuatu 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 under $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 not 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 without formality any amount in foreign currency or Australian currency instruments (other than Australian dollar notes) provided that they brought them into Australia.

Exports and Export Proceeds

Export permits or licenses are not required except in respect of goods covered by the Customs (Prohibited Exports) Regulations, Customs (Endangered Species) Regulations, and regulations administered by the Department of Primary Industry to provide quality controls over certain primary products. 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 is prohibited unless permission to export is granted. Export permits are issued for goods or products approved for export by the appropriate controlling authority. The regulations 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, where necessary (1) to ensure that fair and reasonable market prices are obtained; (2) to ensure that adequate supplies of materials are available to domestic industry; (3) to meet international and strategic obligations; (4) to ensure that the Government’s nuclear safeguards and physical protection requirements on exports are met, consistent with Australia’s international obligations in relation to nuclear trade, uranium and nuclear materials; and (5) to take account of environmental considerations. The Government follows the general principle that exporters should be the sole negotiators for export contracts and that the market should determine prices; generally the export control power is not used but is held in reserve to be used if and when the need arises, consistent with the need to protect 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 and industrial 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. The export of securities and transactions in foreign securities are subject to approval.

Exchange control policy on portfolio investment overseas places no monetary limits on acquisitions of equity and real estate. For portfolio investments in eligible fixed-interest securities, there are limits in any financial year of $A 10,000 for individuals, $A 100,000 for substantial private companies, and $A 1 million for public companies and institutions. Eligible fixed-interest securities are those that are traded on a recognized overseas market and have at the date of purchase not less than one year to reach maturity. Investments in bank money market and similar short-term deposits as well as loans to nonresidents are not permitted. Residents are normally permitted to reinvest the proceeds from sales of foreign 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. Inward equity investment requires exchange control approval, but stockbrokers have been authorized to deal in most stock exchange securities on behalf of nonresidents.

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 following types of proposals are subject to examination: (a) proposals falling within the scope of the Foreign Takeovers Act, including any acquisition of shares or assets that would result in or increase a substantial foreign interest in an Australian company (a substantial foreign interest is defined to cover a holding of 15 per cent or more of the issued shares or voting power of a company by a single or associated foreign interest and a holding of a total of 40 per cent or more by two or more foreign interests); (b) proposals to establish a new business or project, irrespective of size, in the areas of finance, insurance, the media, civil aviation, and uranium and uranium-related activities; (c) proposals to establish new business in other sectors of the economy, where the total amount of the investment is $A 5 million or more, including new projects in mining and other natural resource industries; (d) direct investments by foreign governments or their agencies, i.e., other than portfolio investments or investments related to their official representation; and (e) proposals to acquire real estate valued at $A 350,000 or more.

The Government seeks to ensure that foreign investment is in accord with Australia’s interests by maximizing the benefits and minimizing any disadvantages of such investment. 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 not contrary to the national interest, it is considered against other criteria such as the level of Australian equity participation, management and control following implementation of the proposal, 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 new 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 that 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.

Other projects in the natural resources sector are, as a general rule, only allowed to proceed provided they have a minimum of 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 the Government judges that the unavailability of sufficient Australian equity capital on reasonable terms and conditions would unduly delay the development of Australia’s natural resources. 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 company wishing to naturalize is required to reach an understanding with the Government on practical arrangements for achieving 51 per cent Australian ownership. A naturalizing company is given prior credit for achieving 51 per cent Australian ownership. Accordingly, either a naturalizing company or a naturalized company may undertake new projects (other than projects involving uranium, finance, insurance, the media, and civil aviation, where special restrictions apply) 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.

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.4

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 1981

January 1. The following changes were made in the import tariff system: (a) within the framework of the South Pacific Regional Trade and Economic Cooperation Agreement (Sparteca), duty concessions were granted to the “Forum Island countries”—namely, Cook Islands, Fiji, Kiribati, Niue, Solomon Islands, Tonga, Tuvalu, and Western Samoa; (b) extensive changes were made in the tariff rates on imports of certain textiles, clothing, and footwear from the developing countries; and (c) Greece was removed from the list of developing countries.

January 21. Minor changes were made in the import duties on tanned and finished leather and dressed fur.

February 4. A temporary duty of 20 per cent was levied on imports of certain soft-sided containers.

April 1. The following changes were made in import tariffs: (a) import duty exemptions were granted to imports of cheese from New Zealand and the Forum Island countries; (b) duties of 25 per cent were placed on fluorescent lamps and of 10 per cent on filament lamps; (c) the primage duty of 10 per cent on manufactured cut tobacco was incorporated into the substantive rate, with provision for a rebate upon purchase of specified quantities of Australian leaf; and (d) a duty of 20 per cent was levied on imports of jaw and vertical crushing and grinding machines having a working weight of under 50 tons, and of 15 per cent on other crushing or grinding machines.

April 8. In connection with a decision on the iron and steel industry, new import duty rates were introduced as follows: (a) hot-rolled and semifinished iron and steel products, 5 per cent; (b) cold-finished and coated products, 10 per cent; (c) pipes and tubes, 15 per cent; (d) other coated products, 25 per cent (phasing down to 10 per cent); (e) large bore steel pipes, tubes, and pipe and tube fittings, 25 per cent (phasing down to 15 per cent); (f) high-alloy steel products, 25 per cent (phasing down to 15 per cent); (g) metal cans and canisters, 15 per cent; and (h) certain types of jerricans, 30 per cent (phasing down to 25 per cent).

May 15. Changes were made in the import duties on certain monomers, prepolymers, and goods of the silicone type; the changes involved minimal rates for imports of these goods from New Zealand, Papua New Guinea, and other developing countries.

May 27. The import duties on wheelchairs and parts thereof were placed at 30 per cent, phasing down to 20 per cent.

July 1. All remaining preferential tariffs on imports from the United Kingdom and Ireland were eliminated. In addition, import quotas were abolished on a number of textiles, clothing, and footwear products from developing countries.

July 20. The monetary limits on portfolio investment overseas in the form of equities and real estate by Australian residents were abolished.

August 19. Changes were made in the import duty rates on certain transport equipment, notably bicycles.

September 4. Australia entered into a double taxation agreement with Sweden.

September 16. An import duty of 20 per cent was levied on certain railway and tramway locomotives and their parts, and the duty on certain refractory products was raised to 15 per cent.

September 22. The signing was announced of a Protocol to the 1973 Australia/China Trade Agreement relating to commercial and industrial cooperation between the two countries.

September 29. Australia accepted the GATT Subsidies and Countervailing Duties Code.

October 27. Australia entered into a double taxation agreement with Denmark.

October 30. Certain types of precious metals were made subject to an import duty of 25 per cent, and a 25 per cent duty was levied on loudspeakers.

December 2. Primary cells and primary batteries were made subject to an import duty of 30 per cent for three years, to be reduced to the long-term rate of 25 per cent thereafter.

Austria

(Position on December 31, 1981)

Exchange Arrangement

The currency of Austria is the Austrian Schilling. Without assuming any formal obligations in this respect, the authorities aim at maintaining a stable relation with 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, 1981 the authorized banks’ buying and selling rates for the U.S. dollar were S 15.835 and S 15.935, 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) for industrial products or the Federal Ministry of Agriculture and Forestry for agricultural products. For products falling under monopoly, licenses are issued by the Ministry of Finance.

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, 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. 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, irrespective of the country they are imported from.1 Nearly all imports from GATT countries, their associated territories, and some other countries2 are liberalized. Austria’s GATT liberalization is applied worldwide, except in respect of certain textiles and clothing as defined in Article XII, Section 1, of the Arrangement Regarding International Trade in Textiles. The importation of coffee and sugar is governed by the international agreements for these commodities. Non-liberalized 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; such quotas apply only to potato, wheat, and corn starch, preserved meat, wine, and certain medicaments. 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, sheep, goats, and horses for slaughter and products from these animals for human consumption are imported in accordance with a special system of controls and regulations maintained under the Agricultural Marketing Law and the law governing livestock farming and trading, and the marketing of livestock produce (Viehwirtschaftsgesetz). Certain agricultural products are subject to import levies.

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

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 2,000 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, additional amounts 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 accommodation 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 50,000 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 must 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

The acquisition by nonresidents of Austrian securities, shares and participations in Austrian companies, and Austrian real estate is covered by a general license. Direct investments by nonresidents are also permitted by general authorization, if made with convertible currencies or from free or originally owned blocked schilling balances; for investments financed in other ways, authorization is granted on the merits of each case.

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. Import credit with a maturity customary in the trade concerned is licensed freely.

The short-term foreign assets and liabilities of authorized banks in convertible currencies are not subject to limitation. The National Bank licenses financial loans with maturities of more than one year to nonresidents only to the extent of funds made available through the redemption of such loans outstanding at the end of December of the previous year, plus 15 per cent. 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. Mortgage loans, export finance credits, and loans to Austrian subsidiaries abroad are 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 for the purpose of establishing a secondary residence, i.e., intended for the personal use of the buyer within one year, to grant commercial or investment credits (provided that, in the latter case, the proceeds of the credit are used within Austria), 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. 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 exchanges3 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.

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 on their own behalf or on behalf of their customers (including nonresidents) gold coin that is not legal tender; 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 1981

January 1. The limit on outward payments for invisibles not subject to licensing was raised from S 1,000 to S2,000; authorization was granted for (a) investment credits to nonresidents, provided that the proceeds were used within Austria, and (b) additional participation of nonresidents in domestic enterprises raising their capital to the legal minimum (National Bank Foreign Announcement No. DE 2/80).

January 1. With its accession to membership in the EC, Greece was deleted from the list of beneficiaries (Group II) of the Austrian GSP scheme.

January 1. Austria adhered to the GATT Agreement on Government Procurement.

February 15. Imports of videotape recorders from Japan were subjected to an annual quota of 8,500 units by the Ministry of Trade, Commerce, and Industry.

April 24. The restrictions introduced in 1971 on the use of Free Schilling Accounts were lifted. (The restrictions had stipulated that Free Schilling Accounts were to be credited with the proceeds of sales of convertible currencies only if the conversion served to make a subsequent current payment to a resident.)

July 9. With effect from August 1, 1981 the acquisition of the following assets by nonresidents from residents ceased to be subject to case-by-case approval from the National Bank: (1) domestic securities, (2) shares or participation rights in domestic companies, and (3) domestic real estate, including rights to such real estate (Foreign Exchange Announcement No. 2/81). The same regulation also introduced changes aimed at preventing abuses with regard to (1) external lending and borrowing transactions among relatives, and (2) the acquisition of foreign real estate by residents.

Bahamas

(Position on December 31, 1981)

Exchange Arrangement

The currency of the Bahamas is the Bahamian Dollar, which is pegged to the U.S. dollar, the intervention currency, at B$l = US$1. The U.S. dollar circulates concurrently with the Bahamian dollar. The official buying and selling rates for the U.S. dollar are B$ 1.0025 and B$ 1.0040, respectively, per US$1. Buying and selling rates for the pound sterling are also officially quoted, the buying rate being based on the New York market 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, 1981 the bid and offer rates reflecting this premium were 21 and 26 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 exchange control system of the Bahamas 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 in Bahamian dollars for nonresident companies that have direct investments in the Bahamas and for nonresident investors. External Accounts in Bahamian dollars are normally funded entirely from foreign currency originating outside the Bahamas, but income on registered investments may also be credited to these accounts with the Central Bank’s approval. Balances may be converted freely into foreign currency and transferred abroad.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 that are likely to have adverse effects on the balance of payments.

In principle, inward investment by nonresidents is unrestricted. However, the consent of the Central Bank is required for the issue or transfer of shares in a Bahamian company to a nonresident and for the transfer of control of a Bahamian company to a nonresident. 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. A Foreign Investments Board is scheduled to be instituted to exercise general supervision and control over nonresident ownership of land.

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

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

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

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 that is wholly owned by nonresidents is not normally allowed to raise working capital in Bahamian dollars unless such funds are a small proportion of the total investment. If the company is partly owned by residents, the amount of such local currency borrowing is normally determined in relation to the 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 corporate body (other than a bank) that is resident in the Bahamas and is by any means controlled, whether directly or indirectly, by nonresidents. However, companies that are set up by nonresidents primarily to import and distribute products manufactured outside the Bahamas are not normally allowed to borrow Bahamian dollars from residents either for fixed or working capital but must provide all their finance in foreign currency; borrowings in a foreign currency 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 1981

July 3. A new law was promulgated by Parliament to regulate the acquisition of immovable property by foreigners. The law provided for the establishment of a Foreign Investments Board to exercise general supervision and control over nonresident ownership of land.

Bahrain

(Position on December 31, 1981)

Exchange Arrangement

The currency of Bahrain is the Bahrain Dinar, which is pegged to the SDR at BD 0.476190 = SDR 1. Bahrain sets exchange rates for the Bahrain dinar within margins of plus or minus 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 middle rate of the Bahrain dinar for the U.S. dollar quoted by the Bahrain Monetary Agency is adjusted from time to time. The 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, 1981 the Agency’s buying and selling rates for the U.S. dollar were BD 0.37500 and BD 0.37700, respectively, per US$1. The 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 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 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 are prohibited. Otherwise, no requirements are imposed on exchange payments or receipts.

Nonresident Accounts

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

Imports and Import Payments

All imports from Israel are prohibited, as are products manufactured by foreign companies that 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 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 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. Travelers may bring in or take out of Bahrain any amount in domestic or foreign banknotes.

Capital

No exchange control requirements are imposed on capital receipts or payments by residents or nonresidents, but payments may not be made to or received from Israel. Profits from foreign investments in Bahrain may be transferred abroad freely 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. Brokerage business in gold (as well as other commodities) requires approval from the Bahrain Monetary Agency before registering with the Ministry of Commerce; such business is subject to a minimum deposit requirement equivalent in the case of gold to BD 3,000 or 10 per cent of the contract value, whichever is higher.

Changes during 1981

February 28. The swap facility offered to commercial banks was divided into two tiers, the first at a subsidized rate for one week, and the second at a market-related rate for overnight or one week at the option of the bank.

February 28. Bahrain and Saudi Arabia agreed not to impose duty on imports from each other of locally manufactured goods.

March 25. Investment banks may accept deposits from nonbanks outside Bahrain at call or fixed deposits with a minimum value of US$50,000 (or equivalent in other currencies) for individual deposits.

April 1. New regulations were introduced, under which gold and commodity brokers require approval from the Bahrain Monetary Agency before registering with the Ministry of Commerce. (For existing firms, this regulation did not come into effect until July 1, 1981.) Brokers and dealers in commodity futures and precious metals were required to obtain special licenses and to make margin deposits of BD 4,000 or 10 per cent of the contract value, whichever was higher, with a minimum margin of BD 5,000 for silver.

June 30. Certain amendments were made to the regulations introduced on April 1, 1981 concerning special licenses and margin deposit requirements for trading in commodity futures and precious metals; in the case of gold, the minimum margin requirement was reduced from BD 4,000 to BD 3,000 or 10 per cent of contract value, whichever was higher.

July 1. With a view to discouraging consumption, the import duty on cigarettes, cigars, and all other tobacco products was increased from 15 per cent to 30 per cent.

Bangladesh

(Position on December 31, 1981)

Exchange Arrangement

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 1 per cent in either direction. On December 31, 1981 the middle rate of the official buying and selling rates (spot) was Tk 38.0068 = £ stg. 1. On December 31, 1981 the spot buying and selling rates of the Bangladesh Bank (the central bank) for authorized dealers were Tk 37.9568 and Tk 38.0568, respectively, per £ stg. 1. On the same date the spot buying and selling rates (telegraphic transfers) of authorized dealers were Tk 37.9255 and Tk 38.0881, respectively, per £ stg. 1. Exchange rates for currencies other than sterling are based on the London market rates for the currencies concerned. 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 31, 1981 this rate was Tk 22.65 per US$1 and Tk 42.80 = £ stg. 1. There are no taxes or subsidies on purchases or sales of foreign exchange.

Forward transactions of the Bangladesh Bank are confined to purchases of deutsche mark, Japanese yen, pounds sterling, and U.S. dollars and sales of pounds sterling and U.S. dollars. Forward facilities at authorized banks are available in all approved foreign currencies for export proceeds and for import payments, as well as for remittances of surplus collection of foreign shipping companies and foreign airlines. Forward transactions cover up to a maximum period of six months. For settlement of transactions under the Asian Clearing Union, Bangladesh Bank purchases, both spot and forward, the currencies of the member countries of the Union,1 as well as the Asian Monetary Unit (AMU);2 it also sells these currencies for spot delivery.

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 seven foreign and six domestic commercial banks and four specialized financial institutions have been appointed authorized dealers (authorized banks) in foreign exchange. The Chief Controller of Imports and Exports of the Ministry of Commerce (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 (or commodity exchange) agreements3 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 in respect of current transactions (other than those relating to petroleum and natural gas and their products) must be effected in Asian monetary units through the Clearing Union.4 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 taka for credit to a nonresident bank account in Bangladesh of the currency concerned; (2) in the currency of the country concerned; or (3) in any freely convertible currency. Export proceeds must be received in freely convertible foreign exchange or in taka from a Nonresident Taka Account of a bank abroad. All settlements with Israel and South Africa are prohibited.

Nonresident Accounts

The accounts of individuals, firms, or companies resident in countries outside Bangladesh are designated Nonresident Accounts. All such accounts are regarded for exchange control purposes as accounts related to the country in which the account holder is 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. Foreign missions and embassies may open interest-bearing accounts, but the interest earned thereon can be disbursed only locally.

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 against letters of credit; (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 a year for each country for travel by air to Burma, India, Nepal, Pakistan, and Sri Lanka, up to the equivalent of £ stg. 300 a trip for travel to other countries (for a maximum of three trips in one year), and up to US$50 a year for overland travel to India.

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 1981/82 (July to June), 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 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 agreements and for tied aid imports. Other import licenses and letter of credit authorization forms are valid worldwide, except that imports from Israel 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 requiring fabrication, however, remain valid for 12 months from the date of opening of letters 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. The opening of import letters of credit is subject to margin requirements ranging, for imports at the official exchange rate, from 5 per cent of value for public sector imports to 50 per cent for nonessential private imports; for imports under the Wage Earners’ Scheme and the Export Performance License Scheme, the margin requirement is 10 per cent for essential goods and 100 per cent for luxury consumer goods. Imports of books and periodicals, as well as drugs and medicines, up to specified limits are permissible on a consignment basis. Public sector importers may, however, import on a cash against documents basis. 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 program 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, or 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. The entitlements are 60 per cent or 40 per cent of the net f.o.b. value of foreign exchange earnings. Under the scheme the Bangladesh Bank issues to eligible exporters freely negotiable Import Entitlement Certificates, which may be converted into import licenses for import of goods eligible under the scheme.

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. 500. 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 certain limits (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) for nationals of countries other than India and up to Tk 1,500 for Indian nationals, 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 100 in domestic currency; otherwise, the export of Bangladesh currency notes and coin is prohibited.

Exports and Export Proceeds

Exports to Israel 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 100 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; no declaration is required for import of foreign exchange not exceeding US$150 by nonresidents or US$25 by residents.

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, including foreign exchange, owned in any country other than Bangladesh have to be declared to the Bangladesh Bank by resident Bangladeshis. 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. Borrowing abroad by resident nonbank firms of Bangladesh origin requires approval. Borrowing by nonresident-owned or nonresident-controlled enterprises from commercial banks in Bangladesh beyond specified ceilings, as well as any borrowing from abroad, requires approval, and loans by authorized dealers in local currency against overseas guarantees or collateral outside Bangladesh also require approval. 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.

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

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 1981

January 30. Exporters of raw jute were allowed to quote their export prices in all convertible currencies. (Quotations were previously limited to pounds sterling and U.S. dollars.)

January 31. Use of foreign exchange for settlement of imports on deferred payment terms was made subject to authorization by the Government. (Subsequently, Bangladesh Bank was entrusted with the responsibility for giving such authorization.)

February 6. Existing regulations on import and export of Bangladesh currencies were relaxed as follows: (a) the limit on the exportable or importable amount of Bangladesh currency was raised from Tk 20 to Tk 100 a person; (b) returning residents were exempted from the requirement of declaring to Customs foreign exchange in their possession not exceeding US$25 (US$150 for nonresidents).

February 6. The sixth barter protocol between Bangladesh and Czechoslovakia was signed.

February 11. The eighth barter protocol between Bangladesh and Bulgaria was signed.

February 20. The tenth barter protocol between Bangladesh and the U.S.S.R. was signed.

February 26. The exchange rate of the Bangladesh taka was changed to Tk 37.1000 (buying) and Tk 37.2000 (selling) per £ stg. 1; the rate was subsequently changed 17 more times, the last being on December 30 to Tk 37.9568 (buying) and Tk 38.0568 (selling) per £ stg. 1.

March 6. In a modification of the Export Performance License scheme, entitlements were increased to 60 per cent and 40 per cent of net f.o.b. value of foreign exchange earnings, compared with earlier entitlement rates of 10 per cent, 30 per cent, and 40 per cent; the issuance procedure was also revised to render the scheme more attractive.

March 9. Authorized dealers were empowered to release foreign exchange of up to US$50 a person a year under the Wage Earners’ Scheme for overland travel to India; previously, only those traveling by air were eligible for such an allocation.

July 17. The fifth barter protocol between Bangladesh and the People’s Republic of China was signed.

August 5. Margin requirements were introduced for opening letters of credit, ranging from 5 per cent for public sector imports to 50 per cent for private sector imports at the official exchange rate, and from 25 per cent to 75 per cent, for imports under the Wage Earners’ Scheme and Export Performance Licensing arrangements.

August 28. The fifth barter protocol between Bangladesh and Poland was signed.

August 29. Authorized dealers were advised to sell a portion of the Wage Earners’ funds to Bangladesh Bank with provision for buying it back as and when needed. (Previously, these funds were kept by authorized dealers outside Bangladesh Bank’s reserves.)

September 8. Authorized dealers were permitted to pay interest on balances in the accounts of foreign missions, provided that the disbursement of interest earnings was done locally. (Previously, no interest could be paid on such accounts.)

October 15. Margin requirements for opening letters of credit were reduced from 25 per cent to 15 per cent for private imports of raw materials, spares, and essential consumer goods at the official exchange rate, and from 25 per cent to 10 per cent for similar imports under the Wage Earners’ Scheme and Export Performance Licensing arrangements; for imports of luxury consumer goods under the latter arrangements, the margin requirement was increased from 75 per cent to 100 per cent.

October 31. The sixth barter protocol between Bangladesh and Romania was signed.

Barbados

(Position on December 31, 1981)

Exchange Arrangement

The currency of Barbados is the Barbados Dollar, which is pegged to the U.S. dollar, the intervention currency, at BDS$2 = US$1. On December 31, 1981 the official buying and selling rates for the U.S. dollar were BDS$ 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, 1981 the buying and selling rates of the Central Bank of Barbados for the Canadian dollar were BDS$1.6863 and BDS$1.7128, respectively, per Can$l; those for the deutsche mark were BDS$0.8870 and BDS$0.9009, respectively, per DM 1; and those for sterling were BDS$3.8198 and BDS$3.8796, 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. With specified exceptions, foreign exchange applications for nonimport transactions exceeding BDS$500 are subject to a levy collected in the approval process by the Central Bank in amounts ranging from BDS$20 to BDS$100 per application.

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 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 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 Caricom travelers checks denominated in Trinidad and Tobago 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 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 the Grenadines, and Trinidad and Tobago, whether the goods are being imported from Caricom countries or from elsewhere. Special licensing arrangements have been made for the regulation of trade between Barbados and other Caricom countries in 22 agricultural commodities.

Payments for authorized imports are permitted upon application and submission of documentary evidence (invoices and customs warrants) to authorized dealers. 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 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 within or outside the Caricom area, and BDS$200 a day, up to BDS$4,000 a person a calendar year, for business travel within the Caricom area and BDS$6,000 outside the Caricom area), expenses of education abroad (BDS$5,000 a person a year), remittances of cash gifts not exceeding BDS$100 a donor 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 South Africa are prohibited. Specific licenses are required for the export of certain goods to any country; these 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. 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 a year; 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 1981

January 1. Turkey, ham, and frozen french fries were placed on the list of items subject to quantitative restrictions, while imports of wood items were removed from the list.

March 12. Corned beef was placed on the list of items requiring import license.

March 31. With effect from this date, death duties on the estate of the deceased were abolished.

April 1. “Chemfield” and similar products, welding-wire mesh fabric, gramophone records, and other specified items were placed on the list of items requiring import license.

June 11. Cotton pajamas, nightgowns, dusters, and dressing gowns were placed on the list of items subject to quantitative restrictions.

October 1. Figurines made of wood were removed from the list of items requiring import license, while trucks and other vehicles were added to the list.

October 29. Exchange Control Authority Direction 1981 was issued, empowering the Central Bank of Barbados to request returns on the earnings and disposal of foreign exchange by hotels and other tourist establishments in Barbados.

November 3. Jams, fruit jellies, marmalades, fruit puree, and fruit pastes in the form of cooked preparations were added to the list of items requiring import license, while numerous other items were removed from the list, including canned corn, cosmetics, malt beer, bacon, ham, certain fruit juices, and nonmotorized cycles.

Belgium and Luxembourg

(Position on December 31, 1981)

Exchange Arrangement

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, 1981 these rates were as follows:

Belgian Francs or
Specified InterventionLuxembourg Francs
Rates Per:Upper limitLower limit
100 Danish kroner526.90503.75
100 French francs675.10645.40
100 deutsche mark1,729.751,653.6
1 Irish pound60.902058.2225
1,000 Italian lire33.27529.51
100 Netherlands guilders1,564.851,496.0

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 or 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, 1981 the buying and selling rates for the U.S. dollar in the official market were BF 38.3850 and BF 38.5350, 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, 1981 the free market rates between banks for the U.S. dollar were BF 42.35 buying and BF 42.55 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 agencies, 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. Conversely, import and export of diamonds, including related costs, may only be paid for in foreign currencies through the free market, or in Belgian or Luxembourg francs by means of nonresident Financial Accounts, or in domestic or foreign banknotes. 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 Free
Convertible or Financial
DConvertibleAnyFreeFinancial or Convertible
A,BBilateralConvertibleOfficialBilateral or Convertible*
CBilateralConvertible OtherOfficial or Free Free
Bilateral or Convertible*
DBilateralAnyFreeBilateral or Convertible*

Bilateral Account of the country concerned. Settlements with Zaïre may alternatively be made by debit or credit to Convertible Accounts in zaïres held with banks in Zaïre.

Bilateral Account of the country concerned. Settlements with Zaïre may alternatively be made by debit or credit to Convertible Accounts in zaïres held with banks in Zaïre.

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. A minimum debtor interest rate may be prescribed during certain periods for mail-credit advances in Convertible Accounts of banks, with the exception of those for developing countries. 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.

Interest, charges, and commissions relating to any nonresident account must be credited or debited either to the account in question or to another of the same category.

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, the Democratic People’s Republic of 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—model A), which must be presented to an authorized bank. No exchange control documentation is required for imports not exceeding BF 100,000 in value. 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; 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.

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 required 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 (notice of export—model B) 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 18 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 subject to a value-added tax in Belgium at a rate of 6 per cent.7

Changes during 1981

September 1. Transactions in monetary gold became subject to a value-added tax of 6 per cent in Belgium. (The tax was reduced to 1 per cent on March 1, 1982.)

November 25. The minimum period of foreign ownership of quoted bonds redeemable through the official market was increased from 6 to 18 months.

December 21. It was announced that, with effect from this date, only 25 per cent of the salaries of the staff of embassies and international organizations established in the Belgian-Luxembourg Economic Union could be deposited in a Special Convertible Account, without special authorization from the Belgo-Luxembourg Exchange Institute.

December 22. A requirement was introduced that interest, charges, and commissions relating to any nonresident account must be credited or debited either to the account in question or to another of the same category.

Belize1

(Position on December 31, 1981)

Exchange Arrangement

The currency of Belize is the Belize Dollar, which is pegged to the U.S. dollar, the intervention currency, at a rate of B$l = US$0.50. The buying and selling rates for transactions between the Monetary Authority and the commercial banks are B$1.9937 and B$2.0063, respectively. On December 31, 1981 the buying and selling rates in transactions between the banks and members of the public were B$ 1.9825 and B$2.0175, respectively. The Monetary Authority (soon to be replaced by a central bank) quotes daily rates for the pound sterling and the Canadian dollar.

Administration of Control

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

Prescription of Currency

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

Nonresident Accounts

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

Imports and Import Payments

Payments for imports require authorization by the Monetary Authority; in most cases such authorization is delegated to the commercial banks. For reasons of health, standardization, and protection of domestic industries, import licenses from the Ministry of Trade and Industry are required for a number of goods, mostly food and agricultural products, and certain household and construction products; such licenses are liberally administered. There are no quota limits nor other quantitative restrictions for balance of payments reasons. Goods imported into the country are subject to import duties, ad valorem, in many cases, and specific, in others. Imports by the public sector and certain nonprofit entities, imports of an emergency or humanitarian nature, and goods for re-export are exempt from import duties; goods originating from the Caricom area are also exempt. All imports are subject to a stamp duty of 5 per cent of the c.i.f. value.

Payments for Invisibles

There are no restrictions on payments for invisibles. Authorized dealers have the power to provide foreign exchange for such payments below certain limits. The following limits are applied to purchases of foreign exchange: (a) nonbusiness travel by residents, up to B$ 1,500 a person a calendar year; (b) business travel, B$200 a day a person, up to B$6,000 a year; (c) business or nonbusiness travel by nonresidents, B$500 a person a year, except where payment is made from an external account or from proceeds of foreign currency; (d) educational allowance, B$500 a course a year; and (e) gifts, B$100 a donor. Requests in excess of these amounts are referred to the Monetary Authority; all bona fide requests are granted.

Exports of foreign and domestic banknotes and currency are subject to limits as follows: travelers may carry banknotes up to B$100 a person in domestic banknotes and the equivalent of B$400 in foreign currency, except that a visitor may take out such notes up to the amount imported. Amounts beyond these limits require approval of the Monetary Authority, which is liberally granted when justified.

Exports and Export Proceeds

Export licenses are required for most of the export products. Export proceeds must be surrendered to authorized dealers not later than six months after the date of shipment, unless determined otherwise by the Monetary Authority. A small number of items3 are subject to an ad valorem export duty of between 2 per cent and 5 per cent. Re-exports and transshipments are subject to a 2 per cent administrative fee.

Proceeds from Invisibles

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

Capital

All capital transfers require approval of the Monetary Authority, but control is liberally administered.

Gold

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

Changes during 1981

April 23. Import duties on beverages, cigarettes, and petroleum products were increased. In addition, the stamp duty on retained imports was increased from 4 per cent to 5 per cent of the c.i.f. value.

August 8. A new list of goods requiring import licenses was issued.

October 3. A number of products, including various paper products, were eliminated from the list of products requiring import licenses.

December 24. Isopropyl alcohol and bleaching agents were added to the list of goods requiring import licenses.

Benin

(Position on December 31, 1981)

Exchange Arrangement

The currency of Benin is the CFA Franc,1 which is pegged to the French franc, the intervention currency, at the fixed rate of CFAF 1 = F 0.02. The official buying and selling rates are CFAF 50 = F 1. Exchange rates for other currencies are derived from the rate for the currency concerned in the Paris exchange market and the fixed rate between the French franc and the CFA franc. They include a bank commission. 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.

With the exception of those relating to gold and the repatriation of export proceeds, Benin’s exchange control measures do not apply to (1) France (and its Overseas Departments and Territories) and Monaco; and (2) all other countries whose bank of issue is linked with the French Treasury by an Operations Account (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 are considered foreign countries, but for purposes of certain capital controls, the countries specified in this paragraph are also regarded as foreign countries.

Administration of Control

Exchange control is administered by the Directorate of External Commerce in the Ministry of Commerce. 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, Mauritania, Nigeria, and Sierra Leone are normally made through the West African Clearing House. Settlements with all other countries are usually effected through correspondent banks in France, in any of the currencies of those countries, or in French francs through Foreign Accounts in Francs. Certain settlements with the People’s Republic of China, however, are made through special accounts.3 All settlements with South Africa are prohibited.

Nonresident Accounts

The regulations pertaining to nonresident accounts are based on those applied in France. The crediting to nonresidents accounts of CFA banknotes, French 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 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 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 non-liberalized 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 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 on the due date of payment if the commodities have already been imported.

Payments for Invisibles

Payments to South Africa and Zimbabwe 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 countries 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 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 South Africa and Zimbabwe are prohibited. Exports to all foreign countries, including the French Franc Area, 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 of payment for exports to foreign countries may not be later than 180 days after the arrival of the commodities at their destination; irrespective of the currency of payment, the proceeds must be remitted through an authorized domiciliary bank within one month 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 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 South Africa and Zimbabwe 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. 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 over publicity aimed at placing funds abroad or at subscribing to real estate and building operations abroad; these special controls also apply to France (as defined above), Monaco, and the Operations Account countries.

All investments abroad by residents of Benin require prior authorization by the Minister of Finance; at least 75 per cent of such investments must be financed from foreign borrowing.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 of the capital of a company whose shares are quoted on a stock exchange.

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

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, during a period of up to 5 years, for exemption 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, 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 1981

Circular Nos. 515/MF, 518/MF, and 519/MF were issued during the year, modifying, respectively, the regulations on (a) spot foreign exchange purchases for import payments; (b) the permissible duration of forward exchange cover for imports; and (c) the financing of new foreign investments abroad.

Bhutan1

(Position on December 31, 1981)

Exchange Arrangement

The currency of Bhutan is the Ngultrum. Since its introduction in 1974 it has been pegged to the Indian rupee, which also circulates in Bhutan, at a rate of Nu 1 = Rs 1. At present Bhutan has no central bank. For large transactions, buying and selling rates quoted by the commercial bank for other currencies are determined on the basis of the prevailing quotations for those currencies by the Reserve Bank of India. In the absence of large transactions, exchange rates for other currencies may be determined on the basis of the most recent quotations by the Reserve Bank of India. No other exchange rates apply to international transactions, and there are no subsidies or taxes on exchange transactions. On December 31, 1981 the buying and selling rates of the ngultrum for the U.S. dollar were Nu 9.0780 and Nu 9.120 per US$1, respectively.

Administration of Control

The Ministry of Finance controls external transactions and provides foreign exchange for most current and capital transactions.

Prescription of Currency

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

Imports and Import Payments

All import payments other than those made in Indian rupees are subject to prior permission from the Ministry of Finance. The Ministry has discretionary authority to deny foreign exchange for the payment of luxury imports.

Customs duties exist on imports other than those from India.

Exports and Export Proceeds

Exports of antiques of Bhutanese origin are prohibited. Proceeds of exports in currencies other than the Indian rupee must be surrendered to the Ministry of Finance.

Payments for and Proceeds from Invisibles

All invisible payments other than those made in Indian rupees are subject to approval by the Ministry of Finance. All receipts from invisible transactions in currencies other than the Indian rupee must be surrendered to the Ministry of Finance.

Capital

All capital transactions are subject to approval by the Ministry of Finance.

Gold

There are no specific regulations on transactions in gold.

Changes during 1981

No significant changes occurred in the exchange and trade system.

Bolivia

(Position on December 31, 1981)

Exchange Arrangement

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. However, the official buying and selling rates for the U.S. dollar, the intervention currency, have since been maintained at $b 24.51 and $b 24.53, respectively, per US$1.1 Buying and selling rates for certain other currencies2 are also officially quoted, with daily quotations based on the buying and selling rates for the U.S. dollar in markets abroad. 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 Integration Association.

Imports and Import Payments

All public and private imports are subject to prior authorization by the Central Bank and the Ministry of Finance. Imports by public sector agencies require in addition authorization by the Ministry of Industry and Commerce. Import applications must be consistent with the official foreign exchange budget. The import of manufactured goods that are produced locally is prohibited, in particular, articles of clothing, detergents, and cement. Importation of diesel-powered vehicles and secondhand equipment is also prohibited. Foreign exchange to pay for imports may be purchased from commercial banks, which must obtain prior confirmation from the Central Bank on the availability of foreign exchange. All 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.

Applicants for import authorization must present photocopies of import documents, such as the invoice, description of the articles purchased, and a clearance from the Bolivian tax administration that the applicant is not in arrears on taxes.

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

Private banks require prior authorization from the Central Bank for selling foreign exchange to finance import of invisibles. 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, $b450 for air travel to other Latin American countries, and $b 600 for air travel to countries outside Latin America. Financing abroad for imports of services requires prior authorization by the Central Bank.

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 private mines.

Proceeds from Invisibles

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

Capital

Foreign exchange for outward capital transfers by residents or nonresidents can be purchased from the banks only upon approval by the Central Bank. Inward capital transfers may be made freely, but government receipts of transfers and grants and all proceeds of borrowings from foreign public sector agencies must be surrendered to the Central Bank. All foreign credits, including suppliers’ credits, to government agencies and autonomous entities, and credits to the private sector with official guarantee, 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 1981

January 12. Supreme Decree No. 17938 abolished Decrees No. 12929 and No. 12984 of October 3 and 22, 1975, respectively, thus terminating the requirement that all imports should be secured by a prior deposit of up to 25 per cent.

February 20. Certain import duty rates were reduced under Supreme Decree No. 17930.

June 12. Supreme Decree No. 18403 approved a new foreign exchange budget.

July 13. Supreme Decree No. 18487 modified the foreign exchange budget.

July 30. Supreme Decree No. 18530 introduced the following new exchange control and import regulations: (a) private banks must obtain authorization from the Central Bank for all sales of foreign exchange to the public; (b) all imports would require authorization from the Ministry of Finance and would be approvable only if consistent with the foreign exchange budget; (c) financing abroad for imports of goods and services would require prior authorization of the Central Bank; (d) after obtaining all relevant documents from import applicants, a commercial bank would be required to confirm with the Central Bank the availability of foreign exchange; and (e) among the necessary documents, an import applicant would be required to present a clearance from the Bolivian tax administration confirming that the importer is not in arrears on taxes.

September 11. Prohibition of imports of manufactured goods that could be produced locally was extended from public sector agencies to all importers, including those of the private sector.

Botswana

(Position on December 31, 1981)

Exchange Arrangement

The currency of Botswana is the Botswana Pula, which is pegged to a basket of currencies consisting of equal amounts for the SDR and the South African rand. On December 31, 1981 the official buying and selling rates for the U.S. dollar, the intervention currency, were P 0.8779 and P 0.8800, respectively, per US$1; on the same date, the middle rate for the SDR was P 0.9474 per SDR 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 central bank). 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. There are no restrictions or delays on payments for authorized imports. Goods of domestic origin may move freely between Botswana, Malawi, and Zimbabwe by virtue of a customs agreement of 1956, provided they are not intended for re-export.

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, up to a maximum of P 5,000 a calendar year. The annual limit on remittances and tourist travel by temporary residents is P 6,000 or 50 per cent of eligible salary, whichever is greater. Separately, 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 1981

No significant changes occurred in the exchange and trade system.

Brazil

(Position on December 31, 1981)

Exchange Arrangement

The currency of Brazil is the Cruzeiro. Since August 1968 Brazil has followed a flexible exchange rate policy under which the exchange rate for the 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.

Exchange transactions are carried out by the Central Bank of Brazil, the Banco do Brasil S.A., and by banks and tourist agencies authorized to deal in foreign exchange; the tourist agencies 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, 1981 the buying and selling rates quoted by the monetary authorities to the public were Cr$127.16 and Cr$127.80, 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 respective currencies 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 316 of 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 involving the collection of levies in foreign exchange or at the point of exchange settlement at the banks: (1) under Decree-Law No. 1578 of October 11, 1977, the National Monetary Council can impose an export levy in the form of a tax at the rate of 10 per cent (which can be lowered or be raised up to 40 per cent) and ad valorem export levies on orange juice at a rate of 10 per cent, cornmeal at a rate of 5 per cent, and hides of lamb or cattle at a rate of 18 per cent; (2) special levies (“contribution quotas”) on exports of cocoa beans and cocoa products at a rate of 10 per cent, and on coffee at rates varying with the type of coffee (see section on Exports and Export Proceeds, below); and (3) tax credits on indirect federal and state value-added taxes, granted at a rate of 15 per cent of f.o.b. value for exports of manufactured goods. (Certain manufactured exports to the United States are subject to an export tax at the same rates and subject to the same phased schedule as the tax credits.)

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. Another effective rate arises from the application of a financial transactions tax (imposto sobre operações de crédito, câmbio e seguro, e sobre operações relativas a títulos e valores mobiliares) of 25 per cent to purchases of foreign exchange for imports of goods and services, with specified exemptions.

The Banco do Brasil S.A., the Banco da Amazonia S.A., and the Banco do Nordeste do Brasil S.A., acting on their own behalf, carry out a considerable proportion of all exchange transactions, including those of all public sector agencies. They sell 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 daily limits are fixed for the authorized banks’ bought and sold positions in foreign exchange. The limits are fixed in relation to the registered capital of each bank; a bank having registered capital of up to Cr$500 million may maintain a bought or sold position of up to US$750,000; over and above that financial base, a bank is allowed a bought position of US$1.5 million and a sold position of up to US$7.5 million. Banks that are authorized to operate exclusively in the “manual market” and tourist agencies 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 Central Bank supplies foreign exchange to authorized banks for amortization of foreign loans under Resolution No. 63 and related interest payments. 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 on a spot basis by cable or on a forward basis and must be executed within 2 working days for spot transactions or not later than 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. General borrowing abroad requires the prior approval of the Central Bank. The Department for International Operations (Depin) is in charge of the management of international reserves. Limits on international borrowing by the public sector are applied by the Secretariat for Control of State-Owned Enterprises (Sest) in the Planning Secretariat of the Presidency of the Republic.

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 Banco do Brasil S.A. (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 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 countries1 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 Integration Association (LAIA).

Imports and Import Payments

The import of commodities originating in or shipped from Cuba 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). Moreover, the importation, leasing, or purchasing in the domestic market by the public sector of machinery, equipment, vehicles, and spare parts of foreign origin was limited in 1981 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 automatically if it conforms to a previously submitted indicative annual import plan. 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,2 imports for which tariff concessions are being sought, certain imports without exchange cover, goods for use in fairs and trade exhibitions, certain types of used capital goods, and goods to be brought in with foreign financing on a deferred payment basis. For the last-mentioned category, it is a prior condition for the granting of import certificates for specified commodities that importers must arrange external financing with specified minimum maturities ranging between three years and eight years, depending on the type of commodity and the amount of financing involved.3 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 an annual import program as a basis for requesting import licenses. 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 LAIA, 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$600 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, regardless of the classification of the importer and the purpose of the merchandise, must be authorized by the Central Bank, which will evaluate them in the light of foreign debt policy. 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 and the related scheme of payments issued by Firce. 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; settlement may take place 2 working days in advance of the maturity date. 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,4 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. 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 Banco do Brasil S.A. 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 authorizes 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; the remittances are subject to withholding tax on income at a rate of 25 per cent, but remitters are eligible for a rebate on the tax paid; in May 1980 the rebate was reduced from 95 per cent to 40 per cent of the tax.

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 a year 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 a pound that is at least equal to the minimum registration price (in U.S. dollars a pound, f.o.b.) fixed periodically 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 also are set periodically by the IBC and are fixed in terms of foreign currency; on December 31, 1981 they were US$50.00 for green or decaffeinated raw-hulled coffee (a bag of 60.5 kilograms) and for green or ground-roasted coffee (a bag of 48 kilograms), US$0.75 a pound for spray-dried soluble coffee, and US$0.90 a pound for freeze-dried soluble coffee. Exporters of coffee convert foreign exchange proceeds, after deduction of the contribution quotas, at the official market rate prevailing on the date of exchange contract. 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 1981, 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 sold at freely negotiated rates within the limits of the official market. Foreign exchange contracts covering such transactions may be closed either period to the shipments of goods or within ten working days after shipment. Exporters of cocoa beans and cocoa products are required to surrender without compensation 10 per cent of their exchange proceeds.5 The cruzeiro equivalent of these deductions is used to finance a program of price support and plantation improvement for cocoa. The export of hides of wild animals in any form is suspended.

A number of export incentives are in operation, principally for manufactured commodities. Exporters of manufactured goods are eligible for a tax credit on indirect federal and state value-added taxes; in 1981 the credit amounted to 15 per cent of the f.o.b. value of export and is scheduled to be reduced in stages and to be eliminated by June 30, 1983. However, in the case of a number of exports to the United States (primarily textiles, leatherwares, and footwear), the tax credits are offset by an equivalent export tax, subject to the same phased schedule of elimination. Various lines of credit for exporters, some at preferential rates of interest, are provided by the Banco do Brasil S.A. 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 Banco do Brasil S.A. 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.6 Travelers may bring in domestic and foreign currency notes freely.

Capital

Capital inflows in the form of financial loans under National Monetary Council Resolution No. 63, as amended, or under the provision of the Foreign Investment Law (Law No. 4131) 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 private or public sector when the foreign funds originate from official financial institutions abroad, when the transaction is to be guaranteed by the National Treasury or, on its behalf, by any official credit institution, and for other foreign borrowing by the public and semipublic sector (i.e., direct organs of the Government, autonomous agencies, public enterprises, and companies with mixed public and private participation). 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 that have entered the country without an initial corresponding expenditure of foreign exchange and (2) financial and monetary resources brought into the country for investment in economic pursuits, provided that, in either case, the owner is a person or firm resident or domiciled abroad or with headquarters abroad.

Foreign capital other than capital invested in Brazilian securities is classified, for purposes of registration, as direct investments or loans, whether imported in the form of money or of goods, and it includes reinvested profits from foreign capital. Direct investment is defined as that foreign capital 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).

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. 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 National Monetary Council 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 specific 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. In the case of private enterprises, the deposit is applicable to 75 per cent of the loan proceeds converted into cruzeiros and it is released as follows: one third after 60 days from the deposit date, another one third after 90 days, and the balance after 120 days; for public enterprises, the deposit is applicable to 100 per cent of the loan proceeds converted into cruzeiros and is released as follows: 20 per cent after 150 days from the deposit date, 40 per cent after 180 days, and the balance after 210 days.

In addition to these mandatory deposit regulations, on June 23, t977 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 non-financial 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, 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; where the funds are for use in the rollover of loans to domestic enterprises, the waiting period is 15 days.

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 1981 the Central Bank’s minimum acceptable maturity was 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 relent 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 authorized banks 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. The domestic negotiation of newly mined gold is subject to a mining tax of 1 per cent, which may be offset against other tax liabilities if and when the gold is manufactured. The Central Bank is empowered to buy and sell gold on the domestic market at international prices. In practice, purchases of gold in the domestic market are made at current domestic prices; the international price is considered as a price goal. Imports of gold are 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. Imports of rough gold fall within the zero range of import duties but are subject to the tax on financial transactions. Exports of gold are subject to approval by the Central Bank, which is always the alternative buyer.

Changes during 1981

January 1. A new import licensing system was introduced, under which importers must submit to Cacex annual import programs of a global nature as a basis for requesting import licenses.

February 10. The Customs Policy Commission (CPA) was authorized to issue general resolutions reducing to zero the import tax rates on machinery, equipment, and certain other commodities, in order to harmonize the treatment given to certain enterprises of recognized economic importance with the objectives of tariff policy.

March 6. The tax on financial transactions was reduced from 25 per cent to 20 per cent for imports originating in member countries of LAIA.

April 1. The Ministry of Finance reintroduced the system of tax credits for industrial exports. The benefits were set at 15 per cent of the f.o.b. export value during 1981, 9 per cent during 1982, and 3 per cent during the first half of 1983.

April 29. The taxes on the export of coffee were abolished.

April 30. Exports of a number of products to the United States, including textiles, footwear, and leather-wares, were subject to a tax. The tax would be at the same rates and subject to the same phased schedule as the tax credits approved on April 1.

June 17. The Central Bank specified the products subject to export taxes as orange juice, at a rate of 10 per cent, cornmeal, at a rate of 5 per cent, and hides, at a rate of 18 per cent.

August 27. Brazil prohibited the export of gold, and under existing regulations the Central Bank began to buy and sell gold in the domestic market at international prices.

November 18. The Ministry of Finance decided that the planned reduction in the rate of the tax credits for industrial exports would occur in stages over 1982, to reach the level of 9 per cent by December 31, 1982.

December 9. The National Council of Foreign Trade abolished quotas for exports of soybean products.

Burma

(Position on December 31, 1981)

Exchange Arrangement

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, 1981 the buying and selling rates for the U.S. dollar were K 7.3238 and K 7.4702, 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, the Malaysian ringgit, and the Singapore dollar are determined weekly on the basis of appropriate cross rates in the Hong Kong, Kuala Lumpur, and Singapore markets, respectively; and buying and selling prices 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.

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. Burmese nationals working abroad under permission from the Government may open accounts in U.S. dollars with the Myanma Foreign Trade Bank, Rangoon, out of their savings; with exchange control approval, withdrawals from such accounts can be used for payment of personal imports and petty expenses.

Imports and Import Payments

All imports from 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. 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. State enterprises obtain foreign exchange directly from the Myanma Foreign Trade Bank within the approved foreign exchange budget on endorsement by the respective ministries. Foreign exchange allocations can be transferred by a ministry from one enterprise to another; transfers among ministries require cabinet approval.

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, including transfers of profits, interest, and dividends, 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 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 the respective state economic enterprises. 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. Burmese nationals working abroad under permission from the Government are required to repatriate at least 10 per cent of their gross earnings in foreign exchange.

Capital

There is no foreign investment code as such; 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 1981

June 12. Authorization was granted for Burmese nationals working abroad under permission from the Government to open accounts in U.S. dollars with the Myanma Foreign Trade Bank, Rangoon, out of their savings; with exchange control approval, withdrawals from such accounts could be used for payment of personal imports and petty expenses.

Burundi

(Position on December 31, 1981)

Exchange Arrangement

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, 1981 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 of Burundi; authority to carry out some transactions is delegated to three authorized banks.

Prescription of Currency

Settlements relating to trade in goods or invisibles between Burundi, Rwanda, and Zaïre are governed by the Trade and Customs Cooperation Agreement of September 10, 1978 and the Monetary Agreement of March 13, 1981. Such settlements are effected through convertible currency accounts maintained with the central bank of each signatory country.2 With these exceptions, 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 South Africa are prohibited. All imports require licenses, except trade samples without commercial value, luggage and personal effects of travelers, gifts, supplies for diplomatic missions and agencies of the United Nations, and merchandise not intended for sale whose declared consumer value c. & f. Bujumbura is FBu 50,000 or less. 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. Provided that all applicable regulations have been duly observed, authorized banks are allowed to validate licenses with a value not exceeding FBu 500,000 f.o.b. for import transactions involving surface transportation by authorized importers; applications for amounts in excess of FBu 500,000 require the approval of the Bank of the Republic. 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: 25 per cent after two years and the final 25 per cent after five years. Profits awaiting remittance are to be deposited in the Caisse de Mobilisation et de Financement (Camofi), and interest earned on such deposits is eligible for transfer. 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 is permitted up to 50 per cent of net rental income (after payment of taxes and deduction of 20 per cent for maintenance expenses); the remainder, plus any accrued interest, may be transferred three years later, provided that the funds have been held on deposit with a domestic financial institution. 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 South Africa are prohibited. All exports require licenses, with the exception of trade samples without commercial value, luggage and personal effects of travelers, and merchandise not intended for sale and valued at FBu 100,000 or less. Licenses 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 within 90 days of the date of export declaration at the customs. All exchange proceeds from exports must be surrendered to an authorized bank within 8 days of their collection. Exports of arabica and robusta coffee are the monopoly of the Burundi Coffee Company. Virtually all exports, including coffee, are subject to export taxes and a statistical tax. Exports of manufactured goods may receive a refund of duties paid, provided that they incorporate raw materials on which import duty has been paid.

Proceeds from Invisibles

Exchange receipts from invisibles must be surrendered to authorized banks. Travelers may bring in any amount of foreign 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 some 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 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 of the Republic 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 1981

March 13. A new monetary arrangement with Zaïre and Rwanda was signed, succeeding the 1978 agreement.

Cameroon

(Position on December 31, 1981)

Exchange Arrangement

The currency of Cameroon is the CFA Franc,1 which is pegged to the French franc, the intervention currency, at the fixed rate of CFAF 1 = F0.02. Exchange transactions in French francs between the 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.

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 French Franc Area must be declared to the authorities for statistical purposes. All other countries are considered foreign countries.

Administration of Control

Exchange control is administered by the Directorate of Economic Controls and External Finance in the Ministry of Finance. Exchange transactions relating to all countries must be effected through authorized intermediaries, i.e., the Postal Administration and authorized banks. Import licenses are issued by the Ministry of Economy and Planning, and export licenses are issued by 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 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 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. Settlements for imports effected under an import license benefit from the authorization of uninterrupted transfer given to the authorized banks by the Ministry of Finance.

Payments for Invisibles

Payments in excess of CFAF 500,000 for invisibles to France (as defined above), Monaco, and the Operations Account countries require prior declaration but are permitted freely; those to other countries are subject to the approval of the Ministry of Finance. Payments for invisibles related to trade are permitted freely when the basic trade transaction has been approved or does not require authorization. Transfers of income accruing to nonresidents in the form of profits, dividends, and royalties are also permitted freely, 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. In practice, additional allocations may be allowed.

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 French Franc Area may take out up to CFAF 20,000 in BEAC banknotes. Travelers to other countries of the 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 was made.

Exports and Export Proceeds

All exports to South Africa are prohibited. Export transactions valued at CFAF 50,000 or more must be domiciled with an authorized bank. Exports to all countries are subject to submission of domiciliation documents signed by the Ministry of Finance. Proceeds from exports to all countries must be collected within 30 days of the payment date stipulated in the sales contract, and proceeds received in currencies, other than those of France or an Operations Account country, must be surrendered within a month 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 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 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 and titles embodying claims on nonresidents must be deposited with an authorized intermediary and be classified as foreign, whether they belong to residents or nonresidents.

Direct investments abroad2 require the prior approval of the Ministry of Finance, unless they take the form of a capital increase resulting from reinvestment of undistributed profits; 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 that 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 five 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 1981

No significant changes occurred in the exchange and trade system.

Canada

(Position on December 31, 1981)

Exchange Arrangement

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, 1981 was Can$1.1855 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 or prohibited; the main products affected are oleomargarine and used automobiles. Imports of nonleather, nonrubber footwear are subject to a global quota.

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, the Democratic People’s Republic of 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).

Small and medium-sized exporters are eligible for certain financial facilities operated by the Export Development Corporation (EDC), including political risk insurance.

Payments for and Proceeds from Invisibles

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

Capital

No exchange control requirements are imposed on capital receipts or payments by residents or nonresidents. Apart from specific restrictions in the financial, broadcasting, 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. The domestic assets of a foreign-owned bank operating in Canada must not exceed 20 times its authorized capital; the total domestic assets of all such banks must not exceed 8 per cent of the total domestic assets of all banks operating in Canada.

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 1981

January 1. In the first of several instances during the year, the export tax on certain types of crude oil and hydrocarbon equivalents (namely, Lloydminster and Wainwright-Vicking-Kinsela blends) was changed from Can$16.35 to Can$23.24 a barrel; by August 1981 it had been reduced to Can$ 17.30. (The export charge on other heavy crude was Can$l-2 a barrel higher throughout the period.)

January 5. As a means of matching the concessional financing by other governments, a “crédit mixte” scheme was introduced under which a standard loan offered by the EDC at the market rate is supplemented by a low-interest loan from the Government in cases where it is clear that other countries are resorting to low-interest charges for export promotion purposes.

April 28. A five-year grain agreement was negotiated with the U.S.S.R., under which Canada agreed to sell to the U.S.S.R. 5 million tons of grain annually (about 3.75 million tons of wheat and about 1.25 million tons of barley).

July 1. Export financing facilities aimed at assisting small and medium-sized exporters were introduced. The new facilities, to be administered by the EDC, included (1) purchases by the EDC of promissory notes issued to exporters by foreign buyers, (2) political risk insurance for exporters who cannot obtain credit information on foreign buyers, (3) insurance coverage for possible losses by commercial banks that grant financial accommodation for export bills receivables issued by the EDC.

November 25. An import quota on leather footwear was abolished, while an import quota was imposed on nonleather, nonrubber footwear.

Cape Verde

(Position on December 31, 1981)

Exchange Arrangement

The currency of Cape Verde is the Cape Verde Escudo, which is pegged to a weighted basket of currencies representing nine important trading partners. The exchange rate of the Cape Verde escudo in terms of the U.S. dollar, the intervention currency, is fixed daily on the basis of quotations for the U.S. dollar and the other currencies included in the basket. On December 31, 1981 the buying and selling rates for the U.S. dollar were C.V. Esc 50.56 and C.V. Esc 51.17, 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 receipts of convertible currencies and may be debited for payment of any obligations in Cape Verde. Outward transfers from such accounts may be made freely. Embassies and foreign officials of embassies are required to open special accounts in foreign currency and in local currency.

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 years). 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 1981

No significant changes occurred in the exchange and trade system.

Central African Republic

(Position on December 31, 1981)

Exchange Arrangement

The currency of the Central African Republic is the CFA Franc,1 which is pegged to the French franc, the intervention currency, at the fixed rate of CFAF 1 = F 0.02. Exchange transactions in French francs between the BEAC and commercial banks take place at the rate of CFAF 50 = F 1, free of commission. Buying and selling rates for certain other foreign currencies are also officially posted, with quotations based on the fixed rate for the French franc and the rates for the currencies concerned in the Paris exchange market. A commission of 0.25 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.

With the exception of those relating to gold, the exchange control measures of the Central African Republic do not apply to (1) France (and its Overseas Departments and Territories) and Monaco; and (2) all other countries whose bank of issue is linked with the French Treasury by an Operations Account (Benin, 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.

Administration of Control

All draft legislation, directives, correspondence, and contracts having a direct or indirect bearing on the finances of the State require the prior approval of the Minister of Finance, who has delegated his approval authority to the Director of the Budget. The 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 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 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 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 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 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 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 an 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 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 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 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 1981

No significant changes occurred in the exchange and trade system.

Chad

(Position on December 31, 1981)

Exchange Arrangement

The currency of Chad is the CFA Franc,1 which is pegged to the French franc, the intervention currency, at the fixed rate of CFAF 1 = F 0.02. Exchange transactions in French francs between the BEAC and commercial banks take place at the 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.

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.

Administration of Control

The Office of the Minister of Economy and Finance supervises borrowing and lending abroad, the issuing, advertising, or offering for sale of foreign securities in Chad, and inward and outward direct investment; it also issues import and export authorizations for gold. Exchange control is also administered by the Minister of Economy and 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 and Finance.

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 South Africa are prohibited. Imports of wheat, wheat flour, and sugar from all sources require licenses. All other imports from countries in the French Franc Area and from EC countries (the original member states), other than France, may be made freely. All imports from non-EC countries outside the 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 Economy and Finance 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 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 French Franc Area, as well as other countries. Specified imports from neighboring countries not belonging to the 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 Economy and Finance. 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 Economy and Finance 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 South Africa are prohibited. All exports to non-EC countries outside the 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 Economy and Finance, irrespective of the method of financing; the full or partial liquidation of such investments also requires the prior approval of the Minister. Foreign direct investments in Chad3 require the prior approval of the Minister of Economy and Finance unless they take the form of a mixed-economy enterprise. The full or partial liquidation of direct investments in Chad must also be declared to the Minister. Both the making and the liquidation of direct investments, whether these are Chadian investments abroad or foreign investments in Chad, must be reported to the Minister within 20 days of each operation. Direct investments are defined as investments implying control of a company or enterprise.

The issuing, advertising, or offering for sale of foreign securities in Chad requires prior authorization by the Minister of Economy and Finance. Exempt from authorization, however, are operations in connection with (1) loans backed by a guarantee from the Chadian Government and (2) shares similar to securities whose 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 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 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 not 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 Economy and Finance. The following are, however, exempt from this authorization: (1) loans directly connected with the rendering of services abroad by the persons or firms mentioned above, or with the financing of commercial transactions either between Chad and countries abroad or between foreign countries, in which these persons or firms take part; and (2) other loans, when the total amount outstanding of these loans does not exceed CFAF 5 million for any one lender. The making of loans referred to under (2) that are free of authorization, and each repayment thereon, must be declared to the Minister within 30 days of the operation. Commercial banks must maintain 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 Economy and Finance, 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 gold coins with face values 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 Economy and Finance and by the Directorate of Energy, 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 the Office for Purchases, Sales, Imports, and Exports (Bavie), which is an approved private company. Unworked gold may be exported only to France. Both licensed and exempt imports of gold are subject to customs declaration.

Changes during 1981

No significant changes occurred in the exchange and trade system.

Chile

(Position on December 31, 1981)

Exchange Arrangement1

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, 1981 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, 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. Banks and authorized entities operate in such 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 Executive Committee of the Central Bank is responsible for carrying out currency exchange policy. The Chilean Copper Commission is responsible for the supervision of copper exports and all imports of the copper industry; this supervision has to be exercised in accordance with the general rules enacted by the Central Bank.

Prescription of Currency

Settlements with Argentina, Bolivia, Brazil, Colombia, Ecuador, Mexico, Paraguay, Peru, Uruguay, and Venezuela may be made through accounts maintained with each other by the Central Bank of Chile and the central banks of each of the countries concerned, within the framework of the multilateral clearing system of the Latin American Integration Association (LAIA). 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

Imports are subject to a paper formality known as Informe de importación. The import report form can be obtained from and processed through the intermediary local commercial bank. Once the import report is issued, shipment can proceed but has to occur within 180 days from the date of issue. (In the case of imports valued up to US$10,000 f.o.b., the goods can be shipped and the payment arranged before the date of issue of the corresponding import report, but the length of time allowed for completing the operation is limited to 90 days.) The margin of tolerance in cost and volume of goods actually shipped when compared with those indicated in the pro forma invoice is 10 per cent, with a maximum variation of US$10,000.

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), i.e., on credit terms exceeding 360 days, require prior authorization of the credit terms by the Central Bank. The maximum permissible maturity for import financing under short-term payment terms (cobertura corriente) is 90 days. Virtually all imports are subject to a registration tax of up to 3 per cent of value, which is offset against the applicable import duty. Import duties for most items are at a uniform rate of 10 per cent of c.i.f. value. 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. Residents may purchase up to US$10,000 every 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$10,000 a trip for travel to all countries. Insurance activities within the country are reserved to Chilean companies or to authorized foreign companies. There are allowances of up to US$10,000 a month for study abroad and for medical purchases of a noncommercial character, subscriptions to magazines, books, and pension payments.

Exports and Export Proceeds

All commodities may be freely exported. All foreign exchange proceeds from exports in excess of US$5,000 must be surrendered through commercial banks, which are required to advise immediately the Director of Operations of the Central Bank (the Chilean Copper Commission in the case of copper). Commercial banks are authorized to purchase all 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.

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; 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 cumulative ceiling of US$100,000.

Proceeds from Invisibles

In general, foreign exchange proceeds from invisibles must be surrendered only when required by a legal provision. 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 generally 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 of up to one-year maturity with foreign correspondents and short-term loans for domestic relending up to a limit determined mainly by a bank’s capital and reserves. 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.2 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 with average maturities of less than five and a half years is subject to reserve requirements, as follows: 15 per cent for average maturities of less than four years and 10 per cent for average maturities of more than four years but under five and a half years.

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

(3) Decree-Law No. 600 of July 7, 1974 (amended by Decree-Law No. 1748 of March 18, 1977), the Foreign Investment Law, establishes a regime for long-term capital investment. Authorization to make a foreign exchange investment in Chile is granted by the Foreign Investment Committee through a 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 at the Central Bank, with a few exceptions. 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 a year 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 on terms authorized by 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. Foreign investment in the oil sector is subject to authorization by the Empresa Nacional de Petróleo (ENAP).

Gold

Chile has issued three types of gold coin, 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 1981

January 1. Under a schedule designed in 1979, import tariffs on automobiles were fixed as follows: automobiles over 850 cubic centimeters, 70 per cent; trucks with cargo capacity up to 1,675 kilograms, 60 per cent; trucks with cargo capacity of 1,675 kilograms or over, 30 per cent.

January 1. Import duty exemptions for food products imported in the northern regions of Chile were discontinued.

January 2. The requirement for an import registration for imports exceeding US$10,000 f.o.b. was discontinued and replaced by a simpler Informe de importación.

January 2. The maximum permissible maturity for import financing under the cobertura corriente system was set at 180 days.

March 1. The maximum value of primary necessities importable duty free into Region XI and Chiloé was fixed at US$200,000.

March 1. Import duty exemptions for goods entering Easter Island were removed.

March 25. Special duties on evaporated milk, condensed milk, and concentrated milk were eliminated, while such duties were lowered on powdered milk and low-fat milk.

March 25. Chilean banks were permitted to contract lines of credit of up to one-year maturity with foreign banks without central bank authorization.

April 29. Permission was granted for individuals to maintain demand deposits in foreign banks.

August 18. The goods on the list of prohibited imports were all removed from this list.

November 30. The maximum maturity for import financing under the cobertura corriente system was halved to 90 days, while the maximum maturity of export credit prior to export shipment was increased from 180 to 230 days.

December 23. Commercial banks were permitted to contract short-term credits abroad for relending domestically, up to a limit determined mainly by a bank’s capital and reserves.

People’s Republic of China

(Position on December 31, 1981)

Exchange Arrangement

The currency of the People’s Republic of China is the Renminbi and its unit is the yuan. The exchange rate of the renminbi is adjusted in accordance with movements in the value of a basket of internationally traded currencies, weighted with reference to their importance in China’s external transactions and the trends in their relative values. The yuan–U.S. dollar rate is calculated directly from the value of the basket, while rates for 23 other currencies1 are determined from the cross rates. The exchange rate is published daily by the State General Administration for Exchange Control; on December 31, 1981 the buying and selling rates for the U.S. dollar were Y 1.7411 and Y 1.7499, respectively, per US$1. Published rates for currencies other than those that are important in China’s international transactions are changed whenever the calculated rate diverges from the previously published rate by 1 per cent; for the important currencies, such as the U.S. dollar and the Japanese yen, a smaller margin of 0.5 per cent is applied. All spot transactions are performed at this official exchange rate.

All national enterprises engaged in foreign trade are required to buy foreign exchange from the Bank of China at an internal settlement rate of Y 2.8 per US$1. This rate is formed by adding to the official rate an “equalization price” and applies to all national enterprises and corporations engaged in trade, as well as to receipts and expenditures in foreign exchange for trade-related transactions in invisibles such as shipping and insurance. The official rate remains in effect for all other transactions in invisibles and for all settlements with nonresidents that are denominated in renminbi.

An experimental trading system for foreign exchange has been established by the Bank of China in a few areas, such as Beijing, Guangdong, Hefei, Shanghai, and Tianjin. National enterprises holding foreign exchange earned through the system of retention quotas are permitted to sell this foreign exchange to other national enterprises that have a quota for spending foreign exchange. The Bank of China acts as a broker and levies a commission of 0.1–0.3 per cent on both sides of the transaction. The Bank of China does not operate in this trading system on its own account or provide foreign exchange or take up positions in foreign exchange. Most transactions are in U.S. dollars, but Hong Kong dollars and pounds sterling are also traded. All transactions in this market are spot transactions and are conducted at the internal settlement rate of Y 2.8 per US$1.

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

Administration of Control

The State General Administration for Exchange Control (SGAEC), a government department under the direct control of the State Council, is responsible for controlling all foreign exchange transactions, in accordance with state policy. Where the SGAEC does not have a bureau, the local branch of the Bank of China acts as an agent for the SGAEC. Other banks and financial institutions (for example, the Hong Kong and Shanghai Banking Corporation, the Standard Chartered Bank, the Overseas Chinese Banking Corporation, and the Bank of East Asia in Shanghai) may handle designated transactions with the approval of the SGAEC. The China International Trust and Investment Corporation (OTIC) is authorized to conduct transactions connected with investments of foreign capital in China. Individuals and institutions may hold foreign exchange but may not deal in it or conduct arbitrage operations.

Foreign exchange transactions are generally made in accordance with a foreign exchange plan. That part of the foreign exchange plan dealing with foreign trade is prepared by the Ministry of Foreign Trade. The Ministry of Foreign Economic Relations prepares the part dealing with external assistance and loans by China; the foreign exchange budgets of other government departments are prepared by the Ministry of Finance. The SGAEC draws up the section of the plan covering local and provincial nontrade transactions, receipts from overseas Chinese, and individual receipts. The overall foreign exchange plan is coordinated and balanced by the SGAEC, and after it has been reviewed and reconciled with other plans by the State Planning Commission, it is submitted to the State Council for approval. Following approval, the plan is sent back to the various localities and ministries for implementation. The Bank of China is responsible for supervising the implementation of the foreign exchange plan.

The foreign exchange plan, in principle, covers all transactions, including those with countries with which China maintains bilateral payments agreements. The annual plan is divided into quarterly plans, and at the end of each quarter, the State Planning Commission reviews the implementation of the plan and determines whether corrections are necessary. That part of the foreign exchange plan dealing with trade is broken down by commodity. Unexpected events, such as changes in foreign trade prices, might necessitate a revision of the plan. Special exchange control regulations apply to special economic zones and border regions.

Prescription of Currency

Trade transactions with Albania, Bulgaria, Cuba, Czechoslovakia, the German Democratic Republic, Hungary, the Democratic People’s Republic of Korea, Mongolia, Poland, Romania, the U.S.S.R., and Viet Nam are expressed in Swiss francs at the official exchange rate and are settled through bilateral payments arrangements. In normal circumstances, imbalances emerging toward the end of each year are covered by increased deliveries of goods. Noncommercial transactions are settled on a current basis in convertible currencies, except for the majority of such transactions with the Democratic People’s Republic of Korea and Romania, which pass through the clearing account. Payments to and from countries with which China has bilateral payments agreements3 are made in currencies and in accordance with the procedures set forth in those agreements. In other cases, where there are no specific regulations prescribing the currencies to be used in transactions, they are determined by bilateral contract. Bilateral trade and payments agreements are of three kinds. Type A agreements are designed to ensure balanced trade and include, for each good binding on both parties, itemized quantitative commodity lists or foreign exchange quota lists for those commodities which cannot be expressed in quantitative terms. Most arrangements are of this type. Type B agreements (those with Iran, Sierra Leone, and Syrian Arab Republic) provide such binding itemized lists only for the principal goods traded by the parties and also include nonbinding lists of secondary goods. Type C agreements (those with Cyprus and Greece) contain lists of goods only for illustrative purposes.

Nonresident Accounts

Nonresidents4 in China for a short period may open nonresident accounts with the Bank of China. Joint ventures may also open foreign exchange accounts and use them to make payments abroad. With the permission of the Bank of China, foreign banks may hold convertible renminbi accounts in connection with commercial or noncommercial transactions. Renminbi may be purchased for such an account only on presentation of documentary evidence that the money will be used in the designated transaction. The Bank of China may check any use made of renminbi in such accounts.

Imports and Exports

The primary responsibility for the conduct of trade rests with the Ministry of Foreign Trade and the Import and Export Affairs Administration Commission (an organization under the State Council), which issue the licenses required for all import and export transactions. Most foreign trade is conducted by state foreign trade corporations under the direct leadership of the Ministry of Foreign Trade. Other entities may conduct foreign trade only if authorized by license to do so by the Ministry of Foreign Trade and the SGAEC. The foreign trade activities of entities that are not under the jurisdiction of the Ministry of Foreign Trade are supervised and coordinated by the Import and Export Affairs Administration Commission.

Foreign trade corporations have branches in provinces, cities, and autonomous regions and are under the dual leadership of the local authorities and the Ministry of Foreign Trade. Localities and ministries other than the Ministry of Foreign Trade may also, after registration, participate directly in foreign trade. Local foreign trade corporations have been established in a number of provinces, municipalities, and autonomous regions. Ministries have also been permitted to establish foreign trade corporations.

All enterprises, except registered state-owned foreign trade corporations, need a license from the local foreign trade bureau before they can trade or hold foreign exchange. Part of the proceeds of some exports may be retained in a foreign exchange deposit or foreign exchange quota account with the Bank of China. Such foreign exchange may be sold to other authorized enterprises through the experimental trading system established by the Bank of China. All other foreign exchange earnings from exports must be repatriated and surrendered to the Bank of China, unless a specific exception is granted by the SGAEC. Before using their holdings of foreign exchange, enterprises other than the foreign trade corporations must seek the approval of the SGAEC. The Bank of China provides foreign exchange for imports on the basis of import licenses and approval by the SGAEC. Enterprises must sell their foreign exchange earnings from invisibles to the Bank of China, except for the portion they may retain in accordance with specific regulations.

Foreign trade is conducted in accordance with the annual foreign trade plan. This plan is drawn up by the Ministry of Foreign Trade in conjunction with the State Planning Commission. The former sends directives on the preparation of the plan to all foreign trade corporations and to the foreign trade bureaus in the provinces, municipalities, and autonomous regions; these, in turn, meet with other interested entities and prepare lists of needed imports and goods available for export. The plans prepared at the local level are coordinated and balanced by the Ministry of Foreign Trade and the State Planning Commission at national foreign trade planning conferences. The State Council grants final approval to the foreign trade plan.

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

The import and export of weapons, ammunition and explosives, radio receivers and transmitters, Chinese currency, manuscripts, printed and recorded materials, and films that are deemed to be detrimental to Chinese political, economic, cultural, and moral interests are prohibited. In addition, the import of poisons, narcotic drugs, diseased animals, and plants is prohibited, as is the export of valuable cultural relics and rare books, rare animals and plants, and precious metals and artifacts made from these metals.

The customs regulations in force are the Provisional Customs Law of the People’s Republic of China and the Customs Import and Export Tariff of the People’s Republic of China. Except for imports into Tibet, China applies a two-column import tariff with a general rate and a minimum rate. The minimum rate is applied to goods from those countries with which China has concluded reciprocal commercial treaties.5 The general rate applies to all other countries. Import duties are generally levied on the c.i.f. value of goods. The rates on dutiable imports under the general tariff fall into 24 scales ranging from 7.5 per cent to 250 per cent, while those under the minimum tariff fall into 20 scales ranging from 5 per cent to 150 per cent.6

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

In addition to customs duties, the Consolidated Industrial and Commercial Tax (a turnover tax that is applied also to other commodities) is levied on imports in accordance with the list contained in the Draft Regulations of the Consolidated Industrial and Commercial Tax of the People’s Republic of China. There are no export duties.

In the case of compensation trade, after imported materials and equipment have been paid for, net foreign exchange earnings accrue to the State. Of this total, 15 per cent may be retained and the rest must be surrendered. One half of the retained amount, or 7.5 per cent, remains with the enterprise, while the other half is retained by the locality if the enterprise is controlled at that level, or divided equally between the relevant ministry and the locality if the enterprise is under central leadership. In other cases, the percentage of export earnings that can be retained varies with the enterprise.

Special economic zones have been set up in Shantou, Shenzhen, Xiamen, and Zhuhai. Foreigners and, in particular, overseas Chinese are permitted to open factories in these zones for manufacturing products for export markets. Imports into such zones intended for processing and re-export are exempt from import duties. Profits generated in the zones are taxed at 15 per cent, as opposed to 30 per cent for joint ventures within China.

Invisibles

Foreign exchange remitted from abroad or from the Hong Kong and Macao regions to Chinese citizens, foreign nationals, or stateless persons residing in China must be surrendered to the Bank of China, except for the 10 per cent which may be retained when the remitted amount is equivalent to Y 3,000 or more. For residents of China repatriating foreign exchange held abroad or in the Hong Kong and Macao regions before October 1, 1949, or inherited after that date, up to 30 per cent of such inward remittances may be retained. Similarly, up to 30 per cent of foreign exchange owned by immigrants or returning Chinese before becoming residents may be retained, provided application is made within two months following entry into China. Such retained foreign exchange may be sold to the Bank of China or remitted out of China through the Bank of China, or taken out of China against certification by the Bank of China.

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

Foreign staff members and employees, as well as those from the Hong Kong and Macao regions,7 may remit 50 per cent of salaries and other income earned in China after payment of taxes. Profits of joint ventures may be remitted after taxation, in accordance with foreign exchange regulations; such remittances are subject to the approval of the local branch of the Bank of China and should be paid through the foreign exchange account of the joint venture. Remitted profits are subject to an additional tax of 10 per cent.

If a Chinese resident wishes to spend money on travel abroad, receive his pension abroad, or remit money abroad, he must apply to the local SGAEC bureau for approval. Such factors as the individual’s normal income and expenditure are examined to determine if approval is to be granted for remittances. In cases of serious illness, death, or injury affecting a Chinese resident’s parents, spouse, or children outside China, he may be allocated the necessary foreign exchange on presentation of documentary verification. If permission is granted to travel abroad, a Chinese resident is normally allowed to take a reasonable amount of foreign exchange to cover expenses for transport and subsistence; any surplus must be repatriated and surrendered to the Bank of China. There is no tax on travel. A Chinese resident who retires and emigrates is normally permitted to receive his pension abroad but he is not normally permitted to remit the proceeds from any assets he may sell in China.

Foreign exchange remitted or brought in by nonresidents may be converted into either Chinese currency or foreign exchange certificates denominated in yuan. Foreign exchange certificates can be used solely by nonresidents in hotels, restaurants, and shops serving nonresidents, for purchasing airline tickets and through train or ship fares to Hong Kong and Macao, and for international telecommunications charges and parcel post charges. Persons entering China must declare their holdings of foreign currency and may take out of China any unused foreign currency on presentation of the import declaration form issued by the customs. The import and export of Chinese banknotes are prohibited. Foreign exchange certificates may be imported, but export is subject to the provision of documentation showing that it has been acquired legitimately. Chinese residents must show their authorization to export foreign currency at the border.

Joint ventures are required to insure themselves with Chinese insurance companies.

Capital

A policy of permitting foreign borrowing on a planned basis has been instituted. Loans for vital projects or projects which have a rapid rate of return are given priority approval. All sections and departments wishing to borrow abroad must prepare a plan showing the kinds of imports for which the loan is intended. Such plans must show the amount of foreign exchange needed and how much of this will be earned and how much borrowed from abroad. All such plans are submitted to the State Planning Commission, which reviews them in cooperation with the Foreign Investment Control Commission. If the imports are for new construction, the plans are also reviewed by the State Capital Construction Commission. (All three Commissions are under the supervision of the State Council.)

Approval of foreign loans is based on a consideration of the need for foreign capital, the ability of the borrowing unit to repay, and the overall debt-service ratio of China. Most loans are made through the Bank of China or, in the case of some loans to provinces or enterprises that are able to repay the loan themselves, with Bank of China guarantees. External borrowing plans by entities other than the Bank of China must be submitted to the SGAEC and the Foreign Investment Control Commission for examination and forwarding to the State Council for approval, before loans from abroad or from the Hong Kong and Macao regions can be incurred. Resident organizations may not issue securities for foreign exchange unless approved by the State Council.

All foreign investment projects are subject to the approval of the Foreign Investment Control Commission. The policy with respect to foreign capital is designed both to make up the insufficiency of domestic capital and to facilitate the introduction of modern technology and management. All foreign exchange earned by joint ventures should be kept in a Bank of China account. Transfers of capital require SGAEC approval. When a joint venture is wound up, the net claims belonging to the foreign investor may be remitted with SGAEC approval through the foreign exchange account of the joint venture. Alternatively, the foreign investor may apply for repayment of his paid-in capital.

Profits of joint ventures, with the exception of firms in special economic zones and those exploiting petroleum, natural gas, and other resources, are subject to tax at 33 per cent (30 per cent basic rate plus a 10 per cent surcharge on the assessed tax). As mentioned above, remitted profits are subject to an additional tax of 10 per cent. A joint venture scheduled to operate for ten years or more may be exempted from income tax in the first year of operation and be allowed a 50 per cent reduction for the second and third years. Joint ventures in low-profit operations or located in remote, economically underdeveloped outlying areas may be allowed a further 15–30 per cent reduction in income tax for the following ten years. A participant in a joint venture which reinvests its share of profit in China for a period of not less than five years may obtain a refund of 40 per cent of the tax paid on the reinvested amount. Some joint ventures concluded before the passing of tax regulations in August 1980 are subject to taxes at different rates.8 Foreign investment by Chinese enterprises is subject to approval; profits thereby earned must be sold to the Bank of China, except for a portion which may be retained locally as a working balance. Chinese diplomatic and commercial organizations abroad and undertakings abroad and in Hong Kong and Macao are required to draw up annual foreign exchange plans.

Gold

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

Changes during 1981

January 1. An internal settlement rate of Y 2.8 per US$1 was introduced for all trade transactions. An experimental foreign exchange trading system was also established.

January 16. A State Council Order was published requiring all government and trade units to remit by March 1, 1981 to the Bank of China any foreign exchange held abroad.

March 1. Remittances of salaries and other incomes earned in China by foreign employees of joint ventures were limited to 50 per cent.

March 1. The Provisional Regulation for Exchange Control, promulgated by the State Council on December 18, 1980 came into force.

July 15. New regulations governing foreign exchange certificates were issued by the Bank of China.

August 10. Rules governing the carrying of foreign exchange, precious metals, and payments instruments in convertible currency into and out of China were issued by the State General Administration for Exchange Control. In addition, exchange control regulations were issued related to foreign representations in China and their personnel.

September 25. The basis for the assessment of customs duties on television sets, radio recorders, and electronic calculators imported by individuals for private use was changed from a c.i.f. basis to a domestic retail price basis. (The rate of duty involved, i.e., 50 per cent on television sets and radio recorders and 20 per cent on electronic calculators, remained unchanged.)

November 1. Duties on imports by trading corporations were raised as follows: television sets, from 10 per cent to 60 per cent; radios or recorders, from 30 per cent to 60 per cent; and electronic calculators, from 25 per cent to 40 per cent.

December 31. New rules were issued by the State General Administration for Exchange Control concerning individual foreign exchange holdings and applications for foreign exchange by individuals.

Colombia

(Position on December 31, 1981)

Exchange Arrangement

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; and (3) Colombia’s overall balance of payments performance. Exchange surrender and foreign payments are generally effected through the medium of exchange certificates, which are traded in the official market at the official rate and in the stock exchange at varying rates of discount. On December 31, 1981 the buying and selling rates in the official market for the U.S. dollar, the intervention currency, were Col$59.07 and Col$59.31, 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. All exchange transactions are effected through the Bank of the Republic (the central bank) or authorized banks.

There are other effective exchange rates which result from (1) a 12 per cent tax on coffee export proceeds; (2) tax credit certificates granted at three different percentage rates for most export proceeds; (3) a discount of about 5 per cent on surrender of exchange certificates issued against proceeds from exports of emeralds, pearls, and services, 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 an accounting rate applied by the Bank of the Republic; the Government purchases exchange for all public debt payments and other expenditures included in the national budget at the same exchange rate.

The Bank of the Republic stands ready to sell 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 a year. 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 movements 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 (see footnote 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 Integration Association (LAIA). 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 only to member countries of the LAIA, and special lists applicable only to less developed member countries of the LAIA 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. 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 nine months, except for imports of agricultural and livestock products, for which the validity period is three months. Imports 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$500. The charge for import registration is Col$l,500. In order to obtain exchange licenses, advance import payments deposits (depósitos previo a la nacionalización de mercancías) 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 payments 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 (LAIA 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 payments 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 LAIA 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 (except newsprint) are subject to a stamp tax of 1 per cent of the f.o.b. value.3

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.

Most 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, the monthly allowances of students studying abroad with government support, and for the service on registered foreign loans taken up by the private sector. No exchange restrictions exist for travel abroad. There are also no limits on outward remittances for bona fide cases of student allowances and family maintenance. The transfer of profits accruing to foreign investors is limited to 20 per cent of the investment a year. 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 US$15 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, but prior application for registration is necessary for all exports except 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 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 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 emeralds and pearls, a discount of 5 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. 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$206.50 a 70-kilogram bag. (2) Exporters pay a tax in foreign exchange at the rate of 12 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 30 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 5 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. Purchases of 10 per cent or more of the shares of a Colombian financial institution require the prior approval of the Banking Superintendent.

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.

Current deposit accounts in foreign currency may be held by resident credit institutions, insurance companies, export firms, transportation companies, and other specified entities, upon prior authorization of the Bank of the Republic.

Gold

Natural and juridicial persons may trade in Colombia in gold coins for numismatic purposes only. With this exception, only the Bank of the Republic is entitled to purchase, sell, hold, import, or export gold. 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. 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 1981

January 13. Import duties were reduced for items in about 50 customs categories, covering pharmaceuticals and various other products (Decrees No. 19 and No. 20, Ministry of Finance and Public Credit).

January 15. All sugar exports were required to be properly registered with Incomex (Decree No. 54, Ministry of Agriculture). In addition, the Ministry of Agriculture was empowered to establish quotas on domestic sale of sugar by sugar mills in order to assure adequate domestic supply.

January 28. It was announced that certificates of exchange acquired by the Bank of the Republic after more than 270 days of their date of issue would continue to be redeemed at the exchange rate prevailing on the date of issue, but would no longer be subject to the 5 per cent discount originally established in 1978 (MBR No. 3).

February 26. Import duties were reduced for items in about 50 customs categories, covering rubber and machinery imports (Decree No. 464, Ministry of Finance and Public Credit).

March 10. The requirement for importers to complete consular invoice forms was eliminated, leaving only that of submitting the commercial invoices (Decree No. 608, Ministry of Economic Development).

March 31. A 1 per cent import levy was introduced as a stamp tax to replace the consular invoice tax of 1 per cent, which used to be collected by Incomex (Customs Department Resolution No. 0039).

April 14. The import duty on imports of ink was reduced from 25 to 10 per cent for certain types of ink when imported by ink manufacturers as raw materials (Customs Department Resolution No. 935).

April 20. Minimum f.o.b. prices were established for certain automobile imports for purposes of ad valorem import duties (Customs Department Resolution No. 01063).

April 22. The minimum surrender price for a 70-kilogram bag of coffee was increased from US$181.95 to US$186.55 (MBR No. 13).

April 23. The retention rate (retención cafetera) was increased from 15 per cent to 20 per cent for exports of excelso coffee. In addition, effective September 1, 1981, the ad valorem tax on coffee exports was reduced from 13 per cent to 12 per cent (Decree No. 1019, Ministry of Finance and Public Credit).

April 24. Eight customs categories covering machinery and other items were transferred to the freely importable list.

April 30. Two customs categories were transferred to the freely importable list, while others were shifted to the prior license list (Incomex Resolution No. 025).

May 6. Congress approved Colombia’s membership in the 1980 Montevideo Treaty, which replaced the Latin American Free Trade Association (LAFTA) with the Latin American Integration Association (LAIA) (Law No. 45/81).

May 8. Legislation was enacted specifying that there could be three kinds of free zones (industrial, commercial, and industrial/commercial), and defining which enterprises could operate in the free zones (Law No. 47/81).

May 14. Congress approved Colombia’s membership in the GATT (Law No. 49/81).

May 25. Changes were made in the tariff schedule as follows: (a) customs duties were reduced for some imports of machinery and industrial equipment; (b) the 5 per cent import duty applied for the past five years on imports of certain machinery and industrial equipment was extended to June 30, 1982; and its coverage was extended to certain equipment imports when used for complete production units outside Bogotá, Medellín, and Cali (when used in these three cities, the duty rate would be 10 per cent unless requests for their reduction to 5 per cent were made by June 30, 1981); and (c) the 1 per cent import duty on imports of equipment to eliminate pollution was extended until the end of December 1982. (The preceding summary includes actions taken on June 23 and 25—see Decree Nos. 1317, 1629, 1630, 1631, and 1643 of the Ministry of Finance and Public Credit.)

June 23. About 130 customs categories covering cereals, chemicals, wood products, and machinery were transferred from the list of imports subject to prior approval to the freely importable list (Incomex Resolution No. 036).

July 3. Resin imports under two customs categories were shifted to the list of items requiring prior approval (Incomex Resolution No. 42).

July 15. Freight costs related to the importation of equipment and capital goods under a global license were permitted to be paid within the time period for the financing of the value of imports (MBR No. 21).

July 24. Import duties were reduced for items under five customs categories, covering certain chemicals and instruments, and increased for tricycles (Decree No. 2023, Ministry of Finance and Public Credit).

July 27. Clinical thermometers and tapes were transferred to the list of items requiring prior approval (Incomex Resolution No. 048).

July 31. An import duty of 1 per cent was imposed on certain kinds of tire imports, and the import duties on certain types of machinery were modified (Decree No. 2029, Ministry of Finance and Public Credit).

August 12. In regard to Resolution No. 3/81 of the Monetary Board, which had eliminated the 5 per cent discount on certificates of exchange redeemed after 270 days of issuance, it was clarified that the 5 per cent discount would be charged on certificates for which a period of 271 days from issue had elapsed by January 30, 1981 (MBR No. 29).

August 26. The credit line of the Bank of the Republic to Proexpo to discount export letters of credit was increased from US$20 million to US$40 million and the rediscount rates were raised from a range of 2–4 per cent to 4–6 per cent; in addition, Proexpo reduced its rediscount rate from 20 to 16 per cent (MBR No. 32 and Proexpo Resolution No. 06).

August 28. Benefits under the CATs were increased from 9 per cent to 12 per cent for exports of unwoven fabrics, pipes, and critic acid; from 5 to 9 per cent for cotton and sesame; from zero to 9 per cent for pulses and vegetables; and from zero to 4 per cent for flowers, processed leather, and cocoa; they were reduced from 12 to 9 per cent for exports of stamps and industrial gloves and eliminated for exports of ceramic and metallic statues and other ornaments, platinum and other unprocessed metals, and carton boxes. In addition, the waiting period for the use of the CATs was reduced to three months for all products.

September 17. The retention rate (retentión cafetera) was increased from 20 to 25 per cent for exports of excelso coffee (Decree No. 2563, Ministry of Finance and Public Credit).

September 23. Imports of edible oils were made subject to a 40 per cent ad valorem tax, and the minimum official import price for them was eliminated (Decree No. 2652, Ministry of Finance and Public Credit).

October 16. Imports of certain types of wire and engine parts were transferred to the prior approval list, and imports of radios and parts of furniture and cabinets were transferred to the freely importable list (Incomex Resolution No. 072).

October 29. Regulations were introduced prohibiting investors from purchasing 10 per cent or more of the shares of a Colombian financial institution without prior approval from the Superintendent of Banking.

November 5. The minimum surrender price a 70-kilogram bag of coffee exports was increased from US$186.55 to US$201.90 (MBR No. 43).

November 6. Import duties were reduced by 25–30 per cent for imports of electric alternators, transmission equipment and other electronic equipment, leaving the duties in a range of 5–30 per cent (Incomex Resolution No. 3108).

November 23. Imports of items under 11 customs categories, including various iron, steel, and aluminum plates, were transferred to the prior approval list. Eleven customs positions were affected (Incomex Resolution No. 078).

November 25. The maturity period for certificates of exchange was lengthened from 120–270 days to 120–690 days, and the extension was made retroactive to certificates issued on February 25, 1981.

Comoros

(Position on December 31, 1981)

Exchange Arrangement

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 currencies1 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.

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.

Administration of Control

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

Prescription of Currency

The Central Bank of Comoros 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 South Africa are prohibited.

Imports and Import Payments

Imports of 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 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 Central Bank of Comoros upon the request of the authorized bank.

Exports and Export Proceeds

All exports to 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 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 investment; 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 1981

July 1. The Central Bank of Comoros commenced operation, replacing the Institute of Issue.

People’s Republic of the Congo

(Position on December 31, 1981)

Exchange Arrangement

The currency of the People’s Republic of the Congo is the CFA Franc,1 which is pegged to the French franc, the intervention currency, at the fixed rate of CFAF 1 = F0.02. Exchange transactions in French francs between the 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 from this commission are payments of the State, the Postal Administration, and the BEAC, salaries of Congolese diplomats abroad, expenditures of official missions abroad, scholarships of persons studying or training abroad, and debt service payments due from companies that have entered into an agreement with the Congo. Most payments to other foreign countries and credits to Foreign Accounts in Francs are subject to a commission of 1 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.

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. 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 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 import items, 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 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.

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 payments 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

All exports require prior authorization. Most exports to countries in the 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

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 1981

No significant changes occurred in the exchange and trade system.

Costa Rica

(Position on December 31, 1981)

Exchange Arrangement

The currency of Costa Rica is the Costa Rican Colón. A limited number of transactions are conducted at the official exchange rate of Ȼ 20 per US$1.1 In principle, most other transactions are conducted at a flexible exchange rate determined by authorized dealers in the banking market.2 Tourist transactions as well as other transactions not accommodated through the above-mentioned channels may be conducted at a fluctuating exchange rate in the parallel exchange market. The spread between buying and selling rates in the banking exchange market is legally limited to Ȼ 0.18. The closing selling and buying rates in this market for the U.S. dollar on December 31, 1981 were 0 36.18 and (Ȼ 36, respectively, per US$1. Buying and selling rates for certain other currencies3 are also quoted, with daily quotations based on the relationship of those currencies against the U.S. dollar expressed in Costa Rican colones. The selling and buying rates in the parallel exchange market at the end of December 1981 were Ȼ 39 and Ȼ 38.50, respectively, per US$1. There are taxes and subsidies on purchases and sales of foreign exchange, as follows: Effective from December 10, 1981 for a period of one year, exchange subsidies are granted to certain payments, amounting to Ȼ 10 per US$1 in the case of student remittances abroad at a rate other than the official rate and equal to the full difference between the banking and official market exchange rates in the case of external debt service payments of certain cooperatives.

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. Following the exchange measures introduced in December 1980, it was decided that payments to other member countries of the Central American Common Market (CACM)4 in respect of trade and trade-related invisibles would continue to be made in Costa Rican colones through the Central American Clearing House, but must be made by means of checks and drafts denominated in U.S. dollars and drawn on Costa Rican banks. 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; (3) a selective consumption tax with a range of 6–100 per cent ad valorem on certain imports; and (4) a surcharge of 1 per cent of the c.i.f. value, with the exception of imports originating in CACM countries or Panama and made under prevailing agreements. There is also a small consular tax on certain imports.

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.

Medicine and medical equipment imported by the Social Security Institute, petroleum imports by the state oil company up to US$30.5 million through the end of January 1982, and wheat imports by millers up to US$3.7 million are eligible for foreign exchange financing through the official market; all other imports must be financed through the banking market or the parallel market.

Payments for Invisibles

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. Costa Rican nationals traveling abroad by air must pay an exit visa (Ȼ 84) and an airport tax (US$7.00); Costa Rican nationals who reside abroad must pay, in addition, a consular fee of US$5. For residents covered by Law No. 4812 (pensionados rentistas) and residents not so covered, the payment differs from the national one. Costa Rican diplomats and certain Peace Corps officials pay an exit fee of only Ȼ 6, provided their passport states that they are exempt from the above charges. Civil servants and students are not exempt from these payments unless so determined by the Ministry of Finance or the Migration Council. Costa Rican minors are subject to all the above payments, except for dependents of diplomatic parents, who pay only the Ȼ 6 exit fee.

Exports and Export Proceeds

The Central Bank supervises exports to ensure that exchange proceeds are surrendered to authorized dealers; the latter sell to the Central Bank all of their purchases (10 per cent of export proceeds) at the official rate and 6 per cent of their purchases in the banking market at the free market rate on the following business day. Exporters of nontraditional commodities are entitled to tax credit certificates (CATs, which are freely negotiable) corresponding to 12–15 per cent of the f.o.b value. In addition, exporters of nontraditional commodities eligible for CATs may also receive certificates for increases in exports (CIEX) for 1–10 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. Exchange taxes on export proceeds are applied at the rate of 10 per cent of the difference between the banking rate and the official rate in the case of traditional exports,5 and 5 per cent of the same difference for non-traditional exports to the CACM countries and Panama.

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 and the Ministry of Economy, Industry, and Commerce); 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 from the date 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

Proceeds from invisibles are free from controls or restrictions.

Capital

All capital transfers between residents and nonresidents may be made freely. 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 in U.S. dollars with agent banks in the form of specified foreign currencies6 or be invested in certificates of deposit denominated in colones; such funds, when they mature, are repaid in the currency in which the deposits were made.

Gold

The Central Bank may purchase, sell, or hold gold coin or bars as part of the monetary reserves in accordance with regulations established by its 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. As in the case of other exports, licenses from the Central Bank are required for exports of gold. Gold may also be held in any form in Costa Rica. The Central Bank does not supply gold to artistic or professional users.

Changes during 1981

March 9. A dual exchange market system was re-established on a temporary basis, with the Central Bank buying exchange at Ȼ 15 per US$1 and the colón fluctuating freely in the parallel market. It was also announced that export proceeds must be surrendered to the Central Bank within 15 days from the date of receipt.

March 31. For the external payments arrears of the private sector, the Central Bank introduced a system under which it would take the counterpart deposits in colones and, in return, issue negotiable certificates of deposit denominated in U.S. dollars; the certificates would carry a maturity of three years, redeemable in six semestral installments.

April 2. The prior import deposit requirement was eliminated.

July 11. In response to a Supreme Court ruling that the abandonment of the official exchange rate since the beginning of 1981 was unconstitutional, the Central Bank reintroduced the rate of Ȼ 8.60 per US$1 for 15 minor imports. Payments for other imports could be made through either the banking market or the parallel market. On the same date, exporters were required to surrender 1 per cent of their proceeds at the official rate, and the balance at the banking rate.

August 5. The list of import items eligible for foreign exchange at the official rate was reduced to only medicine and medical equipment imported by the Costa Rican Social Security Institute.

August 7. The following transactions were made eligible for foreign exchange at the official rate: (a) servicing of the external debt of government commercial banks; (b) remittances to students abroad who were registered as such with the Central Bank of Costa Rica prior to December 26, 1980; (c) medical expenses abroad; and (d) servicing of government external debt, and expenditures of the Ministry of Foreign Affairs and Culture as contained in the 1981 budget of the Republic.

August 19. Imports were made subject to a special tax equivalent to the difference in local currency between the amounts obtained at a given tariff rate by applying the official exchange rate and an exchange rate of Ȼ 15 per US$1 to a given foreign exchange value of imports.

August 20. The sale of foreign exchange in the banking market for purposes of foreign travel was suspended.

August 27. It was announced that only payments for priority imports (public or private) would be eligible for foreign exchange at the prevailing banking rate, and the Central Bank would for an indefinite period allocate foreign exchange for external debt service payments only to multilateral financial institutions. In addition, import licensing was introduced for the following items: imports from member countries of CACM and Panama under free trade agreements; medicine; essential grains and edible oils; educational materials; fuel and lubricants; raw materials and semifinished goods for agriculture and industry; essential building materials; parts of machines; and capital goods and equipment intended for use in specific export-oriented projects.

September 1. Importation of commodities specified in 42 import categories was prohibited.

September 21. Selective consumer taxes in the range of 6–100 per cent ad valorem were introduced on certain imports falling under 66 categories of the Standard International Trade Classification (SITC).

October 7. The Central Bank adjusted the value of the colón in the banking market from Ȼ 18.90 per US$1 (selling to Ȼ 30.06 per US$1 (selling) and reaffirmed that henceforth the exchange rate in the banking market would be adjusted in line with market conditions. While external debt service and other foreign payments of the Central Government up to the end of 1981, and certain approved foreign expenditures of the Social Security Institute, continued to be eligible for exchange transaction through the official market, the proportion of student remittances abroad eligible for conversion through the official market was reduced from 100 per cent to 50 per cent until the end of 1981, and the eligibility of debt service payments by the state banks, payments for medical treatment abroad, and payments for 15 minor imports (the latter established on August 5, 1981) was discontinued. In addition, the proportion of export proceeds required to be surrendered in the official market was raised from 1 per cent to 4 per cent, and the Central Bank was empowered to vary this proportion from time to time to ensure the availability of sufficient foreign exchange for sales at the official rate.

October 8. The computation basis for the import surcharge established on August 19, 1981 was changed to reflect the difference resulting from the application of the relevant import taxes at the official exchange rate and the same calculation using the banking market exchange rate prevailing on the business day preceding the import transaction concerned.

October 20. The Central Bank ceased to determine the value of the colón in the banking market and allowed it to be set by the banks and other authorized dealers. In addition, the required proportion of export receipts to be surrendered to authorized dealers in the official market was raised to 10 per cent, and it was stipulated that 6 per cent of authorized dealers’ purchases in the banking market should be sold to the Central Bank at the free market rate on the following business day; the Central Bank stood ready to buy the daily excess of purchases over sales by authorized dealers in the free exchange market, as well as any excess in settlements in Central American currencies through the Central American Clearing House. A maximum spread of Ȼ 0.18 between the buying and selling rates in the free exchange market was prescribed. The import licensing system, which was established in late August 1981, was abolished, and importers were again required only to register their imports for statistical purposes; imports of automobiles and capital goods (except in connection with export promotion projects or as otherwise approved by the Central Bank), for which import licenses had been suspended since August 27, 1981, were explicitly prohibited. Authorized dealers were directed to give priority in exchange sales to imports of raw materials and agricultural inputs, medicines, basic grains, petroleum and its derivatives, and spare parts.

November 5. The priority list established on October 20, 1981 for exchange sales by authorized dealers was expanded to include the following items: (a) expenditures abroad of the Center for the Promotion of Exports and Investments (Cenpro) to maintain its offices abroad, (b) payments for royalties and patents related to industrial manufacturing, (c) imports within the framework of free trade treaties, the payments for which are made through the corresponding clearing house, (d) external debt service payments to multilateral institutions, and (e) expenditures abroad of unregistered students.

November 16. The Central Bank extended the list of import items eligible for financing through the official market to include wheat imports by millers up to US$3.7 million.

November 18. The supplementary import surcharge was abolished, and a method was devised by which the prevailing banking market rate would be legally applied to assess the value of import duties.

November 26. The Central Bank added two items to the list of priority imports and other payments, namely, payments for medical services abroad and documented service payments on private debt. At the end of each working day, authorized dealers must establish whether their foreign exchange position is in deficit or surplus in respect of the priority payments. Authorized dealers in surplus can provide foreign exchange to those in deficit so as to fulfill pending obligations in the following working day. Any foreign exchange remaining after interdealer transactions in respect of priority payments may be used for other documented items.

November 27. The Legislative Assembly approved a law by which the official exchange rate was devalued from Ȼ 8.60 per US$1 (selling) to Ȼ 20.16 per US$1 (selling) effective December 10, 1981. In addition, exchange taxes on export proceeds were established for a period of one year, initially amounting to 15 per cent of the difference between the applicable banking market rate and a rate of Ȼ 8.60 per US$1 in the case of traditional exports,7 and 4½ per cent of the same difference in the case of nontraditional exports to the CACM countries. For student remittances abroad, the subsidy amounted to Ȼ 10 per US$1. For external debt service payments of certain cooperatives, the full difference between the banking and official market exchange rates was subsidized, whereas amortization by private individuals or companies of the obligations denominated in foreign currency and payable in Costa Rica and contracted prior to December 26, 1980 was subsidized up to Ȼ 8 per US$1, with a maximum of Ȼ 100 million. The following additional measures were announced on November 27: (a) authorization for investment companies and exchange houses to engage in foreign exchange dealings in the banking market, (b) the abolition of authorization in certain cases to acquire foreign exchange at a preferential rate as granted by Law No. 5519 of 1974, and (c) instruction to the Permanent Commission for Fiscal Affairs to prepare within 15 working days a proposal to increase, inter alia, taxes on nonessential luxury items, mainly imports.

December 9. The Central Bank of Costa Rica extended the list of imports eligible for payment through the official market to include crude petroleum purchased by the National Petroleum Corporation (Recope) in an amount of up to US$30.5 million through the end of January 1982.

December 18. Changes were made in existing regulations as follows: (a) the exchange taxes on export proceeds imposed on November 27 were reduced to 10 per cent for traditional exports and raised to 5 per cent for nontraditional exports to the CACM countries and Panama; (b) exchange subsidies were abolished in respect of amortization payments by private individuals and obligations denominated in foreign currency and payable in Costa Rica; (c) fertilizers and sugar were eliminated from the list of traditional exports; and (d) the tax base for the exchange taxes introduced on November 27, 1981 was changed from the differential between the banking rate and a rate of Ȼ 8.60 per US$1 to the differential between the banking rate and Ȼ 20 per US$1.

December 24. The regulations prohibiting the importation of capital goods and motor vehicles with an engine capacity exceeding 1,250 cubic centimeters or parts thereof for local assembly were revoked.

Cyprus

(Position on December 31, 1981)

Exchange Arrangement

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, 1981 the official buying and selling rates for the U.S. dollar, the intervention currency, were £C 0.4323 and £C 0.4329, respectively, per US$1. The Central Bank of Cyprus also quotes daily buying and selling rates for the deutsche mark, the Greek drachma, and the pound sterling. 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. Rates for longer periods are available for exports, on request.

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.

Prescription of Currency

Payments may be made by crediting Cyprus pounds to an External Account, or in any foreign currency;2 the proceeds of exports to such countries may be received in Cyprus pounds from an External Account, or in any foreign currency.

Nonresident Accounts

Residents of countries outside Cyprus 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. 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; 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 75 a trip).

Blocked Accounts are maintained in the name of a nonresident for certain funds of a capital nature that 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

The goods which require import licenses are specified in the Import (Regulation and Control) Orders issued under the Import Laws by the Minister of Commerce and Industry. The regulation, control, or restriction of such imports is done in order to protect the local industrial or agricultural production. For most goods subject to an import license, such a license is freely granted. Importers should not, however, enter into any commitment without securing the required import license. This license automatically carries the authority for effecting the relative payment.

Goods originating from Bulgaria, the People’s Republic of China, Czechoslovakia, the German Democratic Republic, Hungary, Poland, Romania, and the U.S.S.R. and not appearing in the above-mentioned Import Orders may only be imported direct from these countries and not through a third country. Import licenses issued by the Ministry of Commerce and Industry are subject to the requirements of other laws and regulations, e.g., medical, health, veterinary, phytopathological, etc.

Individual import licenses are not required for bona fide unsolicited gifts (which may not be sold) up to £ C 25 in value, for returned goods, or for certain special import transactions.

Payments for 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 3.5 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. Exchange allowances depend on the cost of living and tuition in the respective locations. For studies in the Eastern Mediterranean countries, member countries of the Council for Mutual Economic Assistance, the Middle East, and Yugoslavia, the maximum yearly allowance for living expenses is £ C 1,400; for Canada and the United States, £ C 2,700; for the United Kingdom, £ C 2,500; and for all other countries, £ C 2,300. Additional allowances are granted for payment of tuition. For tourist travel, the limit is £ C 3003 a person annually; for business travel up to £ C 100 a day is granted in addition to the tourist allowance, while for purposes of medical treatment the amount is unlimited but based on actual expenses. 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, barley, and maize 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, introduction of know-how, the number of persons to be employed, and in general the benefits accruing to the national economy. 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.

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 1981

During 1981 the buying and selling rates for the Cyprus pound were adjusted by small amounts at relatively frequent intervals, from £ C 0.3646 and £ C 0.3650, respectively, per US$1 on December 31, 1980 to £ C 0.4323 and £ C 0.4329, respectively, per US$1 on December 31, 1981.

August 1. The allowance for educational expenses abroad (in addition to a tuition allowance) was raised from a range of £ C 1,300 to £ C 2,100 to a range of £ C 1,400 to £ C 2,700 a person a year.

September 19. The bilateral payments agreement with the People’s Republic of China was terminated.

Denmark

(Position on December 31, 1981)

Exchange Arrangement

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, 1981 these rates were as follows:1

Specified InterventionDanish Kroner
Rates Per:Upper limitLower limit
100 Belgian or Luxembourg francs19.852018.9785
100 deutsche mark335.74320.98
100 French francs131.04125.28
100 Netherlands guilders303.74290.38
100 Irish pounds1,182.141,130.13
100 Italian lire0.645800.57285

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.2 On December 31, 1981 the middle rate for the U.S. dollar was DKr 7.3250 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 that 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 that 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 that 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 7,000 or less. Transfers of up to DKr 7,000 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 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, alcoholic beverages, 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, the Democratic People’s Republic of 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 (eight and a half years for ships and eight years for aircraft, 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 7,000.

Travelers may take out freely DKr 7,000 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 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 in the case of resident persons 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 capital.3 Private acquisition of real estate for noncommercial purposes and expenses related to building and construction work on such property are permitted within a limit of DKr 250,000 for each piece of property. 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 250,000 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. 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.

Residents may take up loans for up to five years (eight and a half years for ships and eight years for aircraft, heavy machinery, and major installations valued at DKr 1 million or more) from nonresidents to finance imports of commodities and services; they may also take up such loans to finance the granting of credits for exports of commodities and services, provided that the credits are in conformity with normal commercial practice and that the maturity of the loans does not exceed those for corresponding import loans. 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 that 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,4 provided that the assets are delivered within 12 months prior to the date the loan is repatriated or are contracted to be delivered within 12 months following that date. 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 7,000 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 22 per cent; domestic transactions in gold are also taxed at a rate of 22 per cent. There is no customs duty on imports of gold in bars or coin.

Changes during 1981

January 21. The ban on exports of goods and services to Iran was lifted.

May 1. The following measures were introduced: (a) regulations on the operation of the foreign exchange market were relaxed, such that, for the first time in 40 years, exchange rates would be set by dealers and commercial buyers of foreign exchange, and the rates quoted by the National Bank would henceforth serve only as guidelines (previously, all transactions had to be carried out at fixed rates set at midday for major foreign currencies); (b) the limit beyond which individual transactions and remittances become subject to exchange regulations was raised from DKr 5,000 to DKr 7,000; and (c) the limit on foreign exchange allowance for acquisition of real estate abroad for noncommercial use was changed from DKr 60,000 a person to DKr 250,000 in each case.

October 5. The intervention limits of the Danish krone within the EMS were changed with respect to the deutsche mark, French franc, Netherlands guilder, and Italian lira as follows:

Specified InterventionDanish Kroner
Rates Per:Upper limitLower limit
100 deutsche mark335.74320.98
100 French francs131.04125.28
100 Netherlands guilders303.74290.38
100 Italian lire0.645800.57285

The realignment involved a marginal reduction in the effective exchange rate of the krone.

November 17. The minimum period (prior to repatriation of loan) during which delivery must be made of capital assets financed by business investment loans of up to DKr 20 million was lengthened from 6 months to 12 months.

Djibouti

(Position on December 31, 1981)

Exchange Arrangement

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 currencies1 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 1.5–6.0 per cent set by the commercial banks, depending on the currency concerned. In addition, there is a fixed commission amounting to DF 300 for transfers in Djibouti francs, DF 500 (or US$3.00) for transfers in foreign currencies, and zero for transfers in French francs. There are no taxes or subsidies, on purchases or sales of foreign exchange.

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

Administration of Control

There is no exchange control and no prescription of currency. The Djibouti 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.

Prescription of Currency

All settlements with Israel and South Africa are prohibited. Otherwise, no prescription of currency requirements are in force.

Imports and Import Payments

Imports from Israel and South Africa are prohibited. Djibouti has a free trade zone in the port of Djibouti but the territory as a whole does not constitute a free zone. No customs duty is charged on imports but, in practice, fiscal duties are levied by means of indirect taxes (the general consumption tax). The rate of the general consumption tax is 26 per cent for luxury goods and 23 per cent for all other goods.2 Certain commodities, including alcoholic beverages, petroleum products, khat, and tobacco, are subject to surtaxes at various rates.

Exports and Export Proceeds

Exports to Israel and South Africa are prohibited. Otherwise, there are virtually no restrictions on exports, with the exception of the prohibition on exports of live animals. Export proceeds may be retained.

Payments for and Proceeds from Invisibles

No restrictions are imposed on payments for or proceeds from invisibles, except that payments must not be made to or received from Israel and South Africa.

Capital

No restrictions are imposed on inward or outward capital transfers, but payments may not be made to or received from Israel and South Africa. Under the Investment Code of June 5, 1975, enterprises established or expanded to undertake certain specific economic activities are eligible for various tax exemptions.

Changes during 1981

No significant changes occurred in the exchange and trade system.

Dominica

(Position on December 31, 1981)

Exchange Arrangement

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, 1981 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 is a 1 per cent tax on 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 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.

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$250 require approval by the Ministry of Finance. Residents of Dominica may purchase foreign exchange from authorized banks up to the equivalent of EC$ 15,000 a trip for travel outside the East Caribbean Currency Authority area, subject to presentation of evidence of intention to travel. 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 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 transfers of capital or profits require exchange control approval and are subject to payment of all tax liabilities. 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 Authority area may transfer up to EC$20,000 (for a husband, wife, and children under 18 years) 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 coins for numismatic purposes only. Imports of gold, under license by the Ministry of Finance, are permitted for industrial purposes only.

Changes during 1981

August 1. A tax of 1 per cent was imposed on all sales of foreign exchange.

Dominican Republic

(Position on December 31, 1981)

Exchange Arrangement

The currency of the Dominican Republic is the Dominican Peso, which is pegged to the U.S. dollar, the intervention currency, at RD$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 parallel foreign exchange 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, 1981 the buying and selling rates in the parallel market were RD$1.29 and RD$1.30, 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 Integration Association (LAIA).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 of motor vehicles are prohibited, and no official foreign exchange is made available for imports of spare parts of motor vehicles. Importable commodities 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 parallel market. All payments for imports at the official exchange rate require the approval of the Central Bank. Imports of raw materials at the official rate during 1981 were limited to 90 per cent of the average annual value in 1979 and 1980. 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.

Letters of credit for certain import payments are subject to full prepayment by the importer, and commercial banks are required to lodge with the Central Bank the peso equivalent of the value of the letters of credit. At the maturity of import letters of credit not subject to prepayment and opened on or after September 1, 1980, the commercial banks’ liabilities in respect of such transactions are subject to a 100 per cent reserve requirement collected by the Central 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 1981 such arrears represented about 12 weeks of imports.

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. 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 incomes. For students pursuing approved courses, exchange requests for monthly maintenance allowances are approved up to US$240 for Puerto Rico, up to US$300 for 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 1981 there was ah accumulation of about 16 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 34 products or subproducts, mainly foodstuffs, are prohibited, and 33 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 invoiced 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; in addition, under the Export Incentives Law of November 8, 1979 receipts from specified nontraditional exports may be exempted fully or partially from the surrender requirement at the official exchange rate. 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. Tax credit certificates may also be issued for up to 15 per cent of the value of eligible nontraditional exports. By the end of 1981, more than 40 products were fully or partially exempt from the surrender requirement; the overall exemption for the year was not deemed significant in relation to total export receipts. 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 per cent 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 a year 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 non-bank 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 1981

February 2. A new export law provided for a tax discount of 15 per cent of the f.o.b. value of the shipment. Taxes and duties on merchandise imported for re-exports were waived.

June 11. The following measures were introduced: (a) the importation of motor vehicles was prohibited for a period of one year (Decree No. 2496); (b) the Monetary Board established a quota limiting the imports of raw materials at the official foreign exchange rate to 90 per cent of the average annual value in 1979 and 1980; (c) a quota of US$100 million was imposed on imports by the Instituto Nacional de Estabilización de Precios (Inespre) financeable with foreign exchange; and (d) spare parts for vehicles (the value of which amounted to around US$18 million in 1980) were added to the list of imports for which official foreign exchange would no longer be provided.

August 1. Import taxes on spare parts and accessories for tractors, public transport vehicles, and trucks were reduced to a rate of 20 per cent ad valorem.

November 19. Authorization was granted for the repatriation of foreign investments in tourist villas and apartments, provided that the foreign exchange earnings had been surrendered to the Central Bank.

December 17. It was decided that remittances of dividends from foreign investments under Law No. 861 of 1978 would not require prior deposits in Dominican pesos.

Ecuador

(Position on December 31, 1981)

Exchange Arrangement

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 currencies1 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 Central Bank also operates a “special window” through which it sells exchange to the public for specified invisible payments at a rate similar to the free market rate. The free market buying and selling rates on December 31, 1981 were S/. 32.89 and S/. 33.73, respectively, per US$1. A few transactions (such as payments for printed material) may be made in either of the two markets.

Imports, excluding imports of oil companies, are subject to an exchange tax of S/. 0.25 = US$1. Exchange transactions of oil companies are effected at the rate of S/. 25 per US$1; oil companies are subject to an exchange tax of 1 per cent applied to both purchases and sales. 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.

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 Integration Association (LAIA). Exchange proceeds from other countries must be received in convertible currencies. Whenever possible, import payments must be made in the currency stipulated in the import license.

Imports and Import Payments

Permitted imports are divided into two categories: List I, consisting of 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. Mainly for reasons of industrial protection, certain imports require prior authorization from government ministries or agencies.

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 member countries of the LAIA, 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, that prior ministerial authorization (where applicable) has been obtained, 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.

Foreign exchange for advance import payments must be obtained from the free market. 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 must be maintained for 180 days; for imports of List II items, the retention period is 270 days. The deposit is 50 per cent of the c.i.f. value for goods on List II, 15 per cent for goods on List I-B, and 20 per cent for goods imported on a barter basis. 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. With certain exemptions, goods on 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 travel may be obtained at the Central Bank’s special window up to a maximum of S/. 1,000 a person for trips to neighboring countries, S/. 2,000 for trips to other countries in South America, and S/. 3,000 for other destinations. Exchange for private sector interest payments of loans of over one year and of suppliers’ credits can be obtained at the Central Bank’s special window for interest rates not exceeding 15 per cent, provided that the loans have been registered at the Central Bank; 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 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. Export proceeds must be surrendered not later than 360 days after shipment for manufactured goods, 60 days for coffee beans, bananas, and unprocessed seafood products, and 180 days for other products; however, the Central Bank may extend these periods. 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 exports require prior authorization of specified ministries. 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 within one month of the receipt of the export license. Exports of coffee and cocoa are subject to a sliding-scale tax in relation to international prices; the tax ranges up to 13 per cent for washed coffee, 20 per cent for raw coffee, and 15 per cent for cocoa. A number of export products receive 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. For agricultural products the subsidy rate is 5 per cent of the f.o.b. export value; for manufactured products, the rate of subsidy is related, inter alia, to domestic value added.

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 Arrangement, 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 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 1981

January 5. Soluble coffee and fig flour were added to the list of products which can be used in barter for automobile imports (Ministerial Regulation No. 350).

February 13. Changes were made in the advance import deposit scheme, as follows: (a) the rate of deposit was increased from 10 per cent to 15 per cent of the c.i.f. value for goods on List I-B, and from 30 per cent to 50 per cent for goods on List II; (b) goods imported on a barter basis, previously exempt from prior import deposits, were made subject to a prior deposit requirement of 20 per cent; (c) for goods on List II, the retention period for the deposits was lengthened from 180 days to 270 days; and (d) Regulation No. 1080 of May 7, 1980, which allowed prior import deposits to be paid up to 25 per cent in bonds, was annulled (Monetary Board Regulation No. 1104).

February 13. The Central Bank was prohibited from authorizing exchange at the official rate for the purpose of making advance payments for imports (Monetary Board Regulation No. 1105).

February 18. Tariffs on automobile imports were raised by up to 100 percentage points, up to a maximum of 290 per cent, for luxury automobiles (Executive Order No. 382).

February 25. Imports of taxis were exempted from customs duties and the quota on such imports was fixed at 302 units (Ministerial Regulation No. 388).

February 25. Imports of film packs were shifted from List II to List I-B and were made subject to prior authorization by the Ministry of Agriculture. Permissible sources of imports of film packs were no longer limited to Paraguay (Monetary Board Regulation No. 1115).

February 27. Imports of transport vehicles weighing more than three tons and classified under List I-B were made subject to prior authorization by the Ministry of Public Works (Monetary Board Regulation No. 1118).

March 16. Imports of portland gray cement under List I-A were made subject to prior authorization by the Ministry of Industry, Commerce, and Integration (Monetary Board Regulation No. 1121).

March 16. Imports of unpulverized cement clinkers were shifted from List I-B to List I-A and made subject to prior authorization by the Ministry of Industry, Commerce, and Integration (Monetary Board Regulation No. 1122).

April 1. To facilitate access to subsidy in the form of tax credit certificates for nontraditional exports, the criteria for determining the amount of subsidy were relaxed (Ministerial Regulation No. 410).

April 1. Imports of wood and metal planes (tools) were shifted from List I-A to List I-B (Monetary Board Regulation No. 1132).

April 1. Imports of circuit breakers were made subject to prior authorization by the Ministry of Industry, Commerce, and Integration (Monetary Board Regulation No. 1133).

April 1. Foreign exchange allowance for travel obtainable at the Central Bank’s special window was limited to a maximum of US$1,000 a person for unofficial travel and to US$2,000 a person for official travel. In addition, effective May 17, 1981 the maximum travel allowance was established at US$1,000 for trips to neighboring countries, US$2,000 for trips to other countries in South America, and US$3,000 for other destinations.

May 15. The General Management of the Central Bank was authorized to extend, at its discretion, the size and scope of direct intervention in the free market. (Previously, central bank intervention was limited in scope and was done mainly through a special window at a fixed rate established periodically by the Monetary Board.) (Monetary Board Regulation No. 1139)

May 15. Monetary Board Regulation No. 1140 authorized the Central Bank, for a six-month period beginning May 15, 1981, to sell foreign exchange at the official rate for payments of interest by the private sector in respect of (a) foreign loans with maturities of over one year and the proceeds of which had been converted in the official market, and (b) suppliers’ credits for goods on List I-A, provided in both cases that interest rates did not exceed 15 per cent.

May 15. The Central Bank was permitted to sell foreign exchange on the terms specified in the above-mentioned May 15, 1981 measures through its special window, including foreign loans with maturities of over one year which had been registered with the Central Bank but whose proceeds were not exchanged at the official rate.

May 15. Imports by the public sector of goods on List II were made subject to prior authorization by the Ministry of Finance (Monetary Board Regulation No. 1143).

July 23. Imports of teaching materials for schools were exempted from prior import deposit requirements (Monetary Board Regulation No. 1151).

July 29. Import duties were increased on items in about 500 tariff categories.

September 22. The sliding-scale tax on coffee, previously applied uniformly to all types at levels ranging between 26.5 per cent and 35 per cent, was levied at a rate ranging up to 13 per cent for washed coffee and up to 20 per cent for raw coffee (Legislative Act No. 78).

September 24. The 25 per cent export tax on cocoa was changed to a sliding-scale tax ranging up to 15 per cent, depending on international prices (Legislative Act No. 79).

December 8. Imports of specified light vehicles were prohibited (Monetary Board Regulation No. 1166).

Egypt

(Position on December 31, 1981)

Exchange Arrangement

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, 1981 were LE 0.700 and LE 0.707 respectively, per US$1. Established rates for 16 other convertible currencies are based on cross rates quoted in New York.1 This rate applies, however, only to certain exports, Suez Canal dues, and public sector imports financed by the Central Bank. 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. A rate of LE 0.83168 = US$1 is applied to exchange transactions by the commercial banks, notably those in respect of workers’ remittances, tourist receipts, minor exports, certain private imports, and public sector imports not financed by the Central Bank. In addition, certain transactions, including most private sector imports and certain payments for invisibles, 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 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 three main types of accounts: Free 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 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; 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.

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 relevent 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 remit-table 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 outstanding obligations 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.

Foreign Exchange Retention Accounts may be opened in the name of authorized recipients up to specified percentages 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. Balances in such accounts held by the private sector must be used within six months or surrendered; in the case of public sector entities, the limit is one month.

Imports and Import Payments

All imports from 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 and the commercial bank markets. All imports financed by the Central Bank are at the established rate, 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. A more depreciated rate is applied to imports financed by commercial banks, while a freely determined rate is applied for imports under the “own exchange” arrangement.

Most imports from payments agreement countries (except those made under the “own exchange” arrangement), as well as imports of specified goods from any source, are reserved for the public sector. Private sector importers of “own exchange” imports must be Egyptians, born of Egyptian fathers. For imports on “own exchange” basis, importers must make advance payment in local currency to local banks, amounting to 25 per cent of value for certain food items, and 40 per cent for production inputs other than transportation equipment. For imports of other items under “own exchange” arrangements, importers must make an advance deposit in foreign exchange equal to the full value of imports.

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 commercial bank market require approval by the Commercial Agency. Imports are regulated by exchange allocations rather than by import licenses.

All commodities except those appearing on a special list may be imported, provided that no purchase of foreign exchange in the official market or the commercial bank market is involved. For 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 the rate established for exchange transactions with the commercial banks. Egyptian nationals are entitled to retain their earnings in foreign exchange (except those accruing from exports and tourism) in Free Accounts and may use this foreign exchange freely for payments abroad. They may also acquire additional foreign exchange through the medium of Free 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 that 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 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 petrolum 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. Within specified limits, 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. Within specified limits, 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. Foreign and joint-venture banks are required to ensure that 15 per cent of their foreign currency deposits can be made available on call, if necessary, by the Central Bank.

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 1981

June 30. The valuation of gold reserves was changed from the historical price to a level linked to international market prices.

August 1. The prior import deposit requirement with the Central Bank, amounting to 25 per cent for food items and 40 per cent for raw materials, was modified by requiring that the deposits were to be made in domestic rather than foreign currency.

August 1. For transactions through the commercial banks, a depreciated exchange rate of 83.168 piastres per US$1 was introduced (the rate for transactions by the Central Bank remained unchanged at 70 piastres, and a more depreciated free rate continued to apply at the “own exchange market”).

September 23. The “Special Accounts” were abolished and the existing balances were transferred to “Free Accounts.” Foreign banknotes not accompanied by customs declaration continued to be used for certain purposes, such as the purchase of saving certificates in foreign currency.

El Salvador

(Position on December 31, 1981)

Exchange Arrangement

The currency of El Salvador is the Salvadoran Colón. El Salvador maintains a dual exchange market system consisting of an official market in which the Salvadoran colón is pegged to the U.S. dollar, the intervention currency, at Ȼ 2.50 = US$1, and a parallel market in which the value of the colón fluctuates freely. The rates of the Central Reserve Bank for transactions with the public are Ȼ 2.49 buying and 0 2.51 selling, per US$1. Official market transactions by commercial banks with the public take place within these limits. Buying and selling rates in the official market 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. Buying and selling rates in the parallel market fluctuate according to market forces.1 Commercial banks are not permitted to purchase or sell foreign exchange in the parallel market; however, individuals may open foreign currency deposit accounts in the commercial banks and use funds in such accounts to deal in the parallel market in respect of certain authorized transactions.

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 all payments through the parallel market is delegated to the commercial banks. Prior authorization by the Exchange Control Department of the Central Reserve Bank is required for all payments through the official market. Exports of a number of commodities require licenses issued by the Ministry of Economy, subject to agreement by the Ministry of Agriculture. Since January 30, 1980 exports of major commodities have been under government supervision. Exports of sugar are governed by the Instituto Nacional de Azúcar (Inazucar), and those of coffee are governed by the Instituto Nacional de Café (Incafe).

Prescription of Currency

Payments to other member countries of the Central American Common Market (CACM)2 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

Imports of certain nonessential goods are prohibited unless they originate from Central America. 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 valued at US$200 or more from all countries must be registered with the Central Reserve Bank before orders are placed; orders for imports eligible for foreign exchange financing through the official market must be approved by the Exchange Control Department, while approval for imports through the parallel market is delegated to the commercial banks.

Certain goods that are considered nonessential commodities (including alcoholic beverages, tobacco, cosmetics, watches, jewelry, automobiles, furniture, domestic appliances, photographic equipment, prepared foods, electric shavers, and typewriters), which represent about 25 per cent of the total value of imports in 1981, may be paid for only through the parallel market. Some of these goods may be imported through the parallel market only if they originate in the CACM countries or Panama. Only items considered as priority imports may be paid for through the official market.3

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).

All payments for imports eligible for the official market must be approved by the Exchange Control Department of the Central Reserve Bank. 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. 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.4 The deposit may be made in cash at the Central Bank or any authorized bank. If the importer so desires, a bond issued or guaranteed by the Government or a guarantee by a bank (fianza) in an amount equal to 10 per cent of his average monthly imports may be deposited instead of cash.

All payments for imports in the parallel market must be channeled through foreign currency accounts opened with authorized commercial banks.

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.

There has been an accumulation of arrears on payments for imports.

Payments for Invisibles

Payments for invisibles are prohibited in the official market, except for certain student and medical expenses, official travel, and payments of interest and dividends on registered capital. Students registered with the Central Reserve Bank prior to November 30, 1981 for university, postgraduate, or technical training abroad may purchase foreign exchange in the official market up to the equivalent of US$300 a month for living expenses and up to a maximum of US$5,000 a year for educational expenses. Students with scholarships financed by international organizations may also purchase foreign exchange in the official market up to the amounts specified in the scholarship. In addition, individuals studying abroad with a guarantee from the Fondo de Garantía para el Crédito Educativo (Educredito) or financed by the Fondo de Desarrollo Económico as of December 1, 1981 may purchase foreign exchange in the official market for the amount of their educational expenses (not to exceed US$300 a month a person for living expenses).

Foreign exchange can also be purchased in the official market to cover medical and hospital expenses abroad up to US$3,000 a person, subject to a 100 per cent prior deposit and substantiation through medical certification, bills, receipts, and other pertinent documents. This deposit requirement is waived in cases where foreign exchange is requested to pay for services already rendered, subject to appropriate verification.

Payments for invisible transactions of a personal nature (i.e., study abroad, foreign travel, medical care, family assistance, and insurance fees) are permitted in the parallel market up to a maximum of US$2,000 a person a month, or US$24,000 a year, by holders of foreign currency deposits, subject to prior authorization of a commercial bank acting on behalf of the Exchange Control Department of the Central Reserve Bank. There has been an accumulation of arrears on payments for invisibles.

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. The proceeds of traditional exports (coffee, cotton, sugar, shrimp, lobsters) must be received through a bank in El Salvador and the foreign exchange must be surrendered in the official market. Proceeds of nontraditional exports outside the CACM countries may be surrendered in the parallel market.5 Export transactions must be declared to the Exchange Control Department before 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. An export registration certificate from the Central Reserve Bank is required, prior to clearance through customs, for all exports in excess of US$200.

Proceeds from Invisibles

All exchange receipts from invisibles must be surrendered to the Central Reserve Bank or an authorized commercial bank (see footnote 5). 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. 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 tourist enterprises; (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.

Prior approval by the Exchange Control Department is required for outward remittances of interest and amortization on short-term loans from abroad through the official market; 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 jewelry require licenses issued by the Central Reserve Bank; such licenses are granted for imports and exports by or on behalf of the monetary authorities and industrial users. In practice, imports of nonmonetary unworked gold are made only by jewelers’ cooperatives acting on behalf of their members and other users.

Changes during 1981

March 17. Changes were made in exchange control regulations on invisible payments through the official market as follows:

(a) For public sector employees studying abroad or those with scholarships granted by international organizations, exchange allowances for personal maintenance was authorized up to the amount indicated in the scholarship award; for those accompanied abroad by family members, an additional amount of up to 50 per cent of the monthly salary or US$300, whichever was higher, could be approved. (The basic exchange allowance of US$300 a month for university students abroad introduced in February 1980 remained unchanged.)

(b) The documentation requirements and administrative procedures relating to sales of foreign exchange for official travel and representation abroad were simplified.

(c) Beginning from March 1, 1981 bona fide receipts from pensions could be transferred to beneficiaries living abroad up to US$600 a month. (Such transfers had been discontinued following the suspension in November 1980 of foreign exchange sales for family assistance abroad.)

(d) Subject to proper documentation, authorization was granted for foreign exchange to be provided for medical and hospital expenses already incurred, without the 100 per cent prior deposit requirement introduced in November 1980.

June 12. Imports of agricultural and industrial inputs settled with letters of credit under special credit facilities arranged by the Central Reserve Bank were exempted from the 10 per cent prior deposit requirement for imports settled with letters of credit.

November 27. Changes were made in existing regulations as follows: (a) effective December 1, 1981, outward payments through the official market were further tightened, with the exception of certain student expenditures, medical and hospital expenses, and official travel; (b) the restrictions introduced in December 1980 on the use of foreign currency deposits in the banking system were relaxed to permit such deposits to be used to transfer funds from one resident to another or to transfer funds abroad for specified import and invisible payments; and (c) the maximum value of exports or imports beyond which registration must be made with the Central Reserve Bank was reduced from US$500 to US$200.

December 16. A limit of US$2,000 a month a person, or US$24,000 a person a year, was imposed on invisible payments for personal services through the parallel market by holders of foreign currency deposits, subject to prior authorization of a commercial bank acting on behalf of the Exchange Control Department of the Central Reserve Bank.

Equatorial Guinea

(Position on December 31, 1981)

Exchange Arrangement

The currency of Equatorial Guinea is the Equatorial Guinean Ekwele,1 which is issued by the Bank of Equatorial Guinea (the central bank), and is pegged to the Spanish peseta at a rate of Bipk. 1 = Pta 0.5. The ekwele 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. Thereafter, Equatorial Guinea suspended exchange operations, with the exception of some small transactions that took place on the basis of a fixed relationship between the ekwele and a currency basket. From April 9, 1979 to August 5, 1979 the ekwele was pegged to the SDR at the rate of Bipk. 90 = SDR 1. From August 6, 1979 to June 20, 1980 the ekwele was pegged at par to the Spanish peseta, i.e., Bipk. 1 = Pta 1. On June 21, 1980 the ekwele was depreciated to a rate of Bipk. 1 = Pta 0.5. There are no forward exchange facilities. There is a 2 per cent levy on foreign exchange transactions, and 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 Technical Directorate of Foreign Trade in the Ministry of Finance and Commerce. The Technical Cabinet is in charge of approving a monthly import license budget and overseeing its implementation. Import licenses approved by the Ministry of Finance and Commerce are forwarded to the Bank of Equatorial Guinea, and the Bank, in turn, passes them on to the importer and to the local bank at which the importer is to open the necessary letters of credit.

Prescription of Currency

Settlements with all 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 and a monthly license budget approved by the Technical Cabinet. The importer is allowed 30 days to open the necessary letters of credit at a local bank, after which the license may be canceled by the Bank of Equatorial Guinea. Imports must be made within three months from the date of the opening of the letters of credit. The Bank of Equatorial Guinea determines whether an import should be charged against the Spanish credit lines, and forwards, if necessary, the licenses directly to Focoex (a Spanish institute for the promotion of foreign trade) for further processing. In principle, foreign exchange is automatically made available upon the arrival of the goods in Equatorial Guinea; most import payments are effected under irrevocable letters of credit. All imports are subject to a prior payment covering the full amount of the applicable import duty. Final assessment of the import tax is made at the time of registration of the import payment upon declaration of the arrival of the goods. Existing import regulations apply to all imports by private firms as well as by state enterprises and the Government.

Payments for Invisibles

All payments for current invisibles require the prior approval of the Bank of Equatorial Guinea. Residents2 are, in principle, granted foreign exchange up to the equivalent of Bipk. 25,000 a person a calendar year for tourist travel abroad; only one trip a year is allowed for this purpose. The standard allocation for business travel is the equivalent of Bipk. 50,000 a trip, and only two trips a year are allowed. For study abroad and travel abroad for health reasons, foreign exchange is, in principle, granted to cover reasonable costs. Residents may, in principle, send family remittances up to 30 per cent of their taxable earnings and wages.

In principle, enterprises classified as “of national interest” (see section on Capital, below) may transfer abroad freely up to 25 per cent a year 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. Interests on foreign loans utilized for direct investment may be remitted semiannually, subject to a tax of 8 per cent. Branches and subsidiaries of foreign companies established in Equatorial Guinea may transfer to their parent companies abroad, on account of general expenses, an amount not exceeding 10 per cent of the net annual profits of the branch or subsidiary. Transfers abroad in respect of patents, trademarks, and royalties are, in principle, permitted freely, subject to prior review by the Bank of Equatorial Guinea and to a tax of 25 per cent of the amount remitted.

Travelers may not take out more than Bipk. 1,000 a person in domestic banknotes. Residents may only take out foreign banknotes and coin acquired from the Bank of Equatorial Guinea. Nonresidents may take out foreign banknotes and coin up to the amount that they declared at the time of entry. Any excess, however, may be authorized if appropriate documentation is presented that the excess was obtained from a resident in a lawful manner.

Exports and Export Proceeds

All commercial exports require an export license. Licenses are normally valid for three months. All export proceeds must be surrendered to the Bank of Equatorial Guinea within 45 days of their receipt. Although exports can be freely effected by any licensed exporter, the Chambers of Commerce, Agriculture, and Forestry of Bioko and Rio Muni, which operate as private, nonprofit, cooperative associations, have 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 within 15 days. Travelers may bring in any amount of foreign banknotes and coin, but the import of domestic currency by travelers is limited to Bipk. 1,000 a person.

Capital

All imports and exports of capital require approval by the Bank of Equatorial Guinea. In addition, all exports and imports of capital by the State must be subject to a prior evaluation by the Technical Cabinet. Capital receipts in foreign currency must be surrendered to the Bank of Equatorial Guinea. The approval of a foreign loan contract automatically gives the right to the borrower to make payments abroad for interests, commissions, and amortization specified in the approved contract.

Without the explicit approval of the Bank of Equatorial Guinea, no Equatorial Guinean companies or persons residing in Equatorial Guinea may hold accounts in foreign currency either in local or in foreign banks. Foreign residents in Equatorial Guinea are subject to the same regulation only with regard to the foreign exchange acquired as a result of their activities in Equatorial Guinea; they may hold foreign currency accounts in local or in foreign banks with regard to foreign exchange acquired as a result of activities carried out abroad. These provisions apply also with regard to the proceeds from exports and from invisibles.

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 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. The foreign share in Equatorial Guinean enterprises might exceed 50 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. Except for jewelry, residents are not permitted to hold gold.

Changes during 1981

March 16. A new currency, the ekwele (plural bipkwele), replaced the old ekuele at the rate of one to one.

September 30. A Technical Cabinet was established to replace the Executive Committee for Economic Policy (CEPE).

Ethiopia

(Position on December 31, 1981)

Exchange Arrangement

The currency of Ethiopia is the Ethiopian Birr, which is pegged to the U.S. dollar, the intervention currency, at the official rate of Br 2.07 = US$1. Buying and selling rates for certain other currencies are also officially posted; daily quotations by the National Bank of Ethiopia (the central bank) are set on the basis of the official rate for the U.S. dollar and the previous day’s closing rate of the currency concerned against the U.S. dollar in London. The National Bank does not deal with the public; its transactions in U.S. dollars with the authorized dealers take place at the official rate. Authorized dealers must observe the official rate for the U.S. dollar and prescribed commission charges, which accrue to the National Bank, of 0.50 per cent buying and 1.50 per cent selling; in addition, they are authorized, but not obliged, to levy service charges for their own account of up to 0.25 per cent buying and 0.75 per cent selling and, for currencies other than the U.S. dollar, to include the margin charges applied by the correspondents abroad. In practice, the authorized charges are usually levied. These commissions are applied also to the National Bank’s dealings with the Government and certain public sector entities. There are no taxes or subsidies on purchases or sales of foreign exchange. Authorized dealers require the approval of the National Bank to undertake forward exchange transactions.

Administration of Control

All transactions in foreign exchange must be carried out through authorized dealers under the control of the National Bank. All payments abroad require licenses issued by the Exchange Controller, whose office is a 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. 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 or nontransferable 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 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 that 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 percent of their net earnings for the education of their children. Persons traveling abroad are allowed foreign exchange equivalent to Br 125 a day for a maximum period of 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 10 in Ethiopian banknotes.

Exports and Export Proceeds

All exports to 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. In addition, they need the prior approval of the National Bank to overdraw their accounts with foreign correspondents, to borrow funds abroad, or to accept deposits in foreign currency.

Gold

The ownership of personal jewelry of which gold or platinum forms a part is permitted. Unless specifically authorized by the Minister of Mines, 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, is not permitted. 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 1981

No significant changes occurred in the exchange and trade system.

Fiji

(Position on December 31, 1981)

Exchange Arrangement

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, 1981 buying and selling rates for the U.S. dollar were F$0.8748 and F$0.8787, 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, timber, rice, and dairy products. Import licenses for gold are issued by the Ministry of Finance, for timber by the Ministry of Forestry, and for rice and dairy products by the Ministry of Agriculture and Fisheries. 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.

Imports and Import Payments

Imports of most goods are under open general license, although imports of a number of goods, including tea, mild steel bars, certain foodstuffs, alcoholic beverages, kerosene stoves, seed potatoes, polyvinyl chloride pipes, polypropylene ropes, louvre window frames, shirts, wood screws, and incense sticks and chemicals used as raw materials in their manufacture 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 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$100 in Fiji currency and the equivalent of F$500 in other currencies, provided that these amounts are not in addition to travel allowances approved by a bank or the 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, 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 purchase, hold, and sell gold coin in Fiji but not gold bullion. 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, other than imports of gold coin, 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. Commemorative gold coins of F$100, F$200, and F$250 have been issued; these are legal tender but do not normally circulate.

Changes during 1981

January 1. The quota on imports of vehicles was replaced by import tariffs ranging from 57.5 per cent to 147.5 per cent.

September 1. Import licensing requirements were introduced for the importation of louvre window frames, spirits, liqueurs, and other alcoholic beverages.

September 14. Individual licensing requirements were introduced on imports of shirts of all kinds, mosquito coils, wheelbarrows, kerosene stoves, and wood screws.

November 1. Additional commodities were brought under special import licensing, to be administered by the Ministry of Commerce, Industry, and Cooperatives; in addition, several changes were made in the rates of import duty.

Finland

(Position on December 31, 1981)

Exchange Arrangement

The currency of Finland is the Finnish Markka. The external value of the markka is defined in terms of an index reflecting a weighted average of the exchange rates of the currencies most important for Finland’s foreign trade. These are defined as the currencies of countries that have accounted for not less than 1 per cent of Finland’s commodity imports and exports in each of the preceding three calendar years; if a trading partner’s currency is not regularly quoted by the Bank of Finland, the rate used for that currency is the one in which trade with that country is commonly denominated. The value of the exchange rate index is maintained by the Bank of Finland within a margin established by the Cabinet; since January 1980 the range has been 112.0–119.0 (1974 = 100). The actual level of the index has been 113.1 since March 1980. The Bank of Finland calculates the currency index on a daily basis, but only monthly averages of the index numbers are published. Daily (noon) buying and selling rates for the U.S. dollar, the intervention currency, are quoted by the Bank of Finland. On December 31, 1981 the rates were Fmk 4.348 and Fmk 4.366 per US$1, respectively. 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.

Authorized banks may deal among themselves, with residents, and with nonresident banks in U.S. dollars and other convertible currencies. Forward premiums and discounts quoted by authorized banks reflect interest rate differences in various currencies. The Bank of Finland quotes daily forward rates for the clearing ruble, at which authorized banks may cover their contracts with residents in regard to transactions permitted by exchange control regulations.

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 the Export and Import Permits Office (a unit subordinate to the Ministry of Trade and Industry), which is headed by a Board composed of government officials, including a representative of the 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). 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 directly 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 payments 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, with proceeds from other assets belonging to the holder of the account and managed by the monetary institution with which the account is held, with 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 with 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

Most goods may be imported free of license from the multilateral countries, provided that the goods are purchased from and originate in those countries. However, certain goods2 may be imported from the multilateral area under a global quota system, which provides for import licenses to be issued at least up to the amounts of quotas for specified commodity groups. The total value of the global quota imports for 1981 was 0.8 per cent of total 1981 imports. The only commodities still subject to restrictions for the multilateral area are certain agricultural commodities and fuels and petroleum products.

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 area3 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. The Bank of Finland applies quotas within which the banks can negotiate credits from foreign banks to finance advances to importers.

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 2,000 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

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, with the exception of imports of notes with a nominal value above Fmk 100, which are 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 are allowed to transfer abroad their assets in Finland in one lump sum, subject to the prior approval of the Bank of Finland.

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. Direct foreign investment in the forest and mining industries and in certain traditionally regulated activities is not normally permitted. On demand by the Bank of Finland, residents must declare their foreign assets, including property owned abroad. Repatriation of authorized direct investments is subject to the approval of the Bank of Finland, which is freely given. Outward transfers of capital, including transfers for direct investment by residents, require individual approval. 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.

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. Purchases of real estate abroad are authorized up to a limit of Fmk 175,0004 a person, subject to the approval of the Bank of Finland, which is granted liberally.

Finnish emigrants are generally permitted an exchange allowance5 of up to Fmk 150,000 a person or, in the case of emigrating families, Fmk 100,000 a person in addition to the basic tourist travel allowance. There is an automatic exchange allowance of up to Fmk 10,000 a calendar year for each donor for gifts and contributions to nonresidents.

Foreign currency borrowing by Finnish residents, in the form of short-term or long-term financial credits, including bond issues abroad, requires the specific approval of the Bank of Finland, which exercises surveillance over the terms and timing. Lending to nonresidents is generally 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 in some cases subject to deposit requirements by the Bank of Finland, which also sets the terms for such loans.

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 Export and Import Permits 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 Export and Import Permits Office is usually sufficient.

Changes during 1981

December 31. The bilateral payments agreement between Finland and Romania was terminated.

France

(Position on December 31, 1981)

Exchange Arrangement

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, 1981 these rates were as follows:

Specified InterventionFrancs
Rates Per:Upper limitLower limit
100 Belgian or
Luxembourg francs15.49414.8125
100 Danish kroner79.82576.31
100 deutsche mark262.05250.5
100 Netherlands guilders237.06226.63
100 Irish pounds9.22658.8205
100 Italian lire5.04054.471

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 20 foreign currencies are quoted daily on the basis of market rates.1 On December 30, 1981 the buying and selling rates for the U.S. dollar were F 5.7425 and F 5.7535, 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 and to the currencies of the countries that are linked to the French Treasury through an Operations Account2 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) Fixed conversion rates in terms of the franc apply to the currencies of the Operations Account countries (see footnote 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 = F 0.01 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 foreign exchange forward for up to three months in respect of specified import items only, but they are allowed to sell forward foreign exchange whether or not there is an underlying transaction.

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 (see footnote 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. 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, Madagascar, Mauritania, Morocco, Tunisia, and Vanuatu.

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, in which case the Bank of France screens applications. The Directorate of the Treasury also evaluates the balance of payments, together with the Bank of France, which collects the data for its compilation. 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 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. 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 a 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 proceeds, income, and amortization from French and foreign securities held in a foreign dossier in France, and the proceeds of the sale on a French stock exchange of securities denominated in French francs, 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 (see footnote 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; (10) any payment by a nonresident to a resident; and (11) repayment of consumer and real estate loans by French banks for foreigners living in France.

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. 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 one year); emigrants of foreign nationality become nonresidents immediately and, therefore, may take out all of their assets upon departure. Diplomatic personnel working in France may hold resident and nonresident accounts. In addition, nonresidents may hold foreign currency accounts with French and foreign-owned banks.

Imports and Import Payments

Goods originating in and shipped from other countries that are accorded privileged treatment in respect of 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, the Democratic People’s Republic of 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 125,000 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 125,000, as it does not undertake domiciliation.

Authorized banks may without special authorization permit 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 two working days before utilization; utilization cannot take place before the payment falls due. There is no restriction on the use of suppliers’ credit. Forward cover for import payments is limited to specified commodities, namely, green coffee, rice, hides and skins, hairs, wool, cotton, and cotton waste. Forward cover must not exceed three months and must be carried out in the currency stipulated in the contract and be terminated not later than the day of the settlement; should settlement be effected before the expiration of three months, the operation must be canceled for the remaining period. If the settlement of the contract is deferred, the forward covering can be extended for a maximum of eight days without prior authorization. In cases where the contract is canceled, the covering operation must be terminated immediately. If the cancellation results in a foreign exchange profit, the bank involved must inform the monetary authorities.

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 3,000 a person, provided that the transfers 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 1,000 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 2,000 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 are required not later than one month from export deliveries. Small business exporters may be authorized by the Bank of France to deposit up to 5 per cent of export receipts or F 30,000 a month, whichever is lower, in foreign currency accounts. 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 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. For values exceeding the equivalent of F 50,000, 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; in addition, for such amounts, exporters are required within one month from the date of shipment to sell on a spot or forward basis 90 per cent of the foreign currency proceeds from exports. All export transactions related to foreign countries and valued at F 125,000 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 (with the exception of income from work in border areas) 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 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, and the provision of the devise titre system,7 residents may 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.8 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 securities denominated in foreign currency may be reinvested in such securities not later than one month from the selling date, or be sold to another resident on the devise titre market within the same period; beyond the time limits, the proceeds in foreign currency must be sold in the exchange market. 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. Only French securities may, however, be sold in France, with the proceeds being repatriable by nonresidents.

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. Unless specifically exempted, at least three fourths of direct investment abroad must be financed from foreign currency borrowing. In principle, foreign companies domiciled in EC member countries are free to take over any participation in the equity capital of a French company. The Directorate of the Treasury is, however, entitled to issue a finding within two months to forbid such participation should it be deemed to jeopardize public health, order, security, or defense, or thought to be sought on account of a third party outside the EC. For countries outside the EC, 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 firm whose shares are quoted on the stock exchange; any participation in any other type of 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. 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 1 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 5 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 regularly, 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 1981

May 16. The 5 per cent reserve requirement on nonresidents’ deposits at the commercial banks was abolished.

May 21. The following exchange control regulations were introduced: (a) the time limit on forward positions for most imports was reduced from two months to one month, and a limit of three months was introduced in the case of imports of raw materials and other essential products; (b) the maximum period during which importers could hold foreign exchange necessary to pay for imports on a spot basis was reduced from eight calendar days to two working days; (c) the maximum period for the surrender of export proceeds was reduced from the maturation of the covering contracts to one month after export deliveries; (d) the limit on direct foreign investment without prior authorization was reduced from F 5 million to F 1 million, and unless specifically exempted three fourths of direct foreign investment was required to be financed from foreign borrowing; and (e) the devise titre system was reintroduced, under which purchases of foreign securities by individual residents would be required to be matched by proceeds from sales of foreign securities by residents. (The devise titre is the unit of account in which these matching operations are denominated, and its value can fluctuate on the basis of domestic supply and demand for foreign securities.)

September 18. Forward exchange covers for imports were suspended in an effort to alleviate speculative pressures on the franc.

October 5. The bilateral central rates and intervention rates between the French franc and the currencies of the other participants in the European Monetary System were adjusted.

November 12. The ban on forward exchange cover for imports was relaxed as follows: (a) importers of green coffee, rice, hides and skins, wool, hairs, cotton, and cotton waste were authorized to engage in covering operations not exceeding three months in duration, provided that forward coverage was arranged in the currency stipulated in the contract and was terminated on the date of the settlement; (b) in cases of deferred settlement of contract, the forward cover could be extended for a maximum of eight days without prior authorization; (c) should settlement be effected before the expiration of three months, the operation would be required to be canceled for the remaining period; (d) in cases of cancellation of the underlying contract, the exchange cover would be required to be terminated immediately; and (e) if the cancellation would result in a foreign exchange profit, the bank involved would be required to inform the monetary authorities.

Gabon

(Position on December 31, 1981)

Exchange Arrangement

The currency of Gabon is the CFA Franc,1 which is pegged to the French franc, the intervention currency, at the fixed rate of CFAF 1 = F 0.02. Exchange transactions in French francs between the BEAC and commercial banks 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.

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.

Administration of Control

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

In general, imports from member countries of the Central African Customs and Economic Union (UDEAC) are free of formalities; imports of refined vegetable oil from these countries require prior approval. 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 products are subject to licensing but, with a few exceptions,2 licenses are granted liberally in practice. Some imports are prohibited for security and health reasons. Imports of refined vegetable oil are suspended except when originating from member countries of the UDEAC. All imports of commercial goods must be insured through authorized insurance companies in Gabon.

All import transactions relating to foreign countries must be domiciled with an authorized bank. Authorizations duly endorsed by the Ministry of Foreign Trade and the Ministry of Economy and Finance (Directorate of Financial Institutions) entitle importers to purchase the necessary foreign exchange provided that the shipping documents are submitted to the authorized bank.

Payments for Invisibles

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

For tourist travel, residents traveling to countries other than France (as defined above), Monaco, and the Operations Account countries may obtain an exchange allocation equivalent to CFAF 200,000 a person a trip (CFAF 100,000 for children under 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 transactions in invisibles with France (as defined above), Monaco, and the Operations Account countries may be retained. All amounts due from residents of other countries in respect of services and all income earned in those countries from foreign assets must be collected and, if received in foreign currency, be surrendered within a month of the due date. Resident and nonresident travelers may bring in any amount of 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 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 1981

May 15. Imports of refined vegetable oil were suspended except for those originating from member countries of the UDEAC; prior approval, however, continued to be required in the latter category.

The Gambia

(Position on December 31, 1981)

Exchange Arrangement

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 the pound sterling. There are no taxes or subsidies on purchases or sales of foreign exchange. There is a multiple currency practice associated with a requirement that the domestic currency counterpart of all external payments arrears be placed in a Blocked Account at the Central Bank of The Gambia.

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 authorization by 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 dalasis or pounds sterling from nonresident sources or in any other currency. 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, Mauritania, 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 Zimbabwe 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

Importation 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. Except for imports from Eastern European countries, which are subject to specific licensing, all other imports are freely permitted under an open general license.

Settlement for imports from Eastern European 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 other currency.

All goods are subject to an import tax of 2 per cent of the c.i.f. value unless otherwise specified. Imports made by the Government, diplomatic missions, and charitable organizations are exempt.

There have been some delays in import payments.

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 of 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 of 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 or pound 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 other goods can generally be made without individual licensing, if settlement is made in accordance with procedures laid down by the Central Bank. 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 through an authorized dealer within six months from the date of export in dalasis, or in pounds sterling from an External Account, or in any other currency.

Proceeds from Invisibles

Receipts from invisible 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 invesments 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 operations in The Gambia.

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 1981

July 1. The import tax was increased from 1.5 per cent to 2 per cent, c.i.f.

November 5. The domestic currency counterpart of all external payments arrears was required to be placed in a Blocked Account at the Central Bank of The Gambia. Combining the waiting period with the interest rate of 2 per cent annually gave rise to a multiple currency practice.

Federal Republic of Germany

(Position on December 31, 1981)

Exchange Arrangement

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, 1981 these rates were as follows:

Specified InterventionDeutsche Mark
Rates Per:Upper limitLower limit
100 Belgian or
Luxembourg francs6.0475.7810
100 Danish kroner31.15529.7850
100 French francs39,92038.160
1 Irish pound3.60103.4430
1,000 Italian lire1.96701.7450
100 Netherlands guilders92.525088.455

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 erratic 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, 1981 the official middle rate for the U.S. dollar was DM 2.25480 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.

The Deutsche Bundesbank is in charge of the implementation of capital controls, but no such controls are currently in place. 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 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 8,809 statistical positions. Their treatment is as follows: some 8,040 items may be imported free of license from any country. Commodities corresponding to some 8,507 positions may be imported free of license from countries in Country List A/B.3 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 1,743 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 (302 statistical items) when originating in and purchased from Albania, Bulgaria, the People’s Republic of China, Cuba, Czechoslovakia, Hungary, the Democratic People’s Republic of 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 (AMLA4 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 (AMLA 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.5

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 3) 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, in principle, export capital freely without a license. Foreign and international bond issues on the German capital market do not require official approval, although a voluntary monitoring system 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, on the basis of a gentlemen’s agreement between the banks and the Bundesbank. The issue of external bonds denominated in deutsche mark must be made through a banking consortium with at least one German bank with residence in Germany serving as a lead manager. In principle, domestic and foreign securities of all types may be imported or exported freely.

Following the changes in regulations beginning March 12, 1981, no restrictions are applied on the sale of German money market papers and fixed interest securities by residents to nonresidents. 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 located 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 1981 were, in principle, the same as those applicable to domestic liabilities, i.e., 11.25 per cent, 7.95 per cent, and 5.0 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 monetary gold by the Bundesbank are exempt from value-added tax and from customs duty. Domestic transactions in gold are subject to value-added tax at the same rate as imports, but under certain conditions no value-added tax is levied on transactions in 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 all cases are liberalized.

Changes during 1981

February 1. The minimum reserve requirements for domestic and foreign liabilities of banks were lowered by 7 per cent across the board.

March 12. The Bundesbank announced that, with immediate affect, it would grant all applications for the sale by residents to nonresidents of certain money market papers, bills, and domestic fixed-interest securities with a maturity of up to two years; this implied a de facto abolition of the remaining restrictions on capital transactions.

August 27. By an amendment to the foreign trade and payments order, the authorization requirement for the sale by residents to nonresidents of money market papers and fixed interest securities was terminated, implying a de jure abolition of restrictions on capital transactions.

October 5. The deutsche mark and the Netherlands guilder were revalued by 5.5 per cent, while the French franc and the Italian lira were devalued by 3 per cent, against the currencies of the other participants in the EMS.

Ghana

(Position on December 31, 1981)

Exchange Arrangement

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, 1981. On December 31, 1981 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 buying and selling rates for the U.S. dollar in markets abroad. The authorized banks may exchange Ghanaian currency for any foreign currency. Different exchange rates for the cedi arise from the application of an export bonus scheme (20 per cent for all exports except cocoa), a 20 per cent tax on the value of letters of credit issued, a 50 per cent surcharge on exchange allocations for student travel, and an 80 per cent surcharge on exchange allocations for other foreign travel.

Administration of Control

The Controller of Imports and Exports at the Ministry of Trade 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 and Foreign Exchange Allocation Committee on which the Bank of Ghana and various ministries 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 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, Mauritania, 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, as well as to nonresident Ghanaians. 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 restricted currencies. They may be debited for inward payments, for transfers to other Foreign Accounts, and for purchases of external currencies.

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 restricted currencies. 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) 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. Importation of certain goods may be allowed under special license where no transfer of foreign exchange through the Bank of Ghana or a commercial bank is required. 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 involving use of official foreign exchange 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. For cases not requiring the provision of official foreign exchange, there is a special license by which specific goods could be imported in commercial quantities. A 20 per cent tax (the Special Development Tax) is levied on all goods imported under special licenses, with the exception of passenger luggage.

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. With effect from January 2, 1980 the Bank of Ghana ceased to issue letters of credit or to perform other commercial banking operations related to import transactions. The Bank of Ghana, however, provides the necessary foreign exchange cover to the authorized banks. Most imports are effected with confirmed letters of credit established through Ghanaian banks, and usually on a sight basis. A 20 per cent tax is levied on the value of letters of credit. The cash margin deposit requirement has been abolished. 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 specified industries (GHAIP and GHASEL) are not affected by the limit and are allowed to transfer their savings at the end of each tour of duty. Employees in the mining, timber, fishing, and banking industries are allowed to transfer either 40 per cent of their net annual earnings plus leave pay or a maximum of 70 per cent of net annual earnings plus the balance on savings at the end of the 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. In addition, if supported by documentary evidence, outward remittance of up to 70 per cent of disposable income may be authorized in respect of payment of insurance premiums, educational expenses, interest and amortization on mortgages, and contributions to pension funds.

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. With the exception of those for students, all travel allocations are subject to a tax of 80 per cent; the tax on allocations for students is 50 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 80 per cent of the price of the round-trip ticket.

Resident travelers may take with them foreign currency notes equivalent to Ȼ 160, provided that not more than the equivalent of Ȼ40 is taken in any one currency. Ghanaian banknotes up to Ȼ 40 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) 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 Marketing Company, and diamonds are exported through the Diamond Marketing Corporation. Normally, specific export licenses are required.

With the exceptions noted below, exporters are required to collect and repatriate the full 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 20 per cent of the proceeds for all exports except cocoa. Mining, timber, and non-traditional export industries are allowed to retain up to 20 per cent of their export proceeds in accounts abroad for financing essential imports. (Such imports are, however, subject to the import license.)

Proceeds from Invisibles

All receipts from invisibles must be sold to authorized dealers. Foreign currency notes may be imported freely. The import of Ghanaian currency notes in excess of Ȼ 40 is prohibited.

Capital

Foreign investment in Ghana requires prior approval by the Capital Investment Centre if it is to benefit from the facilities available under the Investments Code, 1981. Investments approved under the Code 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 Code stipulates that the assets of foreign investors may not be expropriated and that, when approved enterprises are nationalized, fair compensation is to be determined. Where there is a dispute over the amount of compensation, the dispute shall be settled in accordance with the established procedure for conciliation, for example, through arbitration by the International Centre for Settlements of Investment Disputes. Certain areas of economic activity are not open to foreigners. 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 by the Bank of Ghana; 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. Private sector and commercial bank borrowing require the approval of the Bank of Ghana, as do private import credits in excess of Ȼ 240,000 for machinery and equipment; foreign borrowing by Ghanaian nationals is subject to certain guidelines by the Government. 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 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 semi-refined 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 a troy ounce.

Changes during 1981

January 2. Authorization was granted for nonresident nationals to open foreign accounts (convertible cedi accounts) with domestic banks.

June 30. The Special Development tax was raised from 10 per cent to 20 per cent, as was the export bonus.

August 11. Under the new Foreign Investment Code, the requirement of majority ownership by Ghanaians in business involving foreign participation was discontinued.

August 12. The tax on foreign exchange sales was lowered to 50 per cent for studies abroad and raised from a general level of 75 per cent to 80 per cent in other cases.

September 1. The cedi voucher scheme was abolished, under which purchases of certain amounts of cedis were required as a condition for granting visas and entry permits.

September 15. The cash margin deposit requirement against import letters of credit was abolished.

Greece

(Position on December 31, 1981)

Exchange Arrangement

The currency of Greece is the Greek Drachma. Although a member of the EC, Greece does not participate in the exchange rate and intervention mechanism of the European Monetary System (EMS). The authorities of Greece operate a managed float for the drachma. On December 31, 1981 buying and selling rates for the U.S. dollar, the intervention currency, in the interbank market were Dr 57.457 and Dr 57.803, respectively, per US$1. Quotations for certain other currencies1 are determined daily in the interbank market at the daily fixing2 session. A compulsory commission is charged on all foreign exchange transactions. The commission rate declines from 0.2 per cent to 0.0125 per cent as the size of the transaction increases from Dr 250,000 to Dr 30 million; no charges are levied on transactions of up to US$150, and the maximum charge of Dr 4,500 is applied only to purchases of foreign exchange. The Bank of Greece offers forward cover in U.S. dollars only, at rates determined by the Bank. Additional effective exchange rates result from the application of advance import deposit requirements.

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. Under Law No. 936/79, the Ministry of Commerce is responsible for import and export policy. Exchange control is implemented and foreign exchange approvals for imports are granted by authorized commercial banks. Import and export licenses are also issued by authorized banks. The authorized banks may make exchange settlements relating to most 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 all 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 entail the loss of the reconversion right for the sums withdrawn. At the end of 1981, 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. Nonresidents may make time deposits in convertible foreign exchange with banks authorized to deal in foreign exchange. The minimum period of such deposits is one month for deposits in U.S. dollars, Canadian dollars, and pounds sterling, and three months for other currencies; 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.

4. Deposits in U.S. dollars, Canadian dollars, and pounds sterling. Such deposits may be made as follows:

(a) Greek citizens (including seamen) working abroad, certain Greek societies and associations operating abroad, and Greek nationals residing abroad may make, with funds originating abroad, deposits in U.S. dollars, Canadian dollars, and pounds sterling with authorized banks in Greece. The period, interest rates, and other terms of the deposits are determined by the banks. At the end of 1981 the maximum annual interest rates payable on these accounts were (i) 1.5 per cent for sight deposits; (ii) 8 per cent for savings deposit accounts in U.S. dollars and Canadian dollars and 12 per cent for such accounts in pounds sterling; and (iii) for time deposits, depending on the time and amount, 13.5–14.75 per cent for accounts in U.S. dollars, 15.875–16.625 per cent for accounts in Canadian dollars, and 15.375–15.625 per cent for accounts in pounds sterling. Should the depositor decide at the time of deposit to withdraw accrued interest in drachmas, the interest rate is increased by 1.5 percentage points annually. The banks are obliged to redeposit with the Bank of Greece at least 70 per cent of the increase in such deposits after July 1, 1980, at interest rates set by the Bank of Greece in accordance with developments in the Eurodollar market. The remaining 30 per cent can be deposited abroad, with other domestic banks, the Bank of Greece, or placed in other assets.

(b) The banks are not obliged to redeposit with the Bank of Greece for certain categories of deposits as follows: (i) deposits of shipping (including the shipowners), insurance, and construction companies and of Olympic Airways and (ii) deposits above the equivalent of US$200,000 for each depositor within the categories mentioned in 4(a) above.

5. Deposits in other convertible currencies (excluding U.S. dollars, Canadian dollars, and pounds sterling). Greek citizens (including seamen) working abroad and certain Greek societies and associations operating abroad may open, with funds originating abroad, convertible foreign currency accounts in deutsche mark and other currencies (excluding U.S. dollars, Canadian dollars, and pounds sterling) with authorized banks in Greece. The period and the other terms of the deposits are freely determined by the banks. The Bank of Greece establishes maximum interest rates for each type and currency of deposit based on developments in the internal money markets of the countries in whose currencies the deposits are denominated. Should the depositor decide at the time of deposit to withdraw accrued interest in drachmas, the interest rate is increased by 1.5 percentage points annually. At the end of 1981 the maximum annual interest rates payable on these accounts were (a) for accounts in Belgian francs and French francs: 3 per cent for sight deposits, 13 per cent for savings deposits, and 18 per cent and 19 per cent, respectively, for time deposits of 1–12 months; (b) for accounts in Swiss francs: 2 per cent for sight deposits, 6.5 per cent for savings deposits, and 11.5 per cent for time deposits of 1–12 months; (c) for accounts in Australian dollars: 3 per cent for sight deposits, 6 per cent for savings deposits, and 14 per cent for time deposits of 1–12 months; (d) for accounts in Japanese yen: 3 per cent for sight deposits, 5.5 per cent for savings deposits, and 8.5 per cent for time deposits of 1–12 months; (e) for accounts in Netherlands guilders: 3 per cent for sight deposits, 6.5 per cent for savings deposits, and 12.5 per cent for time deposits of 1–12 months; (f) for accounts in Swedish kronor: 4 per cent for sight deposits, 11 per cent for savings deposits, and 14 per cent for time deposits of 1–12 months; and (g) for accounts in deutsche mark and other convertible currencies: 3 per cent for sight deposits, 7 per cent for savings deposits, and 13 per cent and 12 per cent, respectively, for time deposits of 1–12 months. Withdrawals in drachmas entail the loss of the reconversion right for the sums withdrawn.

The banks are obliged to surrender the entire foreign exchange proceeds to the Bank of Greece at fixed parities in exchange for drachmas. Balances on these accounts, including accrued interest are freely convertible into foreign exchange against reconversion of drachmas at the same fixed parities that were applied at the time of original conversion. Similar facilities for foreign currency accounts exist under a Housing Loan Deposit Scheme.

6. 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 all countries excluding Turkey and Israel may be used for such purposes as (a) travel expenses for each visit to Greece and personal expenses in Greece up to Dr 200,000 a month of the visitor’s stay in Greece and up to Dr 100,000 for other members of his family; for residents of Turkey or Israel, the corresponding limit is Dr 25,000 annually; (b) expenses for buying tickets for a maximum of two trips to Greece by the depositor and other members of his family; (c) expenses for paying taxes and lawyers’ fees; and (d) investing in securities officially listed on the stock exchange in Greece and purchasing real estate in Greece. Payments abroad from funds in Blocked Accounts held by residents of countries that have special agreements with Greece3 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, 1975, 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. Balances on Blocked Accounts held by private individuals in the EC member countries are scheduled to be released in six equal annual installments during the period January 1, 1981 to January 1, 1986.

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.

Resident Accounts

Greek citizens have the option to open accounts in foreign exchange of the types described in paragraphs 4 and 5 above with foreign exchange earned as salaries from work abroad or as payments received for services performed outside Greece.

Imports and Import Payments

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 must be made through an authorized bank), which is granted by a commercial bank. The granting of an import approval implies that the necessary foreign exchange will be made available. 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 Lists A and B (including textiles, television receivers, and certain foodstuffs, passenger cars, buses, and certain types of machinery and spare parts). For a few items on Lists A and B 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. Import licenses are not required for a few items in Lists A and B if they are imported from EC countries.

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. For imports included in List F, the commercial banks may occasionally authorize payment by acceptance of a time draft. 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. 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 exempt are duty-free imports and imports of raw materials and semifinished products for processing and re-export, as well as imports of final products for re-export. 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. For items in List F, advance deposits are not required for imports for which payment is to be made by acceptance of time drafts or by cash against shipping documents.

Generally, 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. Irrespective of whether payment is by letter of credit or by cash against shipping documents, a cash deposit related to the c.i.f. invoice value is required for imports included in Lists F-50/1–2 and F-100/1–2, as security for import duties and other taxes. This deposit must be made when the import approval is obtained and may not be refunded before a period of two to four months from the date on which it was made. Advance deposits are not required for capital goods and spare parts exempt from import duty by virtue of the laws governing domestic or foreign investments.

The rates of deposit in effect in 1981 are set out below:4

PrepaymentSecurityTotal
(In per cent of invoice value)
List F-50/137.515.052.5
List F-50/212.04.816.8
List F-100/175.030.0105.0
List F-100/224.09.633.6

Goods must be shipped within six months and arrive in Greece within three months of shipment. 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 2.4–2.6 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, which 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 ECU 400 for travel to EC member countries and US$250 for travel to all other countries for one trip a year; in lieu 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 for each trip: US$3,000 for exporters; US$2,000 for industrialists and hotel managers; US$650 for other businessmen; US$1,000 for scientists attending international meetings; and US$750 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$510 and US$560 a month, respectively, for the United States and Canada; £ stg. 230 and £ stg. 290 a month, respectively, for the United Kingdom; and DM 830 and DM 980 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 if the visit exceeds 12 months.

Payments of interest, profits, and dividends to countries other than EC members are restricted, and special regulations and limits apply to outward remittances of interest, dividends, and profits (see section on Capital, below).

Exports and Export Proceeds

Almost all exports require individual licenses and are free of quantitative limitation. Beginning in 1981, all transactions for exports are undertaken by commercial banks, rather than the Chamber of Commerce. 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 up to two years for manufactures and up 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 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, 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, but repatriation of the proceeds of liquidation is subject to the Currency Committee’s approval. 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; this decree also provides for the opening of foreign currency accounts by nonresidents and the retransfer of the deposits, as well as the transfer of interest thereon. 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 new gold sovereigns (i.e., those issued since 1974) 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, except 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 1981

January 1. Greece joined the European Community, but did not participate in the exchange rate and intervention mechanism of the EMS.

January 1. Balances on Blocked Accounts as of December 31, 1980 held by private individuals residing in member countries of the EC would be released in six equal annual installments during the period January 1, 1981 to January 1, 1986.

January 1. The cash deposit requirements for specified imports were reduced by 25 per cent.

January 1. All bilateral payment agreements were terminated. A transitional period of six months was set for the liquidation of all outstanding clearing balances (four months for the agreement with the People’s Republic of China.

January 1. The distinction between import procedures D and E was abolished. Most imports would be effected under what was formerly termed procedure E, under which approval was granted by a commercial bank.

January 1. The annual tourist allowance a person was raised to the equivalent of ECU 400 for travel to EC member countries.

March 16. The number of items included in Lists A and B was increased.

April 1. The special clearing agreement between Greece and Portugal was terminated.

July 1. Foreign exchange allocations for undergraduate and postgraduate studies abroad were raised by various amounts, depending on the study station.

Grenada

(Position on December 31, 1981)

Exchange Arrangement

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 Ministry of Planning, Finance, and Trade. 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 South Africa. Trade controls also are administered by the Ministry of Planning, Finance, and Trade.

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 South Africa may be made in any foreign currency3 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 Planning, Finance, and Trade. 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 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 Planning, Finance, and Trade; however, the Ministry has delegated to authorized dealers powers to approve the payment of imports originating in Caricom countries. Advance payments for imports also require prior approval by this Ministry.

Imports of equipment, spare parts, and raw materials for the manufacture of approved goods are exempted from import duties. 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, or the equivalent of US$5,000 a year for travel outside the East Caribbean Currency Authority region), 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 Planning, Finance, and Trade, 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.

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.

Exports and Export Proceeds

Exports to 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 animals and specified agricultural goods, such as bananas, cocoa, nutmeg, coconuts, copra, cotton, and limes and related products.

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 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 Ministry of Planning, Finance, and Trade 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 all liabilities related to the investment have been discharged and that the original investment was registered with the Ministry of Planning, Finance, and Trade. Nonresidents may acquire in Grenada real estate for private purposes with funds in foreign currency; 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 Planning, Finance, and Trade.

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 Planning, Finance, and Trade. The export of gold is not normally permitted.

Changes during 1981

February 12. Consumption taxes were raised for certain import items.

Guatemala

(Position on December 31, 1981)

Exchange Arrangement

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

The Foreign Exchange Department of the Bank of Guatemala is in charge of administering the Emergency Regime for controlling international capital movements, including decisions on cases not specifically covered in this regime. However, the Department’s decisions may be appealed before the Monetary Board. Foreign exchange transactions of the public sector are carried out exclusively through the Bank of Guatemala, while those of the private sector are made through banks authorized by the Monetary Board. Payments in foreign currency must be approved by the Foreign Exchange Department. Banks participating in the system may authorize some foreign payments under powers delegated by the Bank of Guatemala. Exports of goods and services must be registered in the Foreign Exchange Department to guarantee the repatriation of the corresponding foreign exchange proceeds.

Prescription of Currency

In practice, most transactions in foreign exchange are denominated in U.S. dollars. Transactions with other member countries of the Central American Common Market (CACM)2 with respect to trade in invisibles are carried out in national currencies3 through the Central American Clearing House; clearing settlements are made in U.S. dollars.

Imports and Import Payments

Import licenses issued by the Ministry of Economy are required for imports of maps of Guatemala, coffee beans and coffee plants, explosives, lead, poultry, milk, eggs, sugar, butter, vegetable oil, wheat flour, basic food grains, cottonseed, and a few other goods. Imports of cocoa and tallow are prohibited from all sources. Imports from Honduras are regulated by a bilateral trade agreement. Merchandise imports must be registered with the Foreign Exchange Department or one of the authorized banks (imports from the other Central American countries covered by the General Treaty for Economic Integration of Central America are exempt from this requirement); the Bank of Guatemala will issue foreign exchange licenses for import payments only against original bills of lading and invoices with statistical information consistent with the import registration. Except in the case of transactions below US$5,000 and imports made directly by authorized banks on behalf of importers with letters of credit or trade credits, a 25 per cent guarantee deposit, to be made at the time of requesting foreign exchange, is required in the case of prepayments for imports. Deposits may be made in cash, bank guarantees, or government bonds, and are refundable when the Bank of Guatemala has received from the importer a document issued by customs verifying the arrival of the merchandise.

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 per cent of the applicable import duty.

Payments for and Proceeds from Invisibles

There are limits on payments for invisibles, as follows : Study abroad (1) purchases of foreign exchange for study abroad are limited to US$1,000 for moving expenses and a monthly allowance of US$300–US$500 for room and board; no limit is applied on remittances for tuition expenses, and additional amounts may be approved in bona fide cases; (2) remittances to dependents abroad are restricted to a monthly limit of US$500 but not exceeding US$1,250 a family; Travel abroad (3) foreign exchange allowances for nonbusiness travel abroad are limited for each person to US$100 a day, US$3,000 a trip, and US$6,000 a year (brought under these limits are trips abroad paid for in local currency and the use abroad of credit cards), for children from 12 to 18 years of age the limits are US$50 a day, US$1,500 a trip, and US$3,000 a year, for children under 12 years the limits are US$25, US$750, and US$1,500, respectively; for nonbusiness travel to other Central American countries, the limits are the same as those applied for travel abroad, except that only 50 per cent of those limits for adult travelers outside the region can be obtained in U.S. dollars; for foreign exchange allocations in excess of US$500 a person, a guarantee deposit equivalent to 25 per cent of the exchange purchased is required, which is refunded on presentation of evidence showing the number of days spent abroad or, if appropriate, the sale of the unused amount to an authorized bank; (4) foreign exchange allowances for business travel abroad are limited to US$150 a day, with no ceiling applied on each trip or each year, provided that it can be established that the expenses are borne by the firm for which the trip is undertaken; (5) foreign exchange is authorized for medical treatment abroad provided that the need is substantiated; substantiation of the use of foreign exchange must be submitted within 30 days of the individual’s return to Guatemala; and (6) remittances abroad by foreign workers are limited to one third or two thirds of their salaries, within monthly limits of Q 500 or Q 1,250 a recipient, depending upon whether the immediate family resides in Guatemala or abroad; there is a monthly limit of Q 1,500 on emigrating foreigners wishing to transfer their severance pay and the proceeds from the sale of their property in Guatemala. Bona fide requests beyond these limits can be granted upon application to the Monetary Board. All international air passages are subject to a tax of 10 per cent.

Receipts from invisibles accruing to residents must be declared and sold to the Bank of Guatemala or to an authorized private commercial bank. Exempted from this requirement are foreign exchange earnings of foreign nationals from their investments or other operations abroad while these earnings are maintained outside Guatemala.

Exports and Export Proceeds

Certain exports are subject to licenses issued by the Ministry of Economy. Exports of a few other items are prohibited, including the export of gold (unless the Bank of Guatemala issues a special export license) and silver in any form. Travelers may, however, take out up to Q 25 in silver coin that is legal tender in foreign countries. Exporters must obtain export licenses issued by the Foreign Exchange Department before the Guatemalan customs can authorize shipment of the merchandise; the granting of export licenses is contingent on agreement to sell export proceeds to the Bank of Guatemala within three months of the date of issuance (six months for exports to the other Central American countries).

Capital

All existing foreign assets held abroad by Guatemalan residents and all obligations to foreigners must be registered with the Bank of Guatemala; such registration is a precondition for authorizing remittances of dividends, profits, interest, and amortization. Any other outward capital transfer is prohibited. 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 1981

September 14. Regulations on payments for invisibles were tightened as follows :

(a) Study abroad: The installation allowance was halved to Q 1,000 and also the monthly allowance, from Q 1,000 to Q 500 for each university student, while a new limit of Q 300 a month was imposed for other students. (The Foreign Exchange Department may approve higher amounts in duly justified cases.) Proof of student status was required to be established only once a year (instead of every six months as previously).

(b) Travel abroad: For nonbusiness travel outside Central America, the daily allowance was halved from Q 200 to Q 100 a person as was the overall limit a trip, to Q 3,000. A new annual limit of Q 6,000 was established, and trips abroad paid for in local currency and the use abroad of credit cards were brought under the limits. For children from 12 to 18 years of age, the daily allowance was set at Q 50 up to Q 1,500 a trip and Q 3,000 a year, and for children up to 12 years of age, those limits were set at Q 25, Q 750, and Q 1,500, respectively. Nonbusiness travel to other Central American countries (previously not subject to limits on exchange sales) was brought under the limits for travel outside the region, with the proviso that only 50 per cent of the limits for adult travelers could now be obtained in U.S. dollars. The balance would be provided in Central American currencies or local currency checks payable through the Central American Clearing House. Exchange sales for business travel abroad (previously governed by the general travel per diem of Q 200) were limited to Q 150 a day without any ceiling applied on each trip or each year, provided that it could be established that the expenses were borne by the firm for which the trip was undertaken. Subject to proper documentation, the Foreign Exchange Department could approve requests for business travel of up to Q 200 a day. In addition, the guarantee deposit on exchange purchases for travel abroad (except business and official travel) was raised from 10 per cent to 25 per cent. The limit beyond which the deposit must be lodged on the full amount of the exchange purchase was however lowered from Q 1,500 to Q500.

(c) Medical treatment abroad: The initial exchange allowance of up to Q 5,000 for medical expenses abroad was withdrawn, but, as before, exchange for such expenses would be provided above the specified limit subject to ex post verification.

(d) Family remittances: The monthly limits on family remittances were halved to Q 500 a recipient and to Q 1,250 a recipient family; the remittor’s financial circumstances became a factor to be considered in authorizing remittances within the specified limits.

(e) Remittances of nonresident income: The monthly limits on remittances of certain types of income were halved to Q 500 a recipient and to Q 1,250 a recipient family; the affected items were rentals, usufructs, interest and dividends on property located in Guatemala or on funds invested in Guatemala but not considered foreign investments, pensions, annuities, and payments from other schemes approved by the Foreign Exchange Department. (Those receiving remittances under this facility continued to be ineligible for family remittances, and vice versa.)

(f) Remittances by resident foreigners: Resident foreigners with families residing in Guatemala would continue to be eligible to remit abroad one third of their monthly salary, but subject to a monthly limit of Q 500. If all or part of the family resides abroad, two thirds of the salary would continue to be eligible for remittance abroad, subject to a new limit of Q 1,250 a month; in addition, a monthly limit of Q 1,500 was placed on emigrating foreigners wishing to transfer abroad their severance pay and the proceeds from the sale of their property in Guatemala.

(g) Domestic use of foreign credit cards by residents: Use of foreign exchange for the settlement of charges resulting from the domestic use of credit cards issued abroad was limited to Q 100 a person a month.

Guinea

(Position on December 31, 1981)

Exchange Arrangement

The currency of Guinea is the Guinean Syli, which is pegged to the SDR at GS 24.6853 = SDR 1. Exchange rates for 14 currencies 1 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 currencies 2 are determined in accordance with the appropriate cross rates in international markets. There is a free parallel market in which most nonofficial transactions are settled. Transactions under the bilateral payments agreement with the People’s Republic of China are settled in renminbi at the rate of GS 10.030 per renminbi 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. 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 Settlements with 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, Mauritania, 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 (as well as exports) are centralized at the level of Importex. The import licenses are of two types: “licenses with settlement” and “licenses without settlement” (i.e., imports are financed by the importers’ own foreign exchange). The first type of license is mainly for those imports of the public enterprises and ministries that are part of the import program, while the second type of license is for the private sector imports. Regarding the public sector, an annual program of imports is presented by each public enterprise and forwarded to the respective ministry, which aggregates its overall import needs before forwarding them to Importex. These requests are discussed by an inter-ministerial committee (commision de contrôle des licenses), which has the ultimate authority to decide on the final composition of imports; on this basis, annual import quotas are allocated to each ministry. If one ministry’s requirements should exceed its quota, it would have to make a special request to the interministerial committee; the determining criterion in such cases is the urgency of the need. In any case, any extra amount allowed beyond the original quota would normally be deducted from the quota for the following year. The execution of the import program is closely monitored to ensure that actual imports comply with the authorities’ imports. Should the foreign exchange situation permit, an annual program could be expanded in favor of necessities.

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, including most private sector imports, are effected outside the import program. This category comprises goods for which foreign exchange is derived from sources other than the official foreign exchange resources of Guinea and covers mainly imports by two “mixed-economy companies” (the Friguia Company and the Guinea Bauxite Company), the foreign embassies, imports made directly for the execution of the Five-Year Plan, and imports by private traders not involving purchase of foreign exchange through the official market (sans règlement financier).

All commodities are subject to import surcharges, except when imported by the “mixed-economy companies.”

Payments for Invisibles

All payments for invisibles through the official foreign exchange market require the authorization of the Central Exchange Bureau. Payments for freight and insurance in connection with imports are authorized as part of the import license. No official exchange is granted for other types of insurance with companies abroad. There is no official exchange 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 through the official market 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, but 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 through the official market; 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 through the official market 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 on the same basis. The export of Guinean currency is prohibited.

Exports and Export Proceeds

Importex establishes an annual export program for all public sector 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. For the following commodities, special authorization from designated agencies is required in addition to the export license: 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.

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. For diamond producers, there is an auction arrangement operated by the Central Bank, under which producers are paid 60 per cent of proceeds in foreign currency and the remainder is converted at the official exchange rate.

Proceeds from Invisibles

In principle, exchange proceeds accruing to residents in respect of invisibles are required to 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 through the official market require authorization. Outward capital transfers by Guinean nationals through the official market 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. Under a special investment law passed in August 1977, freedom of movement and other privileges are granted to funds remitted and placed in Guinean banks by nonresident Guineans. In accordance with the terms of the Investment Law of February 1, 1980, small and medium-sized enterprises in which at least GS 25 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.

There are arrears on external payments, mostly in respect of debt service payments.

Gold

Guinea has four issues of commemorative gold coin, 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 1981

April 20. As part of a reorganization of the marketing system, private traders were authorized to buy agricultural products directly from the producers and to resell or export them directly.

September 17. Ministerial Order No. 106 was issued, limiting the scope of state trading in imports to cement, educational and pharmaceutical supplies, fuel, steel, sugar, cooking oil, rice, and spare parts and raw materials for the state enterprises.

October 14. Decree No. 563 was introduced, giving individual public enterprises autonomy in their financial operations, including the programing of exports and imports.

Guinea-Bissau

(Position on December 31, 1981)

Exchange Arrangement

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 of 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, 1981 the buying and selling rates of the N