Chapter

Explanatory Note on Coverage of Part Two

Author(s):
International Monetary Fund. External Relations Dept.
Published Date:
September 1984
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Part Two gives a detailed description of the exchange and trade system of individual member countries, including a nonmetropolitan territory (Hong Kong), for which the United Kingdom has accepted the Fund’s Articles of Agreement, and the Netherlands Antilles, which is a part of the Kingdom of the Netherlands. 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 1983, but in appropriate cases reference is made to significant developments that took place early in 1984.

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 1983.

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 1983” 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, 1983, 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 bank notes. 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 bank notes 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.

In this Report, references to “Taiwan” are to the Taiwan Province of China.

Afghanistan

(Position on December 31, 1983)

Exchange Arrangement

The currency of Afghanistan is the Afghani. Da Afghanistan Bank (the central bank) maintains an official rate applied to (a) foreign exchange proceeds from exports of natural gas, karakul, cotton, and wool; (b) transactions for government and authorized transactions for public enterprises; (c) certain foreign currency income earned in Afghanistan (see Proceeds from Invisibles, below); and (d) all transactions in accounting units specified under bilateral payments agreements. Transactions by Da Afghanistan Bank and the commercial banks in convertible exchange not subject to the official rate are undertaken at a separate operational rate more depreciated than the official rate. Both rates are defined in terms of the U.S. dollar and are flexible. 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 percent to 0.375 percent on exchange transactions. 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 percent; 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. Transactions which are not required to be effected with the banks may take place in the bazaar foreign exchange market, where the rates are more depreciated than those maintained by the banks.

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 bilateral accounting dollars in accordance with the procedures set forth in those agreements. The proceeds from exports of wool and cotton to other countries and of karakul to all countries must be obtained in convertible currencies. There are no other prescription of currency requirements.

Imports and Import Payments

Imports are not subject to license, but import transactions must be registered before orders are placed abroad. 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 made against export proceeds subject to surrender requirements (i.e., from natural gas, cotton, 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 percent and 35 percent.

Payments for imports through the banking system to payments agreement countries may usually be made only under letters of credit. Payments to other countries may be made under letters of credit, against bills for collection, or against an undertaking by the importer to import goods at least equivalent to the payment made through the banking system. Generally, a deposit of up to 40 percent of the c.i.f. value is required by banks from private enterprises upon opening of a letter of credit. Foreign exchange for payments for imports by the private sector has to be acquired in the bazaar market.

Payments for Invisibles

Tourists are permitted to take out up to US$2,000 or the equivalent in other foreign currencies. When foreign travel is for other purposes, the permissible amounts are determined by the appropriate authorities; in each case, permission from the central bank or one of the commercial banks is necessary for taking out foreign currency. Exchange for private travel has to be acquired in the bazaar market. The fee for a passport valid for one year is Af 20,000 for tourist travel and Af 1,000 to Af 2,500 for other types of travel. Export of foreign currency notes up to US$2,000 or its equivalent by travelers 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 bank notes.

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, cotton, and wool are subject to surrender requirements and are exchanged at the official rate. Other export receipts in convertible exchange are exchanged at the operational rate, but exporters may retain such exchange to pay for imports of tea, matches, soap, textiles, edible oils, and motor oils. Da Afghanistan Bank buys foreign exchange from exports to bilateral payments agreement countries, purchasing up to 50 percent of exports proceeds from individuals and up to 70 percent from 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 percent of the foreign currency salaries of foreign employees working in the Afghan public and private sectors must be converted into Afghanis at the official rate. Travelers entering Afghanistan may not bring in more than Af 1,000 in Afghan bank notes. They may, however, bring in any amount in foreign currency but should declare it when entering the country if they intend to take out any residue upon departure.

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 and corporate taxes 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 percent 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 percent. 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 percent 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 1983

No significant changes occurred in the exchange and trade system.

Algeria

(Position on December 31, 1983)

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. On each trip to Algeria, Algerians gainfully employed abroad are required to exchange an amount of convertible currency equivalent to DA 700 at the exchange rate operative on the day the transaction takes place. They receive the incentive premium only on those conversions or transfers that are not required of them by law or regulation.

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 five 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 bank notes that the account holder intends to export when he travels abroad. 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. 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 épargnedevises). Depositors receive an incentive premium equivalent to 40 percent of the buying exchange rate on the conversion date of such foreign exchange.

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

5. Foreign Currency Accounts are held by physical or juridical foreign nationals, who may be either nonresidents or persons who have resided for more than six months in a foreign country. Such accounts may be freely credited with (a) book transfers from abroad using either postal or banking facilities, (b) imported convertible foreign currencies which have been declared at the account holder’s entry in the country, and (c) domestic bank-to-bank book transfers. The accounts may be freely debited for book transfers abroad but only through the banking system; they may also be debited for purchases of dinars, for book transfers in dinars, and for purchases of convertible foreign currencies to be physically exported by the account holder. A conversion premium is received on any amount drawn and used for payment of expenses in the country, with the exception of legal payment obligations. The interest rate payable on deposits in these accounts is fixed annually by the Minister of Finance.

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 five 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; (3) AGI objectif planifié, issued to enterprises for imports relating to their investment program; (4) AGI (sans paiement), under which exemption from all exchange control formalities are granted to transactions not involving use of official foreign exchange or local currency or any other counterparts; and (5) AGI (sans transfer), issued to enterprises for specified import products (classified as consumable products—matières consommables) utilized in public works contracts; simplified exchange and trade control formalities applied to such transactions.

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. Without a waiver from the exchange control authority (the Ministry of Finance or the Central Bank), advance payments may not exceed 15 percent of the import value. 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: 50 percent for single persons and married persons having their families in Algeria; and 70 percent for persons having their families abroad. For other workers who have contracts with other employers and hold the necessary employment documents, the amounts that may be transferred are 35 percent for single persons and married persons having their families in Algeria and 55 percent 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 resident nationals and individuals of foreign nationality in resident status (excluding those having an entitlement to make transfers) 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 1,000 a person a calendar year (DA 500 for children under 15 years) and is delivered on presentation of a valid passport and travel vouchers; for overland travel, the allocation is DA 1,000 a person a year for adults and DA 500 for children under 15 years. Residents requiring medical treatment abroad receive a foreign exchange allowance equal to DA 800 if the patient is over 15 years and DA 400 if the patient is under 15 years. On each trip to Algeria, Algerians gainfully employed abroad are required to exchange an amount of convertible currency equivalent to DA 700 at the exchange rate operative on the day the transaction takes place. They receive the incentive premium only on those conversions or transfers that are not required of them by law or regulation. Emigrant Algerian workers who take their vacations in Algeria may, when returning abroad, re-export foreign exchange freely imported and duly declared on their arrival in Algeria.

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 bank notes up to DA 50 a person. Nonresident travelers may also re-export any foreign currency declared upon entry. However, on their arrival in Algeria, nonresidents must convert foreign exchange equivalent to a minimum of DA 1,000. Travel tickets which are bought by nonresidents for traveling abroad must be paid for with imported foreign exchange.

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 require a license, except those undertaken by state enterprises having a monopoly right to export. 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. 78-02 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. Unless a waiver is granted by the Ministry of Finance or the Central Bank of Algeria, the time limit for repatriation of export proceeds is 60 days from the date of shipment. However, for exports of hydrocarbons, the time limit is a maximum of 30 days after the completion of loading. 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 bank notes, 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 bank notes up to DA 50 a person. Nonresident travelers are not permitted to bring in Algerian bank notes.

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 percent 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. The law on joint ventures with foreign companies, which came into effect in April 1982, provides foreign partners with a guarantee of fair return on investment, tax exemptions of up to five years on industrial and commercial profits, reduced taxes on reinvestment profits, and the repatriation of earnings and royalties in respect of transfers of technology.

Gold

Residents may purchase, hold, and sell gold coins in Algeria for numismatic purposes. Under Ordinance No. 70-6 of January 16, 1970, unworked gold for industrial and professional use is distributed by the Agence Nationale pour la Distribution et la Transformation de l’Or et des Autres Métaux Précieux (Agenor). This agency is also authorized to purchase in Algeria, and to hold, process, and distribute any other precious metal, and, within the exchange control regulations, to import and export any precious metal, including gold. 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 1983

Exchange Arrangement

February 19. A circular (arrêté) of the Ministry of Finance was issued on the implementation of the “incentive saving premium,” concerning the inward transfer of freely convertible foreign currencies by physical or juridical foreign nationals, and the exchange of freely convertible foreign currencies for dinars. The regulation provided for a uniform premium for all eligible inward remittances, at a rate to be determined from time to time by the Minister of Finance. (By the end of 1983, the premium was specified at a rate of 40 percent of the applicable buying rate on the conversion date.)

February 19. An implementing decree came into effect, specifying a fixed exchange rate for outward transfers of foreign exchange related to certain types of expenditures of public sector enterprises and administrative entities, including payments of salaries of their employees working abroad and grants for Algerian students abroad.

Nonresident Accounts

February 19. Decree No. 31/83 was issued, spelling out the legal and administrative procedures relating to foreign currency accounts for Algerians working abroad.

Imports and Import Payments

January 11. The Ministry of Finance issued an implementing circular in respect of two types of global import authorization granted to public enterprises—namely, (1) AGI (i.e., autorisations globales d’importation) sans paiement, issued to enterprises for imports not involving use of foreign exchange or local currency or any other counterparts, and not subject to any specific prohibition, such import transactions being exempted from all exchange and trade control formalities; and (2) AGI (sans transfert) issued to enterprises for certain import goods for use in public works, for which the exchange and trade control formalities were simplified.

March 5. Under Decree No. 83/153, a list of products subject to an import compensatory tax on the c.i.f. value was established, including cheese, eggs, dry fruits, cosmetic products, detergents, silk tissues, and jewels.

June 25. It was announced that cars imported by nonresident nationals and sold within one year from the date of entry would be subject to the full taxes and custom duties; if sold after one year but before five years they would be subject to only 50 percent of the taxes and custom duties (Law No. 83/10).

June 25. A regulation was introduced, raising from DA 5,000 to DA 10,000 the limit on personal consumption imports exempt from exchange and trade formalities.

July 25. Legislation was issued, exempting from exchange and trade formalities imports of new capital goods not involving payment from official foreign exchange, provided that (a) the value in each case did not exceed DA 100,000 and (b) the goods were not destined for resale.

September 25. A list of specified goods produced locally was issued; imports of such goods were either banned or restricted.

Proceeds from Invisibles

May 21. In a modification of Decree No. 82/175, Decree No. 83/347 was issued, granting authorization for importation of convertible currencies by nonresident nationals, provided that any such amount was declared upon entry into the country.

Antigua and Barbuda

(Position on December 31, 1983)

Exchange Arrangement

The currency of Antigua and Barbuda is the East Caribbean dollar,1 which is issued by the East Caribbean Central Bank (ECCB). The East Caribbean Dollar is pegged to the U.S. dollar, the intervention currency, at EC$2.70 per US$1. On December 31, 1983 the buying and selling rates for the U.S. dollar were EC$2.6882 and EC$2.7169, respectively, per US$1. The ECCB also quotes daily rates for the Canadian dollar and the pound sterling. All foreign exchange transactions are subject to a levy of 1 percent; the minimum levy is EC$1 a transaction.

Antigua and Barbuda formally accepted the obligations of Article VIII, Sections 2, 3, and 4, of the Fund Agreement as from November 22, 1983.

Administration of Control

Exchange control 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 Collector of Customs in the Ministry of Finance and by the Ministry of Economic Development, depending on the type of commodity.

Prescription of Currency

Settlements with residents of member countries of the Caribbean Common Market (Caricom)2 must be made either in the currency of the Caricom country concerned or in 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. A few residents—firms and individuals in export and tourist industries—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 monthly 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 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 approve application forms for import licenses after confirming sight of documents. The approved forms must be submitted to the Ministry of Finance on a weekly basis.

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 Law and the Hotel Incentives Act. Import duties are levied at the rate of 35 percent in line with the 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 ECCB area; however, this limit may be exceeded with permission from the Ministry of Finance. In terms of Caricom traveler’s 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 if 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; for amounts over US$1,000 Ministry of Finance approval must be obtained. Levy exemptions for transfers, especially for charity purposes, are usually granted.

Capital

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

Gold

There are no restrictions on imports of gold.

Changes During 1983

Exchange Arrangement

October 1. The East Caribbean Currency Authority was succeeded by the East Caribbean Central Bank, and Antigua and Barbuda (as well as Dominica, Grenada, Montserrat, St. Lucia, and St. Vincent and the Grenadines) continued to be a member of the institution.

November 22. Antigua and Barbuda formally accepted the obligations of Article VIII, Sections 2, 3, and 4 of the Fund Agreement.

Argentina

(Position on December 31, 1983)

Exchange Arrangement

The currency of Argentina is the Peso Argentino. The exchange rate for the peso argentino in terms of U.S. dollars is announced on a daily basis by the Central Bank and adjusted in accordance with relative price movements and overall balance of payments objectives. On December 31, 1983 the closing rate for the U.S. dollar was $a 23.25 per US$1 (selling). Transactions are allowed in certain other currencies,1 with daily quotations based on the buying and selling rates for the U.S. dollar on markets abroad. Purchases and sales of foreign exchange are subject to a tax of 0.6 percent. Forward exchange operations are permitted in the private sector with maturities of up to 180 days and at rates agreed by buyers and sellers; such operations must be related to trade transactions.

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

Administration of Control

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

Prescription of Currency

Virtually all payments between Argentina and Bolivia, Brazil, Chile, Colombia, the Dominican Republic, Ecuador, Mexico, Paraguay, Peru, Uruguay, and Venezuela are made through accounts maintained by the Central Bank of Argentina and the central banks concerned, under reciprocal credit agreements within the framework of the multilateral clearing system of the Latin American 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. Payments for imports by the private sector contracted after October 21, 1983 may be effected automatically by authorized entities, provided the financing conforms to terms established by the Central Bank; otherwise prior central bank approval is required. Imports and related payments by the public sector require the prior approval of the Central Bank. In addition to customs duties, imports are subject to a stamp duty of 0.6 percent and selective internal taxes ranging from 5 percent to 22 percent.

All imports by the private sector require an import license (Certificate of Sworn Declaration of Need to Import) issued by the National Import Directorate of the Commerce Secretariat.2 The import of goods classified as “nonessential” (List I) is prohibited until June 30, 1984; this list consists primarily of consumer goods and of industrial inputs for which close substitutes are amply available in Argentina. The prohibition does not apply to temporary imports, to goods included in the border traffic scheme, or to samples and prototypes. The Secretary of Commerce is empowered to grant import licenses for goods on List I when the import is considered necessary for scientific or technical reasons, or in light of the quantity or quality of domestic production.

For most capital goods and certain industrial inputs (List II) the Commerce Secretariat issues import licenses upon approval by the Industry Secretariat and by an Honorary Import Advisory Committee on which both government institutions and competent commercial and industrial organizations are represented. Import licenses for raw materials and inputs for the pharmaceutical industry and for medical and health services (List III) require the prior approval of the Ministry of Health and Social Action, and licenses for imports intended for national defense and for the security and police forces require the prior approval of the Ministries of Defense or Interior.

Import licenses are granted automatically for all goods not specifically covered by the foregoing provisions. Goods imported under concessions granted by any instrument of the LAIA agreement are exempt from the prohibition applicable to goods on List I and the review requirement for goods on List II. Also, import licenses are issued automatically for goods covered under the Argentine-Uruguayan Economic Cooperation Agreement.

Most imports are subject to minimum financing terms of at least 180 days, calculated from the date of shipment. However, imports of goods originating in and transported from member countries of LAI A, member countries of the Central American Common Market (CACM), Cuba, Haiti, Panama, or the Dominican Republic are subject to minimum financing terms of 120 days from shipment, except that goods on the LAIA “negotiated list” have a minimum financing term of 90 days. Payment against shipping documents is permitted for the following: goods imported by importers located in the National Territories of Tierra del Fuego, Antarctica, and the Islands of the South Atlantic and destined for the Special Customs Area established by Law No. 19640;3 fresh fruit received on consignment basis; and periodicals.

Special minimum financing terms apply for imports of capital goods valued at more than US$50,000. Not more than 5 percent may be paid prior to shipment and an additional 10 percent may be paid upon the submission of shipping documents. The balance of 85 percent of the f.o.b. value is to be paid in equal installments beginning not earlier than six months after shipment according to the following schedule:

F.o.b. Value of Import
(In thousands of U.S. dollars)Minimum Financing Term
50– 2501 year
250– 5002 years
500–1,0003 years
1,000–1,5004 years
1,500–2,0005 years
More than 2,000To be determined upon consultation with the Central Bank

Imports of capital goods for which financing amounting to 85 percent of the f.o.b. value is provided by international organizations or official creditors are exempt from these minimum terms, as are imports by firms located in the National Territories of Tierra del Fuego, Antarctica, and the Islands of the South Atlantic.

Payments for Invisibles

All payments for invisibles require prior central bank approval. In general, no sales of exchange at the official rate for travel abroad are permitted; however, in exceptional cases the Central Bank will consider applications to purchase foreign exchange for travel abroad for medical treatment or for attendance at trade fairs.

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 from 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.

Traditional exports are subject to export taxes. The applicable tax rates on December 31, 1983 were 18 percent for wheat; 25 percent for other grains and for live cattle; 22 percent for greasy wool; 15 percent for scoured wool; 10 percent for processed hides; and 10, 15, or 20 percent for other traditional exports.

Certain nontraditional exports are eligible for rebates; on December 31, 1983 the rebates amounted to 5 percent or 10 percent of export value, depending on the type of export. Exports shipped through certain ports were eligible for additional rebates ranging from 8–13 percent.4

Many exports, particularly nontraditional exports, are eligible for other export incentives of various kinds. The Central Bank has established a system of special financing, to be granted to Argentine exporters through banks, with a view to promoting exports of certain goods and services.5 Certain products, mostly nontraditional exports, may be shipped “on consignment” for 360 days; if not sold within that period, the goods must be returned to Argentina.

Proceeds from Invisibles

Proceeds from freight and transportation services and from insurance and reinsurance activity must be surrendered within 30 days of receipt. Exchange derived from other invisibles need not be surrendered. Travelers may bring in freely any amount in domestic or foreign bank notes 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. All amortization payments on loans, other than import-related loans provided in conformity with the established minimum terms, require the prior approval of the Central Bank. All loans outstanding and covered by a swap agreement with the Central Bank as of December 4, 1982 and all loans for which the domestic borrower obtained an exchange rate guarantee from the Central Bank must be extended under minimum terms established by the Central Bank. Loans covered by swap agreements will be repaid in four equal semiannual installments with the first payment beginning 540 days after the final maturity of the swap agreement, except when loans are related to import transactions in which case repayment will then be made in three quarterly installments beginning 270 days after the final maturity of the swap agreement. In lieu of providing foreign exchange to meet principal falling due on loans covered by exchange rate guarantees, the Government of Argentina is issuing U.S. dollar-denominated bonds or promissory notes. Such bonds or promissory notes have a grace period of 3½ years and a maturity of 5 years and pay interest at a spread of 2 percentage points over LIBOR or 1⅞ percentage points over the U.S. prime rate.

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 requires 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 governed by the Foreign Investment Law (codified text of 1980), which incorporates the amendments made under Law No. 22208 to Law No. 21382. Promulgated by Decree No. 1062 of June 30, 1980, the Foreign Investment Law is regulated 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 pesos argentinos belonging to foreign investors, provided that they are legally transferable abroad; capitalization of external credits received in freely convertible foreign currency; intangible assets; and any other form acceptable to the implementing authority or covered by a special regime or a promotion regime.

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

(1) Subject to prior approval by the National Executive are (a) investments in the defense and national security sectors, in public 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 in which the firm was engaged 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 percent 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 that 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 percent 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 Ministry of Economy.

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 prevailing in the international market, against provision of the equivalent in pesos argentinos.

Profits on registered foreign capital are subject to a special tax on after-tax profit when they exceed 12 percent of registered capital on an annual basis. This tax is 15 percent on profits of more than 12 percent and up to 15 percent of registered capital, 20 percent for those of more than 15 percent and up to 20 percent of registered capital, and 25 percent for those of more than 20 percent 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 buy such gold from their clients. Gold exports must be paid for in convertible currencies. Imports of gold by industrial users are subject to a statistical duty of 0.6 percent, and those by other users are subject in addition to sales tax.

Changes During 1983

Exchange Arrangement

June 1. A new monetary unit, the “peso argentino” was introduced; its value was set equal to 10,000 of the former peso.

September 30. All sales of foreign exchange were made subject to prior approval by the Central Bank, and all outstanding and unutilized authorizations for the sale of foreign exchange were required to be revalidated (Communication No. A 391).

Imports and Import Payments

March 17. The minimum foreign financing term for most imports was reduced from 180 days to 150 days (Communication No. A 292).

March 24. Application of Resolution No. SC 19, under which most imports of most consumer goods were made subject to a requirement of prior study, and thereby effectively banned was extended to June 30, 1983.

April 18. The minimum foreign financing period for most imports was further reduced from 150 days to 120 days (Communication No. A 304).

June 28. Application of the Resolution under which most imports of consumer goods were made subject to a requirement of prior study, and thereby effectively banned was extended to December 31, 1983, but with certain exemptions, including, inter alia, those under special import regimes, noncommercial imports by private parties, and prototypes and samples. In addition, the Under Secretary of Foreign Trade was empowered to authorize importation of goods intended for use as spare parts, for health services, or for technical or industrial use (Resolution No. SC 163).

October 10. The acceptance of applications for import licenses (Certificates of Sworn Declaration of Need to Import) was suspended until further notice, except for goods for which substitutes were not produced in Argentina, goods for which no payment in foreign exchange was required, personal baggage, and noncommercial shipments to private parties. In addition, unutilized balances on outstanding import licenses were voided (Resolution No. ME 361).

October 11. A minimum foreign financing requirement of 120 days was introduced for imports originating in member countries of the Latin American Integration Association (LAIA), whether or not negotiated under the LAI A accord, and for imports originating in the member countries of the Central American Common Market, or in Cuba, Haiti, Panama, or the Dominican Republic (Communication No. A 393).

October 20. The requirement of prior study, under which imports of most consumer goods were effectively banned, was extended to imports originating in member countries of LAIA and negotiated under the LAIA agreement (Resolution No. SC 382).

October 20. The suspension of the granting of import licenses since October 10, 1983 was lifted, and a system of foreign exchange allocations was established as the basis for the granting of import licenses. Under this system, each importer would be given an exchange allocation for each customs tariff heading equal to a specified percentage of his imports under that customs tariff heading during the 12 months through September 1983. Import licenses would, however, be granted automatically for the following items not subject to the exchange allocation system: (a) goods for which use of official foreign exchange was not required; (b) noncommercial shipments to private individuals; (c) goods covered by special import regimes; (d) replacement parts of capital goods for final users; and (e) fuel. In addition, unutilized balances on import licenses issued before September 30 were cancelled, but provision was made for the granting of new licenses for goods shipped prior to October 10, 1983 (Resolution No. SC 382).

October 21. The minimum foreign financing requirement for imports was raised from 120 days to 180 days for most imports, but was reduced from 120 days to 90 days for imports originating in the member countries of the LAIA, and negotiated under the LAIA accord. Goods imported by importers located in the National Territories of Tierra del Fuego, Antarctica, and the Islands of the South Atlantic continued to be exempt from all minimum financing requirements (Communication No. A 397).

November 17. It was announced that import licenses would henceforth be granted automatically for goods covered under the Argentine-Uruguayan Economic Cooperation Agreement (Resolution No. SC 435).

December 7. The import duty on specified types of microcomputers and certain other data processing equipment was raised from 10 percent to 30 percent (Resolution No. ME 1439).

December 29. A new import regime came into effect, as follows, under Presidential Decree No. 319: The import of goods included in a long list of customs tariff headings (List I) was prohibited until June 30, 1984; the list consisted primarily of consumer goods and industrial inputs for which close substitutes were considered to be amply available in Argentina. The prohibition did not apply to temporary imports, goods included in the border traffic scheme, or to samples and prototypes. In addition, imports covered by irrevocable letters of credit opened before December 29, 1983, or financed under agreements concluded with international organizations before that date, were exempt from the prohibition, and the Secretary of Commerce was empowered to grant other exemptions when justified for technical reasons or in light of the quality or quantity of domestic production.

All goods not included in List I would remain subject to the import licensing system administered by the Secretary of Commerce. For goods on another long list of customs tariff headings (List II, covering capital goods and specified industrial inputs), the Commerce Secretariat would issue import licenses upon approval by the Industry Secretariat and by an Honorary Import Advisory Committee comprised of representatives of government institutions and competent commercial and industrial organizations. The same review procedure was instituted for spare parts classified under List I.

For List III items (consisting of imports of raw materials and other inputs for the pharmaceutical industry and for medical and health services), the Commerce Secretariat would issue import licenses with the prior approval of the Ministry of Health and Social Action. Licenses for imports intended for national defense and for the security and police forces were made subject to the prior approval of the Ministries of Defense or Interior. Import licenses would be granted automatically for all goods not specifically covered by the foregoing Lists and provisions. In addition, goods imported under concessions granted by any instrument of the LA1A agreement were exempted from the prohibition applicable to goods on List I and the review requirement for goods on List II.

Payments for Invisibles

July 12. The Central Bank announced that it would not authorize sales of foreign exchange for settlement of obligations incurred after July 25, 1983 through the use of credit cards abroad (Communication No. A 341).

August 15. The Central Bank announced that, in duly justified cases, it would authorize sales of foreign exchange in excess of the established limits for foreign study, transfers for family support abroad, foreign medical treatment, and foreign travel (Communication No. 370).

August 15. Access to foreign exchange at the official rate for transfers of profits, dividends, royalties, and technical assistance payments was restored under Resolution No. ME 899. (Since April 20, 1982 such transfers could only be effected through the purchase of U.S. dollar-denominated bonds issued by the Government of Argentina.)

August 19. The limits on sales of foreign exchange for foreign travel, without prior approval by the Central Bank, were reduced to US$100 a day (up to US$1,500 a year) for travel to countries outside South America, and to US$50 a day (up to US$300 a year) for travel to nonneighboring countries in South America. The prohibition on sales of exchange at the official rate for travel to neighboring countries remained in force (Communication No. C 1040).

September 9. It was announced that the amount of foreign exchange which could be sold without prior approval by the Central Bank for foreign travel by children between the ages of 6 and 12 would be limited to 50 percent of the amounts generally provided under prevailing regulations; for children under 6 years old, no foreign exchange for travel could be sold automatically (Communication No. C 1082).

September 15. The annual limits on sales of foreign exchange for foreign travel without prior approval by the Central Bank were reduced to US$1,000 a person for travel outside South America and US$200 a person for travel to nonneighboring countries within South America. The per diem limits and other provisions governing the automatic sales of exchange for foreign travel remained in force (Communication No. C 1103).

September 30. Official sales of exchange for foreign travel were suspended (Communication No. A 391).

Exports and Export Proceeds

January 6. It was announced that, for goods shipped abroad on consignment, the date of sale abroad would be considered to be the date of shipment for purposes of compliance with the exchange surrender requirement and treatment of the exchange proceeds under the exchange system (Communication No. C 594).

January 28. The special rebates for exports of goods originating from, and shipped through ports located in certain less developed regions of the country were increased from a range of 5–9 percent to a range of 8–11 percent of export value (Resolution No. ME 88).

March 2. Provisions were established for the surrender of export proceeds beyond the normal time limits, when such delays resulted from payments restrictions imposed by foreign governments (Communication A 289).

April 15. The special regime involving a rebate equaling 5 percent of value for exports to new markets was abolished (Resolution No. ME 865); applications already received under the system would, however, be processed and rebates granted.

June 7. The export tax on rice was reduced from 10 percent to zero for 90 days (Resolution No. ME 650).

July 7. A rebate was established for fish exports deriving from officially promoted projects; the amount of the rebate was set at 11 percent, 13 percent, or 15 percent depending upon the region of origin (Resolution No. ME 762).

July 12. A rebate equal to 23 percent of the export value was introduced for exports of passenger vehicles not intended for public transportation (Resolution No. ME 766).

July 19. The export tax on coal was reduced from 20 percent to zero (Resolution No. ME 798).

July 19. The export tax on raw tobacco was reduced from 25 percent to 10 percent for a period of 180 days (Resolution No. ME 801).

August 5. The export tax on certain mineral products was reduced to zero (Resolution No. ME 888).

August 11. A special rebate of 10 percent was introduced for exports of specified goods originating in specified provinces of Argentina and shipped through Chilean ports located north of the 30th parallel. In addition, a commission was empowered to consider additions to the list of exports eligible for this rebate (Resolution No. ME 906).

August 21. A 10 percent rebate was introduced, for a period of 180 days, for exports of certain juice concentrates (Resolution No. ME 973).

September 21. The 23 percent rebate for exports of passenger vehicles, introduced on July 12, 1983, was abolished (Resolution No. ME 1074).

September 22. The maximum period for the surrender of export proceeds was increased to 90 days for fresh fruit exported against irrevocable letters of credit (Communication No. A 388).

September 22. The export tax on front quarters of beef for shipments to Egypt was reduced from 20 percent to zero for a period of 60 days (Resolution No. ME 1091).

November 9. A rebate equal to 10 percent of export value was introduced, for a period up to July 31, 1984, for exports of fruit juice concentrates, other than orange juice (Resolution No. ME 1293).

November 15. Most agricultural products, as well as meat and skins, were excluded from the list of goods exportable on a consignment basis (Communication No. 409).

November 18. A special regime was established for refinancing certain domestic debts of, and extending new loans with a government guarantee to, those meat packing firms that were exporting at least 30 percent of their output; access to such new loans would be based on each firm’s exports between January 1 and June 30, 1983 (Communication No. A 411).

November 25. The export tax on certain fresh fruits was reduced from 5 percent to zero, and a rebate of 10 percent was introduced for exports of canned and processed fruits. These measures were scheduled to remain in effect until June 30, 1984 (Resolution No. ME 1358).

November 28. The 10 percent export tax on gelatins and animal glues was abolished (Resolution No. ME 1365).

December 7. The exemption from export taxes for exports of front quarters of beef was extended for 120 days (Resolution No. ME 1496).

December 7. The special rebates for exports produced in, and exported through, ports located in certain less developed regions were revised from a range of 8–11 percent to a range of 8–13 percent of export value. Exports produced in the Province of Neuquén, and shipped through the specified ports, were made eligible for these special rebates, as were certain exports of wool and other animal fibers, wherever produced. It was decreed that these special rebates would be reduced by 1 percentage point on January 1, 1984 and be maintained at that level for a period of 11 years; they were scheduled to be reduced by 1 percentage point a year beginning from 1995 (Presidential Decree No. 23018).

December 16. The export tax on wheat was reduced from 25 percent to 18 percent of export value (Resolution No. ME 7/83).

Proceeds from Invisibles

May 13. A regulation was introduced requiring net foreign exchange receipts from air or sea freight and transportation services and from insurance and reinsurance activity to be surrendered within 30 days of receipt (Communication No. A 315). Previously, proceeds from such transactions were not subject to surrender requirements.

July 21. Net foreign exchange proceeds from land freight and transportation were made subject to surrender requirements within 30 days of receipt (Communication No. A 347).

Capital

January 26. The Central Bank announced the terms of the U.S. dollar-denominated bonds and promissory notes to be issued by the Government of Argentina in lieu of providing foreign exchange to meet principal repayments falling due on certain private sector foreign debts with exchange rate guarantee by the Central Bank. Such bonds or promissory notes would have a grace period of 3½ years and a maturity of 5 years, and would pay interest at a rate of 2 percentage points over 6-month LIBOR (Communication No. A 278).

June 1. The Central Bank issued regulations providing for the compulsory rollover of Argentine private sector foreign loans covered by swap agreements with the Central Bank. Such loans would be repaid in four equal semiannual installments beginning 540 days after the last maturity of the swap agreement, except for certain loans related to import transactions for which repayment would be made in three quarterly installments beginning 270 days after the maturity of the swap agreement (Communications Nos. A 327 and A 328).

June 1. All principal repayments falling due on foreign loans for which domestic borrowers had obtained an exchange rate guarantee from the Central Bank during 1982 were required to be rescheduled with at least 3½ years grace and 5 years total maturity. The instrument for the rescheduling would be a U.S. dollar-denominated bond or promissory note issued by the Government of Argentina. Previously, mandatory rescheduling provision had applied only to loans covered by exchange rate guarantees issued in 1981 (Communication No. C 853).

June 1. It was announced that the U.S. dollar-denominated bonds and promissory notes issued in lieu of providing foreign exchange to meet principal repayments falling due on loans covered by exchange rate guarantees could be issued in the name of the domestic debtors, rather than the foreign creditors, in which case the bonds or promissory notes would serve to guarantee a rescheduling agreed directly between the creditor and the debtor. In addition, it was announced that, in cases where the creditor was a bank, the mandatory rescheduling of exchange guaranteed loans could be effected through a direct loan from the bank to the Government of Argentina on the same terms as had been agreed for the rescheduling of the debt of the Argentine public sector to foreign banks (Communication No. C 853).

June 3. The National Oversight Commission responsible for the implementation of Law No. 22591 of May 18, 1982, which froze the assets of firms owned or directly or indirectly controlled by British subjects not resident in Argentina, was given the authority to suspend the provisions of that law for specified entities (Law No. 22820).

July 8. The provisions of Law No. 22591 of May 18, 1982 (see entry for June 3) were suspended with regard to the transfer of profits, dividends, royalties, and technical assistance payments by financial firms.

August 8. The provisions of Law No. 22591 of May 18, 1982 (see entry for June 3) were suspended with regard to the transfer of profits, dividends, royalties, and technical assistance payments by nonfinancial firms.

August 9. It was announced that firms participating in the Government’s price adjustment accord would be entitled to a reduction of 2 percentage points a month in the premium paid for their exchange rate insurance contracts (Communication No. A 358).

October 5. It was decreed that all fixed-term deposits in foreign exchange maturing in the period through December 4, 1983 should be extended for a period of 60 days beyond the original maturity date, and that all demand deposits in foreign exchange were frozen until December 4, 1983. Deposits of international organizations, embassies, consulates, and legations, or their staff, were exempted from the provisions of this law (Law No. 22937).

November 4. In those cases where neither the foreign creditors nor the domestic debtor had, by November 4, 1983, taken delivery of the U.S. dollar-denominated bond or promissory note issued in lieu of providing foreign exchange in repayment of loans covered by an exchange rate guarantee of the Central Bank, the accrued interest on that bond or promissory note would be placed in a deposit at the Central Bank and blocked for a period of 180 or 120 days, depending upon whether delivery was taken before or after December 15, 1983. Such deposits were to earn interest at a rate of 1 percentage point over LIBOR or 1⅞ percentage points over the U.S. prime rate (Communication No. A 404).

December 5. The Central Bank announced procedures for the registration of all Argentine private sector external obligations with an original value in excess of US$15,000, including the reregistration of obligations that had been reported previously. The status of such obligations was to be reported as of December 31, 1982 and October 31, 1983 (Communication No. A 418).

December 12. The system under which firms participating in the Government’s price accord paid reduced premiums for their exchange rate insurance contracts (see entry for August 9) was terminated (Communication No. A 426).

Australia

(Position on December 31, 1983)

Exchange Arrangement

The currency of Australia is the Australian Dollar.1 The Australian authorities do not maintain margins in respect of exchange transactions; exchange rates are determined on the basis of demand and supply conditions in the exchange market, but the Reserve Bank of Australia retains discretionary power to intervene in the foreign exchange market. On December 30, 1983 the closing buying and selling rates in terms of the U.S. dollar were $A 1.074 = US$1 and $A 1.1099 = US$1, respectively. There are no taxes or subsidies on purchases or sales of foreign exchange.

The trading banks provide forward exchange cover to residents for trade transactions and some trade-related transactions in invisibles. The banks deal with their customers in forward exchange at mutually negotiated rates. Banks may hold foreign currency balances (spot and forward) or incur foreign currency liabilities (spot and forward) within limits established for each bank. 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. Nonresidents may transact business in the hedge market, although it is a nondelivery market with all settlements 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

Following abolition of most exchange controls on December 12, 1983, consent of the Reserve Bank continues to be required for a range of foreign transactions, so as to ensure conformance with the Government’s tax and foreign investment policies. Such consent is conditional on clearance by the appropriate government authority. 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

Both outward and inward payments may be settled in Australian currency or in any foreign currency,2 but purchases and sales of foreign currency by residents in exchange for Australian currency must be undertaken with a bank in Australia.

Nonresident Accounts

Financial institutions in Australia are permitted to offer accounts denominated in foreign currencies, but purchases and sales of foreign currency must be handled through a bank in Australia. 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. Nonresidents may withdraw their balances without restriction.

Imports and Import Payments

Most goods may be imported without import licenses, and no restrictions are imposed on payments for imports. Import restrictions, including quotas, 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.

There is provision in the Customs Tariff Antidumping Act 1975 for action to be taken when dumped imports have caused, are causing, or are threatening material injury to Australian industries. Dumping duties may be imposed unless the exporters voluntarily raise their export prices to the level necessary to remove injury. During 1983 a total of 101 complaints of alleged dumping were received. A total of over 75 cases were completed during the year, of which 33 resulted in the imposition of dumping duties or the acceptance of price undertakings by the overseas exporter.

Payments for Invisibles

All remittances for invisibles require authorization but they are not restricted. Remittances to Vanuatu are subject to special tax-screening procedures. Applications for outward transfers in connection with current invisibles are normally dealt with immediately by banks. Forms do not have to be filled out for transactions up to $A 10,000. There is no prescribed limit on travel funds. Banks may approve for each person up to $A 10,000 for any journey, with applications for larger amounts to be referred to the Reserve Bank. Similarly, no specific limits are placed on remittances for family maintenance and gifts, but, for individual cases beyond $A 10,000, applications must be referred to the Reserve Bank.

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. There are no formalities covering the disposal of export proceeds.

Under the Customs (Prohibited Exports) Regulations, the export of certain minerals and metals, hydrocarbons, and nuclear sensitive material is prohibited unless permission to export is granted by the Minister for Trade or an authorized person. The regulations apply to certain raw or semiprocessed minerals, metals, fuels, and petroleum products. Among other things, export controls are used in necessary cases to ensure that (a) fair and reasonable world market prices are achieved, (b) adequate supplies are available for the domestic market, (c) international and strategic obligations are met, (d) the Government’s nuclear safeguards and physical protection requirements on exports are met, consistent with Australia’s international obligations in relation to uranium and nuclear materials, and (e) account is taken of environmental considerations. 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. With respect to rural commodities, the Government follows the general principle that exporters should be the main 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 and to meet market access limitations imposed by importing countries.

There are also 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 retained or sold for Australian dollars. Travelers may bring in any amount in foreign or domestic bank notes for travel expenditure.

Capital

There are no restrictions on transfers of capital (whether direct or portfolio) from Australia or repayments of overseas borrowings. Applications are readily approved. Borrowing agreements with residents of scheduled countries and territories3 require approval which is readily granted upon presentation of a tax clearance certificate. Borrowing agreements with residents of other countries do not require authorization.

Nonresidents, except foreign governments, government agencies, and foreign banks, including central banks, may deposit funds at interest and make other interest-bearing investments in Australia without formality. Investments by residents of scheduled countries are subject to tax clearance. Portfolio investment (other than interest-bearing investment) and direct investment in Australia by nonresidents are governed by the Government’s foreign investment policy. The Australian Government’s foreign investment policy is based on a recognition of the significant contribution that foreign capital can make to the development of Australia’s industries and resources and the scope it provides for higher rates of growth in economic activity and employment than would otherwise be the case. The Government’s policy is to encourage foreign investment provided such investment is consistent with Australia’s national interests and meets the needs of the Australian community. Australia’s foreign investment policy is concerned primarily with direct investment by foreign interests having significant implications for the levels of foreign ownership and foreign control of Australian industries and resources.

Certain types of proposals are subject to examination by the Foreign Investment Review Board (which is the advisory body to the Government on foreign investment proposals). Examinable proposals include those falling within the scope of the Foreign Takeovers Act, those involving the establishment of a new business or project (irrespective of size) in industries subject to special restrictions (finance, insurance, the media, civil aviation, uranium and activities relating to uranium), or in other sectors where the total amount of the investment is $A 5 million or more (including diversification into activities not previously undertaken directly in Australia and new projects in mining and other natural resource industries), those involving direct investments by foreign governments or their agencies (excluding investments related to their official representation), and those to acquire real estate and real estate development projects.

The Foreign Takeovers Act is concerned with the acquisition of companies or businesses operating in Australia by foreign interests. The Act requires nonresidents, nonresident-controlled corporations or businesses, and Australian companies in which nonresidents have a substantial shareholding to notify the Government of proposals to acquire, or alter, a substantial interest in a company. A substantial foreign interest is defined for the purposes of foreign investment policy as an interest of 15 percent or more in the ownership or voting power of a corporation or business by a single foreign interest either alone or together with associates, or an interest of 40 percent or more in aggregate in the ownership or voting power of a corporation or business by two or more foreign interests and their associates.

The foreign investment examination process centers on three broad requirements concerning economic benefits, the provision of opportunities for Australian participation, and specific Australian equity participation guidelines for certain sectors. Foreign investment proposals are examined on a case-by-case basis by the Government to ensure that they demonstrate economic benefits to Australia. The economic benefits are assessed in very broad terms covering such factors as more efficient use of resources, introduction of new technology, industry rationalization, and price-cost benefits. It is recognized, however, that these economic benefits have to be balanced against continuing community concern that the degree of foreign ownership and control should be kept within acceptable bounds. Government policy, therefore, seeks to ensure that genuine endeavors are made to provide opportunities for Australians to participate in the development of Australia’s industries and natural resources.

Specific equity guidelines (usually 50 percent Australian equity participation) are applied in respect of new natural resource development projects. Proposals for the establishment of new businesses or projects in the mining (other than uranium), agricultural, pastoral, fishing and forestry sectors involving a total investment of $A 5 million or more which are not contrary to the national interest are, as a general rule, only allowed to proceed if there is a minimum 50 percent Australian equity together with at least 50 percent of the voting strength on the board or controlling body of the project held by Australian interests.

Proposals to establish new businesses in the nonbank financial sector, to acquire rural properties, and to develop real estate area, in certain circumstances, are also subject to specific Australian equity participation requirements.

Requirements for Australian equity are, however, administered in a flexible manner; the extent of Australian participation being sought is made subject to the particular commercial and other circumstances of each case. In particular, there is a concern that the unavailability of sufficient Australian equity capital on reasonable commercial terms and conditions should not unduly delay the development of Australia’s resources and industries.

Foreign investment policy also provides an incentive for the “naturalization” of predominantly foreign-owned companies. This process is an entirely voluntary one for those companies which choose to increase the level of Australian participation in their Australian operations. Companies that elect to participate in these arrangements are entitled to certain benefits while they are naturalizing. They may be accorded prior credit for achieving majority Australian ownership, thereby facilitating their participation in certain new projects and ventures, subject to Australian equity participation guidelines.

In the administration of policy, every effort is made to avoid unnecessary interference in normal commercial processes. Although recognition is given to the special characteristics and circumstances that may arise in individual cases, the policy is strictly nondiscriminatory as to the country of origin of investors.

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 customs procedures.

Changes During 1983

Exchange Arrangement

March 8. The Australian dollar was devalued by 10 percent against its peg level on a trade-weighted basket of currencies, resulting in a middle rate of $A1 = US$0.8549, or a depreciation of 9.9 percent compared with the middle rate on the previous day.

October 28. It was announced that, beginning from October 31, the U.S. dollar rate determined each morning by the Reserve Bank on the basis of a trade-weighted basket would be used for indicative purposes only; the banks would be free to deal with customers at mutually negotiated rates, while end-of-day settlements with the Reserve Bank would be effected at a rate reflecting the trade-weighted index announced that morning and movements in exchange rates in international markets during the day. In addition, the Reserve Bank would cease to quote forward margins and would no longer require the banks to clear their net forward positions at the close of each day with the Reserve Bank.

December 9. It was announced that the practice of announcing an exchange rate based on a trade-weighted basket of currencies was being discontinued, and that from December 12, 1983, the exchange rate would be left free to be determined by market forces, although the Reserve Bank would retain discretionary power to intervene in the foreign exchange market.

Imports and Import Payments

January 1. A trade agreement for closer economic relations with New Zealand came into effect, providing for the elimination of tariffs of 5 percent or less, a phased reduction of other tariffs, the phased removal of quantitative restrictions on imports from New Zealand by 1995, and the phased removal of New Zealand’s performance-based export incentives with respect to goods shipped to Australia.

December 12. Restrictions on the timing of import payments were abolished.

Payments for Invisibles

December 12. Restrictions on the timing of invisible payments were abolished.

Exports and Export Proceeds

January 1. A trade agreement for closer economic relations with New Zealand came into effect, providing for the elimination of tariffs of 5 percent or less, a phased reduction of other tariffs, and the phased removal of quantitative restrictions on exports to New Zealand by 1995.

December 12. Restrictions on dealing with export receipts were abolished.

Nonresident Accounts

December 12. Financial institutions were permitted to offer accounts denominated in foreign currency.

Capital

December 12. Trading banks were authorized to approve applications for the repatriation of capital by nonresidents. The requirement to obtain approval for borrowing agreement with residents of nonscheduled countries was removed. Controls were lifted on interest-bearing investments by nonresidents, with the exception of governments, government agencies, and foreign banks, including central banks. In addition, except where residents of scheduled countries were involved, approval would no longer be required for the underwriting and subunderwriting of foreign issues by residents and for the issue of guarantees by residents in favor of nonresidents, or by nonresidents in favor of residents; in the case of the latter proposals, account would, however, be taken of the screening requirements of the Foreign Investment Review Board.

Austria

(Position on December 31, 1983)

Exchange Arrangement

The currency of Austria is the Austrian Schilling. Without assuming any formal obligations, 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, 1983 the authorized banks’ buying and selling rates for the U.S. dollar were S 19.291 and S 19.391, 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 member countries of the IMF or the OECD with which settlements take place in convertible currencies and 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 opened by Austrian credit institutions on behalf of nonresidents without any formality other than a check by the credit institution of the nonresident status of the beneficiary when the schilling funds are obtained from the selling of freely convertible foreign currencies at a domestic credit institution. Such accounts may be freely credited with proceeds from the sale of 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. Usually, 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.

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 from the countries of their trading partners. 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. Under the 1982 Customs Preference Act, which covers the second ten-year period of the Austrian Scheme of Generalized Preferences, special treatment is provided for imports from the 31 least developed countries as defined by the UN General Assembly; the list of products eligible for preferential treatment has also been extended under the Act.

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 countries other than members of the IMF and the OECD with which settlements are made in convertible currencies 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 barter 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 bank notes 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. In certain provinces, the acquisition of real estate is subject to the approval of the local authorities. 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 percent. 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.

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

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 also grant loans to nonresident relatives, provided that the lender draws on his own resources.

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, that is, 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.

Residents are allowed to purchase from nonresidents, without restriction, foreign securities issued in member countries of the IMF or OECD with which settlements take place in convertible currencies 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 percent.

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 specified member countries to export such coin up to a value of S 2,000 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 1983

Capital

January 1. A regulation came into effect, specifying that foreign currency credits to nonresidents by domestic banks during 1983 should not be more than 15 percent of the stock of such credits outstanding at the end of 1982.

Bahamas

(Position on December 31, 1983)

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 percent above the buying rate. The Central Bank of the Bahamas deals only with commercial banks. For transactions with the public, commercial banks are authorized to charge a commission of 0.50 percent buying and 0.75 percent selling, per US$1, and 0.50 percent buying or selling per £ stg. 1. These charges are additional to the Central Bank’s charges. A stamp tax of B$0.07 is applied to all outward remittances where the amount is B$30 or less. A further tax of B$0.07 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, 1983 the bid and offer rates reflecting this premium were 21 percent and 26 percent, 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 local expenses in the Bahamas and for nonresident investors. External Accounts in Bahamian dollars are normally funded entirely from foreign currency originating outside the Bahamas, but income on registered investments may also be credited to these accounts with the 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 0 to 200 percent, depending on the type of goods. Customs entries are subject to a stamp tax at a rate of 1½ percent.

Payments for Invisibles

There are no restrictions on current payments. Authorized dealers can 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 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 a week of issue or, if the traveler is still abroad, within one week 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 percent of their wages and salaries, but where commitments outside the Bahamas are larger than 50 percent of wages and salaries, additional amounts may be remitted.

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

Exports and Export Proceeds

Export licenses are not required except for crawfish, conch, and arms and ammunition. The proceeds of exports must be offered for sale to an authorized dealer as soon as the goods have reached their destination or within six months of shipment; alternatively, export proceeds may be used in any manner acceptable to the Central Bank.

Proceeds from Invisibles

Residents are obliged to collect without delay all amounts due to them from nonresidents and to offer the foreign currency proceeds for sale to an authorized dealer without delay, but these requirements are seldom enforced. There are no restrictions on the import of foreign bank notes. The import of domestic bank notes 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 percent of the total cost of the investment, whichever is greater, for investments from which the additional benefits expected to accrue to the balance of payments from export receipts, profits, or other earnings within 18 months of the investment will at least equal the total amount of investment and will continue thereafter. Investments abroad that do not meet the above criteria may be financed by foreign currency borrowed on suitable terms subject to individual approval 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. Special procedures apply to investments in the form of purchase of real property, as specified under the Immovable Property (Acquisition by Foreign Persons) Act, 1981, which came into effect on November 1, 1983: foreigners intending to purchase land must make application to the Foreign Investments Board, a group of seven designated ministers of the Government. If such application is approved, payment for the purchase may be made either in Bahamian dollars from an External Account or in foreign currency.

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. When the total value of their Bahamian dollar assets is over B$25,000, the excess is transferable through the official exchange market after four years, or through the investment currency market at any time. 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. When 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), which 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 32.5 percent is imposed on imports of gold jewelry from all sources. A 1.5 percent stamp tax payable to the customs is also payable on commercial shipments of gold jewelry from any source. There is no restriction on the acquisition or retention by residents of gold coin. The Bahamas has issued commemorative coins in denominations of B$10, B$20, B$50, B$100, B$150, B$200, B$250, B$ 1,000, and B$2,500 in gold, and B$10 and B$25 in silver; these are legal tender but do not circulate.

Changes During 1983

Gold

June 16. In commemoration of the tenth anniversary of independence, the following coins were issued: B$50, B$100, B$2,500 in gold (proof), and a B$10 silver (proof), and a B$5 silver coin as part of a set of nine coins; in addition, a B$10 silver coin was issued to commemorate the thirtieth anniversary of the coronation of Queen Elizabeth II.

June 23. A B$1,000 gold coin was issued in honor of the Americas Cup Challenge Victory Syndicate.

Bahrain

(Position on December 31, 1983)

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 percent of the fixed relationship between the Bahrain dinar and the SDR; in practice, the Bahrain dinar maintains a relatively stable relationship with the U.S. dollar, 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, 1983 the Agency’s buying and selling rates for the U.S. dollar were BD 0.375 and BD 0.377, 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 are blacklisted by the League of Arab States. 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 bank notes.

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. The Ministry of Commerce and Agriculture operates a center for the dissemination of information on the stock exchange.

Gold

Residents may freely purchase, hold, and sell gold in any form, at home or abroad. Imports and exports of gold in any form are freely permitted and do not require a license. Imports of gold jewelry are subject to a 10 percent customs duty but gold ingots are exempt. Brokerage business in gold (as well as other commodities) requires approval from the Bahrain Monetary Agency before registering with the Ministry of Commerce and Agriculture; such business is subject to a minimum deposit requirement equivalent in the case of gold to BD 3,000 or 10 percent of the contract value, whichever is higher.

Changes During 1983

Imports and Import Payments

February 7. Import duties on alcoholic beverages were raised from 70 percent to 100 percent.

February 15. Import duties on automobiles were raised from 10 percent to 20 percent.

March 1. In line with the agreement among member countries of the Gulf Cooperation Council (GCC), internal taxes on locally produced goods were abolished, provided that the import content of such goods was at least 40 percent.

September 1. As a first step toward a common market arrangement, the six member countries of the GCC, of which Bahrain is a member, introduced a uniform minimum and maximum import tariff of 4 percent and 20 percent, respectively, with the exception of alcoholic beverages and tobacco products. In addition, import duties on certain durable goods were raised from 5 percent to 10 percent.

Capital

January 15. The Bahrain Monetary Agency reduced by 1 percentage point the maximum rate payable on deposits denominated in Bahrain dinars, and an increase of 0.5 percent over the new deposit rate was introduced for certificates of deposit denominated in Bahrain dinars and having a maturity of up to one year.

August 14. A center for the dissemination of information on the stock exchange was established by the Ministry of Commerce and Agriculture.

Bangladesh

(Position on December 31, 1983)

Exchange Arrangement1

The currency of Bangladesh is the Bangladesh Taka. The value of the taka in terms of the U.S. dollar, the intervention currency, is determined on the basis of a weighted basket of currencies. Changes in the exchange rate for the U.S. dollar are generally made when fluctuations in the exchange rates between the U.S. dollar and the currencies in the basket exceed 1 percent in either direction. On December 31, 1983 the official (spot) middle rate of the taka in terms of the U.S. dollar was Tk 25.0 = US$1.1 On December 31, 1983 the spot buying and selling rates of the Bangladesh Bank (the central bank) for authorized dealers were Tk 24.97 and Tk 25.03, respectively, per US$1. On the same date the spot buying and selling rates (telegraphic transfers) of authorized dealers were Tk 24.9387 and Tk 25.0613, respectively, per US$1. Exchange rates for currencies other than the U.S. dollar are based on the U.S. dollar closing rates in New York for the currencies concerned. A different effective exchange rate arises through the operation of the Wage Earners’ Scheme and the Export Performance Licensing Scheme. Under the former scheme, exchange earnings remitted by workers abroad are auctioned or sold by the wage earners or their representatives to their eligible users on a bilateral basis at negotiated rates; foreign exchange purchased under this scheme may be used for specified imports, expenditure on foreign travel, and other approved purposes. Under the Export Performance Licensing Scheme, exporters of nontraditional products receive freely negotiable import entitlement certificates that may be used for the same purposes; and certificates may also be sold in the secondary exchange markets. On December 30, 1983 the exchange rate in the secondary market was Tk 27.40 per US$1 buying, and Tk 39.12 = US$1 selling.

Forward transactions of the Bangladesh Bank are confined to purchases and sales of deutsche mark, French francs, Japanese yen, pounds sterling, and U.S. dollars. Forward facilities at authorized banks covering periods of up to six months are available in all approved foreign currencies for export proceeds and for import payments. Forward exchange facilities for three months are available for remittances of surplus collection of foreign shipping companies and foreign airlines. 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,2 as well as the Asian Monetary Unit (AMU);3 it also sells these currencies for spot delivery.

Upon payment of an annual premium of 2.5 percent, the exchange risk on public or private foreign currency loans that will be fully or partly disbursed by June 30, 1988 may be given forward exchange cover by the Bangladesh Bank under the Exchange Rate Fluctuation Burden Absorption Scheme. The full amount of the exchange risk may be covered in respect of loans disbursed after July 1, 1983, but the scheme applies to only a specified proportion of loans fully disbursed prior to that date.

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 ten domestic commercial banks (of which six are nationalized), together with two joint-venture banks and three specialized financial institutions, have been appointed authorized dealers (authorized banks) in foreign exchange. The Chief Controller of Imports and Exports of the Ministry of Industry and Commerce (Commerce 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 commodity exchange agreements4 normally must be effected through nonconvertible U.S. dollar or pound sterling accounts for goods and services specified in the agreements; settlement with these countries can be made in convertible currencies for goods and services not 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.5 Settlements with other countries normally take place in sterling and other convertible currencies, and in few cases, 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 country concerned; (2) in the currency of the country concerned; or (3) in any freely convertible currency. Export proceeds must be received in freely convertible foreign exchange or in taka from a Nonresident Taka Account. All settlements with Israel 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 a permanent resident.6 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.

Convertible Taka Accounts. 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 the proceeds of inward remittances in convertible foreign exchange and may be debited freely and at any time for local disbursements in taka, as well as for remittances abroad in convertible currencies. Transfers between Convertible Taka Accounts are freely permitted. Foreign missions and embassies may open interest-bearing accounts, but the interest earned thereon can be disbursed only in local currency.

Wage Earners’ Scheme. 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 and postal channels; (2) proceeds of convertible currencies (currency notes, traveler’s checks, drafts, etc.) brought into Bangladesh by the account holders, provided they were declared to the customs upon arrival in Bangladesh; (3) transfers from other Foreign Currency Accounts opened under the Wage Earners’ Scheme; and (4) transfers from nonresident foreign currency deposit accounts. 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 US$200 a year for travel by air to Burma, India, Nepal, Pakistan, and Sri Lanka, up to the equivalent of US$600 a trip for travel to other countries (for a maximum of three trips in one year), and up to US$150 a year for overland travel to India.

Nonresident Foreign Currency Deposit Accounts. Bangladesh nationals and persons of Bangladesh origin may also open Nonresident Foreign Currency Deposit Accounts, denominated in pounds sterling or U.S. dollars. These accounts, which range in term from one month to one year, may be credited, in initial minimum amounts of US$1,000 or £ stg. 500, with (1) remittances in convertible currencies and (2) transfers from existing Foreign Currency Accounts maintained under the Wage Earners’ Scheme. The banks pay interest on balances in these accounts at rates prevailing in the local money market for taka deposits. The balance, including interest earned, may be transferred in foreign exchange by the account holder to his country of residence or anywhere he chooses; the account holder, if he is not otherwise ineligible under the Wage Earners’ Scheme, may also transfer the balance to any Foreign Currency Account maintained under the Wage Earners’ Scheme. The balances in the accounts, which are freely convertible into taka at the official rate, must be reported monthly to the Bangladesh Bank and the accounts must be closed within six months or on maturity of the deposit, whichever is later, upon the taking up of permanent residence by the account holder in Bangladesh.

Imports and Import Payments

Imports are financed either from Bangladesh’s own resources or with foreign aid, loans, and barter arrangements. Imports other than foodgrains, fertilizers, and items financed by project aid are licensed within the framework of an annual import policy (import budget). Under the Import Policy Order for the fiscal year 1983/84 (July to June), items that may be imported were classified into four broad categories: (1) goods imported by “commercial importers”; (2) items imported by the TCB; (3) items which are exclusively importable under the Wage Earners’ Scheme, or the Export Performance Licensing Scheme; and (4) industrial raw and packing materials imported by different industrial sectors. The Import Policy Order prohibits or restricts imports of factory rejects, goods of substandard quality, used items, and materials inimical to public order or religious beliefs.

Import licenses are required by industrial consumers for the importation of raw materials, packing materials, spare parts, capital machinery, and for importation under the Export Performance Licensing Scheme. Letter of credit authorization forms are required for the importation of commercial items, industrial raw and packaging materials and spare parts, machinery, accessories, and spares against specific allocations, goods and commodities imported by public sector importers, and items under the Export Performance Licensing Scheme. Importers intending to import goods under the Wage Earners’ Scheme are required to obtain an Import Registration Certificate for purposes of customs clearance. These documents are issued by a licensing office of the Chief Controller of Imports and Exports. Single country licenses or letter of credit authorization forms are issued for imports under bilateral trade or payments agreements and for imports under aid programs. Other import licenses and letter of credit authorization forms are valid worldwide, except that imports from Israel and South Africa and imports transported on the flag vessels of Taiwan, Israel, and South Africa are prohibited. For shipment of imports under cash and the Export Performance Licensing Scheme, the validity of licenses and letter of credit authorization forms are as follows: (1)11 months from the date of registration of a letter of credit authorization form for commercial items and industrial raw and packing materials; and (2) 17 months from the date of registration of letters of credit authorization form for the importation of capital machinery and spare parts. If these documents lapse for reasons beyond the control of the importer they may be revalidated by the licensing authority. Authorized dealers may, subsequent to the month of registration of the above documents, allow remittances within a period of 12 months for the importation of commercial items and industrial raw materials and packing materials and up to 18 months for the importation of capital machinery and spare parts. If the importers require further time to make remittances, then authorized dealers may allow such remittances only under the Wage Earners’ Scheme or, if applicable, against the surrender of licenses issued under the Export Performance Licensing Scheme, whichever the importer chooses. The validity period of licenses and letter of credit authorization forms issued for imports under aid, loans, and barter is announced from time to time.

Payment against imports is generally permissible only under cover of irrevocable letters of credit. Under the Wage Earners’ Scheme a provision exists for the importation of a large number of items against letters of credit opened on a deferred payments basis. The same provision is also available for the importation of all raw materials, spare parts, and consumer goods against import licenses and letter of credit authorization forms issued against the cash foreign exchange resources of the country or under the Export Performance Licensing Scheme. The deferred payment period is usually up to a maximum of 120 days, except for recognized organizations under the specialized hosiery unit in the textile industry, operating under a warehouse system in which the deferred payment period may be up to 180 days. The opening of import letters of credit is subject to margin requirements ranging from a minimum of 5 percent to a maximum of 25 percent for industrial and commercial imports by the private sector; similar margin requirements also apply to opening letters of credit for imports of crude degummed soybean oil by the vegetable oil refineries in the private sector. The minimum requirement for imports of other specified items by commercial importers is 25 percent. Imports of books and periodicals up to specified limits are permissible on a consignment basis. Public sector importers, however, may import on a cash-against-documents basis.

The licensing of imports of specified raw materials and packing materials by industrial consumers is, subject to the availability of funds, 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. The entitlement system does not apply, however, to raw materials and packing materials that are imported under either the Wage Earners’ Scheme or the Export Performance Licensing Scheme. 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 the Export Performance Licensing Scheme all registered exporters (other than those of jute, jute goods excluding carpets, and loose tea) are entitled to apply to Bangladesh Bank for issuance of Import Entitlement Certificates. These certificates, which are freely negotiable and have a validity period of six months, may be converted into import licenses for the importation of goods eligible under the system. The entitlements are 80 percent and 60 percent of the f.o.b. value of exports, depending on the domestic value added in the export product. Any new product entering the export market will automatically be granted a 40 percent entitlement rate pending determination of the actual percentage of entitlement.

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. Applications for foreign exchange for business travel, medical treatment, and education abroad are considered on an individual basis; as a rule, for business travel exporters with export earnings of Tk 2.5 million or more during the preceding year are entitled to 1 percent of the f.o.b. value of their exports, subject to a maximum US$10,000 a year; those with export earnings of less than Tk 2.5 million during the preceding year are entitled to an allowance of US$80 a day for a maximum of 30 days a year; for medical treatment the amount granted is US$1,000 at the official rate and up to US$3,000 at the rate under the Wage Earners’ Scheme. 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; such approval is usually granted for up to 50 percent 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 traveler’s 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 1,000 into convertible foreign currencies at the time of their exit. Resident travelers may take out foreign currency and traveler’s 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 and exports transported on the flag vessels of Taiwan 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 or in Nonresident Foreign Currency Deposit 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 traveler’s 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 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 1983

Exchange Arrangement

January 11. The exchange rate for the taka was changed to Tk 24.50 = US$1 (middle rate), and the intervention currency was changed from the pound sterling to the U.S. dollar. Exchange rates for currencies other than the U.S. dollar would be determined on the basis of closing rates in New York.

February 14. Exporters having contracts in pounds sterling without forward exchange cover during the period from August 24, 1982 to January 10, 1983 were given the option to receive payments at the predevaluation exchange rate for the pound sterling. (Subsequently the option was extended to cover contracts booked on January 11, 1983; and made applicable to exporters with forward exchange cover.)

March 17. Forward cover facilities were extended to include short-term foreign currency loans of joint-venture firms with foreign participation and branches of foreign firms operating in Bangladesh.

May 9. Forward facilities of the Bangladesh Bank were extended to include sales of deutsche mark and Japanese yen.

May 23. The maximum period for forward exchange coverage for imports under loans, credits, and grants was changed to six months, or one month from the date of shipment, whichever was earlier.

July 1. The Exchange Rate Fluctuation Burden Absorption Scheme was instituted to enable public and private sector borrowers, on payment of an annual premium of 2.5 percent, to cover themselves against exchange risk on loans denominated in foreign currency. The scheme was applicable to all foreign currency loans fully or partly disbursed by June 30, 1988, as well as to a specified proportion of loans fully disbursed prior to July 1, 1983. The exchange risk on loan repayments overdue by June 30, 1983 could, under specified conditions, be covered under the scheme in the form of preferential shares or debentures issued by borrowers in favor of the relevant lending institution. (The scheme was scheduled to become operational early in 1984.)

August 28. The exchange rate for the taka was changed to Tk 24.55 = US$1.

September 23. The exchange rate for the taka was changed from Tk 24.55 = US$1 to Tk 24.75 = US$1.

October 12. The exchange rate for the taka was changed from Tk 24.75 = US$1 to Tk 25.0 = US$1.

December 19. The Bangladesh Bank initiated spot and forward transactions in French francs.

Prescription of Currency

March 4. The twelfth barter protocol between Bangladesh and the U.S.S.R. entered into force.

Imports and Import Payments

June 22. The minimum margin requirement for the opening of letters of credit for imports of machinery and industrial raw materials was reduced from 10 percent to 5 percent of the value of the import.

Payments for Invisibles

January 16. Under the Wage Earners’ Scheme, authorization was granted for Bangladesh nationals traveling by air to purchase up to US$200 a calendar year for visits to Burma, India, Nepal, Pakistan, and Sri Lanka, and up to US$600 for each visit to other countries, subject to a maximum of three trips a year.

May 19. Authorization was granted to Bangladesh nationals traveling abroad by land to purchase up to US$150 a year for visits to India.

Capital

March 17. Permission was granted for authorized dealers to grant loans and advances in domestic currency to manufacturing companies incorporated in Bangladesh with foreign equity participation at a liberalized scale, subject to observance of the local borrowing entitlement of the respective companies.

Barbados

(Position on December 31, 1983)

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, 1983 the official buying and selling rates for the U.S. dollar were BDS$1.9975 and BDS$2.0300, 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 percent buying and 1.6250 percent selling. On December 31, 1983 the buying and selling rates of the Central Bank of Barbados for the Canadian dollar were BDS$1.6036 and BDS$1.6327, respectively, per Can$l; those for the deutsche mark were BDS$0.7317 and BDS$0.7451, respectively, per DM 1; and those for sterling were BDS$2.8900 and BDS$2.9426, 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 percent) 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. Purchases of foreign exchange for private sector remittances abroad (except for remittances for payment of imports, travel allowances, education, and nontrade payments up to BDS$500 and certain other specified items) are subject to a levy collected in the approval process by the Central Bank at the rate of 1 percent of the value of the transaction.

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 traveler’s 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. Imports of automobiles were not subject to a value quota during 1983, whereas in 1982 they were subject to a quota of US$12 million. Import quotas on passenger cars and small commercial vehicles were eliminated in January, 1983. 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, blue jeans, 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; payments for imports of crude oil and derivatives are subject to the prior approval of the Central Bank. 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 appears to be involved. The cost of transportation to any destination may be settled in domestic currency and is not deducted from the travel allocation.

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. Exports of sugar to the United Kingdom and the United States are subject to bilateral export quotas, as are exports of rum to the European Community.

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. Residents 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 percent a year; for the five years immediately preceding the last five years at 5 percent; and for any period preceding the last ten years at 4 percent. Amounts in excess of the sum so derived are restricted to the remittance of BDS$24,000 a year.

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

Gold

Gold coins with face values of BDS$100, BDS$150, 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 1983

Imports and Import Payments

January 1. Import quotas on passenger cars and small commercial vehicles were abolished.

May 5. A ban was placed on imports of blue jeans from outside the Caricom.

July 17. The following items were placed on the list of goods requiring import licenses: chocolate and food preparations containing cocoa, ratchet knives, spring-loaded knives including flick knives, sewing machines and parts thereof, furniture especially designed for sewing machines, television receivers including receivers incorporating sound receivers and reproducers.

July 17. An item designated as prepared or preserved fish (excluding salmon) was removed from the list of items requiring an import license.

Payments for Invisibles

June 1. Fees levied on foreign exchange applications for current invisible transactions were revised to a flat rate of 1 percent.

Belgium and Luxembourg

(Position on December 31, 1983)

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 percent (in the case of the Italian lira, 6 percent) 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, 1983 these rates were as follows:

Specified Intervention Rates Per:Belgian Francs or Luxembourg Francs
Upper limitLower limit
100 Danish kroner564.1000539.300
100 French francs668.0000638.600
100 deutsche mark2,048.35001,958.500
1 Irish pound63.281060.4965
1,000 Italian lire33.970030.1300
100 Netherlands guilders1,818.00001,738.0000

The participants in the EMS do not maintain 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. 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. Authorized banks may sell on the official market currencies acquired on the free market.

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, 1983 the buying and selling rates for the U.S. dollar in the official market were BF 55.55 and BF 55.73, respectively, per US$1.

In the free exchange market, all currencies (including domestic and foreign bank notes) may be bought and sold at freely fluctuating rates. On December 31, 1983 the free market rates between banks for the U.S. dollar were BF 56.50 buying and BF 56.60 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. Banks in Luxembourg may not accept deposits in Luxembourg francs from nonresidents in Luxembourg or term deposits in excess of Lux F 1 million for 12 months or less from residents in Luxembourg.

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. Bank supervision in Belgium is exercised by the Bank Commission, and in Luxembourg by the Luxembourg Monetary Institute.

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, administrative expenses of sales agencies, and sharing in administrative expenses of central offices by branches and affiliates. List B covers settlements of travel agencies, salaries, pensions, fees, subscriptions, taxes, and public administration payments. It also includes family support payments by emigrant workers of foreign nationality. List C covers (1) income on securities, loans, etc., rents, and operating profits; and (2) repatriation of certain foreign long-term investments. List D covers gifts, life insurance payments, family maintenance payments, capital investments, liquidation of long-term investments and transfers by emigrants of foreign nationality, 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 bank notes. 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*
DBilateralAnyFree or OfficialBilateral 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 bank notes and proceeds from the sale in the free market of foreign bank notes, 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 and steel products, certain agricultural products and foodstuffs, coal and petroleum products, diamonds, and weapons. All other commodities are free of license; 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 acquired until the import payment is due. Exchange control approval is required for payments for imports more than three months before or six months after the date of customs clearance; prior examination of supporting documents by the IBLC is required for payments exceeding BF 25 million and for payments made more than 30 days before the date of customs clearance. However, in the latter case, prior examination is not required if payment takes place either under a documentary credit or on a documentary collection basis, provided that documents are submitted to the authorized bank showing that the goods have already been shipped to the BLEU. Payments for transit transactions must be made not later than three months from the date of any advance payment collected from the foreign buyer, and may not be made earlier than three months before the date on which such payment is expected to be received.

Payments for Invisibles

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

Exports and Export Proceeds

Individual licenses are required for exports of specified commodities to all countries outside the BLEU, such as weapons, strategic products, and agricultural products. Individual licenses are also required for steel products exported to the United States.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 must be presented to an authorized bank.

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 Regulated 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. A holder of a Regulated Account is required to use holdings in these accounts by priority whenever an authorized payment through the official exchange market is made. The IBLC may order the holder to sell part or all of the holdings in the official exchange market, to abstain temporarily from making new deposits, and to surrender to the Treasury all gains from exchange rate appreciation. 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 Regulated Resident Account in Foreign Currency with an authorized bank if they are to be used later for authorized current payments. A holder of a Regulated Account is required to use holdings in these accounts by priority whenever an authorized payment through the official exchange market is made. The IBLC may order the holder to sell part or all of the holdings in the official market, to abstain temporarily from making new deposits, and to surrender to the Treasury all gains from exchange rate appreciation. 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 bank notes. Foreign and domestic bank notes 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 bank notes. 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, 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 coins 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 in coins or bars with convertible area countries may be made only through the free market, through Financial Accounts in Belgian or Luxembourg francs, or in domestic or foreign bank notes. Imports and transactions in monetary gold are subject to a value-added tax in Belgium at a rate of 1 percent. Licenses are required for imports of semiprocessed gold. Imports of gold for industrial, artistic, or medical use may be paid through the official market.

Changes During 1983

Exchange Arrangement

March 14. With effect from March 18, 1984 the authorization for major commercial banks to keep long positions in spot foreign currency on the official market in excess of the ceiling of BF 20 million generally applied to all banks was withdrawn.

March 21. As part of the general realignment of the EMS currencies, the bilateral central rates and the intervention rates of the Belgian and Luxembourg francs were depreciated against the Netherlands guilder, the Danish krone, and the deutsche mark, and appreciated against the Italian lira, the French franc, and the Irish pound.

May 26. In a modification of the regulations on the operation of the dual exchange rate arrangement, the Belgium-Luxembourg Exchange Institute (IBLC) granted authorization for the banks to sell on the official market currencies acquired on the free market, thus permitting capital inflows to supply indirectly the official market.

June 1. The Luxembourg Monetary Institute formally commenced operations.

Resident Accounts

March 14. As a means of countering pressures on the exchange rate, the IBLC introduced a regulation that foreign currency export receipts could no longer be deposited in regulated resident accounts in foreign currency, but should be sold immediately on the official market; existing foreign exchange assets on such accounts were required to be either used up or converted on the official market by April 15, 1983. (Following the easing of exchange rate pressures in connection with the EMS realignment of March 21, the IBLC withdrew this regulation on April 5, 1983.)

Nonresident Accounts

March 14. From March 14 to March 22, a penalty rate of interest, payable to the IBLC, was charged for overdrafts on nonresidents’ convertible franc accounts of banks, with the exception of those for developing countries.

Imports

August 23. Within the EC context, a regulation was introduced setting provisional quantitative limits for 1983 in respect of imports into the Benelux countries of specified types of textile products originating in the People’s Republic of China.

Belize

(Position on December 31, 1983)

Exchange Arrangement

The currency of Belize is the Belize Dollar, which is pegged to the U.S. dollar, the intervention currency, at a rate of BZ$1 = US$0.50. The buying and selling rates for transactions between the Central Bank and the commercial banks are BZ$1.9937 and BZ$2.0063 per US$1, respectively. On December 31, 1983 the buying and selling rates in transactions between the banks and members of the public were BZ$1.9825 and BZ$2.0175 per US$1, respectively. The Central Bank quotes daily rates for the pound sterling and the Canadian dollar.

Belize accepted the obligations of Article VIII, Sections 2, 3, and 4 of the Fund’s Agreement on June 14, 1983.

Administration of Control

The Central Bank 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 Central Bank. However, all applications for foreign exchange processed by authorized dealers are regularly forwarded to the Central Bank 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 currencies1 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 Central Bank is needed for banks to open external or foreign currency accounts. The Central Bank may direct also that sums to be credited or paid to foreign residents be credited to a blocked account.

Import and Import Payments

Payments for imports require authorization by the Central Bank; in most cases such authorization is delegated to the commercial banks. For reasons of health, standardization, and protection of domestic industries, import licenses from the Ministry of 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 percent of the c.i.f. value.

Payment 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 BZ$ 1,500 a person a calendar year; (b) business travel by residents, BZ$200 a day a person, up to BZ$6,000 a year; (c) business or nonbusiness travel by nonresidents, BZ$500 a person a year, except where payment is made from an external account or from proceeds of foreign currency; (d) educational allowance, BZ$500 a course a year; and (e) gifts, BZ$100 a donor. Requests in excess of these amounts are referred to the Central Bank; all bona fide requests are granted.

Exports of foreign and domestic bank notes and currency are subject to limits as follows: each traveler may carry domestic bank notes up to BZ$100 and the equivalent of BZ$400 in foreign currency, except that a visitor may take out such notes up to the amount imported. Amounts beyond these limits require approval of the Central Bank, 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 Central Bank. A small number of items2 are subject to an ad valorem export duty of between 2 percent and 5 percent. Re-exports and transshipments are subject to a 2 percent 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 BZ$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 Central Bank but control is liberally administered.

Gold

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

Changes During 1983

June 14. Belize notified the Fund that it accepted the obligations of Article VIII, Sections 2, 3, and 4 of the Fund’s Agreement as of this date.

Benin

(Position on December 31, 1983)

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 Monetary and Banking Affairs in the Ministry of Finance, in conjunction with 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, in collaboration with the BCEAO. 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 nonresident accounts of CFA bank notes, French bank notes, or bank notes issued by any other institute of issue that maintains an Operations Account with the French Treasury is not permitted, except for BCEAO bank notes 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 bank notes 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 nonliberalized commodities originating in OECD countries, all imports originating in Japan, and all imports originating in non-OECD countries are subject to licensing; they are admitted in accordance with an annual import program. Under this program, a global quota is established for imports from all countries outside the 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 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 bank notes, French bank notes, and bank notes issued by other Operations Account countries. Residents traveling to countries of the French Franc Area may take out any amount in BCEAO bank notes, 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 bank notes 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 bank notes, French bank notes, or bank notes issued by the Operations Account countries; a maximum amount equivalent to CFAF 25,000 in foreign bank notes; and any amount in other foreign means of payment (traveler’s checks, etc.) established abroad and in their name.

Exports and Export Proceeds

All exports to South Africa 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 bank notes 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 bank notes and coin (except gold coin) of countries outside the French Franc Area; residents bringing in foreign bank notes and foreign currency traveler’s 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 are prohibited. Capital movements between Benin and France (as defined above), Monaco, and the Operations Account countries are free of exchange control; most capital transfers to all other countries require prior approval by the Ministry of Finance and are restricted, but capital receipts from such countries are permitted freely.

Special controls (additional to any exchange control requirements that may be applicable) are maintained over borrowing abroad, over inward foreign direct investment and all outward investment in foreign countries, and over the issuing, advertising, or offering for sale of foreign securities in Benin. Such operations require prior authorization by the Minister of Finance. Exempt from authorization, however, are operations in connection with (1) loans backed by a guarantee from the Beninese Government and (2) shares that are similar to or may be substituted for securities whose issuance or sale in Benin has already been authorized. With the exception of controls over foreign securities, these measures do not apply to France (as defined above), Monaco, member countries of the 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 percent 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 percent 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 Finance. The following are, however, exempt from this authorization: (1) loans constituting a direct investment, which are subject to prior declaration, as indicated above; (2) loans taken up by industrial firms to finance operations abroad, by international merchanting and export-import firms (approved by the Minister of Finance) to finance transit trade, or by any type of firm to finance imports and exports; (3) loans contracted by authorized banks; and (4) subject to certain conditions, loans other than those mentioned above, when the total amount outstanding of these loans, including the new borrowing, does not exceed CFAF 50 million for any one borrower. The repayment of loans not constituting a direct investment requires the special authorization of the Minister of Finance if the loan itself was subject to such approval, but is exempt if the loan was exempt from special authorization. Lending abroad is subject to prior authorization by the Minister of Finance.

The Investment Code (Law No. 82-005 of May 20, 1982) 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 public and mixed enterprises operating at the national and provincial levels 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 domestic and foreign private enterprises, is granted for a maximum exemption period of 5 years and provides, in addition to the benefits of Plan A, certain other tax privileges. Plan C is intended for very large enterprises wishing to conclude incorporation agreements with Benin and is granted for a period of up to 10 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 small and medium-sized domestic enterprises and cooperatives for up to 5 years. The method of application of the Investment Code is set out in Decree No. 28-254 of July 13, 1983.

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 1983

Imports and Import Payments

June 10. Interministerial Circular (arrêté) No. 46/ MC/MCTC/MF came into force, modifying certain regulations on foreign trade.

Exports and Export Payments

June 10. Interministerial Circular (arrêté) No. 46/ MC/MCTC/MF came into force, modifying certain regulations on foreign trade.

Capital

July 13. A law (Decree No. 28-254) on the application of the Investment Code came into force.

including those made through foreign companies that are directly or indirectly controlled by persons in Benin and those made by branches or subsidiaries abroad of companies in Benin.

Bhutan

(Position on December 31, 1983)

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 = Re 1. The rates for currencies other than the Indian rupee are determined daily on the basis of the prevailing quotations by the Reserve Bank of India for those currencies. 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, 1983 the buying and selling rates of the ngultrum for the U.S. dollar were Nu 10.39 and Nu 10.58 per US$1, respectively. There are no taxes or subsidies on foreign exchange transactions.

Administration of Control

The Ministry of Finance controls external transactions and provides foreign exchange for most current and capital transactions. The Royal Monetary Authority is in charge of implementation of the surrender requirements for proceeds from merchandise.

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

There are no export taxes or subsidies. Exports of antiques of Bhutanese origin are prohibited. Proceeds of exports in currencies other than the Indian rupee must be surrendered to the Royal Monetary Authority either directly or through the Bank of Bhutan.

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 Royal Monetary Authority.

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 1983

No significant changes occurred in the exchange and trade system.

Bolivia

(Position on December 31, 1983)

Exchange Arrangement1

The currency of Bolivia is the Bolivian Peso. The official buying rate is $b 500.00 per US$1. Sales of foreign exchange are subject to a central bank handling charge of 0.15 percent, or $b 0.75, and a National Treasury tax of 1.8 percent, or $b 9.00. Thus, the Central Bank sells foreign exchange to the public sector as well as to commercial banks and exchange houses at $b 509.75 per US$1. A banking commission of $b 0.45 is charged for sales to the public, bringing the effective selling rate of authorized commercial banks and exchange houses to $b 510.20 per US$1. Banks, exchange houses, hotels, and travel agencies are allowed to purchase foreign exchange at the official rate from sources such as the tourist industry for surrender to the Central Bank during the first hour of the business day following the transaction. 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.

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

All receipts and expenditure of foreign exchange are subject to state control. They are regulated by the Ministry of Finance and the Exchange Policy Board which is chaired by a representative of the Ministry of Finance and includes in addition representatives of the Ministry of Planning and Coordination, the Ministry of Industry, Commerce, and Tourism, the Confederation of Private Entrepreneurs, and the Confederation of Labor Unions. The Exchange Policy Board is responsible for approving or rejecting all applications for the purchase of currency for import purposes, in accordance with the Government’s general guidelines, rules, and priorities. The Board also enforces, supervises, and evaluates the mandatory surrender of exchange from all exports of goods and services. The Board is also responsible for the publication, in the official gazette, of the lists of individuals and entities to which foreign exchange has been allocated. All applications for the purchase of foreign exchange for import purposes must be submitted to the Central Bank of Bolivia through the banks. The Secretariat of the Exchange Policy Board then considers applications in accordance with the applicable rules and forwards them for approval or rejection to the Exchange Policy Board. All public sector institutions must present an annual foreign exchange budget to the Ministry of Finance before applications for the purchase of foreign exchange can be approved by the Board. Exchange allocations approved by the Board are administered by the Central Bank.

Prescription of Currency

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

Imports and Import Payments

All public sector imports and all private sector imports involving use of official foreign exchange are subject to prior authorization by the Exchange Policy Board. Imports by public sector agencies require in addition authorization by the Ministry of Finance. The Ministry of Health is authorized to draw up regulations governing the allocation of foreign exchange for the import of medical supplies. Import applications by public sector agencies must be consistent with the official foreign exchange budget. Private sector imports of non-prohibited items financed by importers with their own foreign exchange do not require authorization by the Exchange Policy Board and may be approved by the Central Bank. Importation of some 600 products, which are considered nonessential or produced domestically, is temporarily prohibited unless such items are covered by the agreements signed between Bolivia and the Latin American Integration Association. All imports in excess of US$5,000 (US$15,000 in the case of mining companies) must be covered by letters of credit drawn on foreign banks.

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 5 percent ad valorem. Most imports also are subject to a tax on services rendered of 2 percent.

Payments for Invisibles

Private banks require prior authorization from the Central Bank for selling foreign exchange to finance import of invisibles. Foreign exchange for purposes of foreign travel, students’ subsistence, and health treatment abroad is allocated by the government-owned state bank as delegated by the Ministry of Finance through the Exchange Policy Board and administered by the Central Bank, in accordance with available foreign exchange assets and the standards and priorities determined by the Government. Residents of Bolivian or foreign nationality must present a certificate of tax settlement (certificado de solvencia tributaria) when leaving the country. The fee for the certificate is $b 500 for air travel to neighboring countries, $b 250 for overland travel to such countries, $b 1,000 for air travel to other Latin American countries, and $b 1,500 for air travel to countries outside Latin America. Outward remittances of profit are governed by the provisions of Decision Nos. 24 and 80 of the Cartagena Agreement.

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 at the official exchange rate within three days of receipt, with the exception of reasonable amounts deducted for foreign exchange expenditures undertaken to effect the export. As regards minerals, Comibol and the medium-sized mines export their own production, and the Mining Bank that of the small private mines. All exports of goods and services must be effected through documentary letters of credit drawn on domestic banks.

Proceeds from Invisibles

Banks, exchange houses, hotels, and travel agencies are required to surrender during the first hour of the business day following the transaction, and at the buying rate established by the Central Bank, all their foreign exchange purchases from invisible transactions, including those from tourism.

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 guarantees, are subject to prior authorization by the Ministry of Finance and to control by the Central Bank. All foreign borrowing by the private sector involving use of official foreign exchange for debt servicing requires prior approval by the Exchange Policy Board in cases of individual amounts not exceeding US$100,000, and by the Ministry of Finance for larger amounts. Under Supreme Decree No. 19732 of August 11, 1983 financial institutions in Bolivia may make loans in the form of credits denominated in foreign currency for imports of capital goods and inputs for the external sector with resources from international financial institutions, foreign government agencies, or external lines of credit.

Foreign investments in Bolivia, except those involving petroleum and mining, are governed by the provisions of the Investment Law (Decree-Law No. 18751) of December 14, 1981. 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 Decision 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.

Changes During 1983

Exchange Arrangement

November 21. The exchange rate of the Bolivian peso was changed from $b 196.0 (buying) and $b 200.0 (selling) per US$1 to $b 500.0 (buying) and $b 510.2 (selling) per US$1, representing a devaluation of 60.8 percent on a midpoint basis (Supreme Decree No. 19890). In addition, the 8 percent premium on purchases of foreign exchange from tourists was abolished.

Administration of Control

January 5. The Comisión de Política Cambiaria, or Exchange Policy Board (EPB), established a deadline of February 28, 1983 for all public institutions to present their annual exchange budgets to the Ministry of Finance. Private sector institutions could also submit their exchange budgets to the EPB on a voluntary basis within the same deadline, in which case their requests would receive preferential treatment.

March 30. The EPB was restructured in accordance with Supreme Decree No. 19501 by replacing the representative of the Comptroller General’s Office with a representative each from the Confederation of Private Entrepreneurs and the Confederation of Bolivian Labor Unions (the Central Obrera Boliviana). Other existing representatives on the Board (Ministry of Finance, Ministry of Planning and Coordination, Ministry of Industry, Commerce and Tourism, and the Central Bank) were retained, including its chairmanship, by a representative from the Ministry of Finance. In addition, a permanently functioning Operative Board (Comisión Operativa), chaired by the Director of Exchange Policy of the Ministry of Finance, was created to process and approve applications for foreign exchange; the Board included representatives from the same ministries as the EPB, as well as a representative from the Central Bank. Also, in the same decree, two departmental subcommittees (Cochabamba and Santa Cruz) were established to process minor exchange applications originating locally.

September 23. Supreme Decree No. 19800 was issued, assigning the regulation and administration of the foreign exchange regime to the Ministry of Finance through the EPB which was empowered to allocate foreign exchange for imports of goods and services, foreign debt servicing, travel, and other invisibles in accordance with norms and priorities determined by the Government. Exchange allocations determined by the EPB would be administered by the Central Bank.

September 23. All public sector institutions were required to present their exchange budgets to the Ministry of Finance by December 31 of each year (Supreme Decree No. 19800).

Imports and Import Payments

January 5. The Exchange Policy Board issued directives specifying that all approved exchange requests for imports would be valid for a period not exceeding six months and requiring imports to be shipped within three months from the date of exchange approval.

January 5. The EPB granted authorization for the Central Bank to approve requests for nonprohibited imports financed by the importer with own foreign exchange; in such cases, the importer was required to deposit the total amount at the Central Bank, which would in turn make the payment when due.

Payments for Invisibles

January 5. Permissible applications for foreign exchange by private individuals during a fiscal year were made subject to a limit equal to the disposable annual income in each case, defined as the larger of (a) taxable income in excess of the minimum legal salary, or (b) the average balances in deposits with financial institutions over the preceding 12 months.

January 5. Limits were imposed on purchases of foreign exchange for travel as follows: (a) US$500 for travel to neighboring countries; (b) US$800 to other Latin American countries; and (c) US$1,500 to Europe, the United States, and Japan. In addition, purchases of foreign exchange for medical treatment abroad were made subject in each case to a limit of US$1,500, with a provision for additional amounts in bona fide cases.

May 30. The EPB issued a regulation, specifying that only permanent residents would be allowed to pay for airline or other fares in local currency; with the exception of diplomatic missions and personnel of international organizations, all nonresidents would be required to pay for domestic and international air services in U.S. dollars which were accordingly permitted to be accepted by domestic and foreign airlines in payment for such services.

Exports and Export Proceeds

September 23. All exports of goods and services were required to be effected through documentary letters of credit drawn on domestic banks, and the latter were required to surrender the foreign exchange to the Central Bank within three days of receipt (Supreme Decree No. 19800).

Capital

September 23. Supreme Decrees Nos. 19799 and 197801 introduced the following changes in the regulations governing foreign indebtedness: (a) all public sector institutions were required to obtain prior approval, first from the Ministry of Finance, and then from the Central Bank, before entering into negotiations on any foreign financing or refinancing; (b) foreign borrowing for private sector institutions or private individuals, which would require official foreign exchange for debt servicing, was made subject to approval by the Exchange Policy Board in the case of individual amounts not exceeding US$100,000, and by the Ministry of Finance for larger amounts; (c) no restrictions would be applied on foreign borrowing which would be serviced directly by a private institution or individual with own foreign exchange; (d) loans from multilateral and bilateral international institutions and repayable in foreign currency could be lent and re-lent domestically either in the original currency, or on the basis of maintenance-of-value clauses; and (e) international insurance contracts could be drawn up in foreign currency, in which case the insurance companies would be required to open foreign currency accounts with the Central Bank for their operations and their technical reserves.

Botswana

(Position on December 31, 1983)

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, 1983 the official buying and selling rates for the U.S. dollar, the intervention currency, were P 1.1541 and P 1.1570, respectively, per US$1; on the same date, the middle rate for the SDR was P 1.2112 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 percent of eligible salary, whichever is greater. Separately, travelers may freely bring in any amount of domestic bank notes and coin and take out P 75 in such bank notes 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. Local borrowing by nonresident-controlled companies in Botswana is limited to (a) an initial maximum of P 100,000 without matching nonresident funds, and (b) full matching with inflows of external funds for amounts in excess of P 100,000.

Changes During 1983

No significant changes occurred in the exchange and trade system.

Brazil

(Position on December 31, 1983)

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.

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 bank notes and traveler’s 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, 1983 the buying and selling rates quoted by the monetary authorities to the public were Cr$979.00 and Cr$984.00, 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 of up to 316 of 1 percent on either side of the rates set by the monetary authorities.

On the buying side, other effective rates result from arrangements involving the collection of export levies in foreign exchange or at the point of exchange settlement at the banks. Such export taxes1 are imposed on a range of products, and tax credits are granted on indirect federal and state value-added taxes at a rate of 11 percent of f.o.b. value for exports of manufactured goods (certain manufactured exports to the United States and European Economic Community are subject to export taxes at rates equal to or larger than the tax credits). On the selling side, a different 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 mobiliarios) of 25 percent 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., the Banco do Nordeste do Brasil S.A., and the Banco Nacional de Credito Cooperativo 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; and a bank is allowed a bought 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 percent 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 (bank notes and traveler’s checks). The banks are permitted to sell foreign exchange to each other, and transfers between branches of the same bank are 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 two working days for spot transactions or not later than 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 of Foreign Capital Supervision and Registration (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 or declaraçoes 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 countries2 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). Settlements with countries with which Brazil has no payments agreements or special payments arrangements are made in U.S. dollars or other freely usable currencies.

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).

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, including 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 percent 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,3 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 groups of 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.4 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 10 percent 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 percent of the value of the exchange operation is applied, with some exceptions,5 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 Brazilian residents temporarily staying abroad for educational and health purposes. 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 without the prior approval of the Central Bank in respect of personal expenses connected with travel abroad are permitted up to US$500 a person 18 years old or older; for trips to or initial stopover in Central or South America, the amount is US$100. In both cases, US$100 (or its equivalent in other currencies) is provided in cash or traveler’s checks and any remainder in the form of payment orders. The basic allowances are one half of the preceding amounts for minors between the age of 2 and 18 years and no allowances are available for infants up to the age of 2 years. A special allowance of US$20,000 a year is available for the travel and representation expenses abroad of firms whose annual exports total at least US$200,000. Applications for purchases of foreign exchange for travel in excess of these limits must be submitted to the Central Bank, which considers each case on its merits.

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 percent, but remitters are eligible for a rebate of 40 percent on the tax paid.

Remittances of royalties by a branch or subsidiary established in Brazil to its head office abroad are not permitted when 50 percent 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 percent to 5 percent, 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.

Purchasers of foreign exchange for a number of current invisibles are subject to the financial transactions tax (IOF) of 25 percent.

Travelers may take out domestic and foreign bank notes freely.

Exports and Export Proceeds

Exports are free of licensing requirements but require an export certificate (guia de exportaçao or declaraçoes de exportaçao) 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 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 sales contract is based on a price 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 Treasury. The contribution quotas also are set periodically by the IBC and are fixed in terms of foreign currency; on December 31, 1983 they were US$99.50 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$1.26 a pound for spray-dried soluble coffee, and US$1.58 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 1983, the IBC continued to make periodic announcements of minimum registration prices, as well as contribution quotas for exports of soluble coffee and green, ground-roasted, and decaffeinated coffee, although not necessarily changing them.

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 prior to the shipment of goods or within ten working days after shipment. For a period scheduled to end on April 1, 1984 exporters of cocoa beans and cocoa products are required to surrender without compensation 10 percent of their exchange proceeds.6 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; on December 31, 1983, the credit amounted to 11 percent of the f.o.b. value of export. However, for a number of exports to the United States (primarily textiles, leatherwares, footwear, and certain steel products), export taxes of 11–19 percent are levied. For exports of ladies’ footwear to all destinations, a tax of 19 percent is levied. In 1983, export taxes at different rates were levied on a number of other products, irrespective of destination. Various financing programs 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. Traveler’s checks and foreign bank notes are sold in the manual market. Brazilian enterprises rendering services to tourists (e.g., hotels, restaurants, travel agencies) may receive income tax rebates in proportion to their earnings from tourism, provided that the service is paid for in foreign exchange and that the tourist enterprise converts the exchange into cruzeiros at the official rate.7 Travelers may bring in domestic and foreign currency notes freely.

Capital

Capital inflows in the form of financial loans under 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). Besides, prior approval by the Central Bank is required for borrowing by the private sector when the foreign funds originate from financial institutions abroad. 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 three months. The minimum participation in portfolio investment companies by foreign firms or individuals is US$1,000. Portfolio investments are exempted from the capital gains tax.

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, investment, and development banks and the Banco Nacional de Desenvolvimento Econômico e Social (BNDES) 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 risk can be mitigated for credits with maturities of 90–180 days through monetary correction fixed by the indexed government bonds (ORTNS). 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 percent 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 percent of the loan proceeds converted into cruzeiros and is released as follows: 20 percent after 150 days from the deposit date, 40 percent after 180 days, and the balance after 210 days.

In addition to these mandatory deposit regulations, on June 23, 1977 the Central Bank authorized voluntary deposits at the Central Bank by financial and nonfinancial institutions of the outstanding balances of their foreign loans with a provision that the operation could be reversed after 30 days. For as long as the deposit remains with the Central Bank, the Central Bank covers all costs on these loans, including the exchange cost. As part of the measures announced on December 7, 1979, these provisions were modified as follows: (1) voluntary deposits at the Central Bank in respect of nonfinancial loans (under Law No. 4131) were frozen for an indefinite period,8 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 120 days was established for the withdrawal of deposits made in the Central Bank under Resolution No. 63 and not withdrawn within 60 days from the deposit date; where the funds are for use in the rollover of loans to domestic enterprises, prior notice of 15 days is required.

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 1983 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 re-lent to the same or a second borrower.

Outward capital transfers not mentioned above require authorization by Decam and Firce, which consider applications on their merits. Approved exchange transactions involving outward transfers of private capital are effected through 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 percent, 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 1983

Exchange Arrangement

As part of the changes noted below, the cruzeiro was devalued on 54 occasions during 1983, from a middle rate of Cr$252.04 = US$1 at the end of 1982 to Cr$981.50 = US$1 at the end of 1983, representing a cumulative depreciation of 74.32 percent against the U.S. dollar, in terms of U.S. dollar units per unit of local currency.

February 21. The exchange rate of the cruzeiro was adjusted from Cr$291.95 = US$1 to Cr$379.00 = US$1 (representing a devaluation of 23 percent), and the magnitude of monthly devaluation was reduced from at least 1 percentage point above the domestic rate of inflation to at least the domestic rate of inflation. (In addition, export taxes ranging from 9 percent to 20 percent were levied on a wide range of mostly agricultural, livestock, and forestry products.) (Central Bank Resolution Nos. 799 and 800.)

March 11. The financial transactions tax of 25 percent was abolished for foreign exchange sales for travel and business representation expenses (Central Bank Resolution No. 807).

March 11. Imports of unworked coal and sodium carbonate were exempt from the financial transactions tax, and the tax rate was lowered from 25 percent to 15 percent for a list of specified imports, or 12 percent for such specified imports from LAIA member countries (Central Bank Resolution No. 808).

April 7. A new compilation of the regulations governing payment of the financial transactions tax was published, containing lists of items subject to reduced rates of 15 percent and 12 percent as well as exempt items.

May 25. The Central Bank was authorized to waive the collection of the financial transactions tax on imports of services required for exports of goods and services. Authorization was also given to Cacex to grant exemption from the financial transactions tax until June 30, 1984 for outward payments in respect of the renting or leasing of ships to catch tuna or shrimp for export. In addition, the financial transactions tax on payments for lead imports was reduced from 25 percent to 15 percent, or from 20 percent to 12 percent for such imports from LAIA member countries enjoying tariff concessions.

June 29. It was announced that the rate of depreciation of the cruzeiro would be made equal to that of the monetary correction, which in turn would be equal to the movement in the General Price Index-Domestic Supply (Central Bank Resolution No. 841).

December 28. It was announced that the financial transactions tax would be applied to foreign exchange sales for payment of crude oil imports at the following rates: 10 percent from January 16, 1984 to March 15, 1984, 15 percent from March 16, 1984 to June 15, 1984, and 25 percent thereafter (Central Bank Resolution No. 891).

Administration of Control

July 29. Foreign exchange surrender requirements and a related foreign exchange allocation system were established, and it was announced that from August 1, 1983 foreign exchange transfers abroad for the purpose of discharging payments obligations contracted on or from that date by authorized Brazilian commercial banks would be effected according to the terms and priorities prescribed by the Central Bank (Central Bank Resolution No. 851).

Imports and Import Payments

March 11. Imports of unworked coal and sodium carbonate were exempt from the financial transactions tax, and the tax rate was lowered from 25 percent to 15 percent for a list of specified imports, or 12 percent for such specified imports from LAIA member countries (Central Bank Resolution No. 808).

March 28. A facility called the “green-yellow drawback” was created, under which authorization was granted for trading companies to procure and sell raw materials and intermediate goods free of domestic taxes for transformation into exports within a specified maximum period. In addition, a technical commission (Cotex) was established to approve and monitor such operations.

April 13. A tariff exemption valid for six months was granted for the importation of 1 million tons of wheat (CPA Resolution No. 08-0448).

April 13. The import tariffs on beef leather and hides imported by the tanning or processing industries for their own use were suspended for one year (CPA Resolution No. 05-0443).

May 1. Brazil ceased to grant multilateral tariff concessions to Argentina, Chile, Mexico, Paraguay, and Uruguay, and announced that henceforth, tariff concessions would have to be negotiated bilaterally with these countries, as had been the practice since 1980 with the member countries of the Andean Group (Bolivia, Colombia, Ecuador, Peru, and Venezuela).

May 6. Imports of alumina by aluminum producers were exempted from customs duties for one year (CPA Resolution No. 05-0451).

May 13. Imports of specified minerals, including iron and steel alloys, copper, nickel, aluminum, lead, and zinc, were made subject to prior import control (Cacex Communication No. 49).

May 25. The Central Bank was authorized to waive the collection of the financial transactions tax on imports of services required for exports of goods and services. Authorization was also given to Cacex to grant exemption from the financial transactions tax until June 30, 1984 for outward payments in respect of the renting or leasing of ships to catch tuna or shrimp for export. In addition, the financial transactions tax on payments for lead imports was reduced from 25 percent to 15 percent, or from 20 percent to 12 percent for such imports from LAIA member countries enjoying staff concessions.

December 28. It was announced that the financial transactions tax would be applied to foreign exchange sales for payment of crude oil imports at the following rates: 10 percent from January 16, 1984 to March 15, 1984, 15 percent from March 16, 1984 to June 15, 1984, and 25 percent thereafter (Central Bank Resolution No. 891).

Payments for Invisibles

March 11. The basic foreign exchange allowance for tourist travel abroad was reduced from US$2,000 to US$1,000 a trip, with continued scope for central bank approval of additional amounts in bona fide cases. (The monthly limit of US$300 for personal remittances remained restricted to Brazilians temporarily resident abroad to pursue approved educational programs or for medical treatment.) In addition, the financial transactions tax of 25 percent was abolished for foreign exchange sales for travel and business representation expenses (Central Bank Resolution No. 807).

September 14. The basic foreign exchange allowance for tourist travel abroad was reduced from US$1,000 to US$500 a person a trip, with a reduction from US$300 to US$100 for travel to Latin America. (In addition, further exemptions from the financial transactions tax were announced, including those for specified financial operations of the Brazilian Development Bank.)

December 20. The supplementary tax on remittances of profits and dividends was modified to apply to all distributions of profits and dividends, whether remitted abroad or not, but reinvested profits were exempted from these provisions (Decree Law No. 2073).

December 28. A requirement was introduced that the cruzeiro value of that part of service payments for medium- and long-term external debt which was eligible for rescheduling by the Paris Club (i.e., 95 percent of principal and interest payments due) should be deposited in the Central Bank in special foreign currency denominated deposits (Central Bank Resolution No. 890).

Exports and Export Proceeds

January 1. The interest rates on export financing in foreign currency were lowered from a range of 8.5–10.0 percent to a range of 7.5-9.0 percent, depending on the type of product and period of financing.

January 6. The “contribution quota” for coffee exports was increased from US$50 to US$51.50 a 60.5 kilogram bag of green coffee; and it was announced that henceforth the contribution quota would be adjusted by 75 percent of the rate of depreciation of the cruzeiro, and would be calculated on the basis of the exchange rate in effect on the day of the exchange operation.

February 16. A regulation was introduced, specifying that for purposes of determining the tax base, commissions, price rebates, contractual penalties, and other cost elements for imports under specified conditions could be deducted from the f.o.b. value of certain exports to the United States; the unadjusted f.o.b. value would continue to be the tax base for all other taxable exports to the United States, for some of which higher tax rates were introduced (Central Bank Resolution No. 798).

February 21. Export taxes ranging from 9 percent to 20 percent were levied on a wide range of mostly agricultural, livestock, and forestry products (Central Bank Resolution Nos. 799 and 800).

March 4. The export tax on cocoa and cocoa products was lowered from 20 percent to 15 percent (Central Bank Resolution No. 801).

March 15. Export taxes on soybeans and soybean products were reduced from 20 percent to 5 percent until March 31, 1984, and were scheduled to be abolished on April 1, 1984 (Central Bank Resolution No. 809).

March 17. Export taxes were lowered from 20 percent to 10 percent for manganese ore and hematite, to 8 percent for itabirite, and eliminated for iron, alumina, and tungsten ore. The remaining tax on manganese ore and hematite, and itabirite was scheduled to be lowered by 1 percentage point a month from April 15, 1983 and to be eliminated in November 1983 and January 1984, respectively (Central Bank Resolution No. 810).

March 28. A facility called the “green-yellow drawback” was created, under which authorization was granted for trading companies to procure and sell raw materials and intermediate goods free of domestic taxes for transformation into exports within a specified maximum period. In addition, a technical commission (Cotex) was established to approve and monitor such operations.

March 30. The export tax on cocoa and related products was reduced from 15 percent to 13 percent for cocoa beans and to 10 percent for processed cocoa products, and the tax rates were scheduled to be lowered by 1 percentage point a month to reach 5 percent and 2 percent, respectively, at the end of November 1983, at which levels they would remain until their scheduled elimination after March 31, 1984 (Central Bank Resolution No. 811).

March 31. The tax of 14.41 percent on exports to the United States of prestressed concrete reinforcing wire was withdrawn, and a new tax of 13.42 percent was levied on exports to the United States of specified steel bars (Central Bank Resolution No. 812).

April 29. Exports of specified steel bars to the United States were made subject to a tax of 15.31 percent (Central Bank Resolution No. 819).

May 12. The export tax on maize was reduced from 20 percent to 5 percent for shipments effected during the period May 12, 1983 through March 31, 1984 and to zero percent thereafter (Central Bank Resolution No. 820).

May 16. Exports of maize were temporarily suspended, and it was announced that Cacex would in due course publish regulations on exportation of the exportable surplus estimated at 330,000 tons in 1983 (Cacex Communication No. 50).

May 25. The export tax on citrus fruit pulp was reduced from 10 percent to 5 percent for shipments effected between May 25, 1983 and March 31, 1984, and to zero percent from April 1, 1984 (Central Bank Resolution No. 821).

June 9. The export tax on orange juice concentrate was reduced from 20 percent to 16.49 percent for shipments registered from June 10, 1983 to April 30, 1985, with an additional tax of 3.51 percent for such exports to the United States. (On July 8, the basic tax was further reduced to 1 percent for shipments registered from July 11, 1983 to April 30, 1984.)

June 22. The export tax on tobacco was reduced from 20 percent to 5 percent for shipments registered between June 23, 1983 and March 31, 1984, and to zero percent for shipments registered from April 1, 1984 (Central Bank Resolution No. 840).

June 29. The export tax on cashew nuts was abolished with effect from June 30, 1983 (Central Bank Resolution No. 842).

December 1. It was announced that export taxes would be abolished or reduced on a range of specified goods in monthly steps terminating by April 1984 (Central Bank Resolution No. 866).

December 20. A regulation was introduced specifying that, with effect from January 1, 1984, taxes on exports of orange and tangerine juice, cattle beef hides, women’s footwear, and certain manufactured goods exported to the United States and the European Economic Community would be based on the f.o.b. value, and computation of the cruzeiro equivalent would be based on the official exchange rate on the day of shipment (Central Bank Resolution Nos. 877-880). Tax payments were required to be made within 15 or 45 days of shipment, depending upon the type of merchandise (Ministry of Finance Order No. 313). (In addition, the supplementary tax on remittances of profits and dividends was modified to apply to all distributions of profits and dividends to nonresidents, whether remitted abroad or not, but reinvested profits were exempted from these provisions.) (Decree Law No. 2073.)

December 27. It was announced that the “contribution quota” on cocoa would be replaced on April 1, 1984 by an export tax levied at the same rate as the contribution quota but based on the f.o.b. value of the export. Computation of the cruzeiro value of the tax would be based on the exchange rate in effect on the date of shipment of the merchandise (Central Bank Resolution No. 887).

Capital

January 11. Transactions in the form of leasing and sale-and-leaseback arrangements with a maturity of at least eight years and fulfilling certain specified conditions became eligible for a 20 percent income tax reduction, and outward remittances of the corresponding leasing fees were exempted from the financial transactions tax (Central Bank Resolution No. 788). In addition, the minimum period for which nonresident capital should be invested in Brazilian securities in order to be eligible for the fiscal benefits under Decree Law No. 1986 was lowered to three months (Central Bank Resolution No. 790).

January 13. The maximum amount of exchange transactions on Brazilian securities exchanges that may be effected without the intervention of authorized brokerage houses was raised from the equivalent of US$1,000 to the equivalent of US$20,000 (Central Bank Resolution No. 791).

December 28. A requirement was introduced that the cruzeiro value of that part of service payments for medium- and long-term external debt which was eligible for rescheduling by the Paris Club (i.e., 95 percent of principal and interest payments due) should be deposited in the Central Bank in special foreign currency denominated deposits (Central Bank Resolution No. 890).

Burma

(Position on December 31, 1983)

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 percent 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, 1983 the buying and selling rates for the U.S. dollar were K 8.2266 and K 8.3911, 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 rates for other currencies are based on appropriate cross rates in local markets (e.g., Bombay, for the Indian rupee). There are no taxes or subsidies on purchases or sales of foreign exchange.

Administration of Control

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

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 economic 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 percent 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. Individual licenses are required for the import, export, and transfer of securities involving nonresident interests.

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 1983

Imports and Import Payments

February 28. Forward sales of foreign exchange for imports were suspended.

July 18. The opening of letters of credit for imports of capital goods on a cash basis was made subject to prior approval by the Budget Department.

Burundi

(Position on December 31, 1983)

Exchange Arrangement

The currency of Burundi is the Burundi Franc, which is pegged to the SDR at FBu 122.70 = SDR 1. The official buying and selling rates for the U.S. dollar on December 31, 1983 were FBu 116.82 and FBu 118.00, respectively, per US$1. Exchange rates for 19 currencies1 are quoted by the Bank of the Republic of Burundi (the central bank) on the basis of its fixed rate for the SDR and the transaction value of these currencies in terms of the SDR. Authorized banks must carry out permitted exchange transactions at the buying and selling rates established by the Bank of the Republic of Burundi for currencies quoted by that Bank. An exchange fee 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 with Rwanda and Zaïre in products specified in the commercial agreements between these countries are effected through convertible currency accounts maintained with the central bank and authorized banks of each signatory country. With these exceptions, outgoing payments may be made and receipts may be obtained in any currency quoted by the Bank of the Republic of Burundi.

Nonresident Accounts

Nonresident Accounts in convertible Burundi francs may be maintained, subject to the approval of the Bank of the Republic of Burundi, 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 of Burundi, 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 bank notes). All other debits and credits require the prior approval of the Bank of the Republic of Burundi. 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 of Burundi 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 of Burundi 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 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 of Burundi through an authorized bank. The approval of such an application constitutes an authorization also to obtain foreign exchange. With specified exceptions, authorized banks approve applications for licenses with a value not exceeding FBu 500,000 f.o.b. for transactions involving surface transportation; applications for amounts in excess of FBu 500,000 require the approval of the Bank of the Republic of Burundi. A license is valid for 12 months starting on the first day of the month following its validation, but exceptions may be granted by the Bank of the Republic of Burundi. An administrative tax amounting to 1 percent 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, 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, and price comparison by the Société Générale de Surveillance (SGS) 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 percent ad valorem, in addition to any applicable customs duties and fiscal duties.

Payments for Invisibles

All payments for invisibles require approval. Shipping insurance on coffee exports normally must be taken out in Burundi francs with a Burundi insurer. Upon presentation of evidence of payment of taxes, foreign nationals residing and working in Burundi are permitted to transfer freely up to 60 percent of their 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 percent of the profits for the budget year, net of corporation tax and the tax on capital income. Transfer of the balance of the profits may be authorized subsequently: 25 percent after two years and the final 25 percent 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 percent of net rental income (after payment of taxes and deduction of 20 percent 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 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 bank notes. 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 valued above FBu 10,000 require completion of prior declaration requirements, which must be presented for certification by the Bank of the Republic of Burundi through an authorized bank. Declarations are valid for six months, but extensions may be granted by the Bank of the Republic of Burundi. 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 coffee and of natural robusta coffee from the Rumonge region are the monopoly of the Burundi Coffee Company. Virtually all exports, including coffee in some cases, 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 bank notes and up to FBu 2,000 in Burundi bank notes.

Capital

The Investment Code of August 25, 1967 provides tax 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 agreement, a guarantee that direct taxes on their activities will not be increased for 15 years. An investment commission under the Ministry of the Presidency in charge of the Plan is responsible for examining requests for priority status and granting the necessary authorization. In addition, under the new law, Burundi guarantees each foreign investor the right to move into the country; foreign investors are also assured an allocation of foreign exchange for the purchase of raw materials 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 to provide working capital in foreign exchange; it applies to any of the currencies quoted by the Bank of the Republic of Burundi and is valid for a one-year period and 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

Transactions in gold are unrestricted. Gold purchase and export transactions must be effected through approved agencies, and a security deposit of US$60,000 must be made to ensure satisfactory completion of transactions. To be eligible to transact in gold, an annual fee of US$20,000 must also be paid. A tax of 7 percent ad valorem is levied on exports of unrefined gold. Proceeds from gold exports need not be repatriated.

Changes During 1983

Exchange Arrangements

November 23. The Burundi franc, which had been pegged to the U.S. dollar at FBu 90 = US$1 since May 1976, was pegged to the SDR at a rate of FBu 122.70 = SDR 1. Taking into account the U.S. dollar/SDR relationship prevailing on November 23, 1983, this action involved a 22.9 percent depreciation of the Burundi franc against the U.S. dollar (29.8 percent in local currency terms).

Gold

September 19. The monopoly position of the central bank of Burundi in regard to gold transactions was abolished.

Cameroon

(Position on December 31, 1983)

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 = 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 rate for the currency concerned in the Paris exchange market. A commission of 0.50 percent is levied on transfers to countries that are not members of the BEAC, except transfers in respect of central and local government operations, payments for imports covered by a duly issued license domiciled with a bank, scheduled repayments on loans properly obtained abroad, travel allowances paid by the government and its agencies for official missions, and payments of reinsurance premiums. There are no taxes or subsidies on purchases or sales of foreign exchange.

With the exception of those relating to gold, 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, that is, the Postal Administration and authorized banks. Import licenses are issued by the Ministry of Commerce and Industry, 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 bank notes 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 (CFAF 1 million or more in the case of large retail stores), but licenses are issued freely.

All import transactions must be domiciled with an authorized bank when their value exceeds CFAF 50,000. Import transactions by residents involving goods for use outside Cameroon must be domiciled with a bank in the country of final destination. Settlements for imports effected under an import license benefit from the authorization of uninterrupted transfer given to the authorized banks by the Ministry of Finance.

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. The corresponding allocation for business travel is 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 percent 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 percent or 50 percent 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 bank notes. Travelers to other countries of the French Franc Area may, subject to prior declaration, take out any amount in BEAC bank notes.

Nonresident travelers may take out foreign bank notes 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 domiciliation requirements for the appropriate documents. Proceeds from exports to all countries must be repatriated within 15 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. Payments for exports must be made within 30 days from the arrival date of the merchandise at its destination.

Proceeds from Invisibles

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

With the exception of controls over the sale or introduction of foreign securities in Cameroon, the controls on capital movements 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 after the fact 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 percent of the capital of a company whose shares are quoted on a stock exchange.

The issuing, advertising, or offering for sale of foreign securities in Cameroon requires prior authorization by the Minister of Finance, and must subsequently be reported to him. Exempt from authorization, however, and subject only to a report after the fact, are operations in connection with (1) loans backed by a guarantee from the Cameroonian Government and (2) shares similar to securities 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 percent 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 1983

No significant changes occurred in the exchange and trade system.

Canada

(Position on December 31, 1983)

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, 1983 was Can$ 1.2444 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 nonrubber footwear are subject to a global quota. Imports of clothing and certain textile products from low-cost sources are subject to bilateral agreements.

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.

All 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 percent 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 since 1979. Beginning in 1982, Can$10 and Can$5 coins containing ¼ and 110 ounce of gold, respectively, have also been issued.

Changes During 1983

Imports and Import Payments

January 1. Export restraint agreements for the four-year period 1983−86 came into effect with respect to exports of clothing and textile items from Pakistan and Hungary to Canada.

January 1. Tariff reductions were effected on a most-favored-nation basis, in line with the agreed schedule under the Tokyo Round of Multilateral Trade Negotiations (MTN); proportionate reductions were also made in a number of tariffs under the Generalized System of Tariff Preferences (GSP) for developing countries.

January 1. Under a series of measures scheduled for the period through the end of 1985, the Government continued the withdrawal of the general preferential tariff on rubber footwear and color television sets.

January 13. A list of 31 countries designated as least developed countries was adopted, and it was announced that imports eligible under the GSP would be duty free when imported from such countries.

February 1. Tariff reductions were effected on a number of products in connection with the reaction of the EC to the imposition by Canada of quotas on imports of leather footwear.

February 17. Retroactive to January 1, 1983 further tariff concessions were effected on imports of linerboard and solid bleached boxboard in conclusion of actions between Canada and the United States within the framework of the MTN.

April 20. As part of budget legislation, the following changes were made in the tariff system: (a) improvements in the Generalized System of Tariff Preferences (GSP) for developing countries, including extension of the GSP for 10 years and new or lower GSP rates for a broad range of products; (b) increases in the value limits on dutiable and duty-free goods that could be brought back by Canadian tourists; and (c) higher duty rates on certain machinery parts (to be implemented on completion of GATT negotiations) and lower tariffs on a number of goods, including firebrick and other refractories, electronic carillons, crawler machines and engines, and mixing consoles and tape recorders for sound recording studios.

April 27. Canada ratified a restraint agreement with Uruguay with respect to the latter’s exports of worsted fabric to Canada during the period 1982−86.

May 6. A restraint arrangement was negotiated with Brazil with respect to the latter’s export of acrylic yarns to Canada during the period June 1983–December 1986.

June 16. The threshold levels triggering government-to-government consultation on Canada’s imports of acrylic yarn and blouses and shirts from Malaysia were converted into specific restraint levels for the period 1983−86, inclusive.

June 27. The Government announced a renewed understanding with Japan, under which exports of Japanese passenger cars to Canada would not exceed 202,600 units during the period January 1, 1983 to March 31, 1984, or 153,000 units during the fiscal year. The announcement followed an interim understanding in February 1983 that exports of Japanese passenger cars to Canada would not exceed 79,000 units during the period January 1, 1983–June 30, 1983.

June 30. The following tariff features of the new offshore policy announced by the Government on January 6, 1983 came into effect: (a) extension of the Customs and Excise regime beyond the 12-mile territorial limit, to all goods (such as ships, floating structures, pipe, machinery, and consumables) used in natural resource-related activities on the Canadian continental shelf; (b) elimination of the tariff preferences on Commonwealth ships for the coasting trade, as well as the preferences on other ships and floating structures from Commonwealth and developing countries; and (c) tariff adjustments, including a reduction of the tariff on floating drilling equipment from 25 percent to 20 percent and clarification of the dutiable status of ships and floating structures.

July 21. Following a large increase in imports of clothing items in the first half of 1983, the Government announced a series of support measures for the Canadian clothing industry, including stricter inspection of clothing imports by customs officials to ensure that they conform to Canada’s existing domestic marking and labeling regulations. In addition, the Government expressed its intention to use the orderly marketing provisions in Canada’s bilateral arrangements with Hong Kong, Korea, the People’s Republic of China, and Taiwan to prevent disruptive concentrations of clothing imports during any one calendar quarter of the year and to seek to eliminate the flexibility provisions in these arrangements.

August 9. A one-year agreement was reached for 1983 on the level of imports to Canada of tailored collared shirts from Indonesia. Agreement was also reached on the establishment of an export licensing arrangement for all Indonesian clothing exports to Canada.

August 19. Import quotas for leather and nonleather footwear were modified to exempt women’s leather and nonleather shoes of size 10½ (metric size 43) and above, as well as certain specialty sports footwear, including leather and nonleather cycling shoes, weight-lifting, boxing, and wrestling boots, nonleather shotput and discus shoes, spiked footwear, cleated baseball footwear, and vulcanized squash and volleyball shoes.

August 22. Beef and veal were added to the Export and Import Control List under an intergovernmental arrangement between Canada and the United States. Exports of U.S. beef and veal to Canada in 1983 were limited to 10.4 million kilograms (23 million pounds) under the arrangement.

September 2. Quantitative limits were announced on Canadian imports of hosiery from Singapore for the period January 1984–December 1986.

Exports and Export Proceeds

August 22. Beef and veal were added to the Export and Import Control List under an intergovernmental arrangement between Canada and the United States. Exports of Canadian beef and veal for 1983 to the United States were limited to 58.9 million kilograms (130 million pounds) under the arrangement.

Cape Verde

(Position on December 31, 1983)

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. 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 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 of 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 Economy and Finance, 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 or 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 bank notes 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 1983

No significant changes occurred in the exchange and trade system.

Central African Republic

(Position on December 31, 1983)

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 percent is levied on all capital transfers to countries that are not members of the BEAC, except those made for the account of the Treasury and for the expenses of students. There are no taxes or subsidies on purchases or sales of foreign exchange.

With the exception of those relating to gold, the exchange control measures of the Central African Republic do not apply to (1) France (and its Overseas Departments and Territories) and Monaco; and (2) all other countries whose bank of issue is linked with the French Treasury by an Operations Account (Benin, 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 Autonomous Amortization Fund (CAADE) in the Ministry of Finance supervises borrowing abroad, while the Office of Foreign Financial Relations in the same ministry supervises lending abroad, issuing, advertising, or offering for sale 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 bank notes 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.

Residents traveling as tourists 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 bank notes. 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 bank notes.

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 bank notes, French bank notes, and bank notes 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 bank notes.

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 bank notes 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 bank notes 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 bank notes 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 percent of the capital of a company whose shares are quoted on a stock exchange.

The issuing, advertising, or offering for sale of foreign securities in the Central African Republic requires prior authorization 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 1983

No significant changes occurred in the exchange and trade system.

Chad

(Position on December 31, 1983)

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 percent is levied on all capital transfers to countries that are not members of the BEAC, except those made for the account of the Treasury and for the expenses of students. There are no taxes or subsidies on purchases or sales of foreign exchange.

With the exception of those relating to gold, 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 Commerce 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 Commerce, 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 Commerce.

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 bank notes 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 Commerce 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 certain neighboring countries not belonging to the French Franc Area up to a value of CFAF 3 million a year in each direction for a single importer may be made through compensation transactions. The issuance of import licenses for sugar and a specified brand of cigarettes has been suspended until further notice.

All import transactions valued at CFAF 100,000 or more and relating to foreign countries must be domiciled with an authorized bank. Import licenses entitle importers to purchase the necessary exchange, provided that 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 Commerce. 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 Commerce may approve additional amounts. Travelers to foreign countries may take out up to a maximum of CFAF 30,000 in BEAC bank notes. Travelers to other countries may take out any amount in BEAC bank notes.

Nonresident travelers may take out foreign bank notes 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 bank notes.

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 certain neighboring countries, including 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 bank notes 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 bank notes and coin (except gold coin) and other foreign means of payment. Foreign bank notes 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) 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 Commerce, 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 Commerce 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 Commerce. 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 Commerce. 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 percent 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 Commerce. 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 Commerce, 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 Commerce 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 1983

Imports and Import Payments

April 2. Licenses for the importation of sugar and a specified brand of cigarettes were suspended.

September 24. Controls on the importation of textiles were tightened.

Chile

(Position on December 31, 1983)

Exchange Arrangement

The currency of Chile is the Chilean Peso (Ch$). Beginning December 17, 1983, the official exchange rate of the Chilean peso is pegged to the U.S. dollar, at a rate adjusted at daily intervals on the basis of the domestic rate of inflation during the previous month, less the world rate of inflation estimated for this purpose at not more than 0.5 percent a month. On December 31, 1983 the official exchange rate was Ch$87.50 per US$1. A tax of 12 percent is levied on purchases of foreign exchange for the financing of imports for which licenses had been obtained before March 13, 1983. Foreign exchange dealers, the Banco del Estado, commercial banks, exchange houses, and other authorized entities must trade in foreign exchange only at the official rate, but direct transactions in foreign exchange among private parties can take place at freely negotiated exchange rates provided that they are occasional, non-customary, and without publicity. Commissions on exchange transactions are subject to a 20 percent value-added tax. The exchange rates of the Chilean peso with other currencies are determined on the basis of the peso exchange rate with respect to the U.S. dollar, and of the U.S. dollar exchange rate with respect to other currencies quoted in foreign markets.

A preferential exchange rate was established on September 3, 1982 as a basis for computing a subsidy on service payments contracted before August 6, 1982. The following have access to the subsidy: (1) debtors to Chilean banks or financial companies, whose debt is indexed to the official exchange rate; and (2) debtors with direct obligations abroad, whose obligations were registered with the Central Bank. The preferential rate was fixed at Ch$49.623 per US$1 on August 6, 1982, and is readjusted daily on the basis of the increase in the consumer price index of the previous month. A subsidy equal to the difference between the preferential and the official rate is paid by means of notes with a maturity of between three and five years, and bearing a 7 percent rate of interest. On December 31, 1983 the preferential exchange rate was Ch$72.78 per US$1.

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 general rules enacted by the Central Bank.

Prescription of Currency

Settlements with Argentina, Bolivia, Brazil, Colombia, Ecuador, Mexico, Paraguay, Peru, Uruguay, and Venezuela must 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 must 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

Most imports are free. All imports require a document (known as Informe de Importación) issued by the Central Bank, which can be obtained and processed through the intermediary local commercial bank. Payment for visible trade transactions is not permitted unless an Informe de Importación has been issued.

Since March 23, 1983 imports are subject to a 120-day minimum financing requirement. Importers may purchase spot exchange before the payment date and place a deposit in foreign exchange at the Central Bank in anticipation of payment. Imports on deferred payment terms (cobertura diferida), that is, on credit terms exceeding 360 days, require prior authorization of the credit terms by the Central Bank. Virtually all imports are subject to a registration tax of up to 3 percent of value, which is offset against the applicable import duty. Since March 23, 1983 imports are subject to a uniform 20 percent tariff rate with some exceptions. Among the exceptions are motor vehicles and parts thereof, the tariffs of which are scheduled to decrease gradually to 20 percent by 1986. Temporary tariff increases ranging from 4 percent to 15 percent and averaging 14.7 percent are applied to 25 products, which have been investigated under the regulation for the application of the GATT Code on Subsidies and Countervailing Duties (see section 6 of the Code). Among the products in question, which represent about 4 percent of total imports, are footwear, canned fish, cotton and artificial textiles, and cement. Specific duties exist on imports of some dairy products, in particular powdered milk.

Payments for Invisibles

Specified allowances exist for certain transactions; central bank authorization is required for others. The authorization is provided upon presentation of appropriate documentation. The established limit for tourist travel (in addition to the fares) is the equivalent of US$200 a month for travel to Latin America and Caribbean countries and of US$800 a month to other countries. For travel by land, 20 percent of the allowance is provided in the form of foreign exchange and the rest in money orders. Higher amounts may be authorized by the Central Bank of Chile, upon presentation of adequate justification.

Residents may purchase up to US$200 a month for study abroad, subscriptions to magazines, books, and pension payments, subject to presentation of appropriate documents. Insurance activities within the country are limited to Chilean companies or to authorized foreign companies.

Exports and Export Proceeds

All commodities may be freely exported. All foreign exchange proceeds from exports in excess of US$1,000 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. Exporters are allowed to retain up to 5 percent of export proceeds in a special Foreign Exchange Account, but the cumulative deposits in any such account during a 12-month period may not exceed US$100,000. Receipts from exports of the large copper mines must be deposited in a special foreign currency account at the Central Bank.

Export proceeds subject to surrender requirements must be repatriated within 90 days from the date of shipment and surrendered within 10 days from the date of repatriation; for specified goods this period may be extended. A maximum maturity of 270 days is fixed for export credits opened prior to shipment. Shipment of the merchandise must take place not later than 240 days from the concession of the export credit.

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, and the surplus foreign exchange from travel allocations.

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. There is no minimum term on the maturity of foreign borrowing. 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.

All foreign borrowing undertaken after November 10, 1983 with average maturities of less than 60 months is subject to a 5 percent reserve deposit requirement.

(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 Statute, 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 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, 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 percent 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 percent). 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).

The Central Bank provides exchange guarantee for foreign borrowings to finance amortization payments and for new loans to enterprises operating in the nontradable sector; a cumulative ceiling of US$750 million is applied on such guarantees.

Gold

Chile has issued three types of gold coin, which are not legal tender. Monetary gold may be traded only by authorized houses, but ordinary transactions in gold between private individuals may be freely undertaken. Imports and exports of gold are unrestricted, subject to compliance with the normal formalities for import and export transactions, including registration with the Central Bank.

Changes During 1983

Exchange Arrangement

January 12. Financial instruments (notes) issued for payment of the difference between preferential and official exchange rates were made transferable to “bearer” (i.e., negotiable with third parties).

January 18. Notes with original maturities of 30 days and 180 days and denominated in U.S. dollars were issued by the Central Bank of Chile to financial institutions in exchange for the foreign currency equivalent of the margin between foreign liabilities under Article IV (and Ag. 1418) and corresponding domestic assets.

January 24. Current account facilities were instituted at the Central Bank for the deposit of balances between liabilities and assets under Ag. 1418 and 1196.

February 23. For the purpose of the exchange rate determination, the world inflation rate, previously taken to be 1 percent a month, was scaled down to 0.4 percent a month.

March 23. The exchange rate of the Chilean peso started to be adjusted only on the basis of domestic inflation. (Previously, it was adjusted on the basis of the domestic rate of inflation during the previous month relative to the estimated world rate of inflation.)

December 16. The official exchange rate was set at Ch$87.15 = US$1, and it was announced that the rate would be adjusted at daily intervals on the basis of the domestic rate of inflation during the previous month, less the world rate of inflation estimated for this purpose at not more than 0.5 percent a month.

March 23. A regulation was introduced, requiring commercial banks and exchange houses to trade in foreign exchange at the official rate, in contrast to the previous practice under which they could freely set their rates of exchange. However, direct transactions in foreign exchange among private parties could take place at a freely negotiated exchange rate, provided that such transactions were occasional, noncustomary, and without publicity.

March 23. A 12 percent tax was levied on purchases of foreign exchange for the financing of imports for which licenses (formally known as Informe de Importación) had been issued before March 23, 1983.

Imports and Import Payments

March 23. A 120-day minimum financing requirement for imports was introduced, and a 12 percent tax was levied on purchases of foreign exchange for the financing of imports for which licenses (formally known as Informe de Importación) had been issued before March 23, 1983. In addition, the 10 percent uniform import tariff was raised to 20 percent under a program of phased reduction to restore the 10 percent level by December 24, 1985.

Payments for Invisibles

March 14. The basic travel allowance was reduced from US$300 to US$200 a trip for trips to North American and Caribbean countries, and from US$1,200 to US$800 a trip for trips to other countries. For travel by land, 20 percent of the allowance was required to be delivered in foreign exchange and the rest in money orders. In addition, central bank authorization was made obligatory for a number of service payments, payments of other invisible transactions, and transfer of profits and dividends, amortization and interest payments on foreign debt were made subject to prior authorization by the Central Bank, and the exchange allowance for purchase of noncommercial drugs was discontinued.

Exports and Export Proceeds

January 17. The proportion of export proceeds which exporters could deposit in special Foreign Exchange Accounts was reduced from 10 percent to 5 percent, and a limit of US$100,000 during any 12-month period was imposed on deposits of foreign exchange in such accounts.

March 23. The maximum period for repatriation of export proceeds was reduced from 150 days to 90 days.

Capital

January 13. The necessary deposit under the reserve requirement for capital inflows was extended to medium-term credits financing imports of capital goods, with maturity of less than 72 months, with the exception of loans financing imports of ships, airplanes, magazines, and books.

February 1. With effect from January 31, 1983, a 90-day moratorium was placed on amortization payments on loans from foreign financial institutions contracted before January 31, 1983 and not guaranteed by foreign official agencies. (The moratorium was subsequently renewed and extended to maturities falling due after April 30, July 31, and October 31.)

July 15. The Central Bank introduced an exchange guarantee for foreign borrowings to refinance amortization payments and for new loans to enterprises operating in the nontradable sector, subject to a cumulative ceiling of US$750 million on all such guarantees.

November 10. The coverage of the 5 percent reserve requirement on capital inflows was limited to loans with an average maturity of 60 months.

Gold

March 23. A regulation was introduced, limiting trade in monetary gold to authorized houses.

July 7. Transactions in gold between private individuals were liberalized.

People’s Republic of China

(Position on December 31, 1983)

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 21 other currencies1 are determined from the cross rates. The exchange rate is published daily by the State Administration of Exchange Control; on December 31, 1983 the buying and selling rates for the U.S. dollar were Y 1.9759 and Y 1.9859, 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 percent; for the important currencies, such as the U.S. dollar and the Japanese yen, a smaller margin of 0.5 percent 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, corporations, and joint ventures 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 (including capital payments for joint ventures and other enterprises with nonresident capital), 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 percent 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 People’s Bank of China exercises central bank function and control over foreign exchange; and the State Administration of Exchange Control, as a government administration under the leadership of the People’s Bank of China, is responsible for implementing the exchange regulations and controlling all foreign exchange transactions in accordance with state policy. There are sub-bureaus in the provinces, in main municipalities, autonomous regions, and special economic zones. Other banks and financial institutions, including affiliates of nonresident banks, may handle designated transactions with the approval of the SAEC. The China International Trust and Investment Corporation (CITIC) 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. Those parts of the foreign exchange plan dealing with foreign trade, foreign loans, and China’s external assistance program are prepared by the Ministry of Foreign Economic Relations and Trade; the foreign exchange budgets of other government departments are prepared by the Ministry of Finance. The SAEC 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 SAEC, 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 Bulgaria, Czechoslovakia, the German Democratic Republic, Hungary, the Democratic People’s Republic of Korea, Mongolia, Poland, Romania, and the U.S.S.R. are expressed in Swiss francs, and with Cuba in pounds sterling at the official exchange rate and 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 part of such transactions with the Democratic People’s Republic of Korea and Romania, and all the transactions with Cuba, 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 two kinds: Type A agreements are designed to ensure balanced trade and include, for each good itemized, quantitative commodity lists or foreign exchange quota lists for those commodities which cannot be expressed in quantitative terms; these lists are binding on both parties. Most arrangements are of this type. Type B agreements (those with the Islamic Republic of Iran and Sierra Leone) provide such binding itemized lists only for the principal goods traded by the parties and also include nonbinding lists of secondary goods.

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

All trade, both direct and indirect, with Israel, the Republic of Korea, and South Africa is prohibited.

The primary responsibility for the conduct of trade rests with the Ministry of Foreign Economic Relations and Trade, which issues 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 Economic Relations and Trade. Other entities may conduct foreign trade only if so authorized by a license issued by the Ministry. The Ministry of Foreign Economic Relations and Trade supervises and coordinates the foreign trade activities of entities that are not under its direct jurisdiction.

The branches of foreign trade corporations in provinces, cities, and autonomous regions are under the dual leadership of the local authorities and the Ministry of Foreign Economic Relations and Trade. Localities and ministries other than the Ministry of Foreign Economic Relations and 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 SAEC. Before using their holdings of foreign exchange, enterprises other than the foreign trade corporations must seek the approval of the SAEC. The Bank of China provides foreign exchange for imports on the basis of import licenses and approval by the SAEC. 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 on the basis of the annual foreign trade plan. This plan is drawn up by the Ministry of Foreign Economic Relations and 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 Economic Relations and 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 of goods which have been exported from China requires special authorization. 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. Exports of specified machine tools require a license from the State Administration for the Inspection of Import and Export Commodities, as a means of quality control.

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. Under the general tariff dutiable imports are subject to one of 24 rates ranging from 7.5 percent to 250 percent, while those under the minimum tariff are subject to one of 20 rates ranging from 5 percent to 150 percent.

Imports 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; 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. Raw materials imported for further processing are exempted from both customs duties and commercial taxes, provided that the products are all exported within a specified period. Export duties are levied on exports of 34 different commodities.

Localities and enterprises may retain part of foreign exchange earned from export (including net foreign exchange earnings in a compensation trade), in accordance with state regulations. 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 and in some cases the consolidated commercial and industrial tax. Profits generated in the zones are taxed at 15 percent, as opposed to 33 percent for joint ventures within China.

Invisibles

Foreign exchange remitted from abroad or from the Hong Kong and Macao regions to Chinese residents must be surrendered to the Bank of China, except for the 10 percent 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 percent of such inward remittances may be retained. Similarly, up to 30 percent 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 of foreign joint ventures, as well as those from the Hong Kong and Macao regions,6 may remit abroad all the net amount of salaries and other income earned in China, after payment of taxes and deduction of their living expenses in China. 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 percent.

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 SAEC 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. Special regulations apply in Guangdong province. 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 bank notes are prohibited. Foreign exchange certificates may be imported, but export is subject to the provision of documentation showing that they have 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

All units wishing to borrow abroad must prepare a plan showing the kinds of imports for which the loan is intended. Such plans must indicate the total 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 SAEC and the Ministry of Foreign Economic Relations and Trade. Loans for vital projects or projects which have a rapid rate of return are given priority approval. If the imports are for new construction, the plans are also reviewed by the State Economic Commission.

Loans from international financial institutions and foreign governments require the sanction of the State Planning Commission and the approval of the State Council. Loans from international development agencies are generally the responsibility of the Ministry of Finance or of the China Investment Bank (an organization under the direction of the Ministry), while intergovernmental loans are the responsibility of the Ministry of Foreign Economic Relations and Trade. Government departments, local governments, and enterprises are usually required to borrow through the Bank of China or with its guarantee, rather than borrowing directly abroad themselves. There is an annual limit on such borrowing set by the State Planning Commission. Foreign borrowing in the form of deferred payments requires the approval of the Ministry of Foreign Economic Relations and Trade. Resident organizations may not issue securities for foreign exchange unless approved by the State Council.

All foreign direct investment projects are subject to the approval of the Ministry of Foreign Economic Relations and Trade. 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 and other enterprises involving nonresident capital must be deposited with the Bank of China or another bank approved by the SAEC; transfers of capital require SAEC approval. Such enterprises involved in the exploitation of offshore petroleum reserves may also hold foreign exchange abroad or in Hong Kong or Macao. When a joint venture is wound up, the net claims belonging to the foreign investor may be remitted with SAEC 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 percent (30 percent basic rate plus a 10 percent surcharge on the assessed tax). When profits are reinvested in China, 40 percent of the tax paid is eligible for rebate after five years, provided that the joint venture remains in operation at that time. As mentioned above, remitted profits are subject to an additional tax of 10 percent. A joint venture scheduled to operate for ten years or more may be exempted from income tax in the first two years of operation and be allowed a 50 percent reduction for the next three years. Joint ventures in low-profit operations, such as farming and forestry, or located in economically underdeveloped outlying areas may be allowed a further 15–30 percent 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 percent of the tax paid on the reinvested amount. Some joint ventures established before the passing of tax regulations in August 1980 are subject to taxes at different rates. Foreign companies, enterprises, and other economic organizations, which have establishments in China engaged in independent business operation, or cooperative production, or joint business operation with Chinese enterprises are subject to tax on their net income. There are five levels of tax rates, ranging from the lowest of 20 percent for the first Y 250,000 of profits to the highest of 40 percent when profits exceed Y 1 million. In addition, a local income tax of 10 percent of the same taxable income shall be levied. Income from interest on deposits of foreign banks in China’s state banks and on loans given at a normal interest rate by foreign banks to China’s state banks is similarly subject to income tax. Foreign banks originating from countries in which income from interest on deposits and loans of China’s state banks is exempted from income tax are exempt from this Chinese income tax. For interest income or leasing fees (less than the value of equipment) earned by foreign businessmen under credit agreements, trade agreements, and leasing agreements signed by them with Chinese companies and enterprises during the period 1983−85, income tax is to be levied at the reduced rate of 10 percent (half of the normal rate) during the validity of the aforesaid agreements, and interest earnings from export credits are entitled to income tax exemption. For fees collected by foreign businessmen for the use of special technology provided by them in such fields as agriculture, animal husbandry, research, energy, communications, transport, environmental protection, and the development of important techniques, income tax is to be levied at the reduced rate of 10 percent (half of the normal rate) and fees from the provision of advanced technology at favorable terms are entitled to income tax exemption.

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

Changes During 1983

Exchange Arrangement

February 1. The State Administration of Exchange Control ceased to publish rates for the Tanzanian shilling.

Administration of Control

January 1. In a modification of regulations governing foreign exchange accounts of residents, authorization was granted for deposits to be made in Japanese yen, U.S. dollars, Hong Kong dollars, pounds sterling, and deutsche mark.

February 1. The People’s Bank of China issued new regulations on the operation of foreign bank branches in China.

March 5. The National People’s Congress approved a decision to allow the Ministry of Foreign Economic Relations and Trade to exercise the examining and approving powers of the former Foreign Investment Control Commission.

Prescription of Currency

June 29. In implementation of an agreement dated March 16, 1982, the bilateral payments agreement with Syria was terminated.

Imports and Exports

January 19. Following the imposition by the United States of restrictions on imports of textiles from China, the latter announced that it would stop imports of cotton, synthetic fibers, and soybeans from the United States and would reduce its planned imports of U.S. agricultural products.

May 16. The State Council gave more autonomy in external economic relations to the Shanghai municipality.

August 19. The second Textile Trade Agreement between China and the United States was concluded.

September 6. China lifted the ban introduced on January 19, 1983 on specified imports from the United States.

September 14. The Customs Administration exempted raw materials imported for further processing from customs duties and commercial taxes, provided that the end-products were all exported within a specified period.

September 22. Under a decision of the Ministry of the Machine Building Industry and the State Administration for the Inspection of Import and Export Commodities, quality control licenses were introduced for exports of certain machine tools.

December 1. The permissible value of duty-free imports as part of the luggage of overseas Chinese visiting China was increased; changes were made in the regulations affecting visitors from Hong Kong and Macao.

December 15. China became a signatory to the GATT Multifiber Agreement.

Invisibles

February 7. The State Administration of Exchange Control announced that resident foreign workers and employees, including residents from Hong Kong and Macao, could remit abroad up to 100 percent (previously 50 percent) net earnings after taxes and deduction of their living expenses in China.

September 6. An agreement between China and Japan came into effect, aimed at the avoidance of double taxation and the prevention of evasion of income taxes.

Capital

January 1. The tax rate on income earned by foreign firms from interest on loans in respect of contracts signed during the period 1983−85 was reduced by 50 percent; and a similar reduction was extended to income earned from agriculture, energy development, communications and transport, education, and scientific research.

August 1. New rules (approved by the State Council on July 19, 1983) were introduced for the implementation of exchange controls in respect of enterprises with foreign and overseas Chinese capital and joint ventures.

September 2. The Standing Committee of the National People’s Congress approved certain changes in the income tax law for joint ventures.

September 20. The State Council issued a body of regulations for the implementation of the law on joint ventures involving Chinese and foreign capital.

Gold

June 15. The State Council issued new regulations on holdings of, and transactions in, gold and silver.

Colombia

(Position on December 31, 1983)

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. In the case of export proceeds, exporters have the option of either immediate conversion or acquisition of exchange certificates with a maturity of 90 days. On December 31, 1983 the buying and selling rates in the official market for the U.S. dollar, the intervention currency, were Col$88.77 and Col$89.12, 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 6.5 percent tax on coffee export proceeds; (2) tax credit certificates granted at three different percentage rates for most export proceeds; (3) the imposition of remittance tax at two different rates on certain service payments; and (4) an advance deposit of Col$50 per US$1 on the purchase of foreign exchange for travel purposes. 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 government enterprises in the oil sector, 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 three or six months that may be extended up to 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 8 percent a year. Warrants held until after 12 months cease to bear interest. Warrants held longer than 24 months cannot be converted into exchange certificates but may be resold to the Bank at the certificate market rate on the last day of the twenty-fourth month.

Administration of Control

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

Prescription of Currency

The Monetary Board establishes the list of currencies which it accepts for exchange surrender and provides for import payments. Payments and receipts are normally effected in U.S. dollars, but importers and exporters are also free to use quoted currencies (see footnote 1). Settlements for commercial transactions with countries with which Colombia has bilateral payments or reciprocal credit agreements2 must be made through special 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 involve purchase of official foreign exchange, including imports of machinery and equipment, with financing by international credit institutions. Nonreimbursable imports consist mainly of aid imports under grants and commodities constituting part of a direct investment. Imports are subject to minimum payment terms as follows: 9 months for raw materials and consumer goods, 36 months for capital goods imports not effected under a global license, and 60 months for imports through the global license system. 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. Import licenses can be extended for successive three-month periods, whereas registrations of free imports can be extended only once for up to three months.

Prior registration of the import transaction at Incomex is required for all imports other than those classified as “minor imports” or shipments with an f.o.b. value of less than US$500. The charge for import registration is Col$ 1,500. In order to obtain exchange licenses for imports of consumer goods only, advance import payments deposits (depósitos previo a la nacionalización de mercancías) of 10 percent 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 35 percent of the value of the exchange license, including an advance deposit of 10 percent. If the transaction is also subject to the advance import payment deposit of 10 percent, 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, and imports of medicines, books, and subscriptions to technical publications 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 percent of the c.i.f. value, the proceeds of which go to the Export Promotion Fund. Exempt from this tax are temporary imports, 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 percent of the c.i.f. value, the proceeds of which accrue to the ordinary budget of the National Government. All imports (except newsprint) are subject to a stamp tax of 1 percent of the f.o.b. value.

Payments for Invisibles

Payments for invisibles are made at the exchange certificate rate. To obtain exchange licenses for freight payments, a freight company must, either directly or through agents in Colombia, lodge a deposit amounting to 35 percent of payment value; in addition, a deposit of 10 percent of the value of the exchange license must be lodged in respect of imports. A maximum term of six months applies for payment of freight and transportation related to imports. 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. Foreign exchange purchases for foreign travel are limited to the equivalent of US$125 a day, up to US$2,500 a year for those under 12 years of age, US$250 a day, up to US$5,000 a year an adult, and up to US$300 a day, up to US$20,000 a year for “special” travelers, defined as those traveling for reasons that are of particular usefulness in the economic and social development of the country.3 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 percent of the investment a year. An additional 7 percent may be reinvested. Profits in excess of 20 percent may be capitalized as direct investment, whenever at least 50 percent of the investment is in the form of bonds issued by the Industrial Promotion Institute. These limitations do not hold for multinational enterprises in which at least 80 percent of the capital is held by investors in the countries of the Andean Pact; in such cases, profits can be reinvested and transferred freely. Foreign tourists who have stayed in Colombia for a period not exceeding three months may, on leaving the country, purchase foreign currency on presentation of their passports or credit cards. A remittance tax of 12 percent is applicable to a number of current payments; for profits transferred by branches of foreign companies, the tax is 20 percent.

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 5 percent 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 (180 days for instant coffee); and (2) for other goods, generally within one year of registration. However, longer terms are permitted for exports to Ecuador and Venezuela, goods sold on a commission basis, for books, magazines, and other printed matter (18 months), capital goods (5 years), 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)4 in an amount corresponding to a specified percentage of the total earnings surrendered, converted at the Ministry of Finance exchange rate. This rate is 5 percent, 10 percent, or 15 percent, 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 for the payment of income tax, customs duties, and sales taxes. The surrender of foreign currency earned by exporters can, as an option, be effected by exchanging the foreign currency for exchange certificates (of 90 days’ maturity) that are negotiable on the stock exchange.

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$204.50 a 70-kilogram bag. (2) Exporters pay a tax in foreign exchange at the rate of 6.5 percent 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 45 percent 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 percent 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 on the stock exchange. 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 percent 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,5 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 percent of registered direct investment (beginning with profits earned in 1976), 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 percent, 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 percent 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 may be made only by “national” or “mixed” companies, and by investors from member countries of the Andean Pact on the basis of reciprocal treatment. 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 percent 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 three years with one year of grace and to an interest rate ceiling of 2.5 percent over the New York prime rate or LIBOR. Such loans normally are permitted only for financing working capital or fixed investment. 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 insurance companies, export firms, transportation companies, and other specified entities, upon prior authorization of the Bank of the Republic. A ceiling equivalent to 5 percent of their total foreign liabilities is applied on the foreign currency deposits which may be held by domestic financial institutions.

Gold

Natural and juridical 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 percent in foreign currency on presentation of exchange licenses entitling them to make payments abroad for services, dividends, capital repayments, taxes, etc.; the remaining 50 percent and all payments to domestic producers may be settled by means of exchange certificates with a maturity of 90 days. 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 percent 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 1983

Exchange Arrangement

March 9. The redemption period for exchange certificates was shortened from 690 to 90 days.

September 12. The tax on coffee exports was reduced from 9 percent to 6.5 percent.

Imports and Import Payments

February 24. New minimum prices for the computation of customs duties on the import of automobiles were introduced.

March 29. Twenty-seven products, including lubricants, various chemicals, and small machinery, were shifted from the freely importable to the import license regime.

April 18. The import license regime was extended to cover about 700 items previously freely importable.

April 27. Imports of metal structures and a number of chemical products were made subject to licensing, including imports from other Andean Pact countries.

April 28. Imports of wood were placed on the list of imports requiring licenses.

May 2. A limit of US$500 a person a year was placed on personal imports of travelers returning from at least 10 days stay abroad.

May 18. Import items under 160 tariff headings were transferred from the free import regime to the licensing system.

May 25. It was announced that a wide range of products included in the import licensing list could be freely imported when originating from member countries of LAIA.

June 21. Duties on a number of tariff items originating from Mexico were reduced.

June 21. Ad valorem tariffs on imports of specified chemical products were fixed at 12 percent.

June 25. Import duties on most tariff items were increased by 10 percent.

July 22. Import duties were reduced on a number of textile items used as inputs for domestic production in specified sectors.

July 26. Import tariffs were reduced on a number of items if use was as inputs by specified domestic producers.

August 29. A total of 25 items were transferred from the free import list to the licensing list.

August 29. Nine tariff items originating from countries of the Andean Pact were transferred from the free import list to the licensing list.

September 8. Tariffs on imports of campers were raised to between 70 percent and 198 percent.

September 23. The advance exchange license deposit (Consignación) was reduced to 35 percent for all current payments, with the exception of imports of medicines, books, and subscriptions to technical publications. In addition the deposit rate for imports to the Free Zone was raised to 100 percent.

October 10. Certain agricultural products imported from Andean Pact countries and previously on the free import list were transferred to the licensing list.

October 24. Import items classified under 102 tariff headings were transferred from the free import list to the licensing list.

November 2. Authorization was granted for domestic credit institutions to finance imports of goods for immediate consumption (including raw materials and consumer goods, and equipment and capital goods) without adhering to existing regulations on minimum acceptable financing terms, i.e., 9 months for the first category and 36 months for the second. Importers were thus free in arranging payments for their foreign purchases, regardless of the kind of financing obtained, i.e., from Colombian credit institutions, from foreign suppliers, or through direct foreign loans obtained under Articles 131 and 132 of the Exchange Statute.

Payments for Invisibles

April 6. The foreign exchange allowance for travel abroad was reduced to US$250 a person a day, up to US$5,000 a year (US$125 a day, up to US$2,500 a year for travelers under 12 years of age), and US$400 a day up to US$30,000 a year for “special” travelers. In addition, an advance deposit of Col$15 per US$1 was introduced on purchases of foreign exchange for travel purposes; the deposit would be refunded upon the traveler’s return after accounting for the amount spent and surrendering the unspent balance.

April 22. An individual exchange license was introduced for payments in respect of international travel, freight, and bank commissions abroad.

July 27. The advanced deposit requirement on sales of foreign exchange for travel purposes was raised to Col$50 per US$1. In addition, the allowance for business travelers was reduced to US$300 a day, up to US$20,000 a person a year.

Exports and Export Proceeds

February 22. The quota and compensation rates for exports of rice were fixed.

March 23. Authorization was granted for the surrender of foreign exchange proceeds from exports of coffee prior to actual shipment was authorized, within a limit of US$100 million; such exports were required to be effected within two months of the exchange surrender.

March 24. The maximum permissible amount of preshipment financing was raised to 90 percent.

May 5. Subsidies were introduced for air transportation costs of exports of electric appliances to Peru.

July 1. The maximum period for the repatriation of export receipts from Venezuela and Ecuador was increased to two years, with the addition that the period could be raised to three years with the authorization of Incomex.

August 24. Changes were made in the regulations on noncoffee exports as follows: (a) exchange certificates could be issued during a period up to one year after shipment of merchandise if the terms of remittances permitted immediate registration of exports; and (b) exporters of capital goods of value above US$250,000, selling under terms of anticipated payment could be issued with exchange certificates up to 25 percent of the amount of such exports.

August 30. The new rates for Certificados de Abono Tributario (CATs) were fixed at 5 percent, 15 percent, and 20 percent.

September 12. The retention rate for coffee was fixed at 45 percent.

September 23. The permissible prepayment term for coffee exports was reduced from 90 to 60 days. In addition, the Central Bank was authorized to buy foreign currency from coffee exporters, up to US$100 million for the National Federation of Coffee Growers and US$200 million for other exporters. Final settlement of the foreign exchange would take place at the exchange rate prevailing on the fortieth day after sale, or at the rate of the shipment date, whichever was first.

September 29. An incentive or compensation system equivalent to 5 percent of the increase in the f.o.b. value of exports was introduced for exporters of textiles to Latin American, European, and Caribbean countries. In addition, the quota and compensation system for exports of rice were increased.

October 14. The minimum export price for coffee was fixed at US$1.36 a pound.

October 26. A US$10 million credit line was established by the Colombian authorities to finance exports of domestic goods to Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua.

November 30. The minimum surrender price for coffee was set at US$204.50 a 70-kilogram bag.

December 20. The “Basic Law on Foreign Trade” (Law No. 48) was approved, with the main objective of adapting Colombia’s external trade to changing international conditions. As part of the new legislation, the tax reimbursement certificate (CERT) system was established to encourage exports, in replacement of the CAT. The new system was intended to be flexible, to be modified by the Government from time to time, in accordance with conditions in external markets. In addition, the legislation included steps aimed at furthering the development of Free Trade Zones and special trade systems involving barter, countertrade, triangular and border trade operations.

Proceeds from Invisibles

April 7. Authorization was granted for retail sales and sale of services to nonresidents to be settled in foreign currency; foreign exchange so obtained was required to be surrendered to the Bank of the Republic within five days.

May 4. A ceiling of US$100 was fixed for sales of foreign exchange for tourist travel.

Capital

March 9. Steel enterprises were added to the list of enterprises eligible to borrow abroad to finance investments.

April 13. Car assembly enterprises were added to the list of enterprises eligible to borrow abroad to finance investments, subject to a maximum of US$50 million an enterprise.

April 27. Advance repayment of external loans to private entities was prohibited.

September 27. Authorization was granted for private entities operating in the agricultural, mining, manufacturing, and service sectors to contract foreign loans with a maturity of at least three years and at least one year of grace, to finance working capital or fixed investment; the maximum permissible spread over LIBOR or the U.S. prime rate was fixed at 2.5 percent.

October 5. A regulation was introduced, limiting the amount which domestic financial institutions could keep in foreign currency to 5 percent of their total foreign liabilities.

Comoros

(Position on December 31, 1983)

Exchange Arrangement

The currency of the Comoros is the Comorian Franc (CF), which is pegged to the French franc, the intervention currency, at the fixed rate of CF 1 = F O.02. The current buying and selling rates for the French franc are CF 50 = F 1. Exchange rates for other currencies1 are also officially quoted on the basis of the fixed rate of the Comorian franc for the French franc and the Paris exchange market rate for the respective currencies in terms of the French franc. 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 and Economy 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 and Economy.

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 Comorian francs, French francs, or the currency of any other Operations Account country. Settlements with all other countries are usually made through correspondent banks in France, in any of the currencies of those countries, or in French francs through Foreign Accounts in Francs. 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 CF 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 CF 250,000 in foreign currency a person a trip. The maximum that may be allocated in bank notes is CF 125,000; the remainder may be in the form of a bank transfer, traveler’s 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 CF 500,000 or more.

Proceeds from Invisibles

Proceeds from transactions in invisibles with France (as defined above), Monaco, and the Operations Account countries may be retained. All amounts due from residents of other countries in respect of services and all income earned in those countries from foreign assets must be 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 bank notes 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 1983

No significant changes occurred in the exchange and trade system.

People’s Republic of the Congo

(Position on December 31, 1983)

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 = FO.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’ bank notes and traveler’s checks, are subject to a commission of 0.75 percent, with a minimum charge of CFAF 75; exempt from this commission are payments of the State, the Postal Administration, 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 percent or, for foreign exchange purchased by the Diamond Purchase Office, 0.50 percent; these commissions are subject to a minimum of CFAF 100. A commission of 0.25 percent 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 bank notes 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 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 an 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 countries other than France (as defined above), Monaco, the Operations Account countries, or Zaïre may obtain an exchange allocation of an amount equivalent to CFAF 175,000 a person a trip (CFAF 87,500 for children under ten) or CFAF 10,000 if the duration of the trip is less than 24 hours, for any number of trips a year; any foreign exchange in excess of CFAF 5,000 remaining after return to the Congo must be surrendered.

For business travel, there is a special allocation of the equivalent of CFAF 20,000 a person a day, subject to a maximum of CFAF 400,000 a trip; additional amounts may be authorized in appropriate cases. The use of credit cards abroad by residents is prohibited. There are special facilities for travelers to Kinshasa who request no foreign means of payment other than Zaïrian bank notes. 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 bank notes. Residents and nonresidents traveling 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 bank notes, French bank notes, and bank notes issued by any other institute of issue maintaining an Operations Account with the French Treasury.

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.

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 bank notes 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 bank notes 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 percent. 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 percent 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, to hold gold in any other form or to import or export gold in any form, from or to any other country, the prior authorization of the Minister of Finance is required. Exempt from the latter requirement are (1) imports and exports by or on behalf of the Treasury or the BEAC, and (2) imports and exports of manufactured articles containing a 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 1983

No significant changes occurred in the exchange and trade system.

Costa Rica

(Position on December 31, 1983)

Exchange Arrangement

The currency of Costa Rica is the Costa Rican Colón. Costa Rica maintains a unified exchange market in which all transactions other than the surrender of 1 percent of export proceeds take place at Ȼ 43.15 = US$1 buying and Ȼ 43.65 = US$1 selling. Export proceeds are converted at a mixed exchange rate composed of 1 percent at the official rate of Ȼ 20 = US$1 and 99 percent at the banking rate of Ȼ 43.15 = US$1.1 The spread between the buying and selling rates in the banking exchange market is legally set at Ȼ 0.50. Purchases and sales of other Central American currencies are effected on the basis of quotations in colones, taking into account the value of those currencies in terms of U.S. dollars in the parallel exchange markets of the respective countries. A stamp tax of 1 percent applies to most foreign payments.2

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. The only institutions authorized to deal with foreign exchange transactions are the Central Bank of Costa Rica, the state commercial banks, and certain private banks authorized by the Central Bank.

Prescription of Currency

In practice, nearly all exchange transactions in Costa Rica are expressed in U.S. dollars. Following the exchange measures introduced in December 1980, it was decided that payments to other member countries of the Central American Common Market (CACM) 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. Imports made on a barter basis require a barter license (licencia de trueque) issued by the Ministry of Economy and Commerce. To be eligible for foreign exchange, orders for imports valued at over US$500 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 percent of the customs duty on commodities not covered by the common external tariff of the CACM; (2) a sales tax of 10 percent ad valorem, from which certain essential items are exempt; (3) a selective consumption tax at rates of 10 percent, 40 percent, and 65 percent, depending on the considered degree of essentiality; and (4) a general surcharge of 1 percent on all imports, except imports of medicines and related inputs, school supplies and related inputs, fuel originating in Central America and Panama, industrial inputs, and spare parts and capital goods for industrial and agricultural enterprises with activities having a positive net effect on the balance of payments. (A 2 percent surcharge is levied on industrial inputs, spare parts, and capital goods for enterprises not having such an effect.) In addition, other levies are imposed as follows: a 2 percent surcharge on capital and consumer goods originating in Central America and Panama, as well as on construction materials; a 10 percent surcharge on capital goods coming from outside Central America, vehicles with an engine displacement of less than 1,250 cubic centimeters (or of greater displacement if they are for commercial use and have a load capacity of more than 2 tons); a 12.5 percent surcharge for consumer goods originating outside Central America; a 200 percent surcharge on all other types of vehicles not included in the 10 percent category; and a stamp tax of 1 percent on import payments other than those for imports of inputs and machinery for use in producing nontraditional exports (see footnote 2). 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.

Payments for Invisibles

The stamp tax of 1 percent is applied to outward remittances other than remittances to students abroad, payments deriving from the Zonas Procesadoras de Exportación, S.A. (Export Processing Zones) system, payments of self-management cooperatives, savings and credit cooperatives, service cooperatives and labor unions, payments of state institutions stemming from loans used in Costa Rica on a not-for-profit basis, remittances of state institutions of higher education, and dues of Costa Rican cooperatives and unions to international organizations (see footnote 2).

In addition, withholding taxes of 15 percent and 10 percent, 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 (Ȼ 360); Costa Rican nationals who reside abroad must pay, in addition, a consular fee of US$5 upon renewal of their passports abroad. 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. Commercial banks dealing with the free market may sell foreign exchange—without prior authorization of the Central Bank—in the following amounts: (a) for foreign travel, a limit of US$100 a day up to a maximum of US$800 a traveler (upon presentation of passport and travel tickets, commercial banks are authorized to sell the equivalent of this amount in the currency of a Central American country to travelers to Central American countries other than Panama); (b) for family remittances, up to US$500 a month a person to a maximum of US$1,000 a family; and (c) for unregistered students, a maximum of US$500 a month for living expenses, in addition to tuition, textbooks, and insurance upon presentation of documents. Subject to the approval by the Central Bank, these limits may be exceeded where justified by evidence of a bona fide current expenditures for the specified purpose. Prior authorization by the Central Bank is also required for any foreign exchange purchases for the servicing of private foreign debt, foreign payment of dividends, royalties, patent rights, and professional services.

Exports and Export Proceeds

The Central Bank supervises exports to ensure that exchange proceeds are surrendered to the banking system; the latter sell to the Central Bank all of their purchases (1 percent of export proceeds at the official rate and 99 percent at the banking rate). Exporters of nontraditional commodities to markets outside Central America are entitled to tax credit certificates (CATs, which are freely negotiable) corresponding to 15 percent 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 percent of the increase in the f.o.b. value of exports over the preceding calendar year; the certificates are redeemable against cash at the Central Bank.

Licenses from the Central Bank are necessary for the exportation of merchandise. In addition to the export license from the Central Bank, other export licenses are required as follows: strategic materials, such as armaments, munitions, scrap iron, and scrap of nonferrous base metals (from the Ministry of Economy and Commerce); sugar (from the Agricultural Industrial Board for Sugarcane); beans, rice, potatoes, onions, cotton, meat, and purebred cattle (from the National Council of Production); airplanes (from the Civil Aviation Board and the Ministry of Economy and Commerce); Indian art objects made of gold, stone, or clay (from the National Museum); tobacco (from the Tobacco Defense Board); 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 from coffee, bananas, sugar, beef, bovine cattle, and other perishable items must be surrendered within 30 days of shipment; for exports of other agricultural goods, as well as industrial goods other than capital goods, the deadline is 90 days from shipment. 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 no taxes on nontraditional exports to countries outside of the Central American Area and Panama, while traditional exports do pay tax, in some cases graduated in line with the international prices.

Proceeds from Invisibles

Proceeds from invisibles are free from controls or restrictions.

Capital

All capital transfers between residents and nonresidents may be made, subject to prior authorization by the Central Bank. Capital received by the private sector may be registered at the Central Bank of Costa Rica, provided that it meets various requirements, including the requirements that (a) the project financed with the funds has (or will eventually have) directly or indirectly, a positive effect on Costa Rica’s balance of payments, (b) the amount of the capital is not less than US$50,000, and (c) the individual concerned sells the foreign exchange to the Central Bank. The registration guarantees the individual that the Central Bank will sell to him the exchange required to service the debt at the exchange rate in force at the time the servicing is effected. The National Budget Authority3 is in charge of authorizing the negotiation of new external credits contemplated by the Central Government, decentralized agencies, and state enterprises. Foreign and domestic capital transferred from abroad may be deposited as time deposits in U.S. dollars with agent banks in the form of specified foreign currencies or 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 1983

Exchange Arrangement

November 11. The banking and the free market exchange rates were unified at Ȼ 43.15 = US$1 buying, and Ȼ 43.65 = US$1 selling.

Imports and Import Payments

February 24. Settlement for imports of medicines and medical equipment by the Ministry of Health, the Social Security Fund, and the Technical Council for Medical and Social Assistance was transferred from the official market to the banking market.

June 28. The rates of the temporary surcharge on imports from outside Central America and Panama were raised by 2½ percentage points.

Payments for Invisibles

July 27. The monthly allowance of foreign exchange obtainable at the official exchange rate for remittances to students pursuing higher education abroad was reduced by 50 percent.

August 19. A stamp tax of 1 percent was levied on most foreign payments, with the notable exception of service payments on external public debt, payments by state universities, cooperatives and trade unions, payments for imports serving as inputs in the production of nontraditional exports, and contributions to international organizations.

December 31. Remittances to students pursuing higher education abroad ceased to be eligible for foreign exchange in the official market.

Exports and Export Proceeds

April 29. The surrender requirement for export proceeds at the official rate was reduced from 5 percent to 1 percent, with a corresponding increase from 95 percent to 99 percent in the portion required to be surrendered at the banking rate.

June 28. The surrender requirement of export proceeds at the banking exchange rate was reduced from 99 percent to 98 percent, and the 1 percent was permitted to be sold in the free market.

August 19. The exchange rate differential tax of 1 percent levied on nontraditional exports outside Central America was eliminated.

December 10. The exchange rate differential taxes applying at the rates of 5 percent on nontraditional exports to Central America and of 10 percent on traditional exports were abolished.

Cyprus

(Position on December 31, 1983)

Exchange Arrangement

The currency of Cyprus is the Cyprus Pound. 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, 1983 the official buying and selling rates for the U.S. dollar, the intervention currency, were £C 0.5559 and £C 0.5568, 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 currencies1 on the basis of market rates in international money market centers. There are no taxes or subsidies on purchases or sales of foreign exchange. The Central Bank offers authorized dealers (banks) facilities for forward purchases and sales of U.S. dollars and pounds sterling for periods of up to six months, in respect of trade and tourist transactions only. Rates for longer periods are available for exports, on request.

Administration of Control

Exchange controls are administered by the Central Bank in cooperation with authorized dealers. Authority to approve applications for the allocation of foreign exchange for a number of purposes has been delegated to authorized dealers.

Prescription of Currency

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

Nonresident Accounts

Residents of countries outside Cyprus may open and maintain with authorized banks nonresident accounts in Cyprus pounds, designated External Accounts, or foreign currency accounts. These accounts may be credited freely with payments from nonresidents of Cyprus (such as transfers from other External Accounts or foreign currency accounts), proceeds from sales of any foreign currency by nonresidents (including declared bank notes), and the entire proceeds, including capital appreciation, from the sale of an investment made by a nonresident in Cyprus with the approval of the Central Bank and with authorized payments in Cyprus pounds. External Accounts and foreign currency accounts may be debited for payments to residents and nonresidents, for remittances abroad, for transfers to other External Accounts or foreign currency accounts, and for payments in cash in Cyprus. Companies registered or incorporated in Cyprus which are accorded nonresident status by the Central Bank may maintain External Accounts and foreign currency accounts in Cyprus or abroad.

Blocked Accounts are maintained in the name of nonresidents for funds that may not immediately and in their entirety be transferred outside Cyprus under the existing exchange control regulations. Blocked funds may either be held as deposits or be invested in government securities or government-guaranteed securities. Income earned on blocked funds so invested is freely transferable to the nonresident beneficiary or it may be credited to an External Account or foreign currency account. In addition to income, the principal released in each such case annually for transfer outside Cyprus is not less than £C 5,000. Funds can also be released from Blocked Accounts to meet reasonable educational expenses in Cyprus of the account holder’s children, reasonable living expenses of the account holder while visiting Cyprus, donations to charitable institutions in Cyprus, and for other authorized purposes.

Imports and Import Payments

Cyprus follows a liberal import licensing regime. Most imports are free of licensing requirements. Only imports of certain commodities require an import license. Such commodities include goods produced or manufactured locally, as well as all machinery, plants and equipment, spare parts and accessories.

The Minister of Commerce and Industry may take measures whenever required to regulate the importation of goods for the encouragement of local production and manufacture. Exchange is allocated to pay for imports freely and without restriction through authorized banks, provided that documentary evidence of shipment or actual importation of goods is available.

Advance payments before shipment require the prior approval of the Central Bank, except for imports whose value does not exceed £C 100. Payments for imports free from licensing requirements effected after 200 days from the date of shipment also require the approval of the exchange control authorities. Payments for imports requiring a license are expected to be made within the time limits specified on the license. An import surcharge of 6 percent (3.9 percent for imports from EC countries) ad valorem is levied on all imports except food, feedstuff, pharmaceuticals, and goods imported by the Government.

Payments for Invisibles

Payments for invisibles abroad require the approval of the Central Bank, but approval for certain types of payments has been delegated to authorized banks. Profits, dividends, and interest from approved foreign investments are transferable abroad without limitation, after payment of any due charges and taxes. Insurance premiums due to foreign insurance companies are remittable after deduction of all contingencies. Allowances are granted for study abroad at colleges, universities, or other institutions of higher education. Education allowances for institutions of lower level may be approved by the Central Bank. Exchange allowances are based on the cost of living and cover the full amount of tuition fees plus living expenses for the student. For studies in the Eastern Mediterranean, the Middle East, Yugoslavia, and Comecon countries, the maximum yearly allowance for living expenses is £C 1,600; for Canada and the United States, £C 3,500; for the United Kingdom, £C 2,600; and for all other countries, £C 2,400. There is no limit for the remittance of foreign exchange for payment of tuition fees. The exchange allowance for tourist travel is £C 350 a person a year; the allowance for business travel is not fixed, but depends on the length of stay abroad, the country or countries to be visited, and the purpose; for medical treatment abroad, the amount is unlimited but based on actual expenses.

On leaving Cyprus, travelers may take out with them up to £C 10 in currency notes. Residents may also take out foreign currency notes up to the equivalent of £C 250 a trip as part of any of their foreign exchange allowances. Nonresident travelers may take out any amount of foreign currency notes they declared on arrival. In addition, authorized banks may convert up to £C 100 into foreign currency for departing nonresidents. Furthermore, authorized banks are permitted to issue to nonresidents any amount of foreign currency notes against external funds; delivery of such notes normally takes place through a bank’s branch at the port of departure.

Exports and Export Proceeds

Exports of potatoes and carrots are subject to control by the respective Marketing Boards, 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 the inflow of the sales proceeds. Export proceeds must be surrendered without delay.

Proceeds from Invisibles

Receipts from invisibles must be sold to an authorized bank. Persons entering Cyprus may bring in any amount in foreign currency notes and up to £C 10 in Cyprus currency notes.

Capital

Payments abroad of a capital nature require prior approval. Applications for outward direct investment by residents are approved provided they are expected to contribute to foreign exchange inflows and the exportation of goods and services. Such investments include those by construction and tourist companies.

Investments in Cyprus by nonresidents require also the prior approval of the Central Bank. In considering applications, due regard is given to the purpose of the investment, the extent of possible foreign exchange savings or earnings, introduction of know-how, and, in general, the benefits accruing to the national economy. Foreign direct investment is normally permitted in selected fields of production such as export-oriented industries and new products. Yearly profits and proceeds from the liquidation of approved foreign investments may be repatriated in full at any time, after payment of any due charges and taxes.

With the permission of the Council of Ministers, alien nonresidents may acquire in Cyprus immovable property for use as a residence or holiday home; they are required to pay the value of such property in foreign exchange. The sales proceeds of such property are transferable outside Cyprus up to the amount originally paid for the purchase of the property; the balance, if any, is transferable at the yearly rate of £C 5,000.

Residents of Cyprus (Cypriots or foreign nationals) who take up residence outside Cyprus may transfer abroad immediately 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 from the sale of real estate is limited to £C 5,000, with any excess amount to be credited to a Blocked Account.

Transactions in foreign securities owned by residents require prior permission from the Central Bank. In principle, all securities held abroad by residents are subject to registration.

Gold

Residents may hold and acquire gold coins in Cyprus for numismatic purposes. 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 1983

Exchange Arrangement

April 5. The extended facilities for forward purchases and sales of U.S. dollars and pounds sterling were extended to tourist transactions.

Nonresident Accounts

January 1. The Central Bank raised the maximum amount that could be released within a calendar year from Blocked Accounts from £C 1,000 to £C 5,000.

Payments for Invisibles

April 7. The maximum amount of foreign currency notes that could be issued to residents as part of any of their foreign exchange allowances was increased from the equivalent of £C 100 to the equivalent of £C 250.

Denmark

(Position on December 31, 1983)

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 percent (in the case of the Italian lira, 6 percent) 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, 1983 these rates were as follows:

Specified Intervention Rates Per:Danish Kroner
Upper limitLower limit
100 Belgian or Luxembourg francs18.54317.727
100 deutsche mark371.4355.06
100 French francs121.11115.78
100 Netherlands guilders329.63315.13
100 Irish pounds1,147.351,096.87
100 Italian lire0.61590.5463

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, the Danish central bank intervenes to smooth out fluctuations in exchange rates, the intervention currency being primarily the U.S. dollar. Middle rates for 18 foreign currencies are quoted daily on the basis of market rates.1 On December 30, 1983 the middle rate for the U.S. dollar was DKr 9.875 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.2 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 three 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 Faeroe Islands.

Administration of Control

Exchange control is administered by the National Bank and the authorized exchange dealers, that is, 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 25,000 or less. Transfers of up to DKr 25,000 may, in any event, 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 300,000; any amount in excess of DKr 300,000 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 100,000 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 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 as a general rule be made freely within five years 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 seven 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 25,000.

Travelers may take out freely DKr 25,000 in Danish bank notes and coin, and any amount in foreign bank notes or other means of payment. Nonresidents may, in addition, export amounts of up to DKr 50,000 or any such larger amount in Danish kroner and foreign exchange as they can substantiate as having been imported upon entry into Denmark.

Exports and Export Proceeds

Gold is the only commodity that requires a license when exported to member countries of the EC. Except for certain items subject to strategic controls, licenses for exports to other destinations 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 bank notes and coin, foreign bank notes, 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 with respect to 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 500,000 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. Residents may buy foreign securities that do not represent direct investments in foreign commercial or industrial enterprises,3 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. 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 kinds of 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 2 million a year for each foreign enterprise for direct investments of equity capital.4 Private acquisition of real estate for noncommercial purposes and expenses related to building and construction work on such property can be made without limitations. Direct investments abroad by residents are normally approved in accordance with Denmark’s obligations as a member of the EC and the OECD. 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 certain other transfers abroad of a capital nature by residents.

Danish emigrants are granted an exchange allowance of up to DKr 100,000 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 5 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. A contribution from a parent company to a branch may not be made as a loan or grant; it is treated as direct investment of equity capital. Other direct investments by nonresidents require permission from the exchange control authorities, which is granted liberally in accordance with Denmark’s obligations as a member of the EC and the OECD. The purchase by a nonresident of real property in Denmark normally requires a special license from the Ministry of Justice; permission is usually granted readily where real estate is to be used for industrial or similar enterprises.

The sale to nonresidents of Danish bonds listed on a stock exchange does not require a special license. 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, and may freely purchase shares of joint stock and private companies not quoted on the stock exchange; they may also acquire private mortgage deeds with a residual maturity of five years or more.

Residents may as a general rule take up loans for up to five years 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 at any time exceed the borrowers’ credits to nonresidents in connection with exports of goods and services. Most business enterprises may borrow abroad without restriction, provided that the maturity is at least five years. Residents may take up loans of up to DKr 500,000 a borrower in a calendar year from the borrower’s family members. 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 25,000 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 percent 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 percent 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 and dental 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 and dental 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 percent; domestic transactions in gold are also taxed at a rate of 22 percent. There is no customs duty on imports of gold in bars or coin.

Changes During 1983

Exchange Arrangement

March 21. The intervention limits of the Danish krone within the EMS were redefined as follows, with respect to the Belgian franc, deutsche mark, French franc, Netherlands guilder, Irish pound, and Italian lira.

Specified Intervention Rates Per:Danish Kroner
Upper limitLower limit
100 Belgian or Luxembourg francs18.54317.727
100 deutsche mark371.40355.06
100 French francs121.11115.78
100 Netherlands guilders329.63315.13
100 Irish pounds1,147.351,096.87
100 Italian lire0.61590.5463

Capital

May 1. The limit beyond which individual transactions and remittances would be subject to exchange regulations was raised from DKr 10,000 to DKr 25,000. In addition, residents were permitted to acquire not only bonds issued by international organizations but also bonds listed on a stock exchange. The limit on direct investments in Denmark by nonresidents was raised from DKr 2 million to DKr 5 million a calendar year, and that on direct investments abroad by residents from DKr 500,000 to DKr 2 million. Authorization was also granted for residents to borrow abroad without restriction, provided that the maturity of each such loan was at least five years. Other changes simultaneously introduced included (a) abolition of the limit of DKr 250,000 on purchases of real estate abroad by residents for noncommercial purposes, and (b) an increase from DKr 200,000 to DKr 500,000 (a year) in the limit on loans to and from family members, as well as loans by residents to subsidiary companies abroad.

Djibouti

(Position on December 31, 1983)

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 percent 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. Formally, 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 percent for luxury goods and 23 percent for all other goods. In addition a tax of 5 percent is levied on the c.i.f. value of most nonfood imports. Certain commodities, including alcoholic beverages, noncarbonated mineral water, 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 1983

No significant changes occurred in the exchange and trade system.

Dominica

(Position on December 31, 1983)

Exchange Arrangement

The currency of Dominica is the East Caribbean Dollar,1 which is issued by the Eastern Caribbean Central Bank (ECCB). The East Caribbean dollar is pegged to the U.S. dollar, the intervention currency, at ECS2.70 = US$1. On December 31, 1983 the buying and selling rates for the U.S. dollar were EC$2.6949 and EC$2.7084, respectively, per US$1. The Eccb also quotes daily rates for the Canadian dollar and the pound sterling. There is a 1.5 percent 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 Eastern Caribbean Central Bank area.

Prescription of Currency

Settlements with residents of territories participating in the East Caribbean Central Bank Agreement must be made in East Caribbean dollars; those with 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.

Foreign Currency Accounts

Foreign Currency Accounts may be operated only with the permission of the Ministry of Finance; such permission is normally confined to major exporters and foreign nationals not ordinarily resident in Dominica. The accounts may be credited with foreign currencies obtained outside Dominica. Payments from these accounts require no approval but transactions are subject to the foreign exchange sales tax.

Imports and Import Payments

All imports from South Africa are prohibited. Most other goods are imported under open general license, but individual licenses are required for manufactures or items which compete with local products, unless imported from Caricom countries.

Payments for authorized imports are permitted on presentation of documentary evidence of purchase to a bank. Advance payments for imports require prior approval by the Ministry of Finance.

Payments for Invisibles

Under existing exchange control regulations all settlements overseas require exchange control approval. This is normally granted for specified purposes and services, within limits. The basic travel allowance for each period of travel outside the area served by the ECCB is EC$ 15,000, subject to the presentation of evidence of intended travel. There is a 10 percent ad valorem tax on all travel tickets. In addition to the Basic Travel Allowance, bona fide business travelers may purchase foreign currency not exceeding the equivalent of EC$250 for each day outside Dominica, provided the total for the trip does not exceed EC$7,500. Persons going overseas for medical treatment may draw an amount additional to the basic allowance not exceeding EC$350 a day, up to a maximum of EC$20,000; such purchase is conditional upon the presentation of a medical certificate that the journey is necessary. Foreign currency may also be bought to meet educational expenses, including accommodation, up to EC$ 15,000 in each academic year. Authority will normally be given for the payment of fees and subscriptions to recognized institutions and for such other educational items as newspapers. Outward remittances of cash gifts are allowed, up to EC$1,000 a year to each recipient. Profits may be remitted overseas in full provided that the Comptroller of Inland Revenue has prior knowledge of the transfer.

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 conversion of export proceeds to an East Caribbean Central Bank currency account is mandatory, except where the exporter has a foreign currency account into which the proceeds may be paid. Export duties are levied on bananas, fresh fruit, fruit juices, nuts, essential oil, and timber.

Proceeds from Invisibles

Foreign currency proceeds from transactions in invisibles must be sold to a bank or paid into a foreign currency account. There is no restriction on importation of bank notes and coins.

Capital

All outward transfers of capital or profits require exchange control approval. The purchase by residents of foreign currency securities and of real estate located abroad is not normally permitted. Capital transfers, such as inheritances, to nonresidents require approval which normally is granted subject to the payment of any taxes due. Emigrants leaving Dominica to take up residence outside the Eastern Caribbean Central Bank 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. Approval from the Ministry of Finance is required 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. Small quantities of gold may be imported with the approval of the Ministry of Finance, for industrial purposes only.

Changes During 1983

Exchange Arrangement

July 1. The tax on sales of foreign exchange was increased from 1 percent to 1.5 percent.

October 1. The East Caribbean Currency Authority was succeeded by the Eastern Caribbean Central Bank, and Dominica (as well as Antigua and Barbuda, Grenada, Montserrat, St. Lucia, and St. Vincent and the Grenadines) continued to be a member of the institution.

Dominican Republic

(Position on December 31, 1983)

Exchange Arrangement

The currency of the Dominican Republic is the Dominican Peso. The Dominican Republic operates a dual exchange market, consisting of an official exchange market in which transactions are conducted at an exchange rate of RD$1 = US$1, and a parallel market in which all specified transactions not eligible for the official exchange market are conducted at a freely determined rate. Other implicit rates arise from (a) the requirement of a fully prepaid letter of credit for most imports, and (b) the levying of a tax on remittances of profits from foreign investments, including a surtax on this tax.

Exchange transactions in the official exchange market in U.S. dollars between the Central Bank and other banks take place at RD$1 = US$1 plus a commission of 132 of 1 percent. Commercial banks charge commissions of ¼ of 1 percent (buying) and ½ of 1 percent (selling) on transactions conducted at the official exchange rate of RD$1 = US$1; an additional 1 percent commission is levied on payments by letter of credit.

Foreign exchange operations are currently conducted in the parallel market through commercial banks and exchange banks. The main sources of demand for foreign exchange in the parallel market are (a) import payments for which the Central Bank does not provide foreign exchange at the official rate (about 50 percent of import payments were made in the parallel market in 1983); (b) other foreign exchange payments not approved by the Central Bank, such as foreign travel of Dominican residents; and (c) capital outflow. The main sources of supply in this market are (a) inward remittances from Dominicans living abroad; (b) tourist receipts; (c) possible overinvoicing of imports especially when import duties are low; (d) possible underinvoicing of some exports; (e) capital inflows not transacted through the banking system; and (f) foreign exchange refunds made by the Central Bank to nontraditional exporters.

Foreign Currency Accounts

Under a Monetary Board resolution of August 24, 1982 commercial banks are authorized to open two types of foreign exchange accounts for their clients.1 One of these is a noninterest-bearing dollar account, from which funds can be drawn to make payments for current transactions approved by the Central Bank. The other type of account yields interest at a rate announced periodically by the Central Bank but not more than 1 percentage point below the federal funds rate in the United States; such an account is subject to a minimum deposit requirement of US$25,000. Both types of accounts are subject to a 100 percent reserve requirement.

Beginning in mid-November 1983, exchange banks have been established and empowered to purchase and sell foreign exchange in the parallel market, and the operation of exchange houses has been prohibited. (Commercial banks were permitted to continue transactions in the parallel market until December 31, 1983 but their sales of foreign exchange in this market were limited to transactions involving payments of goods and services.) Beginning also in mid-November 1983 the Central Bank maintains a stabilization exchange fund at the Reserve Bank, whereby the latter may intervene in the parallel market to prevent erratic fluctuation of the exchange rate in the parallel market.

Administration of Control

Exchange and trade control policy is determined by the Monetary Board, and foreign exchange control is administered by the Central Bank. 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). Import payments in currencies other than the U.S. dollar must be made through letters of credit. Otherwise, no obligations are imposed on importers, exporters, or other residents regarding the currency to be used for payments to or from nonresidents.

Imports and Import Payments

Imports may be classified in four categories: (a) fuel imports of the oil refinery and the State Electricity Corporation, for which the Central Bank sells foreign exchange at the official exchange rate in unrestricted amounts; (b) imports for which the Central Bank sells foreign exchange at the official exchange rate only up to specified annual quotas; (c) imports for which the Central Bank does not sell foreign exchange; and (d) imports that are prohibited, either permanently or for temporary periods of time. In principle, except for prohibited imports, all import payments can be made with foreign exchange purchased in the parallel market.

All payments for imports settled with foreign exchange at the official rate require the approval of the Central Bank. Import settlements against collection or by draft must be denominated in U.S. dollars. Prepayment of letters of credit is required for certain imports. The Monetary Board establishes annual foreign exchange quotas for certain raw material and inputs by the state agency INESPRE; in 1983, these were set to be equal to 45 percent of the average annual import level of 1979 and 1980.

The importation of vehicles was prohibited for one year on June 11, 1981. This prohibition was reintroduced on August 18, 1982, and, in addition, imports of certain nonessential goods as such various foodstuff products, capital goods, and household electronic products, were prohibited also for one year. Imports of vehicles are subject to an annual quota of US$25 million, for which payment is to be settled through the parallel market.

In principle, “nominal duty rates” range from a minimum of 40 percent to almost 900 percent for imports of malted beverages. Most of the nominal duty rates at the three- and four-digit level of the tariff schedule range between 40 percent and 75 percent. However, a number of imports were exempted from the payment of these nominal duties. An internal consumption tax of 20 percent ad valorem, and a 4 percent surcharge on the total amount of all customs charges are applied on all imports subject to the minimum duty of 20 percent.

Payments for Invisibles

All payments for invisibles at the official exchange rate require the prior approval of the Central Bank. Foreign exchange at the official rate is sold only for a limited number of payments for current invisibles, and only for limited amounts. Nonresident foreign nationals working in the Dominican Republic in industries and firms that contribute to the country’s economic development may remit abroad up to 40 percent of their incomes, at the official exchange rate, subject to a limit of US$1,000 a month. Nonresident foreign nationals working for the Government are not subject to these limits, and nonresident foreign nationals working on the installation of new manufacturing plants have full remittance rights at the official exchange rate. For graduate education abroad, exchange requests for monthly maintenance allowances of up to US$320 are approved for students in the United States, and up to US$350 for students in Europe; an allowance of US$1,000 each semester is granted for the payment of tuition charges. Purchases of foreign exchange for medical treatment abroad are subject to negotiation with the Central Bank but cannot exceed US$5,000 in each case. Except for official travel, the Central Bank does not sell foreign exchange at the official exchange rate for travel abroad. Payments for invisible transactions not approved by the Central Bank, or in excess of the limits specified, can be made through the parallel market; such transactions include notably expenses for tourist and business travel abroad, insurance premiums, remittances for family living expenses, current earnings for film rentals, and royalties related to films.

Applications for foreign exchange for interest and amortization payments on loans registered with the Central Bank are approved in accordance with the terms of the contract. The interest rate on foreign financing cannot be more than 3 percentage points above the U.S. prime rate when the foreign financing originates in the United States, or above the LIBOR when the foreign financing originates in the Eurodollar market. Transfers of profits and dividends on foreign investment, at the official exchange rate, may be made only when the investment has been registered with the Central Bank. Profit remittances cannot during a year exceed the limit of 25 percent of the net value of original and additional investments plus reinvestments, minus repatriation. Profit remittances from foreign investments are subject to a tax of 18 percent and to a surtax of 3 percent on the amount of the tax.

Beginning from October 29, 1983, nonresident aliens traveling to the Dominican Republic by air are required to possess a valid round trip ticket purchased in the country of departure; this is intended to prevent them from obtaining return air tickets with foreign exchange from the Dominican Republic’s official foreign exchange market.

Exports and Export Proceeds

Exports of 18 categories were prohibited, including mostly food products and certain animal species whose hunting is prohibited for conservation purposes. Export licenses are required for 36 product categories, mainly sugar, molasses, coffee, and textile products. Exports of sugar and sugar by-products are subject to prior authorization by a special committee formed by the Secretary of Finance, the Governor of the Central Bank, and the Executive Director of the National Sugar Institute (Inazucar).

Within two working days of receiving payments, exporters must surrender to the Central Bank, through the commercial banks, foreign exchange equal to 100 percent of the value of their exports. For the purposes of exchange surrender, declared export prices must equal or exceed the minimum export prices established by Cedopex for certain exports. Firms operating in industrial free zones are exempted from the exchange surrender requirements, and are required to convert only the foreign exchange which is needed to cover local costs and taxes. In addition, under the Export Incentives Law of November 16, 1979 (Law No. 69), receipts from specified nontraditional exports (see below) may be exempted partially from the surrender requirement at the official exchange rate. Exporters may not extend credit to foreign buyers for more than 90 days from the date of shipment without authorization by the Central Bank.

Nontraditional exporters are entitled to a refund of a percentage of the import taxes paid on raw materials or component parts used in the manufacture of goods subsequently exported; this percentage is 90 percent on exports containing only imported inputs, 95 percent on exports containing domestic inputs, and 100 percent on exports produced in the industrial free trade zone.2 Exporters are also eligible for a refund of 95 percent of any internal tax levied on locally manufactured goods which are exported.

Law No. 69, which came into effect in 1980, aims to promote nontraditional exports by partially exempting exporters from the surrender requirements at the official exchange rate. This law also provides for the issuance of tax credit certificates (certificados de abono tributario—CATs) for a value not exceeding 15 percent of the f.o.b. or c.i.f. value of exports; the percentage can be up to 25 percent when exports contain a high degree of domestic agricultural inputs. The CATs are, in principle, fully negotiable and can be used for the payment of taxes or other obligations to the Government. (Only a limited number of CATs have, however, been issued.) In addition, Law No. 69 regulates the system of temporary admission for imports, under which duties are waived for any imports used in the manufacture of nontraditional products to be exported within a year.

Nontraditional exporters wanting to benefit from the partial waiver of the surrender requirement must apply to Cedopex, which forwards applications having its support to the Monetary Board for approval. Refunds of surrendered foreign exchange are made in approved cases within two working days of the surrender.

The exemptions from surrender requirements at the official exchange rate for nontraditional exports vary between 20 percent and 100 percent. The exemption level is 100 percent for nontraditional agricultural products and 85 percent for industrial products.

Beginning from November 17, 1983, an export compensation fund operates in place of the exchange certificate scheme which was instituted in November 1982 as an incentive to agricultural products (sugar, molasses, coffee, cocoa, and tobacco). Exporters previously eligible for exchange certificates are eligible for financial benefits in local currency paid out of the compensation fund on the basis of percentages established for the previous (exchange certificate) system. A six-month average of the parallel market exchange rate is used as the basis for calculating the local currency value of the financial incentive. Foreign exchange corresponding to the incentive payments is transferred to the Reserve Bank by the Central Bank for sale in the parallel market.

Proceeds from Invisibles

Foreign exchange proceeds from invisibles must be surrendered to the Central Bank through the commercial banks. The import of Dominican banknotes and coin is prohibited.

Capital

There are no restrictions on the inward movement of capital by either residents or nonresidents. However, direct foreign investment is regulated by Law No. 861 of July 19, 1978, which created a Directorate of Foreign Investment to approve direct investment requests. Such investments must be registered with the Central Bank in local currency for the remittance of dividends through the official exchange market to be permitted for up to an annual maximum of 25 percent of the registered value.

Foreign debt can be contracted directly by the Central Government, subject to congressional authorization. According to Law No. 251 of 1964, new loans by other public and private entities require Monetary Board authorization to ensure the provision of official foreign exchange for servicing the loans. According to a set of criteria established by the Monetary Board on November 19, 1981, priority in the approval of new loans is given to foreign borrowing for export, import substitution, and social projects such as housing and education. Total interest charges on foreign loans are not allowed to exceed the U.S. prime rate or the LIBOR by more than 3 percent. There are also minimum maturity requirements according to the type of financing.

Applications to the Central Bank by residents to transfer capital abroad through the official exchange market for portfolio investments, the purchase of real estate, etc. are normally not approved. But there are no restrictions on the amount of foreign exchange that Dominican residents can purchase in the parallel market.

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 1983

Exchange Arrangement

November 17. The Central Bank opened a stabilization exchange fund in the Reserve Bank as a means of enabling the latter to intervene in the parallel market on behalf of the former to prevent erratic fluctuations of the parallel exchange rate.

November 18. The Monetary Board issued a decree limiting purchases and sales of foreign exchange in the parallel market to exchange banks authorized by the Central Bank. (Commercial banks were permitted to continue to operate in the parallel market until December 31, 1983, but their sales of foreign exchange in the market were limited to transactions involving payments for goods and services from abroad.)

Imports and Import Payments

March 30. The Central Bank excluded a wide range of products from the list of import items eligible for foreign exchange at the official market rate.

June 14. The Central Bank excluded soybeans and soybean cake from the list of import items eligible for foreign exchange at the official market rate.

July 14. The Central Bank authorized the sale of foreign exchange at the official market rate for up to 77 percent of the value of machinery and equipment imports for tourist projects financed by the tourist promotion agency (Infratur) with financial assistance from the World Bank. In addition, it was decided that tourism projects financed with financial assistance from international institutions would be eligible for foreign exchange at the official market rate up to a percentage of their required imports equal to the ratio of the share of the external financing of these institutions to the total value of the financed projects.

September 8. The Central Bank excluded corn from the list of imports eligible for foreign exchange at the official market rate.

November 30. The prohibition on the importation of motor vehicles was temporarily lifted, and a quota of US$25 million of imports was established; payments for such imports were required to be made through the parallel market.

Payments for Invisibles

March 30. The Central Bank removed payments of insurance premiums from the list of payment items eligible for foreign exchange at the official foreign exchange.

October 29. In a move to discourage access to the official foreign exchange market, the Dominican Republic Immigration Authority issued instructions to the airline companies operating in the country to require nonresident alients boarding flights to the Dominican Republic to have in their possession valid round trip tickets purchased in the country of departure.

November 17. The Central Bank introduced a regulation specifying that drawings on U.S. dollar accounts held by individuals and corporations at the commercial banks should be only for payment for imports of goods and services, and not for remittances abroad.

Exports and Export Proceeds

June 15. The Central Bank included cocoa liquor, oil, and cake in the list of export items entitled to foreign exchange certificates.

July 14. Central bank authorization was granted for the sale of domestically mined gold for industrial activities, through an affiliate of the Rosario Mining Company operating in a free trade zone.

October 18. The Central Bank authorized the issue of foreign exchange certificates amounting to 10 percent of value, for exports of gold, silver, and doré.

November 17. In place of the system of foreign exchange certificates, the Central Bank instituted an export compensation fund, to be fed from earnings on the exchange stabilization accounts, and used for cash payments in domestic currency to exporters of sugar, molasses, coffee, cocoa and cocoa derivative products, and tobacco.

Proceeds from Invisibles

March 30. The Central Bank authorized the issue of foreign exchange certificates to such corporate entities as had insurance payments for risks covered abroad and had surrendered the foreign exchange to the Central Bank; the certificates entitled the bearers to acquire foreign exchange at the official market rate for payments eligible to be effected through this market, including reinsurance premiums.

May 5. The Central Bank granted authorization for charges on credit cards of foreign travelers visiting the country to be billed in Dominican pesos and to be converted at the exchange rate established for the parallel market by the Exchange Commission.

June 16. The Central Bank authorized the issue of foreign exchange certificates up to 100 percent of value for those surrendering foreign exchange proceeds from tourism to the Central Bank.

September 8. The Central Bank imposed a surrender requirement of US$20,000 an institution and US$6 a registered student on those universities receiving foreign exchange as payment for tuition and fees from foreign students.

September 8. The Central Bank granted authorization for the commercial banks to open an exchange rate window in airports, ports, and hotels and operate in the parallel market at the rate set by the Exchange Commission.

Capital

July 13. The Central Bank granted authorization for nonbank financial institutions to receive U.S. dollar deposits from Dominican citizens living abroad.

July 14. The Central Bank authorized the issuance of foreign exchange certificates to foreigners purchasing real estate for tourist development projects, provided that they surrendered the foreign exchange to the Central Bank and opted not to register the invested funds with the Central Bank as foreign investment.

Gold

July 14. The Central Bank authorized the sale of domestically mined gold for industrial activities, through an affiliate of the Rosario Mining Company operating in a free trade zone.

Ecuador

(Position on December 31, 1983)

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 operates a system under which the exchange rate is adjusted at frequent intervals by small units amounting to S/. 0.05 per US$1 daily; on December 31, 1983 the buying and selling rates in this market were S/. 54.10 and S/. 55.18 per US$1, respectively. 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. Most export proceeds, certain import payments, certain settlements of invisibles, government and public sector transactions, and specified capital transactions of the private sector are negotiated in the official market. With certain exceptions all other transactions are conducted in the free market, in which the exchange rate fluctuates but where the Central Bank may intervene from time to time. The free market buying and selling rates on December 31, 1983 were S/. 86.88 and S/. 88.75, respectively, per US$1. A few transactions (such as payments for printed material) may be made in either of the two markets.

The sales and purchases of foreign exchange by oil companies are subject to a service charge of S/. 0.25 per US$1. Loan capital from international agencies and foreign governments to the Government and public institutions is converted at the official rate prevailing on the disbursement date.

External loans are subject to a tax that varies between 0.5 percent and 2 percent 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.

An arrangement for refinancing specified private external debt involves different implicit exchange rates arising from the imposition of changes over the official rate to compensate for possible exchange losses.

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, which 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 (MICEI) and, when exemptions from fiscal charges are sought, by the Ministry of Finance. Foreign investment in Ecuador is supervised by the MICEI.

Prescription of Currency

Most settlements with the German Democratic Republic, Hungary, Poland, and Romania take place through bilateral accounts. Payments between Ecuador and Argentina, Bolivia, Brazil, Chile, Colombia, 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 percent of import duties has been made, that an advance deposit has been paid, that prior ministerial authorization (where applicable) has been obtained, that a credit arrangement with a minimum maturity of 180 days has been concluded with an outside party, and that a certificate is submitted showing that insurance has been arranged in Ecuador.

The List I 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. Beginning from March 1983, List II imports are no longer entitled to official foreign exchange.

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.2 The deposit must be maintained for 180 days for List I imports; for imports of List II items, the retention period is 270 days. The deposit is 25 percent of the c.i.f. value for goods on List II, 10 percent for goods on List I-B, and no deposit is required for goods on List IA. All imports are subject to a tax of 6 percent levied on commercial transactions. Furthermore, all goods are subject to a service charge of 1 percent 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 percent 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. An arrangement for refinancing specified private external debt involves different implied exchange rates arising from the imposition of changes over the official rate to compensate for possible exchange losses. These rates are applicable to refinancing of private external credits contracted by the domestic financial system authorized by the Central Bank before May 14, 1982, and for interest on long-term external credits authorized by the Central Bank before May 14, 1982, even if the proceeds were sold in the free market. Foreign exchange for payment of interests on private sector loans of over 18 months as well as for repayment of suppliers’ credits may be obtained at the Central Bank, provided that the loans have been registered at the Central Bank; beyond this, foreign exchange for other private sector interest payments 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 percent above the rates of interest of the creditor country and 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 transaction at 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 bank notes that travelers may take out. Residents traveling abroad by air must pay a tax of S/. 602 for each exit visa. Airline tickets for foreign travel are taxed at 10 percent, and tickets for travel by ship are subject to tax at the rate of 8 percent for departure from Ecuador and 4 percent for the return trip.

Exports and Export Proceeds

All exports require licenses to ensure required surrender of the exchange proceeds to the Central Bank; licenses are issued freely, subject to guarantee. Ten percent of traditional non-oil exports (bananas, coffee beans, cocoa beans, and sugar) and 70 percent of nontraditional non-oil exports are exempt from the surrender requirement. Export proceeds must be surrendered not later than 360 days after shipment for manufactured goods, 45 days for coffee beans, bananas, and unprocessed seafood products, and 75 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 based on the sales contracts; 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 percent for washed coffee, 20 percent for raw coffee, and 15 percent for cocoa.

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 bank notes.

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 percent to 2 percent (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. 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 must 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 short-term 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 the financial and insurance sectors 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 percent 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 percent 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 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 percent ad valorem; semiworked gold is treated as a List II import.

Changes During 1983

Exchange Arrangement

March 18. The Central Bank of Ecuador was authorized to intervene in the free exchange market to purchase foreign exchange in an amount up to 30 percent of the f.o.b. value of merchandise (other than petroleum and its derivatives, bananas, coffee beans, cocoa, and sugar), and to sell foreign exchange to cover the c. & f. value of imports of List II goods (Monetary Board Regulation No. 064-83).

March 19. The official exchange rate was established at S/. 42 = US$1 or its equivalent in other currencies. In addition, it was announced that, beginning from March 23, 1983, the rate (in terms of sucre per US$1) would increase by S/. 0.04 per U.S. dollar, and the buying rate would be the official rate while the selling rate would be 2 percent above the buying rate, rounded to the nearest cent (Monetary Board Regulation No. 065-83).

March 19. It was decided that the following transactions should be traded at the official exchange rate: proceeds from exports of petroleum and its derivatives, bananas, coffee, cocoa, and sugar, as well as 70 percent of the proceeds from exports of other products; foreign investment inflow through official channels; and external private credits with maturities longer than one year authorized and registered by the Central Bank of Ecuador. In addition, foreign exchange would be sold at the official exchange rate for payments of the c. & f. value of imports of List I goods, amortization and interest payments on external public as well as private debt, and foreign exchange allowance for Ecuadoran students abroad (Monetary Board Regulation No. 066-83).

June 20. It was announced that, beginning from June 21, 1983 the official exchange rate in terms of units of sucre per US$1 would increase each calendar day by S/. 0.05 per U.S. dollar, or its equivalent in other currencies (Monetary Board Regulation No. 100-83).

June 20. It was decided that valuation of import duties should be done by taking as reference for each calendar month the official exchange rate calculated for the 20th day of the month in question on the basis of the projected daily rate of devaluation (Monetary Board Regulation No. 102-83).

June 21. A service charge of S/. 0.25 per U.S. dollar was levied on petroleum-related purchases and sales of foreign exchange (at the official exchange rate) by the Central Bank of Ecuador (Monetary Board Regulation No. 103-83).

October 24. A tax of 1 percent for the benefit of Ecuadoran universities and polytechnic schools was levied on sales of foreign exchange on the free market (Monetary Board Decree No. 145).

Imports and Import Payments

January 7. Imports of goods originating in member countries of the Cartagena Agreement were exempted from the import prohibitions (Regulation Nos. 026 and 027 of November 16, 1982, Monetary Board Regulation No. 038-83).

February 8. Imports of capital goods by the mass media in Ecuador (the written press, radio, and television) were exempted from the import prohibitions (Monetary Board Regulation No. 040-83).

February 8. Imports of fixed capital goods contracted before November 16, 1982 were exempted from the import prohibitions (Monetary Board Regulation No. 041-83). In addition, imports of capital goods for use in the hydrocarbon industry were also exempted from the import prohibitions (Monetary Board Regulation No. 042-83).

March 1. Imports of goods originating in and proceeding from the Latin American Integration Association (LAIA) were exempted from the import prohibitions (Monetary Board Regulation No. 050-83).

March 8. It was announced that the Central Bank of Ecuador would make foreign exchange available at the official exchange rate to cover the f.o.b. value of imports including foreign charges stated in the bill of lading (Monetary Board Regulation No. 056-83).

March 8. The minimum payment term for at least 80 percent of the f.o.b. value of all imports not previously subject to term payments was fixed at 120 days or more (Monetary Board Regulation No. 058-83).

March 17. A monetary stabilization surcharge of 5 percent ad valorem was levied on the c.i.f. value of imports under Section A of List I, 8 percent for those under Section B of List I, and 15 percent for List II imports (Law on the Economic Regulation and Control of Public Expenditure, Article 7, published in Official Register No. 453 of March 17, 1983).

March 18. The prior deposit requirements for the c.i.f. value of the different categories of imports were fixed as follows (Monetary Board Regulation No. 063-83):

ListDeposit SectionDeposit Rate (c.i.f. value)Terms
IA0 percent
IB20 percent180 days
II50 percent270 days

March 19. Amendments were made in the classification of 77 tariff items covering goods under Sections A and B of List I imports (Monetary Board Regulation No. 069-83).

April 5. Items for medical and veterinary use imported by the Ministries of Health, or Agriculture and Livestock through the Pan American Health Organization were exempted from the term payment requirements (Monetary Board Regulation No. 070-83).

April 21. Imports of permitted goods for public and private development projects, financed through external credits granted by official international financial institutions and having an original maturity longer than five years were exempted from the term payment requirement; foreign exchange would not be made available at the official rate to pay for such imports (Monetary Board Regulation No. 078-83).

May 26. Public sector imports financed with credits granted by official international financial institutions with the prior authorization of MICEI and the Ministry of Finance were exempted from all restrictions, including import prohibitions or temporary suspensions (Monetary Board Regulation No. 085-83).

May 26. Imports for public or private sector projects financed with external credits having an original maturity longer than five years were exempted from the advance deposit requirement (Monetary Board Regulation No. 088-83).

May 26. A number of import items were transferred from List II to Section B of List I (Monetary Board Regulation No. 089-83).

June 2. Imports of sorghum were shifted to the category of List I, Section A, and made subject to prior authorization by MICEI (Monetary Board Regulation No. 096-83).

June 29. Imports of calcium carbonate were classified under Section B of List I, involving prior authorization from MICEI (Monetary Board Regulation No. 107-83).

June 29. Imports by CEPE (the State Petroleum Corporation) were exempted from the regulation specifying the terms of payment (Monetary Board Regulation No. 108 A-83).

July 5. In an amendment of tariff item 23.01.01.01, imports of fishmeal were removed from quota restrictions (Monetary Board Regulation No. 110-83).

October 18. The surrender requirement for export proceeds was modified as follows: The Central Bank would purchase at the official rate all foreign exchange proceeds from exports of petroleum and its derivatives, 90 percent of the proceeds from exports of bananas, coffee, and cocoa, and 70 percent of the exports of other products. In addition, the Central Bank of Ecuador was empowered to intervene in the free exchange market to purchase foreign exchange in an amount up to 10 percent of the f.o.b. value of exports of bananas, coffee, cocoa, and sugar, and 30 percent of the f.o.b. value of other exports, with the exception of petroleum and its derivatives, such purchase to be made at the free market buying rate prevailing on the collection date of the foreign exchange. Besides, the required percentage of prior deposit was specified for the various import categories as follows, with effect from November 1, 1983 (the requirement was abolished on January 1, 1984):

ListSectionDeposit Rate (c.i.f. value)Terms
IA0 percent
IB10 percent180 days
II25 percent270 days
(Monetary Board Regulation No. 127–83.)
(Monetary Board Regulation No. 127–83.)

Payments for Invisibles

March 8. Foreign exchange sales at the official exchange rate for education abroad were approved only for graduate and handicapped students following special training or adaptation courses (Monetary Board Regulation No. 059-83).

April 21. The Central Bank was empowered to make interest payments in foreign exchange at the three-month LIBOR rate to direct importers or intermediary financial institutions that had paid abroad the foreign exchange funds which they were entitled to obtain at the official rate but had not yet been made available to them by the Central Bank; the interest payments would be calculated from the date of the payment by the importer or intermediary financial institution to the date on which the Central Bank furnished the foreign exchange (Monetary Board Regulation No. 078-83). (This regulation was amended by No. 092-83 of June 2, 1983.)

May 26. Foreign exchange sales at the official exchange rate were authorized for payment of news services intended for the mass media (Monetary Board Regulation No. 089-83). (The facility had been suspended by Regulation No. 066-83.)

June 2. The method of calculating interest payments in respect of the arrangement instituted on April 1, 1984 was changed such that interest payments would be calculated from the date of payment of the equivalent in sucres to the Central Bank (or the date of receipt of authorization to debit the beneficiary’s current account) up to the date on which the Central Bank furnished the foreign exchange (Monetary Board Regulation No. 092-83).

June 2. Authorization was granted for foreign exchange to be sold at the official exchange rate for payments abroad of interest on private sector loans not conforming to the refinancing provisions specified by the Government (Monetary Board Regulation No. 093-83).

June 2. Foreign exchange sales at the official rate were authorized for special studies abroad by handicapped persons or their teachers or instructors; the duration of studies in each case should not exceed three years (Monetary Board Regulation No. 097-83).

July 26. In a modification of an arrangement introduced in April 1983, eligible importers and intermediary institutions were given the option to receive interest payments either in sucres at the free market exchange rate prevailing on the date of deposit of local currency counterpart funds at the Central Bank or in foreign exchange by means of a certificate redeemable 210 days from the date of interest payments (Monetary Board Regulation No. 112-83).

Exports and Export Proceeds

March 8. A control mechanism for export settlement in foreign currencies was instituted with a view to eliminating underinvoicing of Ecuadoran sales to foreign countries (Monetary Board Regulation No. 057-83).

June 21. It was decided that the proceeds of petroleum exports should be surrendered in the official exchange market, and should be calculated on the basis of the selling prices specified in the sales contracts registered with the Central Bank of Ecuador (Monetary Board Regulation No. 104-83).

September 23. The Central Bank was empowered to deduct the value of imported inputs for the purpose of calculating the f.o.b. value to be surrendered in respect of exports incorporating raw materials or inputs brought into the country under the temporary importation regime for industrial production (Monetary Board Regulation No. 122-83).

Capital

March 1. The Central Bank was authorized to discount (or rediscount) for banking and financial institutions established in Ecuador, paper originating in credits contracted by such institutions or endorsed by them to Ecuadoran natural or juridical persons in the private sector, involving the conversion of foreign claims in foreign currencies into sucre claims. The discounting facility provided by the Central Bank should cover up to three years, including a grace period.

The banking or financial institutions involved in such rediscounting should comply with one of the following conditions: (a) acquire certificates of participation (in accordance with Regulation No. 047-83) in an amount equivalent to the foreign currency credits complying with the specified terms; (b) obtain, in favor of the Central Bank, a loan in U.S. dollars in an amount equivalent to the foreign currency credits, with a six-year maturity, not less than one year’s grace, and semiannual interest and amortization payments (the funds thus obtained to be used for payment of claims converted into sucres); and (c) obtain from similar facilities, in favor of the National Government, complementary loans in an amount equivalent to at least 20 percent of the private sector credits under this arrangement. The credits in sucres granted by banks to the private sector under the arrangement would be called “Stabilization Credits,” and would be granted in the following ratios: 30 percent of the refinanced value after the first year, 60 percent after two years, and 100 percent after three years (Monetary Board Regulation No. 048-83).

March 8. A regulation was introduced stipulating that contracts made by public sector entities and repayable in foreign currency should be registered with the Central Bank (Monetary Board Regulation No. 055-83).

April 5. It was announced that the Central Bank would authorize and register foreign loans to the private sector maturing after January 1, 1985 and having terms of not less than 18 months; and that foreign exchange from such loans should be surrendered to the Central Bank at the official buying rate prevailing on the surrender date. In addition, it was decided that amortization and interest payments of up to 2½ points above LIBOR (or prime rate) could be made at the official selling rate prevailing on the payment date (Monetary Board Regulation No. 073-83).

May 26. A regulation was introduced specifying that foreign exchange from direct foreign investment should be surrendered in the official exchange market (Monetary Board Regulation No. 084-83).

June 20. An arrangement was instituted for service payments falling due between November 1, 1982 and December 31, 1984 on private sector external credits authorized and registered by the Central Bank. (This arrangement could also be used for outstanding external credits authorized and registered by the Central Bank with maturities prior to November 1, 1982, as well as for maturities after 1984.) The arrangement provided the following options in regard to the servicing of private external debt: (a) the creditor bank could choose to preserve its credit relationship with the debtor, in which case the maturing obligation should be registered with the Central Bank, which would agree to provide the foreign exchange at the official exchange rate; (b) the private debt could be transformed into a direct obligation of the Central Bank by means of an instrument called monetary stabilization credits; or (c) foreign exchange accounts in favor of the creditor banks could be established at the Central Bank in return for the debtor’s deposit of equivalent funds in sucres. With regard to the introduction of the system of stabilization credits, the Central Bank was authorized to discount (or rediscount) for Ecuadoran banking and financial institutions, paper originating in credits contracted by such institutions or endorsed by them to natural or juridical persons of the private sector, involving the conversion of external obligations in foreign currencies into sucre obligations. To cover possible exchange losses, commissions would be charged at the following rates over the official exchange rate on the date of discounting or rediscounting, depending on the original exchange market entitlement of the transactions and the length of the discounting (or rediscounting) period:

Original Exchange Market EntitlementFirst 18 MonthsEach Quarter Thereafter
Official market203
Official and free markets (Reg. No. 1202)254
Free market306
Short-term free market407
(Monetary Board Regulation No. 101-83.)
(Monetary Board Regulation No. 101-83.)

July 26. Amendments were made in Regulation No. 101-83, pertaining to the refinancing of external private sector credits (Monetary Board Regulation No. 113-83).

Egypt

(Position on December 31, 1983)

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, 1983 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 The established rate only applies on the receipt side to proceeds from exports of petroleum, cotton, and rice, Suez Canal dues, and Sumed pipeline revenues, and on the payments side to settlements for imports of certain essential foodstuffs, insecticides and fertilizers, and specified capital transactions. A special exchange rate, equivalent to LE 0.3913 = US$1, applies to transactions under bilateral payments agreements with the People’s Republic of China and countries that are not members of the International Monetary Fund, as well as to liquidation accounts related to past bilateral payments agreements.2 A different rate also established by the authorities is applied to exchange transactions by the commercial banks, notably those with respect to workers’ remittances, tourist receipts, export items other than those specified above, certain private imports, public sector imports not financed by the Central Bank, and certain capital transactions. On December 31, 1983 the buying and selling rates for the U.S. dollar for such transactions through the commercial banks were LE 0.83168 and LE 0.84000, per US$1, respectively. In addition, certain transactions, including most private sector imports and certain payments for invisibles, take place at freely negotiated exchange rates (“own exchange market”). 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 and Foreign Trade, 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 and Foreign Trade supervises imports and exports. Certain imports and exports are reserved for public sector entities. 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.3 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 and Canal Dues Accounts, there are three types of accounts: Free Accounts, D Accounts, and Nonconvertible Capital Accounts.

Free Accounts may be opened in the name of any entity 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 bank notes 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 bank notes 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 to the country of the account holder. They may be debited for transfers to the country of the account holder and for local payments (including those for Egyptian exports) authorized by the implementing regulations and within the scope of the relevant payments agreement.

Nonconvertible Capital Accounts must be credited with any payment of a capital nature to a foreigner living outside of Egypt that is not remittable under the exchange control regulations. Banks may debit these accounts for charges legally due from the account holder. Accounts held by individuals may be debited up to a limit of LE 2,000 a year for use by the account holder. Accounts held by juridical persons may be debited for settlement of 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.

Resident Accounts

In addition to Free Accounts, which may be opened by both nonresidents and residents, residents may hold foreign currency in two other accounts, as described below.

Foreign Exchange Retention Accounts may be opened in the name of authorized recipients and credited with all or part of proceeds from certain exports of goods and nonfactor services. Public sector companies may use these funds for their purposes within the provision of the foreign exchange budget or transfer them to other public sector companies within the same sector. Private sector exporters may debit these accounts for visible and invisible payments or transfer their foreign exchange to other accounts. Exporters of onions, garlic, potatoes, peanuts, and citrus fruits are entitled to retain only 50 percent of their foreign exchange earnings. Banks are allowed to pay interest on the balances in retention accounts. With specified exceptions, balances in Foreign Exchange Retention Accounts must be surrendered to the commercial banks a year after the funds have been deposited.

Import Accounts may be opened by authorized banks in the name of Egyptian nationals. These accounts may be credited with foreign bank notes not declared on arrival. In addition, they may be credited in the same manner as Free Accounts, by transfers from other import accounts, and by interest on these accounts. They may be debited to finance imports under the “own exchange” import scheme, transferred abroad to cover the account holder’s expenditure up to a maximum annual allowance equivalent to US$5,000, used to settle local transactions, transferred abroad for other purposes subject to specified regulations, or for the purpose of defraying banking fees and commissions.

Imports and Import Payments

All imports from South Africa are prohibited. A Supreme Council for the Planning of Foreign Trade is entrusted with establishing a long-term policy for exports and imports, controlling the annual export and import plan, and supervising the execution of the foreign exchange budget. 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.

Imports by the central government, public authorities, and public sector companies, as well as certain private imports under the scheme for artisans and craftsmen, are effected within the provisions of the foreign exchange budget through the Central Bank and the authorized commercial banks. 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 each sector decide upon the goods to be imported and the entities which are to import them within that quota. 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 Fund, which are financed at a special more appreciated rate. A more depreciated rate applies to imports financed by commercial banks.

Most private sector imports are effected through the “own exchange” market. Applications for “own exchange” imports, other than those undertaken by companies registered under the Foreign Investment Law, are reviewed by the Committee for Import Rationalization. There are two lists of commodities relevant to the regulations governing these imports. The first list includes 231 items and is subdivided into four categories: category A includes foodstuffs and medicines for human use; category B includes raw materials, intermediate goods, and capital goods; category C comprises transportation-related items; and category D comprises items considered as luxury goods. Only items in category A need approval by the Committee for Import Rationalization to ensure compliance with price controls on these goods. The second list includes 135 commodities plus all other products not specified in the first list. Imports in this list are restricted as a means of protecting producers of domestic substitutes and for social reasons. After an import license has been issued by the Committee for Import Rationalization, but before a letter of credit has been opened, an importer is required to lodge an advance import deposit in foreign currency with an authorized bank. The amount of the deposit is stipulated as a percentage of the f.o.b. value of imports: 25 percent for items in category A; 40 percent for items in category B; 75 percent for items in category C; and 100 percent for all other items. The deposit must be lodged for a minimum of one month and be redeposited by the authorized bank at the Central Bank in a noninterest-bearing account; it is returned to the importer upon arrival of the shipping documents, provided that at least a month has elapsed since the deposit was made. Imports by companies registered under the Foreign Investment Law (Law No. 43 of 1974) require a permit by the Investment Authority; such imports are not subject to the advance import requirement.

An economic development tax of 10 percent of the c.i.f. value is payable on imports; the tax is 5 percent for certain essential foodstuffs imported by the Ministry of Supply. A statistical tax of 1 percent 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; an administrative charge of 20 percent is levied on purchases of foreign exchange for travel purposes. 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 not export more than LE 20 in Egyptian bank notes. 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 US$30 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 petroleum are exported by the public sector only, and their proceeds are subject to the three-month repatriation requirement.

Proceeds from exports of movies, television programs, and videocassettes must be repatriated within six months; other export proceeds other than those from books, newspapers, and other publications must be repatriated within four months from the date of shipment. Proceeds from exports other than petroleum, cotton, and rice may be fully or partially 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 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. Egyptian nationals returning from abroad may open within three days of arrival Import Accounts in foreign exchange in amounts exceeding the equivalent of LE 1,000 without having to declare the source of their funds; thereafter, a limit of LE 1,000 is applied for deposits into such accounts.

Persons arriving in Egypt from abroad may import up to LE 20 in Egyptian bank notes 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 US$150 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. Foreign exchange deposited in Import Accounts may also be transferred abroad up to specified limits. With these exceptions, 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, 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 percent 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 Non-convertible 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. A person arriving or departing may carry jewelry and other valuables up to LE 500.

Changes During 1983

Exchange Arrangement

March 1. A temporary 15 percent premium was introduced for a period of one year for visible transactions through the bilateral payments agreement with the U.S.S.R.

June 23. A 15 percent premium was introduced for the period through end-February 1984 for visible transactions through the bilateral payments agreement with the Democratic People’s Republic of Korea.

Prescription of Currency

April 14. The bilateral payments agreements with Jordan and the Yemen Arab Republic were terminated.

Resident Accounts

April 21. Authorization was granted for proceeds from exports other than petroleum, cotton, and rice to be fully or partially retained in Foreign Exchange Retention Accounts. Rules on the use of such accounts were also liberalized. Exporters were allowed to repatriate their foreign exchange earnings within four months from the date of shipment; previously, such repatriation was required within three months from the date of shipment.

Payments for Invisibles

July 1. A 20 percent administrative charge was imposed on purchases of foreign exchange for travel purposes.

Exports and Export Proceeds

May 29. Authorization was granted for exporters of movies, television programs, and videocassettes to repatriate their foreign exchange proceeds within six months from the date of shipment, instead of the usual four months.

Gold

April 28. Authorization was granted for arriving and departing persons to carry jewelry and other valuables up to LE 500 a person.

El Salvador

(Position on December 31, 1983)

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 is allowed to fluctuate. The rates of the Central Reserve Bank for transactions with the public are Ȼ 2.49 buying and Ȼ 2.51 selling, per US$1. 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 percent 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 percent. Buying and selling rates in the parallel market are not fixed by the Central Reserve Bank, but are usually not left to fluctuate freely by the commercial banks.1 Only commercial banks and the Mortgage Bank are permitted to purchase or sell foreign exchange in the parallel market; individuals2 may open foreign currency deposit accounts in the commercial banks and the Mortgage Bank and use funds in such accounts to deal in the parallel market in respect of certain authorized transactions. There is a third, informal foreign exchange market; in addition to unauthorized transactions, this market handles transactions not effected in the other two exchange markets because of rationing. The exchange rate in this third market fluctuates according to market forces and averaged Ȼ 4.00 = US$1 at the end of December 1983.

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 most payments through the parallel market is delegated to the commercial banks and the Mortgage Bank. 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)3 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 less than 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.

Foreign Currency Deposit Accounts

Foreign currency deposit accounts may be opened only by exporters of specified nontraditional products, industrial enterprises exporting more than 25 percent of their products to countries outside the CACM, certain individuals with receipts from foreign companies, tourism, as well as staff of embassies, consulates, and international organizations. Transfers of funds between foreign currency deposit accounts are prohibited; balances in such accounts can be used for conversion into colones through sales to the banks at the parallel market rate, for payment of imports of goods and services, or for monthly withdrawals of up to US$2,000 to cover expenses for foreign travel, family maintenance abroad, education, medical treatment, personal insurance premiums, and other personal needs. The accounts may be opened in U.S. dollars or in any other approved foreign currency; transactions can be effected only in the currency in which an account is opened. Accounts may be in the form of a demand or time deposit and are subject to a reserve requirement of 10 percent. The banks must place the funds thus deposited in investments abroad, on condition that the maturity of investments does not exceed 30 days for demand deposits, and provided that the maturity of investments using time deposits is the same as the maturity of the time deposit. The banks are required to pay interest on the time deposits at rates of up to 2 percent below the LIBOR.

Imports and Import Payments

Imports of automobiles with over 1600 cubic centimeters or priced at more than US$8,000, certain other motor vehicles and motorcycles, buses, recreational vehicles, airplanes, pleasure boats, and other vessels not used for fishing are prohibited. 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 and the Mortgage Bank.

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 percent of the total value of imports may be paid for only through the parallel market. Only items considered as priority imports may be paid for through the official market.4

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 percent, 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 percent prior deposit.5 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 percent 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 an authorized commercial bank or the Mortgage Bank.

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 percent 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 percent. 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 percent prior deposit and substantiation through medical certification, bills, receipts, and other pertinent documents. This deposit requirement is waived when foreign exchange is requested to pay for services already rendered, subject to appropriate verification.

The commercial banks and the Mortgage Bank are permitted to sell foreign exchange in the parallel market for payments for invisible transactions of a personal nature (i.e., study abroad, foreign travel, medical care, family assistance, and insurance fees) within the following limits: (a) up to US$2,000 a trip to countries outside Central America for each person over 12 years of age, (one half of the amount for children under 12 years), with a limit of two trips a year; (b) up to a limit of US$500 a trip to countries in Central America, with an annual limit of US$3,000; and (c) up to US$2,000 a year for personal expenses, such as family maintenance and insurance premiums. Additional amounts for foreign travel and family remittances can be sold to meet bona fide requirements; there is no limit on the amount that can be sold to meet expenses for medical treatment and study abroad. There are arrears on payments for invisibles.

Exports and Export Proceeds

Export licenses are not required except for certain foodstuffs and other items for which the authorities wish to ensure an adequate local supply. Proceeds from 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 from exports of specified nontraditional products to countries outside Central America must be sold to the commercial banks and the Mortgage Bank for use in the parallel market or be deposited in special foreign currency deposit accounts with authorized banks exclusively in the name of the exporters concerned. Exporters of nontraditional products are required to use funds in their special foreign currency accounts or to purchase foreign exchange in the parallel market to effect payments for their own imports of goods and services.

Industrial enterprises which export more than 15 percent of their products to countries outside Central America must sell their foreign exchange receipts to commercial banks and the Mortgage Bank in the parallel market. For at most a year from the date of the authorization, the Central Bank will make foreign exchange available at the official exchange rate to cover the excess of the cost of imported inputs of goods and services over the value of exports to countries outside Central America. If the value of such exports exceeds the cost of imported inputs, the enterprise in question shall be subject to the treatment prescribed in the previous paragraph; that is, its import payments will be settled through the use of foreign currency deposit accounts or with foreign exchange purchased from the commercial banks and the Mortgage Bank in the parallel market. 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 an 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. Receipts from personal transfers, and by representatives of foreign companies, resident individuals, juridical persons, and from tourism must be sold to the commercial banks and the Mortgage Bank in the parallel market. Personal transfers may be deposited in the special foreign currency deposit accounts only in the name of the beneficiaries. Embassies, consulates, and offices of international organizations in El Salvador and their employees are allowed to sell their foreign receipts to commercial banks and the Mortgage Bank in the parallel market or deposit such receipts in the special foreign currency accounts in their names for purposes of meeting their foreign exchange requirements. 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 percent 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 with 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; 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 1983

Imports and Import Payments

February 18. With effect from February 21, 1983 payments for specified goods included in a list of 77 items were required to be settled through the parallel market.

September 1. Imports of nonessential goods prohibited under various regulations issued since 1980 were reauthorized, with the following exceptions: automobiles with over 1600 cubic centimeters or priced at more than US$8,000, certain other specified motor vehicles and motorcycles, buses, recreational vehicles, airplanes, pleasure boats, and other vessels not used for fishing.

Payments for Invisibles

February 18. With effect from February 21, 1983 payments for leasing of movies and television films, as well as commissions and royalties generated during 1982 and onward were required to be settled through the parallel market.

Capital

February 18. With effect from February 21, 1983 payments for the repatriation of new foreign investment during 1983 and onward were required to be settled through the parallel market.

February 22. The regulation which transferred from the official to the parallel market all settlements relating to repatriation of foreign investment made before 1983, and interest on private sector debt was suspended.

June 7. Settlements on account of repatriation of foreign investment, dividends pending approval by the Central Reserve Bank as of December 31, 1982, and dividends earned during 1983 were transferred from the official to the parallel market.

Equatorial Guinea

(Position on December 31, 1983)

Exchange Arrangement

The currency of Equatorial Guinea is the Equatorial Guinean Ekwele, which is issued by the Bank of Equatorial Guinea (the central bank), and is pegged to the Spanish peseta at a rate of EK 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., EK 1 = Pta 1. On June 21, 1980 the ekwele was depreciated to a rate of EK 1 = Pta 0.5. There are no forward exchange facilities. There is a 2 percent levy on sales of foreign exchange, and exchange taxes ranging from 8 percent to 35 percent, depending on the transaction, are levied on certain transfers abroad. In addition, an exchange levy of 10 per mill applies to all foreign exchange transactions.

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 originate from the Bank of Equatorial Guinea and are issued by the Directorate-General of Trade and Enterprise Promotion in the Ministry of Industry and Trade. In addition to the Bank of Equitorial Guinea, the Office of the President handles the approval or rejection of all invisible transactions. Import licenses are passed on by the Ministry of Industry and Trade 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 Office of the President and of the Bank of Equatorial Guinea. Residents1 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 percent 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 percent a year of the net investment income generated by their exporting activities. Any additional transfer is subject to a tax of 20 percent. The transfer abroad of net investment income by enterprises classified as “of preferential interest” is subject to a 20 percent tax. Any other enterprise with foreign capital participation may transfer net investment income, but such transfers are subject to a tax of 35 percent on the amount transferred. In the event of at least 30 percent 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 percent. 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 percent 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 percent of the amount remitted.

Travelers may not take out more than Bipk. 1,000 a person in domestic bank notes. Residents may only take out foreign bank notes and coin acquired from the Bank of Equatorial Guinea. Nonresidents may take out foreign bank notes 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 bank notes 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 percent of the capital. The foreign share in Equatorial Guinean enterprises might exceed 50 percent 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 percent 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 1983

No significant changes occurred in the exchange and trade system.

Ethiopia

(Position on December 31, 1983)

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 percent buying and 1.50 percent selling; in addition, they are authorized, but not obliged, to levy service charges for their own account of up to 0.25 percent buying and 0.75 percent selling and, for currencies other than the U.S. dollar, to include 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. A joint venture may be permitted to open foreign currency, transferable or nontransferable, birr accounts, for the purchase of raw materials, equipment, and spare parts not available in the local market. As soon as the goods are received, documentary evidence of entry of the goods purchased with such funds must be submitted to the Exchange Control Division. In general, the accounts may only be replenished after such documents have been presented.

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 a specified range of imported goods (including alcoholic beverages and certain durable 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, but 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 percent of their net earnings (but only for the first three years of their contract if employed by the private sector); they may remit a maximum ranging between 40 percent and 50 percent of total net earnings during the period of service and upon final departure. Other expatriate employees may on final departure take out the same maximum amount, but not more than Br 20,000 in any one year. Foreign nationals who are not entitled to remittance facilities may, however, remit up to 30 percent of their net earnings for the education of their children. Persons traveling abroad 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 bank notes.

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 10 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. 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. (This regulation does not apply to joint ventures established under the new foreign investment code.) Transfers by emigrants who had operated their own businesses are restricted to Br 20,000 in any one calendar year.

Joint ventures are permitted between the Ethiopian public sector and foreign investors, with up to 49 percent foreign ownership, except in the precious metals, public utilities, telecommunications, banking and insurance, transport, and domestic trade sectors. All applications for joint ventures must be approved by the National Revolutionary Development and Central Planning Supreme Council and registered with the Domestic Trade Ministry; a minimum of 25 percent of share capital is required to be paid before registration. Exemptions from income taxes are granted for up to five years for new projects, and for up to three years for extensions to existing projects. Imports of investment goods and spare parts for such ventures are also eligible for exemptions from customs duties and other specified import levies. Such ventures must be limited to 25 years in duration, but could be extended beyond this limit with the approval of the Council of Ministers.

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 1983

Nonresident Accounts

September 2. Permission was granted for joint ventures to open foreign currency, tranferable or nontransferable, birr accounts for the purchase of raw materials, equipment, and spare parts not available in the local market.

Capital

January 22. Under a new foreign investment code, joint ventures were permitted between the Ethiopian public sector and foreign investors, with up to 49 percent foreign ownership. Joint-venture investment was allowed in projects contributing to foreign exchange earnings, employment, and general economic and social development. Joint ventures were prohibited in the sectors of precious metals, public utilities, telecommunications, banking and insurance, transport, and domestic trade. All applications for joint ventures were required to be approved by the National Revolutionary Development and Central Planning Supreme Council, and registered with the Domestic Trade Ministry; a minimum of 25 percent of share capital should be paid before registration. Such ventures were exempt from income tax for five years in the case of new projects, and for three years in the case of major extensions to existing projects; imports of investment goods and spare parts for such ventures were also made eligible for exemption from customs duties and other specified import levies. In addition, it was specified that joint ventures should be limited to 25 years in duration, but could be extended beyond this limit with the approval of the Council of Ministers.

September 2. It was specified that the existing regulation on outward capital transfers on liquidation of nonregistered investments would not apply to joint ventures established under the new investment code.

Fiji

(Position on December 31, 1983)

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, 1983 the midpoint exchange for the Fiji dollar in terms of the U.S. dollar was F$l.04624 = 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 Economic Development 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 wide range of goods, including tea, mild steel bars, certain foodstuffs, alcoholic beverages, kerosene stoves, safety matches, seed potatoes, polyvinyl chloride pipes, PVC-insulated electric wires, polypropylene bags and 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. Residents 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.

Authority is delegated to banks operating in Fiji to approve transactions involving F$50,000 or more arising from (1) the conversion of foreign currency into Fiji currency, whether for credit to a resident account or to an External Account and (2) the crediting of an External Account with Fiji currency emanating from another External Account (including Fiji currency accounts of overseas banks). The banks must send confirmation of such inflows to the Central Monetary Authority. The banks must also have the approval of the Central Monetary Authority before granting any loans in excess of F$ 10,000 to a company or branch in Fiji (other than a bank) which is controlled directly or indirectly by persons resident outside Fiji or by individuals designated as nonresidents; however, the banks do not need such approval to lend up to F$ 10,000 to individual nonresident customers who must repay such loans prior to their departure from Fiji. The banks may not lend foreign currency to any resident of Fiji without the specific permission of the Central Monetary Authority. 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 family a year to acquire foreign currency securities. The purchase of personal real property outside Fiji is not permitted. Special tax incentives are granted for investments in the tourist industry, and an investment allowance similar to that for the hotel industry is provided for large outlay investment projects supportive of the tourist industry. 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 percent. Gold jewelry is subject to a fiscal duty of 10 percent 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 1983

Exchange Arrangement

March 8. The Fiji dollar depreciated by 2.76 percent against its basket of currencies, following the devaluation of the Australian dollar.

Imports and Import Payments

November 11. As part of the Government budget for 1984 import duties were raised on a wide range of products, including meat, fish, milk powder, potatoes, onions, garlic, fresh vegetables, tea, spices, wheat and other cereals, rice, vegetable oils, infant foods, chocolate preparations, poultry and eggs, coffee, glues, candles, matches, aluminum and plastic utensils, travel goods, certain paper products, window frames, steel wire, corks, sanitary products, suitcases, ropes and twine, spirits, cement, radios, television sets, tape recorders, gramophones, and amplifiers. In addition, a number of items were removed from the duty-free list, including portable typewriters, hair curlers and dryers, and clocks, and many items were added to the duty-free list, namely, audiotapes, videogames, small microcomputers, crystalware, bone china, leather bags and purses, display materials, and wet suits.

Capital

November 11. Tax incentives were introduced with effect from January 1, 1984 for investments in the tourist industry, and an investment allowance similar to that for the hotel industry was granted for a large outlay of investment to projects supportive of the tourist industry.

Finland

(Position on December 31, 1983)

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 percent 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 Suomen Pankki (Finlands Bank), the rate used for that currency is the one in which trade with that country is commonly denominated.1 The value of the exchange rate index is maintained by the Suomen Pankki within a margin established by the Cabinet; since October 1982 the range has been 121.9–127.5 (1974 = 100). The actual level of the index has been 125.0 since November 1982. The Suomen Pankki calculates the currency index on a daily basis, but only monthly averages of the index numbers are published.2 Daily (noon) buying and selling rates for the U.S. dollar, the intervention currency, are quoted by the Suomen Pankki. On December 31, 1983 the rates were Fmk 5.802 and Fmk 5.818 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.

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 Suomen Pankki 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 Suomen Pankki.

Prescription of Currency

For prescription of currency purposes, countries are divided into two groups: the bilateral countries3 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 U.S. dollar for Hungary and Bulgaria, and the clearing Finnish markka for the German Democratic Republic). 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 Suomen Pankki. 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 value4 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 Suomen Pankki 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 goods5 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 only commodities still subject to restrictions for the multilateral area are certain agricultural commodities and fuels and petroleum products.

With the exception of the commodities to which reference was made in the preceding paragraph, 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 or areas not classified in either the multilateral area or the bilateral area6 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 (when required for imports from countries with nonconvertible currencies), 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 Suomen Pankki; if the import payment is made to the seller through foreign financing credit, the credit period may not exceed 6 months. The Suomen Pankki applies quotas within which the banks can negotiate credits from foreign banks to finance imports.

Payments for Invisibles

Payments in respect of authorized invisible transactions 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 Suomen Pankki. All contracts involving payments to nonresidents for which general permission has not been granted must be submitted to the Suomen Pankki 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.7 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.8 For all types of travel, bona fide applications for additional amounts of foreign exchange are approved by the Suomen Pankki.

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 Suomen Pankki 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. Export licenses are required only for exports of scrap metal.

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 bank notes and traveler’s checks must be repatriated, but these are exempt from the repatriation 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.9

Capital

Most outward transfers of nonresident capital are subject to approval by the Suomen Pankki. 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 Suomen Pankki.

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 Suomen Pankki. 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 that involve participation of more than 20 percent in the share capital of a Finnish enterprise requires the approval of the Council of State. Such approval is usually granted, with the exception of investments in the forest and mining industries and in certain traditionally regulated activities. The transfer of direct investment capital needs authorization by the Suomen Pankki. Such authorization is usually granted by the Bank, if the underlying investment has been approved by the Council of State. Repatriation of direct investment is subject to the approval of the Suomen Pankki, which is freely given. Outward transfers of capital, including transfers of direct investment by residents, require individual approval by the Suomen Pankki.

Proceeds from the sale of securities and real property must be repatriated under the general rule of repatriation. Subject to certain regulations, authorized banks and insurance companies have permission to purchase foreign and Finnish securities issued abroad. Purchases of real estate abroad are authorized up to a limit of Fmk 250,00010 a person, subject to the approval of the Suomen Pankki, which is granted liberally. The upper limit on shares entitling part-time use of a second house abroad is Fmk 75,000.

Finnish emigrants are generally permitted an exchange allowance of up to Fmk 250,00011 a person or, in the case of emigrating families, Fmk 150,000 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, particularly in the form of short-term or long-term financial credits, including bond issues abroad, requires the specific approval of the Suomen Pankki, 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 Suomen Pankki, which also sets the terms for such loans.

Gold

Residents may freely hold, buy, and sell gold in any form in Finland. Imports of unwrought 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.

Changes During 1983

Exchange Arrangement

March 11. Authorization was granted for Finnish residents generally to conclude forward exchange contracts with foreign banks involving the exchange of one foreign currency for another for transactions permitted under the foreign exchange regulations.

May 27. Forward quotations of the Soviet ruble by the Suomen Pankki were discontinued, leaving this function to the authorized commercial banks.

June 6. Finnish enterprises were generally allowed to conclude financial (interest rate or exchange rate) futures contracts on financial futures markets, as well as to transfer abroad margin payments in connection with such contracts.

December 16. It was announced that, effective January 1, 1984, the composition of the official currency index would be changed such that only convertible currencies important to Finland’s foreign trade would be included. The Soviet ruble would thus be omitted, and its former share would be distributed proportionately among the other currencies in the basket. In addition, with effect from January 1, 1984, the weights for the currency index would reflect trade weights in a recent period, in contrast to the previous weight structure using trade shares with a fixed base (1974).

Prescription of Currency

January 1. The bilateral payments agreement between Finland and the People’s Republic of China was terminated.

September 1. The Finnish markka replaced the U.S. dollar as the clearing currency in the bilateral payments arrangement between the German Democratic Republic and Finland with a transitional period through December 1, 1983.

Imports and Import Payments

August 30. The maturity limit on import-financing credit was raised from three months to six months.

Payments for and Proceeds from Invisibles

November 18. With effect from January 1, 1984, increases were announced in the limits on specified invisible payments, as follows: (a) the limit on travel exchange was raised from the equivalent of Fmk 5,000 to Fmk 10,000; (b) the limit on additional travel exchange for students was increased from the equivalent of Fmk 3,000 to Fmk 5,000 a month; and (c) the limit on minor payments was raised from the equivalent of Fmk 2,000 to Fmk 5,000.

December 8. It was announced that, effective January 1, 1984, the prohibition of the export and import of 500 markka notes was lifted, and that the maximum value of foreign exchange that could be freely exported and imported was raised from the equivalent of Fmk 5,000 to Fmk 10,000 a person a trip.

Capital

November 18. Exchange controls and limits were eased, with effect from January 1, 1984 as follows: (a) the limit on loans to nonresident citizens for the purchase of a dwelling place in Finland was abolished; and (b) the maximum amount of foreign exchange for an individual emigrating from Finland and the limit on the purchase of foreign exchange for the purchase of a second home abroad were raised in each case from the equivalent of Fmk 250,000 to Fmk 300,000.

France

(Position on December 31, 1983)

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 percent (in the case of the Italian lira, 6 percent) 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, 1983 these rates were as follows:

Specified Intervention Rates Per:Francs
Upper limitLower limit
100 Belgian or Luxembourg francs5.659014.9700
100 Danish kroner86.365082.5650
100 deutsche mark313.6300299.8500
100 Netherlands guilders278.3500266.1000
100 Irish pounds968.8500926.2500
100 Italian lire0.52010.4613

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, 1983 the buying and selling rates for the U.S. dollar were F 8.3420 and F 8.3530, 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 in respect of specified transactions. Forward exchange cover is prohibited for term transactions on commodity markets; and forward cover in respect of spot transactions in commodities is limited to two days, with the obligation to redeem foreign exchange receipts after the eight-day period.

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, that is, in continental France, Corsica, the Overseas Departments (Guadeloupe, Martinique, French 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.

The exchange control regulations include controls over inward and outward direct investment and other borrowing abroad on the basis of Decree No. 68-1021, of November 24, 1968. This decree is applicable to financial relations with all countries except those belonging to the French Franc Zone (i.e., Operations Account countries). Certain exchange operations are free from any prior authorization; these include direct investment coming from and going to EEC countries, which are nevertheless submitted to prior notification.

Administration of Control

The Directorate of the Treasury of the Ministry of Economy, Finance, and the Budget is the coordinating agency for 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 Cooperation Economique (CCCE).

The Directorate of Insurance of the Ministry of Economy, Finance, and the Budget 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 bank notes 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 bank notes (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; (8) liquidation proceeds of nonresident-held direct investments;4 and (9) the proceeds of the sale, through the intermediation of a notary public, of nonresident-owned real estate to physical or juridical persons of foreign nationality: should the nonresident be a French national, he or she must show proof that the property was originally purchased by debiting a foreign account or by inward transfer of foreign exchange.

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 bank notes or withdrawals in French bank notes; (3) the equivalent in francs of arbitrage abroad in foreign currencies by an authorized bank; (4) French bank notes (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); 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 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 and electronic 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. Imports of some products must pass through designated customs offices.

Documents accompanying goods passing through customs must be written or translated into French.

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 150,000 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 150,000, 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 percent of the price for capital goods and up to 10 percent 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 make remittances abroad up to the equivalent of F 1,500 a person each quarter, provided that the transfers do not serve as a means of accumulating funds abroad. Outward remittances for family support abroad are limited to the equivalent of F 3,000 a person a month; transfers in excess of this amount require the approval of the Bank of France or the CCCE. Transfers of donations to nonresidents are subject to authorization by the Bank of France.

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 in French francs or foreign currency. Applications for exchange in excess of the basic allowance for business travel may be approved by the Bank of France or the CCCE, 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 restricted for the settlement of business travel expenditures.

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 bank notes, 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 bank notes or foreign currency traveler’s 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.

Resident travelers to foreign countries may take out F 5,000 in French bank notes. These bank notes 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 bank notes and may reconvert into foreign currency in the French exchange market any French bank notes 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 bank notes must be deposited with the customs against issuance of a receipt.

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 15 days from export deliveries. Small business exporters may be authorized by the Bank of France to deposit up to 5 percent of export receipts or F 30,000 a month, whichever is higher, 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 Francaise d’Assurance pour le Commerce Exterieur (COFACE) has been obtained. For values exceeding the equivalent of F 50,000, export proceeds must not be received in French or foreign bank notes or bank notes issued by an institute of issue maintaining an Operations Account with the French Treasury, or by debit to a postal checking account in France; export proceeds from F 50,000 to F 100,000 may be received in checks and those above F 100,000 by transfer; in addition, for such amounts, exporters are from the date of shipment to sell on a spot or forward basis 90 percent of the foreign currency proceeds from exports. All export transactions related to foreign countries and valued at F 150,000 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 bank notes and coin (except gold coin) in francs, CFA francs, CFP francs, or any foreign currency; however, the exchange of bank notes issued by Algeria, Morocco, and Tunisia is prohibited at the request of those countries. Resident travelers must sell in the exchange market any foreign bank notes or traveler’s 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. Outward remittances of funds for the purpose of buying a second place of residence is subject to prior authorization by the Bank of France. 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 import them into France through an authorized bank and hold them in a foreign dossier. Only French securities may, however, be sold in France, with the proceeds being repatriable by nonresidents.

The exchange control regulations include controls over inward and outward direct investment and other borrowing abroad on the basis of Decree No. 68-1021, of November 24, 1968. This decree is applicable to financial relations with all countries except those belonging to the French Franc Zone (i.e., Operations Account countries). Certain exchange operations are free from any prior authorization; these include direct investment coming from and going to EEC countries, which are nevertheless submitted to prior notification.

Foreign direct investments in France and French direct investments abroad, including loans constituting a direct investment, require prior declaration to the Minister of Economy, Finance, and the Budget. Unless specifically exempted (such as investments by small and medium-sized enterprises, that is, those with a turnover of less than F 350 million each), 75 percent of direct investment abroad must be financed by borrowing in foreign currency. Such loans must have an initial maturity of at least two years and cannot be repaid in advance without authorization. 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 percent 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. However, loans granted by a foreign company to its French subsidiary are free from any prior authorization up to F 10 million a year, provided that (a) the interest rate is a “normal” market rate, (b) a schedule of repayment is defined, and (c) each drawing remains outstanding for at least one year. 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 of direct investments abroad by residents is exempt from prior declaration or prior authorization when the amount involved does not exceed F 2 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. The liquidation of direct investment abroad is free from any prior application provided that the corresponding funds are repatriated to France in due time. Certain inward direct investment up to F 10 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, Finance, and the Budget. 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, Finance, and the Budget. 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 50 million for any one borrower, provided that the interest rate is a “normal” market rate, 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 Euro-francs 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 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 1983

Exchange Arrangement

March 21. The bilateral central rates and intervention rates between the French franc and the Belgian-Luxembourg franc, the Danish krone, the deutsche mark, the Italian lira, the Irish pound, and the Netherlands guilder were adjusted.

March 25. Forward exchange coverage was prohibited in respect of term transactions in foreign currency on commodity markets, and forward cover of spot transactions in commodities was limited to eight days with the obligation to redeem foreign exchange receipts after the eight-day period.

Imports and Import Payments

January 1. In invocation of Article XIX of the GATT, under which import restrictions could be used to safeguard domestic industries from injurious import competition, France imposed quantitative limits for a three-year period on imports of tableware and stoneware for domestic use.

January 1. In the context of a renewal of the Multifiber Arrangement and the conclusion of bilateral agreements for a four-year period between the EC and exporting signatory countries, in respect of wool, cotton, and synthetic textiles, France made a number of modifications in its import regime for these products.

January 15. Regulation No. 1958-82 adopted by the Commission of the European Communities on July 16, 1982, which levied a temporary antidumping duty on imports of photo enlargers originating in Poland and the U.S.S.R., was repealed.

January 20. Within the context of Regulation No. 101-83 of the Commission of the EC dated January 17, 1983, an antidumping duty was imposed on imports of urea and ammonium nitrate fertilizers originating in the United States and exported by Allied Corporation, Kaiser Aluminum Domestic and International Sales Corporation, and the Transcontinental Fertilizer Company. The duties were fixed at 19.05 percent, 12.13 percent, and 12.01 percent for the above companies, respectively.

January 25. Regulation No. 2568-82 adopted by the Commission of the EC on September 24, 1982, which provided for a temporary antidumping duty on imports of polyvinyl chloride originating in Czechoslovakia, was repealed.

January 26. Within the context of Regulation No. 163-83 of the Commission of the EC, dated January 21, 1983, France imposed a temporary antidumping duty on imports of specified isopropyl originating in the United States. The duty was fixed at 37.6 percent when the sales contract called for payment within 30 days of shipment; it would be increased by 1 percentage point for each month of delay of payment.

February 1. Imports of horse and ass meat from Turkey in the form of carcass, quartered, cut up, or boned were suspended.

February 5. Within the context of Regulation No. 290-83 of the Commission of the EC, dated February 2, 1983, France imposed a temporary antidumping duty of 4.14 percent on imports of urea and ammonium nitrate fertilizers originating in the United States and exported by Agrico Chemical Company, Tulsa, Oklahoma.

February 6. Within the context of Regulation No. 273-83 of the Commission of the EC, dated February 1, 1983, France imposed antidumping duties on imports of specified sodium carbonate originating in Bulgaria, the German Democratic Republic, Poland, Romania, and the U.S.S.R. The rates varied from 9.68 percent a ton for imports from Poland to 40.86 percent a ton for imports from the German Democratic Republic.

February 18. In accordance with Recommendation No. 376/83/CECA of the Commission of the EC, dated February 14, 1983, France imposed a temporary antidumping duty on imports of specified sheet iron or sheet steel originating in Brazil.

February 19. Quota limits were announced on imports of footwear from Taiwan.

March 24. It was announced that authorized international traders could no longer purchase foreign exchange to buy goods for resale abroad more than eight days before the inward transfer of the foreign exchange proceeds. In addition, such traders could no longer make forward purchases of foreign exchange to cover operations on foreign commodity markets.

December 8. The threshold level of individual import (and export) transactions subject to domiciliation requirement with an authorized bank was raised from F 120,000 to F 150,000.

Payments for Invisibles

March 28. The foreign exchange allowance for French residents traveling abroad for nonbusiness purposes was reduced from the equivalent of F 5,000 to F 2,000 (F 1,000 for children under 10 years of age) a year, and a limit equivalent to F 1,000 a person a day was introduced for business travel. In addition, the use of credit cards abroad was restricted to business travelers; and a system was introduced under which foreign exchange purchases by residents were to be recorded in a newly issued foreign exchange booklet. Apart from the foreign exchange allowance, resident travelers were allowed to export F 1,000 in French bank notes each trip.

April 8. The limit on the sale of foreign exchange for remittances abroad without supporting evidence was reduced from the equivalent of F 3,000 a person any number of times (provided that such transfers did not serve as a means of disguised capital accumulation abroad) to the equivalent of F 1,000 a person a quarter. In addition, such remittances could not be used to pay tourist expenses abroad, or to make installment payments on external financial obligations. Outward remittances in support of relatives residing abroad were also authorized in an amount up to F 2,000 an applicant a month.

December 8. The limit on outward transfers without supporting documents was raised from F 1,000 to F 1,500 a person a quarter. In addition, remittances in support of relatives abroad were increased from F 2,000 to F 3,000 an applicant a month.

December 20. The reduction introduced on March 28, 1983 in the sale of foreign exchange for travel abroad were eliminated, with the exception of the use of credit cards abroad which continued to be limited to business travel expenses.

Proceeds from Exports and Invisibles

December 8. It was announced that, subject to the applicable specific regulations on the conversion of foreign currency, settlement of an amount subject to repatriation could be effected by using any manner of payment for up to F 50,000 and by a check drawn on an account abroad (or on a foreign account in France) for up to F 150,000.

Capital

March 28. The limit on external borrowings (other than for trade purposes) that residents could contract without prior official authorization was raised from the equivalent of F 10 million to the equivalent of F 50 million.

Gabon

(Position on December 31, 1983)

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. Commissions are charged at the rate of 0.25 percent on transfers made by the banks for their own accounts, and 0.225 percent on all private capital transfers to countries that are not members of the BEAC, except those made for the account of the Treasury, national accounting offices, national and international public agencies, and private entities granted exemption by the Ministry of Economy and Finance because of the nature of their activities. 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, that is, 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 bank notes 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 bank notes, French bank notes, or bank notes 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 (when 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, r