Chapter

Country Surveys

Author(s):
International Monetary Fund. External Relations Dept.
Published Date:
September 1967
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Afghanistan

Exchange Rate System

The par value is 0.0197482 gram of fine gold per Afghani or Af 45.00 = US$1. The Afghanistan Bank (Da Afghanistan Bank, the central bank) charges commissions ranging from 110 of 1 per cent to ½ of 1 per cent on exchange transactions. The official buying rate applies to the proceeds of exports of karakul, wool, and cotton, and to 30 per cent of foreign exchange receipts of the Government for the financing of the salaries in afghanis of foreign experts. The official selling rate applies to foreign exchange payments by the Government. All other transactions take place at free market rates through either the banks or the bazaar. Subject to possible day-to-day deviations, the Afghanistan Bank maintains its free market rate within Af 2 per US$1 either side of the free market rate quoted in the bazaar. On December 31, 1966, the free market rate of the Afghanistan Bank was Af 74.25 buying, Af 74.75 selling, per US$1, and the free market rate in the bazaar was Af 76.75 buying, Af 77.25 selling, per US$1.

Administration of Control

Foreign exchange is controlled by the Government through the 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 such commodities.

Prescription of Currency

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

Imports and Import Payments

Imports of a few items (e.g., some drugs, liquor, arms, and ammunition) are prohibited for social or 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, agricultural and food products, and selected nonessential consumer goods) also is prohibited. In general, there are no quantitative restrictions on other imports. Some of the bilateral agreements, however, specify quotas for commodities to be traded, and the Government exercises control to ensure that trade conforms with the commitments undertaken in the agreements. On the whole, trade with these countries is carried out on a compensation basis, and usually both imports and exports are arranged by the same trader; imports against exports of cotton and wool are carried out by the Government or government agencies, or the proceeds of exports are allocated for repayment of government loans. Imports of certain nonessential consumer goods from Japan are only permitted if equivalent Afghan goods are exported to Japan.

Exchange is provided at the official rate for certain imports by the Government. Payments for imports through the banking system may be made only under letters of credit, against which a local currency deposit of 100 per cent of the value of the imports is required upon establishment of the letter of credit. The Afghanistan Bank is authorized to refuse to sell foreign exchange for the importation of a group of consumer goods that are regarded as nonessential. However, exchange for these items may be purchased either from the commercial banks or in the bazaar.

Payments for Invisibles

Government payments for invisibles and payments to foreigners on government contract in Afghanistan are made at the official rate. All other payments are settled at free market rates. Travelers leaving Afghanistan may take out not more than Af 500 in Afghan banknotes.

Exports and Export Proceeds

In general, control is exercised only over exports to bilateral agreement countries (see section on Imports and Import Payments, above). However, exporters of cotton are required to sell at least 20 per cent of their total exports to countries from which payments will be received in convertible currencies.

Exchange receipts from exports of karakul, wool, and cotton must be surrendered at the official rate. Surrender requirements are also maintained for the proceeds of some other exports to bilateral agreement countries. With this exception, the proceeds of all exports other than karakul, wool, and cotton, irrespective of the currency in which they accrue, may be sold at free market rates or be used by the exporter to pay for imports.

Wool is subject to an export tax of 15.56 per cent. Cotton and cottonseed are subject to an export tax of 24.44 per cent when sold to bilateral countries and 17.11 per cent when sold to other countries. Walnuts are subject to an export tax of 9.5 per cent.

Proceeds from Invisibles

Thirty per cent of the foreign exchange receipts of the Government for the financing of the salaries in afghanis of foreign experts must be surrendered at the official rate. Receipts from foreign embassies, legations, and other foreign official agencies must be surrendered to the Afghanistan Bank at its free market buying rate. All other receipts from invisibles are sold at free market rates through either the banks or the bazaar. Travelers entering Afghanistan may bring in Afghan banknotes not exceeding Af 500.

Capital

All foreign investment in Afghanistan requires prior approval, which is granted readily if the investment is deemed conducive to the prosperity and economic and technical advancement of the country. The Law Encouraging the Investment of Private Foreign Capital in Afghanistan (November 18, 1958) provides that, beginning five years after the date of the investment, registered capital may be repatriated through an authorized bank at the free rate in annual installments not exceeding one fifth of the amount invested. It also provides that ten years after the date of the investment the entire registered capital may be repatriated at the free rate at any time. The annual repatriation of profits up to 15 per cent of registered capital (under the 1958 law or an earlier one) is guaranteed and may take place through an authorized bank at its free rate.

Changes during 1966

March 9. A sliding-scale exchange tax was introduced on export proceeds from karakul, to become effective whenever the price a skin exceeded US$8.24.

August 8. The sliding-scale exchange tax on export proceeds from karakul was repealed.

August 15. The exchange taxes on export proceeds from cotton and cottonseed of 28.89 per cent for exports to bilateral countries and 21.56 per cent for exports to other countries were replaced by export taxes of 24.44 per cent for exports to bilateral countries and 17.11 per cent to other countries; these export taxes were applicable to the 1966 cotton crop.

August 15. The exchange tax on wool exports of 15.56 per cent was replaced by an export tax of 15.56 per cent.

August 15. Proceeds from exports of sesame seed, linseed, and walnuts to bilateral countries, which had been subject to a requirement that 50 per cent be surrendered at the official rate and 50 per cent at the free market rate, became subject to full surrender at the free market rate.

August 15. An export tax of 9.5 per cent was imposed on walnuts.

September 1. Exporters of sesame seed, linseed, and walnuts to bilateral countries were assured the right to repurchase surrendered exchange proceeds upon payment of bank commissions.

Algeria

Exchange Rate System

No par value for the currency of Algeria has been established with the Fund. The official unit of currency is the Algerian Dinar, which is at par with the French franc, giving the relationship DA 4.93706 = US$1. The Central Bank of Algeria deals at par in French francs and the other French Franc Area currencies. Buying and selling rates for specified currencies of countries outside the French Franc Area 1 are fixed by the Central Bank of Algeria on the basis of the rates quoted on the Paris exchange market for these currencies. The exchange rates applicable to “agreement dollars” are those for the U.S. dollar in the Paris market.

Administration of Control

The Ministry of Finance has general jurisdiction over exchange control. The Central Bank of Algeria assists in the formulation of the exchange legislation and regulations and is responsible for their execution and for their application by the authorized banks. In addition, a number of banks have been given authority to carry out much of the detail of exchange control. Import and export licenses for all commodities are issued on the advice of the competent ministry by the Ministry of Commerce. The Office National de Commercialisation (ONACO), the Office Algerien Interprofessionnel de Céréales (OAIC), the Société Nationale des Tabacs et Allumettes (SNTA), the Société Nationale d’Edition et de Diffusion (SNED), the Service des Alcools, and certain professional associations (groupements professionnels) have a monopoly over the import of certain 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

Algeria is a member of the French Franc Area, and settlements with other countries in the French Franc Area are generally made in French francs. Settlements with countries with which Algeria has concluded bilateral payments agreements 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. Algeria has signed payments agreements with Albania, Bulgaria, Mainland China, Cuba, Czechoslovakia, Guinea, Hungary, North Korea, Mali, Poland, Rumania, the U.S.S.R., the United Arab Republic, and Yugoslavia. Settlements with other countries are usually made in French francs, and sometimes in the currency of the country concerned.

Nonresident Accounts

For residents of countries outside the French Franc Area, the regulations pertaining to nonresident accounts are similar to those applied in France; most of these accounts are Foreign Accounts in Convertible Dinars. For residents of other French Franc Area countries, there are three types of accounts in Algerian dinars: Individual Suspense Accounts, Franc Area Accounts, and Final Departure Accounts. Except as described below, all operations through these accounts are subject to authorization.

Individual Suspense Accounts may be opened without authorization and may be credited with payments from any country.

Franc Area Accounts may be opened only with prior authorization from the Central Bank of Algeria. They may be credited freely with proceeds from the sale of convertible currencies; with proceeds from the sale of freely disposable funds (other than notes and coins) in the currencies of other countries of the French Franc Area; with interest on the balances of Franc Area Accounts; and with payments for imports from countries in the French Franc Area. They may be debited freely for any payment in Algeria to a resident of any country in the French Franc Area (including Algeria); for any transfer to the credit of an account of a person residing in a country in the French Franc Area other than Algeria; and for any amount due to the bank with which the account is kept, for interest, commissions, or repayment of capital claims. Transfers between these accounts are free.

Final Departure Accounts may be opened, without prior authorization, in the name of any person residing in Algeria, but not of Algerian nationality, who intends to leave Algeria for another country in the French Franc Area. These accounts may be credited freely with an amount equivalent to the holdings at October 20, 1963 in the account of the person concerned; with proceeds from sales of real estate of the account holder, provided that the sales are made through the intermediary of a notary public; with proceeds accruing from the sale of stocks and other securities and from any income, amortization, and redemption in respect of securities, provided that the transactions are made through the intermediary of a bank; and with any other payments, up to DA 1,000. These accounts may be debited freely for all payments in Algeria on behalf of the account holder; balances of less than DA 5,000 may, subject to certain conditions, be transferred to other parts of the French Franc Area.

The Central Bank of Algeria maintains special accounts for central banks of the countries with which Algeria has concluded payments agreements.

Imports and Import Payments

All imports from bilateral payments agreement countries require a license. A number of specified imports, listed under some 200 tariff headings, subheadings, or their parts, from all other countries are prohibited or are subject to either quantitative restriction or a special import procedure; the items include such commodities as butter, cattle, cement, cereals, clothing, coffee, fish, hides and skins, margarine, matches, meat, melons, milk, phosphates, sheep, soap, sugar, tea, tobacco, tomatoes, vegetables, wine, and passenger cars and other motor vehicles.

The Government has the monopoly over the importation of some of these items through its Office National de Commercialisation (ONACO), the Office Algerien Interprofessionnel de Céréales (OAIC), the Société Nationale des Tabacs et Allumettes (SNTA), the Société Nationale d’Edition et de Diffusion (SNED), or the Service des Alcools, while some of the other items may as a rule be imported only by professional associations (groupement professionnel des produits laitiers or GAIRLAC, groupement professionnel des bois or BOIMEX, groupement professionnel de la chaussure or GIAC, groupement professionnel pour les textiles or GITEXTAL, groupement professionnel des cuirs et peaux or GICP, and groupement professionnel d’achat de l’industrie textile or GADIT). Imports of firearms, ammunition, and explosives require an import license from the Ministry of the Interior (for civil and military firearms) or the Ministry of National Defense (for munitions and explosives). All other imports from countries with which Algeria does not maintain bilateral payments agreements may be made freely.

Imports that are not liberalized are licensed in accordance with an annual import program. The program comprises quotas for the French Franc Area, each payments agreement country, and the convertibility area, i.e., all other countries combined. In addition, there are annual quotas for imports from France of a few specified commodities.

Liberalized imports not exceeding DA 10,000 in value require only the submission of an invoice to the customs when imported from a country with which no payments agreement is in force. Most liberalized imports whose value exceeds this figure are admitted on the basis of a declaration completed by the importer, but some require an administrative visa, which is stamped on an import attestation. Imports exceeding DA 10,000 in value, and all imports for which payment has to be made before the goods reach Algeria, must be domiciled (registered) 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.

Imports “without payment” (sans paiement), i.e., imports which do not involve compensation of any kind, from the French Franc Area require an authorization by the Ministry of National Economy if their c.i.f. value exceeds DA 500.

For goods imported under the import declaration procedure or with an import license, importers may, as soon as the import has been registered with an authorized bank, purchase the required foreign exchange from the bank. Unless earlier payment is to be made in accordance with the provisions of the import license or of a commercial contract approved by the authorities, payment to the foreign exporter may be made only after the shipping documents have been presented to the bank. The importer may also, after having domiciled (registered) the import, open a documentary import credit payable upon presentation of the shipping documents.

Goods normally subject to import license and quota restriction may be freely imported in small parcels and without an import license, provided that the value of the shipments do not exceed DA 60 for each shipment and DA 240 a year for the same addressee.

Payments for Invisibles

All payments for invisibles to all countries require the approval of the Central Bank. However, when supporting documents are presented, approval may be granted by authorized banks, or sometimes by the post office, 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, and (4) payments relating to government transactions with foreign companies. For other invisibles, the granting of exchange must be authorized by the Central Bank. All insurance must be concluded with Algerian companies.

Residents of other French Franc Area countries working in Algeria under the program for technical cooperation may transfer abroad a certain percentage of their net salaries: 50 per cent for single persons or married persons having their families in Algeria; 70 per cent for persons having their families abroad; and 100 per cent for employees who spend their vacations abroad (the transfer being limited to the duration of their absence from Algeria). For other workers from French Franc Area countries who have contracts with employers and hold the necessary employment documents, the amounts that may be transferred are 30 per cent, 50 per cent, and 100 per cent, respectively, for the groups enumerated above. The payments must be transferred once a month on the basis of the remuneration for the previous month. Persons making such transfers of savings are not entitled to allocations for other personal transfers (e.g., for educational purposes).

For residents traveling by air or sea to other countries, including the French Franc Area, the foreign exchange allocation is equivalent to DA 700 a person a year (DA 350 for children under 15) and is issued on presentation of a valid passport and travel documents; for travel by means other than air or sea, the allocation is DA 50 a person a year for adults. Furthermore, residents traveling by air or sea to a country within the French Franc Area are entitled to an allocation, in the currency of the country of destination, equivalent to DA 500 a person a trip, on presentation of travel documents certified by the authorized intermediary; children under 15 are entitled to DA 250. Foreign exchange for business travel is subject to authorization by the Central Bank of Algeria. Funds in EFAC accounts (see section on Exports and Export Proceeds, below) may be used for business travel.

Pilgrims traveling to Saudi Arabia can obtain Saudi Arabian riyals up to the equivalent of DA 1,200 a person; the allocation can be taken up in the form of a check by those traveling by air or sea, and in banknotes by those traveling overland. Travelers may take out Algerian dinar banknotes up to DA 50 a person.

Exports and Export Proceeds

Exports of certain livestock, firearms, ammunition, explosives, and certain radio equipment are prohibited. All exports to countries with which Algeria has bilateral payments agreements and some exports to all other countries require licenses.

With certain exceptions, exports must be domiciled (registered) with an authorized bank. Prior registration is not required for exports that are made on a firm sale basis, provided that they do not exceed DA 5,000 in value and that they are payable in not more than 90 days. After customs clearance, such exports must be registered, if they were not registered earlier. If the payment period is more than 90 days, the exports may be registered only after authorization is given by the Central Bank. Sales on consignment are expressly subject to authorization by the Central Bank, and registration must always take place prior to customs clearance.

The proceeds of exports, including those to the French Franc Area, may be the object of a 90-day credit and must thereafter be collected within 30 days. Foreign exchange proceeds may be used to make authorized payments abroad within three months from the date of their receipt. Companies holding mineral rights must repatriate to Algeria 50 per cent of the proceeds from their exports of hydrocarbons. Certain percentages of the proceeds from exports may be kept in special EFAC (Exportations-Frais Accessoires) accounts. Exporters to the French Franc Area may retain 5 per cent of their export proceeds (up to DA 20,000 per export transaction), while those to the convertibility area (i.e., all other countries except those with which payments agreements are in force) may retain 12 per cent if they hold export cards, and 8 per cent in all other instances. EFAC accounts are denominated in dinars and are held with the bank at which the export is registered. Certain payments may be made from these accounts without prior approval by the Central Bank. All other export proceeds must be surrendered.

Proceeds from Invisibles

Amounts exceeding DA 500 that are due from nonresidents in payment for services must be collected and, if not used to make authorized payments abroad, must be surrendered within one month from the date of receipt.

There are no restrictions on the import of foreign banknotes, coins (except gold coins), checks, and letters of credit, but foreigners must declare such holdings when they enter Algeria. Travelers may bring in Algerian dinar banknotes up to DA 50 a person.

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.

Decree-Law No. 63-277 of July 26, 1963 established a code for foreign investments in Algeria made after July 1, 1962. Such investments could be undertaken to establish new, or to extend existing, enterprises, provided that such enterprises (1) were recognized by the authorities as having economic priority in accordance with programs prepared by the Government, (2) constituted a program of investment of at least DA 5 million, to be carried out in three years, and (3) gave rise to the permanent employment of a specified minimum number of Algerian nationals. Such approved enterprises (entreprises agréées) benefited from certain advantages in respect of fiscal charges and other taxes. Moreover, subject to the fulfillment of certain other conditions (such as the effect that the investment would have on related economic activities and the volume of production intended for export), additional privileges relating to certain taxes were accorded to the approved enterprises. The transfer abroad of part of the profits from, as well as part of the proceeds from the liquidation of, such investments could be authorized by the Central Bank in accordance with the guarantees provided for in the decree. Additional benefits could be accorded to enterprises covered by a special agreement (entreprises conventionnées); these privileges included a guarantee of stability of fiscal charges for up to 15 years.

A new Investment Code, superseding that of 1963, was promulgated by Decree-Law No. 66-284 of September 15, 1966. It provides for state guarantees in respect of foreign investments of more than DA 500,000 in the industrial and tourist sectors. The new code provides for a retransfer guarantee in respect of the sale or liquidation proceeds of invested foreign capital, and establishes that profit remittances on such investments will be permitted up to 15 per cent annually of the foreign capital originally invested. Tax facilities may also be granted, and investments of more than DA 5 million be given exclusive rights in a specified geographic area.

Changes during 1966

During the period under review, a number of imports in addition to those mentioned below were added to the list of those that were subject to either quantitative restriction or a special import procedure.

February 4. The establishment of the Société Nationale d’Edition et de Diffusion (SNED) was announced. It was granted a monopoly over the import, export, and distribution of books and periodicals. It started operating on August 19.

March 29. Imports of mutton required an individual license and became subject to quota.

April 18. The import of industrial tallow for soap manufacture was reserved for the Office National de Commercialisation (ONACO).

May 6. Goods normally subject to import license and quota restrictions could be freely imported in small parcels and without an import license, provided that the value of the shipments did not exceed DA 500 each and that the value of shipments to the same addressee did not exceed DA 2,000 during a 12-month period. For specified garments, the maximum values were DA 50 a shipment and DA 200 a year.

May 10. All mines belonging to foreign companies and all real estate abandoned by foreign nationals were nationalized.

May 28. All insurance operations became a state monopoly.

July 1. The value of imports that was free of individual licensing (see May 6, above) was reduced from DA 2,000 a year a recipient and DA 500 for a single shipment to DA 240 a year and DA 60 a shipment.

September 15. A new Investment Code was published. The provisions of the Investment Code of July 27, 1963 were revoked.

November 2. Raw cotton and cotton linters were included in the list of imports subject to individual licensing and quota restriction.

November 10. Certain exchange allocations for travel were revised.

December 14. Residents could no longer transfer freely, through postal channels, up to DA 100 a person a month for any purpose to any country.

December 16. The import of mineral water, fruit juices, and a large number of foodstuffs was reserved for the Office National de Commercialisation.

December 16. The exchange allocation for residents traveling by air or sea to any destination (including countries within the French Franc Area) was reduced to DA 700 a year for adults and to DA 350 a year for children under 15. For travel by means other than air or sea, the allocation was fixed at DA 50 a year for adults.

Argentina

Exchange Rate System

On January 9, 1957, a par value for the Argentine Peso was established by Argentina with the Fund. However, exchange transactions no longer take place at rates based on that par value. On March 13, 1967, the spot exchange rate was established at M$N 350 buying and selling per US$1; the Central Bank of Argentina dealt at a rate which it quoted daily and which could move up to 1 per cent either side of M$N 350 per US$1. From the same date, funds could be moved abroad freely and the banks could freely accept deposits in foreign currency. Most import restrictions were removed, and all export subsidies were eliminated. Import levies (recargos) were reduced sharply. Export taxes of 16, 20, or 25 per cent were applied to certain commodities. The position on December 31, 1966, however, was as described below.

All exchange transactions take place in the single exchange market, in which the selling rate on December 29, 1966 was M$N 247.30 per US$1. The Central Bank operates in the exchange market by buying and selling foreign exchange to maintain the U.S. dollar rate within certain limits; on December 31, 1966, these limits were M$N 245 buying, and M$N 255 selling, per US$1.

Forward exchange transactions may be concluded between individuals and authorized banks or among authorized banks at freely negotiated exchange rates. Forward exchange purchases by the public, however, are restricted to import payments made under a documentary credit, bank collection, or bank guarantee (aval), and require a 40 per cent deposit in local currency for a period of 180 days. Forward contracts concluded as part of a swap transaction and forward transactions among authorized banks are exempt from the 40 per cent deposit. The deposit may not be financed by local banks. Forward exchange contracts connected with imports may be extended for a period of up to 180 days from the date of their original maturity; those corresponding to exports may be extended only once, for a period of 30 days (or, where shipment is unavoidably delayed, for the period of the delay).

Administration of Control

Exchange transactions must be carried out through banks and institutions authorized expressly for this purpose; purchases and sales of travel exchange may be made through authorized exchange dealers and agencies. The authority to make certain foreign payments has been delegated to the authorized institutions.

Prescription of Currency

Payments between Argentina and Chile, Colombia, Mexico, Paraguay, and Peru must be made through accounts maintained with each other by the Central Bank of Argentina and the central banks concerned, within the framework of the LAFTA multilateral clearing system. Transactions with other countries must be settled in convertible currencies or externally convertible European currencies.

Nonresident Accounts

Authorized banks may open accounts in pesos in the name of nonresident correspondent banks. The accounts may be credited with the counterpart of convertible foreign exchange negotiated in the exchange market and with peso amounts that are transferable abroad. Balances in these accounts may be used to make payments in Argentina or they may be reconverted into foreign exchange. Transfers between accounts may be effected freely.

Imports and Import Payments

Imports are generally free of import and exchange licensing; exchange to pay for them may be purchased in the single exchange market. Some import payments, however, require the specific approval of the Central Bank. Goods imported by official agencies require approval by the Central Bank and the Ministry of Economy if payment is extended over a period of more than 180 days. Imports of a number of nonessential or luxury goods are temporarily prohibited; these include certain foodstuffs, beverages, textiles, and clothing. All imports are subject to a tax of 4 per cent on the freight charges. Most imports are subject to a single import levy (recargo único), in lieu of the import duties and surcharges in force prior to December 1, 1965; there are different situations in which this levy is, for the same commodity, applicable at a rate of nil, 10 per cent, 90 per cent, or 100 per cent.

Import taxes include the following: a consular fee of 1½ per cent payable in foreign currency on most import invoices; statistical taxes of 1½ per cent or 310 per cent applicable to all imports; taxes ranging from 4 per cent to 10 per cent on imports of paper products, certain types of timber and timber products, and forest products (the taxes on logs and sawmill products amount to M$N 2 and M$N 8, respectively, per square meter by one inch, for imports from LAFTA countries); and taxes ranging from M$N 200 to M$N 2,000 a ton on imports of iron and steel.

Prior to the introduction of the single import levy, imports were grouped in lists according to their essentiality and domestic production. Surcharges were established for these lists, independently of the customs duties payable in accordance with the Schedule of Valuations. Imports covered by various industrial promotion measures do not pay the single import levy but continue to be subject to the import surcharges fixed in the relative decrees and amending legislation, and to a 5 per cent import tax calculated on the value on which the surcharges were levied. These are mainly imports for the automobile industry, for the engine industry, for the tractor industry, and for the textile machine industry.

An advance import deposit of 40 per cent of the peso equivalent of the c. & f. value is required on many imports from all sources; goods imported from LAFTA countries are exempt if the goods are included in Argentina’s concession lists (including the special lists for Ecuador and Paraguay), and certain imports from Bolivia also are exempt. The deposit is payable in pesos and calculated at the current exchange rate in the exchange market. It must be lodged before any of the following actions can be undertaken: opening a letter of credit; withdrawing shipping documents from the intermediary bank; purchasing forward exchange; or clearing goods through customs. The deposit is refunded after 180 days, provided that the goods have been cleared through customs.

About 80 per cent of total imports are exempt from advance deposits. The exemptions include the following: gold bullion, capital goods, vegetable seeds, pedigree animals, certain chemicals, fertilizers, pesticides, raw tobacco, and various fuels; imports by certain nonprofit institutions; electronic valves specified in a LAFTA “complementarity agreement”; drugs and medicines; imports for veterinary or phytopathological purposes; imports by official agencies; raw materials for specified enterprises or firms; road construction machinery; airplane engines and parts for private civil aviation; imports by the shipbuilding industry; imports of certain materials by the iron and steel industry; imports by the Mixed Iron and Steel Company (SOMISA) and the Greater Buenos Aires Electrical Service Company (SEGBA); and imports by electrical cooperatives and the Italo-Argentine Electricity Company (CIAE).

To prevent unauthorized capital movements, all import payments require documentary evidence of the bona fide nature of the transaction. Some import payments require the specific approval of the Central Bank; these include payments by automobile manufacturers for imports of raw materials and spare parts, and payments for most imports of capital goods. Payments for specified capital goods valued at over US$5,000, with the exception mainly of those imported from LAFTA countries, must be made in installments over a period ranging from at least two years to at least nine years after the date of shipment, depending on the total value of the goods. Foreign exchange for import payments may be purchased in the single exchange market, subject in a few cases noted above to prior approval of the Central Bank. Advance payments for imports are not permitted.

Payments for Invisibles

The banks and institutions authorized to deal in foreign exchange are permitted to sell exchange for many categories of invisibles up to established limits, subject in appropriate cases to the submission of documentary evidence or sworn declarations of the bona fide nature of the transaction. Transfers in excess of the established limits require the authorization of the Central Bank. Exchange is granted up to US$25 a person a trip (US$400 during the summer season for adults or US$200 for persons under 18) for travel to Uruguay; up to US$300 a person a month for travel to Chile (US$150 for persons under 18); up to US$100 a person a month for travel to Bolivia, Brazil, Paraguay, and Peru; and up to US$400 a person a trip (US$200 for a person under 18) for travel to other countries. Exchange for medical treatment abroad is granted up to US$1,000 a person, as often as considered necessary by the Ministry of Social Assistance and Public Health. Remittances for students abroad are allowed up to US$300 for each student a month; in addition, up to US$200 may be transferred as a one-time installation allowance and up to US$50 every month for a student’s wife and each of his children. Family remittances are allowed up to M$N 10,000 a quarter for each beneficiary subject to certain conditions. Special exchange allowances exist for purchases of books and medicines and for subscriptions to newspapers and magazines by private individuals, and for purchases of books and subscriptions to newspapers and magazines by Chambers of Commerce and Industry and cultural organizations, other than public libraries; books and magazines of a scientific or technical nature are exempt from these limitations. Remittances of trade commissions are limited to 6 per cent of the c. & f. value of imports and 6 per cent of the f.o.b. value of exports, or 10 per cent of the f.o.b. value of nontraditional exports. Transfers of profits, payments for current invisibles not listed above, and payments in excess of the limits listed above require the prior authorization of the Central Bank; examination of the applications has been delegated to the authorized banks.

The export of gold coins or bullion and of domestic and foreign banknotes requires the prior approval of the Central Bank; travelers, however, may take out freely in the form of foreign banknotes 5 per cent of their travel allowance to Peru and neighboring countries other than Chile and Uruguay, and 10 per cent to other countries.

Exports and Export Proceeds

Exports are generally free of direct controls but minimum export prices are established for many agricultural and livestock exports. Exporters of most commodities are required to repatriate and sell in the single exchange market the foreign exchange proceeds of their exports within 10 working days after shipment. Foreign exchange proceeds from exports of chilled meat to the United Kingdom in excess of their provisionally declared value, and proceeds from exports of newspapers, magazines, pamphlets, printed music, and books printed and published in Argentina must be surrendered within 10 days after collection. Proceeds from exports of petroleum products must be surrendered within 180 days after loading. Proceeds from nontraditional exports for which payment is received within 180 days after loading, and which are covered by an irrevocable documentary credit or by drafts of similar duration, must be surrendered within 10 working days after the due date. The proceeds of exports to Chile (except those of nontraditional exports) must be collected within 90 days of the bill of lading and surrendered within 10 working days after the due date. Exporters of malted barley and brewers’ malt must surrender the export proceeds within 45 days after shipment. The collection period for exports of quebracho extract is 120 days from the date of shipment for exports to other LAFTA countries, and 90 days for exports to other destinations.

Some products are subject to retention taxes calculated on the basis of the f.o.b. sales value or on the index values fixed by the Advisory Commission on Export Values, on which the National Grain Board, the National Meat Board, the Departments of Agriculture, Commerce, and Finance, and the Central Bank are represented. The retention tax is 20 per cent for linseed and linseed oil, horses, unprocessed hides, certain meat by-products, and some forestry products; 16 per cent for corn; 12 per cent for live cattle not for breeding; and 10 per cent for exports of certain agricultural and livestock products, including raw goat hides and unprocessed sheepskins, certain oilseeds, and vegetable oils. The tax must be paid before shipment of the merchandise or within the following 30 days when there is a bank aval that guarantees its payment. All exports are subject to a 2 per cent tax on the freight charges.

Other taxes on exports are levied as follows: a 10 per cent sales tax on exports of linseed oil, oilseeds, logs, coal, certain wood extracts; a 5 per cent sales tax on exports of sheepskins and wool; a 1.5 per cent tax, the proceeds of which are destined for the National Institute for Agricultural Technology, on exports of agricultural and livestock products; a 1 per cent tax, the proceeds of which are destined for the financing of road construction in connection with agricultural development, on exports subject to retention taxes; a 1.5 per cent tax, the proceeds of which are destined for the National Grain Board, on certain agricultural products; a 1.5 per cent tax, the proceeds of which are destined for the Secretariat of Public Works, on the export of certain other agricultural products; a 0.3 per cent statistical tax on exports subject to retention taxes; and a 5 per cent tax, the proceeds of which are destined for the Forestry Fund, on exports of tanning extracts (these are exempt, however, from all other charges and taxes).

Surcharges, customs and additional duties, and other charges paid on imports of raw materials or other products incorporated in exported articles are returned to exporters. Moreover, exporters of specified nontraditional exports receive a rebate in compensation for domestic indirect taxes paid in the process of manufacture. There are three rates of rebate, 6 per cent, 12 per cent, and 18 per cent, according to the degree of manufacture; the rebates are computed on the f.o.b. value of the export in question.

The Central Bank has established a system of financial support for products not traditionally exported, based on the purchase of drafts in foreign currency with periods of up to five years for capital goods, up to two and a half years for durable and semidurable goods, and up to one year for other goods.

Proceeds from Invisibles

Exchange derived from invisibles must be sold in the single exchange market within 30 days of receipt. Travelers may bring in freely any amount in foreign banknotes.

Capital

There are no limitations on inward capital transfers by nonresidents. Argentine industrial or commercial firms, however, require the authorization of the Central Bank to enter into swap operations under which loans may be accepted in a convertible currency.

Remittances to repay foreign loans or to transfer the liquidation proceeds of foreign investments in Argentina are authorized without restriction, provided that no transfer of domestic capital is involved. The authorized institutions may, without special authorization, make transfers abroad in respect of foreign capital that entered the country for the purpose of extending loans in foreign exchange and was negotiated in the exchange market after April 13, 1964, and in respect of interest on such capital. They may also transfer abroad, without prior authorization, certain income and amortization relating to certain capital invested by foreigners in public or private securities. The securities must either have been deposited and/or administered by the authorized institutions for holders abroad prior to April 13, 1964, or they must have been acquired after this date with fresh funds from abroad that were negotiated in the exchange market. The maximum amount that may be so remitted without special authorization is M$N 10,000 for each nonresident holder in a fiscal year, for interest or dividends; for repayment of capital, the maximum is M$N 10,000 a foreign holder every six months.

Moreover, the authorized institutions may freely make transfers abroad in respect of amortization of foreign capital entering the country after November 8, 1966 for investment purposes, provided that it was negotiated in the single exchange market; the authorization applies also to dividends, profits, interest, and other income from such investments.

Outward capital movements by residents are restricted, but the Central Bank is willing to consider applications for the transfer abroad for investment purposes of funds owned by persons or firms domiciled in Argentina. The export of Argentine and foreign securities (shares and bonds) is subject to the authorization of the Central Bank, except in the following cases. Authorized banks may export domestic and foreign securities freely, provided that they have been purchased by a nonresident with funds that entered Argentina after April 13, 1964. Authorized banks may export resident-owned securities, provided that the sales proceeds are repatriated in the form of foreign exchange, or that the securities are exchanged abroad for other securities which are subsequently imported into Argentina.

Changes during 1966

January 3. The exchange allowance for tourist travel to Uruguay was increased to US$400 a person a month (US$200 for persons under 18) for the period January 4 to March 17, 1966.

January 13. Banks were authorized to guarantee foreign exchange loans contracted in the period January 13, 1966 to February 28, 1966 in order to cancel other loans in foreign exchange.

January 14. Authorized institutions were permitted to sell foreign exchange for repayments due on loans taken up in foreign exchange, provided that the proceeds of the loans had been sold in the Argentine exchange market after April 13, 1964.

January 21. Representatives’ commissions in respect of nontraditional exports could be transferred abroad up to 10 per cent of the f.o.b. value.

February 11. A reciprocal credit agreement was signed with Chile. It entered into force on April 1, 1966.

February 15. The list of capital goods subject to the financial regime established by Central Bank Circular R.C. 196 of November 20, 1964 was revised according to the new customs nomenclature.

March 16. Many fertilizers were exempted from import duties and other import taxes.

March 23. Regulations were issued for the implementation of the reciprocal credit agreement with Chile.

April 9. The Central Bank announced that the backlog of applications for transfers in respect of current payments had been liquidated. Henceforth, all bona fide payments for imports, capital earnings, royalties, etc., would be approved automatically.

April 13. Authorized institutions could sell forward exchange only for imports payable under documentary credits, bank collection, or bank guarantee; the transactions could not be undertaken before the appropriate advance deposit had been made, which would be retained for 180 days.

April 13. The allowance for the import by mail of books was established at US$100 every four months for libraries, other nonprofit institutions, and Chambers of Commerce, and US$50 every four months for private persons.

April 25. The retention tax on exports of beef, offal, and tongue was reduced from 6 per cent to 3 per cent.

May 10. A reciprocal credit agreement was signed with Paraguay. It entered into force on June 1, 1966.

May 10. A reciprocal credit agreement was signed with Peru.

May 10. A reciprocal credit agreement was signed with Colombia.

May 13. Authorized institutions could grant loans in foreign exchange for the financing of nontraditional exports to countries with which Argentina had concluded reciprocal credit agreements.

May 27. Special payments facilities were introduced for imports of commodities intended for the manufacture of nontraditional exports.

May 28. A retention tax of 5 per cent was introduced on exports of wheat from the current crop; the retention tax on corn was increased from 6.5 per cent to 10 per cent for exports from the current crop.

May 30. The spot exchange rate was depreciated to M$N 202 buying, and M$N 205 selling, per US$1.

May 30. The advance import deposit requirement was reduced from 50 per cent to 40 per cent of the peso equivalent of the c. & f. value of the merchandise.

May 31. The suspension of the 10 per cent sales tax on exports of wool and sheepskins was terminated; exports of these commodities made between June 1 and September 30, 1966 became subject to a sales tax of 5 per cent.

May 31. Regulations were issued for the implementation of the reciprocal credit agreements with Colombia, Paraguay, and Peru.

July 1. The LAFTA multilateral clearing system came into effect. Within its framework, those of Argentina’s reciprocal credit agreements that had not yet entered into force came into operation.

July 4. The exchange houses were informed that travel exchange relating to trips to or from countries with which reciprocal credit agreements had been concluded must be settled through the accounts established under those agreements.

August 9. The spot exchange rate was depreciated to M$N 215 buying, and M$N 218 selling, per US$1.

August 9. A retention tax of 5 per cent was introduced on exports of greasy wool, the retention tax on corn was increased from 10 per cent to 16 per cent, and that on unprocessed sheepskins was raised from 10 per cent to 12 per cent.

August 12. The collection period for the proceeds of exports to Chile other than nontraditional exports was reduced to 90 days from the date of the bill of lading.

September 6. Subject to certain conditions, authorized institutions could transfer abroad funds constituting income from, or amortization of, capital invested in public and private securities. For each nonresident owner, this authority was limited to M$N 10,000 in a fiscal year for interest and dividends and to M$N 10,000 every six months for amortization.

September 30. The surrender period for the exchange proceeds from exports of quebracho extract was extended to 120 days from the date of shipment for exports to LAFTA countries, and to 90 days for exports to other countries.

September 30. The 5 per cent retention tax on exports of greasy wool was abolished; the retention tax on exports of unprocessed sheepskins was reduced from 12 per cent to 10 per cent. The validity of the 5 per cent sales tax on wool exports was extended to September 30, 1967.

October 21. The exchange allowance for tourist travel to Chile was increased to US$300 a person a month (US$150 for persons under 18).

October 24. The 5 per cent retention tax on wheat exports was abolished.

October 31. Procedures were established for payments to and receipts from countries with which Argentina had concluded reciprocal credit agreements.

October 31. The National Meat Board was empowered to authorize exports of live cattle to countries that are not members of LAFTA.

November 7. The 3 per cent retention tax on exports of beef, offal, and tongue was eliminated.

November 8. The spot exchange rate was depreciated to M$N 245 buying, and M$N 255 selling, per US$1.

November 8. The authorized institutions could freely make transfers abroad in respect of amortization of foreign capital entering the country after November 8, 1966 for investment purposes and negotiated in the single exchange market. They received similar authority for dividends, profits, interest, and other income on such foreign capital.

The Central Bank announced that it was prepared to consider applications for the transfer abroad for investment purposes of funds owned by persons or firms domiciled in Argentina.

November 21. Imports of certain chemicals and other products, including gold ingots and mohair, were exempted from advance deposits.

December 5. Decree No. 4105 provided that machinery (except tractors) for agricultural, dairy, fishery, and forestry purposes could be imported without restriction and free of customs duty and other import taxes if not made domestically, subject to certification by the Ministry of Agriculture and Livestock.

December 19. The exchange allowance for tourist travel to Uruguay was increased to US$400 a person a month (US$200 for persons under 18) for the period December 21, 1966 to April 30, 1967. In addition to banks, exchange houses could sell foreign currency corresponding to this allowance; the latter were authorized for this purpose to purchase spot U.S. dollars from authorized institutions.

December 23. Imports of raw tobacco, certain chemicals, stainless steel wire, and certain other items were exempted from advance deposits.

December 26. Import duties on raw materials used by industry were reduced by 15 per cent. Further reductions of 5 per cent each were scheduled for March, June, and September 1967, adding up to an over-all cut of 30 per cent.

December 29. The 10 per cent retention tax on the proceeds of exports of husked oats was abolished.

December 29. Authorized institutions were informed that the instructions of October 31 concerning countries with which reciprocal credit agreements were in force would from January 2, 1967 be fully applicable also to Paraguay.

Australia

Exchange Rate System

The par value is 0.995310 gram of fine gold per Australian Dollar or $A 1 = US$1.12. Official rates are fixed for spot transactions in sterling: $A 2.5000 buying, and $A 2.5100 selling, per £ stg. 1. The rates for spot transactions in other currencies quoted by the authorized banks are based on the closing buying and selling rates of the previous day in London and New York. The rate for the U.S. dollar on December 31, 1966 was US$1.1169 buying, and US$1.1103 selling, per $A 1.

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

Administration of Control

The Reserve Bank of Australia administers the exchange control on behalf of the Commonwealth Treasurer, but considerable discretionary powers are delegated to the trading banks authorized to handle foreign exchange transactions. Import and export licensing is administered by the Department of Trade and Industry and the Department of Customs and Excise.

Prescription of Currency

Australia is a member of the Sterling Area, and settlements between residents of Australia and residents of other Sterling Area countries may be made in sterling, in another Sterling Area currency, or in Australian currency through the account of a bank domiciled in any other country in the Sterling Area with a bank in Australia. Payments for imports from countries outside the Sterling Area may be made by crediting sterling to an External Account in the United Kingdom, in Australian currency through the account of a bank in the country or area of origin of the goods with a bank in Australia, or in any foreign currency. Proceeds from exports to countries outside the Sterling Area may be accepted in sterling from an External Account in the United Kingdom, in Australian currency from an appropriate nonresident account, or in any foreign currency which is freely exchangeable for External Account sterling.

Nonresident Accounts

All credits to the accounts of residents of countries outside the Sterling Area are subject to approval, which is granted in the same circumstances and subject to the same conditions as if a transfer to the country of residence of the account holder were involved. Transfers are allowed freely, on application, between accounts of nonresidents. Under current policy, the balance on a nonresident account may be withdrawn in convertible currency.

Imports and Import Payments

With the few exceptions mentioned below, goods may be imported freely without import licenses, and no restrictions are imposed on payments for imports, provided that the prescription of currency requirements are observed. Import licenses are required for unwrought aluminum and aluminum alloy, waste and scrap aluminum and aluminum alloy, used equipment (and parts therefor) for earth-moving, excavating, and handling of materials and polyethylene twine, rope, cordage, and cable. The licensing of these goods is a temporary measure applied while the Tariff Board conducts inquiries as to the needs of local industries affected. In accordance with a resolution of December 16, 1966 of the UN Security Council, selective mandatory sanctions have been applied against Rhodesia; the goods affected are tobacco, ferroalloys, chrome ores, and asbestos. Import controls are maintained on certain goods, irrespective of origin, for reasons of health, morals, or security; import controls are maintained over certain other goods where it is considered necessary to enforce quality standards.

Payments for Invisibles

All payments for invisibles are subject to exchange control, but they are not restricted; the control operates solely to prevent unauthorized capital transfers. There is a basic exchange allowance of $A 4,000 in any 12 months for any kind of travel in any country; additional amounts may be obtained on application, provided that the exchange control is satisfied that the exchange is to be used for bona fide travel expenses and not for an unauthorized capital transfer. Limits are placed on remittances for family maintenance and gifts; however, applications for such transfers are treated liberally, and amounts beyond the normal limit for family maintenance are approved on application. Travelers who are not residents of Australia may take out any amount in foreign or domestic banknotes within 6 months of entry, provided that they brought the notes into Australia. Other travelers may take out up to $A 100 in Australian currency, without special authorization; of this amount, up to $A 4 may be coins.

Exports and Export Proceeds

Exports to all destinations of copper and copper alloy scrap, and copper and copper alloy ingots, are prohibited, and exports of primary copper, refinery shapes, and copper rod are controlled. Exports to Rhodesia of arms and other military equipment are prohibited. The export of all commodities, unless specifically exempted, requires an export license in terms of the Banking (Foreign Exchange) Regulations, to ensure that the full proceeds are received in a currency and within a period approved by the Reserve Bank. To assist supervision, there is a further condition that all shipping documents, bills of lading, etc., must be drawn to the order of and delivered to the Reserve Bank or a trading bank acting as its agent.

Proceeds from Invisibles

Proceeds from invisibles received in Sterling Area currencies may be disposed of freely. Proceeds from invisibles in other currencies do not have to be surrendered, but they must be reported and may be disposed of only with permission. Travelers may bring in any amount in foreign or domestic banknotes.

Capital

All transfers of capital from Australia require approval. Transfers abroad of resident capital are allowed for certain types of direct investment overseas. Approval is normally granted for the repatriation of capital by nonresidents, but no advance commitments are given.

No restrictions are placed on the receipt of capital funds from abroad, but residents must obtain prior approval before borrowing foreign currency or incurring a liability to a resident of a country outside the Sterling Area.

Foreign securities owned by Australian residents need not be surrendered, but they must be reported. This obligation does not cover securities whose principal and interest are payable in a currency of the Sterling Area or certain securities expressed in Canadian dollars and registered in Australia, provided that the securities are held within the Sterling Area. The export of securities and practically all transactions in foreign securities are subject to approval.

Changes during 1966

January 1. A Free Trade Area Agreement with New Zealand came into force.

January 14. Temporary protective quantitative restrictions were imposed on imports of polyethylene twine, rope, cordage, and cable pending an inquiry and report by the Tariff Board into the protective needs of the local industry.

February 14. A new monetary unit, the Australian dollar, replaced the Australian pound at a rate of $A 1 = £A 0.50. The par value was established at $A 1 = US$1.12.

April 12. Preferential tariff rates were introduced for selected imports from specified less developed countries.

Austria1

Exchange Rate System

The par value is 0.0341796 gram of fine gold per Austrian Schilling or S 26.00 = US$1. The official limits for the U.S. dollar are S 25.80 buying, and S 26.20 selling, per US$1—rates at which the Austrian National Bank will buy or sell. The rate for the U.S. dollar fluctuates in the exchange market between these limits. Market rates for other currencies vary between limits which result from combining the official limits for the U.S. dollar maintained by Austria and such limits in force in the country of the other currency concerned.

“Agreement dollars” (see section on Prescription of Currency, below) are quoted at par with the U.S. dollar.

Forward premiums and discounts are left to the interplay of market forces.

Austria 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 the exchange control and issues licenses where required. Most exchange transactions pass through those Austrian banks that have been authorized to implement exchange control regulations.

The customs 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 competent ministry, viz., the Federal Ministry of Trade, Commerce, and Industry (Licensing Office) or the Federal Ministry of Agriculture and Forestry.

Prescription of Currency

Settlements with the countries with which Austria maintains bilateral payments arrangements 2 are made through clearing accounts expressed in U.S. dollars. Settlements with all other countries may be made either in convertible currencies or through Free Schilling Accounts.

Nonresident Accounts

There are two categories of nonresident accounts in schillings: Free Schilling Accounts and Blocked Accounts.

Free Schilling Accounts may be freely credited with proceeds from the sale of gold, gold coins, or convertible currencies by a nonresident to the Austrian National Bank, or to an authorized bank, as well as with payments permitted by the National Bank on the basis of a general or individual authorization. The accounts may be freely debited for payments to Austrian residents, with the exception of loans granted by nonresidents to residents, which require individual licenses. Balances may be freely converted into any foreign currency. Transfers between these accounts are free.

Blocked Accounts consist of funds that are due to nonresidents. A general license permits their use for many payments for current and capital invisibles. The transfer abroad of funds in Blocked Accounts is subject to an individual license. In most cases the licenses are granted freely if the funds belong to residents of countries with which Austria makes settlements in convertible currencies. As a result, Blocked Accounts largely represent funds due to residents of countries with which Austria settles payments through bilateral accounts.

Nonresidents may also maintain Nonresident Accounts in convertible foreign currencies. These accounts may be debited for the same purposes as Free Schilling Accounts.

Imports and Import Payments

All commodities not included in the Annex 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 Annex require licenses. Most of these goods are free of quantitative restriction. The liberalization depends on the group of countries from which they are imported; for such liberalized goods, licenses are issued by the customs at the time of clearance.3 Nearly all imports from European OECD countries, their associated territories, and many other countries 4 are liberalized. Imports from Canada and the United States and its territories are liberalized to the same degree as those from the European OECD countries, except that slaughtered poultry is subject to quantitative restriction when imported from Canada or the United States. Imports from three other countries5 are treated in practically the same way as imports from European OECD countries. Many nonagricultural imports of Czechoslovak origin are admitted under an automatic licensing procedure.

Nonliberalized imports may be obtained under various procedures, namely, state trading, global quotas, bilateral quotas, discretionary licensing, and compensation (barter).

State trading covers tobacco in any form, salt, spirits, and various breadstuffs and feedgrains. Global quotas apply to specified imports from OECD countries and all other GATT countries, except Cuba, Czechoslovakia, and Japan. Discretionary individual licensing is applicable to all other private imports not covered by the procedures listed above. Licenses are usually granted if the imports concerned do not adversely affect domestic industries; in many cases, they are issued in accordance with quotas established in bilateral trade agreements.

Import licenses may not be granted for goods imported under compensation transactions, unless there is no other way of settling payments; at present, trade under such arrangements is negligible.

Grains and other specified goods are imported in accordance with a special system of controls and regulations maintained under so-called Agricultural Marketing Laws. In addition to grains, the following groups of products are covered by Marketing Laws: milk and butter; cattle, pigs, and horses for slaughter; products from these animals for human consumption; and certain fertilizers.

In principle, import licenses are issued only to importers who have received trade licenses. For new importers there is a newcomers’ quota, which is up to a maximum of 20 per cent of the corresponding global quota. Import licenses are not transferable and are valid for six months, but this period may be extended.

Payments for imports from, and originating in, countries with which Austria makes settlements in convertible currencies do not require exchange licenses.6 Payments for imports from, or originating in, countries with which Austria maintains bilateral payments agreements require exchange licenses, which are granted without restriction if the payments are made in the appropriate bilateral currencies.

Payments for Invisibles

With few exceptions, residents are permitted to conclude transactions involving current invisibles with residents of countries with which Austria makes settlements in convertible currencies. Exceptions comprise transactions concerning transport, films, and insurance. For transactions in current invisibles that involve payments to residents of all other countries, individual licenses are required. The licenses are granted after account is taken of the terms of existing bilateral payments arrangements and other considerations, such as the principle of reciprocity and hardship cases; certain liabilities (e.g., freight payments, handling charges, commissions, etc.) are covered by general licenses.

Payments on account of authorized invisibles to residents of countries with which Austria makes settlements in convertible currencies may be made freely, provided that no capital transfer is involved. All payments to bilateral payments agreement countries for invisibles require licenses.

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

Exports and Export Proceeds

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

Export claims 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. Deposits in bilateral clearing currencies may be used in accordance with the terms of an individual payments license.

Proceeds from Invisibles

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

Capital

Direct investments by nonresidents are generally permitted, if made with convertible currencies or from free or originally owned blocked schilling balances. For investments financed in other ways (imported Austrian currency, inconvertible currencies, investment loans, goods), authorization is granted on the merits of each case.

Residents are permitted to obtain from nonresidents loans and credits as follows: (1) commercial credits for a period of up to one year; (2) loans with maturities of five years or more, to be used for investment purposes (e.g., for expansion of production equipment); (3) loans to be used by enterprises in Austria in which the nonresidents participate; (4) loans secured by export claims; and (5) loans for a period of up to five years, to be used abroad for definite merchandise transactions.

The Austrian National Bank permits the transfer abroad of (1) proceeds from the liquidation of various foreign investments in Austria (shares or participation in Austrian enterprises, Austrian securities, 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 are allowed 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 may be reinvested. Residents also are permitted to acquire real estate abroad, to grant commercial or investment credits, and to grant credits secured by mortgages in Austria or abroad. Domestic insurance companies may conclude with nonresidents life insurance contracts in Austria.

Transactions and operations mentioned in the four preceding paragraphs are licensed upon documentation, provided that they are concluded with residents of countries with which Austria makes settlements in convertible currencies. A number of authorized banks are permitted to accept from abroad and to employ abroad funds in convertible currencies for a period of up to five years.

Residents are allowed to purchase from nonresidents, without restriction, foreign securities quota on foreign stock exchanges 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 Austrian external bonds), the securities purchased must be kept with such banks. Payments for these purchases to residents of countries with which Austria makes settlements in convertible currencies may be made in those currencies, whereas payments to residents of countries with which Austria has bilateral payments agreements may be made only by crediting a Blocked Account. Residents may sell securities deposited in accordance with the afore-mentioned provision with Austrian authorized banks to nonresidents only on a spot basis against payment in convertible currencies and through authorized banks. The proceeds of the sale, as well as the foreign exchange obtained as a result of redemption of the foreign securities by the debtor, may be kept on account with an authorized bank.

Changes during 1966

January 1. A new Amendment to the Foreign Trade Law entered into effect. One hundred and eighteen additional commodities no longer required an export license, regardless of destination. Many other commodities no longer required an import license, regardless of origin; these included many commodities previously liberalized when originating in GATT countries, such as passenger automobiles, raw coffee, cameras, outboard motors, and cosmetics.

July 1. Most global import quotas were increased by 20 per cent.

October 1. A protocol to the trade agreement with Yugoslavia was signed. It provided that Austria, with effect from January 1, 1967, would extend to Yugoslavia the import liberalization accorded to members of the GATT. A few imports of Yugoslav origin would be subject to global quotas open to all GATT countries (except Cuba, Czechoslovakia, and Japan).

December 31. With minor exceptions, the industrial free trade arrangements of the European Free Trade Association went into effect.

Note.—The following changes took place in 1967:

January 1. A long-term trade agreement with Czechoslovakia went into effect. Austria henceforth applied an automatic licensing procedure to many nonagricultural imports of Czechoslovak origin.

January 1. Further commodities were freed from quantitative restriction when imported from and originating in GATT countries (except Cuba, Czechoslovakia, and Japan). The principal remaining restrictions on imports of industrial goods from such countries were global quotas for lignite, antibiotics, and motion-picture films.

Belgium-Luxembourg 1

Exchange Rate System

The par values are 0.0177734 gram of fine gold per Belgian Franc and per Luxembourg Franc or BF 50.00 = US$1 and Lux F 50.00 = US$1. There are two exchange markets—the official and the free.

In the official exchange market, only authorized banks may carry out exchange transactions permitted in that market.2 The spot exchange rate for the U.S. dollar fluctuates within official limits of BF 49.625 buying, and BF 50.375 selling, per US$1; the rates for the other convertible currencies fluctuate between limits which result from combining the official limits for the U.S. dollar maintained by Belgium-Luxembourg and such limits in force in the country of the other currency concerned. Most exchange transactions are settled through the official market.

In the free exchange market, all currencies (including banknotes) may be bought and sold at freely fluctuating rates. Convertible currencies acquired through the free market may be sold in the official market, but no other direct connection between the two markets exists. On December 30, 1966, the free market rates between banks for the U.S. dollar were BF 50.45 buying, BF 50.47 selling, per US$1.

Depending on the category of payments and receipts, either one or both of the exchange markets may be used for settlements with so-called convertible area countries, which include all countries except those in the bilateral group.3 If receipts from bilateral group countries are obtained in convertible currencies, they are to be ceded on the official market.

Forward rates are left to the interplay of market forces. In the official market, authorized banks in Belgium-Luxembourg may deal with other authorized banks and with nonresidents in any of the convertible currencies. Any resident or nonresident, banks included, may deal freely in any currency in the free market.

Belgium and Luxembourg 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 Belgium-Luxembourg Economic Union); the two countries constitute a single exchange control territory in relation to other countries.

Administration of Control

The ultimate responsibility for the administration of exchange control in the Belgium-Luxembourg Economic Union (BLEU) is exercised by the Institut Belgo-Luxembourgeois du Change. Exchange control powers for most payments and transfers are delegated to authorized banks. The BLEU Convention of May 23, 1935, revised with effect from August 1, 1965 by a Protocol of January 29, 1963, conferred on the Belgo-Luxembourg Administrative Commission the authority to license trade transactions; this Commission determines import and export policy, but has delegated the issuance of import and export licenses to the Licensing Offices of the BLEU, one of which is located in each country.

Prescription of Currency

The prescription of currency requirements operate mainly to ensure that settlements with foreign countries are made, according to their nature, 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 (see footnote 3) and the convertible area (all other countries).

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

The permissible methods of settlement for foreign payments are summarized in the accompanying table. In dealing with countries in the convertible area, there is a choice between the official and the free market for convertible currencies received from transactions in Lists C and D or paid for transactions in Lists A, B, and C; such settlements with the convertible area if made in Belgian or Luxembourg francs can also be settled through a Financial or a Convertible Account. All payments to countries in the convertible area, and all receipts from such countries for transactions included in Lists C and D, may also be effected in domestic or foreign banknotes.

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.

Summary of Permissible Methods of Settlement for Foreign Payments
Transaction ListCountry GroupForeign CurrencyExchange MarketNonresident Account in Francs
Outward Payments
A, B, and CConvertibleAnyOfficial or freeAny
DConvertibleAnyFreeFinancial
A, B, C, and DBilateralBilateral4
Inward Payments
A and BConvertibleConvertibleOfficialConvertible
C and DConvertibleConvertible OtherOfficial or free Free
Convertible or Financial
A, B, C, and DBilateralConvertibleOfficialConvertible or Bilateral4

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 these accounts may be opened in the name of any nonresident.5 They are not related to any country or monetary area. They may be used for settlements which either must or may be made through the official market, and may be credited with proceeds from the sale by a nonresident of convertible currencies in the official market to authorized banks in Belgium-Luxembourg. Balances on Convertible Accounts may be transferred freely to any nonresident account or be converted into any currency in the official or the free market.

2. Financial Accounts. These accounts may be opened only for residents in convertible area countries,6 and they are not related to any country or monetary area. They may be used for settlements which either must or may be made through the free market, and may be credited with proceeds from the sale by a nonresident of gold or any currency in the free market and of convertible currencies in the official market. Domestic banknotes and proceeds from the sale in the free market of foreign banknotes deposited with authorized banks by foreign travelers in Belgium-Luxembourg or by persons residing abroad may be credited freely to Financial Accounts. Transfers between Financial Accounts are free. Balances on these accounts may be used to purchase gold or any currency negotiated on the free market.

3. Bilateral Accounts. These accounts may be opened for residents of bilateral countries (see footnote 3), and they 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 by a nonresident of convertible currencies in the official market. Balances on Bilateral Accounts may be transferred to other Bilateral Accounts related to the same country. Transfers may be made freely between Bilateral Accounts related to Burundi, the Democratic Republic of Congo, and Rwanda. In practice, the authorities permit the conversion of balances on Bilateral Accounts of the central banks of these three countries into foreign currencies.

Imports and Import Payments

Imports of sugar and tobacco of Rhodesian origin are prohibited. Individual licenses are required for (1) all imports from Albania, Bulgaria, Mainland China, Czechoslovakia, Eastern Germany, Hong Kong, Hungary, Japan, North Korea, Outer Mongolia, Poland, Rhodesia, Rumania, the U.S.S.R., and North Viet-Nam, (2) a few imports from Luxembourg into Belgium and vice versa, and (3) a number of imports from all other countries.7 The imports for which individual licenses are required include many textile products, certain agricultural products and foodstuffs, and coal and kerosene. All other imports, which constitute about four fifths of total imports, are free of license and quantitative restriction. Only a simple form completed by the importer giving notification of the payment (payment declaration) is required when payment is made through an authorized bank. Many imports subject to individual licensing are also admitted without quantitative restriction.

Imports from non-EEC countries of most products covered by the Common Agricultural Policy of the EEC (including cereals, rice, pork, eggs, and poultry meat) are subject to variable import levies which have replaced all previous barriers to imports; common EEC regulations are also applied to imports from non-EEC countries of beef, veal, dairy products, wine, olive oil, and specified fruits and vegetables.

No exchange control documentation is required for imports not exceeding BF 10,000 in value. The 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). If the requirements are not fulfilled, the authorized bank submits a request to the central exchange control authority for special permission. Exchange control approval is also required to make payments for imports more than three months before or after the date of customs clearance.

Payments for Invisibles

Payments to convertible area countries for transactions included in Lists A, B, and C may be made through the official exchange market or by crediting Belgian or Luxembourg francs to a Convertible Account. Supporting documents must in that case be presented to an authorized bank, and in exceptional cases the approval of the central exchange control authority is required. Payments to convertible area countries for all invisibles (including those in List D) may be made through the free market, by crediting Belgian or Luxembourg francs to a Financial Account, or in domestic or foreign banknotes. Payments to bilateral countries (see footnote 3) must be made by crediting Belgian or Luxembourg francs to a Bilateral Account related to the country concerned. Foreign and domestic banknotes may be exported freely.

Exports and Export Proceeds

The export to Rhodesia of arms, ammunition, other military materiel, and oil and oil products is prohibited. Individual licenses are required for (1) all exports to Albania, Bulgaria, Mainland China, Czechoslovakia, Eastern Germany, Hungary, North Korea, Outer Mongolia, Poland, Rhodesia, Rumania, the U.S.S.R., and North Viet-Nam, (2) a few exports from Belgium to Luxembourg and vice versa, and (3) specified exports to all other countries.8 All other exports are free of license; only a simple form completed by the exporter giving notification of the export is required.

No exchange control documentation is required for exports not exceeding BF 10,000 in value. The authorized bank is required to make sure 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, within eight days of receipt, be surrendered to an authorized bank, or, alternatively, they may be deposited in a Controlled Resident Account in Foreign Currency with an authorized bank if they are to be used later for current payments authorized to be made in these currencies.

Proceeds from Invisibles

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

Capital

All capital transactions with convertible area countries may be carried out freely through the free market, by settlement in Belgian or Luxembourg francs through the Financial Account of a nonresident, or in domestic or foreign banknotes. Direct investments by enterprises and some capital transfers by individuals, including gifts, family maintenance payments, remittances by emigrants of Belgian or Luxembourg nationality, and inheritances, but not transactions of a financial character, may also be made through the official market, subject to individual license. In addition, incoming capital may be received in convertible currencies through the official market or in Belgian or Luxembourg francs to the debit of a Convertible Account. The exchange control authorities may guarantee the repatriation of approved foreign investments made in Belgium-Luxembourg. In that case, capital brought in through the official market 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 had been held at least six months prior to the maturity date. All transactions in securities by residents or nonresidents are free, but the financial settlement of such transactions must conform to the general regulations. Inward payments for capital transactions with bilateral countries must be received in convertible currencies through the official market or in Belgian francs through Bilateral Accounts; outward payments for capital transactions with bilateral countries must be made only in Belgian francs through Bilateral Accounts.

Changes during 1966

January 4. The import of sugar and tobacco of Rhodesian origin was prohibited, as was the export to Rhodesia of arms, ammunition, other military material, and oil and oil products.

January 7. The list of goods subject to import and export license was revised. Imports from and exports to the Netherlands of some commodities, mainly textiles, were exempted from license.

May 23. Certain items were deleted from the list of goods which could not without a special license be the object of transit operations.

July 14. An Industrial Expansion Act was passed. It offered special benefits to new foreign and domestic investment in specified regions of Belgium. The first implementing orders were issued on February 21, 1967.

October 26. Certain jute products no longer required an import license.

November 1. Many of the remaining licensing requirements for imports from the Netherlands or from other EEC countries were abolished. Additional textiles required an individual license unless they were imported from the Netherlands and did not originate in Hong Kong, Japan, or a state trading country.

November 3. The proceeds in excess of BF 500,000 from amortization or redemption of bonds denominated in Belgian or Luxembourg francs and belonging to residents of convertible area countries could not without permission be credited to Convertible Accounts or transferred through the official exchange market unless such securities had been held by nonresidents at least six months prior to maturity.

December 5. Restrictions were imposed on imports of certain cotton yarns and synthetic yarns.

December 28. Imports of roasted coffee, unroasted coffee, liquid coffee, and instant coffee required a license.

Note.—The following change took place early in 1967:

January 1. The accounts in Belgian or Luxembourg francs opened by foreign civil servants appointed to listed international organizations established in the BLEU, which were previously assimilated to resident accounts, were transformed into Convertible Nonresident Accounts. Consequently, exchange control approval no longer was required for the transfer through the official market of savings from salaries.

Bolivia

Exchange Rate System

On May 14, 1953, a par value for the Boliviano was established by Bolivia with the Fund. However, exchange transactions no longer take place at rates based on that par value. A single, freely fluctuating rate was established by virtue of Supreme Decree 4538 of December 15, 1956. All exchange transactions are carried out in a free market, in which the exchange rate has remained stable since January 1959. On January 1, 1963, the boliviano was replaced by the Bolivian peso at a rate of Bs 1,000 = $b 1.00.

For operational purposes, the free market is divided into two sectors: the public sector and the private sector. The Monetary Department of the Central Bank of Bolivia operates in the public sector, buying foreign exchange from the Government and the official enterprises, including the Bolivian Mining Corporation (COMIBOL), and selling foreign exchange to the Banking Department of the Central Bank, the banks, and the Government and its official agencies. The exchange rate of the Monetary Department of the Central Bank on December 31, 1966 was $b 11.875 buying, and $b 11.885 selling, per US$1. Transactions of the Banking Department of the Central Bank, the banks, and the foreign exchange dealers with the public take place at slightly different rates. All sales of foreign exchange in the private sector are subject to a 2 per cent exchange tax and a 2 per mill stamp tax.

Prescription of Currency

There are no prescription of currency requirements. Settlements are usually made in U.S. dollars or other convertible currencies.

Imports and Import Payments

All imports by public sector agencies require the prior authorization of the Ministry of National Economy. Private imports of certain commodities also require such prior authorization; these goods include live cattle, various foodstuffs, raw cotton, and petroleum and petroleum products. All other goods may be imported freely. Exchange to pay for imports may be purchased in the free market, subject to the requirement that the commercial documents involved in the transaction are submitted. Suppliers’ credits are subject to authorization by the Stabilization and Development Council (see section on Capital, below).

Payments for Invisibles

Payments for invisibles and capital transfers may be made freely through the free market.

Exports and Export Proceeds

Exports are not subject to licensing. Exchange receipts from exports by official agencies are surrendered to the Central Bank at the free market rate, with the exception of the portion retained by COMIBOL for its own use. Proceeds from other exports may be sold to commercial banks or to authorized exchange houses at the free market rate, or they may be retained by the exporter.

Proceeds from Invisibles

Exchange derived from invisibles may be sold in the free market.

Capital

Outward capital transfers by residents or nonresidents are free of control and may be made through the free market; inward capital transfers also may be made through that market. All foreign credits, including suppliers’ credits, to government agencies and autonomous entities, and official guarantees of such credits, are subject to prior authorization by the Stabilization and Development Council. The Government does not authorize, nor does the Monetary Department of the Central Bank grant guarantees to, new foreign suppliers’ credits with terms of less than five years from the receipt of the corresponding imports or general foreign credits with terms of less than eight years from the date of disbursement.

Foreign investments in Bolivia, except those involving petroleum and mining, are governed by the provisions of the Investment Law of October 19, 1965, which guarantees the free convertibility and repatriation of profits and amortized capital. Companies established before the passage of this law may also benefit from its provisions. The law is administered by the Institute for the Promotion of Investment in Bolivia (INPIBOL). Investments in petroleum and mining are governed by the Petroleum Code and the Mining Code.

Changes during 1966

September 20. A Stabilization and Development Council was established to replace the National Currency Stabilization Council, the National Economic Development Council, and the National Planning and Coordination Service.

November 30. The Monetary Department of the Central Bank limited its guarantees to credits received by residents from official foreign or international lending agencies and to foreign credits granted to the Government or official entities. All foreign credits, including suppliers’ credits, to government agencies and autonomous entities, and official guarantees of such credits, required prior authorization by the Stabilization and Development Council. New foreign suppliers’ credits with terms of less than five years from the receipt of the corresponding imports, or general foreign credits with terms of less than eight years from the date of disbursement, would not be authorized.

Brazil 1

Exchange System

On July 14, 1948, a par value for the Brazilian Cruzeiro was established by Brazil with the Fund. However, exchange transactions no longer take place at rates based on that par value.

The existing exchange arrangements have grown out of three foreign exchange markets: (1) the market of the monetary authorities, in which the Bank of Brazil carries out exchange operations for the account of the Central Bank, (2) the market of the authorized banks, and (3) the “manual market” where banknotes and travelers checks are negotiated. However, the policies pursued by the authorities have in practice unified the three markets. The rates quoted by the various intermediaries remained within a narrow range of each other during 1966; the maximum spread did not exceed ½ of 1 per cent on the buying side or on the selling side. The Bank of Brazil intervenes in the exchange markets on behalf of the Central Bank of the Republic of Brazil2 whenever this is called for by the monetary authorities’ policy of maintaining uniformity of exchange rate quotations. On December 31, 1966, the buying and selling rates quoted by the monetary authorities to the public were Cr$2,200 and Cr$2,220 per US$1, respectively; those quoted by the authorized banks were Cr$2,200 buying, and Cr$2,220 selling, per US$1, and the rates in the “manual market” were Cr$2,200 buying, and Cr$2,210 selling, per US$1. Exchange rates for other currencies (including “agreement currencies” used for settlements with bilateral agreement countries) are based on the U.S. dollar rates in Brazil and the dollar quotations for such currencies in international markets. (See Table of Exchange Rates, below.)

A brokerage fee, certain other charges, and a stamp tax are levied on most exchange transactions in the free market. The combined cost of these charges and the tax, which, by law, are not to be included in the exchange rate quotations, is about Cr$26 per US$1 on each purchase or sale of foreign exchange at the prevailing market rate. Applied to the buying and selling rates quoted by the monetary authorities on December 31, 1966, the resultant effective rates were Cr$2,173 and Cr$2,246 per US$1, respectively. Transactions in the “manual market” are exempt from these charges and the stamp tax.

On the buying side other effective rates result from the following arrangements: (a) Special regulations apply to coffee exports, (b) Proceeds from exports of fresh and chilled beef from Central Brazil are subject to a contribution (“contribution quota” or quota de contribuição) of 30 per cent, (c) A 15 per cent contribution is levied on proceeds from exports of cocoa beans and cocoa paste, (d) A 5 per cent contribution is levied on proceeds from exports of cocoa derivatives.

On the selling side, a different effective rate may arise from the arrangement whereby Petrobrás (national petroleum agency) concludes, at the beginning of each calendar quarter, an “open foreign exchange contract” with the Bank of Brazil for estimated requirements during the corresponding calendar quarter of imports of petroleum and specified petroleum by-products.

The Bank of Brazil, acting on its own behalf or on behalf of the Central Bank, carries out a large proportion of all exchange transactions. The following arrangements assure the Bank of Brazil of a large portion of the country’s foreign exchange receipts: (1) Authorized banks must surrender to the Bank of Brazil (a) any foreign exchange in excess of a net position of US$25,000 at the close of each day; (b) 90 per cent of the exporter’s portion of the exchange proceeds of coffee exports; and (c) those exchange proceeds from coffee exports corresponding to the “contribution quota.” (2) Petrobrás surrenders its entire foreign exchange proceeds from exports of petroleum on the basis of an agreement that grants it special facilities for imports of crude oil and petroleum by-products. (3) Proceeds from exports of iron ore by the Vale do Rio Doce Company are surrendered to the Bank of Brazil, although there is no legal requirement that receipts from these exports be negotiated with or transferred to the Bank. Furthermore, exporters in regions not served by banks other than the Bank of Brazil sell their exchange proceeds to the Bank. The Bank of Brazil sells foreign exchange for the requirements of the Government within the limits approved in the budget at the exchange rate prevailing on the date when a transaction is made. The Bank of Brazil also sells foreign exchange for payments in respect of a large number of imports, including crude oil and petroleum products, wheat, newsprint, fertilizers, and the requirements of the Vale do Rio Doce Company. Moreover, the Bank of Brazil handles all exchange transactions in bilateral currencies, either direct or by transferring exchange to authorized banks or vice versa.

All free market transactions in foreign exchange other than those undertaken by the Bank of Brazil are effected direct through authorized banks. The banks are not permitted to sell foreign exchange to each other but transfers between branches of the same bank in different trading centers are allowed, subject to certain conditions. The “manual market” is conducted mainly by exchange houses.

Administration of Control

The National Monetary Council is responsible for the formulation of over-all foreign exchange policy. The control system is operated by the Exchange Control Sector of the Central Bank (FICAM) under the general direction of the Board of Directors of the Central Bank and the National Monetary Council. The Central Bank’s exchange operations are handled by the Bank of Brazil; the latter also organizes auctions of promessas de licença (which entitle the holder to receive an import license for Special Category imports), and establishes the total value of promessas de licença on the basis of criteria approved by the Central Bank.

Pending the final transition of the administration of control to the Central Bank, government departments and public entities continue to present to the Bank of Brazil semiannual estimates of their needs for imports and service payments. In respect of petroleum, quarterly requirements are determined by the Petroleum Council. These estimates are reviewed by the Central Bank.

The National Council of Foreign Trade (CONCEX) formulates foreign trade policy. The Ministry of Foreign Affairs is the Council’s executive organ for dealing with foreign countries, while the Foreign Trade Department of the Bank of Brazil (CACEX) implements the Council’s decisions within Brazil. The Foreign Trade Department issues export and import licenses, when required, and verifies price quotations, weights, measures, classifications, and types in export and import operations that are subject to license. The Customs Policy Council decides on changes in customs duties or in their application, subject in some cases to the approval of the Ministry of Finance. The Council is also responsible for the allocation of import commodities between the General and the Special Category, subject to confirmation by the Ministry of Finance.

The Sector for the Control and Registration of Foreign Capital (FIRCE) in the Central Bank is in charge of processing the registration of foreign capital for the purpose of its repatriation and of the remittance of income therefrom; it also approves the terms of foreign financing for imports.

Prescription of Currency

Prescription of currency is in principle related to the country of origin of imports or the country of final destination of exports, unless otherwise specifically prescribed or authorized. Settlements with payments agreement countries are made through the relevant agreement accounts. These accounts are maintained in clearing dollars with Bulgaria, Czechoslovakia,3 Eastern Germany, Greece, Hungary, Israel, Poland, Rumania, the U.S.S.R., and Yugoslavia; in Danish kroner with Denmark; and in clearing sterling with Iceland and Mainland China.

On the basis of provisions for the settlement with certain nonclearing countries of outstanding balances or transactions under bilateral agreements now terminated, a few payments with these countries are still settled in agreement dollars. All trade with Bolivia, except Brazilian exports of coffee and cocoa, is settled in cruzeiros. Settlements with other countries with which Brazil has no payments agreements or arrangements are made in U.S. dollars or other convertible currencies.

Imports and Import Payments

Import procedures depend on whether the goods belong to the General Category or the Special Category. The commodities listed in the General Category are mainly raw materials, equipment goods, spare parts, and some essential goods not produced in Brazil in sufficient quantities. All other commodities are in the Special Category. (With the exception of wheat and onions, all imports from other LAFTA countries are in the General Category.) Secondhand goods classified in the General Category when new may be imported, and then are granted General Category treatment, if they are (1) certified to be in good operating condition, (2) not obsolete, (3) to be used by the importer himself, and (4) considered to contribute directly to domestic productive processes. Imports of new automobiles and recreational boats of a value over US$3,500 are prohibited.

General Category imports are free of quantitative restriction. The administrative procedures for these imports are as follows: an importer must secure from CACEX an import certificate (guia de importação) which is issued subject to the presentation of data on the foreign price of the commodity as well as any other information CACEX may consider necessary. The import certificate entitles the importer to obtain a visa from the Brazilian consular authorities abroad which is required for the shipment of the goods. The import certificate is valid for 120 days. Prior to the clearance of the goods through customs, the importer must close an exchange contract with the Bank of Brazil or an authorized bank for no more than 180 days. As a rule, foreign exchange is sold at present for up to 120 days. For exchange contracts closed at the Bank of Brazil the importer is normally required to provide a 100 per cent guarantee deposit. Commercial banks ordinarily require a guarantee deposit for their own protection; the amount of such a deposit varies with the credit standing of the customer. When the contracts are liquidated, guarantee deposits may be used for payment of the foreign exchange concerned.

Special Category imports are subject to global quotas. They represent a minor proportion of total imports. Importers are required to obtain an import license from CACEX, and for this purpose they must purchase a promessa de licença on a stock exchange, where promessas are offered in global amounts for auction. To obtain a visa from the Brazilian consular authorities abroad and to clear the goods through customs, importers must also obtain an “import certificate,” which is issued by the Foreign Trade Department of the Bank of Brazil, subject to the closing of an exchange contract with the Bank of Brazil or an authorized bank.

The procedure for the auction of the promessas de licença is as follows: Each week the Exchange Department of the Bank of Brazil determines the amount to be offered at auction. Auctions are held weekly in 20 cities; about 30 per cent of the supply is reserved both for Rio de Janeiro and for São Paulo. The promessas are expressed in only two currencies, “free U.S. dollars” and “agreement dollars,” and are offered in lots of US$100 and US$500. Within 3 business days, beginning 48 hours after the date of the auction, a successful bidder must pay the price of the promessa to the Bank of Brazil. The promessa is valid for 30 days, and within this period the importer must close an exchange contract for the payment of the import. A promessa entitles the holder to obtain import licenses for a total value equal to the amount of the promessa. Promessas in agreement dollars are valid for imports from any bilateral payments agreement country, while promessas in free U.S. dollars are valid for imports from any other country.

Special procedures are applicable to certain imports (petroleum and petroleum products, wheat, and imports with foreign financing). For petroleum and specified petroleum by-products, Petrobrás concludes quarterly “open foreign exchange contracts” with the Bank of Brazil. An “open contract” provides that during the calendar quarter actual exchange contracts may be closed up to a specified amount, at the exchange rate prevailing on the day when the “open contract” was concluded. The exchange contracts are entered into by Petrobrás in accordance with the following arrangements made by the Bank of Brazil: 30 per cent of the value of a shipment must be paid no later than 8 working days after the week in which the shipment has taken place, and the remaining 70 per cent within 110 days after the date of shipment; for imports of liquid gas the remaining 70 per cent is to be paid within 140 days of shipment, with an option for advance settlement. The Bank of Brazil charges an interest rate of 1 per cent a month on the balance outstanding during the 110 days or 140 days.

A customs surcharge of 10 per cent of existing import duties is levied on all imports except those from LAFTA countries.

Payments for Invisibles

The Bank of Brazil, in practice, sells foreign exchange only for current invisibles related to those trade transactions for which it has closed an exchange contract and for certain nontrade transactions that have been given exemption from the normal payment of a financial charge. All other payments for current invisibles are made through the authorized banks.

Authorized banks may sell foreign exchange freely up to the equivalent of US$500 for personal remittances abroad. Payments for other current invisibles, except those related to foreign capital, income therefrom, and royalties and technical assistance, are subject to the approval of FICAM. For most current invisibles, FICAM permits the sale of foreign exchange by authorized banks, either freely or up to certain limits. In principle, foreign exchange for other remittances (e.g., tourism) or for amounts in excess of the limits approved by FICAM may be acquired in the form of foreign banknotes in the “manual market” or, if the payment is of a personal nature (e.g., migrants’ remittances or family maintenance), the US$500 allowance, which is granted without limitation, may be used. The sale of tickets for international air travel is made against local currency upon presentation of valid passports.

Remittances abroad of foreign capital, income from foreign 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 Profit Remittance Law (Law No. 4131, as amended by Law No. 4390). 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). Remittances are normally authorized in the currency of registration. 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. A progressive supplementary income tax is levied on such remittances of earnings on foreign capital if their average over a three-year period exceeds 12 per cent of the registered capital and reinvestments. For foreign capital that produces goods or services for luxury consumption, remittances of profits are limited to 8 per cent per annum of registered capital. With the following exception, remittances are permitted freely in respect of royalties for the use of patents of inventions or of industrial and commercial trademarks, as well as in respect of technical, scientific, administrative, or similar assistance. Such remittances of royalties are not permitted by a branch or subsidiary established in Brazil to its head office abroad when at least 50 per cent of the local firm’s voting capital is directly or indirectly held by the foreign principal firm.

In order to eliminate the administrative barriers to remittances which had developed as a result of the large backlog of applications for registration of incoming capital, provision has been made for the issue of Certificates of Authorization for remittances under a guarantee bond (têrmo de responsabilidade) subscribed to by the interested party in advance of the completion of registration. This method of remitting in advance of registration is applicable to profits, dividends, interest, amortization, royalties, and payments for technical, scientific, and administrative assistance. In addition to signing the guarantee bond, the interested party must present to FIRCE the balance sheet showing the profits of the last fiscal year and, where applicable, a copy of the shareholders’ decision authorizing the distribution of profits. If the transfers made under the above provision exceed the value specified in the Certificate of Registration that is ultimately issued, FIRCE will either make adjustment for the excess in the Certificate of Registration or will require the restitution of the excess amount transferred.

Letters of credit opened for payment in inconvertible or “agreement” currencies for imports contracted on an f.o.b. basis must contain a clause requiring that the goods be transported on a ship under the flag of Brazil or the exporting country.

Travelers may take out domestic and foreign banknotes freely.

Exports and Export Proceeds

Under the provisions of Law No. 5025 of June 10, 1966, exports, with only minor exceptions, are to be free of licensing. Accordingly, exports will be grouped into the following three categories: (1) free exports, (2) exports subject to control, and (3) prohibited exports. The first category will include the large majority of exports. The second category will be limited to those goods that are considered to require control in the national interest. The commodities included in the third category will be exceptional cases regulated by specific laws. Until the administrative procedures for the law’s implementation are established, all exports continue to require licenses, with the exception of exports of coffee which are subject to authorization by the Brazilian Coffee Institute.

The Brazilian Coffee Institute does not grant the authorization to export coffee unless the sale contract is based on a price per pound that is at least equal to the minimum registration price (in U.S. dollars per pound, f.o.b.) fixed from time to time by the Institute,4 minus US$0.02 per pound. Exporters of coffee are required to surrender without compensation a portion (“contribution quota”) of their foreign exchange receipts;5 the cruzeiro equivalent of this portion is transferred to a Coffee Defense Fund. For the export proceeds in excess of the contribution quota, exporters receive (1) payment of a fixed cruzeiro amount per bag6 determined from time to time by the Brazilian Coffee Institute and (2) payment of the full cruzeiro equivalent at the free market rate of any foreign exchange received in excess of the minimum registration price. To the extent that the foreign price obtained by the exporter is lower than the minimum registration price, the cruzeiro payment to the exporter is reduced; the reduction is calculated at the prevailing selling rate. Thus, the effective exchange rate for coffee exports depends on (i) the cruzeiro payment per bag, (ii) the minimum registration price, (iii) the actual price received (f.o.b. Brazil, in U.S. dollars per pound), and (iv) the free market rate. Based on payments per bag of coffee of Cr$48,000, Cr$46,000, Cr$39,200, and Cr$35,200 for different grades and ports of shipment, and corresponding minimum registration prices per pound of US$0.385, US$0.375, US$0.345, and US$0.330, respectively, prevailing on December 31, 1966, and on the assumption that the foreign price obtained by the exporter was equal to the minimum registration price, the effective rates for proceeds from coffee exports on that date were Cr$945, Cr$929, Cr$861, and Cr$808 per US$1.

Minimum registration prices for exports of the above grades of coffee against 90-day bills were slightly higher on December 31, 1966; the effective exchange rates applicable to coffee exports against such bills ranged between Cr$934 and Cr$799 per US$1, on the assumption that the foreign price obtained by the exporter was equal to the minimum registration price.

Under the provisions of various Resolutions 7 of the Brazilian Coffee Institute, a foreign importer of Brazilian coffee is entitled to compensation from the Institute if, on specified dates within a specified period of time, the price of Santos 4 coffee ex dock New York is reduced, or the indicator price 8 falls, below the level at which those prices were on the date of sales registration at the Institute. The amount of the compensation payment equals the largest amount that can be calculated as the difference between the minimum registration price or the indicator price prevailing on the date of registration of the sales contract and the level of such prices on either the day of shipment or the ninetieth day after shipment. On the basis of the bills of lading submitted to the Brazilian Coffee Institute by FICAM in connection with the liquidation of the exchange contracts in respect of coffee exports, the Institute issues to the foreign importer a Guarantee Notice entitling him to contract, with a Brazilian exporter of his choice and within a period of 90 days beginning from the date of issue of the Notice, the import of coffee up to the value in foreign currency stipulated in the Notice. The Guarantee Notice expires after the 90-day period. It may be transferred between importers in countries with which Brazil does not maintain bilateral payments agreements. A Guarantee Notice issued to an importer in a bilateral payments agreement country may not be transferred to another country, and the coffee must be used for domestic consumption in the agreement country concerned.

The proceeds from all other exports are also sold at freely negotiated exchange rates, but exporters of cocoa beans and cocoa paste are required to surrender without compensation 15 per cent of their exchange proceeds; and exporters of cocoa derivatives (butter, cake, and powder) are required to surrender without compensation 5 per cent of exchange proceeds. The cruzeiro equivalent of these deductions is used to finance a program of price support and plantation improvement for cocoa. Similarly, exports of fresh and chilled beef are subject to surrender without compensation of 30 per cent of exchange proceeds when the beef originates in the Central Zone of Brazil.

In accordance with the provisions of Law No. 5072 of August 12, 1966, which empowers the National Monetary Council to impose export taxes for the purpose of smoothing out the domestic impact of variations in international prices and of conserving export revenue, a 20 per cent tax is levied on exports of seven types of hide. The tax is applied on the difference between the sale price of the exports and the official “base” prices, when this difference exceeds 5 per cent of the established “base” prices. The tax proceeds are collected by the commercial banks through which the exchange transactions are made and are deposited by them on a special reserve account (“reserva monetária”) held by the Central Bank.

CACEX may, through the Fund for Export Financing (FINEX), finance exports of consumer durable goods and capital goods against payment at medium term and long term, provided that the suppliers’ credit does not exceed 80 per cent of the invoiced value. Credits granted for more than one year may be refinanced by CACEX for the full amount payable, provided that the exporter has given the necessary guarantees and that the maturity of the loan is considered compatible with the value of the exports and the terms for suppliers’ credits prevailing in world markets.

Proceeds from Invisibles

Exchange proceeds from current invisibles are sold through the Bank of Brazil or the authorized banks at the prevailing market rate. Travelers checks and foreign banknotes are sold in the “manual market.” Travelers may bring in domestic and foreign currency notes freely.

Capital

For the purpose of repatriation and the remittance of income, foreign capital and the reinvestment of profits on foreign capital must be registered with FIRCE. Foreign capital is defined as (1) goods, machinery, and equipment which have entered the country without an initial corresponding expenditure of foreign exchange and which are to be used to produce goods or to render services, 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 is classified, for purposes of registration, as direct investments or loans, whether imported in the form of money or goods, and it includes reinvested profits from foreign capital. Direct investment is defined as that foreign capital which constitutes part of 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 and which does not participate directly in capital risk is considered to be a loan. Any loan obtained to purchase capital goods abroad, whether conceded by the manufacturer himself or a third party, is considered to be financing (mostly suppliers’ credit). Loans are considered to be cash loans when monetary or financial resources are brought into Brazil.

To register foreign capital, it is necessary to prove that the capital has entered Brazil. The registration of capital is made in the currency in which it entered the country. For financed imports and for investments made in the form of goods, registration is made 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 country of the lender, and that the prices of the imported goods correspond to the prices of comparable goods in the country of origin. If FIRCE approves the terms of financing, it issues a certificate of authorization to CACEX. The latter, in turn, examines the application in the light of the price and essentiality of the proposed import and of the availability of similares nacionais.9 If CACEX approves the application, it grants an import license, on the basis of which FIRCE issues a certificate of authorization to the importer.

The registration of direct investment is subject to the following rules: The capital that enters or has entered Brazil is registered in foreign currency. Reinvestments are defined as profits of companies established in Brazil and accrued 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 were earned, or appeared on the balance sheet in the case of a company, and the date of their reinvestment.

To provide a more normal basis for the supply of working capital in Brazil by foreign investors, the Bank of Brazil under the provisions of SUMOC Instruction 289 enters into repurchase arrangements which provide that the seller of foreign exchange may subsequently repurchase equivalent foreign exchange, free of restrictions, guarantee deposits, or financial charges, and that the procedure for registration to satisfy the requirements of the Profit Remittance Law will be both immediate and automatic. The repurchase must be a spot or forward transaction in the free market with any authorized bank (or with the Bank of Brazil if it so elects) and does not involve an exchange rate guarantee; the repurchase rights may be exercised in whole or in part after 60 days but will expire after 360 days.

All capital transfers abroad are subject to the approval of FICAM. Exchange transactions concerning private capital are effected through an authorized bank or the Bank of Brazil at freely negotiated rates.

Table of Exchange Rates (as at December 31, 1966) 10(cruzeiros per U.S. dollar)
BuyingSelling
808-945 (Free Market Rate for Cruzeiro Payment a Bag and Minimum Registration Price)11
Coffee exports effected at a price equal to the minimum registration price, for payment at sight.
1,540 (Free Market Rate less 30% Contribution Quota)
Exports of beef (fresh or chilled) from the Central Zone.
1,870 (Free Market Rate less 15% Contribution Quota)
Exports of cocoa beans and cocoa paste.
2,090 (Free Market Rate less 5% Contribution Quota)
Exports of cocoa derivatives.
2,200 (“Manual Market” Rate) Foreign banknotes and travelers checks.2,210 (“Manual Market” rate) Foreign banknotes and travelers checks.
2,200 (Free Market Rate)2,220 (Free Market Rate)
All other export proceeds. Other receipts.Imports.12 Invisibles. Capital.

Changes during 1966

During the year, the Brazilian Coffee Institute lowered the minimum registration prices for exports of different grades of coffee on three occasions (on January 5, January 31, and March 8) and raised them once (on December 10). The effective exchange rates applicable to proceeds from coffee exports changed correspondingly. In contrast to 1965, there were no alterations in the cruzeiro payments to exporters per bag of coffee. During 1966 a large number of imports were transferred in six stages from the Special Category to the General Category; on November 22 it was announced that the commodities in the Special Category would be transferred to the General Category effective on March 1, 1967.

January 1. For a period of one year a customs surcharge of 10 per cent of existing import duties was levied on all imports except those from LAFTA countries.

January 1. An additional charge of 10 per cent was imposed on the stamp tax levied on most exchange transactions.

January 14. The 100 per cent guarantee deposit which authorized banks were required to collect on most sales of foreign exchange for future delivery was reduced to 25 per cent.

February 17. The 20 per cent contribution levied on proceeds from exports of specified types of beef from Rio Grande do Sul was eliminated.

April 14. The amount of foreign exchange which authorized banks could, with exemption from the 15 per cent exchange tax and without prior authorization of FICAM, sell for personal remittances was raised from US$200 to US$500.

April 29. The 25 per cent guarantee deposit that authorized banks were required to collect on most sales of foreign exchange was abolished for forward settlements.

June 1. The limit on the amount of foreign exchange which an importer could purchase in any one week was removed.

June 15. Law No. 5025 of June 10 governing foreign trade was published in the Official Gazette. It established a National Council for Foreign Trade (CONCEX), which would be responsible for the formulation of foreign trade policy. The Council would be presided over by the Minister of Commerce and Industry and the other members would be six ministers, the Presidents of the Central Bank, the Bank of Brazil, and the Customs Policy Council, the Director of the Foreign Trade Department of the Bank of Brazil (CACEX), and three representatives of private enterprise. The Council was to undertake all measures necessary to stimulate the growth of foreign trade. To that end, the law provided for the elimination of numerous charges and taxes on exports, the removal, with minor exceptions, of export licensing, as well as a substantial simplification of administrative procedures relating to exports. The law stipulated, however, that the provision eliminating taxes on exports did not apply to taxes of a foreign exchange nature on exports of coffee and of other commodities, as determined by the National Monetary Council or by the abolished SUMOC.

The law also established a Fund for the Financing of Exports (FINEX) which was to be responsible for the financing of exports and of production for export; the purchasing and financing of exportable domestic surplus commodities; and the subsidizing of export commodities for which temporary marketing difficulties are encountered abroad.

July 1. The LAFTA multilateral clearing system went into effect. Brazil did not participate, since no reciprocal credit agreements had yet been signed by the central banks of Brazil and other LAFTA countries.

August 12. Law No. 5072 empowered the National Monetary Council to impose export taxes for the purpose of smoothing out the domestic impact of variations in international prices and of conserving export revenue. Such taxes could be levied on a commodity when the official “base” price established by the Brazilian authorities was exceeded by more than 5 per cent, and were to be applied to the amount received in excess of that margin; the maximum rate of tax was fixed at 40 per cent of the excess. The proceeds collected by the commercial banks were to be deposited on a special reserve account (“reserva monetária”) held by the Central Bank with the Bank of Brazil, and were to be earmarked for specified purposes in accordance with the policies adopted by the National Monetary Council.

September 7. The bilateral payments agreement with Portugal was terminated; a new trade agreement provided that all payments between the two countries were to be made in convertible currencies.

September 17. The requirement was abolished that an “exchange cover certificate” be secured from the Bank of Brazil in order to obtain a visa from the Brazilian consular authorities abroad authorizing the shipment of imports in the General Category. This meant that the closing of an exchange contract, which was a prerequisite for obtaining the certificate of exchange cover, could now take place at any time prior to the clearance of the goods through customs, rather than prior to the shipment of the goods from the supplying country, as was required under the previous regulations.

September 22. The requirement of a minimum bid for promessas de licença for imports of Special Category commodities was abolished.

September 23. The “financial charge” on nontrade payments was eliminated. This tax had been 15 per cent on payments not specifically exempt, or 10 per cent for firms maintaining price increases within limits specified in Portaria 71.

October 20. Law No. 5143 provided for the elimination with effect from January 1, 1967 of the stamp tax levied on most exchange transactions.

October 21. Law No. 5154 increased from 10 to 25 per cent the additional charge on the stamp tax levied on most exchange transactions until December 31, 1966.

November 22. Central Bank Resolution No. 41 announced that the imports in the Special Category would be transferred to the General Category on March 1, 1967.

November 22. Decree Law No. 63 provided for a new customs tariff schedule to become effective on March 1, 1967 and to replace on that date the tariff schedule appended to Law No. 3244 of August 14, 1957.

November 28. Decree Law No. 59607 implemented further the policies introduced by Law No. 5025 of June 10, 1966 (see June 15).

December 7. In accordance with Law No. 5072 (see August 12), Central Bank Resolution No. 42 imposed a 20 per cent tax on exports of seven types of hide, for which “base” prices in terms of U.S. dollars were established. The tax was to be assessed on the f.o.b. price.

Burma

Exchange Rate System

The par value is 0.186621 gram of fine gold per Burmese Kyat or K 4.76190 = US$1. In dealing with the State Commercial Bank, the only authorized dealer, the Union Bank of Burma buys and sells spot exchange at rates which do not differ by more than ½ of 1 per cent from par. The State Commercial Bank establishes its buying and selling rates for currencies other than the pound sterling on the basis of the rates quoted by the Union Bank of Burma and the London rates for the currency concerned. The State Commercial Bank’s buying and selling rates for sterling are Is. 6132d. and Is. 53132d., respectively, per K 1.

Administration of Control

Exchange control is administered by the Exchange Control Board through the Exchange Control Department of the Union Bank of Burma. Exports are handled by the Myanma Export-Import Corporation (MEIC or Trade Corporation No. 22). The MEIC also imports goods for the use of the private sector. Government agencies and departments make imports of goods for their own use, as well as imports under loan and aid agreements in the name of the MEIC. Most payments and imports are made in accordance with an annual foreign exchange budget.

Prescription of Currency

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.

Imports and Import Payments

An import program is drawn up annually as part of the foreign exchange budget. All imports are made by, or in the name of, the MEIC. Imports from Rhodesia and South Africa are prohibited. Also prohibited are imports of a few commodities from any source—principally opium and similar narcotics, monkeys, playing cards, and gold and silver bullion.

All payments for imports are made through the State Commercial Bank.

Payments for Invisibles

All payments for invisibles are subject to licensing. In general, payments for items connected with foreign trade are allowed automatically, and payments for most other purposes are considered on a case-to-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; the same applies to rental fees for movie films that have been permitted to be exhibited. Family remittances are permitted only by foreign municipal workers or foreign technicians employed under contract by the Government. Remittances of income resulting from investment other than that guaranteed under the Investment Act have been temporarily suspended. The remittance of pension payments to retired government employees of foreign nationality 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 temporarily suspended. However, residents granted an official permit to go abroad for any purpose may take out freely the equivalent of K 50 in the currency of the country of destination (except India) or, if that currency is not available, in sterling notes. 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 one fourth of the amount of foreign currency which they had converted into kyats. The export of Burmese currency notes is prohibited.

Exports and Export Proceeds

All exports are effected by the MEIC. There is a list of prohibited exports: iron and steel, brass, copper and aluminum and scraps thereof, foreign manufactures, and commodities of domestic origin which it is desired to conserve for domestic requirements. All exports to Rhodesia and South Africa are prohibited. Export proceeds must be obtained in a manner satisfactory to the exchange control authorities; the exchange must be surrendered to the Union Bank of Burma within six months from the date of shipment.

Proceeds from Invisibles

Exchange receipts from invisibles must be surrendered. Travelers may bring in, subject to declaration, any amount in foreign currency. The import of Burmese currency notes is prohibited.

Capital

Foreign investments in Burma are governed by the provisions of the Union of Burma Investment Act, 1959, and the Investment Rules of February 25, 1960 issued under authority of the Act. 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, since February 15, 1963, when the Government announced a new policy of nationalization, permission has not been granted for any foreign private investment in Burma.

The investment law provides for the transfer abroad of profits after taxes and for the withdrawal of imported capital at any time after five years from the time of entry, in annual quotas not exceeding 25 per cent of its original value. Proceeds from the liquidation or sale of an enterprise may also be transferred abroad. All such transfers may be made at the official rate of exchange prevailing at the time of the transaction.

The repatriation of personal assets and family remittances has been temporarily suspended for foreign nationals employed in the private sector.

When the transfer abroad of payments in favor of nonresidents is not permitted, the authorities can allow such payments to be credited to kyat nonresident accounts. Certain debits and credits to such accounts require prior permission.

Residents are not usually permitted to remit funds abroad for investment.

The import, export, and transfer of securities involving nonresident interests require individual licenses.

Changes during 1966

During the year imports from and exports to Rhodesia were prohibited.

March 10. Imports of textiles were shifted from Trade Corporation No. 5 to Trade Corporation No. 22 (the Myanma Export-Import Corporation).

June 1. The State Commercial Bank became the sole authorized dealer in foreign exchange.

June 30. The bilateral payments agreement with Mainland China was terminated.

October 17. Burma withdrew from the Sterling Area.

November 14. General permission was given to the State Commercial Bank to open foreign currency accounts in the names of foreign missions, international organizations, and trade representations, as well as personal foreign currency accounts in the names of persons enjoying diplomatic privileges. No deposit of kyats to foreign currency accounts was permissible.

Burundi

Exchange Rate System

The par value is 0.0101562 gram of fine gold per Burundi Franc or FBu 87.50 = US$1. This rate is applicable to all transactions. The official rates on December 31, 1966 were FBu 87.22 buying, and FBu 87.93 selling, per US$1. Authorized banks must carry out permitted exchange transactions at rates between the buying and selling rates fixed by the Bank of the Republic of Burundi for currencies quoted by that bank1 and at rates fixed freely with their customers for certain other currencies.2

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 of these transactions is delegated to three authorized banks.

Prescription of Currency

Outgoing payments may be made in any currency; receipts must be obtained in one of the currencies quoted by the Bank of the Republic of Burundi.3

Nonresident Accounts

Certain nonresidents may maintain nonresident accounts in foreign currencies with an authorized bank. The opening of such accounts requires the approval of the central bank 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 exchange that is received from abroad. They may be debited freely for (1) conversion into Burundi francs required to pay any expenses in Burundi and (2) payments abroad for travel and representation or for the purchase price 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 except trade samples and merchandise not intended for sale and valued up to FBu 20,000 require licenses; these are issued freely, except for certain used clothing. Applications for licenses must be submitted to the Bank of the Republic of Burundi on a form entitled Import License and Payment Authorization. The approval of such an application constitutes an authorization also to obtain foreign exchange. With certain exceptions, applications for amounts under FBu 100,000 are approved by the authorized banks. Import licenses must be presented to the customs officials when the goods are cleared through customs. The license is valid for a period of seven months starting at the end of the month following that of validation; in special cases, extensions may be granted by the central bank. The number and date of expiration must be entered on the customs clearance form, called the Consumption Declaration, a copy of which is then sent to the central bank by the customs office.

Advance deposits calculated on the c.i.f. value are required for specified nonessential goods from importers whose outstanding exchange commitments against import licenses are the equivalent of FBu 100,000 or over. The required deposit on such commodities is 50 per cent or 100 per cent. Advance deposits are not required, however, on nonessential goods imported in small amounts, i.e., when the amount of the license is less than FBu 20,000 for goods requiring a 50 per cent deposit, or less than FBu 10,000 for goods requiring a 100 per cent deposit. The deposit must be made at the time the import license application is approved; it is released when the import payment is made. All essential capital goods, raw materials, and consumer goods are free from deposit requirements.

Payments for Invisibles

All payments for invisibles require approval. Transfers of up to two thirds of net salaries and emoluments of foreign nationals are freely permitted upon proof of payment of taxes. For unincorporated businesses and professional persons, transfers are freely permitted of two thirds of income after taxes. Companies may freely transfer their net income after taxes. Transfers of accumulated earnings accrued prior to 1965 by persons leaving Burundi permanently are authorized on an ad hoc basis. Transfer of income from rental properties to nonresident owners is permitted after payment of taxes and deduction of normal maintenance expenses; resident owners may remit two thirds of such income. Residents of Burundi nationality may purchase reasonable amounts of exchange for foreign travel; they may take out this exchange and up to FBu 2,000 in Burundi banknotes. In addition, residents may freely purchase foreign travel tickets up to certain limits against payment in Burundi francs.

Exports and Export Proceeds

All exports valued at over FBu 3,000 are subject to a prior declaration entitled Declaration of Collection of Foreign Exchange. The Declaration must be presented for certification by the central bank through an authorized bank, with the exception that authorized banks may certify Declarations for coffee exported on consignment. Declarations are valid for a period of six months, but extensions may be granted by the central bank. Payments must be collected not later than 45 days after the goods have left the country when they are sold to neighboring countries, and not later than 90 days for goods shipped to other destinations. All exchange proceeds from exports must be surrendered to an authorized bank within 8 days from their collection.

Proceeds from Invisibles

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

Capital

The Investment Code of August 6, 1963 stipulates the rules under which domestic and foreign private investments may be made in Burundi. It provides that investments of foreign capital are permitted in the form of participation through the acquisition of shares and loans granted for a period exceeding five years and constituting a determining financial element in a firm established in Burundi.

Investments in specified existing economic activities (e.g., industrial development, farming, fisheries, tourist industries), as well as new investments in activities that fulfill certain conditions relating to the realization of the economic development plan, may be accorded specified priority rights. Such rights consist mainly of exemptions from import duties and from taxes on income from investments. Moreover, certain of the above enterprises, when expanding their activities, may be granted additional concessions. Applications for priority status must be submitted to the Minister of Economy, who forwards them to an Investment Commission. Recognition of priority status is granted by a presidential decree. Foreign capital, as defined above, which is invested in a priority enterprise, may be repatriated after five years. The transfer of profits and interest of up to 5 per cent per annum of the invested capital is permitted.

Pending the introduction of a new investment code, which is under preparation, all proposals for foreign investments in Burundi are being considered on a case-by-case basis.

Capital transfers by residents require individual authorization, which is rarely given, except in the case of foreign capital on which a repatriation guarantee has been granted. The guarantee is given to foreign exchange imported in specified currencies (see footnote 1) by resident enterprises for working capital purposes and is valid for one year from the date on which the exchange is surrendered to the central bank through an authorized bank. The guarantee provides for the transfer at the official rate of the original amount surrendered.

Changes during 1966

August 29. A combined trade and payments agreement was signed with the Democratic Republic of Congo. The agreement would enter into force upon an exchange of notes confirming its approval under the constitutional procedures of both countries.

May 4. Burundi and seven other East African countries (Ethiopia, Kenya, Malawi, Mauritius, Tanzania, Uganda, and Zambia) signed a preliminary agreement on the establishment of an East African Economic Community. Somalia and the Sudan were expected to sign later.

Cambodia1

Exchange Rate System

The Cambodian Riel is defined as a monetary unit containing 0.0253905 gram of fine gold. Exchange transactions in U.S. dollars and pounds sterling are carried out at parity rates based on the gold content of the riel and the respective currencies; these rates are CR 35 = US$1 and CR 98 = £1. The official parity for the French franc, however, is fixed at CR 10 = F 1; this rate is applicable to most settlements in French francs. Foreign tourists staying at all officially listed hotels are given coupons for 25 riels over and above the rate of 35 riels for each U.S. dollar sold (coupons for 2 riels over and above the rate of 10 riels for each French franc sold).

Sales and purchases of foreign banknotes quoted on the Phnôm-Penh official market are made at the selling rate plus 3 per cent and at the buying rate minus 1 per cent, respectively. Rates for foreign banknotes quoted “indicatively” on that market are determined by the authorized banks on the basis of the average rates announced by the National Bank of Cambodia plus a commission of 1 per cent for purchases and of 4 per cent for sales. Authorized banks are empowered to negotiate for their own account, and at a rate mutually agreed with their customers foreign banknotes other than those quoted officially or “indicatively” by the National Bank of Cambodia.

Arbitrage operations involving convertible currencies may be authorized by the National Exchange Office. If the operations take place in Cambodia, they are carried out at the rate of the day on the Phnôm-Penh exchange market.

Administration of Control

Exchange control is administered by the National Exchange Office in cooperation with the National Bank of Cambodia; this office is empowered to authorize all operations related to settlements with foreign countries, to foreign investments, and to nonresident accounts.

All import and export transactions are effected by the National Import-Export Corporation (Société Nationale d’Exportation et d’Importation or SONEXIM). The Ministry of National Economy is in charge of import and export controls, but it has delegated this authority to the Director of Foreign Trade. Import and export licenses are issued by SONEXIM and must be domiciled with the Cambodian Bank of Commerce and the National Credit (Inadana Jati); the bank’s visa is required before licenses are presented to customs.

Prescription of Currency

Settlements with ten countries with which Cambodia has bilateral payments arrangements are made through bilateral accounts. Those maintained for Albania, Mainland China, Czechoslovakia, Eastern Germany, North Korea, Poland, the U.S.S.R., and North Viet-Nam are denominated in pounds sterling, and those for Bulgaria and Yugoslavia in U.S. dollars.

Currencies prescribed for settlements with other countries are usually specified in the licenses. Payments for imports from the French Franc Area must be made in French francs. Payments for imports from other countries are ordinarily made in the currency of the country of the exporter.

Foreign investments must be made in a currency acceptable to the National Bank. Profits on, and proceeds from the liquidation of, foreign investments may be transferred abroad in the currency in which the investment was made.

Nonresident Accounts

The following categories of account may be maintained for nonresidents: Foreigners’ Accounts in Riels, Capital Accounts, Nonresident Accounts, and Foreign Currency Accounts. In addition, Cambodian nationals staying abroad temporarily but not recognized as nonresidents, and foreigners staying in Cambodia but not recognized as residents, may maintain special Internal Accounts of Nonresidents.

Foreigners’ Accounts in Riels may be opened, without permission, for foreigners residing abroad. They are related to the country of residence of the account holder. They may be freely credited with (1) proceeds from the sale on the Phnôm-Penh market of the currency (but not banknotes) of the country of the account holder; (2) payments for authorized imports (including incidental expenses) from the country of the account holder; (3) earnings on investments in Cambodia and receipts from repayments on Cambodian stocks and bonds and on other investments made in Cambodia after May 1956; and (4) interest paid by the banks on funds kept in the accounts. These accounts may be freely debited for normal expenses in Cambodia and purchases on the Phnôm-Penh market of banknotes of the country of the account holder. Transfers between Foreigners’ Accounts in Riels related to the same country may be made freely.

Capital Accounts may be opened without permission. Subject to authorization, these accounts may be credited with (1) proceeds from the sale in Cambodia of Cambodian stocks and bonds imported from abroad or kept with an authorized bank in a dossier related to the country of the account holder; (2) proceeds from the sale in Cambodia of participations in corporations other than by purchases of stocks and bonds; (3) contractual or advance repayments of Cambodian stocks and bonds; (4) proceeds from the sale through an authorized notary of real estate or businesses located in Cambodia and in the possession of a nonresident account holder since January 1, 1955 or acquired by him either through inheritance or with the permission of the National Exchange Office; (5) repayment of loans granted to residents prior to January 1, 1955, or after that date with the approval of the National Exchange Office; and (6) transfers from another capital account related to the country of the account holder. Capital Accounts may be freely debited for (1) living expenses of the account holder or his family up to CR 1,000 a person a day, and up to a maximum of CR 50,000 monthly, and (2) expenses connected with the administration of foreign assets in Cambodia (stocks and bonds, buildings, land, etc.). Subject to authorization from the National Exchange Office, these accounts may be debited for (1) purchases in Cambodia of Cambodian stocks and bonds; (2) subscriptions to, or increases in capital of, a Cambodian firm; (3) purchases through an authorized notary of title to real estate or businesses located in Cambodia; (4) loans in riels to residents; (5) transfers to another capital account related to the country of the account holder; (6) living expenses in Cambodia of the account holder’s employees if the account is held by a firm (corporation, bank, etc.); and (7) gifts to individuals and to social, cultural, and religious associations.

Nonresident Accounts may be opened only upon authorization. They may be freely debited for (1) taxes in Cambodia, (2) miscellaneous accounting, correspondence expenses, etc., and (3) living expenses in Cambodia of the account holder and his family, up to CR 2,000 a day. All other operations through these accounts are subject to individual licensing.

Foreign Currency Accounts may be opened only upon authorization. They may be freely credited with foreign exchange transferred from abroad. Account holders may use balances on these accounts (1) to cover expenses abroad, such as those related to travel, missions, and the purchase of foreign merchandise, and (2) to cover expenses of any kind in Cambodia by converting balances on these accounts into riels on the Phnôm-Penh exchange market.

Internal Accounts of Nonresidents may be opened only upon authorization. Balances on these accounts may not be used for transfers abroad. The accounts may be freely credited with (1) proceeds from the sale of foreign exchange on the Phnôm-Penh market; (2) transfers from Foreigners’ Accounts in Riels; (3) wages, salaries, allowances, and payments for expenses of Cambodian nationals employed by Cambodian firms and temporarily residing abroad; (4) income earned in Cambodia by account holders; (5) redeposits of previous withdrawals; and (6) repayment of loans granted to residents out of balances in such accounts. The accounts may be freely debited for (1) living expenses in Cambodia of the account holder or his family, (2) administrative expenses related to the account holder’s property in Cambodia, and (3) loans to residents. All other operations through these accounts require authorization.

Imports and Import Payments

The import of certain commodities is prohibited for reasons of health or security and that of certain other goods for protective reasons.

An annual import program is prepared by the Ministry of Commerce. Twice a year, the National Bank of Cambodia places at the disposal of the Ministry a specific amount of foreign exchange to pay for the programed imports.

Permissible imports are classified in six lists. The list of “financeable” imports contains those commodities subject neither to a compensation payment (péréquation) nor to a fixed resale price. Commodities in lists A, B, and C are subject to compensation payments of CR 46, CR 41.5, or CR 35 per U.S. dollar, respectively.2 Commodities in List D require a compensation payment of 10-50 per cent of the c.i.f. price. List E contains the commodities that are sold by SONEXIM to local distributors at fixed prices.

Foreign exchange received from foreign travelers by approved hotels and surrendered by the latter to SONEXIM may be used by that organization to finance imports (see section on Proceeds from Invisibles, below). All imports are effected by a state trading agency, SONEXIM. Applications for goods to be imported may be submitted by industries and traders to SONEXIM, which transmits them to a Special Board in the Ministry of Commerce for consideration. The Special Board allocates appropriate foreign exchange to SONEXIM for those applications it approves.

Payments for Invisibles

All payments for invisibles require individual licenses.

A foreigner working in Cambodia and receiving a monthly salary exceeding CR 5,000 in Phnôm-Penh, or CR 3,500 in the provinces, may transfer up to 30 per cent of his net monthly salary—after payment of taxes—plus 15 per cent of his monthly salary if a dependent wife stays abroad, plus an additional 10 per cent if dependent children, parents, or grandparents stay abroad. (The additional percentage of transferable income is 2 per cent for each legitimate child or dependent parent or grandparent, with a maximum of 10 per cent of the net monthly income for each family.) Such transfers may not exceed the equivalent of CR 20,000 a month. Transfer facilities are not granted for salaries and wages exempt from income tax. Overtime pay is considered transferable income only when it is received in payment for courses given in public educational institutions. Women of foreign nationality married to Cambodian nationals and working in the private sector are not permitted to transfer savings from salaries or wages to their country of origin.

Foreign landlords domiciled in Cambodia may transfer up to 30 per cent of the taxable portion of their income from rent, provided that the rent exceeds CR 5,000 for landlords living in Phnôm-Penh or CR 3,500 for landlords living in the provinces. Foreign landlords living abroad may transfer up to 20 per cent of the taxable portion of rent.

Foreigners residing in Cambodia, when leaving the country temporarily or permanently, are permitted to transfer abroad, up to prescribed limits, savings out of their salaries earned in Cambodia.

The transfer of up to 80 per cent of net profits from nonresident investments made prior to May 31, 1956 may be authorized, provided that the investment is recognized by the Ministry of Finance as useful to the economic development of Cambodia.

Net profits that do not exceed 20 per cent of foreign investments made after May 31, 1956 may be transferred.

Cambodians studying abroad may receive monthly exchange allocations equivalent to CR 6,000 for France; CR 5,500 for the United States and the United Kingdom; CR 5,000 for Switzerland; CR 4,500 for Belgium and Japan; and CR 4,000 for any other country. A Cambodian student granted a scholarship may receive a monthly allocation to cover the difference between the scholarship and the permissible exchange allocation. The allocation of foreign exchange for tourist travel and business travel has been suspended.

The export of Cambodian currency is prohibited.

Exports and Export Proceeds

All exports are effected by SONEXIM, in accordance with an annual export program prepared by the Ministry of Commerce. Export proceeds are surrendered to the National Exchange Office.

Proceeds from Invisibles

Proceeds from invisibles must be surrendered. Foreign tourists staying at all officially listed hotels are given coupons for CR 25 over and above the rate of CR 35 for each U.S. dollar sold (CR 2 over and above the rate of CR 10 for each French franc sold). Only authorized banks and approved hotels may purchase foreign exchange from travelers. Approved hotels must surrender to authorized banks the foreign exchange that they acquire from foreign travelers; the corresponding exchange may be credited to “Tourism SONEXIM Accounts.” Such accounts may be used by the holder to import commodities. Hotel bills may be remitted in riels by foreign citizens on official travel upon producing a statement issued by their embassy certifying the payment of these expenses through its own funds held in clearing accounts or from the sale of foreign currencies. The import of Cambodian currency is prohibited. Foreign exchange must be declared by travelers when entering Cambodia; if imported by residents, it must be surrendered within seven days from the day of entry into Cambodia.

Capital

All capital transfers require individual licenses.

No transfer abroad of proceeds from the sale of property by a foreigner to a foreigner is permitted. Foreigners who sell their property to Cambodians and leave Cambodia permanently may transfer initially up to 20 per cent of the proceeds of the sale; up to 20 per cent of the remainder may be authorized for transfer annually, when the total amount involved is small. Funds representing the repayment of loans originally granted in foreign currency may be considered transferable income.

Since May 31, 1956, all foreign investments have been subject to authorization from the Ministry of Finance, which requires that a certain percentage of the capital of an enterprise should be reserved for Cambodian participation and that its employees should be Cambodians. Only investments for the creation of activities recognized as useful to the economic development of the country and not involving monopoly or special privilege may be authorized. Proceeds from the liquidation of authorized investments made after May 31, 1956 may be transferred in yearly installments not exceeding 20 per cent of the total investment. Up to 10 per cent of the proceeds from the liquidation of investments made prior to May 31, 1956 may be authorized for transfer every year.

Foreign capital invested after May 31, 1956 is guaranteed the same tax treatment that is applied to resident investments; in addition, special incentives (partial exemption from duties and taxes on reinvested profits, and on equipment goods or raw materials imported during the first year of operation) may be accorded to foreign investment considered as exceptionally useful to the Cambodian economy. There is a guarantee of 10-30 years against risks of nationalization or expropriation, and for a just and equitable indemnity in the event of nationalization or expropriation of investments.

Changes during 1966

January 1. The import program for 1966 went into effect. It envisaged total imports valued at CR 3 billion.

January 1. Notice No. 79 of the National Exchange Office made imports financed with foreign credit subject to the normal import licensing requirements.

February 4. Decree No. 391 extended for the year 1966 the premium of CR 25 per U.S. dollar (CR 2 per French franc) granted to foreign tourists visiting hotels listed by the Department of Tourism. Such hotels could have the foreign exchange that they received credited to “Tourism SONEXIM Accounts.” Holdings on such accounts could be used to import goods.

February 17. Imports of various kinds of paper were prohibited.

May 25. A bilateral payments agreement was signed with Albania.

May 31. Circular No. 3-C/ONC/A of the National Exchange Office authorized foreign nationals on official travel in Cambodia to settle their hotel bills in riels, provided that they produced a certified statement from their embassy to the effect that the funds had been obtained from a clearing account or from surrender of foreign exchange.

July 1. A revised import program for 1966 was published; the total value of imports anticipated for the year was reduced from CR 3 billion to CR 2.7 billion.

August 10. The bilateral payments agreement with the Republic of Viet-Nam was terminated. Payments would take place in U.S. dollars or other convertible currencies.

September 1. The compensation charges (péréquation) for imports from the French Franc Area of goods in lists A, B, and C, were reduced from CR 7.5, CR 6.5, and CR 5 per French franc to CR 6.2, CR 5.2, and CR 4 per French franc, respectively.

Cameroon

Exchange Rate System

No par value for the currency of Cameroon has been established with the Fund. The official unit of currency is the CFA Franc, which is equivalent to 0.02 French franc, giving the relationship CFAF 246.853 = US$1.1 The BCEAEC stands ready, in transactions with commercial banks, to buy and sell CFA francs against French francs at the fixed rate of CFAF 1 = 0.02 French franc. Exchange rates for other currencies are based on the fixed rate for the French franc and the Paris market rates for the other currency concerned.

Administration of Control

Exchange control is administered by the Directorate of Exchange and International Settlements, which operates under the authority of the Ministry of Economic Affairs and Planning. Foreign trade regulations are made by the Ministry of Economic Affairs and Planning on the advice of the Directorate of Commerce and Foreign Economic Relations. The latter Directorate also issues import and export licenses; both require the visa of the Directorate of Exchange.

Prescription of Currency

Cameroon is a member of the French Franc Area, and settlements with other countries of the French Franc Area are made in any currency of that Area. Settlements with Mali, with which Cameroon maintains a bilateral payments agreement, are made through special accounts. Settlements with all other countries are usually made through banks domiciled in France, in any of the currencies of those countries or through Foreign Accounts in Convertible Francs; payments may also be made through postal channels.

Nonresident Accounts

The regulations pertaining to nonresident accounts are based on those applied in France.

Imports and Imports Payments

The import from all sources of certain goods (wines, flour, tobacco, beer, sugar, agricultural tools, sheet aluminum, matches, secondhand clothing, and certain textiles of Asian origin) is subject to restrictive licensing. Other imports from countries in the French Franc Area may be made freely. The import of a number of goods from EEC countries other than France is liberalized. All other imports 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 Ministry of Economic Affairs and Planning and are discussed in a joint French-Cameroonian Committee. The allocations of the program are subsequently subdivided into quotas for West and East Cameroon.

Separate global quotas are established for imports from EEC countries other than France and for imports from all other countries outside the French France Area. Under quotas established for imports from EEC countries, only goods originating in those countries may be imported. Under the quotas for other countries, goods originating in any country outside the French Franc Area except Mainland China and the U.S.S.R. may be imported. Separate quotas are established for Mainland China and the U.S.S.R.

Import licenses are not issued until the importer has received his allotment of foreign exchange from a technical committee headed by the Director of Commerce and Foreign Economic Relations. For purposes of this distribution, registered importers are classified according to the value of their annual imports, although exchange may also be made available, under certain conditions, to newly established importers and to industrial enterprises that are not registered importers.

Import licenses which do not involve a request for foreign exchange, e.g., for gifts, items sent as guarantees, publicity articles, and supplies for foreign religious missions, may be approved, provided that the importer undertakes not to sell the goods and only to use them for his personal requirements.

Payments for Invisibles

Payments for invisibles may be made freely to residents of countries in the French Franc Area. All payments for invisibles to other countries are, in general, subject to approval by the Directorate of Exchange. The transfer of profits from authorized foreign investments is permitted freely. Transfers of premiums by insurance companies require the approval of the Directorate of Exchange, as do transfers for educational and medical expenses abroad. Foreigners working in Cameroon are permitted to transfer up to 50 per cent of their salary if they have their families abroad, and up to 20 per cent if they are single or have their families in Cameroon. Residents may obtain the equivalent of CFAF 75,000 a year in currencies of countries outside the French Franc Area for tourist travel outside the Area; the allocation for business travel is the equivalent of CFAF 100,000 for each trip. Travelers to other countries in the French Franc Area may take out any amount of CFA banknotes. Travelers to other destinations may take out up to CFAF 75,000 in legal tender CFA franc notes and coins, or the equivalent of CFAF 75,000 in French banknotes.

Exports and Export Proceeds

Exports to countries in the French Franc Area do not require a license. All other exports require prior authorization or a declaration. Exporters to countries outside the French Franc Area must sign an exchange commitment to the effect that they will surrender the proceeds in non-Franc Area currencies.

Proceeds of exports to countries in the French Franc Area may be retained by the exporter. Export proceeds in the currencies of all other countries must be surrendered within three months from the date of their receipt.

Proceeds from Invisibles

Proceeds from transactions in invisibles with countries in the French Franc Area may be retained. All amounts due in respect of services from residents of other countries, and income exceeding CFAF 50,000 earned in those countries from securities, must be collected and surrendered within three months of receipt. Travelers may bring in any amount of domestic or foreign banknotes or coins (except gold coins).

Capital

Capital movements between Cameroon and other countries of the French Franc Area are free of control; those between Cameroon and all other countries require approval. When the investment in Cameroon of capital originating outside the French Franc Area is authorized, the authorization of the Directorate of Exchange includes a guarantee in respect of the transfer outside the Area of interest, dividends, and profits, and of the proceeds upon liquidation.

An Investment Code promulgated in 1960 and revised in April 1964 establishes four categories of fiscal and other benefits which may be granted to both foreign and domestic firms undertaking approved new industrial or agricultural projects in Cameroon. The scope and duration of the benefits vary depending on the size of the investment, the degree to which it helps implement the economic and social development plan, and its importance to national economic growth. Category A permits mainly duty-free entry of capital goods and raw materials required for manufacturing and processing. Under Category B, firms may be entitled to the benefits of Category A and also to exemption for 5 years from the tax on industrial and commercial profits and from various other taxes and fees. Under Category C, large companies may conclude an “established agreement” with the Government, under which special conditions are agreed for the operations of the company and the nature and extent of tax concessions are determined. Normally, an “establishment agreement” is valid for 25 years and defines also 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 grants to firms making investments of particular significance to the national economy the benefits of Category C, as well as a guarantee of stability of taxation for up to 25 years.

Changes during 1966

January 1. The treaty establishing the Central African Customs and Economic Union (UDEAC) between Cameroon and the members of the Equatorial Customs Union (the Central African Republic, Chad, Congo (Brazzaville), and Gabon) entered into effect.

February 1. The import of further products from EEC countries other than France was liberalized.

March 31. The EFAC (Exportations-Frais Accessoires) accounts were abolished on which exporters could previously retain a portion of their export proceeds received in non-Franc Area currencies.

July 1. The customs and excise duties applicable in West and East Cameroon were unified at the level of the UDEAC import tariff. The 16 per cent compensatory duty previously levied on imports passing from West to East Cameroon was abolished.

July 6. A bilateral payments agreement with Guinea was initialed but did not enter into force.

August 19. A trade agreement of the most-favored-nation type was signed with the United Arab Republic. It entered into force provisionally on the date of signature. At that time, the bilateral payments agreement with the United Arab Republic expired.

Canada

Exchange Rate System

The par value is 0.822021 gram of fine gold per Canadian Dollar or Can$1.08108=US$l. Canada has no exchange restrictions on foreign payments. 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

Payments and transfers abroad may be made freely. Import licenses are required only for a few agricultural items, including certain cereals; for some of these items, such as certain dairy products, licenses are generally not being issued. Commercial imports from any source of certain commodities are generally prohibited; these include oleomargarine, used automobiles, secondhand aircraft, certain periodicals, and goods of Rhodesian origin.

Exports and Export Proceeds

The surrender of the proceeds of 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. For security reasons, the export of certain specified commodities to all destinations except the United States is under export control. All exports to Soviet countries and Mainland China are subject to control; certain non-strategic goods, when of Canadian origin, may be exported to these destinations under general permit. All goods destined for Rhodesia require an export permit.

Payments for and Proceeds from Invisibles

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

Capital

No exchange control requirements are imposed on capital receipts or payments by residents or nonresidents.

Changes during 1966

January 1. With certain exceptions, the entry into Canada of non-Canadian periodicals (such as split runs) containing advertising primarily directed to the Canadian market, as well as periodicals in which more than 5 per cent of the advertising contained specific references to sources of availability in Canada or conditions of sale in Canada, was prohibited.

January 31. Export controls on copper to destinations other than the United States, introduced in November 1965, were extended to copper scrap, copper alloy scrap, and copper-bearing scrap.

March 16. The Government asked all Canadian investors not to acquire certain types of securities issued by U.S.-owned corporations, viz., securities initially issued overseas by U.S. corporations or their non-Canadian subsidiaries which were denominated in Canadian or U.S. dollars and would be subject to the U.S. Interest Equalization Tax if purchased by U.S. residents. Exempt from this request were purchases by Canadian financial institutions and pension funds to cover foreign currency liabilities to nonresidents of Canada and the United States.

March 21. Export controls on copper to destinations other than the United States were extended to ores and concentrates.

March 29. The 15 per cent withholding tax on interest payments to foreign holders of federal, provincial, and municipal bonds dated after April 15, 1966 was removed. The tax continued to apply to corporate bonds.

March 31. The Government announced that a set of guiding principles of good corporate behavior had been sent to the chief executive officers of all Canadian subsidiaries of foreign companies. Large and medium-sized subsidiaries were also asked to file periodic confidential reports on certain aspects of their operations and financing.

Central African Republic

Exchange Rate System

No par value for the currency of the Central African Republic has been established with the Fund. The official unit of currency is the CFA Franc, which is equivalent to 0.02 French franc, giving the relationship CFAF 246.853 = US$1.1 The BCEAEC stands ready, in transactions with commercial banks, to buy and sell CFA francs against French francs at the fixed rate of CFAF 1 = 0.02 French franc. Exchange rates for other currencies are based on the fixed rate for the French franc and the Paris market rates for the other currencies concerned, and include a commission.

Administration of Control

Exchange control is administered by the Exchange Office, which is an autonomous agency under the authority of the Ministry of Finance. Exchange transactions are handled by authorized banks under the direction of the Exchange Office. The Foreign Trade Office of the Ministry of National Economy makes allocations of exchange to each importer for goods included in the annual import program; it also issues import and export licenses, the former requiring the consent of the Exchange Office.

Prescription of Currency

The Central African Republic is a member of the French Franc Area, and settlements with other countries in the French Franc Area are made in any currency of that Area. Settlements with Mainland China are made through accounts established under a bilateral payments agreement with that country. Settlements with other countries are usually made through banks in France, in any of the currencies of those countries—provided that the currencies are quoted on the Paris exchange market—or through Foreign Accounts in Convertible Francs.

Nonresident Accounts

The regulations pertaining to nonresident accounts are based on those applied in France, but these accounts have little importance. They are limited to Foreign Accounts in Convertible Francs. These may be debited freely for settlements with residents of countries in the area of convertibility, or for purchases of any foreign currency, but they may be credited only after authorization by the Exchange Office.

Imports and Import Payments

The import of coffee, palm oil, groundnut oil, potatoes, butter, cheese, and eggs from countries other than the member states of the Central African Customs and Economic Union (UDEAC) is not authorized unless local production of these commodities is being sold normally. Imports of household utensils and matches from all sources, and imports of certain types of footwear not originating in a member country of UDEAC, may be made only in given ratios to purchases of the local product, and imports of alcoholic beverages from all sources require an import license. All other imports from countries in the French Franc Area may be made freely and without an import license. Most imports from EEC countries are liberalized. Imports from all 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 a joint French-Central African Committee.

Separate global quotas are established for imports from EEC countries (other than France) and for imports from all other countries outside the French Franc Area. The quotas for EEC countries may be used only to import goods originating in those countries; the quotas for other countries may be used to import goods originating in any country outside the French Franc Area. There are ceilings for imports of a few products from countries outside the French Franc Area other than EEC countries. There are special ceilings for imports of textile piece goods from “low-wage countries.”

Licenses for imports outside the program are granted for petroleum imports, for which a joint quota exists for the countries of the Equatorial Customs Union, for imports of tobacco, and for certain imports by diamond and lumber companies.

For goods included in the annual import program, the Ministry of National Economy publishes each year a list of the exchange allocations granted to each registered importer in accordance with, inter alia, his import business in the previous year. The importer submits to the Ministry an application for a license within the limits of the quotas that have been assigned to him. The application must first be domiciled with an authorized bank which collects a fee of 1 per cent of the import value. When the license is issued, the Exchange Office grants its visa and makes the exchange available to the importer through his bank. Payment up to the equivalent of F 20,000 may be made when the import application is domiciled with a bank; any remaining sum due may not be paid until the goods have been shipped. Import licenses are valid for 9 months and may be extended once for 3 months, i.e., the maximum period of validity is 12 months; in exceptional cases, mainly involving capital goods, a second extension for 3 months may be granted.

Payments for Invisibles

Payments for invisibles may be made freely to residents of countries in the French Franc Area. All payments for invisibles to other countries are, in general, subject to approval by the Exchange Office. Insurance on imports and exports must be contracted with French insurance companies or companies operating in France. The transfer of profits from registered foreign investment is permitted freely. Residents of foreign nationality (other than that of a French Franc Area country) may transfer to countries outside the French Franc Area 80 per cent of their net basic salary; the transferable portion is 70 per cent for those having their wives with them in the Central African Republic, and it is reduced by 5 percentage points for each legitimate child living with them. The transfer must be made within three months after the salary period concerned. Other invisibles are authorized liberally, provided that corroborating evidence is submitted to the Exchange Office.

Residents traveling to other countries in the French Franc Area may take out any amount of CFA banknotes or French franc notes. Residents traveling to a country outside the French Franc Area may obtain a foreign exchange allocation of up to the equivalent of CFAF 250,000 a person for each trip and may on each trip take out banknotes up to the equivalent of CFAF 50,000 in French francs or up to CFAF 75,000 in CFA franc notes and coins. Nonresident travelers may take out foreign notes and coins up to the amounts declared when they entered the country.

Exports and Export Proceeds

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 the French Franc Area require licenses, which are issued freely.

Proceeds of exports to countries in the French Franc Area may be retained by the exporter. Proceeds of exports to other countries must be surrendered within one month from the date of their receipt; collection must take place within 180 days from arrival of the goods in the country of destination.

Proceeds from Invisibles

Proceeds from transactions in invisibles with countries in the French Franc Area may be retained. All amounts due in respect of services from residents of other countries, and income exceeding the equivalent of CFAF 5,000 earned in those countries from foreign securities, must be collected and surrendered within one month of receipt. Travelers may bring in any amount of domestic or foreign banknotes or coins (except gold coins).

Capital

Capital movements between the Central African Republic and other French Franc Area countries are free of control; those between the Central African Republic and all other countries are subject to authorization.

Under Law No. 62.355 of February 19, 1963, industrial, tourist, agricultural, and mining enterprises (both foreign and domestic) established in the Central African Republic are granted, under certain conditions, reduced 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. Preferential treatment A applies to enterprises whose activity and market are limited to the territory of the Central African Republic; it is granted for a period of up to 10 years. Preferential treatment B applies to enterprises whose activity and market include the territory of two or more states of the Equatorial Customs Union. Preferential treatment C, which contains the most favorable provisions, is reserved for enterprises of prime importance to the country’s economic development; it provides for stabilization of their fiscal charges for up to 25 years.

Requests for approval for preferential treatment must be submitted to the Minister of National Economy, 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 Equatorial Customs Union upon the recommendation of the Council of Ministers.

The transfer of proceeds from the liquidation of registered foreign investment is permitted freely.

Changes during 1966

January 1. The treaty establishing the Central African Customs and Economic Union (UDEAC) between Cameroon and the members of the Equatorial Customs Union (the Central African Republic, Chad, Congo (Brazzaville), and Gabon) entered into effect.

March 15. Securities issued by public or private legal entities having their main office outside the French Franc Area were exempted from deposit requirements, provided that the securities were payable in French francs only and were serviced in France only.

March 15. Residents were permitted to sell and buy forward non-Franc Area currencies in respect of any payment to be made to, and any receipt to be obtained from, countries outside the French Franc Area; they were also permitted to buy such currencies spot up to six months before the date on which the transfer was to be made.

April 23. The EFAC (Exportations-Frais Accessoires) accounts, on which exporters could retain specified portions of export proceeds received in non-Franc Area currencies, were abolished.

June 16. At a meeting of the Joint French-Central African Committee, some changes in import and export licensing policy were decided upon.

July 27. All imports of alcoholic beverages were made subject to individual licensing.

August 30. The regulations concerning the transfer by foreign residents of savings from salaries were revised.

October 5. Imports from any source of potatoes, butter, cheese, and eggs were prohibited.

October 10. Imports of certain types of footwear not originating in UDEAC countries were made conditional on prior purchases in a specified ratio of the local product.

Ceylon

Exchange Rate System

The par value is 0.186621 gram of fine gold per Ceylon Rupee or Cey Rs 4.76190 = US$1. Exchange rates are based on the fixed sterling-Ceylon rupee rate (Cey Rs 13.33 = £1) and the rates for other currencies against sterling in London.

Administration of Control

Exchange control is administered by the Department of Exchange Control of the Central Bank of Ceylon, as agent of the Government. A foreign exchange budget and an import program are drawn up annually. All remittances of foreign exchange in Ceylon must be made through banks authorized to carry out operations in foreign currencies in accordance with the exchange control regulations prescribed by the Controller of Exchange. Remittances may also be made through post offices, under permits issued by the Controller of Exchange. Import and export licensing is handled by the Controller of Imports and Exports, but licenses for certain industrial imports are issued by the Actual Users Division of the Ministry of Industries, and those for imports under an export incentive scheme are granted by the Commissioner of Commodity Purchase.

Prescription of Currency

Ceylon is a member of the Sterling Area, and the regulations prescribing the currencies for settlements with other countries are similar to the regulations of other Sterling Area countries. Payments to the Sterling Area may be made in any Sterling Area currency; and receipts from the Sterling Area may be accepted in any Sterling Area currency.

Settlements with 11 countries with which Ceylon has bilateral payments agreements1 must be made through the relevant clearing accounts. Payments to all other countries except Rhodesia may be made by crediting sterling or Ceylon rupees to a sterling External Account or an External Rupee Account, or in the currency of the creditor country. Receipts from all other countries except Rhodesia may be accepted in sterling or Ceylon rupees from a sterling External Account or an External Rupee Account, in any specified currency2 other than a Sterling Area currency, or in any nonspecified, non-Sterling Area currency marketable in the United Kingdom, i.e., freely exchangeable for sterling. Transactions involving deviations from the general regulations, and all financial transactions with the Syrian Arab Republic, require the prior approval of the Controller of Exchange. Special regulations apply to settlements with Rhodesia.

Nonresident Accounts

Nonresident accounts may be held in Ceylon by banks, corporations, or persons residing abroad. Transfers of balances in these accounts to Sterling Area Accounts or External Accounts require approval.

Blocked Accounts are used for holding funds that may not be transferred abroad and that are owned by nonresidents, repatriates, and emigrants. Such funds, unless they originate from payments for imports, may be used for investment in Ceylon in prescribed securities. Proceeds from the liquidation of such investments must be credited to Blocked Accounts.

Imports and Import Payments

All imports of goods originating in or shipped from Rhodesia are prohibited. The value and composition of imports are established by an annual import program. Except for imports by the Food Commissioner’s Department, direct imports by other government departments, and certain minor imports (such as trade samples, gifts, and books up to specified amounts), all imports require individual licenses3 and are divided into three groups—essential goods, less essential goods, and nonessential goods. Licenses to import goods in the first and second groups are issued up to the limits of quotas based on past imports. Imports of many nonessential or locally produced goods are either prohibited or considerably restricted.

The right to import is restricted to government-sponsored corporations and registered importers. All imports from countries in the “Ceylonized” area 4 and a few imports from any source are restricted to registered Ceylonese traders—a special group of registered importers. Imports of specified commodities 5 are restricted to government or state corporations or the Cooperative Wholesale Establishment; these are referred to as “reserved items.” In order to allocate quotas, applicants for import licenses are divided into three groups: (1) actual users of industrial raw materials, machinery, etc., (2) those who import other goods for their own use and not for resale, and (3) established importers who import goods for trading purposes.

In addition to the above arrangements, certain imports may be made under an export incentive system (see Exports and Export Proceeds, below).

An authorized dealer may approve an application to remit foreign exchange or to credit a nonresident account when the applicant furnishes, or undertakes to furnish, evidence of importation and of the cost of the goods together with a valid importer’s and exchange control copy of the import license.

Most imports are subject to a 10 per cent customs surcharge on the existing rate of import duty; certain imports are also subject to customs surcharges of 5 per cent ad valorem or 20 per cent of the normal rate of duty.

Payments for Invisibles

All payments for invisibles require individual permits. The remittance of profits, dividends, and other investment income was, until July 31, 1964, freely permitted, but since then a moratorium, which subsequently was relaxed, has been applied to such remittances;6 releases of accumulated arrears have been taking place since the latter part of 1965.

The remittance of life insurance premiums on policies in foreign currencies purchased by nonnationals residing temporarily in Ceylon is permitted, and such policies are considered as part of the assets available to them on retirement.

Foreign exchange for tourist travel abroad is only granted for furloughs of foreign nationals. Business travel is generally limited to travel for the promotion of traditional and industrial exports and of tourism, and exchange up to a maximum of £ stg. 10 a day for a maximum period of 21 days is allowed in such cases.

Exchange for educational expenses is made available only for certain courses of study that will be of positive value to the country and that are not available in Ceylon. For study in educational institutions in “Asian group” countries,7 exchange up to a maximum of Cey Rs 350 a month is allowed; for study in educational institutions in other countries, exchange is made available at £ stg. 60 a month for postgraduate studies and £ stg. 45 a month for undergraduate studies, plus actual fees and costs of books.

For travel and other expenses for medical reasons, exchange is authorized if a certificate is produced from a medical specialist in Ceylon and supported by the Director of Health Services that equally effective treatment cannot be obtained in Ceylon; the amount authorized will depend on the estimated cost, as certified by the specialist.

Indian and Pakistani nationals are permitted to remit for family maintenance a maximum of Cey Rs 750 a month or one third of their gross monthly income, whichever is less. Other foreign nationals are permitted to remit £ stg. 85 a month for a wife and £ stg. 55 for a child, provided that, when the amount claimed on this basis exceeds one third of the gross monthly income, the excess will be treated as an anticipatory transfer to be set off against the amount the repatriate is entitled to remit upon departure. Temporary residents on short-term contracts are allowed to remit up to two thirds of their gross monthly income. Ceylonese nationals are not granted exchange for family remittances.

Nonresident travelers may take out foreign exchange declared to the customs at the time of entry; they may not take out Ceylon currency notes and coins. Residents may take out Ceylon or foreign currency notes and coins not exceeding the equivalent of Cey Rs 50 a person (Cey Rs 25 for children under 12) once in 12 months, provided that they are entitled to travel exchange.

Exports and Export Proceeds

All exports to Rhodesia are prohibited. All exports to the Syrian Arab Republic require the prior approval of the Controller of Imports and Exports and that of the Controller of Exchange. For purposes of exchange control, licenses issued by the Controller of Exchange are required for all commercial exports; in addition, export licenses issued by the Controller of Imports and Exports are required for all commodities except 36 minor items. Licenses for exports to Albania, Austria, Bulgaria, Mainland China, the Republic of China, Czechoslovakia, Hungary, North Korea, the Republic of Korea, Poland, Rumania, the U.S.S.R., North Viet-Nam, and the Republic of Viet-Nam are issued only to registered Ceylonese traders. Exports of certain manufactured goods and re-exports of foreign manufactured articles are allowed only under special permit. Re-exports of nonmonetary gold, silver, and diamonds are allowed only in special circumstances.

The Controller of Exchange issues the license for a commercial export when he is satisfied that payment representing fair value for the goods will be received in Ceylon under prescribed regulations and, usually, within four months from the date of shipment. Foreign exchange proceeds from exports must be surrendered.

An export incentive scheme is in force for all industrial goods the manufacture of which has been either approved by or registered with the Development Division of the Ministry of Industries and for specified nonindustrial exports (so far, only tobacco and mica have been declared eligible). Exporters of such commodities are granted transferable bonus vouchers in amounts equivalent to 20 per cent of the f.o.b. value of the goods exported, provided, for industrial exports, that the net foreign exchange earnings (i.e., the excess of earnings over the cost of imported inputs, excluding depreciation of machinery) are not less than 25 per cent of the f.o.b. value. The vouchers entitle the holder to obtain import licenses to the same face value for any commodity admitted for import by established traders (“trade quota items”), and for industrial raw materials, machinery, and essential spare parts. Applications for bonus vouchers cannot be submitted until the export proceeds have been collected and surrendered.

Proceeds from Invisibles

Foreign exchange proceeds from invisibles must be surrendered.

A traveler entering Ceylon must declare his holdings, including currency notes and coins. The amount of foreign funds that may be carried into Ceylon in the form of travel credit instruments is not restricted. The import of Ceylon, Indian, and Pakistan currency is not permitted; however, Ceylon notes may be imported up to Cey Rs 50, provided that evidence of prior export of such notes by the same traveler is produced. Other currency notes and coins may be taken in without restriction

Capital

Investments of foreign capital are permitted in projects which are specifically approved by the Government, or in shares of public companies incorporated in Ceylon. Proceeds from the sale or liquidation of investments in approved projects may be repatriated, along with capital appreciation. Proceeds from the sale or liquidation of investments not approved by the Government may not be transferred abroad, but they may be reinvested in Ceylonese securities; the current income thereon is subject to the transfer moratorium.

New foreign investments in Ceylon that are considered and approved by the Foreign Investment Approval Committee of the Ministry of Planning and Economic Affairs are also granted special facilities in respect of remittances and taxation. Investments abroad by residents are not normally permitted.

Resident-owned securities on which the principal, interest, or dividends are payable (either contractually or at the option of the holder) in specified currencies must be registered with the Controller of Exchange, and the sale or transfer of such securities is allowed only with the permission of the Minister of Finance.

Emigrants are not permitted capital remittances except on grounds of dire hardship. Subject to prescribed limits, the transfer of their net income, other than investment income, is allowed for one year from the date of emigration if the emigrant is under 55 years of age. If the emigrant is over 55 years of age or has acquired foreign citizenship, net income, other than investment income, may be transferred, within certain limits, even after one year.

Repatriates leaving Ceylon for residence in the country of their permanent domicile are permitted, at the time of their departure, to transfer assets representing their retirement funds and a reasonable amount of savings up to a maximum of Cey Rs 75,000 for the “Asian group” and Cey Rs 150,000 for other countries. For persons who have been in business in Ceylon, the capital they originally brought into the country plus a reasonable amount of savings are allowed to be transferred, subject to the above limits.

Changes during 1966

March 13. The limits up to which certain minor items could be imported without individual import license were increased to Cey Rs 250 a year a person for gifts and to Cey Rs 50 a consignment for books, periodicals, and newspapers.

March 16. A policy statement on the treatment of private foreign investment in Ceylon was issued. Present policy was to relax the moratorium on the remittance of dividends, interest, and profits as the balance of payments position improved. The moratorium would not apply to new, approved investments, provided that the capital was supplied by inward remittance of funds, delivery of goods, or debit to a moratorium account. The moratorium would apply, however, to future earnings from investment of blocked funds. The remittance facilities were specified that foreign investors would enjoy once an investment had been approved. There would be no discrimination of any kind between foreign and domestic investors.

March 16. Credit for local insurance was given on import licenses for consignments insured with the Insurance Corporation of Ceylon; only the foreign exchange content of the amounts paid as insurance premiums would be debited against the license.

March 25. Imported textiles became subject to maximum retail prices; they were already subject to maximum import and wholesale prices.

April 9. The maximum allocation of exchange for business travel was increased from £ stg. 6 to £ stg. 10 a day.

May 10. Exports to the Syrian Arab Republic required the prior written approval of the Controller of Imports and Exports before any commitment could be entered into.

May 15. All financial and commercial transactions with the Syrian Arab Republic required the prior approval of the Controller of Exchange.

June 11. The Cooperative Wholesale Establishment was appointed the sole importer of all textiles for the trade.

June 28. Agreement was reached with the Sudan to the effect that Sudanese licensing of Ceylonese tea would be related to Ceylonese purchases of Sudanese raw cotton.

July 29. It was announced that the moratorium on the transfer of dividends, interest, and profits was being relaxed further; such remittances had been approved at a rate of Cey Rs 1 million a month during the first five months of 1966 and would, if the balance of payments permitted, be allowed up to an amount of Cey Rs 29.5 million in 1966 through seven monthly releases of Cey Rs 3.5 million.

July 29. The Foreign Exchange Budget for 1966 was published; it set the total size of the import program for 1966 at Cey Rs 2,389 million.

July 29. A substantial revision of import duties became effective. The rates of duty on raw materials, which had varied from 17 per cent to 40 per cent, were replaced by a uniform rate of 30 per cent. The concessionary rate of 22 per cent for raw materials, industrial machinery, equipment, and parts essential for local industrial development was lowered to 10 per cent. Rates of 200 per cent and 300 per cent on some household appliances were reduced to 150 per cent or less. Goods on which import duties were abolished in 1965 remained duty-free, and those that were exempted in 1965 from the 10 per cent import surcharge continued to be so exempt.

August 13. It was announced that no import licenses would be issued for automobiles valued at over Cey Rs 12,500 c.i.f.

September 25. Tea small holders were granted refunds of export duty equivalent to the amount by which the prices they obtained at auction fell short of a specified rupee amount per pound.

October 9. New trade and payments arrangements were agreed with the Syrian Arab Republic, under which the latter undertook to resume large-scale purchases of Ceylonese tea. The agreement would come into effect 15 days after exchange of the instruments of ratification.

November 1. A fee of 10 per cent of the c.i.f. value was levied on import licenses for textiles.

November 8. A new trade agreement with the United Arab Republic was signed, under which the latter undertook to increase considerably its purchases of Ceylonese tea. The agreement would come into effect on November 24, 1966.

November 27. It was announced that the foreign exchange budget for 1967 would be considerably smaller than that for 1966 in view of a serious decline in export earnings.

November 27. The relief measures available since September 25 to tea small holders were extended to all tea estates.

December 1. An export incentive scheme was introduced. It was initially applied to exports of all industrial goods the manufacture of which had been either approved by or registered with the Development Division of the Ministry of Industries and to specified nonindustrial exports. Exporters of such commodities could obtain bonus vouchers for an amount equivalent to 20 per cent of the f.o.b. value of the goods exported, provided, for industrial exports, that the net foreign exchange earnings (i.e., the excess of earnings over the cost of imported inputs excluding depreciation of machinery) were not less than 25 per cent of the f.o.b. value. The vouchers, which were freely transferable, could be used to obtain import licenses to the same face value for any commodity admitted for import by established traders under current import policy (“trade quota items”). All approved industrial exports effected after October 1, 1966 were declared eligible for bonus vouchers. The scheme was also applied to exports of tobacco and mica. It would be administered by the Commissioner of Commodity Purchase.

December 15. Export incentive bonus vouchers could also be used to obtain import licenses for industrial raw materials, machinery, and essential spare parts.

Chad

Exchange Rate System

No par value for the currency of Chad has been established with the Fund. The official unit of currency is the CFA Franc, which is equivalent to 0.02 French franc, giving the relationship CFAF 246.853 = US$1.1 The BCEAEC stands ready, in transactions with commercial banks, to buy and sell CFA francs against French francs at the fixed rate of CFAF 1 = 0.02 French franc. Exchange rates for other currencies are based on the fixed rate for the French franc and the Paris market rates for the other currencies concerned, and include a commission.

Administration of Control

Exchange control is administered by the Exchange Department, which is a department of the Ministry of Finance. Exchange transactions are handled by authorized banks under the direction of the Exchange Department, which has delegated to the banks considerable authority in these matters. The Ministry of Economic Affairs and the Exchange Department allocate exchange for imports from countries outside the French Franc Area. Export licenses are issued by the Foreign Trade Office in the Ministry of Economic Affairs and require the approval of the Exchange Department.

Prescription of Currency

Chad is a member of the French Franc Area, and settlements with other countries in the French Franc Area may be made in any currency of that Area. Settlements with other countries are usually made through banks domiciled in France, in any of the currencies of those countries—provided that the currencies are quoted on the Paris exchange market—or through Foreign Accounts in Convertible Francs. Settlements must be made in the currency in which the invoice is expressed.

Nonresident Accounts

The regulations pertaining to nonresident accounts are based on those applicable throughout the French Franc Area.

Imports and Import Payments

Imports from all sources of wheat, wheat flour, sugar, beer, meat preserves, and cotton are restricted. With minor exceptions, all other imports from countries in the French Franc Area may be made freely. All imports from 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 a joint French-Chadian Committee. A special payment and licensing procedure is applicable to the import of petroleum products.

Separate global quotas are established for imports from EEC countries other than France and for imports from all other countries outside the French Franc Area except the U.S.S.R., to which special quotas apply. The quotas for EEC countries may be used only to import goods originating in those countries; the quotas for the other countries may be used to import goods originating in any country except the U.S.S.R.

For goods included in the annual import program and for imports under quota from EEC countries other than France, the Ministry of Economic Affairs publishes each year an announcement of the exchange allotted to each registered importer based on, principally, his import business in the previous year. The importer submits to the Ministry an application for a license within the limits of the quota that has been assigned to him. When the license is issued, the Exchange Department authorizes the importer’s bank to make available to him the foreign exchange required for the purchase of the commodity and for incidental expenses. Import licenses are valid for six months and are automatically extended for another six months. Further extensions are not granted except, in unusual circumstances, for manufactured goods when evidence is presented concerning the time needed for their production.

Specified imports from neighboring countries not belonging to the French Franc Area (Libya, Nigeria, and Sudan) up to a value of CFAF 3 million a year for a single importer may be made through compensation transactions.

Under the EFAC arrangements (see section on Exports and Export Proceeds, below), licenses over and above the quotas of the import program are granted for imports of goods to be used directly by exporters, provided that such imports are paid for with funds from EFAC accounts.

Payments for Invisibles

Payments for invisibles may be made freely to residents of countries in the French Franc Area. All payments for invisibles to other countries are, in general, subject to approval by the Exchange Department, which, however, has delegated authority to authorized banks to approve certain transactions. Residents traveling abroad are granted a tourist allocation equivalent to CFAF 250,000 for each passport for each trip. Foreign exchange is granted freely for bona fide business trips. The transfer of profits from registered foreign investment is permitted freely. As a rule, foreign nationals employed in Chad may transfer their entire net earnings to their country of origin.

Nonresident travelers may take out foreign notes and coins up to the amounts declared when they entered the country. There is no limit on the means of payment denominated in CFA francs or French francs that travelers to other countries in the French Franc Area may take out. Resident and nonresident travelers to other destinations may take out up to CFAF 75,000 or up to F 1,000 in banknotes and coins; however, prior to their departure, nonresidents may exchange into foreign currencies means of payment denominated in CFA francs and purchased against payment in foreign exchange.

Exports and Export Proceeds

Exports to countries in the French Franc Area may, with a few exceptions, be made freely; exports to all other countries require licenses. Specified exports to Libya, Nigeria, and Sudan may be made through compensation transactions (see section on Imports and Import Payments, above).

Proceeds of exports to countries in the French Franc Area may be retained by the exporter. Export proceeds received in currencies of other countries must be repatriated and surrendered within three months from the date of their receipt. Exporters may, however, retain from 6 per cent to 15 per cent of their export proceeds in special, nontransferable EFAC (Exportations-Frais Accessoires) accounts, which may be used by the exporters themselves to pay for any expenses outside the French Franc Area and for imports outside the import program; in practice, these accounts are of minor importance.

Proceeds from Invisibles

Proceeds from transactions in invisibles with countries in the French Franc Area may be retained. All amounts due from residents of other countries must be repatriated and surrendered within one month of receipt. Travelers may bring in any amount of domestic or foreign banknotes or coins; however, travelers from other countries in the French Franc Area must surrender, within one month, amounts in non-Franc Area currencies exceeding the equivalent of CFAF 50,000.

Capital

Capital movements between Chad and other countries of the French Franc Area are free of control; those between Chad and all other countries are subject to authorization.

Investments by residents of countries in the French Franc Area may be made without authorization. Investments by residents of countries outside the French Franc Area are subject to the authorization of the Exchange Department; however, authorized banks and notaries have been granted the authority to approve certain types of investments.

Residents may take up loans from persons resident outside the French Franc Area up to an amount equivalent to CFAF 50 million, with interest up to 5 per cent per annum and for a period not exceeding 2 years; these regulations, however, do not apply to public sector financing.

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. Preferential treatment A applies to enterprises whose activity and market are limited to the national territory of Chad. Preferential treatment B applies to enterprises whose activity and market include the territory of two or more states of the Central African Customs and Economic Union (UDEAC)—Cameroon, the Central African Republic, Chad, Congo (Brazzaville), and Gabon. Preferential treatments A and B are granted for a period of up to 15 years. Preferential treatment C is reserved for enterprises of prime importance to the country’s economic development; it provides for stabilization of their fiscal charges for up to 25 years.

Requests for approval for preferential treatment must be submitted to the Minister of Economy, 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. Preferential treatments A and C are granted by decree issued by the Council of Ministers. Preferential treatment B is granted by a decision of the Central African Customs and Economic Union upon the recommendation of the Council of Ministers.

The transfer of proceeds from the liquidation of registered foreign investment is permitted freely.

Changes during 1966

January 1. The treaty establishing the Central African Customs and Economic Union (UDEAC) between Cameroon and the members of the Equatorial Customs Union (the Central African Republic, Chad, Congo (Brazzaville), and Gabon) entered into effect.

Chile

Exchange Rate System

No par value for the Chilean Escudo (which was introduced on January 1, 1960) has been established with the Fund. The par value for the Chilean peso established with the Fund on October 5, 1953 is not applied to any transactions under the present exchange system.

There are two exchange markets: the official market (known as the banking market) and the brokers’ market. Only the Central Bank, the State Bank, authorized commercial banks, and other persons or entities authorized by the Central Bank may operate in these markets; brokers are not at present permitted to operate in either market. The rates of exchange in both markets are fluctuating rates. Through the banking market pass government transactions, proceeds from exports, sales of exchange by the large mining companies, receipts from a few invisibles, and payments for imports and for some commercial invisibles. Most invisibles and most capital transactions pass through the brokers’ market. In general, capital transactions are entitled to the same exchange market treatment on exit as on entry. However, the servicing and withdrawal of some capital received through the brokers’ market may be effected through the banking market. Importers are permitted to purchase foreign exchange, in advance of the date on which payment for imports can legally be effected, from exporters through commercial banks in a so-called futures market; for imports of most commodities, such exchange purchases are mandatory. Commercial banks are authorized to contract export proceeds in advance of receipt from all registered exporters except the large copper companies.

On December 31, 1966, the spot exchange rate in the banking market was E° 4.36 buying, E° 4.37 selling, per US$1. On the same date, the effective exchange rates in the banking market for “futures” were E° 4.37 buying, and E° 4.38 selling, per US$1.1 Transactions not permitted in the banking market may be settled in the brokers’ market, but in many cases the approval of the Central Bank must first be obtained; certain invisibles that are channeled through the brokers’ market are restricted. The exchange rate in the brokers’ market on December 31, 1966 was E° 4.99 buying, E° 5.00 selling, per US$1. Purchases of exchange in the brokers’ market for remittances that may be effected without prior authorization by the Central Bank are subject to a 6 per cent exchange tax.

Administration of Control

The Foreign Trade Department of the Central Bank of Chile is in charge of the operation of the exchange control system. Some functions of the Department have been delegated to local commissions in important cities, and the supervision of copper exports and all imports of the copper industry has been delegated to the Copper Corporation. Imports for the public sector are supervised by the interministerial Import Committee for the Public Sector, on which the Central Bank is also represented.

Prescription of Currency

The proceeds of exports by the large copper companies must be received in U.S. dollars or other currencies specifically authorized by the Copper Corporation; large copper and iron ore mining enterprises must pay their income taxes in U.S. dollars. Settlements with Argentina, Colombia, Mexico, Paraguay, and Peru must be made through accounts maintained with each other by the Central Bank of Chile and the central bank of the country concerned, within the framework of the LAFTA multilateral clearing system. All other transactions with other countries, including exports of iron ore by small and medium-sized mining companies, may be settled in any currency, irrespective of the country of origin or destination of the payment.

Imports and Import Payments

All imports, except those of the copper mining industry, must be registered with the Central Bank. There is a List of Permitted Imports; commodities not appearing on it are prohibited unless imported through a “free port” zone (see below). Certain other commodities may be considered as effectively prohibited since, although on the List of Permitted Imports, they are subject to an advance deposit requirement of 1,000, 5,000, or 10,000 per cent. Goods may normally be imported in any amount. The Central Bank, however, is empowered to reject import applications (registrations) for any commodity group if total applications for imports in the current month exceed by more than 5 per cent the average monthly registrations for imports during the past 12 months; when applications are so rejected, the Central Bank must reject registration for all commodities listed under the same customs tariff heading. During 1966 the Central Bank invoked these powers on only one occasion.2 Imports of goods not on the permitted list are only allowed to be imported in “free port” zones, such as Arica, Magallanes, and Aysén, and may not be shipped to other parts of the country unless they are first processed or assembled in the “free port” zone. Certain commodities (including automobiles and most trucks) may only be imported into a “free port” zone for use in that zone.

Importers may purchase exchange in the “futures market” as soon as their import application has been approved, but they may not take delivery until the compulsory deferment period for import payments has been completed. For specified commodities, importers must, within 60 days after shipment, purchase exchange in the “futures market” corresponding to the full registered value against immediate cash payment in local currency; this requirement now applies to about 70 per cent of all imports. In all cases, however, the exchange cannot be remitted until 70 days 3 after the date of the bill of lading.

Most imports are subject to customs surcharges calculated by the addition of two separate charges (the impuesto adicional and the impuesto adicional agregado) and payable when the goods are cleared through customs. The following items are exempt: imports by large companies concerned with mining iron, copper, nitrates, or iodine; crude petroleum and diesel oil destined for the nitrate, subnitrate, and iodine industries; imports by the University of Chile; imports under loans or credits from the Export-Import Bank of Washington or the International Bank for Reconstruction and Development; imports under the Surplus Agricultural Commodities Agreement with the United States; spare parts for agricultural machinery; planes and parts for Chilean airlines; jute sacks, magnetic enamels, etc.; certain capital goods; and goods imported into the “free port” zones of Arica and Magallanes. The surcharges range from zero to 400 per cent of the c.i.f. value and are paid in escudos at a rate of exchange that is periodically established by the Central Bank. On December 31, 1966 this rate was E° 4.37 per US$1.

Most imports are subject to advance deposit requirements, which must be discharged in escudos at the time of registration. The importer’s deposit obligation generally is equal to the amount of the import surcharges. Thus, the maximum advance deposit generally is 400 per cent of the c.i.f. value, or, for a small number of commodities, 1,000 per cent or 5,000 per cent. For protective reasons, however, certain imports continue to be subject to an advance import deposit expressed as a percentage of the c.i.f. value and higher than the import surcharge; the rate for these items is 10,000 per cent.

The following imports are exempt from advance deposit requirements: imports by the Government, the municipalities, the universities, certain specified state enterprises, the large mining companies, and the fishing industry; imports financed by international organizations or under agreements for U.S. agricultural surpluses; imports on a deferred payment basis (con cobertura diferida); many capital goods financed by the U.S. AID; imports into the “free port” zones; imports of foodstuffs into the principal mining area; imports to replace machinery and equipment damaged or destroyed in the 1960 earthquake; household effects and personal effects of travelers; personal effects of certain immigrants; household goods of returning Chileans and resident foreigners; imports not of a commercial character and valued at less than US$100; and imports that originate in other member countries of LAFTA and are included either in Chile’s National List for LAFTA countries or in Chile’s List of Special Concessions extended to Paraguay and Ecuador. These exemptions do not apply to items subject to the 10,000 per cent deposit, except for imports from LAFTA countries of goods on the Chilean National List.

Imports from Cuba are prohibited and imports from Rhodesia require a guarantee of 500 per cent of the value of the goods.

Payments for Invisibles

Payments for invisibles may be made through the brokers’ market in accordance with the regulations applicable in that market. Payment at the rate of exchange in the banking market is permitted for a few commercial invisibles; all other transactions take place in the brokers’ market. Payments through the brokers’ market may be effected up to established limits for the following purposes: for tourist travel (in addition to fares), up to the equivalent of US$360 a person a year for travel to Latin American countries, or up to US$720 a person a year for travel to other countries; for family remittances (including remittances to students), up to US$200 a month for each beneficiary; for books, up to US$100 a person a month; for subscriptions to periodicals, up to US$200 a person a year; and for insurance premiums, up to US$1,200 a person a year.4 Payments for medicine and pharmaceutical products may be made, provided that the product in question is not available in Chile. Transfers in excess of these limits, and those in respect of other transactions, require the prior authorization of the Central Bank. All purchases of exchange in the brokers’ market, except those for which the Central Bank has approved a transfer application, are subject to a tax of 6 per cent, which is applicable not only to purchases of notes and checks but also to payments in respect of bills of exchange and letters of credit. Residents of Chilean nationality and residents of foreign nationality who have spent more than a year in Chile, when traveling to countries outside Latin America, are required to pay a travel tax of E° 310 a trip. Travelers may take out any amount in Chilean banknotes. Resident travelers may take out 10 per cent of their travel allowance in foreign banknotes when traveling to countries outside Latin America; for travel in Latin America, up to US$60 is available in foreign banknotes, or up to US$100 if the traveler agrees not to use the remaining US$260 of his allowance.

Exports and Export Proceeds

With minor exceptions for humanitarian reasons, exports to Cuba are prohibited. Exports to Rhodesia require a guarantee of 500 per cent of the value of the goods.

Otherwise, most goods may be exported freely, but exports of some items are prohibited or are subject to quota. In order to enforce these requirements and to ensure the repatriation of export proceeds, all exports, except those of the large copper mines and the Nitrate and Iodine Sales Corporation (COVENSA) must be registered with the Foreign Trade Department of the Central Bank. The Central Bank certifies the f.o.b. value of the exports for the purpose of restitution of duties and taxes to exporters of certain agricultural and industrial products either imported earlier for processing or produced locally. It also issues reimbursement certificates in respect of certain taxes and other charges in accordance with the Export Promotion Law (Law No. 16528).

The export price for copper is set by the Copper Corporation. For most exports except those by the large copper and iron mines and COVENSA, exporters must repatriate within 90 days from the date of shipment the total value of their exports and must sell the exchange within 10 days from its repatriation through an authorized bank at the exchange rate in the banking market. The Executive Committee of the Central Bank, however, may allow exporters to repatriate export proceeds at a later date; accordingly, longer surrender periods have been established for some minor exports. The large copper companies sell exchange to the Central Bank only to the extent needed to meet their local requirements, primarily to meet their tax obligations. Payments for exports on a cash, collection, or consignment basis must be arranged through an authorized bank, which must specifically contract with the exporter to buy the exchange proceeds. The bank issues a certificate that payment has been made or arranged in an approved manner, to enable clearance of the export through customs. All registered exporters except the large copper companies may sell their export proceeds to a commercial bank in advance of receipt; the proceeds of certain commodities are bought in this manner by the Central Bank.

Proceeds from Invisibles

Receipts of exchange from news and communications agency fees, from specified transactions by national insurance companies, from commissions, from reimbursements of insurance claims, and from credit granted in foreign currency by the commercial banks must be sold in the banking market. Exchange derived from other invisibles, including tourism, may be sold in the brokers’ market or retained. Travelers may bring in any amount in domestic or foreign banknotes.

Capital

Large mining companies (copper, iron, nitrates, and iodine) may freely remit interest, dividends, and amortization on invested capital up to the amount of their exchange receipts that they are not required to surrender or use to pay local taxes.

Capital may be brought into Chile through either exchange market. Normally, capital is subject to the same exchange market treatment on exit as on entry; this policy applies also to remittances of dividends and profits on the capital.

Foreign capital may enter Chile under one of three different arrangements, depending on the purpose and the type of the investment.

(1) Article 14 of Decree 1272 (September 7, 1961) stipulates that capital brought into the country in the form of foreign exchange may be sold freely in the brokers’ market through authorized banks when the investor (individual or corporation, national or foreign) has registered with the Central Bank. To this end, the Central Bank issues a nontransferable certificate which also permits the free outward transfer of the capital through the brokers’ market. The remittance of profits or interest on this capital requires the authorization of the Central Bank.

(2) According to Article 16 of the above Decree, the investor may enter into a loan agreement with a Chilean individual or corporation, or into an agreement with a national enterprise with a view to capital participation. In these cases, the investor has an option between the banking market and the brokers’ market; the Central Bank guarantees access to the exchange market chosen for the entry of the capital, both for the servicing of loans and the re-export of capital, and for the remittance of interest and profits. The guarantee is given subject to certain conditions, one of which is a minimum investment period of 3 years. As an application and extension of Article 16, the Executive Committee of the Central Bank on November 3, 1963 took a decision to create an additional regime to further foreign investment in Chilean export industries. Under this regime, capital brought in for the promotion of exports of agricultural, industrial, and mining products may be sold in the brokers’ market, while its repatriation may take place in the banking market, provided that the amount repatriated is financed from the increase in the volume of exports resulting from the investment. The regime is implemented through individual investment agreements in accordance with Article 16. Repatriation of the invested capital may start 2 years after entry and may amount to 12½ per cent annually of the invested capital. In addition, the remittance of interest or profits is permitted annually up to 7 per cent of the invested capital. The repayment of capital, and the transfer of interest or profits thereon, may be effected through the banking market, provided that the amount does not exceed 50 per cent of the amount of exchange resulting from the volume increase in exports. If this criterion prevents the transfer of the full amount of amortization, interest, and profits through the banking market, the transfers may be completed through the brokers’ market. The above privileges are only granted to firms that will not purchase foreign exchange in the banking market to acquire abroad any machinery, equipment, or capital goods on a cash payment basis. In a further extension of the regime under Article 16, on June 2, 1966, the Central Bank announced that it would guarantee the foreign exchange for repatriation of, and earnings on, imported capital, provided that certain conditions were met. These were that (a) the investment must be deemed to be of importance to the Chilean economy; (b) it must amount to at least US$100,000 or the equivalent in other currencies; (c) the capital must remain in the country for at least 3 years, and subsequent repatriation must not be more than 20 per cent per year, on a noncumulative basis; (d) the exchange must be sold in the banking market; and (e) the interest rate on credit to Chilean firms must not be higher than that in the domestic market.

(3) The most important law governing foreign investment is Decree-Law 258 of 1960, which establishes a regime both for foreign exchange transfers and long-term capital investment. A Foreign Investment Committee approves by decree the particular investment; it establishes both guarantees regarding withdrawal of capital and remittances of interest and profits and may also give special guarantees regarding exemption from payment of certain import surcharges, customs duties, and taxes. Such privileges may be granted for a period of 10 years, with extension to 20 years in special cases. Remittances are effected in the same market (normally the banking market) through which the capital was brought in, and the investor has the right to use the exchange resulting from the export proceeds of his investment.

Changes during 1966

During the year, the exchange rates in the banking market and the brokers’ market were revised from month to month. The import of many additional commodities financed by loans from the U.S. AID or by suppliers’ credit was permitted on a deferred payment basis (con cobertura diferida). Included were machinery, taxis, trucks, and buses. At various dates, commodities were added to the List of Permitted Imports.

January 11. It was announced that all transactions in bearer securities denominated in foreign currencies would be considered as foreign exchange transactions and would require the prior authorization of the Central Bank.

January 14. The conversion rate for the calculation of import surcharges and advance deposits was established at E° 3.62 per US$1.

January 14. The compulsory deferment period for import payments was reduced from 120 days to 110 days.

January 14. The Central Bank required a guarantee equivalent to 500 per cent of their value for all commercial transactions with Rhodesia.

January 24. The Central Bank issued a consolidated list of additions and amendments to the List of Permitted Imports resulting from various decrees issued in December 1965 and January 1966. Additions to the permitted list included certain machinery and medicines.

January 25. Importers could purchase exchange in the “futures market” as soon as their import application had been approved. The foreign exchange could not be delivered, however, until the compulsory deferment period had been completed, and unless the goods had been shipped within 150 days of the date of approval.

Certain commodities were added to those covered by Central Bank Circular No. 590 of 1965, which had established that for specified goods importers must, within 60 days after shipment, purchase exchange in the “futures market” corresponding to the full registration value against immediate cash payment in local currency.

January 28. The University of Chile and the State Technical University were declared exempt from the Central Bank’s authority under Law No. 16101 to reject import applications.

February 3. The date on which exporters could sell exchange in the “futures market” was changed from 30 days to 10 days before the date when the surrender of their export proceeds was required.

February 10. Following the modification of the Copper Law (Law No. 11828, as amended by Law No. 16425), the Central Bank announced what were the implications in respect of exchange matters for the copper companies.

February 11. The conversion rate for the calculation of import surcharges and advance deposits was established at E° 3.69 per US$1.

February 11. A reciprocal credit agreement was signed by the central banks of Chile and Argentina.

February 17. Further commodities were brought under the import regime established by Circular No. 590 (see January 25, above).

March 8. Regulations were issued for the implementation of the reciprocal credit agreement with Argentina.

March 14. A reciprocal credit agreement was signed by the central banks of Chile and Colombia.

March 15. The conversion rate for the calculation of import surcharges and advance deposits was established at E° 3.77 per US$1.

March 17. Further commodities were brought under the import regime established by Circular No. 590 (see January 25, above).

March 22. Regulations were issued for the implementation of the reciprocal credit agreement with Colombia.

March 31. Hull insurance could only be taken out with domestic insurance companies or authorized agents of foreign insurance companies.

April 5. The Central Bank henceforth accepted applications for imports from Portugal payable in any currency, provided that the authorized bank concerned confirmed that it did not hold any balances in Portuguese escudos.

April 5. The Central Bank was given authority to adjust the approval of registrations of imports by the television receiver, automobile, and sewing machine industries in Arica to the need to stimulate the development of similar industries in the rest of the country.

April 13. The conversion rate for the calculation of import surcharges and advance deposits was established at E° 3.84 per US$1.

April 14. The compulsory deferment period for import payments was reduced from 110 days to 100 days.

April 15. Further commodities were brought under the import regime established by Circular No. 590 (see January 25, above).

April 26. A reciprocal credit agreement was signed by the central banks of Chile and Paraguay.

April 26. The Central Bank required a guarantee of 500 per cent of the import value for import registrations in respect of watches.

April 27. All direct or indirect trade with Cuba was prohibited, with the exception of deliveries of food, medicine, and supplies for humanitarian purposes.

May 1. Circular No. 778 of the Superintendent of Banks announced that, in accordance with Article 182 of Law No. 16464, a stamp tax of 1 per cent of the c.i.f. value would be payable on all imports. The measure took effect from April 25. The tax was payable upon registration of the import or upon submission of an application for an import license. A tax of 1 per cent was also imposed on all drafts, payments orders, bank pagarés, and letters of credit.

May 10. The compulsory deferment period for import payments was reduced from 100 days to 90 days.

May 10. Regulations were issued for the implementation of the reciprocal credit agreement with Mexico.

May 11. The conversion rate for the calculation of import surcharges and advance deposits was established at E° 3.92 per US$1.

May 11. Regulations were issued for the implementation of the reciprocal credit agreement with Paraguay.

May 13. A reciprocal credit agreement was signed by the central banks of Chile and Peru.

May 20. Further commodities were brought under the import regime established by Circular No. 590 (see January 25, above).

May 26. The transfer of exchange in payment for imports on consignment had to be made within one year from the date of arrival of the commodities.

June 1. A reciprocal credit agreement was signed by the central banks of Chile and Mexico.

June 2. The Central Bank announced that, subject to certain conditions, it would guarantee the availability of foreign exchange for the repatriation of the principal of, and the payment of interest on, capital imported under Article 16 of Decree No. 1272 and converted in the banking market.

June 5. Decree No. 1505 of the Ministry of Finance reduced the import surcharges on a large number of commodities, including many types of machinery.

June 8. The conversion rate for the calculation of import surcharges and advance deposits was established at E° 4.01 per US$1.

June 15. Regulations were issued for the implementation of the reciprocal credit agreement with Peru.

June 15. The surcharge on many items of machinery was modified.

June 16. Central Bank Circular No. 686 prescribed a minimum downpayment for imports on a deferred payment basis of 10 per cent of the f.o.b. value (plus cost, insurance, and freight) or 20 per cent of the c.i.f. value.

June 22. Persons receiving indemnity payments in foreign currency in respect of insurance policies taken out in Chile in foreign currency were required to declare the proceeds within 15 days from the date of receipt and to sell them in the brokers’ market within a further period of 10 days.

July 1. The LAFTA multilateral clearing arrangements went into effect. Within their framework, Chile’s reciprocal credit arrangements came into operation.

July 12. The conversion rate for the calculation of import surcharges and advance deposits was established at E° 4.06 per US$1.

July 12. The compulsory deferment period for import payments was reduced from 90 days to 80 days.

July 20. The exchange tax on those remittances through the brokers’ market that did not require central bank approval was increased from 4 per cent to 6 per cent.

July 20. The Central Bank introduced new credit facilities to stimulate exports; they consisted of preshipment and postshipment credit.

August 1. The travel tax was increased from E° 60 to E° 310 a trip for travel to countries outside Latin America; the tax of E° 30 a trip on travel to Latin American countries was abolished.

August 4. Registration of imports of spare parts valued at up to US$500 was required within 60 days of shipment; previously, this period was 15 days.

August 8. The conversion rate for the calculation of import surcharges and advance deposits was established at E° 4.13 per US$1.

August 15. The price of Chilean copper to foreign customers was based on the daily quotations on the London Metal Exchange.

August 17. An export promotion law (Law No. 16528) was promulgated. It provided for refunds of certain taxes and for the creation of export credit facilities.

August 22. The advance deposit required for imports of lubricating oils in bulk containers was raised from 5 per cent to 1,000 per cent.

August 25. Imports of books could be paid for two years from the date of arrival.

September 5. Decree No. 1930 of the Ministry of Finance reduced the import surcharges on many types of machinery.

September 7. The Central Bank announced new facilities for the financing of exports and issued lists of eligible products.

September 7. Central Bank Circular No. 734 announced details of the preshipment and postshipment credits to be granted to exporters. Lists were included of eligible commodities.

September 9. Increased exchange allowances for invisibles were announced. The increases were as follows: tourism, from US$300 to US$360 a person a year for Latin America and from US$600 to US$720 for other countries; family maintenance, from US$100 to US$200 a month for each beneficiary; books, from US$30 to US$100 a person a month; and periodicals, from US$100 to US$200 a person a year. An allocation of US$1,200 a person a year was established for transfers of insurance premiums, replacing one of US$100 a person a month.

September 12. The conversion rate for the calculation of import surcharges and advance deposits was established at E° 4.18 per US$1.

September 27. Decree No. 1270 of the Ministry of Economy, Development, and Reconstruction set out in broad lines how the export promotion law would be implemented.

September 29. The interest that could be remitted abroad for charges included in applications for import exchange cover was raised from 7 per cent to 9 per cent.

October 10. Decree No. 2198 of the Ministry of Finance reduced the import duties and other import charges on many types of machinery.

October 10. The conversion rate for the calculation of import surcharges and advance deposits was established at E° 4.25 per US$1.

October 21. Further commodities were brought under the import regime established by Circular No. 590 (see January 25, above).

October 31. New procedures were prescribed for payments to and receipts from Argentina, Colombia, Mexico, and Peru under the reciprocal credit agreements with those countries.

November 7. The conversion rate for the calculation of import deposits was established at E° 4.31 per US$1.

November 22. Circular No. 805 of the Superintendent of Banks directed authorized banks to agree credit lines with Argentine banks for the purpose of enabling Chilean deliveries of copper to be made to Argentine buyers on 180-day credit terms.

November 30. The first list of commodities to receive rebates under the new export promotion law (see August 17, above) was issued in Decree No. 1224 of the Ministry of Economy, Development, and Reconstruction.

December 2. The compulsory deferment period for import payments was reduced from 80 days to 70 days.

December 5. The conversion rate for the calculation of import surcharges and advance deposits was established at E° 4.37 per US$1.

Republic of China

Exchange Rate System

No par value for the New Taiwan Dollar has been established with the Fund. The official buying and selling rates for the U.S. dollar are NT$40 and NT$40.10, respectively. Buying and selling rates for certain other currencies are also officially fixed.1 Currencies for which rates are not officially fixed are accepted by appointed banks, and the rates are calculated in accordance with the foreign market quotations. With certain exceptions, earners of foreign exchange must sell it at these rates to banks appointed by the Central Bank of China.

Administration of Control

The Executive Yuan is responsible for policies concerning foreign exchange and trade controls. The Foreign Exchange and Trade Commission (FETC) is the executive agency concerned with foreign exchange and trade matters. The functions of the FETC are to formulate policies and plans on foreign exchange and foreign trade; to screen and approve the use of foreign exchange (including the issuance of exchange and trade licenses); to coordinate the use of foreign exchange with the international economic cooperation program; to determine the official buying and selling rates of exchange; to act as a coordinating agency among various authorities in connection with foreign exchange and trade transactions; and to deal with other relevant matters pursuant to orders of the Executive Yuan. Decisions of the FETC are implemented through the appropriate organizations and appointed banks. Exchange and trade licensing is administered by several committees in accordance with the nature of the applications. These committees refer applications for import licenses to the FETC only in exceptional cases.

The Central Bank of China is responsible for the over-all management of foreign exchange and the supervision of the appointed banks, of which the Bank of Taiwan is the most important. The Bank of Taiwan issues import and export licenses on authorization from the FETC; however, licenses for imports under U.S. Public Law 480 are issued by the Bank of China.

Prescription of Currency

Export receipts must be obtained in Australian dollars, Canadian dollars, deutsche mark, French francs, Hong Kong dollars, Italian lire, Malayan dollars, pounds sterling, or U.S. dollars. Also, these are the foreign currencies that may be used by residents of other countries to finance investments in the Republic of China. Settlements with Spain are made in U.S. dollars through a bilateral account.

The currency and method for making payments to residents of foreign countries other than Spain are not prescribed.

Nonresident Accounts

China’s exchange control regulations do not provide for a clear distinction between residents and nonresidents. As a consequence, persons who would be considered nonresident under many other exchange control systems are not granted treatment essentially different from that accorded to residents of the Republic of China in exchange control matters.

Accounts in new Taiwan dollars of persons who are residents of other countries are treated in the same way and are subject to the same regulations as other accounts in new Taiwan dollars. The exchange control regulations do not provide for blocked balances and blocked accounts held in the name of residents of foreign countries.

Residents may maintain accounts in foreign currencies. These accounts—designated Foreign Currency Deposits—may be used for making authorized payments abroad. They are of two categories: (1) Foreign Currency Deposits maintained by government organizations, insurance and transportation companies, and private productive enterprises. These cover exchange either earned by account holders or directly allocated by the exchange authorities on the basis of individual permits. (2) Foreign Currency Deposits maintained by individuals. These are subdivided into interest-bearing time deposits and personal passbook accounts (which do not bear interest). Balances on these accounts originate from exchange obtained by account holders prior to their arrival in the Republic of China or from earnings and other receipts from their private resources outside the Republic.

Imports and Import Payments

All imports require individual licenses. When applying for a license to import goods in excess of US$400, the importer must submit evidence that he has acquired “patriotic bonds”2 corresponding to at least NT$1.25 for every U.S. dollar of the f.o.b. value of the goods; exempt from this requirement are educational equipment, aircraft parts, and machinery and equipment financed with self-provided exchange. Full exchange settlement for imports must be made within 14 days of approval of the license. Provided that the foregoing requirement has been met, the holder of an import license is entitled to obtain the necessary foreign exchange from an appointed bank. Imports from communist countries are prohibited. The Chinese authorities license and check imports from Hong Kong in order to induce importers to obtain certain imports direct from the country of production and to control effectively imports from Mainland China; for similar reasons, certain commodities are not permitted to be imported from Hong Kong and Macao. Certain commodities which still can be financed with U.S. aid funds can be imported only from the United States.

Imports are divided into three groups: (1) prohibited, (2) controlled, and (3) permissible. The prohibited imports comprise not only narcotics and some other goods usually excluded by most countries from importation but also a wide range of pharmaceuticals and a number of luxury goods and less essential items, such as certain luxury Chinese goods, cigarettes, cigars, liquors, jewelry, certain medicines, tea, sugar (and its substitutes), and molasses. Liquor and cigarettes are imported from time to time by a government monopoly organization, which is also responsible for domestic distribution of these commodities. The controlled list contains three types of goods: some consumer luxury items; certain goods that are also produced locally of good quality and in sufficient quantity to meet domestic demand and whose factory prices are not more than 15 per cent higher than the c.i.f. prices of comparable imported goods; and goods subject to regulation and allocation. The first two types are licensed restrictively; goods of the third type are often imported by government agencies, which offer them for sale either by allocation or by auction. Imports on the permissible list are licensed liberally.

According to the intended utilization, goods may be imported by one of four main groups of importers: government trading agencies, registered private traders, licensed private traders on a commission basis, and end-users and manufacturers. The Central Trust of China is the main government trading agency. It handles imports financed with U.S. aid funds, and imports for government and military organizations, public enterprises, and other customers. Another government trading agency is the Taiwan Supply Bureau, which is in charge of imports for the Taiwan Provincial Government, some local industries, and certain other customers.

Firms that wish to operate as authorized (“registered”) importers must obtain approval (“registration”) from the FETC and be registered by the Taiwan Provincial Department of Reconstruction; the firms must be operating in accordance with certain laws and have a minimum capital of NT$200,000 and an “export record” of two years equivalent to more than US$50,000. Traders licensed to operate on a commission basis may act only as agents for traders or foreign suppliers. They also must be approved by the FETC.

End-users and manufacturers are permitted to import raw materials, machinery, and replacement equipment needed for their factories. In granting licenses to this category of importer, the licensing authorities take into account such criteria as production capacity and equipment. In processing applications for licenses to import capital equipment for the construction of new plants, the licensing authorities consider the feasibility of the project and its priority from the point of view of the economic needs of the country. Imports to be used for processing or producing goods for export are automatically licensed (e.g., raw cotton, wool, wood for the production of plywood).

Private importers (i.e., importers other than government agencies and public enterprises) handle more than 70 per cent of the imports paid for with currencies provided from official exchange reserves.

According to the methods of financing, imports may be divided into two broad categories: (1) imports for which exchange is allocated directly out of official exchange reserves, and (2) imports which are made without recourse to official exchange reserves and which comprise (a) those made under the U.S. aid program and (b) those paid for with self-provided exchange or exchange supplied by foreign investors, foreign lenders, or overseas Chinese. Imports obtained with self-provided exchange are those financed by importers out of their own foreign exchange obtained by them prior to their coming to the Republic of China or originating from exchange receipts exempted from the surrender requirement.

With the exception of machinery and equipment imported by a productive enterprise for its own use, imports from all sources are subject to a defense surcharge equivalent to 20 per cent of the customs duty.

Payments for Invisibles

All payments for invisibles require approval from the FETC. Payments for invisibles directly related to trade are permitted freely when the basic trade transaction has been approved. The transfer of interest, profits, and earnings on authorized foreign investments in the Republic of China may be made without restriction.

Foreign exchange for payments for certain other invisibles is allocated only up to established limits or on a percentage basis. Foreign technicians are allowed to remit to their dependents abroad up to 70 per cent of their basic monthly salary (year-end bonus, profit sharing, overtime pay, and insurance payments are excluded), but the maximum amount permitted for family maintenance is the equivalent of US$250 a month to Japan, US$400 to Europe, and US$500 to the United States; remittances of larger amounts require special approval. Employees of the Government or of educational institutions may remit to their dependents in Hong Kong or Macao up to HK$150 a month. Membership fees to foreign institutions and certain payments for news services, books, and magazines (personal subscriptions for reference purposes) are approved up to certain limits. Receipts from local subscriptions to, and sales of, imported newspapers and periodicals are remittable up to certain limits. Up to 70 per cent of the net amount of motion-picture film rental and of foreign entertainers’ earnings may be transferred abroad; the remainder is to be used for local expenses and investment in the Republic of China. A maximum of US$2,400 a year is provided for tuition and living expenses during the first academic year of students studying abroad. Individual approval is required if their total tuition and expenses exceed the US$2,400 limit. Residents are granted an exchange allowance equivalent to US$300 a trip (US$150 for each accompanying dependent) for any type of travel. For business travel, an allowance equivalent to US$500 a month for up to three months is granted for living expenses. All travel allocations are net of fares and tickets. Applications for exchange to pay for certain other types of invisibles are approved as liberally as possible, account being taken of the merits of submitted applications.

Persons leaving the Republic of China may take with them no more than NT$1,000 in domestic banknotes and coins and the equivalent of US$200 in foreign currencies. Those travelers who have stayed in the Republic less than six months may take with them any unspent portion of the foreign currency which they registered upon entry.

Exports and Export Proceeds

All exports require licenses, mainly in order to ensure the surrender of foreign exchange. Licenses may be issued only for exports to non-communist countries. The re-exportation of imported goods is permitted after they have been processed.

Quota limitations are maintained on the export of canned mushrooms. The export of a few foodstuffs is restricted. There are also ceilings on the export of cotton textiles to Canada, the United Kingdom, and the United States. Minimum prices are established for exports of some 20 commodities. The FETC is empowered to authorize exports at prices below the minimum export price.

Manufacturers who use imported raw materials to produce goods for export are, after export of the processed goods, refunded various charges imposed on such raw materials, namely, import duties, defense surtax on import duties, harbor dues, and commodity tax. Some preferential treatment is accorded to payers of income tax related to the production of goods for export, provided that the taxpayers submit satisfactory proof of such exports; complete exemption from the tax is not granted, however.

With minor exceptions, exporters are required to surrender exchange earnings accruing from exports immediately after their collection. Most exports to any permitted destination may be made on a consignment or delayed collection basis, provided that payment is not deferred for more than 180 days from shipment. Subject to approval, bona fide gifts and commodity samples up to the value of US$100 may be sent abroad. When leaving the Republic of China, tourists are allowed to take out domestic products valued up to US$100 without providing evidence that they have surrendered foreign exchange.

Proceeds from Invisibles

Exchange surrender requirements applicable to proceeds from invisibles are generally similar to those applicable to export proceeds. Interest, earnings, and profits on investments made by Chinese investors outside the country, and originally approved by the FETC, must be surrendered to the banks, but earnings from private investments abroad that have not been financed by outward remittance may be retained. Private inward remittances may be retained by the recipients for deposit on a foreign exchange account, from which they may be transferred freely.

Travelers may bring in any amount of foreign currency and either hold or surrender it; the amount imported must be declared upon entry. The import of domestic banknotes expressed in new Taiwan dollars is limited to NT$1,000 for each traveler; a license from the Ministry of Finance is required for importing a larger amount.

Capital

Investments by foreigners may be made in capital equipment or raw materials, or through the transfer of foreign currency to the Republic of China. In accordance with the Foreign Investment Law of July 14, 1954, liberally revised in 1959, and the Statute for Encouragement of Investment, enacted in 1960 and revised in 1965, new foreign investments approved by the authorities are guaranteed (1) unrestricted transfer of net annual profits or earned interest; (2) repatriation of capital, including reinvested earnings, 2 years after completion of the investment plan, at an annual rate not exceeding 15 per cent, calculated in relation to the originally invested funds; (3) the right to re-export invested capital in its original form; (4) favorable treatment in respect of rezoning and requisition of agricultural land for industrial use; (5) certain benefits with respect to business income tax and import duties; and (6) compensation for expropriation where the foreign investment constitutes less than 51 per cent, and immunity from expropriation for 20 years where the foreign investment constitutes at least 51 per cent, of the total investment. In addition, foreign investments are granted treatment at least as favorable as that accorded to new domestic investments. Laws for the encouragement of foreign investments provide for additional benefits in specific cases.

To obtain the benefits of the investment laws, investments by foreign nationals must be made in enterprises conducive to the economic and social development of the country, such as mining, communications, and manufacturing for domestic needs. Preference is given to foreign investors who intend to produce goods for export or for replacing imports.

Foreign investors who intend to make investments in Taiwan stocks and wish to take advantage of privileges provided under foreign investment laws, as described above, must obtain approval from the Ministry of Economic Affairs. Purchases and sales of stocks by foreign investors must be made through the intermediary of registered brokers, such as the Trust Department of the Bank of Taiwan and the Trust Division of the Central Trust of China.

Subject to approval, investments may be made outside the Republic of China only in the form of technical know-how, semifinished products, and locally manufactured equipment.

Chinese nationals who wish to emigrate, and persons who had settled in the Republic of China and wish to return to their native countries, are not accorded any special transfer facilities in respect of proceeds from the liquidation of their assets in the Republic. Persons outside the Republic of China who acquired in the Republic assets or balances in new Taiwan dollars on account of dowries, inheritances, gifts, etc., are not normally granted the right of transferring them from the Republic.

Changes during 1966

During the year, a number of commodities were shifted from the controlled to the permissible list of imports, or vice versa; the net effect was some further relaxation of import restrictions.

February 22. The Executive Yuan approved revised “Enforcement Rules for the Statute for Encouragement of Investment,” which provided for further simplification of administrative procedures and generally facilitated domestic and foreign investment in China.

March 1. The FETC issued a revised commodity classification for import and export licensing purposes. It included a list of commodities that could be imported only from the United States and one of goods that could not be imported from Hong Kong and Macao.

April 22. The ceilings on exports of cotton textiles to Italy were removed, following Italian liberalization of cotton textiles originating in the Republic of China.

June 6. Exporters of bananas and canned mushrooms were exempted from the requirement to purchase “patriotic bonds” equivalent to NT$10 a basket and NT$50 a box, respectively.

July 3. The amount of “patriotic bonds” that importers of most goods were required to purchase was raised from NT$1.00 to NT$1.25 for every U.S. dollar of the f.o.b. value of the goods.

July 15. Controls were established over exports of asparagus.

August 19. The validity of import licenses providing for payment on documents against payment or documents against acceptance terms was extended from two to six months.

November 18. Soybeans were shifted from the “controlled” to the “permissible” import list.

Colombia

Exchange Rate System

On December 17, 1948, a par value for the Colombian Peso was established by Colombia with the Fund. However, exchange transactions no longer take place at rates based on that par value. All exchange transactions are effected through the Bank of the Republic in the official market, which comprises several fixed rates. These are (1) a preferential market rate of Col$7.67 per US$1 for purchases of foreign exchange representing capital imported for petroleum exploration and exploitation; (2) a preferential market rate of Col$9.94 per US$1 for the purchase of proceeds from coffee exports; (3) a preferential market rate of Col$9.00 per US$1 for other purchases and sales of exchange that must be effected in the preferential market; (4) an intermediate market rate of Col$13.50 per US$1; and (5) a capital market rate of Col$16.25 per US$1 buying, and Col$16.30 per US$1 selling.

The preferential market rate of Col$9.00 per US$1 applies on the buying side to royalties, consular fees, and certain other government receipts; it applies on the selling side to certain students’ expenses, specified payments by the National Government, and purchases of crude oil from foreign-owned oil companies operating in Colombia. The intermediate market rate applies on the buying side to the proceeds from other exports (except coffee), to capital registered as entering through the intermediate market, and to all receipts from foreign loans. This rate applies on the selling side to all imports, 80 per cent of certain freight payments, service on new foreign debt, service on old foreign debt covered by special provisions, and repatriation and profits on new capital registered as entering through the intermediate market. There is a remittance tax of 10 per cent on payments of interest on, and repayments of, external debt and foreign capital registered before June 17, 1957, if such payments are made through the intermediate market; the application of the tax results in a fixed rate of Col$15.13 per US$1. All other transactions take place at the capital market rate. (See Table of Exchange Rates, below.)

Administration of Control

To import from, export to, or make payments to foreign countries, prior application for registration of the transaction must be made at the Exchange Registration Division of the Superintendency of Foreign Trade. Exchange for payments must be purchased at the Bank of the Republic and may be acquired through the commercial banks, which act as authorized agents of the Bank of the Republic. Applications for exchange certificates require the prior approval of the Exchange Registration Division. An Exchange Regulation Fund, operated by the Monetary Board, regulates operations in the official exchange market. The Monetary Board draws up a foreign exchange budget; it also establishes priorities within that budget for the delivery of exchange; it must make the necessary reservations to provide for payments resulting from the obligations of the Bank of the Republic and from the servicing of the public external debt of the Government, the local authorities, the National Coffee Federation, and the public agencies. Over-all import and export policy is determined by the Board of Foreign Trade. The- Superintendency of Foreign Trade controls imports that are subject to prior licensing. Imports and exports of foreign capital and the transfer of profits thereon, including commissions and royalties for trademarks and patents, must be recorded at the Exchange Registration Division. The Division is also in charge of the registration of the foreign debt. The Prefecture of Exchange Registration, which is attached to the Ministry of Development, enforces the control over exchange transactions.

Prescription of Currency

Payments and receipts related to international transactions are normally effected in U.S. dollars. Settlements with Denmark, Finland, and Spain for commercial transactions must be made through a clearing account in accordance with the provisions of the relevant bilateral payments agreement. Under the agreement with Denmark, goods originating in third countries and purchased in one of the agreement countries may be settled through the agreement account by mutual consent of the partners. The National Federation of Coffee Growers has concluded trade and payments agreements with Bulgaria, Eastern Germany, Hungary, Poland, Rumania, the U.S.S.R., and Yugoslavia. Payments between Colombia and Argentina, Chile, Ecuador, Mexico, and Peru must be made through accounts maintained with each other by the Bank of the Republic and the central banks concerned, within the framework of the LAFTA multilateral clearing system.

Nonresident Accounts

Provided that certain requirements are met, nonresidents are permitted to hold foreign currency accounts in Colombia.

Imports and Import Payments

For purposes of import licensing, imports are classified as follows: goods whose import is prohibited; goods whose import is subject to prior licensing by the Superintendency of Foreign Trade; and goods that may be imported freely. Import liberalization, however, has been suspended, and all permissible imports require a prior import license.

Prior registration of the import transaction at the Exchange Registration Division is required for all imports; the charge for import registration forms is Col$5.00 for imports valued at less than US$20.00 and Col$100.00 for other imports. Advance import deposits are required for all commodities. Imports of capital goods by the National Government and by regional or municipal governments are subject to a nominal advance deposit of Col$1.00. From October 1, 1965 to August, 1, 1966, the rates of advance deposit listed below were reduced once a month by 5 per cent for the commodities imported at the intermediate market rate; beginning on November 1, 1966, they have been reduced by 5 per cent every quarter. An advance deposit of 1 per cent is required for the following: capital goods and spare parts imported by official agencies and public service agencies for their own use; equipment for the printing industry; capital goods and spare parts not destined for resale; capital goods intended for the establishment of die-forging works; raw materials and basic foodstuffs brought into the country by the National Institute of Health for the preparation of pharmaceutical products; certain chemicals; raw materials for tires; imports under clearing agreements concluded for the foreign marketing of coal and products of Acerίas Paz del Rίo S.A., subject to the exchange and trade regulations; foodstuffs imported by the National Institute of Supply, with the approval of the competent ministry, for Colombia’s normal needs; imports exempt from advance deposits under laws, decrees, or resolutions in effect before the coming into force of Law No. 1 of 1959, provided that they comply with the regulations and are authorized by the Ministry of Finance and Public Credit; sacramental wine imported by the dioceses in quantities considered reasonable by the Bank of the Republic; imports of books, newspapers, and magazines of a scientific or literary nature which will contribute to the culture or entertainment of the Colombian people; and a few other items. Other advance deposits required as a prerequisite to import registration are as follows: 5 per cent for certain machinery and equipment for basic industries and for capital goods valued at over US$250,000 f.o.b. for which payments are spread over several years; 10 per cent for paper, cryolite, zinc ore and concentrates, aluminum fluoride, certain lighting equipment, agricultural machinery and apparatus, chassis for jeeps, and seagoing ships; 30 per cent for certain types of sheep, goats, poultry, trees, shrubs, plants, wheat, oats, barley, oleaginous fruits, fish oil, fodder concentrates, certain ores, and raw materials for the production of pharmaceuticals; 60 per cent for church organs; 65 per cent for certain raw materials, some chemicals, and metal tools; 90 per cent for certain metals and metal products; 500 per cent for gold coins; and 120 per cent for all other goods. These advance deposits are not required (1) on imports from LAFTA countries of goods included in Colombia’s National List or in the special concession lists for Paraguay and Ecuador, or (2) on imports under the “Vallejo Plan.”1 The advance deposit must be placed with the Bank of the Republic before the application for registration of the import transaction is submitted to the Exchange Registration Division; it is returned 90 days after the merchandise is cleared through customs. Advance deposits are calculated on the f.o.b. value; the conversion rate is Col$9.00 per US$1 for commodities under license and Col$13.50 per US$1 for commodities on the free list.

A prior exchange license is required for all payments for imports; licenses are granted by the Exchange Registration Division, provided that it is satisfied that the importer has complied with all requirements. Applications are not approved unless evidence is submitted that the goods have been cleared through customs and that payment is due. At least 20 days prior to filing an application for exchange certificates, the importer must provide a peso advance deposit equivalent to at least 95 per cent of the exchange requested, calculated at the rate of Col$13.50 per US$1; exempt are obligatory payments of the Government and of the local authorities, remittances to students abroad, and payments for imports financed with foreign credits granted to the Bank of the Republic. Import payments before the maturity date of the exporter’s claim are not authorized, except for official imports. Importers, or commercial banks acting for them, may buy exchange certificates covering the value of their imports from the Bank of the Republic.

Certain foodstuffs may be imported only by the National Institute of Supply.

Payments for Invisibles

Exchange for payments in respect of invisibles is sold as follows: (1) At the preferential rate, expenses of certain students engaged in studies abroad at the university level that are not available in Colombia; government payments for diplomatic expenses; government payments for contractual obligations entered into before September 2, 1965; and government, departmental, and municipal debt service payments, provided that the underlying receipts were not brought in at the intermediate or free market rates. (2) At the intermediate rate, 80 per cent of freights on imports financed with exchange certificates and carried by national or foreign ships belonging to a shipping conference or by ships registered in a LAFTA country; debt service payments on new foreign loans brought in after September 2, 1965; debt service payments on capital registered prior to June 17, 1957; profits on capital registered prior to June 17, 1957 (for these two latter categories, a remittance tax of 10 per cent of the peso countervalue of the transfer calculated at the capital market rate is applied); profits on capital brought in after September 2, 1965 and registered as eligible for intermediate market treatment; service payments on debts contracted before October 25, 1964 and registered at the intermediate market rate; service payments on that part of official debt contracted before September 2, 1965 that corresponds to receipts brought in at the intermediate rate. All other payments for invisibles must be made through the capital market at the rate of Col$16.30 per US$1.

Exchange licenses for payments for invisibles are granted according to officially established priorities and within the limits set bimonthly in a foreign exchange budget. Transfers for students’ expenses abroad are limited to US$120 a month, and allocations for travel abroad are limited to US$30 a day, not to exceed US$1,800 a year.

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

Exports and Export Proceeds

Prior application for registration is required for all exports except crude oil. If the application meets all legal requirements, approval is stamped on the application form, i.e., registration is granted. When registering an export transaction, the exporter must provide a personal guarantee in pesos corresponding to the full export value to ensure that the proceeds will be surrendered to the Bank of the Republic. For coffee, the proceeds must be surrendered within 10 days after registration if the shipping documents are made out in the interior of Colombia, or within 10 days after the date of the bill of lading in respect of shipment by sea; these regulations do not apply to exports made by the National Coffee Federation, which may keep stocks abroad for sale and make deposits in banks abroad in the interim before sale. Exporters of bananas must surrender 60 per cent of their proceeds within 10 days of the issuance of the export license and the remaining 40 per cent within 60 days. The surrender period is 180 days for some manufactured products containing imported raw materials. Receipts from other exports have to be surrendered within 90 days after registration.

Exporters of products other than coffee may retain 10 per cent of their exchange proceeds to repay foreign debt contracted prior to June 30, 1965. Exporters of manufactured products with a nonreimbursable import component imported in accordance with the provisions of Articles 55-60 of Law No. 1 of 1959 may retain part of their exchange earnings to repay their foreign suppliers (“Vallejo Plan,” see footnote 1). All other exchange proceeds from exports, except those from the export of crude oil by foreign-owned oil companies, must be surrendered.

The exchange proceeds from exports of coffee must be surrendered to the Bank of the Republic at the buying rate of Col$9.94 per US$1 fixed by the Monetary Board. Exports of coffee are subject to a minimum surrender price (reintegro) presently fixed at US$65.25 per 70-kilogram bag; the surrender price for bananas and other products varies according to the quantity exported and the price that the exporter may obtain in accordance with world market conditions. Further, coffee exporters are required, prior to registration, to surrender in kind to the National Coffee Fund the equivalent of 19 per cent of the volume of coffee exported (retención).

Exchange proceeds from all other exports are surrendered at the intermediate rate, i.e., Col$13.50 per US$1.

Proceeds from Invisibles

All exchange receipts from invisibles must be surrendered. With minor exceptions, they are converted at the capital market buying rate of Col$16.25 per US$1.

Capital

Capital imported for the activities of the petroleum industry, including activities in the field of petrochemicals, must be registered with the Exchange Registration Division. When such capital is imported for exploration and exploitation of petroleum or to pay for related services, the foreign exchange must be sold to the Bank of the Republic at the rate of Col$7.67 per US$1. Foreign capital invested in the petroleum industry and net profits on such capital are remitted according to special laws and contracts.

For other industries, there is at present a dual system. Capital may be brought in through the capital market, in which case all amortization and profit remittances must be made through the same market. Capital may also be brought in through the intermediate market. In this case, repatriation may be made through the intermediate market. Capital registered prior to June 17, 1957 may also be repatriated through the intermediate market, and profit remittances on such capital are made through that market; the remittance tax of 10 per cent applies to such capital repatriation and profit remittances. Capital may not be repatriated earlier than five years after it was brought into the country, and profit remittances must not exceed 8 per cent of the total investment annually.

All foreign capital must be recorded at the Exchange Registration Division of the Superintendency of Foreign Trade; the import and repayment of such capital must be recorded as well as the transfer of profits thereon, including commissions and royalties relating to trademarks and patents. Capital imported through the intermediate market must, in addition, be specially registered with the above-mentioned Division.

Table of Exchange Rates (as at December 31, 1966)(pesos per U.S. dollar)
BuyingSelling
7.67 (FixedRate2)
Exchange sales by petroleum companies for exploration and exploitation.
9.00 (FixedRate2)9.00 (FixedRate2)3
Royalties. Consular fees and other government receipts, except receipts from foreign loans.Certain payments by the National Government. Certain students’ expenses.
9.94 (FixedRate2)
Exports of coffee.
13.50 (Intermediate Market Rate)13.50 (Intermediate Market Rate)
All other exports except those of crude oil by foreign-owned petroleum companies.4 All receipts from foreign loans. Capital inflow electing intermediate market registration.All imports. Eighty per cent of import freight payments on merchandise paid for with exchange certificates. Service on foreign debt registered after September 2, 1965 and on foreign debt registered under special provisions before that date. Repatriation and profits on foreign capital electing intermediate market registration.
15.13 (Intermediate Rate plus 10% Remittance Tax)5
Principal and interest on external debt registered before June 17, 1957. Repatriation of and service on foreign capital registered before that date.
16.25 (Capital Market Rate)16.30 (Capital Market Rate)
Other invisibles. Other capital.Other invisibles. Other capital.

Changes during 1966

January 19. The surrender requirement for export proceeds was rescinded for the part of the proceeds corresponding to the freight and insurance paid on the imported raw materials that were incorporated in the goods exported.

January 26. The official buying rate for proceeds of coffee exports was depreciated from Col$8.50 to Col$8.94 per US$1. The quantity of coffee that private exporters were required to surrender to the National Coffee Fund was lowered from 16 per cent to 15 per cent of their export shipments.

January 26. The distribution of the exchange differential was discontinued. The Bank of the Republic was authorized to pay the National Coffee Federation the following amounts per U.S. dollar received from coffee exports: Col$0.40 for the National Fund (of which Col$0.10 remained earmarked for the Bank of the Republic) and Col$0.10 for the National Coffee Federation, to be spent in social and economic campaigns.

January 27. The minimum surrender price for exports of coffee was raised from US$71.50 to US$72.25 per 70-kilogram bag.

January 27. The Board of Foreign Trade issued a third list of imports that could be imported free of license, if paid for at the intermediate rate of exchange; some items on this list could also be imported at the preferential rate, if an import license were obtained.

February 3. The remittance tax on some debt and capital payments channeled through the official market was abolished. These payments were (1) repatriation of capital registered in the intermediate market after September 2, 1965; (2) service on private debt registered after September 2, 1965; and (3) repayments on private debt contracted before October 25, 1964, provided that the debt would have been approved for intermediate market registration by special decision.

February 22. The Board of Foreign Trade issued a fourth list of imports that did not require a license if paid for at the intermediate rate.

February 28. The Board of Foreign Trade issued a fifth list of imports that did not require a license if paid for at the intermediate rate.

March 9. The Monetary Board raised the rate utilized in the calculation of exchange deposits from Col$9.00 per US$1 to Col$13.50 per US$1 for payments effected through the intermediate market.

March 17. The Board of Foreign Trade issued a sixth list of imports that did not require a license if paid for at the intermediate rate.

March 30. A reciprocal credit agreement was signed by the central banks of Colombia and Chile.

April 27. A reciprocal credit agreement was signed by the central banks of Colombia and Mexico.

May 5. A reciprocal credit agreement was signed by the central banks of Colombia and Peru.

May 10. A reciprocal credit agreement was signed by the central banks of Colombia and Argentina.

June 1. The advance deposit required for imports of certain chemicals was reduced to 1 per cent.

June 15. Twenty per cent of the peso equivalent of debts incurred abroad before October 25, 1964 could be deposited at the Bank of the Republic; making this deposit resulted in the right to transfer the principal at the rate of Col$13.50 per US$1.

June. The provision that 80 per cent of certain import freight could be settled at the intermediate market rate was extended to merchandise transported by ships whose capital was 80 per cent owned by a LAFTA country.

July 1. The LAFTA multilateral clearing system came into effect. Within its framework, Colombia’s reciprocal credit agreements came into operation.

July 1. Decree No. 1592 imposed a travel tax of Col$500 on Colombian nationals and resident foreigners, payable upon departure from the country; exempt were government officials and certain students.

A 15 per cent surcharge was levied on income tax payable by Colombian nationals who stayed outside Colombia for three months without interruption, or for four months with one or more interruptions.

July 27. A reciprocal credit agreement was signed by the central banks of Colombia and Ecuador.

July 29. The Board of Foreign Trade issued a seventh list of imports that did not require a license if paid for at the intermediate rate.

August 21. The official buying rate for proceeds of coffee exports was depreciated from Col$8.94 to Col$9.35 per US$1. Payments for imports that were still being effected at the preferential rate of Col$9.00 per US$1 were all shifted to the intermediate rate of Col$13.50 per US$1. These imports, with the exception of taxis and chassis, were included in an eighth list of imports that did not require a license.

The buying rate of Col$9.00 per US$1 ceased to be applicable to exports of manufactured products with an import component exceeding 50 per cent paid at the preferential rate.

It was announced that, starting in November 1966, advance import deposit rates were to be reduced by 5 per cent quarterly instead of 5 per cent monthly, as had been the practice since October 1, 1965.

October 20. The minimum surrender price for exports of coffee was lowered from US$72.25 to US$68.00 per 70-kilogram bag.

November 2. A consolidation was issued of the existing regulations concerning minor exports.

November 29. Operations in the free exchange market were suspended. Priorities for the delivery of official exchange were instituted. All imports again required prior licenses. All individuals or corporations resident or domiciled in Colombia who possessed foreign exchange or documents representing foreign exchange were required to communicate the amounts to the exchange control office; they could no longer use these funds or claims without previous authorization.

November 30. The official buying rate for the proceeds of coffee exports was depreciated from Col$9.35 to Col$9.94 per US$1. The minimum surrender price for coffee exports was lowered from Col$68.00 to Col$65.25 per 70-kilogram bag. The quantity of coffee that had to be surrendered to the National Coffee Fund by private exporters was increased from 15 per cent to 19 per cent of their export shipments.

December 1. A resolution of the Monetary Board established the priorities that would be observed in allocating exchange for sale in the preferential and intermediate markets. A capital market replaced the free market. Transactions in the capital market could only be made through the Bank of the Republic or authorized banks; the buying and selling rates were fixed at Col$16.25 and Col$16.30 per US$1, respectively. Priorities were also established for sales of exchange in this market. Banks were required to maintain minimum reserves of 100 per cent against their foreign currency liabilities (net of their clients’ deposits).

December 19. The remittance tax of 10 per cent on certain foreign debt and capital payments no longer was payable in U.S. dollars. The tax was henceforth to be paid in pesos on the foreign exchange value of the transfer; this value was calculated at the capital market rate.

December 23. An Exchange Registration Prefecture was instituted to enforce the controls on transactions in invisibles and capital transactions.

Congo (Brazzaville)

Exchange Rate System

No par value for the currency of Congo (Brazzaville) has been established with the Fund. The official unit of currency is the CFA Franc, which is equivalent to 0.02 French franc, giving the relationship CFAF 246.853 = US$1.1 The BCEAEC stands ready, in transactions with commercial banks, to buy and sell CFA francs against French francs at the fixed rate of CFAF 1 = 0.02 French franc. Exchange rates for other currencies are based on the fixed rate for the French franc and the Paris market rates for the other currencies concerned. There is a commission of 0.6 per cent on transfers to countries outside the French Franc Area; on payments for imports of petroleum and petroleum products, however, the commission is 0.1 per cent. The amount of the commission must be deposited by the intermediary bank to an account of the Exchange Office with the Treasury.

Forward transactions in non-French Franc Area currencies are permitted for all receipts and payments in such currencies.

Administration of Control

Exchange control is administered by the Exchange Office. Exchange transactions are handled by commercial banks under the direction of the Exchange Office. The Ministry of Economic Affairs allots to each importer exchange for goods included in the annual import program; it also issues import and export licenses; the former require the consent of the Exchange Office.

Prescription of Currency

Congo (Brazzaville) is a member of the French Franc Area, and settlements with other countries in the French Franc Area are made in any currency of that Area. Settlements with other countries are usually made through banks in France, in any of the currencies of those countries—provided that the currencies are quoted on the Paris exchange market—or through Foreign Accounts in Convertible Francs; settlements with countries with which Congo (Brazzaville) maintains bilateral payments agreements,2 however, are made through special accounts in accordance with the terms of those agreements.

Nonresident Accounts

The regulations pertaining to nonresident accounts are based on those applied in France. They are limited to Foreign Accounts in Convertible Francs. These accounts may be debited freely for payments to residents and for purchases of non-French Franc Area currencies; they may be credited only after authorization by the Exchange Office.

Imports and Import Payments

Imports from countries in the French Franc Area may be made freely. All imports of Portuguese origin are prohibited. Imports from all other 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 a joint French-Congolese Committee. The import program does not include petroleum imports, for which a joint quota is determined for the four countries of the Equatorial Customs Union.

Separate global quotas are established for imports from EEC countries (other than France) and for imports from all other countries outside the French Franc Area. The quotas for EEC countries may be used only to import goods originating in those countries; the quotas for the other countries may be used to import goods originating in any country outside the French Franc Area, including those in the Soviet countries and Mainland China. Licenses for liberalized commodities originating in EEC countries other than France are issued automatically; such liberalized imports are not included in the quotas for EEC countries. Imports of certain products from non-French Franc Area countries are subject to special ceilings which are established in the import program separately for EEC countries other than France and for all non-French Franc Area countries. Imports of certain products from some low-wage countries of the Far East are limited to an established percentage of the total quotas fixed for all non-French Franc Area countries.

For goods included in the annual import program, the Ministry of Economic Affairs publishes each year an announcement of the exchange allotted to each registered importer in accordance with, inter alia, his import business in the previous year. The importer submits to the Ministry an application for a license within the limits of the quota that has been assigned to him. When the license is issued, the Exchange Office makes the exchange available to the importer through his bank. Payments up to the equivalent of CFAF 1 million for imports from countries outside the French Franc Area may be made as soon as the import transaction is domiciled. Import licenses are valid for one year, and no extensions are granted except for specially manufactured goods when evidence is presented concerning the delay in manufacture.

Imports of certain goods are not permitted unless the importer also buys a certain quantity of the local product.

Under the EFAC arrangements (see section on Exports and Export Proceeds, below), licenses outside the import program are granted for imports of goods to be used directly by exporters, provided that such imports are paid for with funds from EFAC accounts.

Payments for Invisibles

Payments for invisibles may be made freely to residents of countries in the French Franc Area. All payments for invisibles to other countries are, in general, subject to approval by the Exchange Office; however, all payments by Portuguese nationals or by companies controlled by Portuguese nationals are subject to special presidential approval. For the following categories, authorized banks may sell foreign exchange without prior authorization from the Exchange Office: (1) for travel, up to the equivalent of CFAF 250,000 a person for each trip, except to Portuguese nationals; (2) for study and living expenses connected therewith, upon presentation of supporting documents from the educational institution attended by the student; and (3) for family maintenance, upon presentation of supporting documents. In addition, the Exchange Office authorizes the sale of foreign exchange freely for the following: payments for patent rights, royalties, trademarks, licenses, etc.; the net amount of salaries received by foreigners employed in Congo (Brazzaville); expenditures and earnings of foreign governments; and medical expenses and living expenses abroad for reasons of health.

Travelers to other countries in the French Franc Area may take out any amount of CFA banknotes. Travelers to other destinations may take out up to CFAF 75,000 in CFA banknotes. Nonresident travelers may take out foreign notes and coins up to the amounts declared when they entered the country.

Exports and Export Proceeds

With the exception of cotton and minerals, exports to countries in the French Franc Area may be made freely; exports to all destinations of coffee, cacao, palm oil, groundnuts, bananas, cotton, and minerals are subject to individual license. All other exports are free of individual license. For exports to countries outside the French Franc Area the exporter must sign an exchange commitment (engagement de change).

Proceeds of exports to countries in the French Franc Area may be retained by the exporter. Proceeds of exports to other countries must be surrendered within one month from the date of their receipt. Exporters may, however, retain 10 per cent of their export proceeds in special, nontransferable EFAC (Exportations-Frais Accessoires) accounts, which may be used by the exporters themselves to pay for export promotion expenses and for modernization and expansion needs of their industries.

Proceeds from Invisibles

Proceeds from transactions in invisibles with countries in the French Franc Area may be retained. All amounts due in respect of services from residents of other countries, and income exceeding the equivalent of CFAF 5,000 earned in those countries from foreign securities, must be collected and must be surrendered within one month of receipt. Travelers may bring in any amount of domestic or foreign banknotes or coins (except gold coins).

Capital

Capital movements between Congo (Brazzaville) and other countries of the French Franc Area are free of control; those between Congo (Brazzaville) and all other countries are subject to authorization.

Controls over foreign investments in Congo (Brazzaville) are administered along the lines established by exchange control regulations in France.

The transfer of profits from, as well as the proceeds from the liquidation of, registered foreign investment is permitted freely. However, Portuguese nationals and companies controlled by Portuguese nationals require the authorization of the President of Congo (Brazzaville) to make financial transfers abroad; Portuguese nationals are upon request given permission to make such transfers to Portugal.

Under the Investment Code of June 1961, as amended on December 29, 1962, any enterprise established in Congo (Brazzaville), 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 fiscal and other privileges may be accorded to firms investing in specified new industries or in the expansion of existing ones. Preferential treatment A applies to enterprises whose activity and market are limited to the national territory of Congo (Brazzaville); it is granted for a period of up to 10 years. Preferential treatment B applies to enterprises whose activity and market include the territory of two or more states of the Equatorial Customs Union (the Central African Republic, Chad, Congo (Brazzaville), and Gabon). Preferential treatment C is reserved for enterprises of prime importance to the country’s economic development; it provides for stabilization of their fiscal charges for up to 20 years. The granting of any one of the three kinds of preferential treatment automatically includes the application of specified exemptions from direct taxes which are granted under the provisions of the ordinary law (see above).

Requests for approval for preferential treatment must be submitted to the Minister of Finance and Planning, 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. Preferential treatment A is granted by decree issued by the Council of Ministers. Preferential treatment B is granted by an act of the Executive Committee of the Equatorial Customs Union upon the recommendation of the Council of Ministers. Preferential treatment C requires legislation.

Changes during 1966

January 1. The treaty establishing the Central African Customs and Economic Union (UDEAC) between Cameroon and the members of the Equatorial Customs Union (the Central African Republic, Chad, Congo (Brazzaville), and Gabon) entered into effect.

March 28. The Office National du Commerce (OFNACOM) was granted a monopoly over the importation of salt and cement from all sources.

Democratic Republic of Congo

Exchange Rate System

No par value for the currency of the Democratic Republic of Congo has been established with the Fund. The official unit of currency is the Congo Franc. The official buying rate is CF 150 = US$1 and applies to all exchange proceeds; the official selling rate is CF 180 = US$1 and applies to all exchange payments. The buying and selling rates for other currencies are fixed on the basis of official cross rates between each of those currencies and the U.S. dollar. Forward exchange transactions are prohibited.

Administration of Control

Exchange control is administered in the first instance by the National Bank of Congo, which is responsible for global allocations of foreign exchange for payments for imports and invisibles, and for the broad formulation and control of exchange programs. The High Commission for Planning and National Reconstruction and the Ministry of National Economy are responsible, respectively, for the determination of priorities for imports and for the allocation of import quotas to recognized importers. On the basis of decisions reached by the above-mentioned agencies, combined import licenses and payment authorizations for imports are issued by the Licensing Office. Authorizations for payments for invisibles are issued by the Exchange Office. Both offices are an integral part of the National Bank. An Exchange Commission, composed of representatives of the economic ministries and of the National Bank, deals with contraventions of exchange control regulations.

Prescription of Currency

There are no prescription of currency regulations.1

Nonresident Accounts

There are three categories of nonresident accounts: Nonresident Accounts in Congo Francs, Nonresident Foreign Currency Accounts, and Blocked Accounts.

1. Nonresident Accounts in Congo Francs. These accounts may be freely debited for and credited with settlements in the Democratic Republic.

2. Nonresident Foreign Currency Accounts. Nonresident nationals require special authorization from the National Bank to open these accounts with authorized banks; nonresident foreigners may open them freely. All Nonresident Foreign Currency Accounts may be credited freely; they may be debited freely for transfers to other Resident and Nonresident Foreign Currency Accounts and to accounts abroad.

3. Blocked Accounts. These accounts in Congo francs may be freely credited with funds owned by nonresidents; they may be debited without special authorization for certain specified purposes. Transfers between Blocked Accounts are prohibited except between accounts held by the same individual.

Imports and Import Payments

The import of a number of goods is prohibited. All imports are subject to individual licenses.

The National Bank determines the total amount of foreign exchange to be made available for payments for imports and for other foreign payments in accordance with an exchange budget which, normally, is established for each four-month period. The budget distinguishes between imports financed from the Democratic Republic’s own resources and those financed by foreign aid.

Within the budget, the Ministry of National Economy establishes global quotas by commodity categories for imports financed by the Democratic Republic’s own resources, in accordance with priorities set forth by the High Commission for Planning and National Reconstruction. The Ministry of National Economy then allocates individual quotas to recognized importers. Importers who have obtained an import quota must apply to the Licensing Office, through an authorized bank, for a combined import license and exchange authorization. Importers do not require individual import quotas for a few specified products, such as petroleum products, salt, yeast, dried fish, and many types of meat, the import of which has been liberalized. The commodity categories to be financed by foreign aid are determined in agreement with the donor countries.

Export companies and nonexporting producers and service enterprises deemed essential to the economy are granted guaranteed exchange allocations for imports and invisibles directly required for their operations. These allocations are established in annual agreements (“exchange allocation agreements”) between each company and the National Bank, and are an integral part of the exchange budget. Under this system, certain proportions of export proceeds surrendered by exporting companies at the rate of CF 150 per US$1 are credited at the rate of CF 180 per US$1 to so-called Resident Foreign Currency Accounts. These accounts may be debited exclusively for payments for authorized categories of imports and invisibles to be effected directly by the account holder in connection with his own business activity. Banks in which the Resident Foreign Currency Accounts are held obtain an import license on behalf of the account holder and make payments against the presentation of import documents. The proper use of exchange credited to Resident Foreign Currency Accounts is verified by the National Bank. Imports under guaranteed exchange allocations to nonexporting producers and to service enterprises are not subject to quota requirements, but a combined import license and exchange authorization is required in accordance with the provisions of the respective exchange allocation agreements.

In recent years, about 30 per cent of total exchange allocations for imports financed from the Democratic Republic’s own resources was for imports under the individual quota procedure administered by the Ministry of National Economy, and 10 per cent was for liberalized imports. The remaining 60 per cent of total exchange allocations for imports was divided about equally between export companies, on the one hand, and nonexporting producers and service enterprises, on the other, under guaranteed exchange allocation agreements.

During 1966, because of delays in effecting imports and because of favorable export developments, special allocations of exchange for imports were made under a presidential quota. Quantities of consumer goods in categories determined by the National Bank were imported subject to special deadlines. Quotas were granted to exporters by the National Bank upon presidential approval, and licenses were issued without prior scrutiny by the Ministry of National Economy or the High Commission for Planning and National Reconstruction.

An application for an import license must be accompanied by a specification of the merchandise to be imported, its unit price and country of origin, the transport charges connected with it, and the currency in which the payment is to be made. No exchange is granted to cover insurance on imports. The combined import licenses and exchange authorizations that are granted are normally valid for four months. Within that period, importers must complete the importation and make the authorized payment.

Banks are permitted to open letters of credit for importers to whom import licenses have been granted. The importers must forthwith provide to the banks the countervalue in Congo francs, calculated at the rate of exchange for imports; however, by that action they are not relieved of any exchange risk involved. Payment to the foreign exporter may not be made until the bank has received the invoice and the documents evidencing either the shipment to the Democratic Republic of the merchandise described in the import license, or its clearance through Congolese customs. A certificate of verification of the quantity, the quality, and the country of origin of the merchandise, issued by a foreign correspondent of the Société Congolaise de Surveillance, must be part of these documents.

A similar licensing procedure applies to import with “foreign financing,” which are allowed under certain conditions. These imports consist mainly of consumer goods, including durables (in the form of gifts), of materials and equipment related to new investments, and of the requirements for institutions such as schools and charitable organizations. An import license is required, but there is no corresponding payment authorization, and no foreign exchange is made available.

The quota procedure also is not required for imports financed by foreign aid. Authorized banks may issue import licenses direct to importers against the submission of import contracts and the opening of letters of credit. However, for these imports the special procedure prescribed for foreign aid imports must be observed.

Payments for Invisibles

Policy related to payments for invisibles is formulated by the National Bank. No exchange is granted for insurance on imports. Transfers abroad of salaries of foreign nationals resident in the Democratic Republic of Congo are authorized, within certain limits. Travel abroad by foreigners must be entirely paid for with foreign exchange supplied by the traveler himself, while fares for authorized travel by Congolese nationals may be paid in Congo francs; airline booking offices and travel agencies may, upon application, obtain foreign exchange cover to the extent that their receipts in Congo francs exceed one third of their total receipts from fares for foreign travel. There are basic allocations for official and business travel and students’ expenses abroad. Transfers for certain administrative expenses abroad by enterprises, interest on private loans, and certain portions of insurance premiums are, as a rule, authorized. No exchange is made available for transfers of investment income.

All payments for invisibles are subject to authorization by the Exchange Office. Provisions covering the invisibles listed above may be included in “exchange allocation agreements.” In these cases, the exchange is made available in accordance with procedures similar to those described in the section on Imports and Import Payments, above.

All travelers may take out Congolese banknotes up to CF 15,000 a trip.

Exports and Export Proceeds

All exports require an export license. Banks are normally authorized to extend such licenses to exporters who submit a declaration of collection of exchange. Such declarations must specify the nature of the merchandise to be exported, the price, and the currency in which payment is to be received. Export licenses are normally valid for three months; within this period, the proceeds must be received and surrendered. There is an export duty of 30 per cent on copper.

Under the system of “exchange allocation agreements” (see section on Imports and Import Payments, above), certain proportions of the export proceeds surrendered may be repurchased by the exporters concerned in accordance with the procedures described above. Exporters of agricultural products may use up to 25 per cent of repatriated export proceeds to settle payments for authorized imports and invisibles. “Exchange allocation agreements” with mining companies provide for allocations of foreign exchange in specified amounts.

Proceeds from Invisibles

All exchange receipts from invisibles must be surrendered. The import of Congolese banknotes is prohibited, except that travelers to the Democratic Republic may import such banknotes up to an amount not exceeding CF 15,000 a trip. With certain exceptions, nonresident travelers to the Democratic Republic are required upon entry to purchase for each day of the proposed stay US$20 worth of Congo francs at the official buying rate. Evidence of purchases must be shown at the time of departure. In the event of early departure, amounts of local currency purchased in excess of the required amount are refundable in foreign currency.

No one on Congolese territory (whether national or foreigner) is allowed to hold foreign banknotes or other foreign means of payment in amounts in excess of US$300 or its equivalent. Foreigners traveling to the Democratic Republic and carrying amounts in excess of this limit must deposit the excess amounts in an authorized bank within 48 hours of arrival on Congolese territory; they are allowed to recover them on departure. Nationals who leave the Democratic Republic and wish to export foreign banknotes and foreign means of payment in excess of US$300 or its equivalent must submit to the customs authorities an official certificate showing that the banknotes and other means of payment concerned have been acquired legally.

Capital

Capital transfers abroad, except some relating to the Government, are not authorized. The sale of real estate located in the Democratic Republic can only be made to the Congo Government, against payment in Congo francs; gratuitous transfers of real estate are subject to approval by executive ordinance.

Changes during 1966

January 1. A new classification system for imports was introduced. Import quotas were henceforth established in accordance with 90 customs sections corresponding to the Brussels customs nomenclature.

January 1. The selling price or rent of real estate situated in the Democratic Republic was required to be stipulated and paid in Congo francs; sales of such real estate could only be made to the Government, with the exception of sales made for public purposes or as participation in the capital of enterprises. The Government reserved to itself the right to purchase or to decline to purchase the real estate offered to it. Gratuitous transfers of real estate situated in the Democratic Republic required authorization by ordinance of the Chief of State.

January 1. Minimum daily requirements were established in respect of the amount of foreign exchange to be sold at the official exchange rate for local currency by nonresident travelers entering the Democratic Republic. These requirements did not apply to travelers possessing a Blocked Account in Congo francs with balances sufficient to cover living expenses while visiting the Democratic Republic, travelers who in terms of tax legislation were under the charge of a resident, and travelers employed in the Democratic Republic by virtue of a contract concluded with an employer established in the Democratic Republic.

January 31. It was announced that commercial and financial relations with Rhodesia were to be considered suspended.

March 18. A High Commission for Planning and National Reconstruction was established following a decision to abolish the Bureau of Economic Coordination.

March 30. A turnover tax was introduced which was applied at a rate of 7.5 per cent on the wholesale price of goods, whether imported or manufactured in the Democratic Republic, and at a rate of 10 per cent on the price of certain services. Import and export taxes, the statistical tax, excise and consumption taxes, and taxes on company profits were increased.

May 5. The export tax on copper was increased from 17 per cent to 30 per cent.

May 21. All mining companies were in principle required to deliver to the Government 10 per cent of their production, in the form in which exports normally took place.

June 7. The Democratic Republic resumed the full and free disposition of all its real estate, forestry, and mineral concessions granted before June 30, 1960. The State was to proceed sovereignly in granting rights to exploit its natural, forestry, and mineral resources.

June 7. All enterprises whose principal field of operations is in the Democratic Republic were required to have their administrative headquarters and registered office located in the Democratic Republic by January 1, 1967, and by the same date to put their statutes in accordance with Congolese legislation for commercial enterprises of a similar nature.

August 25. The responsibilities of the High Commission for Planning and National Reconstruction were expanded to include policy formulation and coordination of foreign technical assistance and aid.

August 29. A combined trade and payments agreement was signed with Burundi. The agreement would enter into force upon an exchange of notes confirming its approval under the constitutional procedures of both countries.

November 23. A national insurance company was created; it was to begin operations on January 1, 1967. Private companies were allowed to continue their activities under conditions to be determined by the Government.

December 31. The Government announced the creation of a new Congolese mining company, Générale Congolaise des Minerais, to replace the Union Minière du Haut Katanga. The latter’s operations in the Democratic Republic had been terminated by Government Order on December 24, following the refusal of Union Minière’s Board of Directors to move the company’s head office to Kinshasa as required by Congolese legislation enacted on June 7, 1966.

Costa Rica1

Exchange Rate System

The par value is 0.134139 gram of fine gold per Costa Rican Colón or Ȼ 6.625 = US$1. The Central Bank buys exchange derived from exports and other exchange tendered to it at a fixed rate of Ȼ 6.62 per US$1. Exchange at the official rate is granted only for listed essential imports and specified invisibles. All other sales and purchases may be made freely in a fluctuating free market; the rate in that market on February 2, 1967 fluctuated between Ȼ 7.00 and Ȼ 7.35 per US$1. Mixing rates arise from the fact that transfers at the official rate of interest and dividends on registered capital are limited to 10 per cent of the registered amount, while amounts in excess of that percentage can be transferred through the free market. Costa Rica accepted the obligations of Article VIII, Sections 2, 3, and 4, of the Fund Agreement, as from February 1, 1965.

Administration of Control

The exchange controls are operated by the Central Bank of Costa Rica. Purchases and sales of exchange are made through the Central Bank or through commercial banks authorized for this purpose.

Prescription of Currency

In practice, nearly all exchange transactions in Costa Rica are expressed in U.S. dollars. Payments to Poland may be made through special U.S. dollar accounts established under a payments agreement with that country. Payments to El Salvador, Guatemala, Honduras, and Nicaragua in respect of trade and invisibles are made in Costa Rican colones and at the official rate through the Cámara de Compensación Centroamericana, a clearinghouse established by the central banks of Central America to foster the process of economic integration of their countries; the documents must be expressed in colones and require approval by the Central Bank, which is given for payments for all imports of Central American origin and for transactions to which the regulations of the official exchange market apply. The central banks of these four countries may also engage in transactions in Costa Rican notes and coins, up to the equivalent of US$40,000 a month for Nicaragua and up to the equivalent of US$10,000 a month for each of the other countries. Payments to Mexico in respect of trade and invisibles that are eligible for access to the official market may also be made in Costa Rican colones through the clearinghouse, in accordance with the Agreement on Clearing and Reciprocal Credits between the Bank of Mexico and the member banks of the clearinghouse; the documents must be expressed in colones and require the prior approval of the Central Bank. There are no transactions with Mexico in Costa Rican notes and coins.

Imports and Import Payments

There is no system of import licensing and all payments may be made freely. Some imports, however, are made on a barter basis; these require a barter license (licencia de trueque) issued by the Ministry of Economy and Finance.

Exchange at the official rate is granted for the c.i.f. value of specified essential commodities from any source and of all imports from Central American countries and from Panama that are covered by the provisions of regional integration agreements. Imports of the specified essential commodities must be registered with the Central Bank within two months of arrival at a national port. Their registration serves as an application for official exchange. The Central Bank grants permission to purchase exchange cover in order of registration. All other goods may be freely imported, provided that they are paid for through the free market. Official exchange is not granted for commodities on the list of essential imports that are also produced in acceptable quality either in Costa Rica or Central America, provided that these commodities are available in satisfactory volume and at adequate prices; prior authorization by the Ministry of Industry and Commerce is required to purchase official exchange for the importation of any goods on the list that are also produced in Costa Rica.

Payments for Invisibles

Payments for invisibles may be made freely through the free market. Exchange at the official rate is only granted for freight and insurance on imports effected at the official rate; for dividends, interest, and amortization on registered foreign capital; servicing of debts contracted before January 2, 1967; indispensable payments of the Central Government; and normal expenses in foreign currency on export transactions settled through the official market. The allocation for interest and dividends is 10 per cent of the registered capital.

Exports and Export Proceeds

The Central Bank supervises exports to assure a supply of exchange to the market. Export licenses from the Central Bank are necessary for the physical exportation of merchandise, and the license is granted if the exporter agrees to surrender the exchange proceeds at the official rate; the Bank may require the exporter to provide a guarantee in this respect. In addition to the export license issued by the Central Bank, other export licenses are required as follows: (1) strategic materials, such as armaments, munitions, scrap iron, and scraps of nonferrous base metals, require export licenses from the Ministry of Industry and Commerce; (2) sugar requires an export license from the Ministry of Industry and Commerce in order that shipments under the sugar quotas may be controlled; (3) lumber and root of ipecacuanha require export licenses from the Institute for Lands and Colonization; (4) beans, rice, potatoes, onions, cotton, meat, and purebred and other cattle require export licenses from the National Council of Production; (5) airplanes require export licenses from the Civil Aviation Board; (6) Indian art objects made of gold, stone, or clay require export licenses from the National Museum; (7) tobacco requires an export license from the Tobacco Defense Board; (8) certain livestock and animals and plants of forest origin require a permit from the Ministry of Agriculture and Livestock; and (9) coffee requires a sales contract approved by the Coffee Office, in order to control exports under the coffee quotas, and when there is a lien on the coffee in favor of a bank, that bank’s approval is required before the Central Bank grants an export license.

The exchange proceeds of all exports must be surrendered within 60 days of exportation or, if the goods were sold on credit, upon expiry of the term of the credit. Foreign-owned banana companies that have contracts with the Government must surrender their net export proceeds calculated by deducting from their gross export proceeds (1) profits obtained during the year from their transactions in Costa Rica; (2) a sum equivalent to the depreciation on their investments 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 export taxes on sugar and coffee.

Proceeds from Invisibles

Exchange receipts from invisibles must be surrendered at the official rate within 60 days of accrual, with the exception of the following, which may be retained or sold in the free market: diplomatic and similar salaries and expenses; tourist expenditures; family remittances and other personal remittances; settlements on insurance claims, provided that the premium was financed in the free market; and commissions received by agents of foreign firms.

Capital

Inward and outward transfers of capital through the free market may be made freely by residents and nonresidents. The Organic Law of the Central Bank provides that foreign capital entering through the official market may be registered with the Central Bank in order to be ensured access to that market for the transfer of interest, profits, and amortization. Incoming capital must be registered to become entitled to servicing at the official rate. Incoming capital may be sold freely in the free market if it is foreign capital that did not elect registration and surrender at the official rate or if it is national capital returning from abroad. The only outward transfers of capital permitted to be made at the official rate are repayments on certain private and public debts and amortization on registered foreign capital; for the latter, the amounts are determined individually by the Central Bank.

Changes during 1966

March 24. A trade agreement of the most-favored-nation type was signed with Yugoslavia. The agreement required parliamentary ratification in Costa Rica and did not enter into force in 1966. It stipulated that payments would take place in U.S. dollars, subject to technical arrangements agreed between the two central banks.

April 27. The President confirmed Law No. 3676, thereby putting into effect a bilateral payments agreement with Poland that had been signed on August 26, 1965.

June 14. An implementing agreement between the Central Bank of Costa Rica and the Bank Handlowy w Warszawie of Poland entered into force. This agreement provided for the establishment of clearing accounts in accordance with the earlier agreement with Poland (see April 27, above).

July 11. Decree No. 26 increased the consumption tax on passenger automobiles by 70 per cent; the tax now amounted to Ȼ 11,050 for cars weighing more than 1,650 kilograms.

December 26. The Board of the Central Bank of Costa Rica approved a three-stage economic emergency program. The first stage would involve the imposition of restrictions on the sale of official exchange; the sale of certain classes of exchange receipts would be permitted to take place in the free market, and certain imports would have to be financed through the free market (previously, official and free market were unified, although legally the latter had not been abolished). The second stage would be the introduction of surcharges on the c.i.f. value of certain nonessential imports to be specified by the Central Bank; payments for all imports and invisibles would again be made through the official exchange market. The third stage would involve the implementation of measures of an indirect nature aimed at restoring the equilibrium of the balance of payments and of the budgetary position.

Note.—The following changes took place in 1967:

January 2. The first stage of the emergency program went into effect. The free exchange market was reactivated. The Central Bank ceased to sell official exchange, except for (1) the c.i.f. value of specified essential imports, (2) goods imported prior to January 2, (3) contractual remittances of interest, dividends, and amortization on past and future registered foreign capital investments, (4) payment of debts contracted with first-class foreign financial institutions prior to January 2, (5) indispensable payments of the Central Government, (6) normal expenses payable in foreign currency on export transactions settled through the official market, (7) imports of commodities originating in Central America and covered by the free trade treaties of that area, and (8) imports of products originating in Panama and covered by the trade agreements concluded with that country. The Central Bank was authorized to add goods to, and delete goods from, the list of essential imports. Access to the free market was unrestricted; any type of payment for which official exchange was not granted could be made through it.

Export proceeds were required to be surrendered within 60 days of exportation, or, if the goods were sold on credit, at the expiration of the term of the credit. All other receipts of foreign exchange had to be surrendered within 60 days of accrual, except the following, which could be retained or sold in the free market: (1) diplomatic and similar salaries and expenses, (2) tourist expenditures, (3) family remittances and personal remittances received by residents, (4) insurance claim settlements, provided that the premium had been financed in the free market, (5) incoming foreign capital that did not elect registration and surrender at the official rate, (6) national capital returning from abroad, (7) commissions received by agents for foreign firms, and (8) any other type of receipt that the Central Bank might determine.

January 2. Imports of the listed goods eligible for official exchange were required to be registered within two months of arrival of the goods at a national port, registration serving as an application for official exchange; authorization to purchase exchange cover would be granted in order of registration.

January 2. The Central Bank reminded the public that it was empowered to authorize exporters who imported their raw materials through the free market to sell part of their export proceeds in the free market.

January 2. Remittances at the official rate of interest and dividends together on foreign capital registered through the official market could not exceed 10 per cent a year on the registered amount. The maximum percentage for transfers at the official rate of amortization on such capital would be determined by the Central Bank on a case-by-case basis.

January 2. Persons owing debts abroad had to register these with the Central Bank. The Bank would grant official exchange to service these debts in the light of the availability of exchange and the prospects for the balance of payments.

January 2. Payments at the official rate to Central American countries had to be made in colones through the Central American clearinghouse. The Central Bank could permit payments at the official rate to Mexico to be made in colones through the clearinghouse.

January 18. Certain items were added to the list of essential imports entitled to official exchange.

January 18. It was announced that official exchange would not be granted for commodities that were also produced either in Costa Rica or in Central America in acceptable quality and available in satisfactory volume at adequate prices. Prior authorization by the Ministry of Industry and Commerce was required to purchase official exchange for the importation of goods on the list of essentials if these were also produced in Costa Rica.

February 2. The Government withdrew the bill it had submitted for Parliamentary consideration that would have provided for the introduction of surcharges on imports.

Cyprus

Exchange Rate System

The par value is 2.48828 grams of fine gold per Cyprus Pound or £C 1 = US$2.80. Exchange rates are based on the fixed rate for sterling, with which the Cyprus pound is at par, and London market rates for sterling against other currencies. The rate for the U.S. dollar on December 31, 1966 was US$2.79½ buying, US$2.78⅝ selling, per £C 1.

Administration of Control

Exchange controls are administered by the Central Bank of Cyprus; trade controls, by the Ministry of Commerce and Industry. Certain authority to approve applications for the allocation of foreign exchange within the scope of instructions issued by the Central Bank of Cyprus has been delegated to the authorized banks. Authority to introduce, adapt, and supervise controls on exports of potatoes has been delegated to the Cyprus Potato Marketing Board.

Prescription of Currency

Cyprus is a member of the Sterling Area, and settlements between residents of Cyprus and residents of other Sterling Area countries may be made freely in sterling or another Sterling Area currency. Settlements with countries covered by bilateral payments arrangements must be made through the appropriate account.1 Payments to other countries except Rhodesia may be made by crediting sterling or Cyprus pounds to an External Account, or in any foreign currency other than Rhodesian pounds. The proceeds of exports to other countries except Rhodesia may be received in sterling or Cyprus pounds from an External Account, in any specified currency,2 or in any other currency freely exchangeable for sterling. Settlements with Rhodesia are subject to special regulations; payments for exports to Rhodesia must be received in a specified currency.

Nonresident Accounts

No distinction is made between the accounts of residents of Cyprus and those of residents of other parts of the Sterling Area, and the funds on all such accounts are freely transferable within the Sterling Area. Residents of countries outside the Sterling Area other than Rhodesia may maintain with authorized banks nonresident accounts, designated External Accounts. These may be credited with authorized payments from the Sterling Area, with transfers from other External Accounts, and with the proceeds from sales by nonresidents of foreign currency other than Rhodesian pounds. External Accounts may be debited for payments to residents of the Sterling Area, for transfers to other External Accounts, and for purchases of foreign currency other than Rhodesian pounds.

Rhodesian Accounts are held by residents of Rhodesia. They may be credited with (1) payments from External Accounts, (2) payments by residents of the Sterling Area that are made by check, bill, or draft drawn on or before November 11, 1965 or under irrevocable credits opened on or before that date, (3) the proceeds of sales by, or on behalf of, the account holder to an authorized dealer of foreign currencies other than Rhodesian pounds, and (4) transfers from other Rhodesian Accounts. Rhodesian Accounts may be debited for (1) payments to residents of any country made by check, bill, or draft drawn on or before November 11, 1965 or made under an irrevocable credit opened on or before that date by a bank in Cyprus or Rhodesia, (2) payments to residents of the Sterling Area for goods that had been delivered or shipped to Rhodesia on or before November 11, 1965, (3) living expenses in Cyprus of the account holder or his family, (4) insurance premiums payable to companies in the Sterling Area on personal policies taken out prior to November 11, 1965 by the account holder or his family, (5) bank charges due to authorized dealers in Cyprus, (6) sterling travelers checks and personal letters of credit issued by banks in Rhodesia and encashed in Cyprus, and (7) transfers to other Rhodesian Accounts.

Blocked Accounts are maintained in the name of a nonresident for certain payments of a capital nature which, under the existing exchange control regulations, may not be transferred outside Cyprus. These accounts may be in the form of deposits with local banks earning interest which may be freely transferred abroad.

Imports and Import Payments

All imports from Rhodesia and South Africa are prohibited. Most imports from other countries may be made freely under an open general license. Individual import licenses are, however, required for all goods originating in countries with which Cyprus maintains bilateral payments arrangements (see footnote 1) and for some 50 items from all sources (certain agricultural and textile products, a few metals, and most nonelectrical machinery); for a few of these items, no licenses are granted, while for most of the others licenses are granted freely. Individual import licenses are not required for bona fide gifts up to £C 10 in value and not to be sold, for returned goods, or for certain special transactions.

Payments for all authorized imports may be made freely.

Payments for Invisibles

Payments for invisibles to residents of other Sterling Area countries may be made freely. All remittances to countries outside the Sterling Area require the approval of the exchange control authorities. Profits, dividends, and interest from approved foreign investments may be transferred abroad, after payment of any charges and taxes due. For certain categories of payments, limits are imposed mainly for the purpose of preventing illicit capital outflow. For study abroad, the lower limit is £C 400 a year, and the upper limit is £C 1,400 a year; the amount allowed depends on the cost of living in the country concerned—e.g., for study in countries in the Middle East, £C 450; in the United States and Canada, £C 1,400; in other countries, £C 850. Higher amounts for student allowances may be granted on production of sufficient documentary evidence. For tourist travel, the limit is £C 250 a person annually; for business travel £C 5 to £C 25 a day is granted in addition to the tourist allowance. The basic tourist allowance is not available for travel to Rhodesia. Resident travelers may take out Cyprus notes up to £C 10 and foreign currency notes up to the equivalent of £ stg. 50. Nonresident travelers may take out £C 10 in Cyprus notes and any amount of foreign currency notes which they brought into Cyprus.

Exports and Export Proceeds

Exports of potatoes are subject to licensing by the Cyprus Potato Marketing Board, and those of wheat and barley to licenses issued by the Cyprus Grain Commission. Exports to any destination are free from licensing when the f.o.b. value does not exceed £C 75. All other exports require an export license from the Ministry of Commerce and Industry; goods destined for countries outside the Sterling Area are subject to a further control to ensure repatriation of the sales proceeds in an appropriate manner (see Prescription of Currency, above). With minor exceptions, exports to the Sterling Area are unrestricted.

Proceeds from Invisibles

Receipts from invisibles in specified currencies must be sold to an authorized bank. Persons entering Cyprus may bring in any amount in foreign currency notes and Cyprus currency notes.

Capital

No control is exercised over capital receipts or payments in Sterling Area currencies. Receipts in other currencies must be offered for sale to an authorized bank; payments of a capital nature in those currencies require prior approval.

Foreign investments in Cyprus by residents of countries outside the Sterling Area require the prior approval of the exchange control authorities. In considering such application, due regard is given to the purpose of the investment, the extent of possible foreign exchange savings, the number of persons to be employed, the extent of the foreign exchange liability which might arise from the investment, and possible competition with existing industries. Foreign investment involving participation in domestic industries not exceeding 49 per cent of the share capital is normally approved; participation above this limit may be permitted in exceptional circumstances. Proceeds from the liquidation of approved foreign investments may be repatriated after payment of any charges and taxes due.

Foreign nationals who repatriate or take up residence outside the Sterling Area, and Cypriots who emigrate to countries outside the Sterling Area, may transfer abroad up to £C 5,000. Any excess amount is deposited in a Blocked Account.

Transactions in foreign securities owned by residents require prior permission from the authorities.

Changes during 1966

March 24. Imports of goods originating in or shipped from South Africa were prohibited.

Dahomey

Exchange Rate System

No par value for the currency of Dahomey has been established with the Fund. The unit of currency is the CFA Franc, which is officially maintained at the rate of CFAF 1 = 0.02 French franc, giving the relationship CFAF 246.853 = US$1.1 Exchange transactions in French francs between the Banque Centrale des Etats de l’Afrique de l’Ouest (BCEAO) and commercial banks take place at rates resulting from the relation CFAF 1 = 0.02 French franc plus or minus a commission. Exchange rates for other currencies are based on the fixed rate for the French franc and the Paris exchange market rate for the currency concerned, and include a commission.

An exchange tax of 0.5 per cent is levied on all payments to countries outside the French Franc Area, except payments by the Government; the minimum charge is CFAF 100.

Administration of Control

Exchange control is administered by the Exchange Office. Foreign exchange transactions are handled by authorized banks under the direction of the Exchange Office. Import licenses, import certificates, and export licenses are issued by the Department of Economic Affairs and approved by the Exchange Office.

Prescription of Currency

Dahomey is a member of the French Franc Area, and settlements with other countries in the French Franc Area are made in any currency of that Area. Settlements with countries with which payments agreements are in operation are made through special accounts under the terms of the bilateral payments agreements concluded with those countries.2 Settlements with all other countries are usually made through banks in France, in any of the currencies of those countries—provided that the currencies are quoted on the Paris exchange market—or through Foreign Accounts in Convertible Francs.

Nonresident Accounts

The regulations pertaining to nonresident accounts are based on those applied in France.

Imports and Import Payments

Certain imports from all sources are prohibited.3 Imports of all other goods from countries in the French Franc Area may be made freely. Most imports from EEC countries other than France may also be made freely. Most imports from other countries are subject to licensing; they are admitted in accordance with an annual import program, which is determined each year in a joint French-Dahomean Committee, as provided for by the Economic Cooperation Agreement with France. Under this program, global quotas are established for imports from all countries outside the French Franc Area except EEC countries. A few specified commodities4 are subject to individual ceilings; for each of these commodities, this amount is made up of a global quota for the EEC countries other than France and a global quota for all countries outside the French Franc Area except EEC countries. The quotas determine the limits up to which import licenses are issued for specified commodities to licensed traders and to industrial or agricultural producers. Certain textiles are licensed freely outside the import program. For other goods admitted without quantitative restriction import certificates are issued.

All imports from countries outside the French Franc Area must be registered (domiciled) with an authorized bank. The import license or import certificate entitles the importer to purchase the necessary exchange, provided that the shipping documents are submitted to the authorized banks; however, import payments up to the equivalent of CFAF 1 million may be made when the import transaction is registered.

Payments for Invisibles

Payments for invisibles to countries in the French Franc Area are permitted freely; those to other countries are subject to the approval of the Exchange Office. Payments for invisibles related to trade are authorized freely when the basic trade transaction has been approved. Transfers of income accruing to nonresidents in the form of profits, dividends, and royalties are also approved freely. Foreigners may transfer all their savings from salaries, provided that the transfer is made within three months of receipt of the salary. Payments for other invisibles are subject to administrative decision. Exchange for premiums in respect of bona fide insurance transactions is granted freely. Travelers to countries outside the French Franc Area may obtain an exchange allowance in an amount equivalent to CFAF 120,000 per annum; the allowance is released in four equal installments, each of which may be taken up only if evidence is submitted to show that the preceding installment has been fully utilized for genuine tourist expenditures. Exchange for business travel is granted up to the equivalent of CFAF 50,000 for each trip. Exchange for family support is granted up to the equivalent of CFAF 27,500 a month for each dependent. Exchange for study abroad is granted freely upon submission of documentary evidence of expenses.

Travelers to the other countries of the West African Monetary Union5 may take out, without limit, banknotes issued by any bank of issue within the French Franc Area. Travelers going direct to other countries in the French Franc Area may take out, without limit, banknotes issued by any bank of issue in the French Franc Area, with the exception of those issued by the BCEAO, for which the limit is CFAF 75,000. Travelers going to countries outside the French Franc Area may take out in banknotes or coins up to a maximum of F 750 in French francs, or up to 75,000 in CFA or CFP francs, or the equivalent of F 750 in notes and coins denominated in any French Franc Area currency other than the French franc. Nonresident travelers may take out foreign banknotes and coins up to the amount declared by them on entry.

Exports and Export Proceeds

Exports to countries in the French Franc Area may be made freely; exports to all other countries require licenses but are not subject to quantitative restriction.

Export proceeds in currencies of countries outside the French Franc Area that are not used to make authorized payments abroad must be surrendered within three months from the date of their receipt. Exporters may, however, retain for their payments outside the French Franc Area 10 per cent of the export proceeds they receive during the year.

Proceeds from Invisibles

Proceeds from transactions in invisibles with countries in the French Franc Area may be retained. All amounts due from residents of countries outside the French Franc Area in respect of services, and income exceeding the equivalent of CFAF 25,000 earned in those countries from foreign securities, must be collected, and they must be surrendered within one month of receipt. Travelers from the other countries of the West African Monetary Union (see footnote 5) may bring in any amount of CFA banknotes issued by the BCEAO. Travelers from other countries may bring in up to CFAF 75,000 in banknotes issued by the BCEAO. All travelers may bring in any amount of banknotes and coins issued by a bank of issue of the French Franc Area other than the BCEAO, as well as any amount of banknotes and coins (except gold coins) of countries outside the French Franc Area.

Capital

Capital movements between Dahomey and other French Franc Area countries are free of control; those between Dahomey and all other countries require approval.

The Investment Code of December 31, 1961 provides for preferential status that may be granted to foreign and domestic investments in industry, agriculture, and, in some cases, commerce, when such investments are deemed to be of value to national development. Three preferential regimes are established. Plan A is intended for small and medium-sized investments and provides for exemption, during a period of up to 5 years, from import duties and taxes on materials necessary for the production of the proposed product. Plan B, for larger projects, is granted for a maximum period of 8 years and provides, in addition to the benefits of Plan A, exemption during the first 5 years of operation from the tax on industrial and commercial profits as well as certain other taxes. Plan C is intended for very large enterprises and is granted for a period of up to 25 years. In addition to the benefits of Plans A and B, Plan C guarantees marketing stabilization for products, free choice of suppliers, and certain other advantages.

Transfers abroad of proceeds from the liquidation of foreign investments are authorized freely.

Changes during 1966

August 8. The EFAC (Exportations-Frais Accessoires) accounts were abolished on which exporters could retain a portion of their export proceeds received in non-French Franc Area currencies. Instead, 10 per cent of their annual receipts of such currencies was left at the disposal of exporters to cover their requirements outside the French Franc Area.

December 15. A new West African Customs Union agreement (the UDEAO agreement) came into force, replacing that of June 9, 1959. The other signatories were Ivory Coast, Mali, Mauritania, Niger, Senegal, and Upper Volta.

Denmark 1

Exchange Rate System

The par value is 0.128660 gram of fine gold per Danish Krone or DKr 6.90714 = US$1. The official limits for the U.S. dollar are DKr 6.8575 buying, and DKr 6.9575 selling, per US$1, at which rates the exchange authorities stand ready to intervene; the rate for the U.S. dollar fluctuates in the exchange market between these limits. Market rates for the Canadian dollar and specified European currencies 2 are quoted daily. Authorized exchange dealers may engage in arbitrage with one another and with their foreign correspondents in convertible and externally convertible currencies, including Danish kroner, both spot and forward for up to 12 months. Forward premiums and discounts are left to the interplay of market forces. Forward transactions with residents must have a commercial basis.

Exchange Control Territory

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

Administration of Control

Exchange control is administered by the National Bank of Denmark, which is the central exchange control authority. However, administrative powers for most payments and transfers are delegated to the authorized exchange dealers, i.e., banks and the stock exchange brokers who are members of the Copenhagen Stock Exchange. Permission, when required, for foreign direct investments in Denmark has to be obtained from the Ministry of Commerce. Licenses for imports and exports, when required, are issued by the Ministry of Commerce, the Ministry of Agriculture, or the Ministry of Fisheries.

Prescription of Currency

For exchange control purposes, countries are divided into two groups: the bilateral account countries3 and the convertible area (all other countries).

Payments to countries in the convertible area may be made in any foreign currency or by crediting Danish kroner to any Convertible or Bilateral Krone Account (see section on Nonresident Accounts, below). Payments from countries in the convertible area may be received in any currency of the area or in Danish kroner, except from a Bilateral Krone Account.

Payments to the bilateral account countries must be made in accordance with the payments agreement between Denmark and the country concerned, usually in Danish kroner through a Bilateral Krone Account; noncommercial payments to Brazil may be made in convertible currencies. Payments from bilateral account countries may be received in accordance with the relevant payments agreement or in convertible currency, including Danish kroner.

Nonresident Accounts

Most accounts held in Danish kroner for nonresidents are convertible. Bilateral Krone Accounts are maintained for a few countries (see footnote 3). Both Convertible Krone Accounts and Bilateral Krone Accounts may be opened by authorized banks for foreign banks, insurance companies, and shipping lines. They may also be opened for other nonresidents, if it is agreed with the account holder that amounts in excess of DKr 75,000 are to be transferred abroad automatically at the end of each quarter; this limitation is not applicable to persons who are or have been of Danish nationality.

Convertible Krone Accounts may be credited with transfers from other Convertible Krone Accounts, with the proceeds from sales of currencies of countries in the convertible area, and with authorized payments to countries in the convertible area. They may be debited for transfers to other Convertible Krone Accounts or to Bilateral Krone Accounts, for purchases of any foreign currency, and for authorized payments to residents of Denmark from any foreign country.

Bilateral Krone Accounts may be credited with transfers from any Convertible Krone Account, with transfers from another Bilateral Krone Account of the same country and with the proceeds from sales of the currency of that country or of currencies of countries in the convertible area, and with authorized payments to any foreign country. They may be debited for transfers to other Bilateral Krone Accounts of the same country and for purchases of the currency of that country, and for authorized payments to residents of Denmark from the country of the account holder.

Capital Accounts and Foreign Accounts play only an insignificant part in settlements with foreign countries.

Capital Accounts are kept for nonresidents by authorized exchange dealers for holding capital, income from capital, pensions, and other funds owned by or accruing to Danish emigrants within the first year after emigration and which are not transferable abroad because they amount to more than the allocation granted for the transfer of such funds. Balances on Capital Accounts may be used for the same private payments in Denmark as those generally allowed from Convertible and Bilateral Krone Accounts, but may be used only within certain limits for commercial payments in excess of DKr 2,000. Within the limits set for transfers of emigrants’ funds, i.e., up to DKr 40,000 a person in the year after emigration, balances may be transferred abroad, used for commercial payments in Denmark, or transferred to other Capital or to Foreign Accounts. After one year, emigrants may transfer remaining balances on Capital Accounts without limitation, and the account is then reclassified either as a Convertible Krone Account or as a Bilateral Krone Account.

Foreign Accounts are nonresident accounts with savings banks, small cooperative banks, and the Public Trustee’s Office. These accounts are kept mainly by private persons and for private purposes. The rules governing such accounts follow broadly the same principles as those established for Convertible Krone Accounts, except that transfers abroad may be made only through an authorized exchange dealer.

Imports and Import Payments

All goods not on a restricted list containing mainly nonindustrial goods may be imported without license from the “Free List Area,” which comprises most countries outside the Soviet bloc.4 For imports from the “Free List Area” of commodities on the restricted list, licenses are issued on the basis of global (regional) quotas and may be used for any country in the “Free List Area.” 5 Imports from countries outside the “Free List Area” require licenses; these are generally granted in accordance with bilateral trade agreements and traditional trade relations, and apply to the specific country concerned. Licenses are issued freely for a large number of commodities when these are imported from, and originate in, Bulgaria, Czechoslovakia, Poland, and Rumania. Imports of bread grain, feedgrain, and grain products are subject to equalization charges representing the difference between specified minimum import prices and the lowest prices payable for grain c.i.f. Danish ports.

Payments for imports and the related shipping expenses may be made freely within two years from the end of the month in which the goods were cleared through customs, or within five years for imports of ships, aircraft, large machines, and major plants. The authorized exchange dealer may make payment before clearance of the goods, provided that the probable date of clearance lies within a year from the date of payment.

Payments for Invisibles

The National Bank has delegated to authorized exchange dealers the authority to permit payments for most invisibles to be made freely; only in a few cases is approval from the Bank required. Transfers of up to DKr 2,000 for any permitted purpose may be made without delivery of forms. Foreign exchange for travel is allocated liberally and may be obtained in convertible or externally convertible currencies for travel to any country, including the bilateral account countries. Foreign exchange in banknotes and coins may be purchased from agencies or individuals other than the authorized exchange dealers, provided that the amount does not exceed DKr 2,000 for each transaction.

Travelers may take out freely DKr 2,000 in Danish banknotes and coins, and any amount in foreign banknotes or other means of payment. The DKr 2,000 limit may be exceeded by nonresidents who may export any amount of Danish banknotes and coins derived from sales of foreign currency in Denmark or brought in by them when they entered Denmark.

Exports and Export Proceeds

Exports of major agricultural and fishery products require export licenses issued by the Ministry of Agriculture or the Ministry of Fisheries. Exports of a few industrial products to the “Free List Area” and of all products to other countries require licenses issued by the Ministry of Commerce, the primary purposes of the regulations being to safeguard the fulfillment of bilateral obligations, to avoid excessive credits to importing countries, to serve strategic purposes, and to avoid re-export and transit transactions involving loss of convertible or externally convertible currencies.

Export proceeds must be transferred to Denmark without undue delay unless the National Bank permits otherwise. However, this obligation does not apply to amounts which are to be used within three months to settle or to offset the cost of certain commercial expenses. Foreign exchange receipts must be offered for sale to the National Bank or to an authorized exchange dealer without undue delay, except that an individual resident may hold foreign banknotes and coins not exceeding DKr 2,000 in value.

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 in Danish banknotes and coins, foreign banknotes, and other Danish or foreign means of payment.

Capital

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, to redeem, or to repurchase the transferor’s own securities to lend amounts not exceeding DKr 200,000 in a calendar year to subsidiary companies, etc., or to a member of the resident’s family, and to buy foreign securities that do not represent direct investments in foreign commercial or industrial enterprises, provided that the securities are acquired on the basis of a subscription right to shares or the like owned by the resident concerned or provided that the resident furnishes proof that he has repatriated a corresponding amount within the last 12 months from the sale of foreign securities to a nonresident. Permission from the National Bank is required for most other transfers abroad of a capital nature by residents.

Danish emigrants are granted an exchange allowance of up to DKr 40,000 for each person during the first year after emigration. Funds exceeding this amount must be credited to a Capital Account in the name of the owner and may be transferred abroad one year after emigration.

Direct investment in Denmark by nonresidents may be made without any special license if the transaction concerns industry, commerce, handicrafts, hotel business, or transportation, and if the investment does not increase total direct foreign investment in the enterprise concerned by more than DKr 40,000 in each calendar year. Other direct investment by nonresidents requires permission from the Ministry of Commerce, which is granted liberally in accordance with Denmark’s obligations as a member of the Organization for Economic Cooperation and Development. The purchase by a nonresident of real property in Denmark usually requires a special license from the Ministry of Justice. A nonresident who is or has been a Danish national may freely purchase or subscribe to securities expressed solely in Danish kroner which do not represent direct investment. Other nonresidents may purchase or subscribe to bonds that are quoted daily and are expressed solely in Danish kroner, when the funds have been obtained from the liquidation of investments in Denmark. They may purchase or subscribe to shares that are quoted daily, are expressed solely in Danish kroner, and do not represent direct investment, when the funds have been obtained from the liquidation of Danish shares, or when the acquisition is made on the basis of subscription rights to shares. Nonresidents may grant credits within certain limits to residents to finance purchases of commodities abroad and to finance the granting of credits for exports. They may, further, grant loans up to DKr 200,000 per borrower in a calendar year to commercial and industrial enterprises connected with the lender as subsidiary companies, branches, etc., or to members of their families.

Municipalities and public utility companies may as a rule issue debenture loans abroad without special permission of the National Bank, but their foreign borrowing is subject to control by the competent executive 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 newly emigrated Danish nationals 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.

Inheritances and gifts to relatives may normally be transferred to any country without limitation. Individual payments above DKr 2,000 as gifts to persons other than relatives require approval from the National Bank. Such approval is normally given for bona fide gifts.

Imports and exports of securities are subject to regulations, the details of which are established by the National Bank or, when exports of specified multiple currency Danish bonds are concerned, by the Ministry of the Interior. Bona fide imports of Danish securities payable only in Danish kroner are permitted. Exports of Danish and foreign securities owned by nonresidents are normally permitted also. Danish securities held in Denmark and belonging to nonresidents may be sold freely to residents. Foreign securities held in Denmark and belonging to nonresidents may be sold to residents only with the National Bank’s permission. Foreign securities held in Denmark may be negotiated freely between residents, provided that the exchange control regulations concerning emigrants are not circumvented.

Changes during 1966

January 1. The bilateral payments agreement with Rumania was terminated.

January 1. Certain imports originating in Bulgaria, Poland, and Rumania were liberalized.

January 1. Further imports from the “Free List Area” were liberalized.

January 17. Levies were introduced on exports of pigs and pork to EEC countries.

March 1. Exports of poultry to the United Kingdom were limited to an annual quota.

March 17. Imports from Eastern Germany were restricted to correct a temporary imbalance of bilateral trade.

June 1. Imports of certain commodities originating in Czechoslovakia were liberalized.

June 23. Specified foreign bearer securities no longer were required to be declared to the National Bank upon importation into Denmark.

July 1. A number of additional imports from the “Free List Area” were liberalized, including specified footwear. It was announced that this liberalization would be extended, with effect from January 1, 1967, to certain other commodities, including chocolate and foodstuffs containing chocolate. The global quotas for the period to June 30, 1967 were published.

July 1. The bilateral payments agreement with Czechoslovakia was terminated.

November 25. Rhodesia was excluded from the “Free List Area.”

December 31. With minor exceptions, the industrial free trade arrangements of the European Free Trade Association went into effect.

Dominican Republic

Exchange Rate System

The par value is 0.888671 gram of fine gold per Dominican Peso or RD$1.00 = US$1. Exchange transactions in U.S. dollars between the Central Bank of the Dominican Republic and other banks take place at the par value, plus a commission 132 of 1 per cent. Exchange transactions by commercial banks with the public also take place at the par value, subject to normal banking commissions which result in effective rates within 1 per cent on either side of the par value. All payments abroad must be made through banks, and all exchange received must be sold to banks. The commercial banks are required to transfer to the Central Bank all exchange purchased.

On August 1, 1953, the Dominican Republic notified the Fund that it accepted the obligations of Article VIII, Sections 2, 3, and 4, of the Fund Agreement.

Administration of Control

Exchange and trade control policy is made by the Monetary Board. Foreign exchange control is administered by the Central Bank.

Prescription of Currency

No obligations are imposed on importers, exporters, or other residents in respect of the method to be followed or the currency to be used for payments to or from nonresidents.

Imports and Import Payments

Imports of cigarettes and of automobiles with an f.o.b. value in excess of RD$2,000 are prohibited. Licensing controls are maintained over a few other commodities for reasons of health or security. With these exceptions, imports are not subject to license or prohibition. All payments for imports require the approval of the Central Bank, which is granted automatically, subject only to an ex post scrutiny to establish the genuine nature of the transaction.

Payments for many imports are settled on a draft for collection basis; when the draft is presented for collection, the importer pays the full amount in pesos to the commercial bank; the bank then transfers this deposit to the Central Bank which releases exchange for the remittance. Other imports are paid for by letter of credit or a direct transfer of exchange. Except in respect of direct transfers, the commercial banks transmit daily to the Central Bank copies of importers’ applications for exchange accompanied by the equivalent in local currency. The Central Bank authorizes the commercial banks to open letters of credit and, when these have been negotiated, it transfers foreign exchange to the banks; all letters of credit except those covering industrial machinery and raw materials imported against acceptance letters of credit with a maturity of 90 days or more must be paid in full by the importer upon the opening of the credit. When imports are paid for by direct transfer, the Central Bank makes exchange available upon receiving the request from the commercial bank, and charges the latter’s account for the peso equivalent of the amount involved. In principle, exchange for import payments is made available within not more than five working days from the receipt of the application, but since the middle of May 1966 there have been delays in the provision of exchange. Importers of certain commodities are required to make payment by means of fully prepaid letters of credit. Imports in this group include automobiles, motorcycles, household appliances, finished textiles and clothing, and many luxury consumer goods. Importers of most of these commodities are also required to prepay 80 per cent of the estimated value of customs duties and surcharges on the goods prior to the opening of the letter of credit.

Virtually all imports are subject to customs surcharges (impuestos internos) ranging from 20 per cent to 200 per cent of the f.o.b. value; for most imports, however, they are 51.5 per cent. Imports of automobiles are subject to a further surcharge of RD$700 per unit. Imports of agricultural and industrial machinery and equipment and spare parts are subject to a single import tax (including customs duties) of 5 per cent. Certain foodstuffs are exempt from import taxes and others are relieved under special arrangements in times of seasonal shortage.

Advance import deposits of 40 per cent or 80 per cent of the f.o.b. value are required for many imports. The advance deposits are collected by the Customs Administration prior to the clearance, of the goods, and are lodged in the Central Bank for a period of six months. A number of goods are exempt, including certain foodstuffs, medical supplies, industrial and agricultural machinery and spares, commercial vehicles, industrial raw materials and packing materials, and petroleum products.

Payments for Invisibles

For travel, the commercial banks may sell up to US$100 to an individual resident every 12 months. For business travel, the Central Bank may approve applications for additional amounts. Airline tickets are subject to a tax of 10 per cent. All payments for other invisibles require the prior approval of the Central Bank, which in most cases is given freely. The Central Bank normally approves requests for exchange for family or personal remittances fairly freely in amounts considered reasonable for the purpose. Exchange is granted for medical expenses abroad and for students’ expenditures in reasonable amounts upon the provision of appropriate evidence of the genuineness of the transaction.

Applications for exchange for contractual payments, such as interest and amortization payments on loans registered with the Central Bank, are approved freely in conformity with the terms of the contract. Transfers of profits and dividends on foreign investments are approved on presentation of a balance sheet which has been agreed with the tax authorities. In some cases the transfer may be effected in monthly installments.

In principle, exchange for payments for invisibles is made available within five days from receipt of the application, but there have been delays.

Travelers may take out foreign currency notes up to the amount of the travel allocation they have obtained. Travelers are not permitted to take with them any domestic currency.

Exports and Export Proceeds

Export licenses are required for sugar, in connection with the operation of export quotas established under the International Sugar Agreement. Within 48 hours of receiving payment, exporters of Dominican products must surrender through the commercial banks to the Central Bank foreign exchange equal to 100 per cent of the f.o.b. value of their exports. Exporters may not extend credit for more than 90 days from the date of embarkation without authorization by the Central Bank.

Proceeds from Invisibles

The foreign exchange proceeds from invisibles are subject to surrender requirements and must be surrendered to the Central Bank through the commercial banks. The import of Dominican banknotes and coins is prohibited.

Capital

There are no restrictions on the inward movement of capital by either residents or nonresidents. Inward capital remittances must be registered with the Central Bank and must be converted into pesos at that Bank. Applications for approval of outward capital remittances must be submitted through the commercial banks to the Central Bank. Withdrawals of capital by foreigners leaving the Dominican Republic are authorized in reasonable amounts, sometimes with provision for the transfer to be effected in annual installments. Applications by residents to transfer capital abroad to make portfolio investments, purchase real estate, etc., are not normally approved.

Changes during 1966

April 19. The exemption of specified food products from import duties, advance deposit requirements, and import surcharges was extended for a six-month period.

May 30. Nontraditional agricultural and industrial exports were exempted from most export taxes.

June 29. Existing customs duties and import surcharges on industrial and agricultural machinery and equipment and spare parts were replaced by a uniform 5 per cent import tax.

July 14. The basic travel allowance of US$100 a person every 6 months was reduced to US$100 every 12 months.

July 21. The import of automobiles with an f.o.b. value of more than RD$2,000 was prohibited.

July 21. The prepaid letter of credit requirement was extended to cover imports of finished textiles, clothing, and motorcycles.

September 4. The prepaid letter of credit requirement was further extended to cover imports of luxury consumer goods.

Importers of most goods covered by the prepaid letter of credit procedure were required to make an advance payment to customs, at the time of opening the letter of credit, equivalent to 80 per cent of the estimated amount of customs duties and import surcharges payable on the goods. An additional surcharge of RD$700 per unit was imposed on all permitted imports of automobiles.

October 19. The exemption of specified food products from import duties, advance deposit requirements, and import surcharges was extended for a six-month period.

November 17. Importers were required to submit to the customs authorities price lists containing a detailed description of the goods being imported. These lists must be certified by the Chamber of Commerce at the point of origin and legalized by the Dominican consul for that area.

December 31. Decree No. 812 provided that henceforth exemption from import duty could only be granted under the terms of industrial incentive laws or by virtue of formal decisions of the Central Government.

Ecuador

Exchange Rate System

The par value is 0.0493706 gram of fine gold per Ecuadoran Sucre or S/ 18.00 = US$1. The official rates are S/ 17.82 buying, and S/ 18.18 selling, per US$1. These rates apply to all exports, to payments for most imports and related invisibles, to official transactions, to other essential invisibles, to registered capital, and to all contractual registered private foreign debt operations entered into after July 14, 1961. Exports of rice are subsidized. For all other transactions there is a free market, in which the rates on December 31, 1966 were S/ 20.33 buying, and S/ 20.39 selling, per US$1.

Administration of Control

The Monetary Board classifies transactions according to the exchange market through which they must be settled. Most transactions pass through the official market, which is under the control and supervision of the Central Bank of Ecuador. The Central Bank also issues import and export licenses. Transactions that do not qualify for the official market may enter the free market—conducted mainly by exchange houses and several commercial banks—where such transactions are free of supervision by the exchange control authorities. Some imports eligible for official exchange may also be paid for through the free market, in which case they are exempt from advance deposits.

Prescription of Currency

Most settlements with Czechoslovakia, Eastern Germany, Hungary, and Poland must take place through bilateral accounts. Payments between Ecuador and Colombia and Peru may 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 LAFTA multilateral clearing system. Exchange proceeds from other countries must be received in convertible currencies.

Imports and Import Payments

Permitted imports are divided into two categories: List I, consisting of essential and semiessential goods, and List II, consisting of less essential and luxury goods. All goods not included in these two lists are prohibited, except books, newspapers, periodicals, and printed or recorded music, which may be imported freely without a license. Prior import licenses are required for all permitted imports exceeding a value of US$100. A few goods may only be imported from LAFTA countries, and some only from Paraguay; with these exceptions, import licenses are issued freely irrespective of the origin of the goods, provided that the appropriate advance deposits, monetary stabilization surcharges, and additional import taxes have been paid and that the required prepayments of import duties have been made. The licenses automatically entitle the holders to obtain exchange at the official rate to cover the c.i.f. value of the imports upon presentation of the shipping documents; advance payments for imports are prohibited. Imports for which licenses are not required are paid for with exchange purchased in the free market. For some goods, import licenses are issued which do not entitle the importer to foreign exchange at the official rate (“no exchange licenses,” licencias sin divisas, or permisos de importación no reembolsables); the exchange for such imports must be obtained in the free market, or the goods must be financed abroad. The Monetary Board is authorized to shift items between Lists I and II and to prohibit the import of goods or lift import prohibitions when the economic situation of the country and the balance of payments situation so require.

The advance deposit requirement applies to almost all private imports financed with official exchange. The exceptions are imports under the Agricultural Surplus Agreement with the United States, imports of certain goods to be used for the construction and equipment of hotels, all imports (other than capital goods) financed with foreign credit of more than a year, imports of special types of cotton from LAFTA countries, all imports from Paraguay, imports of capital goods financed by international organizations or by suppliers’ credit of at least one year, and imports of medical supplies and equipment made by official health or social service institutions. The advance deposit must be made in sucres by the importer when applying for an import license; the importer must at the same time lodge with the Central Bank a prepayment of part of the import duty. The rates for the advance deposit required are currently 50 per cent of the c.i.f. value for imports in List I (25 per cent for the same goods if covered by foreign credit of 180 days to one year), 70 per cent for specified articles in List II, and 140 per cent for other imports in List II.1 The prescribed prepayment of import duty is 10 per cent of the duty on commodities in List I and 45 per cent of the duty on those in List II. Advance deposits are released pari passu with the making of the import payments.

Most imports are also subject to monetary stabilization surcharges and to additional import taxes. The surcharge is 10 per cent of the c.i.f. value for List I items and 20 per cent for List II items. Surcharges must normally be paid in sucres to the Central Bank when application is made for an import license. Surcharges on List I items financed with suppliers’ credit of a year or more may be paid when the final import payment is made. Exempt from surcharges are diplomatic imports and imports financed by loans from foreign governments or international organizations. Most goods on List II are subject to an additional import tax of 10 per cent or 15 per cent of the c.i.f. value, payable in sucres; the others are exempt. Exempt from this tax are diplomatic imports and imports financed by foreign governments or international organizations.

Payments for Invisibles

Payments for transactions in invisibles that may be made through the official market require an exchange license from the Central Bank; the license is granted freely for all authorized transactions. These transactions include invisibles connected with trade (e.g., freight and insurance); necessary expenses (i.e., travel, tuition, and living expenses up to US$100 a month) of Ecuadoran students abroad who are registered with the Central Bank; most payments of the Government and of official entities; payment of interest on registered foreign loans up to 7.5 per cent annually; or payments of profits and dividends on registered private foreign investments up to 12 per cent annually; and contractual private foreign debt operations entered into and registered after July 14, 1961. Other payments for invisibles may be made freely through the free market.

Exports and Export Proceeds

All exports except those of certain foreign oil companies require licenses to ensure, among other things, the full surrender of the exchange proceeds; licenses are issued freely. Minimum surrender prices (aforos) are established for exports of bananas (according to port of shipment, destination, and season); they differ for bananas shipped on the stem and those shipped in boxes. Exchange corresponding to those prices must be surrendered at the official rate, while any excess receipts may be sold in the free market. Exports of bananas are subject to minimum export prices expressed in sucres. Exports of coffee, cacao, bananas shipped on the stem, sugar, and gold and silver filigree work are subject to export taxes of 9.4 per cent (washed, or 9.6 per cent unwashed), 10 per cent, 21.4 per cent, 3.4 per cent, and 10 per cent, respectively.2 Exports of bananas in boxes are subject to a specific export duty expressed in sucres per pound (differentiated according to destination and province of origin). All exports of bananas are subject to certain additional specific taxes. Exports of coffee to “new markets” are exempt from export tax. Exports of rice by the National Development Bank receive a subsidy equal to the difference between its cost to the National Development Bank and the f.o.b. price; the average subsidy paid in 1966 was S/ 17.49 per quintal or S/ 2.91 per US$1. The proceeds from exports of rice are surrendered at S/ 20.73 per U.S. dollar.

Proceeds from Invisibles

Receipts from invisibles related to trade and all receipts of the Government and of official entities have to be sold at the official rate. Other receipts from invisibles (including those from tourism) may be sold in the free market.

Capital

Receipts of private foreign capital must be surrendered to the Central Bank at the official buying rate if registration with the Central Bank is desired. This also applies to foreign exchange sold by foreign companies for the purpose of obtaining local currency for salaries, taxes, and other local expenses. Foreign capital entering in the form of machinery and equipment may also be registered with the Central Bank. The Central Bank can refuse to register foreign capital if the investment is not considered to be in the interest of the Ecuadoran economy at that particular time. All unregistered private capital may enter without limitation through the free market. An Industrial Promotion Law provides for certain exemptions from import duties and import charges to three categories of industrial investment.

Foreign exchange at the official rate may be obtained for the withdrawal of registered foreign investment from Ecuador five years after the date of registration. Exchange at the official rate is also granted for profit remittances up to 12 per cent a year on registered capital, and for interest up to 7.5 per cent on registered foreign loans. Contractual repayments of registered foreign loans may also be made at the official rate. All other capital remittances, either by residents or nonresidents, may be made through the free market.

Capital receipts of the Government and of official entities are converted at the official buying rate, and payments at the official selling rate. However, the proceeds from loans granted to the Government and official entities by foreign financing organizations are converted by the Central Bank at the official selling rate of S/ 18.18, instead of at the official buying rate of S/ 17.82, per US$1. In such instances, the Central Bank receives from the Treasury or the borrower a payment of S/ 0.36 per US$1 as reimbursement for the Central Bank’s share of the normal spread between the official buying and selling rates.

Commercial banks are permitted to hold up to 10 per cent of their capital in foreign exchange.

Changes during 1966

January 20. Regulation No. 456 of the Monetary Board established new surrender requirements for the exchange proceeds from exports of bananas shipped in boxes; the amount of exchange to be surrendered was US$0.0256 per pound for sales to the United States and Canada, and US$0.0204 per pound for sales in other markets. The requirements for bananas exported on the stem were not affected.

February 23. Decree No. 422 imposed an import tax at rates of 5 per cent of the c.i.f. value for List I commodities and of 7.5 per cent for List II commodities. The tax was payable upon application for the import license. Certain exemptions from import duties were eliminated or reduced.

March 2. Regulation No. 458 of the Monetary Board increased the advance deposit requirements for all imports in List I from 15 per cent to 50 per cent, those for semiessential goods in List II from 30 per cent to 70 per cent, and those for all other items in List II from 80 per cent to 140 per cent. The deposits were calculated on the equivalent at the official rate of the c.i.f. value. They were released when the import payment was made, or pari passu with the installments when import payments were made in installments.

March 9. Regulation No. 459 of the Monetary Board exempted imports of means of transportation valued at more than US$500,000 c.i.f. a unit from the advance deposit requirements if financed with foreign credit with terms not less than five years. This facility was canceled by Regulation No. 470 of July 7, 1966.

March 9. The commodities in List I were freed from the new import tax. The 7.5 per cent tax on List II imports was raised to 12 per cent for the luxury items on that list, i.e., the items subject to an advance deposit of 140 per cent, but remained unchanged for those subject to an 80 per cent deposit. Provisions which eliminated certain exemptions from the import taxes were rescinded.

March 10. Decree No. 578 based all fiscal charges on bananas exported in boxes on their weight. For these bananas, the 21.4 per cent export duty on the f.o.b. value was replaced by a specific export duty (impuesto fiscal) expressed in sucres per pound; this duty was differentiated according to destination and province of origin. The 21.4 per cent export duty continued to apply to bananas exported on the stem.

April 7. Decree No. 29 abolished the import taxes introduced in March; taxes already paid were to be reimbursed.

April 21. Regulation No. 463 of the Monetary Board deleted certain nonessential items from List II; their importation was prohibited.

April 21. Decree No. 118-A shifted all imports of List II items from the official to the free market. List II goods now required a 100 per cent advance deposit in foreign exchange, which had to be purchased in the free market and must be lodged when the import license was granted. Advance deposits on List I goods continued to be required in sucres but were now calculated by applying the official selling rate to their c.i.f. value.

May 17. Regulation No. 466 of the Monetary Board raised the amount of exchange to be surrendered by exporters of bananas in boxes to US$0.03072 per pound for sales to the United States and Canada and to US$0.02448 per pound for sales to other markets.

May 17. All imports financed with foreign credits of 180 days or more from the date of arrival, or with loans from international institutions, were exempted from the advance import deposit requirements. The advance deposit requirements were extended to imports by all public institutions except health or social services.

May 17. By Regulation No. 467 of the Monetary Board, the full exchange proceeds from the export of shrimps were required to be surrendered.

May 20. Decree No. 297 introduced a monetary stabilization surcharge (recargo de estabilización monetaria) of 20 per cent on the c.i.f. value of all imports in List II. An additional import tax (gravamen adicional) of 10 per cent was levied on the c.i.f. value of some goods in List II, and one of 15 per cent on that of certain other goods in that list; the remaining goods on List II were exempt from the additional tax. The surcharge was calculated at the rate of S/ 18.18 per US$1, and the additional tax at S/ 18.00 per US$1. The surcharge had to be paid when the import license was issued. Exempt from the surcharge were diplomatic and similar shipments. The proceeds of the surcharges were to be credited to a Deferred Stabilization Account at the Central Bank. Exempt from the additional tax were only goods exempt from import duty.

All imports of goods in List II were shifted back to the official market; these goods no longer required an advance deposit in foreign exchange but became again subject to the advance deposit requirements introduced on March 2 (70 per cent or 140 per cent, depending on the goods).

May 31. Decree No. 329 shifted a number of imports from List II to List I; these included certain industrial chemicals, rubber, glass, gold, silver, and iron.

May 31. Decree No. 391 levied a monetary stabilization surcharge of 10 per cent of the c.i.f. value on imports of all List I goods. Exempt were diplomatic and similar imports.

June 3. Decree No. 402 levied an import tax on cigarettes; they remained subject to the 20 per cent stabilization surcharge and to the existing tax on foreign cigarettes.

June 14. Decree No. 464 established that the proceeds from exports of rice could be sold at a rate of S/ 21 per U.S. dollar.

June 14. Decree No. 464 established that the proceeds from the stabilization surcharges could be applied to the subsidization of agricultural exports, subject to the approval of at least seven members of the Monetary Board.

June 30. Decree No. 569 exempted the following imports from stabilization surcharges: crude mineral oil, all imports that did not require an import license, and all imports not financed with exchange granted at the official rate.

June 30. The Central Bank granted, upon the importer’s request, import licenses for certain goods in Lists I and II which did not entitle the importer to exchange at the official rate (licencias sin divisas or permisos de importación no reembolsables). Such imports were exempt from stabilization surcharge and advance deposit but not from import duty or additional import tax. The foreign exchange required for the import payment had to be obtained in the free market and must be deposited with the Central Bank at the time of application for the import license. These measures were not implemented simultaneously throughout the country.

July 1. The LAFTA multilateral clearing system came into effect; within its framework, Ecuador’s reciprocal credit agreements subsequently went into operation.

July 27. A reciprocal credit agreement was signed by the central banks of Ecuador and Colombia. It took effect on October 1.

July 29. Decree No. 793 exempted from export tax coffee shipments to markets not covered by the International Coffee Agreement (“new markets”).

August 12. A reciprocal credit agreement was signed by the central banks of Ecuador and Peru. It took effect on September 1.

August 16. A bilateral payments agreement was signed with Eastern Germany.

August 22. Decree No. 688 of July 15 became effective, which established that 40 per cent of the proceeds from surcharges must be transferred from the Central Bank to the Treasury.

September 8. Decree No. 1016 took effect, which raised the proportion of the proceeds from surcharges to be transferred to the Treasury from 40 per cent to 65 per cent.

September 20. By virtue of Monetary Board Regulation No. 475, imports paid for with free market exchange and covered by “no exchange licenses” were again made subject to the advance deposit requirements applied prior to July 14, 1966; they remained exempt, however, from monetary stabilization surcharges. Regulation No. 475 stipulated that advance deposits were not required for List I imports financed with foreign credit of one year or more after arrival of the merchandise; previously, the minimum term had been 180 days after arrival and had applied to both List I and List II imports.

September 22. Decree No. 1052 of September 22 took effect, which raised the above-mentioned proportion of proceeds from surcharges (see September 8) from 65 per cent to 90 per cent.

September 22. The Monetary Board decided that some of the funds in the Deferred Stabilization Account that need not be transferred to the Treasury would be used to subsidize exports; the goods subsidized were rice and coffee.

October 3. Decree No. 1182 limited the exemption from surcharges and additional import taxes to (1) imports financed by loans from foreign governments or international organizations, and (2) diplomatic and similar imports. This eliminated the exemption from surcharges for imports financed with free market exchange (sin divisas oficiales), imports not requiring an import license, imports of oil, and imports from LAFTA countries of goods on which Ecuador had granted concessions. Also terminated was the exemption from additional tax for List II imports financed sin divisas oficiales.

Payment of the surcharge on List I imports financed with foreign suppliers’ credits of a year or more could take place when final payment for the import was made, instead of at the moment of licensing, as required for all other items subject to surcharges.

All imports financed with foreign suppliers’ credit of up to a year became subject to the advance deposit requirements; imports financed with such credit for periods over a year were declared exempt from advance deposits.

October 19. Regulation No. 476 of the Monetary Board prescribed the requirements for the registration of private foreign capital imported as loans or investments, whether in monetary form or not, and modified the benefits resulting from such registration. Foreign exchange at the official rate could be obtained for the withdrawal of registered foreign capital five years after the date of registration; official exchange would also be granted for profit remittances up to 12 per cent (previously 15 per cent) a year, and for interest on foreign loans up to 7.5 per cent (previously 7 per cent) a year. International organizations could request a waiver of these conditions and limits from the Monetary Board.

October 20. Regulation No. 477 of the Monetary Board exempted from the advance deposit requirements and import prohibitions established by its Regulations Nos. 458 and 463 those goods originating in and shipped from Paraguay on which Ecuador had granted concessions under the Treaty of Montevideo.

October 21. Regulation No. 483 lowered the advance import deposit for List I goods (all of which at that time were subject to the 50 per cent deposit requirement) to 25 per cent for goods financed with foreign credits of between 180 days and a year; List I goods financed with foreign credits of a year or more remained exempt from advance deposit.

Certain goods in Lists I and II that were required for the construction and equipment of hotels were exempted from advance deposit by Regulation No. 480.

October 27. Regulation No. 484 restricted the exemption from advance deposit requirements on automobiles, furniture, and household effects imported by residents to imports by persons who had been abroad not less than one year.

November 7. A bilateral payments agreement was signed with Poland.

December 10. Imports of goods covered by agricultural surplus agreements and imports of medical supplies and equipment by social or health services were exempt from advance deposit by virtue of Regulation No. 485.

El Salvador

Exchange Rate System

The par value is 0.355468 gram of fine gold per Salvadoran Colón or Ȼ 2.50 = US$1. The rates of the Central Reserve Bank for transactions with the public are Ȼ 2.49 buying, and Ȼ 2.51 selling, per US$1. Exchange transactions by commercial banks with the public take place at or within these limits and are subject to a tax of ¼ of 1 per cent. On November 6, 1946, El Salvador notified the Fund that it was prepared to accept the obligations of Article VIII, Sections 2, 3, and 4, of the Fund Agreement.

Administration of Control

Exchange control authority is exercised by the Central Reserve Bank of El Salvador through its Exchange Control Department. Authority to approve certain payments is delegated to the commercial banks. Exchange licenses for imports are issued by the Exchange Control Department; in some instances the license also requires the approval of the Ministry of Economy. The Central Reserve Bank is also empowered to license exports, but this power has not been exercised.

Prescription of Currency

Payments to Costa Rica, Guatemala, Honduras, and Nicaragua in respect of trade and specified invisibles are settled in, Salvadoran colones through the Cámara de Compensación Centroamericana, a clearinghouse established by the central banks of Central America to foster the process of economic integration of their countries. Payments to Mexico are also settled in Salvadoran colones through the clearinghouse. Otherwise, residents are free to make authorized payments in any currency they choose.

Nonresident Accounts

The accounts of nonresidents may be utilized freely, but the commercial banks must make periodic reports to the Central Reserve Bank of the movements on such accounts. Accredited diplomatic missions and other foreign institutions or persons established in El Salvador may be authorized to hold nonresident accounts in U.S. dollars with authorized banks, provided that such accounts are credited with foreign exchange received from abroad. The maximum balance which may be held on these accounts is fixed by the Exchange Control Department.

Imports and Import Payments

Imports must be registered with the Central Reserve Bank before orders are placed. Import licenses are required for airplanes, firearms, ammunition, military equipment, dynamite, liquors, cotton for industrial use, jute sacks, skins, leather, some chemical and pharmaceutical products, coffee for seeding, sugar, and saccharine. Payments and transfers abroad require exchange licenses, which are granted freely, provided that (unless the goods are imported from other countries of the Central American Common Market) the terms of payment do not exceed certain maxima: (1) Imports of raw materials or equipment for use in agriculture, stock raising, or industry (including construction), and essential products as determined by the Board of the Central Reserve Bank, are authorized by the Exchange Control Department when the terms of payment do not exceed 360 days from the date of entry of the merchandise into a customs warehouse. (2) Imports of the same commodities with longer payment terms are not authorized by the Exchange Control Department unless the prior approval of the Ministry of Economy has been obtained. (3) Imports of all other commodities are authorized by the Exchange Control Department, provided that the terms of payment do not exceed 120 days.

The commercial banks are authorized to provide exchange for import payments not exceeding US$6,000 for imports from Central American countries and US$2,000 for imports from all other countries; larger amounts have to be approved by the Central Reserve Bank. When suppliers abroad request payment in advance, a prior deposit calculated on the value of the advance payment is required from the importer as a guarantee. The deposit varies according to the nature of the goods: 10 per cent on raw materials not produced domestically; 20 per cent on other raw materials and machinery; 50 per cent on manufactured goods not classified as luxury items; and 80 per cent on luxury goods. Imports paid for against letters of credit are subject to a prior deposit of 25 per cent (10 per cent for imports of machinery, equipment, and raw materials). When the importer is a manufacturer rather than a merchant, the prior deposit is usually waived. The deposit is refunded upon completion of the import transaction.

Payments for Invisibles

Payments for current invisibles require exchange licenses, which are granted freely for most items, although for certain payments only up to specified limits. Net profits may generally be remitted up to a limit of 10 per cent a year of the registered capital; higher transfers require the authorization of the Ministry of Economy. The commercial banks provide exchange up to the equivalent of US$200 a person each six months for tourist travel. For larger amounts, authorization by the Exchange Control Department is required; as a general rule, under such authorization, each person is granted up to US$30 a day while traveling abroad, subject to a maximum of US$2,000. Persons who require exchange in excess of US$2,000, for medical treatment abroad or for other special reasons, must deposit 25 per cent of the amount exceeding US$2,000 with the Central Reserve Bank at the time the authorization is issued; the deposit is refunded when the Department receives the required proof. The Department also authorizes transfers of up to US$500 a month plus US$50 for each child to Salvadorans with permanent residence abroad. Students are allowed US$200 a month; those with families are allowed US$250 a month plus US$50 for each child. Foreign exchange in excess of the limits given above is seldom granted.

Insurance and reinsurance premiums may be paid for in foreign exchange, provided that the insurance contract was registered with the Exchange Control Department at the time it took effect. Alternatively, insurance companies may receive premiums in colones and periodically obtain from the Exchange Control Department authorization to purchase the foreign currencies they are obliged to transfer abroad. Foreign currencies derived from insurance or reinsurance contracts must be surrendered to the Central Reserve Bank or to an authorized commercial bank.

The exchange control regulations permit travelers to take out up to Ȼ 200 in local currency, but this amount may be increased to facilitate border trade with other Central American countries.

Exports and Export Proceeds

Export licenses are not required except for a small number of foodstuffs and other items of which the authorities wish to ensure an adequate local supply, but the proceeds of all exports must be received through a bank in El Salvador and the foreign exchange must be surrendered to the Central Reserve Bank or an authorized commercial bank. Export transactions must be declared to the Exchange Control Department within 15 days of shipment. The collection terms must not exceed 90 days.

Proceeds from Invisibles

All exchange receipts from invisibles must be surrendered to the Central Reserve Bank or an authorized commercial bank. The exchange control regulations permit travelers to bring in up to Ȼ 200 in local currency, but this amount may be increased to facilitate border trade with other Central American countries.

Capital

All exchange receipts resulting from capital transactions must be surrendered. Payments abroad representing capital movements require exchange licenses; such licenses are not granted for resident-owned capital except for investments in Costa Rica, Guatemala, Honduras, and Nicaragua. The entry of capital in the form of foreign investment is subject to the advance approval of, and registration by, the Ministry of Economy. Registration ensures (1) the remittance of net profits up to a limit of 10 per cent a year of the registered capital (larger amounts may be authorized in special cases by the Ministry of Economy at the time of registration of the investment) and (2) amortization payments and repatriation of the proceeds from the sale of the assets of the enterprise after payment of taxes (including, where appropriate, capital gains tax); the repatriation of registered foreign investments is not limited to the amount of the originally registered investment. Foreign investments made in El Salvador prior to June 1, 1961 must also be registered by the Ministry of Economy or the Exchange Control Department in order to enjoy the same facilities. For long-term foreign loans, the Exchange Control Department authorizes, without restriction, the remittance abroad of foreign currency for the payment of interest and amortization. The same treatment is granted to short-term foreign loans that have been approved by and registered with the Exchange Control Department.

Changes during 1966

April 15. The Central Reserve Bank required that each request for authority from the Exchange Control Department to remit foreign currency for imports (unless advance payment was permitted) must include a copy of the invoice, a nonnegotiable copy of the bill of lading, a copy of the order, and a copy of the advice of arrival of the merchandise.

May 25. Circular No. 73 of the customs administration imposed restrictions on imports of certain sweetened products.

Ethiopia

Exchange Rate System

The par value is 0.355468 gram of fine gold per Ethiopian Dollar or Eth$2.5 = US$1. The official rates are Eth$2.48125 buying, and Eth$2.51875 selling, per US$1.

Administration of Control

All transactions in foreign exchange must be carried out through authorized banks under the control of the National Bank of Ethiopia. All payments abroad and exports are subject to the supervision of the Exchange Controller, whose office is a department of the National Bank.

Prescription of Currency

Outgoing payments are normally made in foreign exchange appropriate to the country of the recipient or in U.S. dollars or sterling. The net proceeds of exports must be received in a foreign currency which is freely convertible, or in any other foreign currency acceptable to the Exchange Controller.

Nonresident Accounts

Nonresidents may hold nonresident accounts either in Ethiopian dollars or in foreign currencies at authorized banks. Balances in these accounts may be freely transferred abroad. Transfers between nonresident accounts require prior approval.

Imports and Import Payments

No import licenses are required. However, payments abroad for imports require exchange licenses; these licenses are granted freely in the currency appropriate to the country of origin, or in any convertible currency that may be requested. Goods ordered through a third country must be supported by evidence of original cost. Payment is normally authorized by letter of credit, mail transfer, telegraphic transfer, or cash against documents at sight or on an acceptance basis; for goods which were previously subject to advance deposit requirements, however, the usance must not exceed 90 days.

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 nationals may remit up to 35 per cent of their salaries or annual taxable income, subject to a maximum of Eth$27,000 a year, provided that they have resided in Ethiopia for less than six years; this time limit does not apply to foreign nationals who are in contractual service with the Ethiopian Government or with an autonomous government organization and who have an employment contract specifically entitling them to remit a percentage of their earnings. Ineligible persons may apply for exchange to meet expenses for maintenance of bona fide dependents, education of children, medical care, and premiums on insurance policies taken out before April 2, 1962. Subject to proper provision having been made for local taxation, foreign companies may remit dividends on their invested and reinvested capital in any currency; for approved projects, they may also transfer amortization at the rate of 10 per cent per annum.

Persons traveling abroad are allowed foreign exchange equivalent to Eth$100 a day for a maximum period of six weeks if the journey is made for business purposes, and up to the equivalent of Eth$l,050 a year for persons 16 years of age or over and Eth$735 a year for those under 16, if the journey is made for pleasure and/or vacation. Travelers may take with them a maximum of Eth$100 in Ethiopian banknotes.

Exports and Export Proceeds

All commodities require export licenses. When applying for a license, an exporter must give details of the goods to be exported, the destination, and the value. The granting of the license 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 of Ethiopia 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. Persons may bring a maximum of Eth$100 in Ethiopian banknotes. Foreign exchange need not be declared by travelers on entry, and its re-export is freely permitted.

Capital

All receipts of capital in the form of foreign exchange must be surrendered. There is no discrimination regarding the currencies in which foreign investments are accepted. Special concessions are made to approved new enterprises financed by foreign capital; these concessions include exemption from taxes for a period of five years, admission of all imports of machinery free of duty, and permission to foreign investors to remit abroad earned profits after taxation (see section on Payments for Invisibles, above). Upon liquidation, transfer of the entire imported capital and reinvested profits is permitted in any currency. Emigrants’ allowances, transfers of legacies, and savings of foreign employees upon retirement are permitted up to the equivalent of Eth$70,000 in foreign currency. Transfers of sums in excess of this amount are authorized up to a total of Eth$70,000 in any subsequent 12-month period.

Changes during 1966

May 4. Ethiopia and seven other East African countries (Burundi, Kenya, Malawi, Mauritius, Tanzania, Uganda, and Zambia) signed a preliminary agreement on the establishment of an East African Economic Community. Somalia and the Sudan were expected to sign later.

Finland1

Exchange Rate System

The par value is 0.277710 gram of fine gold per Finnish Markka or Fmk 3.20 = US$1. The official buying and selling rates for the U.S. dollar vary within ¾ of 1 per cent on either side of the par value. Market rates for certain other currencies 2 vary between limits which result from combining the official limits for the U.S. dollar maintained by Finland and such limits in force in the country of the other currency concerned. Forward premiums and discounts are left to the interplay of market forces. Official, fixed selling rates are applied to the U.S.S.R. ruble and the U.S. dollar when used as a unit of account on bilateral clearing accounts. Authorized banks may deal among themselves, with their Finnish customers, and with foreign authorized banks, in U.S. dollars and certain other convertible or externally convertible currencies.2 Forward transactions may be concluded freely for periods not exceeding 12 months; forward transactions with residents must have a commercial basis.

Administration of Control

The Bank of Finland operates the exchange control system, delegating authority to the authorized exchange dealers (mainly commercial banks). Import and export licensing is administered by an office subordinate to the Ministry of Trade and Industry, the Licensing Office, which is headed by a Licensing Board composed of government officials, including a representative of the Bank of Finland.

Prescription of Currency

For prescription of currency purposes, countries are divided into two groups: the bilateral countries 3 and the convertible currency countries (all others). Settlements with the bilateral countries must be made in the currency of the agreement or in Finnish markkas through Restricted Accounts. Settlements with the convertible currency countries may be made in any convertible currency or through Convertible Accounts. Payments for imports from Brazil may be made only to Brazilian banks.

Nonresident Accounts

There are four categories of nonresident accounts: Foreign Exchange Accounts, Convertible Markka Accounts, Restricted Markka Accounts, and Capital Accounts.

1. Foreign Exchange Accounts are held by nonresidents in convertible or bilateral currencies.4 These accounts may be credited with amounts received in the currency in which the account is kept; with payments authorized to be made in the currency in which the account is kept; and with interest accrued on such accounts. They may be debited for transfers to Capital Accounts; for payments to residents of Finland; and for withdrawals in Finnish currency. If the account is held in a convertible currency, it may also be debited for transfers to other Foreign Exchange Accounts in any convertible currency and for transfers abroad or withdrawals in any convertible currency. If the account is held in a bilateral currency, it may be debited for transfers to other Foreign Exchange Accounts in the same currency and for transfers to the respective bilateral country.

2. Convertible Markka Accounts may be credited with the equivalent in Finnish markkas of convertible currencies sold to an authorized bank; with authorized remittances from residents of Finland to residents of convertible currency countries; with transfers from other Convertible Markka Accounts; with the value of Finnish banknotes received by an authorized bank from a bank in a convertible currency country; and with interest accrued on the account. They may be debited for authorized payments in Finland, including the purchase of foreign exchange; for remittances abroad; and for transfers to other Convertible Markka, Restricted Markka, or Capital Accounts.

3. Restricted Markka Accounts are held by residents of countries with which Finland has bilateral payments agreements (see footnote 3). They may be credited with the proceeds from the sale of U.S. dollars, the currencies listed in footnote 2, or the currency of the country of the account holder; with transfers from another Restricted Markka Account of the same country; with authorized remittances payable to the country of the account holder; with the value of Finnish banknotes received by an authorized bank from a bank in the country of the account holder; and with interest accrued on the account. They may be debited for authorized payments in Finland in accordance with the relevant payments agreement; for transfers to other Restricted Markka Accounts related to the country of the account holder; for transfers to the country of the account holder; and for transfers to Capital Accounts.

4. Capital Accounts comprise all other nonresident accounts. They may be credited with funds available for credit to a Foreign Exchange Account, a Convertible Markka Account, or a Restricted Markka Account; with proceeds from the sale to a resident of any asset held by a nonresident; with interest on the account; with income from nonresident-held assets; and with sums obtained from the redemption of bonds. If the account holder is a bank, the account may also be credited with transfers from a Capital Account of a resident of the same country. Capital Accounts may be debited for the travel and living expenses in Finland of the account holder and nonresident members of his family or, if the holder is a firm, members of its staff traveling at the firm’s expense, up to Fmk 1,000 for each person for each period of ten days; for payments not exceeding Fmk 1,000 for support of a person in distress in Finland; for payments for expenses incurred by a bank in administering the assets of the account holder; for investment in bonds quoted on the stock exchange and issued after August 31, 1939 which are not tied to any foreign currency and are purchased by a bank on behalf of the holder; for acquisitions of shares on the basis of subscription rights to shares belonging to the same account holder and held in the custody of a bank; for the purchase through the Helsinki stock exchange of shares in place of other shares, held in the custody of a bank, that have been sold not more than a month before; for transfers to the Capital Account of a bank located in the same country as that of the account holder; and for monthly transfers abroad up to Fmk 1,000 to an account holder who has resided abroad during the last three years, provided that he is destitute in his country of residence. Other transfers between Capital Accounts and other transfers abroad of funds deposited in Capital Accounts require the specific permission of the Bank of Finland.

There are also special transfer accounts for nonresident funds awaiting repatriation.

Imports and Import Payments

Most goods may be imported free of license from the multilateral area or license-free area (i.e., nearly all countries with which Finland does not have bilateral payments agreements), provided that the goods are purchased from and originate in that area.5 Certain other goods 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 certain value quotas for specified commodity groups. All remaining goods require an individual license when imported from the multilateral area and are set out in a negative list or discretionary licensing list. Import licenses are not required for most commodities originating in and shipped from the U.S.S.R., and for many commodities originating in and shipped from the other bilateral countries; all commodities liberalized for import from the bilateral area are among those already liberalized for import from the multilateral area. Other imports from the bilateral countries are admitted under licenses up to quotas provided for under the related trade agreement. All other imports require individual licenses. For goods that do not require a license, the importer must file an import control declaration with the customs for statistical purposes.

Exchange is granted without delay for all permitted imports on presentation of an application form, the import license if required, and the original commercial invoice, provided that the goods are already in the country or there is sufficient evidence to guarantee their importation. Importers of specific consumer durable goods must make payment abroad or deposit cash for their imports before customs clearance can be obtained; otherwise, payment for imports must be made within six months after the arrival of goods in the country. For imports on credit of over six months, the credit must be authorized by the Bank of Finland.

Payments for Invisibles

The authorized banks have general permission to effect payments for most current invisibles, subject in some cases to maximum allowance or other conditions; for other transactions, with few exceptions, exchange licenses are granted liberally by the Bank of Finland. All contracts involving payments to nonresidents for which general permission has not been granted must be submitted to the Bank of Finland for approval.

A Finnish resident going abroad may purchase from commercial banks foreign exchange equivalent to Fmk 400 for each visit to the Scandinavian countries and Fmk 800 for each visit to other countries. Resident and nonresident travelers may take out Fmk 100 a trip in Finnish notes and coins and any reasonable amount in foreign notes and coins; travelers to neighboring countries making frequent trips to destinations not located beyond any municipality adjoining Finland’s land boundary may take out Fmk 100 a person a month in Finnish notes and coins. The automatic exchange allocation for business travel is the equivalent of Fmk 120 a day.

Exports and Export Proceeds

Export licenses are required only for exports of metal scrap. Exports of other goods require only an export control declaration, which is approved automatically by the Licensing Office except in a few specified cases. Foreign exchange acquired through commodity exports must be surrendered to the Bank of Finland or an authorized exchange dealer. All exporters, however, are permitted to keep a part of their export proceeds in foreign exchange accounts with Finnish banks or with banks abroad. The accounts may be used by the exporter to pay for incidental expenses related to exports and for authorized imports of raw materials, equipment, and machinery. The Bank of Finland may at any time claim the accounts against payment at the official rate.

The authorized exchange dealers and shipping firms are allowed to maintain their own working balances in foreign exchange, under the supervision of the Bank of Finland.

Proceeds from Invisibles

With the exception of freight earnings, foreign exchange receipts derived from current invisibles do not have to be surrendered. The import of Finnish and foreign means of payment by nonresident travelers and returning Finnish residents is unrestricted.

Capital

Most outward transfers of nonresident capital are subject to approval by the Bank of Finland, which is granted in certain circumstances. Inheritances are in most cases transferable without limitation and, subject to certain conditions, are generally transferred automatically, up to Fmk 50,000 for each beneficiary. Nonresidents who have resided outside Finland for three years are permitted to repatriate their blocked assets within five years (1) by annual installments of Fmk 5,000 for amounts not exceeding Fmk 25,000 (to the annual installments may be added interest accrued on the account calculated in conformity with the ordinary rate of bank interest paid on deposits), and (2) by five equal annual installments for amounts exceeding Fmk 25,000. During the entire period of transfer, the funds must be held on special transfer accounts. Moreover, persons who have resided abroad since September 1, 1939 and foreign corporate bodies that since that date have held an account with a Finnish monetary institution are permitted to repatriate their balances freely.

Nonresident bondholders may repatriate amounts falling due on account of redemption of bonds in markkas issued before September 1, 1939.

Nonresidents may purchase through an authorized bank, against convertible or externally convertible currencies or by debiting a Convertible Markka Account, bonds or shares quoted on the Helsinki stock exchange. 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 stock exchange through the authorized bank and to repatriate the proceeds of the sale in a convertible or an externally convertible currency. No permission is needed for the acquisition of bonds issued after August 31, 1939 with funds classified as Capital Accounts, but proceeds of the sale of such securities may not be repatriated without the permission of the Bank of Finland. Any other transactions in, and the export of, securities involving nonresident interests require approval. If the securities were acquired with convertible foreign exchange or with markkas from a Convertible Markka Account, approval for their export can be obtained freely. The import of securities by nonresidents and returning Finnish residents is unrestricted.

The regulations concerning foreign investments are as follows. All incoming capital transactions must be approved by the Bank of Finland, which considers the foreign exchange aspect. The Bank grants permission liberally, except where it would be contrary to the national interest. At the time the Bank approves an incoming transaction, it may state the conditions for repatriation of the invested capital. Foreign investments that involve a participation of more than 20 per cent in the capital of the enterprise require, in certain cases, the approval of the State Council. This approval, when required, is usually granted liberally. The primary reason for the 20 per cent limit is concern for the protection of natural resources, mainly forests.

On demand of the Bank of Finland, residents must declare their foreign assets and the yields on their property owned abroad. Proceeds from the sale of securities and real property abroad must be surrendered. Outward transfers of capital by residents require individual approval; investment by residents in foreign securities or real estate is rarely permitted. For direct investment abroad, approval is granted on the merits of each case.

Finnish emigrants are granted an exchange allowance of up to Fmk 5,000 a person.

Changes during 1966

January 1. The import regulations for 1966 came into effect. Further imports from the multilateral area were liberalized. The total value of global quotas was set at Fmk 483 million, slightly below the total for 1965 owing to the liberalization of 15 commodity groups previously included in the global quota list; the new quotas represented increases of between 20 per cent and 25 per cent over the corresponding ones for 1965. Many goods no longer required a license when imported from bilateral countries, provided that the country of purchase and the country of origin were identical; this liberalization was more extensive for the U.S.S.R. than for the other bilateral countries. The goods to which this liberalization regime did not apply were set out in a negative list for the U.S.S.R. and in a positive list for the other bilateral countries.

January 1. The international postal money order service, which had been interrupted since 1939, was restored. The service would be available for payments with Austria, Denmark, the Federal Republic of Germany, Iceland, Italy, Norway, Portugal, Sweden, and Switzerland.

January 17. The de facto liberalization of imports of passenger cars from multilateral countries was temporarily suspended; licenses would be limited to a total value of Fmk 120 million for the first half of 1966, compared with a global quota of Fmk 115 million as required by the EFTA arrangements for the calendar year 1966. Imports of passenger cars under bilateral payments agreements were not affected. Previously, under an administrative practice adopted in 1962, imports of passenger cars in excess of the global quota had been freely licensed from the multilateral area.

July 1. The de facto liberalization of imports of passenger cars from the multilateral area was restored. The import tax on passenger automobiles was further increased.

August 1. The payments agreement with Greece was terminated; all payments between Finland and Greece would henceforth take place in convertible currencies.

August 1. For import licensing purposes, Greece was included in the multilateral area.

October 1. For import licensing purposes, Turkey was included in the multilateral area.

December 2. Import duties were abolished for about 30 products and reduced for 20 products. The commodities affected were mainly raw materials and semimanufactured goods.

December 2. The requirement of cash payment before customs clearance, which was applicable to specified commodities, was applied to additional commodities. The requirement was extended to cover shipments arriving at a free port.

December 16. An amendment to the bilateral payments agreement with Czechoslovakia was agreed; in 1967, half of any clearing balance would be paid quarterly in convertible currencies.

Note:—The following changes took place early in 1967:

January 1. The import regulations for 1967 entered into force. Commodities under 30 tariff headings were removed from the global quota list and no longer required licenses when imported from the multilateral area; some of these goods also were freed from licensing when imported from bilateral countries.

January 15. Exchange allocations for travel services (other than transportation) included in the cost of a trip paid for in domestic currency before departure were limited to Fmk 400 a person a trip for travel in Scandinavian countries and Fmk 800 a person a trip for travel in other countries. Amounts in excess of Fmk 200 (for Scandinavian travel) or Fmk 400 (for other travel) were to be deducted from the standard exchange allowance for tourist travel.

France 1

Exchange Rate System

The par value is 0.180000 gram of fine gold per French Franc or F 4.93706 = US$1. Market rates for spot exchange transactions in U.S. dollars are maintained between official limits of F 4.90 buying, and F 4.9740 selling, per US$1. Market rates for Western European currencies and a few other currencies fluctuate between limits which result from combining the official limits for the U.S. dollar maintained by France and such limits in force in the country of the other currency concerned. Forward exchange transactions take place at freely negotiated rates. Authorized banks in continental France (including Corsica) and in the Principality of Monaco, as well as banks established abroad, are permitted to deal spot or forward in the exchange market in France. Authorized banks may also deal with their correspondents in foreign markets in all currencies. Residents may freely conclude forward exchange contracts for periods not exceeding one year in respect of receipts and payments related to any permitted current or capital transactions; forward exchange contracts for longer periods may be entered into for the purpose of making payments for trade transactions.

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

Exchange Control Territory

The French Franc Area comprises (1) the territory of the French Republic, i.e., continental France, Corsica, the Overseas Departments (Guadeloupe, Martinique, Guiana, and Reunion), the Overseas Territories, except French Somaliland (Comoro Islands, St. Pierre and Miquelon, New Caledonia, Wallis and Futuna Islands, and French Polynesia); (2) the Condominium of the New Hebrides; and (3) Algeria, Cameroon, the Central African Republic, Chad, Congo (Brazzaville), Dahomey, Gabon, Guinea, Ivory Coast, the Malagasy Republic, Mali, Mauritania, Monaco, Morocco, Niger, Senegal, Togo, Tunisia, and Upper Volta. Payments from France to other parts of the French Franc Area are free of restriction.

Administration of Control

The Minister of Economy and Finance is granted extensive authority in trade and exchange control. Various departments of the Ministry are concerned with the issue and supervision of import and export documents, statistical registration of import payments and export proceeds, the preparation of decisions concerning and control over French investments abroad and foreign investments in France, and the preparation of regulations concerning foreign trade and exchange. The Bank of France is concerned with the issue of licenses for transactions of a financial nature, controls relating to assets held abroad, the repatriation of income, transactions in foreign securities, etc. Much of the detail of exchange control is carried out by authorized banks designated by the Minister of Economy and Finance.

Prescription of Currency

Settlements with other parts of the French Franc Area may be made in the currency of any part of that Area. Settlements with countries in the area of convertibility, which comprises all countries outside the French Franc Area, may be made in any of the currencies of those countries, or through Nonresident Foreign Accounts in Convertible Francs (see section on Nonresident Accounts, below). Settlements with Laos and Viet-Nam are subject to special regulations.

Nonresident Accounts

A nonresident account in francs may be opened by an authorized bank for a nonresident foreigner or for a French national who either has been residing abroad for at least two years or, before this two-year period has elapsed, has been accorded the status of a nonresident. Authorized banks may freely grant credit for up to one year in the form of debit balances on nonresident accounts; otherwise, nonresident accounts in francs may not show a debit balance unless specifically permitted. French franc balances maintained by nonresidents are permitted to bear interest.

Foreign Accounts in Convertible Francs may be used for settlements with residents of the French Franc Area (including settlements for imports and exports). They may be credited freely with francs obtained from sales of currencies of countries in the area of convertibility in the exchange market in France or through a French authorized bank in an exchange market abroad; with transfers from other Foreign Accounts in Convertible Francs; with French francs obtained from the sale of foreign banknotes; and with French banknotes and coins received by authorized banks from their correspondents in countries in the area of convertibility. They may be debited freely for purchases in the exchange market in France of any foreign currency negotiated in that market; for purchases of the currency of any country in the area of convertibility through a French authorized bank in an exchange market abroad; for transfers to the credit of another Foreign Account in Convertible Francs; for the purchase of foreign banknotes; and for French banknotes and coins dispatched by authorized banks to their correspondents in countries in the area of convertibility.

Other transactions through Foreign Accounts may be made by individual or general authorization. Three other categories of nonresident accounts (Tourist Accounts, Suspense Accounts, and Nonresident Internal Accounts) are of minor significance, in practice.

Imports and Import Payments

Goods originating in and brought from other parts of the French Franc Area are generally admitted free of quantitative restriction and individual license. Imports of goods which originate in countries outside the French Franc Area and are not covered by French import liberalization require individual licenses. Some imports from EEC countries and some other imports from non-EEC countries are subject to minimum prices; these require an administrative visa and sometimes, exceptionally, an import license.

For import control purposes, countries outside the French Franc Area 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, Finland, the United States, and Yugoslavia; (2) 49 specified countries;2 (3) the Eastern European countries (Albania, Bulgaria, Czechoslovakia, Hungary, Poland, Rumania, and U.S.S.R.) and Mainland China; and (4) certain other countries not included in any of the foregoing groups. Eastern Germany occupies an intermediate position between categories (3) and (4). Imports from all countries of certain agricultural items and certain raw materials are free of quantitative restrictions. Commodities that may be imported free of quantitative restrictions from one group of countries include all the commodities that may be freely imported from the next group of countries plus some other specified commodities. 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 liberalization.

Imports of practically all industrial products from countries in group (1) are free of quantitative restrictions, but such restrictions are applied to a number of agricultural products; there is relatively little difference between the lists of goods which may be imported freely from different countries in this group, these differences relating mainly to Canada, the United States, Hong Kong, and Macao. Imports of 54 industrial products from countries in group (2) are restricted, and restrictions are applied to these 54 and to certain additional industrial products from group (3) countries. For some commodities global quotas that apply to all countries outside the French Franc Area are announced semiannually.

Imports from non-EEC countries of most products covered by the Common Agricultural Policy of the EEC (including cereals, rice, pork, eggs, and poultry meat) are subject to variable import levies that have replaced all previous barriers to imports; common EEC regulations are also applied to imports from non-EEC countries of beef, veal, dairy products, certain wines, olive oil, and specified fruits and vegetables.

Liberalized imports are not subject to trade control formalities, only a customs document that constitutes the customs declaration being required. For some liberalized imports an administrative visa issued by the central customs administration or by the competent technical ministry is required on an import declaration. Imports of the products of the European Coal and Steel Community require licenses, which are issued automatically.

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 applicable to specified countries or areas in accordance with trade agreements or an import plan drawn up for a definite period. Moreover, licenses may be issued under the IMEX and EXIM procedures,3 which provide for the importation of raw materials and other goods needed to produce goods for export, or under the compensation transaction procedure, which applies mainly to agricultural items from countries in the Soviet bloc. Because of the high degree of import liberalization, and as a result of the liberalization of exchange control that took place in December 1966, imports under these schemes now are of very slight importance.

Imports exceeding F 10,000 in value, and all imports for which payment is required before the goods reach France, must be domiciled (registered) 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. For goods imported under the import declaration or attestation procedure or with an import license, importers may, as soon as the import has been domiciled with an authorized bank, arrange with the bank to purchase spot or forward exchange. As a general rule, payment to the foreign exporter may be made only after documents have been presented to prove that the goods have been shipped. However, payment up to F 20,000 may be made at the time of domiciliation of the import, and special authorization may be given to importers to purchase exchange forward for a period of more than six months and to make total or partial prepayment at a date preceding that of importation by more than one year.

Payments far Invisibles

Payments for current invisibles are controlled, but applications for remittances are approved, provided that no unauthorized capital transfer is involved.

If justifying documents are presented and certain exchange control requirements are met, authorized banks are permitted to approve applications for payments without any limitation for many categories of current invisibles, and up to established limits for many other categories of current invisibles. Applications for other payments for invisibles are referred to the Bank of France to prevent unauthorized capital transfers.

Payments which may be authorized without limitation include those related to approved trade transactions; to maritime contracts of any kind; to income accruing to nonresidents in the form of profits, dividends, and royalties; to banking commissions, patent fees, and specified categories of taxes; to specified insurance payments; to fees to medical doctors, lawyers, etc.; to rents and similar payments due to nonresident owners and administrators of firms in France; to participation in foreign congresses, conferences, etc.; to alimony in accordance with court decisions; to fees for education and cost of maintenance of students abroad; to business travel abroad; and to net salaries of nonresidents employed in France within three months from the date of payment.

Payments up to established limits which may be approved include those by residents traveling abroad for pleasure (up to F 7,000 for each trip), by residents for family maintenance (up to F 1,000 a month for each beneficiary), and by residents on account of rebates, refunds, discounts, etc. Also, authorized banks may approve payments up to F 500 for any purpose; subject to certain conditions, they may approve transfers up to F 2,500 to residents finding themselves abroad without means of payment.

In addition to the exchange allocation for tourist purposes (up to the equivalent of F 7,000 for each trip), authorized banks may grant resident tourists going abroad exchange for renting rooms and villas abroad; these tourists may freely make travel arrangements through licensed travel agencies operating in France or purchase credit cards in France for their traveling expenses abroad, without limitation, and buy tickets in France against French francs for any transportation abroad. Also, they are permitted to take with them up to the equivalent of F 1,000 in foreign exchange (notes, coins, travelers checks, etc.) which they did not spend during previous travel abroad.

Nonresident travelers leaving France may exchange into foreign currency French banknotes and coins up to F 1,000 without any formality, and larger amounts upon presentation of proof that such banknotes and coins were obtained from the sale of foreign currency or from debiting a nonresident account within the two months preceding their departure from France.

Nonresident travelers crossing the border may take out of France coins (except gold coins) and banknotes issued by a bank of issue in the French Franc Area, up to a limit of F 1,000 for banknotes issued by the Bank of France and French coins, or up to 75,000 CFA or CFP francs, or up to the equivalent of F 750 in banknotes and coins in a currency other than the French franc.

Within the limit of the F 7,000 that they are allowed to export to cover the cost of their stay abroad, resident travelers may take out coins (other than gold coins) and banknotes issued by a bank of issue in the French Franc Area, provided that the amount of banknotes or coins in a currency other than the French franc does not exceed 75,000 CFA or CFP francs or the equivalent of F 750.

Exports and Export Proceeds

Certain goods on a prohibited export list may be exported only if a special license is issued. Some other exports also require individual licenses; but if the total value does not exceed F 500, these exports may be permitted without any formality, subject to certain exceptions. Regardless of their value, exports under the IMEX or EXIM procedures, or through compensation transactions with certain countries,4 require licenses if the commodities are those for which export licenses are required. Other exports are free of trade or exchange controls; when such exports exceed F 5,000 in value, certain financial information must be supplied together with the customs declaration in order to enable the verification of the collection of the export proceeds.

Goods that are purchased in France by nonresidents against checks or travelers checks expressed in any currency, or against checks issued by foreign correspondents of French banks to the debit of nonresident accounts, are considered as exports and are exempt from turnover taxes.

Exporters may grant credit for one year from the date of arrival of the goods at destination or, subject to administrative authorization, for a longer period, but thereafter the proceeds must be collected within 30 days. Exporters are permitted to sell forward their anticipated export proceeds. If payment is received in foreign currencies, these currencies must be ceded on the exchange market within three months, unless they were used for payments for authorized transactions.

Holders of exporters’ cards, which are issued to enterprises that export a certain percentage of their production, are entitled to obtain every year import licenses for any commodity related to their export activity, up to a value corresponding to 10 per cent of their exports made in the previous year.

Proceeds from Invisibles

Residents are obliged to collect within one month from the date that payment is due proceeds accruing from services rendered by them abroad and, in general, all proceeds accruing from any other source abroad. If the settlement is in foreign currencies, these currencies must be ceded on the exchange market within three months, unless they were used for payments for authorized transactions.

Residents are, however, exempt from this requirement in respect of proceeds of up to F 1,000 accruing from the collection of coupons of foreign securities held abroad and from immovable property located abroad. When the limit of F 1,000 is reached, such proceeds must be repatriated prior to March 31 of the year following the year in which the limit was exceeded.

Travelers may bring in any amount of banknotes and coins (except gold coins) in metropolitan francs, CFA francs, CFP francs, or any foreign currency; however, the exchange of banknotes issued by some banks of issue in the French Franc Area is prohibited or limited to certain amounts for each traveler.

Residents returning from abroad may retain foreign exchange (notes, coins, travelers checks, etc.) up to the equivalent of F 1,000 for use during their next trip abroad.

Capital

All capital transactions involving nonresident interests must be carried out through the intermediary of authorized banks.

Most outward transfers by residents for the purpose of making investments abroad require approval; these include direct investments in foreign enterprises as well as the establishment of branches by French firms. Requests for the authorization of direct investments abroad are approved liberally. Issues of securities in France by nonresidents require the approval of the Ministry of Economy and Finance. Authorized banks may freely grant overdrafts on nonresident accounts for periods not exceeding six months. Residents are permitted to deal in securities abroad, within the limitations described below.

Capital assets abroad of residents are not subject to repatriation. Residents of French nationality may use such assets in accordance with a general or individual license. Residents of foreign nationality may dispose freely of their assets abroad. Residents of French nationality must repatriate within three months the proceeds from the sale of securities abroad, unless these proceeds were used to purchase other securities. This obligation also applies to residents of foreign nationality, to the extent that the securities sold have previously been purchased with funds they held in France.

Transfers abroad are permitted freely in respect of legacies and dowries due to nonresidents and in respect of assets of persons of foreign nationality who, after staying in France as residents, leave to establish residence abroad. Emigrants are allocated F 5,000 in addition to the tourist allowance; they may apply to the Bank of France for permission to transfer larger amounts.

Within the limits described below, nonresidents may freely make investments in France and deal in securities in France. They are permitted to repatriate the proceeds accruing from the liquidation of approved investments and from the sale of their securities in France.

The following investments may be made freely in France by nonresidents: (1) subscriptions to an increase in the capital of a French company, provided that its shares are officially quoted on a stock exchange in France; (2) subscriptions, at the time of issuance, to short-term 5 or long-term securities and bonds issued by a French public service organization or by a private enterprise having its head office in France, provided that the securities issued by the private enterprise are officially quoted on a stock exchange in France; (3) acquisition on a spot basis through the intermediary of a notary public of immovable property or rights to such property located in France, for which up to 50 per cent of the sales price may be financed with credit; (4) loans to residents of up to F 1 million (or its equivalent in foreign currency), provided that the rate of interest does not exceed 4 per cent and that the maturity is less than two years;6 and (5) purchases of securities in France as described below. Other investments, particularly direct investments, by nonresidents in France require individual licenses. Repatriation of the proceeds from the liquidation of approved investments is permitted.

Dealings in securities are subject to special regulations; in principle, all dealings must take place on stock exchanges. Nonresidents are permitted to deal on a stock exchange in France in any security officially quoted on that stock exchange, and residents are permitted to deal in France or abroad in any security officially quoted on a stock exchange. Special conditions are, however, attached to transactions in certain foreign securities listed by the Ministry of Economy and Finance. Furthermore, purchases of French securities by nonresidents require prior license when they are to be made in any manner other than by purchase on a French stock exchange.

Securities may be imported and exported freely through authorized banks as follows: imported on behalf of residents or nonresidents; exported on behalf of nonresidents, or exported on behalf of residents for the purpose of selling the securities in accordance with the regulations mentioned in the preceding paragraph. Dealings in securities on a spot or forward basis may be made in France by all nonresidents. Residents may carry out spot or forward transactions in securities on foreign stock exchanges.

Nonresidents must make payments for securities purchased in France in accordance with the regulations applicable to foreign countries; they are permitted to transfer abroad the proceeds accruing from the sale of securities in France.

Exchange proceeds from the sale of securities abroad by residents may be disposed of in one of the following ways: (1) repatriated and surrendered, (2) used to acquire securities abroad, or (3) if exchange control regulations in the country where the sale took place do not permit the transfer of proceeds from the sale of securities, ceded to a resident for the subsequent purchase of securities in that country.

The purchase of securities by a resident on a stock exchange abroad can be financed by (1) the purchase of foreign exchange on the exchange market in France, (2) the use within three months of the proceeds from the sale abroad of securities by the seller, (3) the use of funds in foreign currency held by the buyer and not subject to surrender requirements, and (4) the use of funds in foreign currency acquired from any person in the French Franc Area if such funds may not be repatriated because of exchange control regulations abroad.

Changes during 1966

January 1. Export controls were revised. Exports to countries outside the French Franc Area no longer had to be domiciled at an authorized bank.

January 8. The EFAC (Exportations-Frais Accessoires) accounts, in which exporters could retain certain percentages of their export proceeds received in currencies of countries outside the French Franc Area, were abolished. Henceforth, holders of an exporter’s card could obtain annually import licenses for any commodity related to their export activity, up to a value corresponding to 10 per cent of their proceeds in non-French Franc Area currencies received in the previous year.

January 27. The opening at Le Havre of an international futures market for robusta coffee was announced.

January 30. Many imports of manufactured goods originating in and shipped from Albania, Bulgaria, Mainland China, Czechoslovakia, Hungary, Poland, Rumania, and the U.S.S.R. were liberalized.

February 16. Importers of chrome and asbestos from Rhodesia were requested to seek alternative suppliers.

March 31. Exports of hides, skins, and unworked leather to countries other than EEC members and Greece were prohibited; exempt were sales in accordance with bilaterally agreed quotas.

April 4. A communiqué of the Minister of Economy and Finance reminded the public that purchases of real estate situated outside the French Franc Area required prior approval by the Bank of France. Those who had not yet done so were requested to declare their purchases to the Bank in order to comply with the regulations.

April 5. The two principal import liberalization lists were transformed from positive into negative lists, indicating the products still subject to quantitative restriction rather than those that were liberalized. One negative list applied to imports originating in and shipped from the former OEEC countries, their dependent territories, and certain former dependent territories, Andorra, Canada, Finland, the United States, and Yugoslavia; a few items on this list were liberalized for the former OEEC countries but not for Canada and the United States, and attached to it were separate lists of additional items that were restricted when originating in Hong Kong and Macao, respectively. The other list applied to goods originating in and shipped from 49 specified countries (see footnote 2).

May 4. An interdepartmental committee on Foreign Investments in France was created. One of its duties was to advise the Minister of Economy and Finance on investment proposals of exceptional importance that were submitted to him for approval.

May 5. The conditions were announced on which certain new credit facilities for exports of capital equipment would be granted.

May 11. Duty-free quotas were announced for a number of products originating in Tunisia; these did not include wine.

May 13. Authorized banks could freely open accounts in non-French Franc Area currencies for any person, irrespective of nationality and country of residence. The existing regulations concerning such accounts were liberalized. The new regulations governing the operation of such accounts varied according to whether the holder was a nonresident, a resident of foreign nationality, or a resident with the nationality of a country in the French Franc Area.

June 1. Wine from Algeria became subject to a minimum import price.

June 21. Nonresident physical persons could freely open savings accounts related to the purchase of houses and apartments in France (comptes d’épargne-logement).

June 26. The amount of French franc banknotes that resident travelers could freely take with them was increased from F 1,000 to F 7,000. The total amount in French francs and non-French Franc Area currency that they could take out remained unchanged at F 7,000 a person a trip.

June 26. A number of agricultural commodities and foodstuffs on the negative list for former OEEC countries, etc., were liberalized when imported from the countries to which the list applied. This liberalization was in fact applied to all GATT countries.

June 26. A number of agricultural items were liberalized when originating in and shipped from Albania, Bulgaria, Czechoslovakia, Hungary, Poland, Rumania, or the U.S.S.R.

July. A new protocol to the trade agreement with Japan was signed. It provided that France would liberalize imports of 10 of the 64 items still subject to quantitative restriction when of Japanese origin; most of the remaining quotas for Japanese goods would be increased.

July. An agreement between the Government and the Chambre Syndicale de la Sidérurgie Française gave the steel industry the right to buy coal and ores in the cheapest market.

July 1. An international futures market for refined sugar was opened in Paris.

July 15. The arrival at destination of goods exported or re-exported without an export license to other parts of the French Franc Area no longer required documentary proof.

July 27. The duty-free importation of 1 million hectoliters of Tunisian wine was permitted.

September 15. Export contracts could provide that claims would fall due one year (previously six months) after arrival of the goods at their destination. The period of one month allowed for the collection of claims due remained unchanged, as did the period of three months allowed between collection of non-French Franc Area currencies and their sale on the Paris exchange market. Exports under compensation transactions, exports under the IMEX and EXIM procedures, temporary exports, and exports on consignment were freed from the requirement of domiciling the export title (export license) with an authorized bank.

September 15. Authorized banks were permitted to grant guarantees to nonresidents in respect of exports to countries outside the French Franc Area.

September 15. Authorized banks were permitted to put up guarantees related to residents’ purchases and sales at auctions in countries outside the French Franc Area.

September 15. Additional types of payment that authorized banks could approve included the following: (1) payments for collective subscriptions to foreign periodicals; (2) refunds by exporters to foreign purchasers of amounts overpaid; (3) settlements by French enterprises in respect of the expenses of their offices abroad; (4) payments for imports valued at up to F 10,000 for which the importer could not produce the customs copy of the invoice; (5) payments for imported electricity, water, and gas; and (6) reimbursement of expenses resulting from the implementation of after-sales guarantees on goods sold abroad.

October 22. The official quotation of the Portuguese escudo was suspended.

October 25. The Minister of Economy and Finance was given powers to issue licenses for imports for which quotas were opened in accordance with the regular procedures to firms or groups of firms undertaking to follow marketing and pricing policies that conformed to the policy set by the Government.

November 5. The opening in Paris of an international futures market for soy cakes was announced.

November 8. A number of additional imports were liberalized, and the four principal liberalization lists were revised accordingly. The measures did not affect all areas equally. The import of meat was liberalized from virtually all sources. The number of items that were subject to quota when originating in Japan was reduced from 64 to 54.

November 9. The National Credit Council permitted interest to be paid on nonresident accounts in France that were denominated in French francs.

November 9. Loans extended in French francs by French banks to foreign firms were exempt from the tax on services.

November 9. The Bank of France extended special refinancing facilities to French banks for the credits in francs that they granted to French firms in connection with the firms’ investments or establishment in countries outside the French Franc Area.

November 18. The obligation of depositing non-French Franc Area currencies and non-French Franc Area securities held in France was abolished. Those currencies and securities already deposited could be returned immediately by the depository to the holder, whether resident or nonresident.

November 18. The maximum period for which authorized banks could freely grant credits to nonresidents of the French Franc Area through franc overdrafts on nonresident accounts was extended from six months to one year.

November 18. The maximum period for forward exchange transactions between authorized banks and their correspondents outside the French Franc Area was extended from six months to one year, irrespective of the currency concerned.

December 18. A law providing for the introduction of antidumping duties was promulgated.

December 28. A law governing Financial Relations with Foreign Countries was promulgated. It established freedom of financial relations between France and all foreign countries. Existing legislation contrary to this principle would be revoked from the date on which the law took effect (January 31, 1967, see below). Existing regulations in respect of imports and exports of goods, insurance, reinsurance, and capitalization would not be affected. The Government reserved the right, in order to ensure the defense of the national interest, to take the following action: (1) To require declaration, prior approval, or supervision of (a) exchange transactions, capital movements, and payments of any nature between France and foreign countries; (b) formation, changes in composition, and liquidation of French assets in foreign countries; (c) formation and liquidation of foreign investments in France; and (d) the import and export of gold and all other physical movements of assets between France and foreign countries. (2) To prescribe the repatriation of claims on foreign countries resulting from commodity exports, of remuneration for services, and, generally, of any income or proceeds in foreign countries. (3) To authorize intermediaries to effect the operations under (1) (a) and (1) (d).

Annex

Abolition of Exchange Control

January 31, 1967. Law No. 66-1008 dated December 28, 1966 and an enforcement decree dated January 27, 1967 introduced far-reaching changes in the system governing France’s financial relations with countries abroad, on and from January 31, 1967. The main feature of the regime introduced by these two enactments is the abolition of the exchange control brought into existence on September 10, 1939, i.e., a return to complete freedom of transfers between France and foreign countries. Compared with the previous situation, this means that persons residing in France may now freely undertake all movements of funds between France and foreign countries for any purpose whatever, and by any means whatever (settlements through banks, through the postal system, through compensations on current account, etc.). Similarly, such persons may henceforth freely constitute and maintain abroad holdings of any sort whatever, and they are no longer obliged to repatriate the receipts arising from their claims on foreign countries. Moreover, as a consequence, imports and exports of monetary paper (banknotes, checks) have again become completely free, as have imports and exports of all types of securities and gold, with the proviso that those of gold are subject to a prior declaration to the Bank of France.

Without prejudice to the convertibility of the franc, control is exercised by the Minister of Economy and Finance over a limited number of capital movements. This control is therefore exercised not over the transfers which, in any event, are completely free but over the transactions themselves. Three categories of operation are still subject to such control: foreign issues on the French capital market, borrowing abroad by French companies, and direct investment, i.e., investments implying control of a company or enterprise. Mere participation is not considered as direct investment, provided that it does not exceed 20 per cent in the capital of a company whose shares are quoted on the stock exchange. Operations other than those listed above may be carried out freely.

Foreign investments in France, and French investments abroad, must be declared to the Minister of Economy and Finance when they are being made. The Minister has a period of two months from receipt of the declaration, during which he may request the postponement of the projects submitted to him. Insofar as the liquidation of direct investments is concerned, whether these are French investments abroad or foreign investments in France, the liquidation must be reported, and the report must be submitted within 20 days following each liquidation.

Foreign issues on the French capital market require prior authorization by the Minister of Economy and Finance, as do issues by French companies. Exempt from authorization, however, are operations in connection with (1) loans backed by a guarantee from the French Government, (2) shares similar to securities that already are officially quoted on a stock exchange in France, or (3) securities whose issue has previously been authorized.

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, require prior authorization by the Minister of Economy and Finance. The following are, however, exempt from this authorization: (a) loans constituting a direct investment, which are subject to prior declaration, as indicated above; (b) 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 France and countries abroad or between foreign countries, in which these persons or firms take part; (c) loans contracted by banks; (d) loans other than those mentioned above, when the total amount outstanding of these loans does not exceed F 2 million for any one borrower.

Compared with the previous regulations, the concept of “foreign country” has been extended. The term now includes all countries other than France, i.e., other than continental France, Corsica, the Overseas Departments, and the Overseas Territories (except French Somaliland). The Principality of Monaco is assimilated with France. Nevertheless, the control measures affecting direct investment and borrowing abroad do not apply to relations with the following states, whose bank of issue is linked with the French Treasury by an operations account: Cameroon, the Central African Republic, Chad, Congo (Brazzaville), Dahomey, Gabon, Ivory Coast, the Malagasy Republic, Mauritania, Niger, Senegal, Togo, and Upper Volta.

So far as foreign trade is concerned, export and import procedures have been adjusted to take account of the abolition of exchange control. In particular, the domiciliation requirement in connection with imports has been abolished, as have the approval procedure for transfers in respect of liberalized commodities prior to their shipment, the formality of the foreign exchange commitment for exports, and the special control regimes for imports and exports where no payment is involved.

Gabon

Exchange Rate System

No par value for the currency of Gabon has been established with the Fund. The official unit of currency is the CFA Franc, which is equivalent to 0.02 French franc, giving the relationship CFAF 246.853= US$1.1 The BCEAEC stands ready, in transactions with commercial banks, to buy and sell CFA francs against French francs at the fixed rate of CFAF 1 = 0.02 French franc. Exchange rates for other currencies are based on the fixed rate for the French franc and the Paris market rates for the other currencies concerned.

Administration of Control

Exchange control is administered by the Exchange Office, which is under the authority of the Ministry of National Economy. Exchange transactions are handled by commercial banks under the direction of the Exchange Office. The Foreign Trade Office of the Ministry of National Economy allots to each importer exchange for goods included in the annual import program. It also issues import and export licenses, which must be approved by the Exchange Office.

Prescription of Currency

Gabon is a member of the French Franc Area, and settlements with other countries of the French Franc Area are made in any currency of that Area. Settlements with other countries are usually made through banks in France, in any of the currencies of those countries—provided that the currencies are quoted on the Paris exchange market—or through Foreign Accounts in Convertible Francs.

Nonresident Accounts

The regulations pertaining to nonresident accounts are based on those applied in France.

Imports and Import Payments

Imports of a few commodities from all sources are prohibited for reasons of health or security, and imports of certain others are restricted for protective reasons. Imports of all other goods from countries in the French Franc Area may be made freely, provided that they originate in that Area. Many imports from EEC countries other than France are also free of quantitative restrictions. All other imports from countries outside the French Franc Area except petroleum are subject to import licensing in accordance with an annual import program. This program and the amount of foreign exchange required to implement it are determined by a joint French-Gabonese Committee. For petroleum imports a joint quota is established for the four countries of the Equatorial Customs Union (the Central African Republic, Chad, Congo (Brazzaville), and Gabon). Licenses for certain imports outside the import program are granted to large firms.

Separate global quotas are established for imports from EEC countries other than France and for imports from all other countries outside the French Franc Area. The quotas for EEC countries may be used only to import goods originating in those countries; the quotas for other countries may be used to import goods originating in any country outside the French Franc Area except the U.S.S.R. and Mainland China, for each of which separate quotas are established.

Imports of certain goods from countries outside the French Franc Area are subject to ceilings within the import program; there are separate ceilings for EEC countries other than France and for all countries outside the French Franc Area. Total imports from certain Far Eastern countries (taken as a group) are limited to 40 per cent of the total quotas established for all countries outside the French Franc Area.

For goods included in the annual import program, the Ministry of National Economy publishes each year an announcement of the exchange alloted to each registered importer in accordance with, inter alia, his import business in the previous year. The importer submits to the Foreign Trade Department of the Ministry of National Economy an application for a license within the limits of the quota that has been assigned to him. When the license is issued, the Exchange Office makes the exchange available to the importer through his bank. Import licenses are valid for six months; the license may be renewed three times for six months at a time for imports of capital goods, and twice, for three months at a time, for imports of supplies, provided that the importer presents valid reasons for requesting the renewal. Imports of liberalized goods from EEC countries other than France require an import certificate. Under the EFAC arrangements (see section on Exports and Export Proceeds, below), licenses are granted for imports of raw materials and equipment to be used directly by exporters, provided that such imports are paid for with funds from EFAC accounts.

Payments for Invisibles

Payments for invisibles may be made freely to residents of countries in the French Franc Area. All payments for invisibles to other countries are, in general, subject to approval by the Exchange Office. Foreigners who are not nationals of a French Franc Area country and who have been hired by contract and hold an employment card may transfer to their country of origin their net basic pay. There is a basic tourist allocation up to the equivalent of CFAF 250,000 a person for each trip to countries outside the French Franc Area. Travelers to those countries on business may obtain an amount in excess of the above limit for bona fide living expenses, the amount depending on the destination and the duration of the trip. Transfers of earnings from capital invested in Gabon by foreign companies or foreign physical persons require prior approval by the Exchange Office; for investments registered under the Investment Code, such transfers are always permitted upon production of documentary evidence.

Gabonese nationals traveling abroad must lodge a deposit (repatriation guarantee) with the Treasury; exempt are persons traveling on official business, government-sponsored students, and persons taking up salaried professional employment abroad. Persons having the status of residents and traveling to other countries in the French Franc Area may take out any amount of CFA banknotes or French banknotes. When traveling to other countries, they may take out banknotes up to a maximum of F 1,000 in French francs or CFAF 75,000 or CFPF 75,000 in legal tender CFA or CFP notes and coins. Nonresident travelers may take out foreign notes and coins up to the amounts declared when they entered the country, minus the amounts of French Franc Area banknotes that are taken out.

Exports and Export Proceeds

Exports to countries in the French Franc Area may be made freely. For exports to all other countries licenses, which are issued freely, are required; exceptions are cocoa, timber, and manganese, for which only an exchange commitment (engagement de change) must be approved by the Exchange Office. Gold and uranium may be exported only to France. The exporter undertakes to repatriate the export proceeds within a period of 180 days from the date of arrival of the goods at their destination. When settlement is made in a currency other than a French Franc Area currency, the exporter must surrender it on the Paris exchange market within three months following settlement.

Exporters may retain, however, a part of their export proceeds in special, nontransferable EFAC (Exportations-Frais Accessoires) accounts, which may be used by the exporters themselves to make payments abroad for export promotion expenses and for modernization and expansion needs of their industries. The portion that may be retained is 8-15 per cent, depending on the country of destination.

Proceeds from Invisibles

Proceeds from invisibles received from countries in the French Franc Area may be retained. All amounts due in respect of services from residents of other countries, and income exceeding the equivalent of CFAF 50,000 earned in those countries from foreign securities, must be collected and must be surrendered within one month of receipt. Travelers may bring in any amount of domestic or foreign banknotes or coins (except gold coins).

Capital

Capital movements between Gabon and other French Franc Area countries are free of control; those between Gabon and other countries are subject to authorization.

Under the Investment Code promulgated on December 4, 1961, any enterprise established in Gabon, whether domestic or foreign, is granted, under certain conditions, reduced duties and taxes on specified imports, as well as exemption from direct taxes on specific income.

The Code also provides, for three categories of preferential treatment, in accordance with which fiscal and other privileges may be accorded to firms investing in specified new industries or in the expansion of existing ones. Preferential treatment A applies to enterprises whose activity and market are limited to the national territory of Gabon; it is granted for a period of up to 10 years. Preferential treatment B applies to enterprises whose activity and market include the territory of two or more states of the Equatorial Customs Union. Preferential treatment C is reserved for enterprises of prime importance to the country’s economic development; it provides for stabilization of their fiscal charges for up to 25 years. The granting of any one of the three kinds of preferential treatment automatically includes the application of specified exemptions from direct taxes which are granted under the provisions of other existing legislation.

Requests for approval of preferential treatment must be submitted to the Minister of National Economy, 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. Preferential treatments A and C are granted by decree issued by the Council of Ministers. Preferential treatment B is granted by a decision of the Executive Committee of the Equatorial Customs Union upon the recommendation of the Council of Ministers.

Foreigners who are not nationals of a country of the French Franc Area are permitted to repatriate their capital, provided that they have settled their taxes and provided that the foreign investment regime is applicable to them.

Foreigners leaving Gabon permanently may take out up to CFAF 250,000 in foreign exchange, provided that they sign a statement to the effect that they are not returning to the French Franc Area; three months after their return to their country of origin they may obtain the transfer of their total bank balances in Gabon.

Changes during 1966

January 1. The treaty establishing the Central African Customs and Economic Union (UDEAC) between Cameroon and the members of the Equatorial Customs Union (the Central African Republic, Chad, Congo (Brazzaville), and Gabon) entered into effect.

January 1. The import allocation for certain Far Eastern countries (taken as a group) was increased from 30 per cent to 40 per cent of total quotas established for all countries outside the French Franc Area.

January 15. In accordance with the UDEAC customs tariff, certain import taxes were abolished.

January 15. The UDEAC customs tariff went into effect.

February 25. Circular No. 634 of the Ministry of National Economy listed all commodities whose importation was unrestricted when originating in and shipped from EEC countries other than France.

July 1. The exemption of cocoa exports from export duty and certain other taxes was extended until September 30, 1967.

July 26. Gabonese nationals traveling abroad were required to lodge a deposit (repatriation guarantee, garantie de repatriement) with the Treasury. Exempt were persons traveling on official business, government-sponsored students, and persons taking up salaried professional employment abroad.

Federal Republic of Germany

Exchange System

The par value is 0.222168 gram of fine gold per Deutsche Mark or DM 4.00 = US$1. The official limits established by the Deutsche Bundesbank for its dealings with banks are DM 3.97 buying, and DM 4.03 selling, per US$1. For banks’ transactions with their customers, these rates are considered as middle rates which can be exceeded by buying or selling margins. The rate for the U.S. dollar fluctuates in the exchange market between these margins. Market dates for certain other currencies vary between limits which result from combining the official limits for the U.S. dollar maintained by Germany 1 and such limits in force in the country of the other currency concerned. All other currencies are also admitted to market quotations in Germany. Premiums and discounts on forward exchange transactions are left to the interplay of market forces. There are no restrictions on foreign exchange dealings by residents or nonresidents.

There are no restrictions on payments and no prescription of currency requirements. Residents are not required to repatriate or surrender their foreign exchange earnings or holdings, which may be held in Germany or abroad at the choice of the holder. Accounts in deutsche mark or in any foreign currency may be held in Germany by any nonresident. Balances on nonresident accounts may be transferred freely to any type of resident or nonresident account and used for any payment in Germany or abroad, including the purchase of any foreign currency or gold, minted or in bars; these accounts may be credited freely with any payment. However, credit balances on nonresident accounts, except savings accounts of individual persons, may carry interest only if a special license has been granted. Such licenses are given to all credit institutions for the payment of interest on customers’ balances held as cover for letters of credit; otherwise, licenses are given in exceptional cases only.

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

Administration of Control

The administration of control in Germany in respect of imports and exports of goods and services is operated by the Federal Ministry of Economics, the Federal Office for Trade and Industry (Bundesamt für gewerbliche Wirtschaft), the Federal Office for Food and Forestry (Bundesamt für Ernährung und Forstwirtschaft), Import and Storage Agencies (Einfuhr- und Vorratsstellen), and the Land Ministries of Economics. The Deutsche Bundesbank is primarily the authority in charge of exchange control for certain capital transactions. All banks in Germany are permitted to carry out foreign exchange transactions.

Imports and Import Payments

Imports of virtually all commodities either originating in or purchased in Rhodesia are suspended. With this exception, quantitative restrictions are not applied to imports of most commodities purchased from and originating in countries other than Soviet countries and Mainland China (i.e., the countries included in country list C of the Foreign Trade Regulation); out of a total of some 8,000 items, 7,400 may be imported freely from those other countries (i.e., those in country lists A and B of the Foreign Trade Law).

In addition, some 240 items are liberalized when originating in European OECD countries and their associated or dependent territories. Certain solid fuels are liberalized only when purchased and imported from other member countries of the European Coal and Steel Community; imports of coal from other sources are limited to a global quota. Imports from all sources of about 190 tariff items (sugar, cereals, cattle, certain meat and meat products, milk, and edible fats) are controlled by virtue of the German Marketing Laws; since these items are also covered by EEC regulations, licenses are issued automatically and without limit for all of them. Imports from non-EEC countries of most products covered by the Common Agricultural Policy of the EEC (including cereals, rice, pork, eggs, and poultry meat) are subject to variable import levies which have replaced all previous barriers to imports; common EEC regulations are also applied to imports from non-EEC countries of beef, veal, dairy products, wine, olive oil, and specified fruits and vegetables.

De facto liberalization is extended to many industrial and certain agricultural commodities when originating in and purchased in Bulgaria, Hungary, Poland, or Rumania. Under these arrangements, import licenses are issued automatically upon application, provided that domestic production and prices are not affected adversely.

Imports free of quantitative restriction are not subject to licensing, and no prior control is exercised over such imports; however, an import declaration stamped by the Deutsche Bundesbank, which serves as documentation for customs control and for statistical purposes, is required. For imports still subject to quantitative restriction (with certain exceptions, such as books, maps, etc., and small parcels through the post), an individual import license is required. Import licenses may be allocated to importers either on a first-come, first-served basis, or account may be taken of conditions of price, delivery, quality, etc., or of the total value of applications in relation to the quotas established for specified commodities.

For manufactured goods, the period of validity of the license is usually six months, but it may be extended in certain cases (e.g., heavy machinery) to a period necessary for the production of the goods. For agricultural products the usual period is also six months; however, for seasonal imports, it may be shorter. No fees are charged for licenses to import manufactured goods.

Payments for imports are free, even if the underlying import transaction is still restricted. Commodity futures may be dealt in freely. Transit trade transactions may, in principle, be carried out freely; but when they involve certain countries, they are subject to certain conditions.

Payments for Invisibles

All payments for invisibles may be made freely without individual license. German and foreign notes and coins and other means of payment may be exported freely.

The following transactions—but not the related payments—between residents and nonresidents are subject to restriction: the chartering of foreign ships from residents of specified countries; the use of foreign boats in certain inland waterways traffic; transactions with specified countries (which do not grant reciprocal treatment) for hull and marine liability insurance and aviation insurance, except passenger accident insurance; the production of motion pictures in association with nonresidents; and certain contracts with nonresidents pertaining to motion-picture films.2

Exports and Export Proceeds

Certain exports to Rhodesia are suspended. With few exceptions, other export transactions may be carried out freely. For all goods, only an export notification, for statistical purposes, is required. Certain exports—mostly strategic goods—are subject to individual licensing. The customs authorities exercise control over export declarations and also check to see whether a license is required.

Foreign exchange proceeds from exports do not have to be declared or surrendered, and they may be used for all payments. Claims exceeding DM 10,000 that have been overdue for more than three months must be reported, for statistical purposes.

Proceeds from Invisibles

With few exceptions, services performed for nonresidents do not require licenses. However, licenses are required for transactions related to specific sea services, and for technical assistance through the delivery to residents of Eastern bloc countries of constructional drawings, materials, and instructions for manufacture, insofar as such assistance is for the production of goods whose export requires a license.

There are no restrictions on the receipt of payments for services rendered to nonresidents. However, receipts exceeding DM 500 on account of such services have to be reported.

German and foreign notes and coins and other means of payment may be imported freely.

Capital

Residents and nonresidents may import or export capital freely without a license. However, domestic money market paper (Treasury bills, etc.) and domestic fixed-interest-bearing securities—if in the latter case the contracts contain an obligation to reacquire the securities later at a definitely fixed price—may not be sold to nonresidents without an individual license. Securities of all types may be imported or exported freely. There are no limitations on the disposal of legacies located in Germany and inherited by nonresidents, or on legacies located abroad and inherited by residents.

Changes during 1966

January 1. The amount beyond which export claims overdue for more than three months must be reported was raised from DM 3,000 to DM 10,000.

January 5. The granting of official export credit insurance in respect of new transactions with Rhodesia was suspended.

March 24. The validity of import licenses for crude oil and heating oil was reduced to three months in order to facilitate estimates of future imports. The denial of import licenses for these commodities no longer required cabinet approval.

March 29. Imports of pig iron and chromite of Rhodesian origin were prohibited.

March 31. Export credit for up to 180 days could be extended without prior approval on sales to countries included in country list C of the Foreign Trade Regulation.

April 6. New trade arrangements agreed with Japan provided for further relaxation of restrictions on imports of Japanese origin.

May 6. De facto liberalization was extended to many industrial and certain agricultural commodities when originating in and purchased in Bulgaria, Hungary, and Rumania. Import and export quotas for these countries for the remaining restricted items were increased considerably. Similar treatment would be accorded to other Eastern European countries upon the signature or renegotiation of the respective bilateral trade agreements. Corresponding action with respect to Poland was taken on May 10.

July 16. All imports of goods either originating in or purchased in Rhodesia required an individual import license; Rhodesia was deleted from country list B of the Foreign Trade Law. It was subsequently announced that the measure was aimed at preventing any increase in imports of unprohibited items from Rhodesia; for asbestos, the degree of quantitative restriction would depend on the safeguarding of alternative supplies on comparable terms.

August 14. The export restrictions maintained for security reasons were revised in accordance with agreed changes in the international embargo lists; a further revision on December 9 lifted the restriction on exports of steel pipe.

October 28. Imports of specified cotton textiles of Hong Kong origin that previously were liberalized required an individual license.

October 28. Imports of lead and zinc originating in Soviet countries of Eastern Europe required an individual license; previously, such imports were liberalized, provided that the goods had been purchased on a commodity exchange from a seller resident in a country included in country list A or list B of the Foreign Trade Law.

December 1. Imports of motion-picture films from France and Italy were liberalized; imports from all other countries in country lists A and B had already been liberalized.

December 24. The issuance of import licenses for the following commodities was suspended when they originated in or were purchased in Rhodesia: asbestos, iron ore, chromite, pig iron, sugar, tobacco and tobacco products, copper, meat and meat products, hides, skins, and leather. The issuance of export licenses for specified commodities (those in Part I of the Export List) was to remain suspended when the goods were sold to or destined for Rhodesia.

Ghana1

Exchange Rate System

The par value is 1.24414 grams of fine gold per Ghanaian New Cedi or NȻ1 = US$1.40. Exchange rates are based on the fixed rate for sterling, which is NȻ 1 = £0 10s. Od. The new cedi circulates concurrently with the old cedi, which is being withdrawn from circulation at a rate of NȻ 1 = Ȼ 1.20. The Bank of Ghana quotes rates for the pound sterling and certain other currencies; it deals at rates within ½ of 1 per cent on either side of parity, the statutory limits being ¾ of 1 per cent on either side of parity. For other currencies, the commercial banks in Accra base their rates on the current London market rates plus the exchange charge of ½ of 1 per cent levied on sterling transactions and a brokerage fee of ⅛ of 1 per cent. The authorized banks may exchange Ghanaian currency for any foreign currency and engage in arbitrage in all currencies, spot or forward.

Administration of Control

A Foreign Exchange Committee, under the chairmanship of the Governor of the Bank of Ghana, is responsible for drawing up an annual foreign exchange budget. The Ministry of Trade prepares an import and export plan, which is subject to approval by the Cabinet. The over-all import plan must correspond to the import ceiling set by the Foreign Exchange Committee. The Controller of Imports and Exports at the Ministry of Trade is empowered, on behalf of the Ministry of Trade, to prohibit or regulate the import and export of all goods. Open general licenses, other import licenses, and other export licenses are granted by the Controller of Imports and Exports.

Applications for individual import licenses must be channeled through the appropriate ministry or government agency for endorsement. Applications that have been endorsed by the competent ministry or agency are then forwarded to the Controller of Imports and Exports at the Ministry of Trade. An exception is made for applications by the private sector for the import of consumer goods as well as for applications by the National Trading Corporation and similar state trading agencies; such applications are submitted direct to the Ministry of Trade.

The Exchange Control Department of the Bank of Ghana administers the allocation of exchange for payments for invisibles and capital. Permitted foreign exchange transactions must be made through authorized banks.

Prescription of Currency

Ghana is a member of the Sterling Area and has prescription of currency requirements similar to those of the United Kingdom. Settlements between residents of Ghana and residents of other Sterling Area countries may be made in new cedis through Sterling Area accounts, in sterling, or in other Sterling Area currencies. Authorized payments, including payments for imports, by residents of Ghana to residents of countries outside the Sterling Area other than Rhodesia may be made in new cedis to the credit of a Foreign Account, in sterling to the credit of an External Account, or in any foreign currency. Receipts from residents of countries outside the Sterling Area other than Rhodesia may be obtained in new cedis from a Foreign Account, in sterling from an External Account, or in any non-Sterling Area currency which is freely exchangeable for sterling or new cedis. However, settlements related to transactions covered by bilateral trade and payments agreements are made through clearing accounts maintained by the Bank of Ghana and/or the central or state banks of the countries concerned.2

Nonresident Accounts

Accounts in new cedis held by residents of countries within the Sterling Area are designated Sterling Area Accounts. These accounts may be credited with authorized payments by residents of Ghana, with transfers from Foreign Accounts and from other Sterling Area Accounts, and with the proceeds from sales of foreign currencies. They may be debited for payments to residents of the Sterling Area countries, for transfers to other Sterling Area Accounts, and for purchases of Sterling Area currencies.

Accounts in new cedis held by residents of countries outside the Sterling Area other than Rhodesia with authorized banks in Ghana are designated Foreign Accounts. The opening of these accounts is subject to approval by the Bank of Ghana. The accounts may be credited with authorized payments by residents of the Sterling Area countries, with transfers from other Foreign Accounts, and with the proceeds from sales of non-Sterling Area currencies other than Rhodesian pounds. They may be debited for payments to residents of the Sterling Area, for transfers to other Foreign Accounts, and for purchases of foreign currency other than Rhodesian pounds.

Nonresident accounts maintained under the provisions of bilateral payments agreements are called “Official Accounts.” These accounts may be credited with authorized payments by residents of Sterling Area countries, with transfers from Foreign Accounts, with payments received through the Bank of Ghana for settlements with bilateral payments agreement countries, and with proceeds from sales of non-Sterling Area currencies other than Rhodesian pounds. They may be debited for authorized payments to residents of Ghana, for transfers to other Official Accounts related to the same country, and for transfers to the related clearing account at the Bank of Ghana.

Blocked Accounts are nonresident accounts of another category, the purpose of which is to receive funds that are not placed at the free disposal of nonresidents, e.g., certain types of capital proceeds. These may be debited for authorized payments, including the purchase of approved securities.

Imports and Import Payments

A large part of the import trade is carried out through the state-owned Ghanaian National Trading Corporation or similar state trading agencies. Other goods are imported by private importers who must be registered. Certain imports are prohibited. There are six open general licenses which permit the free import from any country of specified commodities (including certain chemicals and fertilizers). All other imports require individual licenses, which are issued within the limits of the import plan. Individual licenses are of two kinds: specific and special unnumbered licenses. All goods not covered by an open general license must be covered by a specific license, but where satisfactory evidence can be produced to the effect that payment for such goods has been made and therefore no transfer of foreign exchange is involved, they can be imported under “special unnumbered licenses”; these are not issued for imports in commercial quantities. A license fee of 1 per cent is payable on the c.i.f. value of all imports under specific license.

Licenses for imports from bilateral payments agreement countries specify the bilateral partner country from which the commodity has to be imported; licenses to import from countries outside the bilateral account group are valid for any of these countries. Licenses are normally issued on a c.i.f. basis but are endorsed to the effect that insurance must be covered in Ghana.

Imports from Rhodesia, South Africa, South West Africa, and the Portuguese Monetary Area are not permitted.

Exchange for payment of approved imports is granted freely by the Bank of Ghana. Imports by the private sector under individual licenses have to be financed on the basis of sight or acceptance documentary credits established by the importer with a commercial bank in Ghana. The opening of all import letters of credit requires the approval of the Bank of Ghana. Importers are required to deposit with the Bank of Ghana a minimum of 15 per cent of the value of letters of credit covering imports of most consumer goods, including consumer durable goods. In practice, however, commercial banks require importers to make downpayments on the opening of letters of credit for all categories of imports. Importers are required to deposit with the Bank of Ghana 15 per cent of the value of their orders for imports of consumer goods to be financed on a collection basis, within 14 days from the date of confirmation of the orders. Exchange control approval must be obtained by banks for a credit ceiling for the individual importer before acceptance documentary credits are established. Documents against acceptance terms for imports valued at more than NȻ 300 require exchange control approval before orders are placed.

Many imports are subject to a levy of 11.5 per cent on the combined amount of c.i.f. value, import duty, and other import charges.

Payments for Invisibles

All payments for invisibles require specific approval of the Exchange Control Department of the Bank of Ghana, and documentary evidence must support all applications.

The following categories of payments are normally authorized in connection with the importation of goods: (1) the buying commission—this must be duly endorsed on the import license and the amount of the authorized commission is deducted from the value of the import license; (2) the transfer of normal bank charges payable to overseas bankers for import payments, provided that the amount of the bank charges and the buying commission combined do not exceed 4 per cent of the c.i.f. value of the goods; and (3) the transfer of funds to cover interest on bills up to 6 per cent per annum. Freight charges must be paid to the local shipping agents; the transfer of funds to cover such charges is normally permitted, provided that the applications are properly documented. Insurance on all imports shipped to Ghana on f.o.b. or c. & f. terms must be arranged in Ghanaian currency with local insurance companies.

Remittances of income by non-Ghanaian employees are limited to 50 per cent of their annual earnings, up to a maximum of NȻ 5,000 a year; this quota is intended to cover all personal and family requirements and commitments outside Ghana, including leave expenses, travel for health purposes, education, gifts, insurance premiums, subscriptions, and donations. Applications for remittances of income by non-Ghanaian self-employed persons are considered on their individual merits by the Exchange Control Department of the Bank of Ghana.

Nonresident companies are, in principle, permitted to transfer abroad freely their net profits, i.e., profits after payment of the prevailing 45 per cent tax on companies and of a 20 per cent withholding tax; at present, however, no profit transfers are being authorized.

The basic annual travel allowance for Ghanaians is NȻ 41.66 for each person 18 years of age or over and NȻ 20.83 for each person under that age. Foreigners resident in Ghana but domiciled elsewhere in the Sterling Area are allowed up to NȻ 500 a calendar year out of their personal remittance quota. Exchange for business travel is granted up to NȻ 20.83 a day, for a maximum of seven days. All residents may buy round-trip tickets in Ghana to the country of destination. Residents of any nationality (except children under 2 years of age, diplomats, and UN personnel) who, for any purpose, are leaving Ghana by air or sea, whether temporarily or not, must pay a travel tax of 10 per cent of the price of the round-trip ticket.

Persons leaving Ghana may take with them Ghanaian currency notes and foreign currency notes (including CFA franc notes) together equivalent to NȻ 100, provided that not more than NȻ 20 is taken in any one currency. Ghanaian banknotes may be taken out by any traveler up to NȻ 20, but may be spent only on Ghanaian aircraft and ships. Nonresident travelers may take out any unutilized foreign currency imported and declared upon entry.

Exports and Export Proceeds

There are three open general licenses for exports, covering such articles as trade samples, advertising materials, postage stamps, gifts up to NȻ 20 in value, and luggage. All other exports require specific licenses from the Controller of Imports and Exports prior to shipment. Most items are exported through the Ghana Agricultural Produce Marketing Board. Exports to Rhodesia, South Africa, South West Africa, and the Portuguese Monetary Area are prohibited.

Exporters are required to collect proceeds from their exports within 60 days of shipment; export proceeds in foreign exchange must be surrendered.

Proceeds from Invisibles

All receipts from invisibles must be sold to an authorized bank. Foreign currency notes may be imported freely, provided that their exportation is not prohibited by the issuing country. Travelers may bring in Ghanaian currency notes in any amount, but new cedi notes in excess of N$ 20 must be declared.

Capital

Foreign investment in Ghana requires prior approval if repatriation is to be guaranteed. The Capital Investments Act, which was promulgated in April 1963, provides for the granting of special benefits to specified existing investments as well as to new investments. Under the Act approval may be granted to investments that contribute to the development and utilization of productive capacity, the reduction of import requirements, the attainment of a high level of employment, or the acquisition of technical skills by citizens of Ghana. Investments granted “approved status” under this Act obtain a guarantee of the right to transfer profits and liquidation proceeds; tax holidays, initial capital allowances, etc., are also available for such investments. The Act also stipulates that the assets of foreign investors may not be expropriated and that, when approved enterprises are nationalized in the public interest, fair compensation is to be determined either by voluntary agreement of the parties or through arbitration by the International Bank for Reconstruction and Development. A Capital Investments Board, whose principal function is to decide which foreign investments qualify for benefits under the Act, has been established.

All outgoing capital movements must be approved; applications for such transfers must be supported by documentary evidence and are considered on their merits. Transfers to beneficiaries under wills and intestacies are approved, provided that all local indebtedness has been paid. Requests for the transfer of funds representing personal assets of foreign residents in Ghana who retire and return to their home country are considered individually on their merits. Applications must be supported by appropriate documentation showing that the savings are genuine and that no illegal transfer of capital is involved. If the amounts involved are very large, their transfer may be authorized over a period of a few months. Proceeds from the liquidation of real assets of foreign nationals leaving Ghana may be directed to reinvestment in registered government stocks, Treasury loans, or Treasury bills; the interest accruing on such investments is transferable. Applications for the transfer abroad of funds by emigrants must be accompanied by appropriate documentation and are also considered on their individual merits.

Loan and overdraft facilities to resident companies controlled by nonresidents require the individual approval of the exchange control authorities.

Transactions in securities are controlled to ensure that capital is not transferred abroad without express permission. In respect of portfolio investments, residents have to obtain approval for any switch in their holdings of securities issued by nonresidents.

Changes during 1966

January 1. The import licensing procedures announced on October 27, 1965 came into operation. The special list of commodities that could be imported only from bilateral payments agreement countries was abolished. Four open general licenses for imports from all sources were established, replacing the existing ones. An export incentive scheme for manufactured goods was introduced, which provided for the issue of additional import licenses to manufacturers exporting goods made in Ghana, including goods incorporating imported raw materials or components (the scheme was subsequently abolished). A list was issued of goods for which, save in exceptional circumstances, no import licenses would be issued; these included various kinds of textiles and footwear.

January 7. Imports from and exports to Rhodesia were prohibited.

January 17. Exchange allocations for tourist and business travel were reduced. The basic travel allowance was cut back from Ȼ 120 to Ȼ 50 a year. Exchange for business travel would be granted up to Ȼ 25 a day for a maximum of seven days.

January 17. Imports valued at more than Ȼ 360 and payable on documents against acceptance terms required prior exchange control approval. All applications for the opening of import letters of credit required the prior approval of the Bank of Ghana. The deposit requirements for such credit were extended to imports of industrial raw materials and to capital goods, for which deposits of 5 per cent and 1 per cent, respectively, had to be made.

March 4. Specific import licenses issued after January 4, 1966 and for which letters of credit had not yet been established were recalled for revalidation.

March 18. Authorized banks could, without prior reference to the Bank of Ghana, establish import letters of credit for permitted imports under revalidated specific licenses, provided that the payment terms conformed to the endorsement on the import license. Importers could, without prior reference to the Bank of Ghana, make payments for imports under bills for collection, provided that the bills were received and paid through an authorized bank. The cash margin requirements on import letters of credit for pharmaceuticals, spare parts, essential foodstuffs, raw materials, and capital goods were abolished.

May 16. Importers were not permitted to take up new suppliers’ credits other than normal trade credits of up to 360 days’ maturity.

June 1. The servicing of medium-term suppliers’ credits was suspended, pending the outcome of negotiations with major creditor countries for a rescheduling of such payments.

June 13. The Bank of Ghana announced that from June 1, 1966 import licenses would be limited to the amounts foreseen in the foreign exchange budget.

August 19. The Bank of Ghana announced a schedule for the settlement of arrears on current payments, other than profits, that were due prior to June 1966.

December 1. The Bank of Ghana announced further releases of exchange in respect of arrears and for new payments. Payments under the separate arrangements with large creditors were not accelerated, nor were profit remittances resumed. Under the announcement of August 19, the Bank had so far provided the commercial banks with foreign exchange cover only for import payments, for transfers under personal remittance quotas, and for students’ expenditures; it would now do so for many other current transactions, including passenger fares, freight earnings, technical fees, and subscriptions.

December 9. Agreement was reached with the governments that were guaranteeing the major part of the outstanding, medium-term (1-12 years) suppliers’ credits on the principles which should underlie the rescheduling of Ghana’s payments on suppliers’ credits. Details were to be agreed in bilateral agreements between Ghana and the creditor countries concerned.

December 16. A new List of Restricted Commodities was published. With effect from January 1, 1967, no import licenses would be issued for these goods, except in special circumstances. The list included poultry, various foodstuffs, fish (fresh, chilled, or frozen, not caught by Ghanaian-owned or Ghanaian-chartered vessels), fruits, coffee, all alcoholic beverages, cigarettes, gasoline, gas oil, diesel oil, soap, certain building materials, certain textiles, and all footwear.

December 17. The Ghana pound, which had circulated concurrently with the cedi, was demonetized.

December 30. It was announced that, with effect from January 1, 1967, no special unnumbered licenses would be issued to import goods in commercial quantities.

Note.—The following changes took place early in 1967:

January 21. Authorized banks were required to deposit at the Bank of Ghana the full cedi equivalent of amounts received from residents for the purpose of making subsequent transfers abroad.

January 23. Two additional open general licenses permitted the unrestricted importation from all sources of certain pharmaceuticals, fertilizers and other chemicals, tools, coke, and pig iron.

January 23. Further imports were prohibited by inclusion in the List of Restricted Commodities. These included cocoa, lard, palm oil, coconut oil, travel goods, certain textiles, and phonograph records.

February 17. The International Monetary Fund concurred in the replacement of the existing currency unit, the cedi, with a new unit called the new cedi. The new cedi was the equivalent of 1.2 old cedis. The move did not involve any appreciation or depreciation of Ghana’s currency. The par value of new cedi 1 = US$1.40 replaced that of old cedi 1 = US$1.16667. The old cedi would cease to be legal tender on May 23, 1967.

Greece

Exchange Rate System

The par value is 0.0296224 gram of fine gold per Greek Drachma or Dr 30.00 = US$1. The official rates are Dr 29.90 buying, and Dr 30.10 selling, per US$1. Market rates for other currencies vary between limits which result from combining the official limits for the U.S. dollar maintained by Greece and such limits in force in the country of the other currency concerned.

Administration of Control

Controls are administered on the policy level by the Ministry of Coordination, the Ministry of Trade, the Currency Committee, and the Foreign Trade Board. Exchange control is implemented and applied, and import approvals are granted, by the Bank of Greece and authorized commercial banks. Import and export licenses are issued by the Bank of Greece, authorized banks, and the Ministry of Commerce and, in some cases, require the prior approval of the competent ministry.

Prescription of Currency

Settlements on account of merchandise transactions and invisibles are made on the basis of the origin or destination of the goods and services involved or in the currency and manner provided for by trade and payments agreements. Settlements with countries with which Greece has bilateral payments agreements are made through controlled accounts, with the U.S. dollar as the currency of account.1 Settlements with all other countries are made in any convertible currency or through Foreign Sight Deposit Accounts in drachmas.

Nonresident Accounts

Nonresidents are permitted to open with Greek banks convertible Foreign Sight Deposit Accounts in drachmas or convertible currencies. These accounts may be credited with convertible foreign exchange or the proceeds from sales of convertible currencies, with authorized payments by residents of Greece for imports or services payable in convertible currencies, and with transfers from other Foreign Sight Deposit Accounts. They may be debited for payments to residents for current transactions, for transfers to other Foreign Sight Deposit Accounts, and for the purchase and transfer abroad of any convertible currency. Any withdrawal from drachma accounts for use in Greece and any conversion of foreign exchange withdrawals into drachmas entail the loss of the conversion right of the sums withdrawn. The maximum rate of interest on such accounts is 1.50 per cent per annum.

Nonresident investors enjoying the privileges of Legislative Decree No. 2687/53 (see section on Capital, below) may also establish time deposits, for a minimum period of six months and with a minimum deposit in convertible currencies equivalent to US$10,000; balances on these accounts earn interest of between 5 per cent and 6 per cent, and principal and interest are freely transferable at maturity in the currency of the deposit.

All drachma assets of nonresidents other than those in Foreign Sight Deposit Accounts must be declared and are held in blocked accounts. Domestic banknotes in excess of Dr 200 brought in by nonresident travelers must also be credited to a blocked account. Subject to the approval of the exchange control authorities, balances on blocked accounts may be used for such purposes as personal expenses in Greece up to Dr 30,000, purchases of securities officially listed on the stock exchange in Greece, and purchases of real estate in Greece. Amounts of up to Dr 60,000 may be released for remittance by each account holder, provided that his account had been opened before December 31, 1963, that the money deposited was derived from general revenue sources, and that the money was deposited in a blocked account during the current or prior calendar year; amounts of up to Dr 30,000 may be released semiannually for remittance by each account holder, from accounts opened after January 1, 1964, provided that the money deposited was derived exclusively from rents. Other amounts of balances on blocked accounts may also be transferred abroad with the prior approval of the Bank of Greece. Blocked balances may be deposited with a commercial bank, where they earn interest at current rates for sight deposits.

Imports and Import Payments

Imports of a few commodities from all sources and of all commodities originating in or shipped from Rhodesia are prohibited. Imports of cotton textiles from Hong Kong are suspended. All imports, other than those with an invoice value c.i.f. of the equivalent of US$100 or less for which payment will be made through an authorized bank, require approval. For most imports, prior approval is required; however, for certain commodities, mainly machinery and raw materials, imports may be effected without prior approval. The granting of an import license implies the allocation of appropriate foreign exchange. Apart from imports for which special licenses are required, two general import procedures (E and D) are applicable to private imports, mainly for statistical purposes. Under procedure E, the approval of an authorized bank is required (1) for imports from countries participating in the European Monetary Agreement (EMA) when payment is to be made in a convertible or externally convertible European currency; (2) for imports from Canada or the United States when payment is to be made in free dollars, i.e., not on the basis of procurement authorizations under U.S. aid; (3) for imports from countries with which Greece has concluded bilateral payments agreements when payment is to be made through the relevant clearing account; and (4) for imports from Cyprus when payment is made in free Cyprus pounds or through one of the EMA countries. No license is necessary under procedure E, but import applications which have been approved by an authorized bank are registered with the Bank of Greece. Under procedure D, an import approval issued by the Bank of Greece is required for imports financed by U.S. aid, for imports other than those covered by procedure E, and for imports for which the importer requests changes in the general provisions concerning the terms of shipment, method of settlement, terms of payment, etc. For all goods that do not require a special import license, prices must be approved and pro forma invoices visaed in Greece by a local Chamber of Commerce.

Special licenses are required for imports of commodities in List A (certain luxury items, textiles, automobiles and parts, and certain foodstuffs, including rice) and List B (certain types of machinery and spare parts). Special regulations govern imports of petroleum products similar to those produced by Greek refineries and imports of certain other items, such as goods under monopoly control, medicines, narcotics, wheat and flour, sulphur, and motion pictures, as well as barter transactions based on clearing agreements.

For purposes of applying regulations concerning payments for imports and advance deposit requirements, all private imports are classified in nine lists (P-3, P-6, F, F-50/1-3, and F-100/1-3). Payments for imports may be made by letter of credit, by cash against shipping documents, or by acceptance of time drafts (which is permitted only for goods in Lists P-3 and P-6, the time limit being three months for List P-3 and one year for List P-6, except for machinery and spare parts, for which the time limit is three years). The Ministry of Commerce may authorize longer payment periods and may also approve deferred payments for imports not included in any one of the nine lists. When time drafts are accepted, a personal written undertaking amounting to 4 per cent (List P-6) or 8 per cent (List P-3) of the amount of the draft is required as a guarantee that the payment will be made within the prescribed time limits.

When a letter of credit is opened, the importer is required to deposit in drachmas the whole amount of the credit with the intervening bank. In addition, for those imports included in Lists F-100/1-3, further cash deposits of 26-40 per cent of the c.i.f. value are required as security for import duties and other taxes. For imports under procedure E, this deposit must be made when the import approval is obtained; for imports under procedure D, the deposit must be made within 20 days of the import approval.

Advance deposits are not required for imports for which payment is to be made by acceptance of time drafts. When payments for imports are to be made against sight drafts, advance deposits in cash are required for private imports included in Lists F-50/1-3 and F-100/1-3.2 Advance deposits are the same for all countries. They are calculated on the c.i.f. invoice value and consist of two components: a prepayment required when applying for an import approval and an advance (security) against import duties and other taxes. Security deposits, however, are not required for capital goods and spare parts that are exempt from import duty by virtue of the laws governing investment of foreign or domestic capital. The rates of deposit for each list of imports are set out below.

PrepaymentSecurityTotal
In per cent of invoice value
List F-50/1502070
List F-50/2451863
List F-50/3351449
List F-100/110040140
List F-100/290361263
List F-100/3702898

For goods imported and cleared through customs in the Dodecanese Islands, the advance against import duties and other taxes is reduced to one half of the above-mentioned percentages. When imports are financed with U.S. aid funds, a further deposit of 10 per cent must be made in cash or by bank guarantee and in favor of the Greek State, in addition to any deposit as specified above. All deposits must be made with the intervening bank (1) at the time the import approval is obtained, for imports under procedure E, and (2) within 10 days (for Athens and the Piraeus area) or 20 days (for the provinces) of obtaining the import approval, for imports under procedure D. Upon delivery of the shipping documents, the importer’s bank issues a permit for the customs clearance of the goods, and advance deposits are refunded; however, for goods included in Lists F-50/1-3 and F-100/1-3 the deposits must be retained by the commercial bank for a period of two months from the date on which they were made.

Certain companies, public agencies, and organizations that have been designated as public service institutions are exempt from the advance deposit requirements.

Advance payments may be made to foreign suppliers for all imports against delivery of shipping documents or against a letter of undertaking issued by a foreign bank. Special regulations govern imports by state agencies, public entities, and public utility companies. Except for goods in List P-6, which may be shipped prior to approval, goods must be shipped within six months and arrive in Greece within nine months after the date of import approval. Final settlement of the value of imported goods must take place within 45 days following the date of arrival at the first Greek port; however, settlement must take place within 90 days following the date of arrival for goods in List P-6, and within 60 days following the date of import approval for goods in Lists F-50/1-3 and F-100/1-3.

Payments for Invisibles

Payments for invisibles require approval, but this is granted freely for expenses incidental to authorized trade transactions and for certain other transactions. Transfers abroad on account of specified categories of insurance (shipping, aviation, merchandise transport, and fire) or reinsurance (accident and life) are authorized by the Bank of Greece up to specified percentages of the amounts owed.

Greek residents going abroad for family reasons, tourist travel, or business are entitled to US$200 for each trip and for any number of trips a year; instead of this allowance, tourists participating in group tours are granted an amount based on a cost declaration submitted by the travel agency. Exporters and manufacturers are allowed US$20 a day for a maximum of 45 days when they travel to the United States, Canada, or the Far East; for all other countries the allowance is US$15 a day for a maximum of 30 days. Requests for larger amounts or from other businessmen, commercial representatives, etc., are submitted to the Foreign Exchange Subcommittee.

Persons traveling abroad may take with them a maximum of Dr 200 in Greek banknotes. Nonresident travelers holding Greek passports are required to declare their foreign exchange when leaving Greece if the amount of such exchange exceeds US$500 or its equivalent; no declaration is required from holders of foreign passports.

Exports and Export Proceeds

Exports to Rhodesia are prohibited. All exports require individual licenses, but most exports are free of quantitative limitation. Export proceeds must be surrendered within 150 days from the date of export of the goods; in special cases, however, the authorities are empowered to extend this period up to two years for manufactures and up to one year for other commodities. The Ministry of Commerce may license barter transactions involving the export of tobacco, certain types of fruit, or wine; such transactions are permitted only with Mainland China, Czechoslovakia, Eastern Germany, Hungary, Iran, Israel, Poland, and the U.S.S.R.

Proceeds from Invisibles

Exchange receipts representing payments for services must be surrendered. Exchange proceeds from shipping are exempt from the surrender requirement, but shipowners have to pay for supplies, repairs, etc., and any taxes and fees, and must cover their disbursements and expenses in Greece in local currency obtained through the sale of foreign exchange to the Bank of Greece.

Travelers may bring in a maximum of Dr 200 in Greek banknotes in denominations of Dr 50 and Dr 100 only. Any surplus is deposited in a blocked account with the Bank of Greece; subject to prior approval by the Bank, the surplus may be taken out on departure or spent in Greece on personal financial requirements. Greek residents returning to Greece must declare the foreign exchange in their possession. Nonresident travelers of foreign nationality need not declare their holdings of foreign exchange at the time of entering the country, and nonresidents holding Greek passports are required to declare their foreign exchange only if they intend, when leaving Greece, to take out again foreign exchange in excess of US$500 or its equivalent.

Capital

Commercial banks and investment banks may freely borrow convertible currencies abroad, provided that they lend corresponding amounts as foreign currency loans for periods of at least five years to productive enterprises established in Greece. All other investments in Greece by nonresidents are subject to approval. Such approval is automatic for purchases of real estate for personal use. Under Legislative Decree No. 2687/53, approved foreign investments which aim at the promotion of national production or otherwise contribute to the economic advancement of Greece may be granted preferential treatment. Under Law No. 4171-61, as amended by Legislative Decree No. 4256/62, further privileges are provided for foreign capital participating in investment projects in Greece exceeding Dr 60 million in value. Moreover, Legislative Decree No. 4256/62 provides additional repatriation facilities for foreign investments which promote exports.

Repatriation facilities are as follows: (1) Approved investments according to the provisions of the legislation mentioned above may not be repatriated before one year from the date the enterprise begins to operate productively and in no case before one year from the date the capital was imported. (2) The repatriation of foreign capital may not exceed 10 per cent a year of the amount of capital imported. The repatriation of dividends on equity capital and of interest on loan capital may not exceed 12 per cent a year and 10 per cent a year, respectively. (3) Under the provisions of Law No. 4171/61, profits on approved foreign investments may be transferred abroad in amounts not exceeding 6 per cent a year of the repatriated portion of the capital, provided, however, that the amount of profits transferred shall not exceed 8 per cent of the foreign exchange earnings of the enterprise from the sale of its products abroad. (4) For investments made under Legislative Decree No. 2687/53 that are not covered by Law No. 4171/61, the transfer of profits is related to the residual capital remaining in Greece, and the transfer privilege expires as soon as all capital has been repatriated. (5) Under the provisions of Legislative Decree No. 4256/62, the repatriation of capital and profits of foreign investments approved under the provisions of Legislative Decree No. 2687/53 can exceed the rates specified in (2) above, up to 70 per cent of the foreign exchange earnings of the enterprise from the sale of its products abroad. Also, foreign loans approved under Legislative Decree No. 2687/53 can be repatriated at an annual rate of up to 20 per cent, provided that the amount of the loan does not exceed double the value of the share capital and that the amounts repatriated do not exceed 70 per cent of the foreign exchange earnings of the corporation.

Deviations from the general regulations may be approved for foreign capital imported to develop exports of agricultural and mining products or invested in enterprises of special importance to the economy. Specified foreign short-term investment may also be granted preferential treatment in respect of the repatriation of capital and the transfer of interest.

Transfers of capital abroad by residents require approval.

Changes during 1966

March 7. The Athens Chamber of Commerce was authorized to negotiate bilateral trade agreements with its counterparts in Albania and Mainland China. A preliminary agreement with the Albanian Chamber of Commerce was signed on March 24.

March 17. Additional regulations were issued regarding loans with a foreign currency clause extended by commercial and investment banks. The loan agreement must state the foreign currency in which the loan would be extended, and it was not permitted subsequently to change the currency specified.

April 1. Imports originating in or shipped from Rhodesia were prohibited.

April 2. All commercial exports to Rhodesia were prohibited; exports of arms had been prohibited since November 1965.

June 6. The facility for the release of amounts up to Dr 60,0000 from blocked accounts opened before December 31, 1963 was limited to amounts deposited in such accounts during the current or prior calendar year.

June 8. The Government imposed a requirement that advance deposits (both prepayment and security deposits) made by importers for their orders of certain goods be retained by the banks for two months instead of being refunded to the importer upon settlement of the shipping documents. The goods covered by this new measure were those in Lists F-50/1-3 and F-100/1-3. Final settlement for such goods could be made within 60 days of the date of import approval (previously, within 45 days following the date of arrival).

June 29. A fee of 10 per cent was imposed on the f.o.b. value of all coffee of Brazilian origin paid for with convertible exchange. Furthermore, licenses for the import against payment in convertible currencies of Brazilian coffee, whether imported direct from Brazil or through intermediaries in third countries, would not be issued unless the f.o.b. price was 15-20 per cent below that quoted for delivery against payment through the Brazilian clearing.

July 8. A list was published of companies, public agencies, and organizations designated as public service institutions. These institutions were exempted from the advance deposit requirements for imports.

July 19. Payments between Greece and Spain were made in convertible currencies.

July 31. The bilateral payments agreement with Finland was terminated.

August 4. Greek tourists traveling in group tours were not permitted the travel allowance of US$200 but a reasonable amount within this limit, on the basis of a declaration of costs met by the travel agency.

September 1. Adjustments in interest rates included reductions in the maximum rates payable on drachma sight deposits and increases in the maximum rates payable on drachma time and savings deposits.

September 1. Certain credit facilities in respect of imports from Eastern European countries with which payments agreements were in force were abolished; similar credit facilities were introduced again on January 20, 1967.

October 6. A tax of 30 per cent was imposed on imports of passenger automobiles.

October 27. The conditions were announced on which approval could be granted for the sale on credit, to payments agreement countries only, of agricultural products from government stocks in exchange for capital equipment to be supplied to the private sector.

October 30. Imports of cotton textiles from Hong Kong were suspended.

Guatemala1

Exchange Rate System

The par value is 0.888671 gram of fine gold per Guatemalan Quetzal or Q 1.00 = US$1. The official rates are Q 1.00 buying, and Q 1.01 selling, per US$1. The Bank of Guatemala quotes exchange rates for certain other currencies 2 on the basis of their rates in the New York market. On January 27, 1947, Guatemala notified the Fund that it was prepared to accept the obligations of Article VIII, Sections 2, 3, and 4, of the Fund Agreement.

Administration of Control

Exchange control is administered by the Bank of Guatemala (Exchange Department) under the direction of the Monetary Board. Foreign exchange transactions of the public sector are carried out exclusively through the Bank of Guatemala; those of the private sector are carried out through the medium of authorized banks for the account of the Monetary Stabilization Fund maintained by the Bank of Guatemala.

Prescription of Currency

All exchange transactions must be carried out through banks. Payments to Costa Rica, El Salvador, Honduras, and Nicaragua in respect of trade and invisibles are normally settled in Guatemalan quetzales through the Cámara de Compensación Centroamericana, a clearinghouse established by the central banks of Central America to foster the process of economic integration of their countries. The Exchange Department of the Bank of Guatemala, however, is empowered to authorize the sale of currencies of other Central American countries to make payments to the Central American area. There are no obligations prescribing the currency for payments to and from other countries.

Imports and Import Payments

Import licenses are not required except for imports of maps of Guatemala, explosives, poultry, and wheat flour. Within eight days after confirmation, importers must register with the Exchange Department any firm order to import merchandise. (Imports originating from Central American countries and included in the General Treaty for Central American Economic Integration are exempt from this requirement.) Importers must effect their registered imports during the 90-day validity of the registration.

All remittances abroad to pay for imports require exchange licenses, which are granted freely by the Exchange Department; the exchange is granted by the authorized banks upon submission of the registration form and the shipping documents. Checks denominated in quetzales are authorized freely for payment for specified imports from Central American countries. Payments for imports which have to be fully or partially prepaid must be made by letter of credit. When it is impossible to establish a letter of credit and the prepayment exceeds Q 1,000, a deposit equal to 25 per cent of the amount of foreign exchange requested must be made with the Bank of Guatemala or an authorized bank in cash or in government bonds by importers who are not established importers in the country or who are unable to provide sufficient proof of the nature of the transaction; the deposit is refunded when the goods arrive in Guatemala. Importers of merchandise for which payment must be made in cash or in installments, and importers of merchandise on consignment, must present the original shipping documents usually required by the Guatemalan customs for the clearance of goods.

Authorizations to withdraw imports from customs must be obtained from the Exchange Department or an authorized bank, except for imports whose value does not exceed Q 50, household goods, samples, printed advertising material, and those imports originating in Central American countries and included in the General Treaty for Central American Economic Integration. The Exchange Department and the authorized banks issue such authorizations without delay. The customs officials may refuse clearance of goods if discrepancies are found between the information contained in the authorization issued by the Exchange Department and in the import documents. For the specified imports from Central American countries, the importer must complete, at either the Exchange Department or the customs office, a special form required by the Exchange Department, giving a description of the merchandise to be imported and the date on which he made the advance payment or the date on which he undertook to pay in the future. If these forms are completed at the customs office, they must be forwarded daily to the Exchange Department.

A surcharge of 100 per cent of the customs duty may be applied to products originating in or imported from countries with which Guatemala has an unfavorable trade balance. On December 31, 1966, this surcharge applied to certain imports from 28 countries.3 This surcharge is waived if the goods are transported in Guatemalan ships. Moreover, all imports from other areas which are included in the agreed uniform tariff list of the countries participating in the General Treaty for Central American Economic Integration are exempt from the surcharge.

Payments for Invisibles

All transfers abroad on account of current invisibles require authorization by the Exchange Department, mainly for the purposes of checking capital transactions. Payments of up to Q 1,000 to El Salvador or up to Q 200 to Costa Rica, Honduras, and Nicaragua do not require authorization by the Exchange Department.

Requests for foreign exchange for payments for current invisibles must be supported by such documents as may be required by the Exchange Department to verify that the operation is genuine. The sale of foreign exchange for most categories of current invisibles, including remittances of income from and repayments of registered foreign loans and investments, is authorized freely. For certain payments for current invisibles, exchange is sold up to established limits; in some cases, requests in excess of these limits are approved. There is an exchange allowance equivalent to a maximum of Q 2,500 a person in any one year for tourist travel abroad. Up to that limit, exchange may be purchased for tourist travel as follows: for each trip to Central America, Q 300; to Mexico, Panama, and the Caribbean area, Q 750; and to the rest of the world, Q 2,500. Minors not traveling alone are entitled to half these allowances. The exchange allocation for travelers on business is Q 750 a person for journeys to British Honduras and the Mexican border towns, and Q 2,500 for journeys to other parts of the world. Subject to the Q 2,500 annual limit, exchange is granted up to the equivalent of Q 50 for each day of planned tourist travel abroad; exchange in excess of this daily maximum is granted when an additional allotment is considered justified. To ensure that both limits are observed for tourist travel, the traveler, when purchasing travel exchange, must lodge with the Bank of Guatemala a guarantee deposit in quetzales equivalent to the foreign exchange purchased; the deposit is refunded upon return to Guatemala, provided that the traveler either submits proof of having stayed abroad for at least the number of days for which he purchased the exchange or returns foreign exchange corresponding to the number of days of the shortfall. All international air passages are subject to a tax of 5 per cent; furthermore, such passages (with the exception of those for travel within Central America) are subject to a tax of Q 3 for a one-way ticket or Q 5 for a round-trip ticket.

The exchange allocation for remittances abroad for family maintenance is Q 250 a month for each relative (Q200 for those under 18 years of age), up to a maximum of Q 700 a month for each beneficiary family. Foreign technical personnel employed in Guatemala may remit abroad up to two thirds of their salaries if their families reside abroad, or up to one third if their families reside in Guatemala. Foreign technicians leaving the country permanently may, subject to individual approval, transfer their savings up to the full amount of their earnings in Guatemala. Limits are also imposed on remittances for students’ expenses abroad.

The export of Guatemalan banknotes and coins is not prohibited; however, Guatemalan banknotes and coins received from abroad are not converted by the Bank of Guatemala unless they come from Costa Rica, El Salvador, Honduras, or Nicaragua. For these countries, the Bank of Guatemala guarantees monthly conversions into U.S. dollars up to the following limits: Costa Rica, Q 125,000; El Salvador, Q 400,000; Honduras, Q 300,000; and Nicaragua, Q 125,000. There are no regulations prohibiting the export of foreign banknotes.

Exports and Export Proceeds

All exports require an export license from the Exchange Department of the Bank of Guatemala. Exports to Central American countries of goods included in the General Treaty for Central American Economic Integration are exempt from this requirement; for these goods, the exporter must complete a special form required by the Exchange Department presenting evidence that the export proceeds have been sold to an authorized bank. The application for an export license must be accompanied by a full description of the nature of the transaction, including the terms and method of payment. The Exchange Department issues licenses only if certain conditions have been met: (1) for exports paid for in advance or in cash, it requires evidence that the export proceeds have been sold to an authorized bank; (2) for exports on credit, it requires an undertaking to sell the relevant exchange to an authorized bank within 90 days of the date the license is issued; and (3) for exports on consignment, it requires the exporter’s certified declaration showing the estimated value of the export and his undertaking to sell the relevant exchange to an authorized bank within a period not exceeding 180 days after the issuance of the license.

Proceeds from Invisibles

Foreign exchange proceeds from invisibles must be declared and surrendered. The purchase of Salvadoran banknotes by authorized banks is limited to Ȼ 500 a person.

Capital

All foreign capital investments in Guatemala must be declared and registered with the Exchange Department of the Bank of Guatemala. All investment by foreign, domestic, or foreign-controlled companies in the construction of private housing in Guatemala requires the prior approval of the Ministry of Economy; such investment may be limited to a specified over-all amount a year, it must meet certain minimum quality and financing standards, and the sales value of a housing unit must not exceed Q 6,000. All outgoing capital payments require exchange licenses, which, like those for the transfer of profits and dividends, are granted freely for remittances of registered foreign investments. Transfers abroad of resident-owned capital are not permitted, with the exception of transfers for the purpose of investing in, or financing of, commercial, agricultural, or industrial firms in Costa Rica, El Salvador, Honduras, and Nicaragua.

Changes during 1966

April 14. Decree-Law No. 443 provided that imports to be used in the production of manufactures for export could be brought in duty-free. Firms wishing to benefit were required to apply for registration as “export industries” and to ship their imports and exports by national means of transportation and through national ports.

April 14. Decree-Law No. 444 provided that imports specifically exempted from import duty and imports from countries with which Guatemala had no diplomatic relations must be transported by enterprises in which there was government participation. Excluded from this restriction were goods exempted from duty under national development laws, when these goods originated in countries with which Guatemala had a favorable balance of trade. With certain exceptions, imports of the commodities referred to above, exports of firms enjoying benefits under national development laws, exports of minerals, and exports of agricultural products subject to licensing or quotas must, when transported by sea, channeled through one of the two government-owned ports—Matías de Gálvez or Champerico.

May 4. Decree-Law No. 468 clarified and amended Decree-Law No. 444 of April 14. The requirement regarding the use of state-owned transport companies would be applied only to shipment to Guatemala by sea or air and not to internal transport. The provision relating to imports from countries with which Guatemala had no diplomatic relations was suppressed. The requirement to ship certain imports and exports exclusively through two specific ports was extended to cover exports of all agricultural and livestock products except coffee. Movements of petroleum products were temporarily exempted from these requirements.

July 14. The Government announced that it had taken action to settle certain prewar foreign obligations (“the sterling debt”).

July 14. The Government authorized the Exchange Department of the Bank of Guatemala to permit the transfer of capital for investing in, or financing of, commercial, agricultural, and industrial firms in Costa Rica, El Salvador, Honduras, and Nicaragua.

August 5. Certificates of origin were no longer required for imports.

Note.—The following changes took place early in 1967:

January 1. In accordance with Decree-Law No. 1627 of December 9, 1966, certain taxes were imposed. These included a withholding tax of 10 per cent on dividends, profits, and bonuses paid in 1967 by natural or juridical persons to persons resident abroad; a tax of 5 per cent on all international air passages sold in 1967; a tax of 5 per cent on the first sale in Guatemala in 1967 of an imported passenger automobile; and a tax of 15 per cent on the local list price of passenger automobiles of 1966 or 1967 models imported by private persons.

January 3. A limit of Q 50 for each day of planned foreign travel was imposed on foreign exchange sales for tourist travel abroad. A guarantee deposit was imposed in an amount equivalent to the value of the exchange purchased, to be made at the Bank of Guatemala at the time the exchange was purchased.

Guinea

Exchange Rate System

No par value for the currency of the Republic of Guinea has been established with the Fund. The unit of currency (introduced on March 1, 1960) is the Guinean Franc, defined as a monetary unit containing 0.0036 gram of fine gold. It corresponds to GF 50 = 1 French franc and GF 246.853 = US$1. The official buying and selling rates are GF 247 and GF 253 per US$1, respectively. These rates apply to all transactions and include a bank commission. Clearing account transactions under bilateral payments agreements are carried out on the basis of GF 246.853 per US$1.

Administration of Control

The Central Bank of the Republic of Guinea is the only authority in exchange control matters; this authority is carried out through the Exchange Control Office of the Bank. The Bank has not delegated any of its exchange control powers to any other bank or institution. All settlements with foreign countries, including payments for imports, require individual licenses from the Exchange Control Office.

Import and export licenses are issued, within the framework of an annual program, by the Ministry of Foreign Commerce and Banks (the Office of the Director of Foreign Trade) after applications have been screened by the National Economic Commission.

Prescription of Currency

Settlements on account of transactions covered by bilateral payments agreements are made in currencies prescribed by, and through accounts established under, the provisions of the agreements.1 Settlements with other countries are made in convertible currencies.

Nonresident Accounts

There are three types of nonresident accounts: Nonresident Transferable Accounts in Foreign Currencies; Nonresident Transferable Accounts in Guinean Francs; and Blocked Accounts.

Balances in Blocked Accounts, which are maintained in Guinean francs, represent funds held by nonresidents when their businesses were nationalized. When the commercial banks were liquidated, these balances were transferred to the Crédit National, the principal government-owned deposit bank. No regulations have yet been issued to permit debits to Blocked Accounts.

Imports and Import Payments

There is no list of prohibited imports, but certain imports are not being licensed. All imports, other than those for the Seven-Year Plan, require individual licenses, which are issued by the Ministry of Foreign Commerce and Banks, after applications have been screened and approved by the National Economic Commission. Once an import license has been issued, authorization for the corresponding payment is granted by the Exchange Control Office. Imports by foreign concession holders require import licenses for statistical purposes only and are not restricted.

Imports into Guinea are made within the framework of an annual import program. This program is prepared jointly by the Ministry of Foreign Commerce and Banks and the Ministry of Domestic Trade on the basis of the country’s import needs, the domestic production possibilities of import substitutes, and experience with the previous year’s import program. The program requires the approval of the National Economic Commission, which takes into consideration the amount of imports foreseen under the program, the sources of imports, and the availability of convertible currencies and of balances under payments agreements.

Certain items are imported outside the import program. These are goods for which foreign exchange is derived from sources other than the exchange reserves of Guinea—e.g., imports made by a foreign concession holder (the Fria Company) and by foreign embassies—and goods for the Seven-Year Plan. All commercial imports other than those by the Fria Company are made by state enterprises that specialize in various types of commerce.

Payments for Invisibles

All payments for invisibles require the authorization of the Exchange Control Office.

Payments for freight and insurance in connection with imports are authorized as part of the import license. No exchange is granted for other types of insurance with companies abroad. There is no basic allocation for tourist travel; each application is considered individually. There is a basic allocation for business travel expenses (other than transportation) of GF 15,000 a trip. Government officials on official missions are permitted an allowance of GF 2,000 a day if they travel in Africa and GF 2,500 a day if they travel outside Africa. Pilgrims are granted exchange up to the equivalent of GF 60,000 for each pilgrimage. In cases of serious illness, provided that a doctor’s certificate is submitted, Guinean nationals are granted foreign exchange for medical care abroad or are permitted to transfer exchange for the care of relatives receiving medical treatment abroad. Individual authorization is required for the payment in Guinea of all fares for foreign travel.

Payments for family support may be made up to GF 10,000 a month for each beneficiary, whether child or adult. For officially recognized study abroad, the student’s relatives may transfer the equivalent of the amount of a government scholarship, i.e., GF 22,500 a month. Students starting their studies abroad are granted an additional foreign exchange allowance of up to GF 30,000. The Foreign Investment Law guarantees that at least 20 per cent of the net annual profits of approved foreign investments may be transferred abroad; the percentage actually permitted to be transferred depends on the agreement concluded between the enterprise concerned and the Government. In addition to transfers under other regulations, foreign planters are permitted to transfer abroad GF 4 per kilogram of pineapples exported, GF 3 per kilogram of bananas exported, and GF 2 per kilogram of citrus fruit exported. Expatriate workers employed by the public sector in Guinea may transfer abroad 30 per cent of their net monthly salaries if they are married and 20 per cent if they are single; expatriate workers employed by the private sector may transfer abroad 25 per cent of their net monthly salaries if married and 15 per cent if single.

The export of Guinean currency is prohibited.

Exports and Export Proceeds

The Ministry of Foreign Commerce and Banks in cooperation with the Ministry of Domestic Trade establishes an annual export program, which requires the approval of the National Economic Commission and the Government.

All exports require individual licenses in order (1) to assure the implementation of the export program (particularly in respect of commitments under bilateral trade agreements); (2) to permit the Treasury to levy certain duties (e.g., mining companies must pay export taxes of 6 per cent on the value of ores exported); (3) to prevent shortages of goods needed for domestic consumption; and (4) to prevent the export of capital. Special authorization from designated agencies is required in addition to the export license for the following commodities: wild animals (dead or alive), edible animals, articles of historical or ethnographical interest, jewelry, articles made of precious metals, and plants and seeds. An export license is granted only when the exporter assumes the obligation to surrender the proceeds immediately after they are collected.

Exports other than those effected by the Fria Company are made by a state institution, Guinexport. Foreign planters are granted special transfer privileges related to the quantity of pineapples, bananas, or citrus fruits exported (see section on Payments for Invisibles, above).

All export proceeds must be surrendered; however, the Fria Company is allowed to retain 66⅔ per cent of its export earnings to pay for imports and invisibles and for the transfer of capital.

Proceeds from Invisibles

Exchange proceeds accruing to residents in respect of invisibles must be surrendered. The import of foreign banknotes is permitted freely, subject to declaration on entry. Nonresidents may retain the foreign banknotes they brought in and may sell them locally to finance their expenses, whereas Guinean nationals are required to surrender all foreign banknotes they bring in. The import of Guinean currency is prohibited.

Capital

All capital transfers require authorization. Outward capital transfers by Guinean nationals are prohibited.

The Foreign Investment Law (Law No. 50/AN/62) of April 5, 1962, which replaced a more restrictive one of May 1960, provides guarantees against nationalization for foreign investments in the industrial and mining sectors; it also provides for preferential tax and customs treatment applicable to foreign investments and for the transfer of profits, interest, amortization, and proceeds accruing from the liquidation of such investments. Small and medium-sized enterprises in which at least GF 150 million is invested over a 3-year period may receive exemptions for a period of 7 to 10 years; exemptions for up to 25 years may be granted on long-term investments of particular importance to the Guinean economy. The actual conditions under which foreign investments may be made are subject to negotiations within the terms of this code.

Changes during 1966

July 6. A bilateral payments agreement with Cameroon was initialed but did not enter into force.

July 6. Bilateral relations with Senegal were suspended.

July 8. Guinea agreed with the International Monetary Fund a provisional exchange rate of GF 247 per US$1.

Guyana 1, 2

Exchange Rate System

The par value is 0.518391 gram of fine gold per Guyana Dollar or G$1.71429 = US$1. The Guyana dollar has a fixed relationship to sterling of G$4.80 = £1 and is freely convertible into sterling at this rate, subject to banking commissions; the Bank of Guyana charges a commission of 316 of 1 per cent for both buying and selling. The banks in Guyana base the rates for other currencies on the current London market rates.

Guyana accepted the obligations of Article VIII, Sections 2, 3, and 4, of the Fund Agreement as from December 27, 1966.

Administration of Control

Exchange control authority is vested in the Governor-General and the Minister of Finance.3 Authority for approving normal import payments and providing allocations of foreign exchange for other current payments is delegated to the banks authorized for this purpose. Import and export licensing is the responsibility of the Ministry of Trade, Shipping, and Civil Aviation.

Prescription of Currency

Guyana is a member of the Sterling Area and maintains prescription of currency requirements similar to those of the United Kingdom. Authorized settlements with residents of other parts of the Sterling Area may be made in any Sterling Area currency. Authorized payments, including payments for imports, by residents of Guyana to residents of countries outside the Sterling Area other than Rhodesia may be made in any foreign currency, in sterling to the credit of an External Account in any other part of the Sterling Area, or in Guyana dollars to the credit of an External Account in Guyana. Receipts from countries outside the Sterling Area other than Rhodesia may be obtained in any foreign currency or in sterling or Guyana dollars from an External Account. Special regulations apply to payments to and receipts from Rhodesia.

Nonresident Accounts

Residents of other parts of the Sterling Area may maintain accounts in Guyana dollars in Guyana. These are treated in the same way as the Guyana dollar accounts of residents of Guyana; thus, no exchange control permission is required for transfers within the Sterling Area. There are two categories of accounts for persons who are not residents of Guyana or other parts of the Sterling Area: External Accounts and Blocked Accounts.

External Accounts may be opened, with exchange control approval, for nonresidents of the Sterling Area. They may be credited with all authorized payments by residents of Guyana to nonresidents of the Sterling Area and with transfers from other External Accounts; other credits require approval. They may be debited for payments for any purpose to residents of the Sterling Area, for transfers to other External Accounts, and for withdrawals by the account holder while he is in Guyana; other debits require approval.

Blocked Accounts are credited with funds that are not placed at the free disposal of nonresidents (e.g., capital proceeds). These accounts may be debited for authorized payments, including the purchase of approved securities, and balances on Blocked Accounts may be transferred freely to Blocked Accounts in the United Kingdom.

Imports and Import Payments

Imports of a few commodities are prohibited. Imports subject to individual licensing are specified in a “negative list”; they include coffee, sugar, certain vegetables, cereals, meat, poultry, dairy products, fats, copra, vegetable and animal oils, petroleum products and other fuels, building materials, gold, diamonds and jewelry, firearms, grain-milling machinery, and appliances. The granting of individual licenses and the conditions attached thereto depend on current policy. Other goods may be imported under an open general license applicable to all countries except the Soviet countries and Mainland China;4 for certain garments, the open general license is not applicable to Japan.

Payments for authorized imports are permitted upon application and submission of the necessary documentary evidence. Exchange control forms have to be completed only for transactions exceeding G$240. An advance deposit of 100 per cent is required for payment against letters of credit.

Payments for Invisibles

Payments for invisibles to other countries of the Sterling Area are permitted freely without limit. All payments for invisibles to countries outside the Sterling Area require approval, which is given freely, except in some cases for payments of a personal nature. Limits are applied to certain payments on an annual basis, e.g., for travel abroad (G$666), for education at schools abroad (G$3,360 for each child), for education at universities and comparable institutions (G$4,800 for each student), and for family maintenance (G$4,800). Applications for amounts in excess of the above must be submitted to the Bank of Guyana for approval.

Travelers going abroad may take with them Guyana currency notes not exceeding G$100; these notes do not form part of any allotment of exchange for travel. In addition, notes to the value of G$50 may be taken out in the form of foreign currency notes as part of any travel exchange allowance.

Exports and Export Proceeds

Exports of rice may only be made by the Rice Marketing Board. Most exports are free of export license, but are supervised by the authorized banks and the Customs and Excise Department to ensure that the exchange proceeds are repatriated and, if obtained in specified currencies,5 surrendered. Exchange control forms have to be completed only for exports exceeding G$2,000 in value.

Proceeds from Invisibles

Receipts in the specified currencies on account of invisibles must be sold to an authorized bank. Travelers may bring in any currency notes freely.

Capital

Nonresidents of the Sterling Area must obtain “approved status” for new investments at the time of investment in order to be able to repatriate capital. Such approval is normally given for direct investments in new projects that would benefit Guyana or the balance of payments of the Sterling Area; it carries with it an assurance that profits may be remitted and that upon liquidation of the investment the proceeds, including any capital increments, may be repatriated in full.

The export of capital to non-Sterling Area countries by residents is not normally permitted. Specified currencies obtained by residents through capital transactions must be surrendered to an authorized bank.

Changes during 1966

March 15. Hides and skins (undressed) were added to the “negative list” of commodities subject to export licensing.

July 1. All trade with the Soviet countries and Mainland China was suspended. Notice to Importers No. 198 revoked all import licenses previously granted for imports from Albania, Bulgaria, Mainland China, Czechoslovakia, Eastern Germany, Hungary, North Korea, Poland, Rumania, and the U.S.S.R.

July 5. Guyana ceased to invoke the provisions of Article XXXV of the GATT with respect to Japan.

July 14. A number of items, including grain-milling machinery and appliances, were added to the “negative list” of commodities subject to import licensing.

July 14. Cattle, swine, beef, pork, and poultry were added to the “negative list” of commodities subject to export licensing.

August 18. The 1963 regulation which had placed all imports from Japan under individual licensing was revoked; in addition to items on the “negative list,” only shirts and pajamas of Japanese origin remained subject to specific license.

September 30. The West Indian dollar previously issued by the British Caribbean Currency Board ceased to be legal tender in Guyana.

November 16. An advance deposit requirement of 100 per cent on import letters of credit was introduced.

November 25. It was announced that import quotas had been established for imports from Soviet countries and Mainland China, and that applications for licenses could be submitted.

Note.—The following change took place early in 1967:

February 13. An initial par value for the Guyana dollar of G$l.71429 = US$1 was agreed with the International Monetary Fund.

Haiti

Exchange Rate System

The par value is 0.177734 gram of fine gold per Haitian Gourde or G 5.00 = US$1. This rate is applicable to all transactions. Exchange transactions by commercial banks with the public are subject to small banking commissions. There are no controls or restrictions on foreign transactions. On December 22, 1953, Haiti 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 obligations prescribing the method or currency for payments to or from nonresidents are imposed.

Imports and Import Payments

Although the law provides for the imposition of quantitative restrictions on imports, none has so far been imposed. Imports of certain types of footwear and of a few other items are controlled for other than balance of payments reasons. Payments abroad may be made freely.

Exports and Export Proceeds

A few exports require licenses. Gold coins, bullion, etc., may be exported only by the National Bank of the Republic of Haiti. The proceeds of exports are not subject to exchange control.

Payments for and Proceeds from Invisibles

Payments for invisibles are not restricted. No exchange control requirements are applied to proceeds from invisibles. A regulation, which is seldom applied, prohibits the export and import of U.S. banknotes in denominations of over $20.

Capital

Incoming and outgoing capital payments by residents or nonresidents are not subject to exchange control. Under a decree of June 27, 1957, revising a law of August 14, 1952, private banks operating in Haiti are required to keep in the form of domestic assets up to 80 per cent of deposits collected from residents of Haiti.

Changes during 1966

No significant changes took place during 1966.

Honduras

Exchange Rate System

The par value is 0.444335 gram of fine gold per Honduran Lempira, or Honduran Lempiras 2.00 = US$1. The official rates are L 1.98 buying, and L 2.02 selling, per US$1. Banknotes and coins in Costa Rican colones, Guatemalan quetzales, Nicaraguan córdobas, and Salvadoran colones are purchased at parity rates minus an official exchange commission of 1 per cent and sold at parity rates plus an official exchange commission of ½ of 1 per cent. Honduras has no exchange restrictions on foreign payments. Exchange may be purchased from local banks without restrictions; however, for statistical purposes, buyers are required to file an application stating how the exchange will be used. Earners of foreign exchange wishing to negotiate the exchange in Honduras may do so only with the Central Bank of Honduras or through the banking system for account of the Central Bank. On August 19, 1950, Honduras notified the Fund that it had assumed the obligations of Article VIII, Sections 2, 3, and 4, of the Fund Agreement, beginning July 1, 1950.

Prescription of Currency

No obligations prescribing the method of currency for payments to or from nonresidents are imposed. Payments to Costa Rica, El Salvador, Guatemala, and Nicaragua in respect of trade and invisibles may be settled in Honduran lempiras through the Cámara de Compensación Centroamericana, a clearinghouse established by the central banks of Central America to foster the process of economic integration of their countries. Payments to Mexico may also be settled in Honduran lempiras through the clearinghouse.

Imports and Import Payments

Import licenses are required for a few items. Payments and transfers abroad may be made freely; however, for statistical purposes, buyers of exchange are required to file an application stating how the exchange will be used.

Exports and Export Proceeds

Exports do not require licenses. The proceeds of exports are not subject to exchange control, and the foreign exchange may be retained or used for international transactions. Those wishing to negotiate their exchange in Honduras may do so only with the Central Bank or through the banking system for account of the Central Bank.

Payments for and Proceeds from Invisibles

These are not restricted.

Capital

Capital payments are not subject to exchange control.

Changes during 1966

May 6. The Industrial Development Law of April 30, 1958 was modified to permit the Government to grant additional tax concessions to export industries on the part of their production that is exported to countries ouside Central America, and to industries that could show that similar industries in other Central American countries were receiving greater benefits than those offered in Honduras.

September 23. Honduras was enabled by the Central American Economic Council to grant qualified industries reductions in import duties and other fees up to 20 per cent greater, and tax holidays for periods up to two years longer, than those granted by other Central American Common Market countries.

Hong Kong

Exchange Rate System

The par value is 0.155517 gram of fine gold per Hong Kong Dollar or HK$5.71429 = US$1. The exchange rate system comprises official rates and free market rates; as far as rates for the U.S. dollar are concerned, these are, in practice, within 1 per cent of the par value. On December 31, 1966, rates in the official market were Is. 3132d-sterling buying, and Is. 21516d. sterling selling, per HK$1, or HK$5.691332 buying, and HK$5.77⅝ selling, per US$1; rates in the free market on that date were HK$5.72 buying, and HK$5.72¼ selling, per US$1. The official market rates are those of authorized banks, based on the sterling-Hong Kong dollar rate (agreed informally by the three note-issuing banks with the Hong Kong Exchange Fund) and the sterling-foreign currency rates in the London foreign exchange market.

The official rates apply to all transactions in Hong Kong dollars against sterling, to the proceeds in U.S. dollars of exports not of local or neighboring origin, and to most authorized non-dollar transactions. The free market rates apply to other transactions.

Administration of Control

Exchange control authority is vested in the Financial Secretary of the Colony. Fifty-one banks are authorized to conduct exchange transactions within the framework of the local regulations and subject to specific or general approval of the local control. These authorized banks are permitted to conclude exchange transactions only at the official market rates. The free market is operated by other banks and financial institutions. Import and export licensing is carried out by the Director of Commerce and Industry.

Prescription of Currency

The Colony of Hong Kong is part of the Sterling Area, and all settlements except those through the free market must be made by the method and in the currency prescribed in the exchange regulations, as described in the following paragraphs.

Settlements for exports to and imports from other parts of the Sterling Area may be made in any Sterling Area currency. Licenses are required, however, for all payments made from Hong Kong to, or received in Hong Kong from, residents of other parts of the Sterling Area, except that authorized banks may freely make or receive such payments in respect of the following: (1) bona fide trade between Hong Kong and other Sterling Area territories; (2) payments between authorized banks or their branches in the Sterling Area for the purpose of transferring banking funds to an authorized bank or for the settlement of the exchange transactions of an authorized bank; (3) bulk payments in favor of banks or recognized dealers in Hong Kong when the payments are for bona fide family remittances and no individual payment exceeds HK$8,000; and (4) other payments not exceeding £500 or the equivalent in other Sterling Area currencies.

Payment in Hong Kong dollars for exports to Mainland China, the Republic of China, and Macao is permitted; imports from these territories may be paid for in Hong Kong dollars (but not to the credit of an External Account; see section on Nonresident Accounts, below) without exchange control approval. The proceeds of exports to all other countries outside the Sterling Area must be received in Hong Kong dollars from an External Account, in sterling from an External Account held with an authorized bank in the Sterling Area, in a foreign currency emanating from outside Hong Kong and freely exchangeable for sterling or Hong Kong dollars (the foreign currency must be surrendered to an authorized bank), or by international money order issued outside the Sterling Area; however, U.S. dollar proceeds of exports to the dollar area or to the Republic of Korea of goods originating in Mainland China, the Republic of China, Hong Kong, the Republic of Korea, or Macao may be sold in the free market to the extent of the f.o.b. value of the goods; proceeds from freight and insurance payments have to be surrendered to an authorized bank. Payment for imports from countries outside the Sterling Area may be made by crediting sterling or Hong Kong dollars to an External Account or in any foreign currency.

For merchanting transactions by Hong Kong firms in goods bought from and sold to countries outside the Sterling Area, outgoing payments may be made in a Sterling Area currency to the credit of an External Account or in any foreign currency, provided that the incoming payment is received in a Sterling Area currency from an External Account or in a foreign currency from outside Hong Kong that is freely exchangeable for sterling or Hong Kong dollars. Subject to certain requirements, including the submission of evidence that the local regulations of the country of destination have been complied with, authorized banks may, on application by merchants in Hong Kong undertaking a transaction in goods for their own account, make payment to nonresidents of the Sterling Area for direct imports into other territories of the Sterling Area of goods originating outside the Sterling Area. Such payments may be made in sterling or Hong Kong dollars to an External Account or in any non-sterling area currency, provided that such currency has not been acquired in the Hong Kong free market.

Nonresident Accounts

The treatment of nonresident accounts distinguishes between those of residents of other parts of the Sterling Area (their accounts being treated the same as accounts of residents of Hong Kong), those of recognized banks situated outside the Sterling Area (External Accounts), and those of other nonresidents outside the Sterling Area.

The accounts of companies and individuals resident outside the Sterling Area are treated in the same way as the accounts of residents, except that, without exchange control permission, they may not be overdrawn or be debited for any payment outside Hong Kong.1

The accounts of recognized banks situated outside the Sterling Area are termed External Accounts. These may be credited with permitted payments from residents of the Sterling Area, with transfers from other External Accounts, and with the proceeds from sales of foreign currencies to authorized banks. They may be debited freely, but they may not normally be overdrawn, and an order for the purchase of foreign currency may be executed only by an authorized bank.

Imports and Import Payments

Except for certain dutiable and dangerous commodities, imports are free of license. If the prescription of currency requirements are fulfilled, and if related shipping documents are presented when the value of the consignment exceeds £250, the authorized banks may freely make payments to residents of countries in the Sterling Area for imports from the Sterling Area, and to residents of other countries for individual shipments not exceeding £10,000 in value from those countries.2 To make payment or establish letters of credit through an authorized bank for imports from the dollar area for local consumption or for re-export to Mainland China, the Republic of China, or Macao, the importer must surrender to an authorized bank U.S. dollars or Canadian dollars in amounts equivalent to the value of the imports; these currencies may be purchased in the free market. Imports from Mainland China, the Republic of China, or Macao are normally paid for in Hong Kong dollars (but not to the credit of an External Account), and exchange control approval is not required.

An exchange control form must be submitted for prior approval for payments for imports not covered by the regulations described above. These include (1) imports for which documents are not presented, payment is required in advance of shipment,3 and payment is not in accordance with the usual prescription of currency requirements; (2) goods imported specifically for re-export; and (3) all imports of diamonds, ships, and boats.

Payments for Invisibles

Payments made through authorized banks and not exceeding £500, or the equivalent in other Sterling Area currencies, to other parts of the Sterling Area do not require approval; for larger amounts, exchange control permission is necessary. The authorized banks have power to approve payments to nonresidents for most invisibles up to certain limits (no exchange control form is required when the payment does not exceed £100 or the equivalent). Payments for invisibles above these limits need the approval of the exchange control, which is normally granted. The basic allowance of exchange at the official rate for residents (for exchange control purposes) of Hong Kong traveling to countries outside the Sterling Area or beyond Macao is £250 or the equivalent for each individual journey. Applications for exchange in excess of this allowance to cover genuine travel expenses may be made to the exchange control. In any event, payments may be made freely through the free market by holders of Hong Kong dollars.

Exports and Export Proceeds

Exports to any destination of certain strategic goods and of such commodities as textiles and garments are subject to restrictive licensing; exports of many textiles and garments to specified countries are restricted in accordance with bilateral agreements. For exports to countries outside the Sterling Area, Mainland China, the Republic of China, and Macao, the exporter must submit to the Department of Commerce and Industry, for approval, a declaration showing how the export proceeds will be collected. If payment is not being received within six months and in accordance with prescription of currency requirements, the circumstances must be reported to the exchange control. The U.S. dollar proceeds of exports to the dollar area or to the Republic of Korea of goods originating in Mainland China, the Republic of China, Hong Kong, the Republic of Korea, or Macao are freely disposable to the extent of the f.o.b. value of the goods; proceeds from freight and insurance payments have to be surrendered to an authorized bank. The proceeds of exports must be obtained in accordance with the regulations (see section on Prescription of Currency, above).

Proceeds from Invisibles

Receipts exceeding £500, or the equivalent in other Sterling Area currencies, from other parts of the Sterling Area require permission. When freight and insurance on exports that have originated in Mainland China, the Republic of China, Hong Kong, the Republic of Korea, or Macao, and that have been financed in U.S. dollars, are paid in Hong Kong by the exporter in sterling or in Hong Kong dollars, the exporter must surrender the U.S. dollar proceeds of that freight and insurance at the official market rate. Other exchange receipts from invisibles need not be surrendered.

Capital

Licenses are required for transfers abroad of capital in currencies other than the U.S. dollar; these are granted at the official market rate only for approved purposes or, if the equivalent in U.S. dollars has been sold to an authorized exchange bank, at the discretion of the local control. Exchange for the repatriation of foreign capital is normally provided at the official market rate if the exchange control had given prior approval of the investment. Transfers of capital may be made freely in Hong Kong dollars through the free market. However, licenses are required for all receipts from, as well as transfers to, other parts of the Sterling Area which exceed £500 or the equivalent in other Sterling Area currencies; these licenses are granted for all bona fide transactions between Hong Kong and other parts of the Sterling Area.

Changes during 1966

No significant changes took place during 1966.

Iceland 1

Exchange Rate System

The par value is 0.0206668 gram of fine gold per Icelandic Króna or IKr 43.00=US$1. The official rates are IKr 42.95 buying, and IKr 43.06 selling, per US$1. Rates for other currencies are based on these rates and the dollar rates for such currencies in other countries. Rates for settlements through clearing accounts are fixed; the buying and selling rates maintained for the currencies concerned by the Central Bank of Iceland differ from their parities by 0.12 per cent and 0.14 per cent, respectively. The authorized banks are permitted to carry out exchange transactions among themselves and to engage in arbitrage in foreign markets. A fee of ½ of 1 per cent is charged on the krónur amount of foreign exchange sold by banks for most transactions; this results in an effective selling rate of IKr 43.28 per U.S. dollar.

Administration of Control

The Ministry of Commerce has the ultimate decision on matters concerning import and export licensing and on payments for invisibles. The Central Bank of Iceland is responsible for the regulation of foreign exchange transactions and of exchange control, and for ensuring that all foreign exchange due to residents is surrendered to the authorized banks and that such exchange is disposed of as authorized. The two largest Icelandic banks, the National Bank of Iceland and the Fisheries Bank, are the only banks, other than the Central Bank, that are authorized to deal in foreign exchange. In addition, they issue import and exchange licenses in consultation with the Ministry of Commerce. Export licenses are issued by the Ministry of Commerce.

Prescription of Currency

Iceland is a member of the Sterling Area. All settlements with the five countries with which Iceland maintains bilateral payments agreements must be made exclusively through clearing accounts, denominated as follows: with Rumania and the U.S.S.R., in Icelandic krónur; with Brazil and Hungary, in sterling; and with Eastern Germany, in U.S. dollars. As a general rule, exchange receipts from other countries must be obtained in convertible currencies. In practice, settlements with countries in the dollar area are made in U.S. dollars; with countries in the Sterling Area and some other countries, in sterling; and with all other countries, in their respective currencies.

Nonresident Accounts

There are two categories of nonresident krónur accounts: Foreign Accounts and Special Accounts.

Foreign Accounts may be credited with the proceeds from the sale of foreign currency to authorized banks and with authorized payments due to nonresidents from residents. Balances on Foreign Accounts may be used for authorized payments to residents and may be converted into the currency of the country of residence of the account holder. These accounts are in practice seldom used, payments for international transactions generally being made in U.S. dollars, sterling, or other convertible currencies.

Special Accounts may be opened by agreement with an authorized bank. The most important of these accounts are those of foreign banks and foreign insurance companies. They may be credited freely, up to certain limits, with payments from residents.

Imports and Import Payments

All goods not included in the restricted list or subject to state trading (see below) may be imported freely without an import license from any country; about 87 per cent of total imports (1965 basis) is liberalized. Some 55 commodities or groups of commodities are included in the restricted list and are subject to quantitative restriction. Most of these goods are admitted, subject to individual license, under global quotas that apply to all countries with which Iceland does not maintain bilateral payments agreements. The remaining goods on the restricted list are admitted from the same countries on the basis of individual licenses issued on a discretionary basis (“other licensing”). The principal items involved are gasoline, gas oil, and fuel oil; they are imported mainly from Rumania and the U.S.S.R. All goods on the restricted list require individual licenses when imported from bilateral payments agreement countries; licenses in this case are generally issued in accordance with bilaterally agreed quotas, but in practice they are granted freely for global quota items. Certain imports are only admitted under state trading; these include radio receivers and perfumes.

Except for imports of automobiles, a fee of ½ of 1 per cent (minimum IKr 10.00) is charged as a license fee on the krónur amount of the import license when the license is issued. This fee is not charged on licenses for imports from countries with which Iceland maintains bilateral payments agreements. A fee of 125 per cent is charged as a license fee on the f.o.b. krónur amount of the import license for automobiles from all sources (30 per cent for jeep-type vehicles).

Importers of goods not requiring licenses do not have to obtain a foreign exchange permit prior to shipment from abroad, provided that the purchase is payable at sight. On the other hand, the goods will not be cleared by the customs unless payment has already been made or the importer has arranged with an authorized bank for the payment. An importer may either open a letter of credit or obtain a payment certificate which enables him at any time to buy foreign exchange to pay for the goods. For imports that require individual licenses, foreign exchange is granted in accordance with the terms stipulated in the license.

Payments for Invisibles

No exchange license is required for government payments (such as interest and amortization on external loans, expenses of the foreign service, payments to international organizations, payments for postal, telegraphic, and telephone services), for banking commissions, or for bank charges on foreign exchange transactions.

Most other outgoing payments are licensed freely on the basis of bona fide documents. An exchange allocation for tourist travel is granted up to US$350 a year, or its equivalent in other currencies, for each person. Applications for exchange for repair of ships, repair of means of transport other than ships and aircraft, transactions and transfers in connection with direct insurance, and insurance business operations abroad are considered on their merits.

A fee of ½ of 1 per cent is charged on the krónur equivalent of foreign exchange sold by banks for current invisibles, with the exception of exchange for expenditures connected with study abroad.

Residents traveling abroad may take with them foreign banknotes and coins which they possess legally, and Icelandic banknotes and coins not exceeding IKr 2,500. Nonresidents may re-export the foreign banknotes and coins, and up to IKr 2,500 of the Icelandic banknotes and coins, which they brought into Iceland.

Exports and Export Proceeds

All commercial exports require licenses. Exchange receipts accruing from exports must be surrendered without undue delay.

Proceeds from Invisibles

Exchange receipts from invisibles must be surrendered without undue delay. The owners of Icelandic ships and aircraft are, with the approval of the authorized banks, permitted to retain their foreign exchange receipts from freight, passenger tickets, or other charges, and to use them for operating purposes and for purchases of necessities for the homeward journey of the ship or aircraft. Icelandic insurance companies which reinsure abroad are permitted to retain foreign exchange earned from premiums and indemnities and to use it to pay reinsurance premiums, claims, and other regular expenditures of the insurance business in the country where the foreign exchange was earned.

Residents may bring in, upon re-entering the country, up to IKr 2,500 in Icelandic banknotes and coins; the limit for nonresident travelers is IKr 5,000. There are no limitations on the import of foreign banknotes and coins.

Capital

All foreign investments in Iceland are subject to individual approval. The participation of nonresidents in Iceland’s joint stock companies may not exceed 49 per cent. Nonresident-owned foreign capital entering in the form of foreign exchange must be surrendered. Nonresidents may be authorized to open nonresident accounts for these funds, in which case their retransfer abroad may be permitted.

Residents are obliged to surrender foreign exchange accruing to them on account of capital transactions and payments. Without the approval of the Government, residents may not obtain loans abroad, including loans for financing imports, for periods exceeding one year. Applications for the contracting of financial credits and loans abroad for a period of less than one year are considered on their merits and approved only in exceptional circumstances. The contracting of commercial credits abroad for a period of between 3 and 12 months is also approved only in exceptional circumstances, e.g., in connection with the import of industrial raw materials for which the production process is lengthy, construction materials, etc. Commercial banks may freely permit import credits of up to 90 days, except for the financing of a number of specified imports, including motor vehicles for personal use, various household appliances, specified foods, various types of clothing, precious and semiprecious stones, watches and clocks, toys, and portland cement. Transfers of capital abroad by residents require approval, which is granted only in exceptional cases.

Nonresidents may acquire Icelandic securities and other assets with imported funds; the transfer abroad of the proceeds from the sale of these assets and securities requires authorization. Securities held in Iceland by nonresidents must be registered, and all transactions and operations concerning them are subject to licensing. The import and export of securities by residents are subject to the approval of the Central Bank.

Changes during 1966

January 1. A fee of ½ of 1 per cent was charged on the krónur amount of foreign exchange sold by banks for most transactions.

January 18. A license fee of 30 per cent was imposed on the f.o.b. krónur amount of the import license for jeep-type vehicles from all sources.

January 21. Imports of iron, lumber, and several groups of other commodities were liberalized. The global quotas for 1966 were published; their total value amounted to IKr 134.7 million, compared with IKr 221.6 million for 1965. The reduction reflected the further liberalization that had taken place. For the remaining global quota items, the value of the 1966 quotas exceeded the 1965 level by 60 per cent.

March 15. The basic annual allocation for tourist travel abroad was increased from the equivalent of US$280 a person to the equivalent of US$350 a person.

July 1. Imports of electric batteries and material therefor were liberalized.

October 1. The bilateral payments agreement with Czechoslovakia was terminated.

Note.—The following changes took place early in 1967:

January 1. The bilateral payments agreement with Poland was terminated. It was replaced by an agreement providing that payments would be made in freely convertible currencies.

January 11. Further imports from all sources were liberalized; the main item affected was feedgrains. The global quotas for 1967 were announced. All feedgrains were exempted from the special regulations previously employed to ensure procurement under U.S. Public Law 480 arrangements; the authorized banks discontinued their control over purchases of feedgrains.

India

Exchange Rate System

The par value is 0.118489 gram of fine gold per Indian Rupee or Rs 7.50000 = US$1. Transactions in foreign exchange are conducted through authorized dealers, as follows: in sterling, at rates fixed by the Foreign Exchange Dealers Association; in other currencies, at rates fixed on the basis of market conditions, subject to spot transactions being done at or between the London market rates for sterling against the other currency concerned. Authorized dealers are permitted to cover their requirements of foreign currencies in the London market and to cover their permitted transactions in certain currencies 1 against sterling, rupees, or any one of these currencies, either spot or forward for periods not exceeding six months, with authorized banks in any country outside the Bilateral Account group.2 On December 31, 1966, market rates for telegraphic transfers on London were £ stg. 4.7660 buying, and £ stg. 4.7380 selling, per Rs 100 and for telegraphic transfers on New York they were US$13.32 buying, and US$13.20 selling, per Rs 100.

Administration of Control

Exchange control is administered by the Reserve Bank of India in accordance with the general policy laid down by the Government of India in consultation with the Reserve Bank. Much of the routine work of exchange control is delegated to certain commercial banks, which act as authorized dealers permitted to buy and sell foreign exchange for specified purposes under regulations laid down by the Reserve Bank.

Prescription of Currency

India is a member of the Sterling Area and has an exchange control system similar to that of the United Kingdom but adapted to suit local requirements. For prescription of currency purposes, countries are divided into three groups: Sterling Area countries, Bilateral Account countries (see footnote 2), and the Convertible Account group (all other countries).

Payments to and from Sterling Area countries may be made in sterling or any Sterling Area currency, except Indian rupees, through the account of a resident of any Sterling Area country except India, or in Indian rupees through the account of a bank in any Sterling Area country except India.3 Payments to and from Bilateral Account countries must be settled in Indian rupees through the appropriate clearing account. Payments to countries in the Convertible Account group may be made in rupees or sterling to the credit of the account of a resident of any country in this group 4 or in any listed currency.5 Receipts from the Convertible Account group may be obtained in any listed currency,5 in rupees from the account of a bank in any country in this group, or in sterling from an External Account in the United Kingdom.

Nonresident Accounts

The accounts of residents of Bhutan and Nepal are treated as resident accounts.6 Accounts related to all other foreign countries are treated as nonresident accounts. The treatment of these accounts distinguishes between those of banks and of others.

The accounts of banks are classified in three groups corresponding to the division of countries for prescription of currency purposes, i.e., Sterling Area Accounts, Bilateral Accounts, and Convertible Accounts. These accounts may be credited with payments for imports, interest and dividends, and other authorized payments, with authorized transfers from the nonresident accounts of private firms or persons, with proceeds from sales of the currency of the country or monetary area of the account holder, and with proceeds from sales of sterling from the appropriate nonresident sterling account in the United Kingdom. They may be debited for payments for exports, and for other payments to residents of India. These accounts may also be debited for remittances by Indian nationals resident in the Sterling Area for credit to their accounts in India or for payment to Indian nationals resident in India. Transfers may be made from Convertible Accounts to other Convertible Accounts or to Sterling Area Accounts and between Sterling Area Accounts. All other entries on Sterling Area Accounts, Bilateral Accounts, and Convertible Accounts require the prior approval of the Reserve Bank.

Nonresident accounts of private individuals or firms may be credited, without prior approval, for payment of dividends and interest on securities, shares, and deposits; refunds of amounts previously debited or overcharged; proceeds of remittances in appropriate foreign currency or transfers from appropriate nonresident banks’ rupee accounts (see Prescription of Currency, above); proceeds from checks issued by the Life Insurance Corporation in respect of maturity or death claims and surrendered value of policies held by nonresidents, provided that the Corporation certifies that premiums had been received in India in an approved manner and that actuarial reserves are held in India; proceeds of checks, provided that the aggregate of such credits during a month does not exceed Rs 2,000 and no individual credit is in excess of Rs 750; and proceeds from the sale of Indian Government securities and of units issued by the Unit Trust of India which were originally purchased from funds in the same nonresident account. These accounts may be debited without prior approval for such items as payments for premiums on life insurance policies of the account holder or his dependents; all taxes due from the account holder in India; contributions to the National Defence Fund, the Prime Minister’s National Relief Fund, or any government-sponsored charity; allowances not exceeding Rs 1,000 a month to relatives and dependents; investment in Indian Government securities and in units issued by the Unit Trust of India; and for checks up to Rs 1,000 a week drawn in favor of beneficiaries resident in India or in favor of the account holder while temporarily resident in India. All other credits and debits require the prior approval of the Reserve Bank. Transfers are not normally permitted from nonresident accounts of individuals or firms to nonresident accounts of banks, unless the amounts originally credited to such accounts could have been transferred abroad.

Special regulations cover funds lodged in National Defence Remittance Scheme (Special) Accounts representing rupee proceeds of inward remittances for the account of nonresidents and rupee proceeds from sales of certificates issued under the Scheme, which expired on May 31, 1966. Balances in such accounts cannot be remitted abroad; they may, however, subject in some cases to prior approval by the Reserve Bank, be invested domestically or be used for other expenditures in India.

There are also blocked accounts, to which are credited capital proceeds that are due to nonresidents and may not be remitted abroad. Balances in blocked accounts may be placed on fixed deposit or invested in approved Indian rupee securities; the income derived from such investments may normally be remitted to the owner’s country, with the approval of the Reserve Bank.

Imports and Import Payments

Raw materials required by certain export industries may be freely imported under an open general license. Practically all other imports require individual licenses. Import restrictions are minor on specified commodities required by 59 priority industries, including small-scale industries; special procedures are applicable to these commodities. Individual licenses may be issued ad hoc, or on the basis of quotas allocated to established importers in accordance with their imports in a base period, to actual users on the basis of their requirements, and to registered exporters in accordance with the import content of their exports. Generally, licenses may be used to import from any country except South Africa, South West Africa, and Rhodesia;7 imports from these countries are prohibited. Licensing policy generally accords priority to foodstuffs, capital goods, raw materials, and other industrial requirements, while the import of other items is severely limited or prohibited. At the beginning of each financial year, an announcement on import control policy is made in the form of a Red Book, which gives in detail the policy for various categories of importers. Licensing is in most cases on an annual basis, subject to the condition that for licenses issued to established importers only the first half of the annual license may be used in the first six months of the validity period of the annual license, and the second half of the license may be utilized, subject to such changes as may be decided upon, in the second six months and within the extended period of validity allowed for this purpose. This condition is not imposed on actual users, to whom annual licenses are issued. In other cases, licenses are issued for the first six months, and a supplementary license is issued later for the second six months. There are special procedures applicable to imports of capital goods, of heavy electrical plant, and of goods imported to fulfill government contracts and for irrigation projects. In licensing imports of a capital nature, their essentiality, their potential for earning or saving foreign exchange, and the availability of medium-term or long-term credits for financing such imports are taken into account.

Where a valid import license is held, the required exchange is released by an authorized bank on presentation of the exchange control copy of the license. License holders may make payments by opening letters of credit or by remitting against sight drafts. Advance remittances before shipping documents can be submitted are not normally allowed; but in special cases, e.g., imports of machinery and capital goods, where deposits have to be made with overseas manufacturers, the Reserve Bank grants special authorization for advance payment for a part of the value of the import.

Payments for Invisibles

In general, payments abroad for invisibles require approval. Foreign exchange is granted freely for a few such payments, mainly for expenses incidental to trade transactions and transfers of recurring contractual obligations.

Premiums on insurance policies issued in foreign currency to residents may be paid in rupees or in the currency in which the policy is issued; but Indian residents are prohibited from taking out life insurance policies in foreign currencies.

There are no restrictions on the remittance of profits, dividends, and interest to nonresident beneficiaries (except any income accruing to beneficiaries of the National Defence Remittance Scheme), provided that all current tax and other liabilities in India have been cleared. However, remittances to Indian nationals who were granted exchange facilities for emigration on or after January 1, 1963 of dividends and interest on shares, securities, and deposits held in India require the prior approval of the Reserve Bank or are subject to any special directions given to the person concerned when he was granted emigration facilities; such remittances are subject to an over-all limit of Rs 20,000 a year.

Foreign employees are permitted to make reasonable remittances to their own countries to pay insurance premiums, for the support of their families, and for other expenses. Authorized dealers may allow such remittances by foreign nationals other than nationals of Pakistan up to Rs 2,360 a month, or up to the foreign currency amount of the monthly average of remittances made by the person concerned during the last 12 months prior to June 6, 1966, whichever is less.

Applications for foreign exchange for travel or education abroad are considered on an individual basis; no exchange is granted for tourist travel. Travel agents and companies are not permitted to book passages abroad for persons resident in India (other than foreign nationals temporarily resident in India) unless the traveler has been granted travel exchange by the Reserve Bank or has been specifically granted permission by the Reserve Bank to book his passage.8

The export of Indian currency notes and coins except to Nepal is, in general, prohibited. However, deck passengers to Burma, Malaysia, Singapore, Persian Gulf ports, and East Africa, and travelers to Ceylon and Pakistan, may take with them Rs 20 a person at any one time. Residents may take out foreign notes and coins up to Rs 63 a person: authorized money-changers at airports and seaports are permitted to sell foreign currency notes up to a value of Rs 63 a person to all passengers, whether Indian or foreign, who have made payments for the fare in rupees in India; nonresidents may take out the foreign notes and coins which they declared on entry, less the amounts sold to authorized dealers in India.

Exports and Export Proceeds

Export licenses are required for only a few items, and most commodities may be exported without a license. Most of the controlled commodities are licensed freely to all shippers; a few may be exported through established shippers; and a few commodities are subject to export quotas. Exports to South Africa, South West Africa, Tibet, and Rhodesia are prohibited.

Exchange control is exercised over the proceeds of exports to countries other than Bhutan and Nepal. An exporter must declare that the full export proceeds will be received and dealt with in accordance with the prescription of currency regulations.

Foreign exchange holdings, including the proceeds of exports, in most currencies 9 must be offered for sale against rupees to an authorized dealer, unless the holder has been authorized by the Reserve Bank to retain them, or the holdings are the balance on July 8, 1947 in a sterling account held by him, or he is not domiciled in India and the funds do not represent the proceeds of an export.

Some major exports, including tea and jute manufactures, are subject to export duties. Some items accounting for a small part of total exports receive cash assistance; they are mainly new manufactures, such as engineering goods.

Proceeds from Invisibles

Proceeds from invisibles in certain currencies (see footnote 9) must be surrendered.

The import of Indian currency notes and coins is, in general, prohibited. However, deck passengers from Malaysia, Singapore, Persian Gulf ports, and East Africa, and travelers from Ceylon and Pakistan, may import into India Rs 20 a person against presentation of evidence that they previously had exported this amount from India. Persons coming to India from Burma are allowed to bring in Indian currency notes up to a value of Rs 50 for an adult and Rs 25 for a child between the ages of 12 and 18. Travelers from Nepal may bring in up to Rs 75 a person. Foreign currency notes may be brought into India without limit, provided that a declaration of the total amount brought in is made to the customs authorities upon arrival. Persons holding foreign currency notes may sell them to any authorized dealer in foreign exchange or to an authorized money-changer.

Capital

The inward movement of capital is practically free, except when it is to form part of an investment requiring the prior approval of the Indian Government. Banks in India may borrow freely from their branches and correspondents abroad, provided that borrowings in excess of Rs 2 million are utilized for the purchase of rupees from the Reserve Bank and that they are repaid only when the debtor bank has no outstanding borrowings in India from the Reserve Bank or any other bank. Foreign investments once admitted are eligible for the same treatment that Indian enterprises receive. Repatriation of capital owned by persons residing in Sterling Area countries other than Pakistan, and by residents of Denmark, Norway, or Sweden, is authorized freely. Capital invested in approved projects after January 1, 1950 by residents of other countries, including capital appreciation on the original investment, may be repatriated at any time. The proceeds from liquidated foreign investments not eligible for repatriation are blocked (see section on Nonresident Accounts, above). Local borrowing by foreign-controlled corporate bodies is restricted. Prior permission by the Reserve Bank is required for foreign-controlled partnership firms or corporate bodies to accept appointment as agents or technical advisors.

Indian nationals (including persons domiciled in India) are not normally granted any foreign exchange facilities for emigration purposes. In exceptional cases, foreign exchange may be released up to a limit of Rs 20,000 at the time of emigration and in three subsequent annual installments of Rs 10,000 each. The remainder of an emigrant’s assets are blocked; only income on such blocked assets is thereafter allowed to be remitted up to a limit of Rs 20,000 per annum. Foreign nationals who are resident but not domiciled in India are permitted at the time of their retirement to transfer to their own country the proceeds from the sale of their investments, subject to a limit of Rs 75,000 at the time of retirement and the remainder in annual installments not exceeding Rs 20,000 per annum, provided that the shares and securities concerned are quoted on recognized stock exchanges in India; in addition, they may transfer all their current remittable assets in India.

There are no restrictions on the import into India of Indian or foreign securities. The export of securities and their transfer to nonresidents require approval, as does also the sale, transfer, or other disposal of foreign securities. Persons resident in India are permitted to hold foreign securities that have been acquired in a manner not involving a breach of the Indian exchange regulations.

Changes during 1966

During the year, the bilateral payments arrangements with Pakistan were allowed to expire.

January 28. The “Gulf rupee” issued by the Reserve Bank of India was withdrawn from circulation in Bahrain.

May 27. The suspension of direct and indirect imports from and exports to Pakistan was rescinded.

May 31. The National Defence Remittance Scheme was terminated; import licenses under the Scheme could be obtained up to August 31, 1966.

June 6. The par value of the rupee was changed from Rs. 4.76190 per US$1 to Rs 7.50000 per US$1. The Tax Credit Certificate (Exports) Scheme and the various export promotion schemes were eliminated. The 10 per cent customs surcharge previously applied to virtually all imports was abolished. Export duties were levied on tea, jute manufactures, and certain other products.

Subsequently, substantial changes were made in exchange and trade regulations as well as in import duties. They included the following:

(1) Fifty-nine specified priority industries, including the major export industries, industries producing essential consumer goods, and capital goods industries, were allowed to import the raw materials, components, and spare parts necessary to maintain production at full capacity for six months. Applications for a supplementary license would be considered when a letter of credit for not less than 90 per cent of the face value of the license had been opened, or when documentary evidence was produced to show that shipments of 70 per cent of the face value of the initial license had been effected. Small-scale industries producing the same goods as the 59 priority industries would receive licenses equivalent to three times the licenses given to them in 1964/65 or twelve times the value of the license for the period April 1965 to March 1966. Supplementary licenses would be issued to these small-scale industries upon application when goods covering half the face value of the original license had been shipped. For other small-scale industries, the licenses granted would be twice as much as in 1964/65 or eight times the value of the license for April 1965-March 1966. No liberalization was undertaken in respect of capital goods.

(2) The raw materials required by certain export industries (jute textiles, cashew nut processing, and tanning) were placed on an open general license that was valid initially for shipments up to March 31, 1967.

(3) Actual users and traders were granted licenses freely for importation from the United States, against U.S. AID nonproject loans, of certain spare parts not produced in India, e.g., spare parts of earth-moving and construction equipment.

(4) The value in terms of foreign exchange of import licenses to be granted to established importers for specified essential commodities was increased by percentages ranging from 5 to 75; these commodities included printing and lithographic material (50 per cent), machinery required for the jute and tea industries, electric power plants, and mines and quarries (30 per cent), scientific and surgical instruments and equipment (20 per cent), and drugs, medicines, and spare parts for agricultural tractors (15 per cent).

(5) With a view to increasing agricultural production, special arrangements were made to facilitate large imports of fertilizer, pesticides, sulphur, and rock phosphate.

(6) Restrictions on imports of certain essential drugs and of books for libraries and educational institutions were eased.

June 16. Qatar and the Trucial States, with the exception of Abu Dhabi, adopted the Saudi Arabian riyal as their unit of currency to replace the “Gulf rupee.” Later in the year, the Saudi Arabian riyal was replaced by the Qatar-Dubai riyal.

June 18. Abu Dhabi adopted the Bahrain dinar as legal tender, to replace the “Gulf rupee.”

June 23. Open general licenses were introduced for a number of raw materials. Restrictions on imports of specified raw materials, components, and spare parts for actual users in small-scale industries were relaxed substantially.

June 28. Restrictions on imports of specified commodities required by 59 priority industries accounting for about 85 per cent of total industrial production were relaxed substantially.

June 29. Detailed regulations for a Government of India Scheme for special educational loans for Indian students who were already studying abroad were published; five-year or ten-year rupee loans at low interest rates were granted to cover the difference between the rupee counter-value at the new and the old par value of the foreign exchange remittances previously granted to such students (these remittances were continued without change).

July 29. The period during which import licenses under the National Defence Remittance Scheme could be obtained was extended until December 31, 1966.

August 16. Some exports, mainly new manufactures such as engineering goods, were granted cash assistance for market development.

August 16. A third group of importers, registered exporters, was created (additional to established importers and actual users); they would receive import licenses on the basis of the import content of their exports.

October 17. The Indian rupee ceased to be legal tender in Nepal.

October 24. The list of machine tools prohibited for importation was extended.

November 5. The import of additional types of ball bearings was prohibited.

Indonesia1

Exchange Rate System

No par value for the Indonesian Rupiah has been established with the Fund. The official exchange rate, called the transaction rate, is Rp 0.25 = US$1. All transactions at this rate are subject to a premium or charge of Rp 9.75 per US$1, giving rise to an effective transaction rate of Rp 10 per US$1, buying and selling. This rate is applicable to payments and receipts of petroleum companies and to the exchange allocated to the regional authorities; it also serves as the basis for the calculation of the effective rates for most other receipts. Exporters other than petroleum companies are entitled to receive an export bonus (BE) corresponding to a specified percentage of their export proceeds. The bonus is negotiable in a fluctuating free market. On the demand side, access to this market is reserved for imports of goods on the so-called BE List. On December 28, 1966 the market rate for BE exchange was Rp 85 per US$1, buying and selling. Depending on the category of exports, the portion of export receipts that must be surrendered to the Foreign Exchange Fund is 50, 25, or 10 per cent, giving rise to effective buying rates of Rp 47.50, Rp 66.25, and Rp 77.50 per US$1, respectively; other effective rates, however, may arise as a result of mixing with the DP rate (see below).

Export proceeds are surrendered on the basis of “posted prices” (“f.o.b.-net prices”) for each commodity. If a price higher than the “posted price” is secured, the excess (“overprice”) may be retained by the exporter or sold through an authorized bank in a separate free market, the DP market. Prescribed percentages, ranging from zero to 100 per cent, of receipts from invisibles must be surrendered to the Foreign Exchange Fund at the effective transaction rate. Export proceeds resulting from “overprices” and foreign exchange receipts from invisibles in excess of the surrender requirements may be held abroad by the initial holder or be deposited as Complementary Foreign Exchange (Devisa Pelengkap or DP) in a DP “A account” with an authorized foreign exchange bank. Complementary Foreign Exchange may be sold once; a DP “B account” is then established with an authorized foreign exchange bank in the name of the buyer. Complementary Foreign Exchange in either a DP “A account” or a DP “B account” may be used freely to pay for any imports, except sedan automobiles and ceramic tiles. Complementary Foreign Exchange in DP “A accounts” may also be used freely for payments in respect of invisibles. The use of Complementary Foreign Exchange in DP “B accounts” for payments for invisibles, however, is subject to licensing. On December 28, 1966 the market rate for Complementary Foreign Exchange was Rp 105 per US$1, buying and selling. Payments for certain invisibles and for government imports and aid imports are effected at a fixed rate, the BE (BNI) rate, which is periodically set by the Indonesian State Bank, Unit I.2 On December 28, 1966 this rate was Rp 85 per US$1. The corresponding buying rate of Rp 84.50 is applicable to local expenditures of foreign embassies and to BE’s sold to the Indonesian State Bank, Unit I.

The Foreign Exchange Fund allots, at a rate of Rp 10 per US$1, 10 per cent of export proceeds in each category of exports, based on “posted prices,” to regional authorities (“ADO foreign exchange”). This exchange is shared by the authorities of the region in which the exports originated and those of the region from which the exports were shipped abroad; it may be used for import payments by the regional authorities, or it may be sold in the BE market.

Administration of Control

Exchange control is administered by the Bureau of Foreign Exchange Transactions (BLLD), which is under the direction of the Governor of the Central Bank. The Bureau also issues exchange licenses for imports and invisibles payable with foreign exchange from the Foreign Exchange Fund. Export licenses are issued by local branches of the Export Directorate of the Ministry of Trade. The implementation of exchange and trade control is entrusted to Unit I of the Indonesian State Bank, the Ministry of Trade, the Bureau of Foreign Exchange Transactions, authorized foreign exchange banks, and the customs authorities.

Prescription of Currency

Payments and receipts must be effected through the authorized banks. Generally, payments are made in convertible currencies, but settlements with countries with which Indonesia has bilateral payments arrangements are made through special clearing accounts.3 In addition, under an arrangement agreed upon between the Indonesian State Bank, Unit I, and the Netherlands Bank, payments for imports from the Netherlands may be settled through a special bilateral account (“A account”).

Nonresident Accounts

No distinction is made between resident and nonresident accounts, since the 1964 Foreign Exchange Act only distinguishes foreign nationals and Indonesian nationals. There are no restrictions on the opening by foreign nationals of accounts in Indonesia in rupiahs or foreign currencies.

Imports and Import Payments

There is a registry of authorized importers, and an initial deposit is required for registration; registration is automatically authorized, however, for exporters who also want to establish themselves as importers. Imports are classified in four categories: Category I includes certain essential items, such as rice, fertilizers, medicines, and books for study; Category II includes exchange-earning or exchange-saving raw materials, semifinished goods, and capital equipment; Category III includes other raw materials and semifinished commodities used to produce goods for domestic consumption, as well as motor vehicles for transportation of commodities; and Category IV includes all other goods. There is also a so-called Enclosure V, which comprises goods from the various categories that are “banned” or protected; their import requires a special permit from the Ministry of Trade.

With the exception of sedan automobiles and ceramic tiles, all commodities listed in Categories I-IV may be imported if payment is made with DP exchange. If paid for with “ADO foreign exchange,” only commodities listed in Categories I-III may be imported. If payment is made with “BE foreign exchange,” only goods on the so-called BE List are importable; the list comprises mainly goods from Categories I, II, and III, as well as a few items from Category IV. Imports paid for in any one of the ways mentioned above do not require an import license; documentary evidence, including an Import Declaration (PI), must be submitted, however, to the authorized foreign exchange bank making the payment. These imports may be effected through all ports in the Indonesian customs territory, but not through Sabang, which is a free port. Imports that are paid for with foreign exchange derived from the resources of the Foreign Exchange Fund require an import/ exchange license from the Bureau of Foreign Exchange Transactions. Import licenses and foreign exchange for imports are made available for the c. & f. value of the imports; insurance must be obtained in Indonesia.

Import duties are calculated on the c.i.f. value of imports at a rate of Rp 75 per US$1; this rate is reviewed every three months. Fifty per cent of the duties is payable when the Import Declaration is submitted or the import/exchange license is issued and the remainder when the goods are cleared through customs. An import surcharge of 50 per cent of the applicable import duty is levied on the importation of certain nonessential goods. Excess profit levies of Rp 20 and Rp 30 per US$1 are applied to imports of luxury goods and protected goods. A BLLD import fee of 1 per cent is levied on all payments for imports; it is calculated at the rate applicable for the calculation of import duty, i.e., at Rp 75 per US$1.

Payments for Invisibles

All payments for invisibles may be made freely with Complementary Foreign Exchange from a DP “A account.” Payments for invisibles with foreign exchange from a DP “B account” or from the Foreign Exchange Fund must be authorized by either a general or a special license. General licenses are issued to the authorized banks to make payments for specified invisibles (e.g., those relating to trade transactions) without further authorization from the Bureau of Foreign Exchange Transactions. Special licenses are required for payments in excess of the limits established in the general licenses and for payments not covered by the general licenses (e.g., for advertising fees, film rentals, royalties, registration fees for patents and trademarks, subscriptions to newspapers and periodicals, memberships in associations, charitable remittances, salaries of foreign experts, travel, and study). Licenses are usually not granted for invisibles other than government payments or public sector payments and pilgrimages. All other payments for current invisibles are made with DP foreign exchange.

A BLLD fee of 1 per cent is payable for payments in respect of invisibles.

Travelers may take out Rp 500 in Indonesian banknotes and the equivalent of US$100 in foreign banknotes (or any larger amount in foreign banknotes, provided that they are registered in the traveler’s passport).

Exports and Export Proceeds

All exports require licenses from the local branches of the Export Directorate of the Ministry of Trade. Certain commodities (including soybeans, tapioca, cassava, and corn) may be exported only if authorized by the regional authorities. Exports may be made by registered private firms as well as state trading firms.

All exporters except the petroleum companies and the state trading firms must require their buyers to open a bank letter of credit covering at least the “f.o.b.-net” value of the goods to be exported. Upon shipment of the goods and upon receipt of the export documents by the bank, exporters are credited with a certain portion, depending on the category of exports, of the export proceeds calculated in accordance with the “f.o.b.-net prices,” which are announced for each commodity (other than petroleum) at regular intervals. This portion of export proceeds is the “export bonus”; it is freely negotiable and may be used to pay for imports of specified commodities on the BE List. For the purpose of determining the export bonus, exports are grouped into three categories. Exports in Category I (including rubber, copra, pepper, tea, tin, and tobacco) are eligible for a 50 per cent export bonus. Exports in Category II (among which are hides, coffee, cocoa, livestock, kapok, and oilseeds) are eligible for an export bonus of 75 per cent. An export bonus of 90 per cent is accorded to exports in Category III (which includes all other goods).

The remainder of the export proceeds calculated at the “f.o.b.-net price” must be surrendered to the Foreign Exchange Fund at Rp 10 per US$1. If a price higher than the “f.o.b.-net price” is secured, the exporter is free to retain the additional proceeds (“overprice”) as Complementary Foreign Exchange.

The export bonus is valid for three months from the date it is credited to the exporter’s account at an authorized bank. During this period, the exchange may be used to pay for imports of goods on the BE List or it may be sold to an authorized importer or to the Indonesian State Bank, Unit I, at a rate established periodically; on December 28, 1966, this rate was Rp 84.50 per US$1. Each sale is made by debiting the seller’s BE account and crediting the buyer’s BE account, but only for the remainder of the original three-month validity of the bonus. After the validity of the bonus, it can only be exchanged at the rate of Rp 10 per US$1.

No customs duties are levied on exports. However, a BLLD fee of ⅛ of 1 per cent of the “f.o.b.-net” value of the goods shipped is payable; the fee is calculated at a rate of Rp 10 per US$1.

Proceeds from Invisibles

Services provided by Indonesian residents to foreign countries or foreign nationals must generally be paid for in foreign exchange. Dependent on the type of service, a certain portion (ranging from zero to 100 per cent) of the proceeds from services must be surrendered to the Foreign Exchange Fund. Shipping companies, insurance companies, hotels, and Indonesian airline companies that are not subject to surrender requirements must deposit their entire foreign exchange receipts with an authorized foreign exchange bank; they must obtain the approval of the Bureau of Foreign Exchange Transactions before using the deposits for payments in respect of foreign currency expenses, and conversion of the deposits into rupiahs to meet rupiah expenses is subject to specific license. Private persons of foreign nationality in Indonesia may retain on a DP “A account” all income in foreign exchange except that resulting from exports and certain services; foreign persons belonging to the diplomatic or consular corps must surrender their foreign exchange to the Foreign Exchange Fund.

Capital

Pending the enactment of a new Foreign Investment Law, a status quo is maintained concerning capital movements and all relevant outward transfers are postponed except, with a special permit, with DP exchange.

There are no limitations on the remittance to Indonesia of capital in the form of foreign exchange or commodities, provided that no retransfer and/or profit or amortization transfer is required other than with DP exchange.

Under the Foreign Exchange Act of 1964, Indonesian nationals, natural persons as well as corporate bodies, must deposit (lodge) their Indonesian securities issued before December 29, 1949 by Indonesian corporate bodies and their foreign securities with one of the foreign exchange banks in Indonesia or with one of their correspondents abroad (in a custody account in the name of the foreign exchange bank concerned). Foreign nationals, natural persons as well as corporate bodies, must deposit their Indonesian securities with one of the foreign exchange banks in Indonesia, while their foreign securities must be deposited with one of the foreign exchange banks or one of their correspondents abroad, if the securities were acquired before the enactment of the Foreign Exchange Act of 1964.

The export of rupiah securities is prohibited, except by special license. Indonesian nationals are not allowed to export foreign securities except by virtue of a special or general permit of the Bureau of Foreign Exchange Transactions. The export of foreign securities by foreign nationals also requires a permit from the Bureau of Foreign Exchange Transactions.

Table of Exchange Rates (as at December 28, 1966)(rupiahs per U.S. dollar)
BuyingSelling
0.25 (Transaction Rate, Fixed Rate)0.25 (Transaction Rate, Fixed Rate)
No transactions.No transactions.
10.00 (Transaction Rate plus Rp 9.75 Premium)10.00 (Transaction Rate plus Rp 9.75 Charge)
All exchange receipts of petroleum companies. That part of other receipts from exports and invisibles that must be surrendered to the Foreign Exchange Fund.All exchange payments by petroleum companies. Foreign exchange allotted to regional authorities by the Foreign Exchange Fund.
47.50 (50% at BE Rate and 50% at Rp 10 Rate)4
Category I exports.
66.25 (75% at BE Rate and 25% at Rp 10 Rate) 4
Category II exports.
77.50 (90% at BE Rate and 10% at Rp 10 Rate)4
Category III exports.
84.50 (BE (BNI) Rate)85.00 (BE (BNI) Rate)
Local expenditures of foreign embassies. Export bonus certificates sold by exporters to Indonesian State Bank, Unit I.All aid imports. All central government imports. Invisibles paid for with exchange granted by the Foreign Exchange Fund.
85.00 (BE Rate, Fluctuating Rate)85.00 (BE Rate, Fluctuating Rate)
The part of export proceeds that is retained by the exporter and sold in the export bonus market.All imports in the BE List, when financed with export bonus certificates.
105.00 (DP Rate, Fluctuating Rate)105.00 (DP Rate, Fluctuating Rate)
Foreign exchange corresponding to export “overprices” or to the portion of receipts from invisibles that is not subject to surrender requirements.All imports or invisibles when paid for with Complementary Foreign Exchange.

Changes during 1966

[In December 1965, the new rupiah had replaced the old rupiah at a rate of Rp 1 = 1,000 old rupiahs.]

February 22. Exporters were granted a certain percentage of their export proceeds in the form of nonnegotiable foreign exchange in a BE account with their authorized bank. This exchange was referred to as export bonus (BE) and could be used to import goods on the Commodity Import Program List (later called the BE List). Exports were grouped into three categories. Exporters of commodities in Category I, consisting of all major exports (the “hard products”), were entitled to 10 per cent of the foreign exchange proceeds as BE exchange. Exporters of commodities in Category II, containing other products with a regular market abroad, were eligible for 15 per cent BE exchange. Exporters of goods in Category III, covering all other products, were entitled to 50 per cent BE exchange. Imports paid for with BE exchange were freed from import licensing requirements; instead, only an import declaration (PI) was needed, which could be submitted direct to the authorized bank. However, 50 per cent of any imports made with BE exchange was subject to authorization by the authorities of the region where the exports originated and/or of the region from where they were shipped overseas.

May 20. The percentages of export bonus (BE) were raised for commodities in Categories I, II, and III to 20, 60, and 100 per cent, respectively. The coverage of Category II was enlarged by transferring to it coffee from Category I and a number of other items from Category III. In addition, BE’s were made negotiable (for one sale only) among registered importers. Regional authorities were entitled to receive a regional export premium (BED) of 10 per cent of any export proceeds in excess of the specific export target fixed for their region by the Ministry of Trade.

October 3. The percentages of export bonus (BE) were further raised for Categories I, II, and III to 50, 75, and 90 per cent, respectively. The regional export premium and the requirement that 50 per cent of the use of BE’s be authorized by regional authorities were abolished. The Foreign Exchange Fund would henceforth grant the regional authorities an exchange allocation (“ADO foreign exchange”) of 10 per cent of export proceeds at the periodically established BE rate. This allocation had to be shared by the regional authorities in the area of origin and that of shipment.

October 14. A bilateral payments agreement with the Philippines signed on August 27, 1966 became effective. Most trade transactions were to be invoiced in U.S. dollars and covered by irrevocable U.S. dollar letters of credit, and the corresponding payments were to be channeled through a special account denominated in U.S. dollars.

October 17. A surcharge on less essential goods of 50 per cent of the existing import duty was introduced. In addition, excess profit levies of Rp 20 and Rp 30 per US$1 on the c.i.f. value of imports were introduced on luxury imports and protected imports, respectively.

December 20. It was announced that payments on Indonesia’s long-term foreign debt to France, Germany, Italy, Japan, the Netherlands, the United Kingdom, and the United States, which had been in arrears since 1965, would be rearranged. Arrears up to June 30, 1966 and amortization and interest falling due during the period June 30, 1966-December 31, 1967 would be payable over a period of eight years commencing in 1971. Arrears on commercial credits of 180 days or less would be rearranged in such a way as not to impose an excessive burden on the balance of payments.

Iran

Exchange Rate System

The par value is 0.0117316 gram of fine gold per Iranian Rial or Rls 75.75 = US$1. The official rates are Rls 75.00 buying, and Rls 76.50 selling, per US$1. Exchange rates for other currencies quoted by the central bank1 are based on these buying and selling rates for the U.S. dollar, taking into consideration the exchange rates of the quoted currencies in the international exchange markets. Exchange rates for currencies not quoted by the central bank are determined by the authorized banks with due regard to the rates against the U.S. dollar currently quoted in the international exchange markets.

The following charges are levied by the authorized banks on the amount of exchange sold for imports: ½ of 1 per cent for sanitary services, and 110 of 1 per cent of the invoice amount for the Export Promotion Fund.

Administration of Control

Exchange control authority is vested in the Bank Markazi Iran (the central bank). All foreign exchange transactions must take place through authorized banks. The import and export of goods is governed by regulations issued annually by the Ministry of Economy under the approval of the Cabinet. Import policy is formulated within an over-all foreign exchange budget. Foreign trade relations with Albania, Mainland China, Eastern Germany, and North Korea are under the control of the Foreign Transactions Corporation within the Ministry of Economy.

Prescription of Currency

Payments and receipts are normally settled in sterling, U.S. dollars, or the currency of the country concerned, provided that the currency is one which is quoted by the central bank.

Transactions with the five countries with which Iran has bilateral payments agreements 2 must be conducted through agreement accounts denominated in U.S. dollars. Proceeds from exports to India may be accepted in Indian rupees.

Nonresident Accounts

Foreign nationals are permitted to maintain Foreign Nationals’ Accounts freely, in rials as well as in foreign currencies, with the authorized banks. Rial accounts may be used only for payments in Iran. Foreign currency accounts may be used for transfers abroad or for sales to authorized banks, provided that such funds originate abroad.

Imports and Import Payments

All imports into Iran are subject to control by the Government. The import policy is re-examined annually, and a new Import List, effective for the next Iranian year, is published by the Ministry of Economy. The Import List distinguishes between “authorized,” “unauthorized,” and “prohibited” goods. “Authorized” imports, consisting of nonluxury goods which either are not produced in Iran or are produced in Iran but not in quantities sufficient to meet domestic requirements, are divided into two main categories: (1) imports for which orders may be placed without prior approval by government agencies,3 and (2) imports that are subject to prior approval by government agencies before the import order is placed. “Unauthorized” imports include goods which have been shifted from the “authorized” list to the “unauthorized” list, as well as goods that may be permitted occasionally by the Ministry of Economy when the supply of the protected local product is considered insufficient. For “prohibited” goods, no authorizations are given.

Imports free of charge of “authorized” goods require prior approval by the Ministry of Economy and the central bank of Iran; permission is given for the following: imports destined for official charitable institutions or government organizations; machinery, spare parts, and raw or intermediate materials for productive institutions, up to US$500 a shipment; and all other imports of “authorized” goods up to US$150 a shipment.

Specified commodities, such as tobacco and cigarette paper, are imported under state monopoly. Gold may be imported only by the central bank.

Unless otherwise specifically authorized, payment for all commercial imports must be made through the official exchange market. Payments may be made either against bills for collection or documentary letters of credit. Payments against bills for collection may be made without authorization for goods (mainly capital goods and raw materials) listed in the Schedule attached to Circular No. 116 of August 3, 1965 (Iranian date 12.5.1344). Payments for imports of other goods required by domestic industries may also be made against bills for collection with special permission from the central bank. All other import payments must be made against documentary letters of credit. All orders for imports must be registered with the Bank Markazi Iran through an authorized bank; registration is effected against a pro forma invoice. The import of gifts is restricted to Rls 10,000 for each person a year.

Special regulations apply to certain commodities originating in Hong Kong.

At the time of registration of imports, importers are required to deposit with the Bank Markazi Iran, through an authorized bank, Rls 3 per US$1 of the amount of the import order for goods eligible for payment against bills for collection, and Rls 11.50, Rls 31.50, and Rls 76.50 (depending on the essentiality of the goods) per US$1 for goods for which payment must be made against a documentary letter of credit. This deposit is liable to forfeiture up to Rls 3 per US$1 in the event that any misrepresentation by the importer is subsequently discovered but it is otherwise refundable upon presentation of the customs clearance certificate after the respective goods have been cleared through customs, or if and when the order is canceled.

Authorized banks make payments for permitted imports against the presentation of shipping documents. Approval of the shipping documents by the authorized banks represents approval of the foreign exchange transfer.

Almost all imports are subject to commercial profit taxes, in addition to tariffs, which are either specific or ad valorem. The ad valorem commercial profit tax ranges from 1 per cent to 225 per cent. Monopoly taxes are included in the commercial profit taxes. The authorities specify in the Import List the commercial profit taxes for each year. All taxes are paid to the customs before customs clearance. The clearance through customs is authorized upon the presentation of shipping documents approved by the authorized banks, specifying that payment has been made or will be made, and, when required, that the special import authorization has been received from government agencies prior to lading of goods in the country of origin.

Payments for Invisibles

Payments for invisibles related to imports are made on the same basis as payments for those imports. Exchange is granted to merchants for insurance of imports against bills for collection; for imports covered by documentary letters of credit, insurance must be taken out in Iran. Exchange is not granted to merchants for insurance of Iranian exports sold f.o.b. Payments for noncommercial invisibles require licenses from the central bank. Foreign nationals working in Iran as technical assistants and whose employment has been recognized as necessary by the Government may take out in foreign exchange about 50 per cent of their net salaries. The annual travel allowance for Iranian nationals—which is limited to US$500 or its equivalent in other currencies for travel to Europe, the United States, or the Far East, and to US$100 for other countries—may be sold by authorized banks upon presentation of the traveler’s passport. For children under 12 years of age the allowances are 30 per cent of the above amounts.4

Iranian nationals leaving the country are required to pay a travel tax of Rls 10,000 for each single-voyage exit permit, except for pilgrimage travel for which the tax is Rls 3,000. Lower rates apply to family members traveling on the same passport (wife and children from 7-18 years of age), viz., Rls 750 a person for pilgrimages and Rls 2,500 a person for other travel. Iranians resident abroad and students studying abroad but visiting home temporarily are exempt from payment of the tax.

Travelers leaving Iran may take with them Rls 3,000 in Iranian banknotes. Travelers of foreign nationality may not export foreign currency in excess of the amount they imported less the amounts they have sold to authorized banks, as recorded in their passports; they may, however, convert rials up to the equivalent of US$50 into other currencies upon presentation of their visaed passports.

Exports and Export Proceeds

Exports of oil to Rhodesia are prohibited. Exports of some commodities require licenses. A commercial profit tax is imposed on a few exports, mainly consumer goods or raw materials. The commercial profit tax charged at the time of import on materials contained in goods for export may be returned to the exporter after the export has taken place. Under a system of export subsidies (that are announced semiannually), the Ministry of Economy pays the exporter 20 per cent of the f.o.b. value of exports of manganese ore; 9 per cent of the f.o.b. value of first-grade and second-grade pickled skins (salambore); and 7½ per cent of the f.o.b. value of exports of chromite ore. However, the actual rates paid to the exporter by the Ministry of Economy are 90 per cent of the percentages mentioned for ores and 75 per cent of that indicated for pickled skins; the remainder is put at the disposal of the Ministry of Economy to promote exports.

The exporter must offer for surrender the foreign exchange value of his exports, as appraised by the customs, within eight months after the goods have been exported. Authorized banks accept export proceeds only in specified currencies (see footnote 1) or, for exports to India, in Indian rupees.

Proceeds from Invisibles

Exchange receipts from invisibles must be surrendered or held in a foreign currency account in the name of the recipient with an authorized bank and under the control of the central bank.

The import of Iranian currency by travelers to Iran is permitted in unlimited amounts. The repatriation of Iranian banknotes through the mail is not permitted. Upon arrival in Iran, travelers of Iranian nationality must either sell their foreign exchange to an authorized bank or deposit it in a temporary foreign exchange account, from which transfers abroad or to Foreign Nationals’ Accounts require licenses from the central bank. Other travelers, during their stay in Iran, may sell their exchange only to an authorized bank at the bank’s buying rate.

Capital

Transfers of capital abroad require the approval of the central bank. Except as noted below, such approval is given only in exceptional circumstances.

In accordance with the law concerning the encouragement and protection of foreign capital investment in Iran (1955) and regulations implementing the law, foreign capital invested in approved development or productive activities in industry, mining, agriculture, or transport may be repatriated, together with net profits (in accordance with the provisions contained in the implementing regulations), in the form of foreign exchange and/or goods. Transfers of exchange must be made at the selling rate prevailing at the date of transfer. However, the central bank has the option of buying the exchange or accepting it as a deposit to be converted into rials at a rate mutually agreed upon in a separate agreement, and this rate is applicable to the funds when they are repatriated. Capital imported in the form of foreign exchange must be in currencies acceptable to the central bank; the exchange is converted into rials at the buying rate prevailing at the date of application for conversion. The law does not set up any limit of participation with respect to the ratio of foreign to domestic investment, but the Supervisory Board encourages participation by Iranians in the proposed investments.

Changes during 1966

February 23. The opening of letters of credit for imports of tractors was made subject to the permission of the Ministry of Economy.

March 14. Registration of import orders for 24 types of drugs was no longer permitted.

March 21. The Import/Export Regulations for the Iranian year 1345 (March 21, 1966-March 20, 1967) were published by the Ministry of Economy. There were few major changes, there being a continuation of policies of protection for Iranian industry and restrictions on imports of luxury and nonessential commodities. Six items were added to the “unauthorized” import list; two were moved to the “authorized” list from the “unauthorized” list. The commercial profit tax was raised on imports of 35 items and decreased on 9 items. Commercial imports “free of payment” and imports to be settled by compensation against export proceeds were made subject to the permission of the Ministry of Economy and the Bank Markazi Iran; the former could previously be financed either through the unofficial exchange market or with exchange receipts that were not subject to surrender requirements.

March 21. All tractor imports were made subject to the approval of the Ministries of Economy and Agriculture.

March 21. The export subsidy on packed raisins was abolished, the subsidy on first-grade and second-grade pickled skins was reduced from 12½ per cent to 10 per cent, and that on chromite ore was reduced from 10 per cent to 7½ per cent.

April 9. Permission was given to import the following goods either without transfer of foreign exchange or by payment from exchange earnings accruing abroad from invisibles: (1) goods imported free of charge for official charitable institutions and government organizations; (2) machinery spare parts and raw or intermediate materials with a maximum cost of US$500 f.o.b. for each shipment, provided that the import served to make good any deficiencies or to replace damaged goods in earlier consignments; and (3) any commodity that was not a “prohibited” item, with a maximum value of US$150 f.o.b. for each shipment.

April 13. The import of specified types of bottled alcoholic beverages on the “unauthorized” import list was authorized by the Ministry of Economy.

April 24. The import of specified types of industrial plant and capital goods was no longer subject to the prior approval of the Ministry of Economy; the list of goods was extended on May 21.

June 13. The resignation of import orders for bobbinet originating in Mainland China or Hong Kong was no longer permitted.

June 23. The import of cows, calves, and sheep by land without payment was permitted.

July 17. The registration of import orders for tractors was not permitted.

August 2. Foreign exchange allowances for travel to specified countries were no longer subject to the presentation of visas.

August 9. The import of plastic-making machines was made subject to the prior approval of the Ministry of Economy.

August 24. The existing deposit charge of Rls 1.50 per US$1 for registration of imports was increased to Rls 3 for imports eligible for payment by bills for collection.

August 24. Refunds of advance deposits against import letters of credit (Rls 10.00, Rls 30.00, and Rls 75.00 per US$1, according to the classification of the import), which had hitherto been made upon clearance of documents, were postponed until clearance of the goods through customs. As a result, the deposits were effectively amalgamated with registration deposits (Rls 1.50 per US$1 for imports required to be settled against letters of credit, repayable on clearance of goods through customs) to establish registration deposits of Rls 11.50, Rls 31.50, and Rls 76.50 per US$1.

September 7. The registration of import orders for specified textile items originating in Mainland China or Hong Kong was no longer permitted.

September 22. The export subsidy on first-grade and second-grade pickled skins was reduced from 10 per cent to 9 per cent.

September 27. The import of goods originating in Mainland China and North Korea was made subject to reference to the Foreign Transactions Corporation of the Ministry of Economy.

October 31. The import of goods originating in Albania was made subject to reference to the Foreign Transactions Corporation of the Ministry of Economy.

October 31. The registration of import orders for tractors was allowed, subject to the permission of the Ministry of Economy.

November 1. The import of shoe-making machines valued at more than Rls 30,000 was made subject to the permission of the Ministry of Economy.

Iraq

Exchange Rate System

The par value is 2.48828 grams of fine gold per Iraqi Dinar or ID 1 = US$2.80. Transactions in the official market are carried out in any of the listed currencies1 or in Iraqi dinars through nonresident accounts in Iraq. The Central Bank of Iraq quotes official rates for the listed currencies for its transactions with authorized dealers. The official rates for the U.S. dollar on December 31, 1966 were US$2.7905 buying, and US$2.7819 selling, per ID 1. An exchange tax is levied on the Iraqi dinar equivalent of foreign exchange granted to a person who leaves Iraq or resides abroad, except on amounts transferred for the account of persons studying abroad, persons on official missions, and foreigners (other than those married to Iraqis). The tax is 8 per cent for the first ID 500 (with the exception of certain exempted amounts; see section on Payments for Invisibles, below) and 12 per cent on amounts above ID 500 (with the same exemptions) granted during any calendar year. There is a small free market (mainly in banknotes) in Iranian rials and Saudi Arabian riyals.

Administration of Control

The Board of Administration of the Central Bank of Iraq is entrusted with all powers and responsibilities in connection with exchange control; it has delegated this authority to the Foreign Exchange Committee, headed by the Governor of the Central Bank, to the Foreign Exchange Department of the Central Bank, and to the licensed dealers. Foreign exchange transactions must take place through a licensed dealer unless otherwise authorized by the Board of Administration. The Directorate-General of Imports and Exports in the Ministry of Economy is the licensing authority for imports and exports.

Prescription of Currency

Settlements must be made in any of the listed currencies,1 or, under bilateral payments agreements,2 in dinars or pounds sterling through the appropriate clearing account.

Nonresident Accounts

The opening of a nonresident account requires the approval of the exchange control authorities. Transactions permitted in convertible currencies may alternatively be settled in Iraqi dinars through nonresident accounts.

Imports and Import Payments

All imports from Israel and all imports from Hong Kong other than certain capital goods are prohibited. Imports of some 69 commodities are prohibited from all sources. Imports of jute, sugar, tea, olive oil, and certain medical supplies are a government monopoly. All private imports are licensed in accordance with an annual quota system. Quotas are distributed by the Directorate-General of Imports and Exports in accordance with its own criteria; each category of importers is limited to specified types of commodities. Imports of consumer goods generally are more heavily restricted than those of raw materials and construction materials for industrial use. Some commodities may only be imported by government agencies or state trading companies; other commodities may also be imported by registered private importers or by contractors who have entered into contracts with the Iraqi Government. New importers who meet the requirements may also be granted import privileges. Licenses for private imports are valid for 6 months from the date of issue and are automatically renewable for a similar period if a letter of credit has been opened. Licenses for imports by the Government or by official agencies are valid for 12 months from the date of issue.

Licensed dealers make exchange available upon presentation of the exchange control copy of the import license, except in some instances where reference has to be made to the Central Bank.

Payments for Invisibles

All payments for invisibles require permission. Exchange is usually granted for travel, educational and medical expenses abroad, freight on exports carried on a c. & f. basis, insurance premiums, royalties, etc. Exchange is not granted to merchants for the insurance abroad of their imports or exports. Licensed dealers are permitted to transfer up to ID 50 a month for family maintenance on behalf of foreign nationals resident in Iraq, provided that remittances do not exceed half of the resident’s monthly income; it is necessary to refer to the exchange control authorities for amounts exceeding this limit.

There is a basic travel allowance of ID 300 a calendar year for each person 18 years of age or over, of ID 150 for persons aged between 5 and 18, and of ID 50 for children 5 years of age or younger, subject to a limit of ID 600 for each passport covering more than one person. Tourist travel exchange additional to the basic allowances is subject to ad hoc approval of the Central Bank. Travelers may take out ID 5 in Iraqi currency notes and the equivalent of ID 15 in foreign currency. Residents on a pilgrimage to Saudi Arabia are permitted to take out the equivalent of ID 150 in listed currencies or in Saudi Arabian riyals.

An exchange tax is levied on the Iraqi dinar equivalent of foreign exchange granted to a person who leaves Iraq or resides abroad, except on amounts transferred for the account of persons studying abroad, persons on official missions, and foreigners (other than those married to Iraqis). The tax is 8 per cent on the first ID 500 granted during any calendar year and 12 per cent on amounts above ID 500, with the following exemptions: ID 150 for persons 18 years of age or over, ID 75 for persons aged between 5 and 18, and ID 25 for children 5 years of age or younger.

Travelers leaving Iraq must deposit with an authorized bank 10 per cent of the Iraqi dinar equivalent of the foreign exchange granted. The deposit is refunded upon the traveler’s return to Iraq, subject to the fulfillment of certain formalities. The following are exempt from the deposit requirement: officials of government, semigovernment, and public utility departments, certain persons traveling for study purposes, foreigners except non-Iraqi wives of Iraqi nationals, and persons leaving on a pilgrimage.

Exports and Export Proceeds

All exports to Hong Kong and Israel and exports of certain goods to all other countries are prohibited. The Ministry of Economy has authority to prohibit exports of agricultural products when supply falls short of domestic demand. All other exports are licensed freely. The re-export of such goods as cars and agricultural machinery is prohibited.

Exporters must undertake to repatriate their foreign exchange proceeds through a licensed dealer and to surrender them. Proceeds from exports of dates taken by sailing boats to countries of the Persian Gulf area (excluding Iran) and India are exempt from these requirements.

Proceeds from Invisibles

Foreign exchange receipts from invisibles must be surrendered to a licensed dealer. Travelers may bring in foreign exchange, including currency notes, in unlimited amounts, provided that they are declared to the Iraqi customs; foreigners may re-export any unused amount. Travelers may bring in ID 5 in Iraqi notes.

Capital

Nonresidents may import capital freely, but they must deposit it with a licensed dealer; such deposits may be converted into local currency at the official rate, and repatriation to the country of origin is permitted. With minor exceptions, foreign companies starting operations in Iraq must use Iraqi capital to the extent of at least 51 per cent of their total capital. One half of the profits of foreign service companies (companies rendering services only) is transferable. The transfer of profits from foreign investments in other economic activities is limited to 10 per cent per annum of the paid-up capital for commercial, banking, and insurance companies, and to 20 per cent of the paid-up capital for industrial companies. These percentages are applicable for each year separately. They also apply to profits on capital resulting from reinvestment of profits in excess of the transferable percentages. Interest payments may be made freely, subject to administrative checking. Imports of capital from Israel are prohibited. All transfers of capital abroad by residents, whether Iraqis or foreigners, require exchange control approval.

Under the Industrial Development Law (No. 31 of 1961) and the Industrial Promotion Law (No. 164 of 1964), specified enterprises in Iraq are granted partial or total exemption during the first five years of operation from income tax, stamp duties, and customs duties on their profits up to 10 per cent of paid-up capital, provided that (1) the principal work of the enterprise is done by machine; (2) all workers and employees other than essential technicians or experts are Iraqi citizens or Arabs; (3) the value of machinery and tools required, excluding power-generating plant, exceeds ID 3,000; and (4) foreign non-Arab participation in the enterprise does not exceed 40 per cent. Similar exemptions for profits up to 5 per cent of paid-up capital are granted during the second five-year period of operation. The specified enterprises are those whose main purpose is to process raw materials into semimanufactured or finished products or to process semimanufactured products into finished products, including assembly. Under the Iraqization Law of June 1961, all branches of foreign firms and all foreign-owned firms (except banks) 3 must have a majority of equity capital held by Iraqi nationals; this law does not cover export agencies and operations requiring special skills.

Changes during 1966

January 1. The import program for the public and private sectors for 1966 took effect. Imports (other than defense items and goods for industrial projects executed by foreign firms) would amount to US$364 million. The import of luxury items would remain severely restricted.

May 4. The circulation of Iranian rials was prohibited in certain northern provinces.

September 12. Licensed dealers could hold balances of listed currencies not exceeding in value 10 per cent of the total of their documentary credits and other outstanding liabilities with their correspondents abroad.

October 6. The Higher Supply Committee approved a draft notification concerning the beginning of the implementation of the Arab Common Market. Attached were lists of livestock products, agricultural products, and industrial products, the liberalization of which from import and export restrictions the Committee recommended.

October 10. The Higher Supply Committee liberalized the export of all winter and summer crops. The Ministry of Economy reserved the right to prohibit the export of any of the items concerned when supply did not cover domestic demand.

Ireland

Exchange Rate System

The par value is 2.48828 grams of fine gold per Irish Pound or £Ir 1 = US$2.80. Transactions in sterling take place at parity. Exchange rates for other currencies are based on London market rates. Certain capital transactions involving investment currency or property currency (see section on Capital, below) take place at different effective rates. On February 15, 1961, Ireland accepted the obligations of Article VIII, Sections 2, 3, and 4, of the Fund Agreement.

Administration of Control

Exchange control is operated by the Central Bank. Much of the authority for approving normal payments is delegated to commercial banks authorized for this purpose. Import licenses, where necessary, are issued by the Department of Industry and Commerce if the goods are of an industrial nature, or by the Department of Agriculture if the goods are agricultural in character. Import licensing is not used for exchange control purposes. Import and export controls are administered by the Revenue Commissioners.

Prescription of Currency

Ireland is a member of the Sterling Area, and payments to and from other parts of the Sterling Area may be made freely in any Sterling Area currency; certain insurance payments within the Sterling Area, however, may be made in non-Sterling Area currencies. Authorized payments to countries outside the Sterling Area other than Rhodesia may be made in Irish pounds or sterling through an External Account or in any non-sterling currency other than Rhodesian pounds. The proceeds of exports to countries outside the Sterling Area other than Rhodesia must be received in Irish pounds or sterling through an External Account or in any specified currency.1 The proceeds of permitted exports to Rhodesia must be received in specified currency; payments to Rhodesia are subject to special regulations.

Nonresident Accounts

Accounts of persons resident in other countries of the Sterling Area are treated as resident accounts. Accounts of persons resident in countries outside the Sterling Area are treated as nonresident accounts and, with the exception of Blocked Accounts and Rhodesian Accounts, are designated External Accounts. These may be credited with payments authorized for transfer to countries outside the Sterling Area other than Rhodesia, with transfers from other External Accounts in Irish pounds or in sterling, and with the proceeds in Irish pounds of any non-sterling currency other than Rhodesian pounds sold by a resident of a country outside the Sterling Area to an authorized bank in Ireland. Balances on these accounts may be transferred freely to other External Accounts in Irish pounds or in sterling, used for payments to residents of the Sterling Area, or converted through an authorized bank in Ireland into any non-sterling currency other than Rhodesian pounds.

Blocked Accounts are credited with funds not eligible for transfer that are due to persons resident outside the Sterling Area.2 These funds arise from such sources as the sale of Irish securities, proceeds from sales of real estate exceeding £1,000, and the Irish estates of persons who at the time of death were resident outside the Sterling Area. Funds in these accounts may be invested through the stock exchange in Irish or sterling securities which cannot be redeemed within five years from the date of investment. They may also be used for expenses of the account holder and his family during visits to Ireland and for the upkeep of the account holder’s property in Ireland. Balances on Blocked Accounts may be transferred freely to other Blocked Accounts in Ireland or in the United Kingdom. Holders of Blocked Accounts may avail themselves of facilities for the sale of funds in such accounts at the prevailing price for blocked sterling (normally at a slight discount).

Accounts held by or on behalf of residents of Rhodesia are designated Rhodesian Accounts. The opening of such accounts, and all debits and credits thereto, require the prior approval of the Central Bank.

Imports and Import Payments

All imports of commodities originating in Rhodesia require a special license. With this exception, the import of goods into Ireland is subject to two types of administrative control. Under one type, which covers only a limited range of commodities for protective and other non-balance of payments purposes, imports of certain commodities are subject to quantitative restrictions which, in most cases, are on a world-wide basis. Individual import licenses are required for these goods and are used to limit the quantity of goods imported. In addition, special quota restrictions apply to certain textiles originating in any of 16 specified countries or territories.3 All other imports are free of import licensing. Under the other type of control, prior permission of the Central Bank is required before orders may be placed for goods originating outside the Sterling Area, if they are not to be used in Ireland or are to be delivered more than nine months after the date of the order.

For permitted imports, appropriate exchange or permission to credit Irish pounds or sterling to an External Account is granted automatically. Exchange control forms are required for import payments exceeding £2,000 to countries outside the Sterling Area.

Payments for Invisibles

Payments to other territories of the Sterling Area are not subject to exchange control unless they are for transactions outside the Sterling Area. Payments to residents of countries outside the Sterling Area require approval. Approval to make payments for most invisibles is given by the authorized banks; for other invisibles, it is given by the Central Bank.

For tourist travel outside the Sterling Area (other than to Rhodesia) there is a basic allowance for residents of the State of £250 a person for each trip. For business travel, up to £1,500 is allowed for each journey. Limits are also established for allowances for education and other purposes. Applications for larger amounts are approved, provided that no unauthorized export of capital is involved. Not more than £250 of a foreign currency allowance may be issued in the form of currency notes. Persons traveling to destinations outside the United Kingdom (other than to Rhodesia) may also take with them up to £25 in Sterling Area currency notes. Travelers who are resident outside the Sterling Area (other than in Rhodesia) may take with them any foreign currency notes that they brought into Ireland. There is no restriction on the amount of Irish or other banknotes that may be taken to the United Kingdom.

Exports and Export Proceeds

A system of export licensing is applied to a limited range of goods. Exporters of goods to countries outside the Sterling Area must obtain payment for the goods within six months of shipment, if the value of the goods exceeds £100. When payment is received in specified currencies, the exchange must be sold to an authorized bank. Exchange control forms are required for exports exceeding £2,000 to countries outside the Sterling Area.

Proceeds from Invisibles

There are no specific requirements governing exchange receipts from invisibles, but if specified currencies are received they must be sold to an authorized bank or permission for their retention must be obtained. Any foreign exchange held by a person after his return from a trip abroad may be retained for three months from the date he received the exchange, for use on a subsequent trip abroad. There are no limitations on the import of Irish or foreign banknotes.

Capital

Exchange control approval is required for all transfers of capital to countries outside the Sterling Area. Applications for transfer of capital at the official market rate of exchange by residents of the State emigrating to countries outside the Sterling Area (other than Rhodesia) are approved up to a limit of £5,000 a family. Where the total value of an emigrant’s assets exceeds £5,000, the transfer of the excess amount outside the Sterling Area is restricted for a period of four years from the emigrant’s redesignation as a nonresident, i.e., from the date of departure from Ireland. Thereafter, the assets would be treated in the same way as those of non-Sterling Area residents who had never been resident in Ireland. However, permission is given at any time after redesignation for the restricted funds to be transferred abroad through the investment currency market (see below). Applications for the transfer of capital for purposes other than emigration are considered on their merits.

There are no restrictions on the inflow of capital, but purchases of unquoted Irish securities by nonresidents of the Sterling Area require approval and the purchase of nonurban land by foreign nationals in most cases requires approval by the Land Commission. Incoming capital received in specified currencies must be sold to an authorized bank. However, investment currency, i.e., the proceeds from the sale of non-Sterling Area securities4 sold outside the Sterling Area, may be fully reinvested in non-Sterling Area securities, provided that the securities sold were held prior to April 7, 1965, or acquired by “switches” from securities so held, and that the investment is carried out within six months from the date of sale through a bank, a stockbroker, or a solicitor. Where the securities sold were purchased with investment currency on or after April 7, 1965, 25 per cent of the sale proceeds must be surrendered at the official rate. In certain cases, the proceeds from the sale or liquidation of direct investments outside the Sterling Area are eligible for investment in non-Sterling Area securities, provided that 25 per cent of such proceeds is surrendered at the official rate. The foreign currency proceeds (referred to as property currency) from the sale outside the Sterling Area of property owned by residents, mainly houses and apartments, may be used, subject to individual permission, to purchase for personal use a house or apartment in a country outside the Sterling Area; payments for attendant expenses and improvements must also be made with property currency. Approval is normally limited to one property a family, and purchases of property currency are limited to reasonable amounts. Transactions in securities are controlled to ensure that capital is not transferred outside the Sterling Area. Dealings in Irish registered securities are permitted freely between residents of the Sterling Area. Specific approval is required for all dealings in securities payable in Rhodesian pounds.

Changes during 1966

January 21. Exchange control regulations removed, with respect to Rhodesia, the general exchange control exemptions applicable to territories outside the Sterling Area. The new regulations had the effect that payments for imports of goods and services from Rhodesia required the approval of the Central Bank, that currency notes could not be exported by travelers to Rhodesia except as permitted by the Central Bank, and that exports to Rhodesia must be paid for in a specified currency.

January 21. By an Order made under the Restriction of Imports Act, 1962, the importation of goods from Rhodesia was prohibited except under license.

March 31. The temporary import levy imposed on November 2, 1965 was continued in operation until June 30, 1966.

June 30. The temporary import levy was continued in operation until September 30, 1966.

July 1. An Anglo-Irish Free Trade Area Agreement entered into force. Import duties on most goods of U.K. origin were reduced by 10 per cent, and those on a wide range of goods originating in Northern Ireland by 20 per cent. With minor exceptions, quantitative restrictions on imports of U.K. origin were abolished.

July 1. Imports of certain commodities previously subject to global quotas were liberalized from all sources; these items included motor vehicles and certain tires and tubes.

July 28. Banks and travel agents were not permitted to authorize non-Sterling Area currency facilities for travel purposes to residents of the United Kingdom or any other Sterling Area country unless the applicant produced evidence of the approval of the Bank of England or his local exchange control and intended to commence his journey within three months from the date of approval.

August 18. Declared assets in excess of £5,000 of persons emigrating on or after this date were restricted for a four-year period from the date of redesignation as a nonresident; during that period the funds could be disposed of for non-Sterling Area currency through the investment currency market, and afterward any remaining assets would be transferable in accordance with the rules then applicable to the assets of a nonresident. Previously, emigrants’ assets in excess of £5,000 could be realized at any time through the security sterling market.

September 30. The temporary import levy on certain finished consumer goods was abolished.

November 1. Banks and travel agents were instructed that, in keeping with the United Kingdom’s new travel allowance regulations, the cost of hotel accommodation or similar services outside the Sterling Area should be deducted from any allowance duly approved for residents of the United Kingdom.

November 30. The scheme of “market development grants” on exports of manufactured goods to the United Kingdom lapsed with the termination on this date of that country’s temporary import charge.

Israel

Exchange Rate System

The par value is 0.296224 gram of fine gold per Israel Pound or I£3.00 = US$1. All exchange transactions take place at rates based on the par value.

Administration of Control

Exchange control is administered by the Department of Foreign Exchange Control of the Ministry of Finance under the responsibility of the Controller of Foreign Exchange in cooperation with other government agencies, and is carried out through authorized banks.

Prescription of Currency

Payments and receipts must be effected in the currency and manner prescribed by the exchange control authorities. Settlements with countries with which payments agreements are in force1 are usually made in U.S. dollars or sterling as accounting units.

Nonresident Accounts

Nonresidents’ funds are held either on foreign currency accounts or on local currency accounts. A nonresident abroad may use his foreign currency account freely; when in Israel, he may convert funds held on the account into local currency at the official rate. Local currency accounts of nonresidents are of two types: (1) Registered Accounts—for foreign aviation, shipping, insurance, and film companies and for former residents—may be established only with special approval. Aviation, shipping, and insurance companies may freely convert at the official rate of exchange any amounts held on these accounts which are surplus to requirements; film companies may do so under individual arrangements made with each company. Registered Account funds held by former residents may be used for investment in listed Israel securities, for purchase of real estate, for tourist expenses in Israel up to an amount of I£100 a day for the account holder and for each member of his family, for remittances of up to I£2,500 in support of relatives who are residents of Israel, for the payment of taxes payable in Israel by the owner of the account, and for donations to public and charitable institutions. Ownership of Registered Accounts may not be transferred. (2) Blocked Accounts may be used to hold funds derived from former investments which are not eligible for transfer at the official rate and funds left behind in Israel by tourists. Balances may not be transferred from one nonresident to another, but the accounts may be liquidated by purchasing foreign securities against Israel pounds and selling them abroad against foreign exchange. Otherwise, Blocked Accounts may be used within Israel for the same purposes as Registered Accounts but no limit is placed on the amounts that may be withdrawn.

Imports and Import Payments

A few imports are prohibited from all sources. Importers of goods listed in the Free Import Orders (slightly over one half of total imports in 1966) must be approved as importers by the Ministry of Commerce and Industry. These goods are free of all licensing and restriction. All other imports are subject to licensing. For commodities on the Automatic Approval List (more than one third of total imports), licenses are issued automatically upon application. All individual import licenses must be countersigned by the Department of Foreign Exchange Control of the Ministry of Finance. The currency and method of payment are prescribed in each license; if a convertible currency is prescribed, payment may be made in any convertible currency. Seven basic food products are imported exclusively by or for account of the Government of Israel.

Exchange to pay for items listed in the Free Import Orders or to pay for licensed imports is granted automatically. An import license may prescribe whether, if payment is to be made by documentary credit, the full amount of foreign currency required must be purchased at the time of opening the credit; in such cases, funds not transferred abroad immediately must be deposited in a special account with the Bank of Israel until transfer is made. Licenses are issued for imports of goods on consignment, provided that the recipient of the license imports goods valued at US$250,000 within three months and undertakes to deposit 10 per cent of the value of the goods with the Bank of Israel through an authorized bank. Each license is valid only for a single commodity, and an importer cannot receive more than two such licenses a year. The approval of the Department of Foreign Exchange Control is required for all imports effected under foreign credits.

Payments for Invisibles

Most payments abroad for invisibles require individual licenses. Each resident is allowed exchange equivalent to US$30, which is obtainable on demand, for the purchase of books, membership dues, etc., and US$50 for certain other purposes (e.g., registration in a university).2 For tourist travel abroad, there is an exchange allowance equivalent to US$500 a traveler for each journey.3 Not more than I£100 in Israel banknotes may be taken out by travelers. Foreign tourists leaving Israel are permitted to repurchase through authorized dealers part of the same foreign currency they previously exchanged into Israel pounds, but not more than the equivalent of I£900. Residents traveling abroad must pay a travel tax; the tax is I£255 plus 7.5 per cent of the price of the ticket for travel by sea, and I£290 plus 7.5 per cent of the price of the ticket for travel by air. Exporters doing more than US$100,000 of export business a year are exempt from travel tax on business trips.

Exports and Export Proceeds

Most exports do not require licenses. For some commodities, however, export licensing is retained for the purpose of quality control. The Ministry of Commerce and Industry maintains a check on export transactions with a low value-added content which are made with bilateral partners: this is done to discourage switch transactions. Export proceeds in foreign currencies must be surrendered or held on a PAZAK account (see section on Proceeds from Invisibles, below).

Proceeds from Invisibles

Exchange proceeds from invisibles must, in general, be surrendered. Alternatively, they may be kept in foreign exchange on PAZAK accounts, balances on which may be exchanged into Israel currency at any time or used to make authorized payments.

One third of the foreign exchange received by residents of Israel as restitution payments, and as pensions by disabled soldiers who served in World War II, may be retained in TAMAM accounts (see section on Capital, below).

For ten years after entering Israel, new immigrants are exempt from surrendering their foreign exchange to the Treasury, and they may keep these currencies with authorized banks in Israel or with banks abroad.

Tourists visiting Israel are expected to bring with them the amounts of foreign currency that they will need during their stay. Not more than I£100 in Israel banknotes may be brought in by travelers. Tourists and others visiting Israel who are holders of Registered Accounts (see section on Nonresident Accounts, above) may draw upon such accounts to the extent of I£100 a day for themselves and the same amount for each member of their families; if they are holders of Blocked Accounts, they may draw on these without limit.

Capital

Foreign exchange representing incoming capital has to be surrendered at the official rate or held in a PAZAK account (see section on Proceeds from Invisibles, above). Capital brought into Israel for the purpose of investment may, subject to approval, be granted preferential treatment in accordance with the Law for the Encouragement of Capital Investments of August 16, 1959, which permits a nonresident who has made an “approved” investment in foreign currency to transfer all his profits abroad in the same currency at the official rate. Repayment and amortization of capital may also be transferred on the following terms: if the investment has been kept for less than five years, the capital may be withdrawn in five equal annual installments; if the investment has been kept for more than five years, it may be withdrawn immediately. Current policy is to grant “approved” status only to enterprises in selected fields of production that undertake to export half their output, that provide for a significant degree of import substitution, or that create desirable employment in development areas. Foreign investments made in Israel without taking advantage of the 1959 law do not benefit from these transfer privileges, but most old investments have in fact been recognized as “approved” investments. Interest and dividends on bonds or shares registered on the stock exchange which have been purchased by nonresidents with exchange converted at the official rate may be transferred abroad in foreign currency at the official rate; this applies also to amounts received through sales of such shares.

Payments due to nonresidents and not permitted to be transferred abroad may be credited to Registered Accounts or Blocked Accounts, subject to prior approval by the Ministry of Finance.

Proceeds accruing from the repatriation or liquidation of foreign assets held by residents are treated in the same way as proceeds from invisibles. New immigrants may, for ten years from the date on which they first entered, retain their foreign assets and use them freely. Transfers abroad of a capital nature by residents are generally not permitted.

Holders of TAMAM accounts may use them to purchase abroad, for themselves or their families, foreign securities quoted on an official stock exchange and, subject to submission of evidence to the authorized bank maintaining the account, for legal costs in respect of restitution payments and for travel expenses abroad exceeding the basic travel exchange allocation of US$500 (see footnote 3). Foreign securities purchased by debiting a TAMAM account may be sold abroad for foreign currency and the proceeds again credited to a TAMAM account, or the securities may be sold to other residents against payment in Israel pounds or foreign currency. If the foreign securities purchased from a holder of a TAMAM account are sold to another resident for foreign currency, the proceeds are credited to a NATAD account. Holders of NATAD accounts may use them for the purchase of foreign securities or exchange the balances for Israel pounds.

Changes during 1966

During the year on various dates import restrictions were further relaxed by the addition of commodities to the Free Import Orders or the Automatic Approval List and by deletion of commodities from the list of prohibited imports.

November. The requirement that importers opening a letter of credit must deposit 50 per cent of the value of the goods was abolished.

Italy 1

Exchange Rate System

The par value is 0.00142187 gram of fine gold per Italian Lira or Lit 625.00 = US$1. Market rates for spot exchange transactions in U.S. dollars are maintained between official limits of Lit 620.50 buying, and Lit 629.50 selling, per US$1. Market rates for certain other currencies 2 vary between limits which result from combining the official limits for the U.S. dollar maintained by Italy and such limits in force in the country of the other currency concerned. The monetary authorities may intervene in the forward exchange market from time to time; otherwise, forward premiums and discounts are left to the interplay of market forces. Authorized banks are allowed to engage in spot exchange transactions in any currencies, and in forward exchange transactions up to 180 days in U.S. dollars, Canadian dollars, and externally convertible European currencies. Transactions in foreign banknotes take place at freely negotiated rates.

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

Administration of Control

The exchange control system is operated by the Italian Exchange Office (Ufficio Italiano dei Cambi) on the basis of instructions issued by the Ministry of Foreign Trade. All sales and purchases of exchange pass through banks authorized for this purpose. Import and export licenses, when required, are issued by the Ministry of Finance at the request of the Ministry of Foreign Trade. Issues of securities by nonresidents require the prior approval of the Ministry of Foreign Trade and of the Interministerial Credit Committee. Payments to and from the Republic of San Marino or Vatican City are not subject to exchange control.

Prescription of Currency

Settlements with foreign countries may be made in U.S. dollars, Canadian dollars, or externally convertible European currencies, or in lire on Foreign Accounts.

Nonresident Accounts

The main types of accounts in Italian lire which nonresidents are allowed to maintain with authorized banks in Italy are Foreign Accounts, for current transactions and Italian investments abroad, and Capital Accounts, for foreign investments in Italy. The use of these accounts, and of Special Accounts for certain investments, is described below.

1. Foreign Accounts may be credited with transfers from other Foreign Accounts, from Capital Accounts, and from Special Accounts Under Law No. 43, with authorized current and capital payments, with payments for approved investments abroad by residents of Italy, and with the proceeds from sales of U.S. dollars, Canadian dollars, and externally convertible European currencies. They may be debited for purchases of any of these currencies, for transfers to any other Foreign Account, Capital Account, or Special Account Under Law No. 43, for payments to residents of Italy for current and capital transactions, for payments due to residents of Italy on account of their disinvestments abroad, and for drawings in cash by the holder of the account or his delegates.

2. Capital Accounts may be credited with transfers from Foreign Accounts, from Special Accounts Under Law No. 43, and from other Capital Accounts, with Italian banknotes sent to Italy by banks abroad, and with the proceeds from the liquidation of foreign investments in Italy not made under the provisions of Law No. 211 of March 2, 1948 or Law No. 43 of February 7, 1956 (see below). They may be debited for transfers to any other Capital Account or to Foreign Accounts and for the purchase of investments not made under Law No. 43.

3. Special Accounts Under Law No. 43 of February 7, 1956 are accounts in the names of nonresidents who have invested in Italy convertible currencies or externally convertible European currencies in accordance with the above-mentioned law. These accounts may be credited with transfers from Foreign Accounts or from other Special Accounts and with the proceeds from sales of investments that have been made in accordance with Law No. 43. They may be debited for purchases of the same currency that was originally sold and for investments in Italy, and balances on them may be transferred to Foreign Accounts, Capital Accounts, or to any other Special Account Under Law No. 43.

Nonresidents may also maintain Foreign Accounts in foreign currencies.

Imports and Import Payments

Imports of tobacco and sugar of Rhodesian origin are prohibited and all other imports of Rhodesian origin require an individual license. Practically all imports from other countries except Japan, Mainland China, and the Soviet countries are free of quantitative restriction; all goods, however, require either a bank certificate for submission to the customs authorities or a license issued by the Ministry of Finance. Commodities that still require individual licenses when imported from these other countries are included in a negative list (Tabella A Import),3 which includes goods listed under 55 tariff headings or their parts—of these, 20 relate to agricultural products and foodstuffs. However, the general permission to import goods not included in the Tabella A Import applies to Somalia, the United Arab Republic, and Yugoslavia only if the goods both originate in and are shipped direct from the country concerned; in addition, in respect of imports from the United Arab Republic, the payee must reside in that country or in one of the European OECD countries.

A more extensive negative list (Tabella B Import) contains those commodities which require an individual license when imported from Albania, Bulgaria, Mainland China, Czechoslovakia, Hungary, North Korea, Mongolia, Poland, Rumania, the U.S.S.R., or North Viet-Nam. The list includes some 130 tariff items or subitems related to agricultural products and foodstuffs, and about 830 tariff items or subitems related to other goods. Special lists contain those commodities on the Tabella B Import which may be imported freely from some of the countries 4 to which the Tabella B Import applies, provided that the goods both originate in and are shipped from the country concerned.

A separate negative list applies to Japan indicating the goods (listed under 96 tariff items or their parts) that are subject to restrictive import licensing when imported from that country. A special list contains those commodities of Japanese origin (at present comprising 100 tariff items or subitems) for which import licenses are issued freely. All other goods of Japanese origin may be imported freely without an individual license, irrespective of the country from which they are shipped.

Imports from non-EEC countries of most products covered by the Common Agricultural Policy of the EEC (including cereals, rice, pork, eggs, and poultry meat) are subject to variable import levies that have replaced all previous barriers to imports; common EEC regulations are also applied to imports from non-EEC countries of beef, veal, dairy products, wine, olive oil, and specified fruits and vegetables.

For imports not exceeding Lit 500,000 in value, no exchange control form is required; for imports from Lit 500,000 to Lit 1 million in value, a form completed by the importer is required; for imports over Lit 1 million in value, an import document completed by an authorized bank is required.

For all authorized imports, the authorized banks provide exchange or permit payment in Italian lire to a nonresident account, provided that appropriate payment terms are observed (see section on Capital, below). International postal money orders may be used to pay for imports not exceeding Lit 250,000 in value, or any lower amount within the limits established for each country to which this service is provided; amounts in excess of Lit 250,000 must be approved by the representative of the Italian Exchange Office at the branch of the Bank of Italy having jurisdiction for the area concerned.

Payments for Invisibles

In principle, payments abroad for invisibles require licenses issued by the exchange control authorities. Under general authorization, however, the authorized banks may sell foreign exchange freely, provided that the necessary documents are submitted, although for certain transactions5 there are limits beyond which the banks may make payments only after examination of the supporting documents by the Italian Exchange Office. Exchange is granted freely for remittances of earnings on investments. Residents may use international postal money orders for financial payments in the currency and within the limits established for each country; for payments exceeding Lit 250,000, however, prior authorization is required by the representative of the Italian Exchange Office at the branch of the Bank of Italy having jurisdiction for the area concerned.

Certain transactions (but not the related payments) in respect of services are subject to approval by the Ministry of Foreign Trade or the Ministry of Industry. These transactions can be divided into two groups: (1) contracts which require a permit if they involve residents of specified countries6 and (2) contracts which require a permit regardless of the nationality of the nonresidents involved. The first group includes transactions giving rise to expenditures for chartering of ships (excluding charters for a single trip); repairs to ships which are not urgent and not necessary for safety of operation; news agencies and newspaper correspondents (for amounts exceeding Lit 5 million a month for the same payee); purchase of publication rights, information agencies, etc. (for amounts exceeding Lit 5 million per contract); copyrights (for amounts exceeding Lit 5 million a year per contract); services of professional workers and company managers (for amounts exceeding Lit 5 million); and services of entertainers and athletes (for amounts exceeding Lit 5 million). The second group includes transactions giving rise to expenditures for production abroad of films and advertising shorts; utilization of films, scripts, synchronization, etc.; collaboration in cinematography; insurance of ships and aircraft against risks of operation;7 and other transactions not permitted by general authorization (provided that the amounts involved exceed Lit 250,000).

Residents traveling to foreign countries may obtain from the banks exchange equivalent to Lit 500,000 for each trip for tourism, business, medical treatment, and education (the corresponding amount for group travel is Lit 300,000); banks are authorized to supply foreign exchange above these allowances, provided that they are satisfied that no unauthorized capital transfer is involved. Any person traveling abroad may take with him Lit 50,000 in Italian banknotes; to the extent that he refrains from obtaining an allocation of foreign exchange, a resident traveler may take in addition a proportionate amount in Italian banknotes, up to Lit 500,000.

Exports and Export Proceeds

A few commodities in a special list (Tabella Esport) applicable to all countries except Eastern Germany require export licenses. For exports not exceeding Lit 500,000 in value, no exchange control form is required; for exports from Lit 500,000 to Lit 1 million in value, a form completed by the exporter is required; for exports exceeding Lit 1 million in value, an export document completed by an authorized bank is required.

Unless special approval is obtained for different terms of payment (see section on Capital, below), exchange receipts must be collected within one year of the arrival of the goods in the country of destination, and they must be offered for sale to an authorized bank within seven days of receipt. Proceeds in U.S. dollars, Canadian dollars, and externally convertible European currencies may be retained by authorized banks on behalf of the recipients in foreign exchange accounts for six months, during which period such balances may be used for permitted transactions or be sold to authorized banks; the banks are allowed to sell these currencies to residents for authorized transactions or to negotiate them freely with the Italian Exchange Office or among themselves. After expiration of the retention period, unused balances must be sold to the Italian Exchange Office at the lowest official exchange rate quoted during the retention period (these official rates are determined daily on the basis of the average closing rates in Milan and Rome). Export proceeds may also be received by international postal money order, up to amounts within the limits established for individual countries.

Proceeds from Invisibles

Receipts from invisibles are subject to the same requirements as receipts from exports. Shipping and insurance companies and travel and forwarding agencies may keep operating accounts in U.S. dollars, Canadian dollars, and externally convertible European currencies. Residents may retain up to the equivalent of Lit 100,000 in foreign banknotes left over from trips abroad and may use this exchange for other trips abroad or sell it at any time to an authorized bank. Persons may bring in any amount in Italian or foreign banknotes.

Capital

Inward and outward movements of nonresident capital are free. However, loans of any kind from nonresidents to residents and from residents to nonresidents require specific authorization from the Ministry of the Treasury or the Ministry of Foreign Trade, respectively, except, with regard to OECD countries, long-term loans (other than loans from financial institutions to nonresidents) for the purpose of establishing or maintaining lasting economic relations; loans to relatives up to the third degree of relationship, provided that the amount does not exceed the limit of Lit 10 million; and, with regard to EEC countries, short-term and medium-term (up to five years) financial loans (i.e., loans not connected with commercial operations or the performance of services) that do not exceed Lit 50 million; for none of these is any kind of authorization required. Repayment of such loans may be made freely. Foreign investment in Italy is in principle governed by Law No. 43 of February 7, 1956 and subsequent implementing regulations.

Direct investment in OECD countries, by individual or juridical persons (other than participation by a financial institution that has its main office in Italy in a foreign company not having the same corporate purpose), is permitted in any form and without any limit. Direct investment in other countries may be made only by juridical persons in firms that are in the same line of business as that of the Italian firm making the investment; other types of direct investment in such countries require special authorization from the Ministry of Foreign Trade. The general license to make these investments also covers the reinvestment of earnings and the use for this purpose of the liquidation proceeds of previous investments (after crediting the proceeds of the disinvestment to bank accounts similar to those established for export proceeds; see section on Exports and Export Proceeds, above).

Residents of Italy are free to buy and sell, through the Bank of Italy or the authorized banks, any foreign securities issued or payable abroad and quoted on foreign stock exchanges, and to deal in such securities among themselves against payment in lire. Such foreign securities have to be deposited with an Italian bank or with a bank abroad for account of an Italian bank. Residents are also free to buy and sell shares in foreign mutual funds or investment trusts, provided that they are quoted on an official stock exchange abroad, with the exception of open-end funds whose holdings include securities that are not quoted on official stock exchanges abroad.

All issues of securities by nonresidents on the Italian capital market require the prior approval of the Ministry of Foreign Trade, and subsequently that of the Interministerial Credit Committee; such issues are subject to the rules governing the issue in Italy of Italian securities.

Transfers in connection with donations, inheritances, and dowries may be made freely. The transfer of property of permanent emigrants is allowed in two steps: up to the equivalent of Lit 4 million a person upon presentation of specified documents at the time of leaving Italy (plus Lit 50,000 in Italian banknotes), and the remainder when residence has been established abroad.

Special regulations apply to commercial credits and credits related to the performance of services. Advance payments for imports may be made freely if importation is to take place within 90 days; such payments require prior examination of the underlying documents by the Italian Exchange Office if importation is to take place between 90 days and 360 days from the date of payment and must be in accordance with normal commercial practice; in all other cases, the prior approval of the Ministry of Foreign Trade is required. Deferred payments for imports are permitted freely if settlement is to take place, to the extent of at least 90 per cent, within 360 days after importation, and the balance within 24 months after importation; such payments require the prior approval of the Italian Exchange Office if the settlement is to take place between 12 months and 24 months after importation. In all other cases, the prior approval of the Ministry of Foreign Trade is required.

Advance payments for exports may be received freely if exportation is to take place within 360 days; in all other cases, such receipts require the prior approval of the Italian Exchange Office. Deferred payments for exports are permitted freely if settlement is to take place, to the extent of at least 90 per cent, within 360 days after exportation, and the balance within 24 months after exportation; in all other cases, such receipts require the prior approval of the Ministry of Foreign Trade.

Virtually identical regulations are in force for the permitted credit terms for imports and exports of services.

In relations with EEC countries, the reciprocal granting of credits for commercial transactions or the performance of services, with a maturity longer than the time limits that banks are authorized to approve and up to five years, may be effected after examination of the documents by the Italian Exchange Office.

Loans and credits (the latter only beyond a certain duration, generally 180-360 days) not connected with commercial transactions or with the performance of services require the approval of the Ministry of Foreign Trade. However, financial loans may be granted to or by residents of EEC countries, provided that the duration of such loans or credits does not exceed five years, that the total amount outstanding for a resident is not more than Lit 50 million, and that the rate of interest on a credit taken up by a resident from a nonresident does not exceed 6 per cent per annum; the authorized banks have been granted a general license to approve such transactions.

The export is not permitted of securities, except those which are owned by nonresidents and have been purchased against U.S. dollars, Canadian dollars, or externally convertible European currencies, or against funds on a Foreign Account or Capital Account.

Changes during 1966

January 22. Direct investment in the OECD area was permitted in the following forms: (1) participations by juridical persons (other than financial institutions) in firms with a line of business different from that of the person acquiring the participation, and (2) participations by physical persons. Long-term loans in the OECD area which have the character of participations by physical or juridical persons were liberalized, with the exception of the disbursement of the loans of financial institutions.

The following also were freely permitted for OECD countries: (1) outward transfers in respect of legacies, gifts, endowments, lottery winnings, etc., and (2) inward and outward transfers in settlement of debts of immigrants and emigrants, provided that the debts were contracted before immigration or emigration.

Inward and outward transfers in respect of loans to relatives up to the third degree of relationship resident in OECD countries were freely permitted, up to Lit 10 million for each beneficiary.

February 10. Imports of copper no longer required a certificate of origin.

March 5. The import of sewing machines from countries to which Tabella A Import applied was made subject to individual license; licenses would be issued freely.

March 14. It was announced that imports and exports to and from Eastern Germany of goods not included in Tabella B Import or Tabella Esport, respectively, would until further notice not require an individual license; they could be authorized by the customs.

March 24. Imports of goods of Rhodesian origin not included in Tabella A Import required an isdividual license; as a result, all imports of Rhodesian origin now were subject to individual licensing.

April 28. Residents were freely permitted to purchase abroad, through the Bank of Italy or authorized banks, Italian securities expressed in lire, provided that they were quoted on a foreign stock exchange in an OECD country. Subsequently, this measure was made applicable to all countries.

December 20. Bonds denominated in lire and issued in Italy before February 1, 1938 could be exported freely to OECD countries. Subsequently, this measure was made applicable to all countries.

December 20. Government securities could be donated or endowed to nonresidents.

Note.—The following changes took place early in 1967:

January 28. The maximum value of imports and exports that could be effected without exchange control formalities, and hence without production of currency forms to the customs, was increased from Lit 250,000 to Lit 500,000 per shipment.

Imports and exports of goods ranging in value from Lit 500,000 (previously Lit 250,000) to Lit 1 million (previously Lit 500,000) required only a form completed by the importer or exporter instead of a bank certificate.

February 15. Transportation of the following goods on vessels or aircraft flying the Italian flag was prohibited when of Rhodesian origin: asbestos, iron ore, chromium, cast iron, sugar, tobacco, copper, meat and meat products, leather, and hides and skins.

Also forbidden was transport to Rhodesia overland, in Italian aircraft, or in vessels flying the Italian flag, of refueling supplies of petroleum or petroleum products, even if the contracts were drawn up and the relevant permits issued before February 15.

Except with special authorization, it was forbidden to effect transit, intermediary, or transportation operations in respect of goods shipped from or destined for Rhodesia, and to make investments in Rhodesia or to extend credit of any kind or duration to Rhodesia.

February 15. All exports to Rhodesia of goods not included in the Tabella Esport required an individual license. Any activity was prohibited that aimed at promoting the sale or dispatch to Rhodesia of arms, ammunition, military aircraft or vehicles, etc.

Ivory Coast

Exchange Rate System

No par value for the currency of Ivory Coast has been established with the Fund. The unit of currency is the CFA Franc, which is officially maintained at the rate of CFAF 1 = 0.02 French franc, giving the relationship CFAF 246.853 = US$1.1 Exchange transactions in French francs between the Banque Centrale des Etats de l’Afrique de l’Ouest (BCEAO) and commercial banks take place at rates resulting from the relation CFAF 1=0.02 French franc. Exchange rates for other currencies are based on the fixed rate for the French franc and the Paris exchange market rate for the currency concerned, and include a commission.

Administration of Control

Exchange control is administered by the Department of External Finance and Credit of the Ministry of Economic and Financial Affairs. Foreign exchange transactions are handled by authorized banks under the direction of the Department of External Finance and Credit. Global annual programs for imports from countries outside the French Franc Area are coordinated by the Ministry of Economic and Financial Affairs. Import licenses (for imports subject to quotas) are issued by the Foreign Trade Department, after checking and approval of the terms of payment by the Department of External Finance and Credit (Bureau of Exchange Operations). Import certificates (for imports not subject to quota restrictions) are approved by the Department of External Finance and Credit (Bureau of Exchange Operations).

Prescription of Currency

Ivory Coast is a member of the French Franc Area, and settlements with other countries in the French Franc Area are made in any currency of that Area. Settlements with other countries are usually made through banks in France, in any of the currencies of those countries that are quoted on the Paris exchange market; they may also be made through Foreign Accounts.

Nonresident Accounts

There are two types of nonresident accounts: Foreign Accounts and INR Accounts. Foreign Accounts apply to nationals of countries out-side the French Franc Area who reside outside the Area or to nationals of French Franc Area countries who have resided outside the Area for more than two years. INR Accounts (intérieurs de nonresidents) apply to nationals of French Franc Area countries who have resided outside the Area for less than two years and to nationals of countries outside the Area who have resided within the Area for less than two years. Balances in Foreign Accounts are fully convertible. Balances in INR Accounts are only transferable between INR Accounts; any remaining balance may be transferred abroad when the holder gives up his ties with the French Franc Area permanently.

Imports and Import Payments

A few imports from all sources are prohibited or restricted. All other imports from countries in the French Franc Area may be made freely. As a rule, imports from countries outside the Area require import licenses and may be made in accordance with an import program, which is determined annually by the Department of Foreign Trade. Under this program, semiannual global quotas are established for imports from EEC countries, other than France, from countries with which Ivory Coast maintains bilateral trade agreements,2 and for imports from all other countries outside the French Franc Area. The last-mentioned global quotas may be used for imports from EEC countries when the corresponding EEC quotas are exhausted. The quotas establish limits up to which import licenses may be issued, for specified commodities, to licensed importers and, in exceptional cases, to industrial or agricultural producers who are considered as end-users of the imported goods. The import program also provides for minimum imports from France of certain products. Certain products, contained in two liberalized lists, may be imported freely from any source and from any EEC country other than France, respectively. Certain imports from Mainland China, Hong Kong, India, Japan, Pakistan, and Portugal are suspended.

Private persons cannot obtain import licenses, except for transactions not requiring foreign exchange. For certain goods admitted without quantitative restriction, certificates of importation are issued.

The import license or import certificate entitles the importer to purchase the necessary foreign exchange, provided that the shipping documents are submitted to the authorized bank.

Payments for Invisibles

Payments for invisibles to countries in the French Franc Area are permitted freely; those to countries outside that Area are subject to certain restrictions and require the approval of the Department of External Finance and Credit. Payments for invisibles related to trade transactions are permitted freely when the basic transaction has been approved. Payments for transportation costs may be made freely; for payments abroad for insurance, the approval of the Director of Insurance is required. The exchange allowances are as follows: for tourism, up to the equivalent of CFAF 125,000 a year; for business travel, up to the equivalent of CFAF 100,000 for each trip; for family support, up to the equivalent of CFAF 27,500 a month for each beneficiary. In all cases, supplementary allowances may be given, provided that the applicant presents reasonable justification. Income accruing to nonresidents from profits, dividends, various kinds of royalties, etc., may be remitted abroad, subject to verification. Payments in respect of many other categories of invisibles are also permitted subject to verification. Nonresident workers in Ivory Coast may remit abroad, monthly, 50 per cent of their salaries.

Travelers to the other countries of the West African Monetary Union3 may take out, without limit, banknotes issued by any bank of issue within the French Franc Area. Travelers going direct to other countries in the Area may take out, without limit, banknotes issued by any bank of issue in the Area, with the exception of those issued by the BCEAO, for which the limit is CFAF 75,000. Travelers going to countries outside the French Franc Area may take out in banknotes or coins up to a maximum of F 1,000 in French francs, or up to 75,000 in CFA or CFP francs, or the equivalent of F 750 in notes and coins denominated in any other French Franc Area currency. Nonresident travelers may take out foreign banknotes and coins up to the amount declared by them on entry.

Exports and Export Proceeds

Exports to countries in the French Franc Area may be made freely; exports to all other countries require licenses, mainly to ensure repatriation of the proceeds. For certain export commodities subject to international quotas, the export license must be accompanied by an authorization issued by the organization responsible for the management of the quota.

Export proceeds in currencies of countries outside the French Franc Area must be surrendered in their entirety within three months from the date of their receipt.

Proceeds from Invisibles

Proceeds from transactions in invisibles with countries in the French Franc Area may be retained. All amounts in respect of services, interest, and income due from residents of other countries must be collected and must be surrendered within three months of receipt. Travelers may bring in without limit CFA or other banknotes and coins (excluding gold coins), with the exception of Guinean and Malian currencies. Imported foreign banknotes must be declared to the customs authorities and must be surrendered to an authorized bank within one month.

Capital

Capital movements between Ivory Coast and other French Franc Area countries (except temporarily Guinea and Mali) are free of control; those between Ivory Coast and all other countries are subject to authorization.

Foreign investment in Ivory Coast is subject to prior approval by the Department of External Finance and Credit; approval depends on the nature and purpose of the proposed investment, a liberal policy being followed in this respect. Law No. 59-134 of September 3, 1959 provides tax and customs duty benefits and other special privileges for new enterprises recognized as having priority status.

Changes during 1966

May 16. The import from all sources of cereals and natural honey was liberalized. The import from EEC countries other than France of goods corresponding to about 30 tariff items was liberalized.

June 15. Imports in border traffic from neighboring countries outside the French Franc Area of goods originating from the border areas of these countries and not exceeding a value of CFAF 100,000 could be made under a simplified procedure.

December 15. A new West African Customs Union agreement (the UDEAO agreement) came into force, replacing that of June 9, 1959. The other signatories were Dahomey, Mali, Mauritania, Niger, Senegal, and Upper Volta.

Jamaica

Exchange Rate System

The par value is 2.48828 grams of fine gold per Jamaican Pound or £J 1 = US$2.80. The currency is freely convertible into sterling at parity, subject to banking commissions. Exchange rates for other currencies are based on the buying and selling rates in the London market. The Bank of Jamaica is authorized by law to levy a commission charge of up to ¾ of 1 per cent on inward and outward transfers; on December 31, 1966 these charges were 316 of 1 per cent on inward transfers and ½ of 1 per cent on outward transfers. Jamaica accepted the obligations of Article VIII, Sections 2, 3, and 4, of the Fund Agreement, as from February 22, 1963.

Administration of Control

The Bank of Jamaica administers exchange control on behalf of the Ministry of Finance, subject to certain limitations in respect of which the approval of the Ministry is required. The commercial banks are designated as authorized dealers and have authority to release foreign exchange for imports, basic travel allowances, and certain other payments. Most imports are regulated by the Trade Administrator, who is responsible to the Ministry of Trade and Industry.

Prescription of Currency

Jamaica is a member of the Sterling Area and has prescription of currency requirements similar to those of other Sterling Area countries. Settlements with other parts of the Sterling Area may be made freely in any Sterling Area currency. Payments to countries outside the Sterling Area may be made by crediting Jamaican pounds to an External Account or in any foreign currency. Receipts from countries outside the Sterling Area must be received to the debit of an External Account, in any specified currency,1 or in any other foreign currency that is freely exchangeable for sterling. Special regulations apply to settlements with Rhodesia, and all payments to Rhodesia require specific authorization.

Nonresident Accounts

No distinction is made between the accounts of residents of Jamaica and those of residents of other parts of the Sterling Area.

The commercial banks are empowered to open External Accounts in Jamaican pounds for residents of countries outside the Sterling Area, except Rhodesia. The funds on these accounts are treated as equivalent to External Account sterling and may be transferred freely between residents of countries outside the Sterling Area. External Accounts may be credited with payments by residents of the Sterling Area approved by the exchange control authority, with transfers from other External Accounts, and with the proceeds from the sale to an authorized dealer of gold or foreign currencies. They may be debited for payments to residents of the Sterling Area, for transfers to other External Accounts, and for the purchase of foreign currencies.

Accounts which are credited with funds that may not be placed at the free disposal of nonresidents (e.g., proceeds from the sale of sterling and Jamaican pound securities or other capital proceeds) are designated Blocked Accounts. Permission may be given for these funds to be transferred to London, where their disposal is subject to the approval of the U.K. exchange control authorities. Blocked funds may be reinvested in Sterling Area securities which are not redeemable either optionally or contractually within five years from the date of acquisition; the income from such securities, and the proceeds at maturity of any that are redeemable, are normally available for credit to an External Account. Applications for the release of funds in Blocked Accounts for use in Jamaica by the nonresident owner must be referred to the Bank of Jamaica.

Imports and Import Payments

Most goods may be imported freely under an open general license.2 Other imports, i.e., some 150 tariff items or groups of tariff items included in a special schedule and all imports originating in Mainland China, Japan, the Soviet countries, Rhodesia, South Africa, or Cuba, require individual import licenses. Licenses for imports from Japan are issued according to criteria of essentiality. The special schedule comprises (1) goods for which specific quotas are assigned to importers according to their past performance, e.g., certain types of footwear (for these items vouchers are issued to importers on the basis of which licenses are granted by the Trade Administrator); (2) goods which are prohibited, e.g., automobiles with a wheel base over 116 inches, canned milk, cement, cigars, citrus products, cheap clothing, household detergents, sugar, and coffee; and (3) goods the licensing of which depends upon local supply, e.g., poultry, eggs, and vegetables.

Payments for imports from the Sterling Area may be made freely in any Sterling Area currency. Payments for imports from other countries may be made by crediting an External Account or by purchasing foreign exchange from an authorized dealer, provided that the licensing requirements, if any, have been met, and that the importer presents a copy of the settlement invoice or other evidence of purchase and value, together with documentary evidence that the goods either have been shipped or are about to be shipped, or that the importer is under contract to make prepayment up to six months prior to shipment; specific exchange control approval is required for advance payments preceding shipment by more than six months.

Certain imports from all sources are subject to a 2½ per cent consumption tax levied on the sum of customs value, customs duty, and tonnage tax.

Payments for Invisibles

Payments for invisibles originating in the Sterling Area may be made freely in any Sterling Area currency. Payments for invisibles originating outside the Sterling Area require the approval of the authorities. Except for transactions involving residents of Rhodesia, the following applies. Approval is granted freely for payments for all commercial transactions, when the application is supported by the appropriate documentary evidence. For payments for certain other purposes, e.g., insurance premiums, approval is granted upon request. A basic exchange allocation of £J 250 for each journey for travel outside the Sterling Area is made available automatically to residents by the authorized dealers, and additional amounts for travel will be approved by the Bank of Jamaica upon presentation of satisfactory documentation (e.g., tickets, hotel reservations, and estimates of daily expenditures). Moreover, authorized dealers may, subject to the presentation of supporting evidence, sell foreign exchange for the following: cash gifts of up to £J 250 annually from each donor; refunds of income tax due to nonresidents; consular fees without limit, as well as transfers from the Ministry of External Affairs to accounts in the names of embassies and their established staffs, High Commissioners, and diplomats; up to a limit of £J 1,000 for (1) advertising and promotional expenses, (2) renewal and refund of premiums due to nonresident insurers, and (3) subscriptions to trade organizations; up to a limit of £J 2,000 for commissions and expenses due by Jamaican firms to their agents and representatives and for serial rights in Jamaica of newspaper and magazine articles, photographs, strip cartoons, etc.; specified payments, up to a limit of £J 2,500, that are due by Jamaican insurers to nonresident insured parties under life or endowment insurance policies; agents’ expenses and fees, up to £J 2,500, due by Jamaican insurers to nonresidents in respect of direct insurance policies. Requests for additional amounts or for purposes for which there are no standard limits (e.g., remittances by charitable institutions) are approved if the authorities are satisfied that no capital flight is involved.

Travelers going abroad may take with them Jamaican banknotes not exceeding £J 10 and other notes, with the exception of U.K. notes, not exceeding £J 100 in value. Nonresidents may take out the foreign currency notes they brought in.

Exports and Export Proceeds

All exports valued at over £J 10 to countries outside the Sterling Area require export licenses. Certain other exports require individual licenses irrespective of destination; these include all re-exports and some exports (mostly agricultural products) that are subject to licensing to ensure adequate local supplies. Exporters to countries in the Sterling Area are not required to repatriate their export proceeds; exporters to other countries are required to surrender their exchange proceeds, which must be obtained in one of the specified currencies, to authorized dealers within six months from the date of shipment. However, certain exporters may retain, with the approval of the exchange control authorities, an agreed portion of their proceeds to facilitate the import of items necessary for their operations.

Proceeds from Invisibles

Receipts from invisibles in specified currencies must be sold to an authorized dealer. Receipts in other currencies may be retained. Travelers to Jamaica may bring in Jamaican banknotes up to £J 10 (i.e., £ stg. 10) a traveler, notes of other Sterling Area territories up to an aggregate value of £J 10 a traveler, and any amount of non-Sterling Area banknotes; resident travelers are required to sell their holdings of specified currencies to a local authorized dealer.

Capital

There are no restrictions on investments in the Sterling Area by residents. Investments in non-Sterling Area securities require the approval of the exchange control authorities, and such securities may only be purchased in the United Kingdom with investment currency. The sale of securities by residents to nonresidents may be allowed, provided that the full proceeds are received in External Account sterling or in foreign currency; the latter must be surrendered to an authorized dealer in Jamaica. Purchases of property for personal use outside the Sterling Area require the approval of the exchange control authorities, and such property may be purchased only through the United Kingdom and only with property currency.

Direct investments in the Sterling Area may be made freely by residents. Direct investments in other countries are only permitted through the investment currency market in the United Kingdom.

Direct investments in Jamaica by nonresidents for which “approved status” is sought require the approval of the exchange control authorities (which is usually granted) and must be made in the currency appropriate to the country of permanent residence of the investor or in External Account sterling. To qualify for “approved status,” an enterprise must have adequate capital and the nonresident investor must take an active part in management. For foreign investments granted “approved status,” repatriation of the capital (including any appreciation in value) is permitted at any time; remittances of profits and dividends are permitted when the application is supported by the appropriate set of accounts. Remittances of profits resulting from foreign investment in respect of which “approved status” was not sought or granted are not restricted, but the realization of the invested capital (if the enterprise is bought by a resident) has to take place through Blocked Accounts (see section on Nonresident Accounts, above).

Payments for amortization of, and interest on, foreign loans (i.e., loans made by nonresidents of the Sterling Area) are permitted upon application to the exchange control authorities. However, nonresidents are not normally permitted to take security in respect of loans made to Jamaican companies owned or controlled by them. Authorized dealers may, without reference to the exchange control authorities, make loans or overdrafts to nonresident individuals and nonresident-owned or nonresident-controlled Jamaican companies, up to £J 1,000 and £J 10,000, respectively. Other requests are referred to the Bank of Jamaica.

Transfers to nonresident beneficiaries under wills and intestacies are approved, provided that all local indebtedness has been met.

Changes during 1966

During the year, many imports were added to the list of exceptions to the open general license; only the principal instances are listed below.

January 5. Imports of domestic refrigerators required a specific license.

April 14. Imports of electric irons required a specific license.

July 15. The Bank of Jamaica’s commission charge on outward transfers was raised from ⅜ to ½ per cent.

August 29. By an amendment to the Bank of Jamaica Law, 1960, it was provided that in certain circumstances the parity of the Jamaican pound could be altered but that any new parity could not be less in terms of fine gold than that of the pound sterling.

Japan

Exchange Rate System

The par value is 0.00246853 gram of fine gold per Japanese Yen or ¥ 360.00 = US$1. The official limits of buying and selling rates for U.S. dollars (spot), which are set by the Ministry of Finance, are ¥ 362.70 (upper limit) and ¥ 357.30 (lower limit), per US$1; the exchange authorities will buy or sell exchange at rates within this range. Authorized banks may freely carry out spot and forward exchange transactions. Japan accepted the obligations of Article VIII, Sections 2, 3, and 4, of the Fund Agreement, as from April 1, 1964.

Administration of Control

The exchange control system is operated by the Ministry of Finance, the Ministry of International Trade and Industry (MITI), and the Bank of Japan as the Government’s agent. However, much of the authority for approving normal payments is delegated to authorized banks. Import and export licensing is handled by MITI. Inward capital investments of a long-term character require the approval of the Minister of Finance (in some cases at the same time that of the competent Minister) after deliberation by the Foreign Investment Council. Outward capital investments require the approval of the Minister of Finance.

Prescription of Currency

Payments to all countries may be made in any currency, and receipts may be obtained in any of the designated receivable currencies;1 receipts in other currencies require an individual license. Settlements in yen with foreign countries must be made through a Nonresident Free Yen Account.

Nonresident Accounts

There are two main nonresident accounts, as described below.

1. Nonresident Free Yen Accounts. These accounts may in principle be opened by any nonresident with any authorized bank in Japan and may be credited with the yen proceeds from exports of goods to Japan and from other authorized transactions incidental thereto, with yen proceeds from sales of designated receivable foreign currencies, with transfers from other Free Yen Accounts, and with the countervalue in yen of authorized outward payments. There are no restrictions on payments from these accounts. The yen balances on these accounts may be converted into any foreign currency.

2. Nonresident Yen Deposit Accounts. These accounts may be held by any nonresident with any authorized bank in Japan. They may be credited with yen proceeds from transactions other than those which are authorized to be credited to Nonresident Free Yen Accounts. Permitted credits to Nonresident Yen Deposit Accounts include proceeds from the sales of debentures and beneficiary certificates sold within six months from the date of validated acquisition, proceeds from sales of fixed assets which a nonresident acquired when he was a resident, and yen in excess of the amount of US$10,000 which permanent emigrants are allowed to take out of Japan. Balances on these accounts are not convertible into foreign currencies, although remittances are permitted each year up to one fifth of the balance at the end of the previous year or the equivalent of US$2,000, whichever is the higher. Withdrawals from these accounts are authorized for certain purposes, such as meeting the outlays involved in managing investments in Japan and the expenses of nonresidents staying in Japan. Transfers to other Nonresident Yen Deposit Accounts are authorized freely, thus enabling the individual account holder to repatriate his funds by selling them to another nonresident in return for foreign currency.

In addition, there are Foreign Investors’ Deposit Accounts in which certain proceeds from investments liquidated by foreigners may be placed. Balances on these accounts may be used for remittances abroad or for making other investments under certain conditions. However, these accounts are of limited importance, because proceeds from foreigners’ liquidated investments may be remitted through Nonresident Free Yen Accounts without having been placed in Foreign Investors’ Deposit Accounts.

Imports and Import Payments

Most imports from Rhodesia are prohibited. Other imports are subject to individual licensing by the authorized banks, but in practice 93 per cent of nongovernment imports are liberalized. There are different licensing procedures for imports requiring payment in foreign currencies: (1) Under the Import Quota System (covering imports of goods on the “negative list,” which comprises 167 items), the importer must first obtain from MITI an import quota, which is based on the quantitative principle. If the quota is granted, the importer receives an import quota certificate which entitles him to receive an import license from an authorized bank automatically upon application. Practically all import quota certificates are issued on a global basis, without regard to the country of origin or the currency of settlement. (2) Under the Automatic Import Quota System, import quotas for specified categories of imports are granted automatically on a global basis and without restriction by MITI. (3) Under the Automatic Approval System, imports are, in effect, free of quantitative restriction, since licenses to import the commodities specified under this system are issued freely and without limitation by the authorized banks, on application. All items subject to the Automatic Approval System may be imported from any country, except, for some of these items, from Rhodesia.

Payment for imported goods must be made under one of the standard methods of settlement for imports (generally within a period from the date of receipt of the shipping documents or the goods to four months after customs clearance). When the settlement proposal is not in accordance with one of the standard methods, prior approval of MITI must be obtained.

In general, importers must make a deposit with an authorized bank when applying for an import license; currently the amount of this deposit is 1 per cent or 5 per cent of the value of the intended imports, depending on the goods to be imported (for imports from the Ryukyu Islands and the Bonin Islands, the deposit is 110 of 1 per cent). The deposit is returned after 80 per cent of the goods has been imported or if the import transaction is canceled for a reason acceptable to the control authorities. The percentage of deposit can be increased or decreased. The 1 per cent deposit may be made in cash, securities, or other collateral; the 5 per cent deposit must be made in cash.

Payments for Invisibles

Payments for invisibles require approval. However, most such payments are approved freely by authorized banks without any limitation or within certain established limits. Payments for certain invisibles, including payments that exceed the established limits, are referred to the Bank of Japan for the purpose of capital control; except for certain travel expenditures, they are automatically approved without undue delay, upon verification of the authenticity of the current transaction. For tourism, other travel for personal reasons, and business travel, an allowance equivalent to US$500 a person a trip is automatically made available; for additional amounts, special authorization is required. A traveler is permitted to pay in yen, before departure, the cost of transportation to and from his destination. Certain contracts require approval; but when a license for a contract has been granted, any payment resulting from the contract may be made freely. Settlements which are not made under a “standard” method require, in principle, individual approval; under this method, payments for services, etc., may not be made more than three months before, or later than six months after, receipt of the services, etc.

Both residents and nonresidents may take out freely ¥ 20,000 in Japanese currency. A nonresident may take out freely foreign currencies up to the amount which he brought into Japan.

Exports and Export Proceeds

Certain exports to Rhodesia are prohibited. All exports (except exports without exchange) must be registered with an authorized bank (“bank certification”), in order that the requirements concerning prescription of currency and surrender of proceeds may be enforced.

Licenses are not generally required, except for goods subject to the following restrictions: restrictions on strategic goods to control their export to communist countries; restrictions on goods in short supply in the domestic market (e.g., minerals, fertilizers, and staple foodstuffs); and restrictions designed to forestall the imposition of import restrictions by other countries (e.g., on such commodities as pottery and porcelain, sewing machines, and certain textiles). Exports under processing and consignment sale contracts and exports for which settlement is not under the standard method also require individual licenses.

Under the standard method of settlement for exports, the value of the exported goods must, in general, be settled by drawing a bill of exchange payable within five months after sight or within six months after shipment in a designated receivable currency.

Export proceeds must be surrendered within 10 days from the date of acquisition. However, trading concerns resident in Japan may be permitted to hold foreign currency deposit accounts with authorized banks, in which they may keep their proceeds in U.S. dollars and/or sterling from exports and invisibles for a maximum of 20 days; during this period, they may use the exchange to make approved payments for their imports or for current invisibles, or sell it to the authorized banks for yen.

Proceeds from Invisibles

Receipts under the standard method of settlement may be accepted without a license. Under this method, receipts for the value of services, etc., must be obtained within one year before, or within six months after, rendering the service, etc. But contracts for services performed for nonresidents when payment is to be received by a nonstandard method are subject to individual licensing. Receipts from invisibles must, as a rule, be surrendered. However, in order to facilitate payments for current invisibles, specified residents (shipping companies, etc.) are authorized to keep foreign currency deposit accounts with banks in the designated receivable foreign currencies.

Both residents and nonresidents may bring in freely any amount in foreign or Japanese currency.

Capital

Foreign investments in Japan are generally subject to approval, mainly in accordance with the Foreign Investment Law (Law No. 163 of May 10, 1950) or the Foreign Exchange Control Law (Law No. 228 of December 1, 1949). All acquisitions of stocks, bonds, debentures, beneficiary certificates, and claims in the form of loans by foreign investors are in principle subject to validation or license. However, acquisitions of stocks in the securities market are automatically approved by the Bank of Japan as follows: up to 15 per cent of the stock of a corporation not classified as a restricted industry, up to 10 per cent of the stock of a corporation classified as a restricted industry,2 and up to 5 per cent of the total capital of any corporation if acquired by a single holder. Acquisition of stock for participation in management is subject to individual validation, but it is approved in principle if there is no adverse effect on the Japanese economy. All these acquisitions, to be validated, must be made against yen proceeds from the sale of foreign exchange or its equivalent. Stocks in the form of stock dividends on earned surplus or revaluation of assets may be acquired freely, but application for remittance rights must be made within three months from the date of acquisition. The following are deemed to be the same as yen proceeds from the sale of foreign exchange, if they are reinvested in Japan and if approval had been obtained for their acquisition: proceeds from the redemption after maturity of debentures, beneficiary certificates, or claims in the form of loans; dividends on stocks; interest on debentures or on claims in the form of loans; distributed profits of beneficiary certificates; receipts from technological assistance contracts; and proceeds from sales of stocks, debentures, and beneficiary certificates.

In the event of expropriation or compulsory sale of a foreign investment, the amount paid on account of expropriation may be repatriated freely.

Remittance of the proceeds from the sale of validated stock, as well as transfer abroad of earnings on foreign investments acquired with foreign currency, is permitted. Proceeds from the sale of validated debentures and beneficiary certificates may be deposited in Nonresident Free Yen Accounts, if the securities have been held for six months from the date of acquisition.

Proceeds from the sale of stocks, bonds, debentures, beneficiary certificates, etc., acquired with yen withdrawn from Nonresident Yen Deposit Accounts may be deposited in Nonresident Free Yen Accounts, provided that the securities have been held for at least three years from the date of acquisition (or from December 18, 1964 for securities acquired before that date). Repayments of loans extended to residents from Nonresident Yen Deposit Accounts become remittable, subject to licensing by the Bank of Japan, beginning three years from the date of the loan.

Foreign investment in Japan generally requires approval by the Minister of Finance (in some cases at the same time that of the competent Minister) after deliberation by the Foreign Investment Council. When foreign companies desire to establish a branch or a plant in Japan, they are required to inform the Ministry of Finance and MITI through the Bank of Japan; and when the branches or plants wish to bring in funds from their main offices abroad, they are required to obtain licenses. The branches established in accordance with such procedures are permitted to remit their profits and principal abroad.

Purchases by nonresidents of real estate in Japan for residential or other nonprofit purposes and of offices require approval by the Bank of Japan; purchases of real estate for other purposes require approval by the Ministry of Finance.

The transfer abroad of capital by residents and the making of investments abroad are subject to approval. Japanese emigrants may remit their assets to their new country of domicile subject only to verification by an authorized bank or the Bank of Japan. Foreign immigrants leaving Japan may remit to their new country of domicile up to US$10,000 or its equivalent in other foreign currencies; additional amounts may be granted according to the merits of each case. The remaining liquid assets in Japan of such foreigners may be credited to Nonresident Yen Deposit Accounts.

Securities acquired with approval under the Foreign Investment Law may be imported and exported freely.

Changes during 1966

January 1. The allowance for tourist travel and other travel for personal reasons was increased from the equivalent of US$500 a person for one trip a year to the equivalent of US$500 a person for each trip. The automatic allowance for business travel also was raised to the latter level.

January 27. All imports from Rhodesia were made subject to individual licensing under a special approval procedure; the import from Rhodesia of seven commodities, including iron ore, was prohibited.

February 22. A trade agreement with Spain was signed, retroactive from January 1, 1966. With the exception of listed commodities, Spain granted to goods of Japanese origin the liberalization and global treatment applicable to goods from any other country. Japan gave assurances of similar treatment in respect of Spanish exports.

March 15. The Australian dollar was designated as a receivable currency.

March 19. The bilateral payments agreement with the Republic of Korea was terminated.

April 1. Further imports were liberalized.

May 1. The classification of imports for licensing purposes was revised in accordance with the revision on April 1, 1966 of the tariff schedule to the customs tariff law.

May 16. Purchases by nonresidents of real estate in Japan for residential or other nonprofit purposes and of offices required approval by the Bank of Japan; previously, approval by the Ministry of Finance was required.

May 16. The amount a foreigner residing in Japan could, with automatic approval of the Bank of Japan, take out upon repatriation to his home country was raised from US$5,000 to US$10,000. Subject to approval by the Bank of Japan, residents could borrow from their relatives abroad, provided that the funds were not used for profit-making purposes; previously, such borrowing was confined to living expenses.

August 1. The approval procedure for technical assistance contracts concluded with nonresidents was simplified.

August 12. The Cabinet decided to authorize emergency imports of beef and timber to counter rising prices.

September 1. The contracting by residents of certain types of insurance other than life insurance with insurance companies in Japan (including branches in Japan of foreign companies) was liberalized. The contracting of foreign travel life insurance was liberalized to the same extent as the contracting of foreign travel accident insurance, which had already been liberalized.

October 1. Further imports were liberalized.

November 1. The approval procedure for technical assistance contracts concluded with nonresidents was further simplified.

December 26. Exports of motor vehicles to Rhodesia were prohibited.

Jordan

Exchange Rate System

The par value is 2.48828 grams of fine gold per Jordan Dinar or JD 1 = US$2.80. The official limits for the U.S. dollar are US$2.82 buying, and US$2.78 selling, per JD 1. The Jordan dinar is at par with the pound sterling, subject to banking commissions. Authorized banks deal in U.S. dollars and other foreign currencies at rates usually based on the rates in the London market. A fee of 4 per cent is levied on the issue of import licenses. A fee of 110 of 1 per cent is levied on exchange permits approved by the Central Bank of Jordan for sales of exchange for imports and invisibles, except educational expenses and import payments and payments for invisibles by government departments and certain other approved institutions.

Administration of Control

Exchange control is administered by the Foreign Exchange Department of the Central Bank of Jordan, which also issues exchange licenses; the Central Bank has, however, delegated to authorized banks the issuance of exchange licenses for opening documentary import credits, for import payments against documents, for any import payments up to JD 25,000, and for payments for educational expenses of Jordanians studying abroad. Import policy is formulated by an Import Committee, which is composed of the Director of Supplies (Import and Export Department), the Deputy Governor of the Central Bank of Jordan, the Undersecretary of the Ministry of Finance and Customs, a representative of the Chambers of Industry, and a representative of the United Chambers of Commerce. The decisions of the Import Committee are carried out by the Director of Supplies, Import and Export Department, of the Ministry of National Economy.

Prescription of Currency

Jordan is a member of the Sterling Area, and most of its trade is financed in sterling. Payments to residents of the Sterling Area may be made in any Sterling Area currency. In practice, such payments are made in sterling to a Resident Account in the United Kingdom, or in Jordan dinars to a nonresident Sterling Area Account with an authorized bank in Jordan. Payments to residents of countries outside the Sterling Area (except Yugoslavia)1 must be made in sterling to an External Account in the United Kingdom, or in Jordan dinars to a nonresident External Account with an authorized bank in Jordan, or in currency appropriate to the country of residence of the recipient and/or the country of origin of the goods.

Proceeds from exports and invisibles must be collected, and surrendered where required, as follows: from residents of the Sterling Area, in resident sterling or in Jordan dinars from a nonresident Sterling Area Account with an authorized bank in Jordan; from residents of countries outside the Sterling Area, in sterling from an External Account in the United Kingdom, in Jordan dinars from a nonresident External Account with an authorized bank in Jordan, or in any convertible currency.

Nonresident Accounts

Subject to the prior approval of the Central Bank of Jordan, authorized banks may open nonresident accounts designated either Sterling Area Accounts or External Accounts, according to the permanent residence of the account holder. These accounts must be fed with appropriate funds. The approval of the Central Bank of Jordan is necessary for redesignation of residence, for transfers from resident to nonresident accounts, and for transfers from Sterling Area Accounts to External Accounts. Transfers between similarly designated nonresident accounts, transfers from External Accounts to Sterling Area Accounts, and transfers from nonresident to resident accounts are permitted freely.

Imports and Import Payments

Imports of certain items2 from any source and all imports from Israel and Rhodesia are prohibited. Most other imports, unless covered by an agreement between Jordan and the exporting country (i.e., agricultural products from neighboring countries and imports covered by the Arab Common Market Agreement), require import licenses if their c.i.f. value is JD 50 or more. These are granted freely by the Ministry of National Economy, except for certain items which are subject to scrutiny by the Minister of National Economy (whose prior approval is also required for imports of industrial machinery and of all materials needed for the establishment or expansion of an industrial firm), or the competent ministry. Importers of tea and iron bars must obtain 75 per cent and 50 per cent, respectively, of their annual requirements from India.

Imports valued at JD 50 or more require an exchange license from the Central Bank. Exchange licenses are granted automatically when an import license has been obtained. A fee of 4 per cent is payable on licenses for imports.

Licenses for imports originating in Arab League countries 3 are valid for 4 months and those for imports originating in other countries for 12 months. For the latter, the importer must open a letter of credit within 45 days of the date of issue of the license and must complete the process of importation within the period of validity of the license. If the importer chooses to pay against documents, the requirement that he open a letter of credit is dispensed with, provided that the goods are shipped within 3 months of the date of issue of the license.

With minor exceptions, imports must enter the country through the port of Aqaba; goods that do not meet this requirement are subject to a penalty of 10 per cent of the c.i.f. value.

Imports that require an import license also require an exchange license, which is granted automatically. A fee of 110 of 1 per cent is levied on exchange licenses for imports, except those made by government departments and certain approved institutions.

Payments for Invisibles

All payments for invisibles except those of less than JD 25 are subject to exchange control approval. Payments for the following types of invisibles are generally permitted: income of nonresidents; savings of foreign nationals who intend to return to their own countries; remittances to refugee dependents; reasonable living expenses of Jordanian nationals abroad; expenses of Jordanian residents traveling abroad; expenditures for education; expenses of medical treatment; business expenses abroad; and insurance payments in accordance with special regulations.

The policy in respect of these payments is, in general, liberal and nondiscriminatory. However, foreign exchange is not granted for travel to Iraq, Kuwait, Lebanon, Saudi Arabia, or the Syrian Arab Republic, though residents of Jordan traveling to them may take out up to JD 100 in Jordanian notes and coins. Otherwise, persons leaving Jordan may not take out more than JD 25 in Jordanian notes and coins or the equivalent in foreign currency; in addition, tourists and other nonresidents may take out foreign currency notes and any other foreign means of payment which they had previously brought into the country. Remittances for family maintenance may be made by postal order at a rate not exceeding JD 10 a month to any one person resident abroad.

A fee of 110 of 1 per cent is levied on exchange permits, with the exception of those for educational remittances and for payments by government departments and certain approved institutions.

Exports and Export Proceeds

Export proceeds exceeding JD 50 must be collected and the foreign exchange, including sterling, surrendered. Proceeds from exports to Arab League countries of agricultural products and locally manufactured goods are exempt from the surrender requirement, except for the products of tobacco and cigarette factories, the phosphate company, the dyeing and tanning company, the cement plant, and the petroleum refinery; also exempt are proceeds from exports to Iran of agricultural products. Exports to Israel and Rhodesia are prohibited.

Proceeds from Invisibles

Foreign exchange (including sterling) receipts from invisibles must be surrendered to an authorized bank. Travelers entering Jordan may bring in a maximum of JD 100 in Jordanian currency notes and any amount in foreign currencies. Any person regarded for exchange control purposes as resident in Jordan may be required by the Central Bank to surrender to an authorized bank any foreign currency (including sterling) at his disposal.

Capital

Capital may be imported freely, but exports of capital require approval and normally are not allowed. Current income resulting from nonresident investments in Jordan may be transferred abroad. Under the Law for the Encouragement and Guidance of Industry, effective May 1, 1955 (Law No. 28 of 1955, as amended by Laws Nos. 33 and 34 of 1963), profits from approved foreign investments may be remitted regularly, up to 10 per cent a year, in the currency of the original investment. After one year, repatriation of the capital is permitted in four annual installments in the same foreign currency in which the original investment was made. The Government may approve more liberal provisions upon application.

Changes during 1966

January 1. The Central Bank delegated to authorized banks the issuance of exchange licenses for opening documentary import credits and for import payments against documents.

January 1. The Central Bank delegated to authorized banks the approval of payments for educational expenses of Jordanians studying abroad. Exchange licenses could be granted for transfers in respect of university-level studies in the following amounts in a 12-month period: JD 300 for Arab League countries, except Lebanon; JD 700 for Lebanon and Europe; JD 1,200 for the United States; and JD 500 for any other country.

January 1. The Central Bank delegated to authorized banks the issuance of exchange licenses for remittances up to JD 25,000 in respect of imports.

March 1. Fourteen foreign insurance companies were ordered to suspend their activities in Jordan.

March 16. The list of prohibited imports was revised. Certain commodities were added to the list of those requiring a special import license.

March 16. The penalty on goods not imported through Aqaba was increased from 5 per cent to 10 per cent of the c.i.f. value.

March 16. The validity of licenses for imports originating from countries outside the Arab League was extended from 6 to 12 months.

March 16. The fee of ½ of 1 per cent on the issue of import licenses for goods imported without exchange was abolished.

August 10. Certain commodities were excepted from the ruling that all imports must enter Jordan via Aqaba port; they included aviation gasoline, Brazilian coffee, and large items of machinery and equipment.

October 22. Proceeds from exports to countries outside the Sterling Area could be received in any convertible currency; previously, they were required to be collected in convertible currencies designated as specified currencies.

October 22. Foreign Exchange Control Law No. 95 came into effect. Broadly speaking, it restated the provisions of the 1959 law and codified various foreign exchange regulations issued under that law.

December 12. In accordance with a decision of the twenty-fourth Arab League Conference, the import of the products of specified U.S. companies was prohibited.

Kenya

Exchange Rate System

The par value is 0.124414 gram of fine gold per Kenya Shilling or K Sh 7.14286 = US$1. The Kenya shilling is officially maintained at par with the U.K. shilling, giving the relationship of K Sh 1=US$0.14. The Kenya shilling circulates concurrently with the East African shilling issued by the East African Currency Board. The official buying and selling rates of the pound sterling differ from parity by 132 per cent and 116 per cent, respectively. The Central Bank of Kenya deals with authorized banks at these rates, and the public in its turn deals with the authorized banks. The Central Bank does not deal in foreign currencies1 other than sterling. Banks in Kenya base their rates for such foreign currencies on the current market rates in London. Tanzania shillings, Uganda shillings, and East African Shillings may be exchanged into Kenya shillings at par at commercial banks or at the Central Bank of Kenya.

Administration of Control

The Ministry of Finance is in charge of exchange control, but has delegated its administration to the Central Bank of Kenya. Authority for approving normal import payments, many payments in respect of current invisibles, and some capital payments to countries other than Tanzania and Uganda is delegated to the authorized banks.

Import and export controls are administered by the Director of Trade and Supplies in the Ministry of Commerce and Industry. The responsibility for issuing import and export licenses rests with the Director, to whom applications should be submitted by the importer or exporter in Kenya before orders are placed abroad or exports are shipped. The government-owned Kenya National Trading Corporation, Ltd., has a monopoly over the import of rice and certain textiles, and the Ministry of Commerce and Industry is the sole importer of sugar for consumption. Certain agricultural imports and exports are effected by State Marketing Boards.

Together with Tanzania and Uganda, Kenya is part of the East African currency area. Payments from Kenya to Tanzania and Uganda are free of restrictions.

Prescription of Currency

Kenya is a member of the Sterling Area and maintains prescription of currency requirements similar to those of the United Kingdom; all settlements with Tanzania and Uganda, however, must be effected in East African currency.2 Payments to residents of countries in the rest of the Sterling Area other than Tanzania and Uganda may be made in Kenya shillings to the credit of a Nonresident Sterling Area Account in Kenya or in any other Sterling Area currency; receipts from such countries must be obtained in Kenya shillings from a Nonresident Sterling Area Account in Kenya or in any other Sterling Area currency. Authorized payments, including payments for imports, by residents of Kenya to residents of countries outside the Sterling Area other than Rhodesia may be made in sterling to an External Account in the United Kingdom, in Kenya shillings to the credit of an External Account in Kenya, or in any other foreign currency except Rhodesian pounds that is appropriate to the country of residence of the payee. Receipts from countries outside the Sterling Area other than Rhodesia may be obtained in sterling from an External Account in the United Kingdom, in Kenya shillings from an External Account in Kenya, or in any other specified currency 3 that is not a Sterling Area currency. Special regulations apply to settlements with Rhodesia.

Nonresident Accounts

Nonresident Sterling Area Accounts are held by residents of other Sterling Area countries except Tanzania and Uganda. They may be credited freely with all authorized payments to such Sterling Area countries by Kenya residents, with transfers from other Nonresident Sterling Area Accounts, with transfers from External Accounts, and with the proceeds from sales to an authorized dealer in Kenya of any non-Sterling Area currency (other than Rhodesian pounds) or gold by residents of any country outside the Sterling Area. They may be debited freely for payments for exports to other countries in the Sterling Area except Tanzania and Uganda and other payments due by residents of other countries in the Sterling Area except Tanzania and Uganda to Kenya residents, for payments to residents of other countries in the Sterling Area except Tanzania and Uganda for any purpose, for transfers to other Nonresident Sterling Area Accounts in Kenya, for purchases of any Sterling Area currency, and for withdrawals by the account holder while he is temporarily resident in Kenya; provided that permission of the appropriate exchange control authorities in a Sterling Area country other than Tanzania or Uganda has been obtained, Nonresident Sterling Area Accounts may exceptionally be debited for transfers to External Accounts in Kenya or elsewhere in the Sterling Area and for purchases in Kenya of any foreign currency or gold from authorized dealers.

Accounts in Kenya shillings held by residents of countries outside the Sterling Area other than Rhodesia with authorized banks in Kenya are, with exchange control approval, designated External Accounts. They may be credited freely with authorized payments to such countries by residents of Kenya, with transfers from other External Accounts, and with the proceeds from sales of any foreign currency (other than Rhodesian pounds) and gold by nonresidents of the Sterling Area to authorized dealers; provided that permission of the appropriate exchange control authorities in a Sterling Area country other than Tanzania or Uganda has been obtained, External Accounts may also be credited with transfers from Nonresident Sterling Area Accounts. External Accounts may be debited freely for payments to residents of the Sterling Area, for transfers to other External Accounts in Kenya or in any other Sterling Area country, and for purchases of non-Sterling Area currencies from authorized dealers.

Nontransferable funds of residents of countries other than Tanzania and Uganda are credited to Blocked Accounts. Subject to prior approval, balances on Blocked Accounts may be used for the purchase in Kenya of specified bonds issued by the Kenya Government or by local authorities and officially quoted in Kenya;4 the redemption proceeds of these securities, which must have a life of five years at the time of acquisition, are transferable, and interest is freely transferable to nonresidents as and when it accrues. Transfers between Blocked Accounts in Kenya, and to Blocked Accounts in Tanzania and Uganda, require prior approval.

Imports and Import Payments

Some imports from all sources are prohibited for reasons of public policy; for protective reasons, certain other imports are not being licensed. All imports from metropolitan Portugal, Rhodesia, Somalia, and South Africa are prohibited. With minor exceptions, imports from Tanzania and Uganda are unrestricted, but certain goods imported from these countries require a specific license unless they are of Tanzanian or Uganda origin. Specific import licenses are required for certain goods from all other sources and for all goods of Japanese origin. Other goods may be imported without licenses.

When the importer has obtained a license from the Director of Trade and Supplies, or if the transaction is covered by an open general license, exchange is provided automatically by an authorized bank upon application and submission of the necessary documentary evidence.

Payments for Invisibles

Payments for invisibles to all countries other than Tanzania and Uganda are controlled. Authorized banks are empowered to approve specified categories of current payments up to established limits; with the exception of transfers of savings from salaries by expatriate workers in Kenya, amounts above these limits as well as all other current payments are approved administratively, if the authorities are satisfied that such payments do not represent an illegal export of capital. The basic allowance for travel outside the Scheduled Territories 5 by adults is K Sh 5,000 a person (K Sh 2,500 for children over 3) a year, which may be taken out in foreign banknotes.6 Travelers to destinations outside Tanzania and Uganda may take out up to K Sh 250 in domestic currency notes; travelers proceeding direct to Tanzania or Uganda may export any amount in Kenya, Tanzania, Uganda, or East African shilling notes. Nonresident travelers may take out foreign currency notes up to the amount they brought in upon entry.

Fees for education up to the equivalent of K Sh 14,000 a person for a full scholastic year and fees for other specified purposes may be approved by an authorized bank upon production of evidence of debt. A resident of Kenya may not send as a cash gift to a country other than Tanzania or Uganda more than K Sh 200 a year without specific exchange control approval. Facilities exist whereby nationals of countries other than Tanzania and Uganda who come to work in Kenya for not more than four years may remit abroad up to 50 per cent of their monthly earnings, but not more than K Sh 3,000 a month, to cover family maintenance, savings, etc.; this amount is to cover all their commitments outside the Scheduled Territories. Nationals of Sterling Area countries other than Scheduled Territories who are employed on a contract basis and have been resident in Kenya for over four years may transfer uncommitted up to 20 per cent of their salaries, but not more than K Sh 1,200 a month; the total of their committed and uncommitted remittances must not exceed 50 per cent of their salary.

Exports and Export Proceeds

Exports of certain foodstuffs and agricultural products require licenses and may be subject to restriction in order to ensure sufficient supplies for consumption in Kenya. Exports of certain minerals, precious stones, and strategic materials are also subject to licensing. Export licenses for some commodities are required only for destinations other than Tanzania or Uganda. Other goods may be exported without licenses. All exports to metropolitan Portugal, Rhodesia, Somalia, and South Africa are prohibited.

Export proceeds in foreign currencies must be collected within six months of exportation and offered to an authorized bank in Kenya for conversion into Kenya shillings.

Proceeds from Invisibles

Receipts from invisibles in specified currencies (see footnote 3) must be sold to an authorized bank. Travelers may bring in freely foreign currency notes; the import of Kenya, Tanzania, Uganda, or East African shilling notes must not exceed K Sh 250 in value for each traveler unless arriving direct from Tanzania or Uganda, in which case any amount may be brought in.

Capital

Capital transfers to all countries other than Tanzania and Uganda are restricted.

Specified capital transfers up to established amounts to all countries other than Tanzania and Uganda are approved by authorized banks; all other capital transfers to destinations other than Tanzania and Uganda require individual exchange control approval. Persons leaving Kenya permanently may transfer their assets up to the equivalent of K Sh 100,000 per family unit if they take up residence in a country outside the Sterling Area; if they return to their country of origin in the Sterling Area, they may additionally every 12 months thereafter apply for the release of K Sh 40,000 from their Blocked Accounts. All remaining funds must be credited to a Blocked Account; they may then be invested in approved Scheduled Territory securities, and redemption proceeds become transferable five years from the date of purchase.

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