Chapter

Country Surveys

Author(s):
International Monetary Fund. External Relations Dept.
Published Date:
September 1954
Share
  • ShareShare
Show Summary Details

Explanatory Note

The descriptions of exchange controls and restrictions which follow relate generally to the position in each country as at December 31, 1953, but in a few cases the position is described as at a later date in order to take account of significant developments in the exchange system which took place in the first months of 1954 and which could not be indicated easily by means of footnotes. In drafting these surveys, a standardized framework has been employed as far as practicable. For this purpose, each system is described under the following headings (where applicable): Origin and Essential Features, Exchange Rate System, Exchange Control Territory, Administration of Control, Prescription of Currency, Nonresident Accounts, Imports and Import Payments, Payments for Invisibles, Exports and Export Proceeds, Proceeds from Invisibles, Capital, Banknotes, Table of Exchange Rates, and Changes during 1953. The sections on Exchange Control Territory, Nonresident Accounts, and Banknotes do not appear in all surveys either because they do not apply or because they appear to have no particular significance to the country concerned. Neither does the section on Table of Exchange Rates appear in the surveys of all countries having a multiple currency practice. The subject matter included under each of the above headings is indicated below.

As in previous years, an attempt has been made to employ as far as possible a consistent terminology for describing similar documents or practices, but this has not been pressed beyond the point where the use of an expression would conflict with the term used by the country concerned, so that expressions such as “exchange license” and “import license” used in these country surveys do not reflect any interpretation of the actual function of such documents. The word “license” is, however, used to cover all granting of permits or permissions, either general or individual, whether or not they are conveyed in any actual document or merely consist in conforming to certain requirements under the supervision of some authority, in circumstances where, without that conformity, the transaction or payment could not take place.

Under Origin and Essential Features, a brief survey of developments in each country’s system and a short summary of the main features are provided. The summary is, however, not to be taken as indicating that the Fund necessarily regards all the features of the system as desirable or has given specific approval to them, or as implying that all the practices described are necessarily under the Fund’s jurisdiction.

Under Exchange Rate System, the par value, where one has been agreed with the Fund, and/or the official rates are given, usually in terms of the U.S. dollar, together with a reference to any other rates which may be essential parts of the country’s exchange rate system. In the majority of cases where there is a multiple exchange rate system, further details are given in the later section, Table of Exchange Rates (see below). The rates quoted are those effective as at December 31, 1953, unless stated otherwise.

Under Exchange Control Territory, the extent of applicability of a given system of exchange controls and restrictions is explained when it covers two or more sovereign or autonomous territories and when a resident of one country is treated as a resident of another country for the purposes of exchange control.

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

Under Prescription of Currency, the requirements affecting the selection of the currency and method of settlement for transactions with other countries are described. It will be seen that the degree to which these are significant and effective varies considerably with different countries. Where a country has concluded payments agreements with other countries or monetary areas, the terms of these agreements will usually lead to prescription of currency arrangements being applied to specified categories of payments to and from the countries concerned. For a country whose currency has international importance, the prescription of currency arrangements involve the use of its currency where it is derived from current international transactions and is held by nonresidents, whose accounts in that currency are designated geographically according to the country or monetary area of the account holder. Payments to and from such nonresident accounts are then regarded as equivalent to settlements in the currency of the country or monetary area of the nonresident whose account is concerned.

Under Nonresident Accounts, an indication is given of the manner in which the country concerned regards the accounts in its currency of persons not regarded as resident in that country, and the facilities and limitations attached to such persons’ accounts.

Under Imports and Import Payments, import licensing requirements are described briefly, and details are given of the additional requirements attached to the making of payments in respect of imports. The term “under open general license,” which is applied in some countries, is to be understood to indicate arrangements whereby certain imports or other international transactions are exempt from a restrictive application of licensing requirements, in contrast to an “individual license,” which may, according to circumstances, be either given freely or restricted in its issue.

Under Payments for Invisibles, action in the matter of permitting payments abroad in respect of current invisible transactions is described briefly. In most cases, the limitations placed on the export of foreign and domestic banknotes are given.

Under Exports and Export Proceeds, the application of export licensing, where this is operative, is indicated, together with a brief outline of the requirements attaching to the proceeds derived from exports from the country concerned. The expression “exchange receipts must be surrendered” is used to indicate that the recipient is required by the regulations to sell his foreign exchange against local currency, usually at the official rate, to the central bank or to a commercial bank or exchange dealer authorized for this purpose. In some countries there is a requirement that the proceeds be sold in a free market, but in such cases the expression “surrendered” is not used.

Under Proceeds from Invisibles, any conditions attaching to exchange derived from invisible transactions are given. For some countries, the limitations placed on the import of foreign and domestic banknotes are described.

Under Capital, a general indication of the special arrangements or limitations attaching to international receipts and payments in respect of capital items is given. Where the special arrangements attaching to foreign capital also cover the income thereon, they are dealt with under this heading rather than under the headings, Payments for Invisibles and Proceeds from Invisibles.

Under Banknotes, a heading included in only a few of the country surveys, special arrangements concerning the negotiation of foreign banknotes within the country are described briefly.

Under Table of Exchange Rates, which is provided for most countries having a multiple exchange rate structure, the exchange rates effective as at December 31, 1953 or, in some cases, as at January 1, 1954, are given. For convenience, most of these tables are given in terms of local currency units per U.S. dollar. The tables include effective “mixing” rates arising from the negotiation of percentages of the total exchange at different rates, which occurs in those countries employing “mixing” systems.

Under Changes during 1953, the more significant changes taking place in a country’s restrictive system during 1953 are presented in chronological order. Where it is known that some significant event has taken place since then, this is indicated either at the end of the section or in a footnote against the item affected by the change.

Australia

Origin and Essential Features

Australia introduced import and exchange controls late in 1939. At the outset, the controls applied restrictively to imports from and payments to all countries, although with discrimination in favor of transactions with other parts of the Sterling Area. In 1946-47, imports from Sterling Area countries were exempted generally from import licensing, and a similar exemption for imports from most non-sterling, non-dollar countries was made in 1950. In March 1952, import licensing was extended again, to cover imports from all countries. The Australian system of exchange control in respect of procedure, currency prescription, and policy applicable to non-Sterling Area transactions is essentially of the pattern of the United Kingdom and other Sterling Area controls. All export proceeds must be received in prescribed currencies and surrendered at official rates within a specified time, and all payments in foreign currency (including sterling) must be made through authorized banks in prescribed currencies with general or specific approval.

Exchange Rate System

The exchange rate system is unitary, based on the par value of Australian Pound 1 = US$2.24. Official rates are fixed for transactions in pounds sterling: £A 125 buying, £A 125/10/- selling, per £100. The authorized banks quote their own rates for other currencies, including the U.S. dollar, based on market quotations in London and New York.

Administration of Control

The Commonwealth 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 Customs, in collaboration with the Treasury and the Commonwealth Bank on foreign currency aspects.

Prescription of Currency

The Commonwealth Bank, by notices in the Commonwealth Gazette, prescribes the currency which may be accepted for exports to each foreign country or monetary area. Conformity to this prescription is one of the conditions on which the Department of Trade and Customs issues the export license. For payments for imports and other outward payments, the same type of currency prescription operates through central bank directions to the authorized banks. The form of prescription in both cases follows closely that of the United Kingdom and other Sterling Area countries. All payments to and from Sterling Area countries must be made in sterling or another Sterling Area currency. Payments for imports from countries outside the Sterling Area may be made in the currency of the country of origin of the goods, in sterling through a sterling acdount appropriate for that country, or in Australian currency through an account of a bank in the country of origin of the goods with a bank in Australia. For exports, sterling or Australian currency through appropriate accounts (as for imports) is always acceptable, but provisions regarding the acceptance of foreign currencies vary.

Nonresident Accounts

There is no formal classification, as in the United Kingdom, of the accounts of nonresidents—i.e., those resident outside the Sterling Area—because of the relatively few accounts involved, but the same principles as in the United Kingdom apply. Transfers are freely allowed (administratively on application) between the accounts of residents of the same country or monetary area. All credits to nonresident accounts are subject to approval and are approved 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.

Payment in sterling to an appropriate nonresident account in the United Kingdom is always an alternative method of payment open to a payee, and this would, in terms of the United Kingdom’s payments arrangements, ensure the payee’s ability to acquire his own currency if desired. Where, however, amounts are left indefinitely in Australia on nonresident account, they might be regarded as capital if transfer should be sought.

Imports and Import Payments

Apart from minor exemptions, the importation of all goods is prohibited except under import license issued by the Department of Trade and Customs. All import licenses are specific in respect of country of origin of the goods. Import licenses issued for imports from the dollar area are confined to items regarded as essential, especially raw materials, industrial supplies, and capital equipment. Licenses for imports from Japan are issued on the basis of administrative decision. Licenses for imports from all other countries are issued mainly on percentage quotas based on imports in the fiscal year 1950-51; but for some essential raw materials they are issued freely, and for some other goods, e.g., machinery and capital equipment, for which quota control is inappropriate, the issue of licenses is subject to administrative decision.

In respect of imports subject to license, the provision of foreign exchange or permission to credit Australian currency to a nonresident account is automatic following the issuance of the import license, provided the prescription of currency requirements (see section on Prescription of Currency, above) are observed.

Payments for Invisibles

All payments in respect of invisibles come under exchange control, but approval is given freely for most items and the control operates largely to prevent unauthorized capital transfers. Restrictions apply, however, to allocations of foreign exchange for travel, to earnings of U.S. film companies and of visiting U.S. entertainers, and to dollar expenditure for such items as advertising, insurance of local risks, and newspaper representation abroad. For royalties and service charges due in dollars, approval for transfer is given provided the contract giving rise to the commitment was entered into prior to control or subsequently with exchange control permission. Limits are placed on noncontractual transfers, such as donations, remittances for family maintenance, and movements of emigrants’ funds. The treatment of such applications is, however, relatively liberal, and any limitations may be regarded as complementary to the control over capital movements.

Exports and Export Proceeds

All exports (with minor exceptions) are subject to licenses issued by the Department of Trade and Customs. A condition of these licenses is that full proceeds must be received in a currency and within a period approved by the Commonwealth 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 Commonwealth Bank or a trading bank acting as its agent. Unless payment is to be received in a currency and within a period corresponding to those stipulated by the Commonwealth Bank, the exporter’s bank will not clear the documents without specific exchange control approval.

Proceeds from Invisibles

For U.S. dollar accruals from invisible items, offers to sell must be made within specified periods. Currency holdings and securities in foreign currencies (except Sterling Area currencies) must be reported and may be disposed of only with permission, but their surrender is not compulsory.

Capital

All transfers of capital from Australia require specific exchange control approval. Approval is granted freely for the repatriation of nonspeculative funds owned by Sterling Area residents; however, no advance commitments are given in such cases.

Transfers of capital to countries outside the Sterling Area are not allowed other than in very exceptional cases; nonresident transfers are treated on their individual merits, sympathetic consideration being given to cases of personal hardship, special cases of business liquidation, etc.

There are no restrictions on the receipt of capital funds from abroad, except that residents borrowing foreign currency must obtain prior exchange control approval.

Changes during 1953

January 1

All debits standing against importers’ quotas for imports of goods of non-dollar, non-Japanese origin were canceled at the beginning of the licensing period, thus enabling importers to use their new quotas for current imports.

February 17

The exchange allowance of Sterling Area currency for residents of Australia traveling in the Sterling Area and available in any period of 12 months was increased from UK£500 to UK£750 per person.1

April 1

Restrictions on imports from non-dollar countries (other than Japan) were relaxed: some items were transferred from administrative control to the category of “license freely,” while others, limited to a percentage of imports of the same goods in the financial year 1950-51, were increased—from 60 per cent to 70 per cent for Category A and from 20 per cent to 30 per cent for Category B. Allocations for items subject to administrative control were also increased.

July 3

Restrictions on certain imports based on percentages of their previous import were again relaxed—from 70 per cent to 80 per cent for Category A and from 30 per cent to 40 per cent for Category B—and appropriate adjustments were made for imports licensed on an administrative basis. It was also announced that imports from Japan would be increased on a selective basis.

October 1

Restrictions on certain imports based on percentages of their previous import were again relaxed—from 80 per cent to 90 per cent for Category A and from 40 per cent to 50 per cent for Category B—and appropriate adjustments were made for imports licensed on an administrative basis.2 It was also announced that for an extensive range of essential items imported from non-dollar countries (other than Japan) import licenses would be issued freely, and that the issue of licenses for imports from Japan would be raised in line with the increases in imports from other non-dollar countries.

Austria

Origin and Essential Features

An exchange control system was established in Austria on October 9, 1931. It was reintroduced after the war, on July 25, 1946. The exchange rate structure, which was revised on November 25, 1949 and modified on October 6, 1950, was unified on May 4, 1953, when an initial par value for the Austrian schilling was established.

Imports from OEEC countries are liberalized to the extent of 50 per cent of 1952 imports.1 Other imports are restricted through import and exchange licensing. Payments for invisibles are subject to individual licenses, although most payments for invisibles in respect of OEEC countries are liberalized. Capital payments and transfers are subject to individual licenses. With certain exceptions, foreign exchange receipts must be surrendered. Some exports require licenses.

Exchange Rate System

The par value is Austrian Schillings 26.00 = US$1. The official rates are S 25.92 buying, S 26.08 selling, per US$1. Basically, exchange transactions are effected at uniform rates based on the par value, but special arrangements for exchange transactions in Egyptian pounds give rise to other rates for that currency.

Administration of Control

The exchange control administration is operated by the Austrian National Bank. Trade controls are conducted by the Central Export and Import Office (Zentralstelle für Aus- und Einfuhr), which is subordinate to the Federal Ministry of Trade and Reconstruction. Exchange control and trade control authorities cooperate closely with each other to coordinate control policies in the field of international economic transactions.

Prescription of Currency

The method of settlement for exchange transactions is prescribed for practically all receipts and payments by means of exchange licenses, which are issued by the Austrian National Bank (Prüfungstelle für den Zahlungsverkehr mit dem Auslande), and by the terms of bilateral payments agreements and arrangements.

Two types of method for settling international payments arise from bilateral payments agreements:

1. In the currency of the partner country. This method is applicable to Austria’s settlements with Belgium, Canada, Denmark, Egypt, France, Federal Republic of Germany, Netherlands, Norway, Sweden, Switzerland, and United Kingdom (including all other territories of the Sterling Area).

2. In U.S. dollars as the currency of account. This method is applicable to Austria’s settlements with Argentina, Brazil, Bulgaria, Czechoslovakia, Greece, Hungary, Iceland, Italy, Poland, Portugal, Rumania, Turkey, Uruguay, and Yugoslavia.

Payments can also be effected through nonresident accounts, which have a limited significance in the Austrian exchange control system.

Nonresident Accounts

Payments that may not be transferred abroad are in some cases credited to blocked accounts. If these accounts are with authorized banks, they can be debited, without license, with payments in Austria on behalf of the account holder for the following purposes: (1) donations (e.g., to relatives for personal aid, or to social, religious, or similar institutions) or payments of adequate maintenance to residents eligible for such payments, up to S 1,500 per person per month, but not exceeding S 6,000 per month; (2) payments to residents of certified claims arising in connection with the opening or the administration of a blocked account or other blocked property of the account holder (e.g., bankers’ commissions, handling charges, deposit fees); (3) payments of taxes and other public fees and charges, and legal counsel and notary fees owed by the account holder in Austria; (4) settlement of costs payable in Austria for the travel of the account holder and his family and accompanying servants, up to S 4.000 per person per week; (5) payments for the maintenance of graves, up to S 2,000 per year.

Blocked accounts can be debited with permission of the Austrian National Bank for investments in Austria by the account holder (e.g., purchase of real estate, participation in Austrian enterprises, purchase of securities, granting of loans to residents).

Imports and Import Payments

Imports are subject to individual licenses, which are granted freely for a considerable number of items imported from OEEC countries. Otherwise, the issuance of import licenses is governed, among other factors, by the following considerations: provisions of bilateral trade agreements and efforts to fulfill quotas established in accordance with such agreements; needs of the Austrian economy; and exchange reserves available. In order to effect payment for an import, an exchange license is required, and these are granted, on the basis of the import license, within two business days after the issuance of an import license. Exchange is made available immediately upon the presentation of an exchange license.

Deposits of up to 10 per cent of the invoice value of the goods to be imported can be required by the Central Export and Import Office.

Compensation (barter) transactions are permitted with those countries with which Austria has no payments or clearing agreements, when there is no other way of settling payments. Such transactions are subject to individual licensing by the Austrian National Bank and the Central Export and Import Office.

Payments for Invisibles

Most payments arising from invisibles are subject to individual licensing by the National Bank. For payments to OEEC countries, exchange licenses are granted automatically for most items. For payments to other countries with which there are bilateral payments agreements, the authorization is based on reciprocity. For payments to all other countries, and if the payments are connected with the international transportation of goods, travel, facilitation of trade and services, registration of patents, subscriptions to newspapers, etc., licenses are granted according to the merits of the case, and with other considerations, such as the availability of exchange and reciprocal equal treatment on the part of the other countries, being taken into account. For other payments to this last group of countries, a license is issued only in cases of hardship or if a license to conclude the transaction that gave rise to the payment (e.g., repayment of commercial credit) had been granted.

Residents traveling as tourists to OEEC countries benefit from yearly allocations of exchange up to the equivalent of S 2,600 per adult.2 Persons traveling abroad may take with them Austrian banknotes and coins up to S 1,000. A maximum of S 500 in those currencies whose rates are quoted by the National Bank3 may also be taken, but residents must deduct this from the maximum of S 1,000. Nonresidents can take out, in addition, S 4,000 in Austrian currency provided they submit a valid frontier certificate showing that the amount of S 4,000 was originally brought in by them. An unlimited amount of foreign banknotes not quoted by the National Bank can be taken by persons going abroad.

Exports and Export Proceeds

Specified goods and goods exported through compensation (barter) transactions are subject to individual licensing. Some 300 tariff numbers (out of a total of 558) are partly or entirely included in the list of exports subject to individual licenses. The issuance of export licenses is governed also by the provisions of bilateral trade agreements and the efforts to fulfill quotas established in accordance with such agreements, and by the needs of the Austrian economy.

Export claims must be declared on special forms. Export proceeds must be surrendered, except as follows: (1) compensation transactions, which consist of bartering an export commodity against an import commodity; and (2) proceeds accruing from exports to Egypt and collected through a “Collector Account” established in accordance with the Egyptian-Austrian payments agreement of July 6, 1953; such proceeds may be sold to Austrian residents who hold valid exchange licenses, at rates freely formed through the intermediary of authorized banks, for payments in favor of Egyptian residents. In addition, if an exporter is authorized to keep a foreign exchange account, he may retain his export proceeds for 30 days, but the amounts so credited to a foreign exchange account may be used only with a special license.

Proceeds from Invisibles

All exchange receipts from invisibles have to be surrendered within eight days from the date of their collection. Certain institutions, such as insurance companies and patent offices, are granted open licenses to dispose of their proceeds. Persons coming from abroad can bring in Austrian banknotes and coins up to S 5,000, and any amount in foreign banknotes.

Capital

New investments by nonresidents are subject to individual licensing. Applications for the transfer of capital and proceeds arising from new investments are dealt with on a case-to-case basis. The transfer of income and capital in respect of “old” investments is not permitted; proceeds accruing from “old” investments in any form are usually credited to blocked accounts, balances on which may be used within limits for specified personal expenses in Austria of the account holder and his family and for certain other specified transactions within Austria (see section on Nonresident Accounts, above).

Changes during 1953

March 16

Certain noncommercial payments to nonresidents could be made freely by crediting their blocked accounts; e.g., certain categories of payments ordered by the courts; repayments of taxes paid in excess, public and legal fees, and dues; payments in schillings in fulfillment of legacies, and similar obligations, up to a value of S 5,000 for each foreign beneficiary; payments in schillings arising from the sale of goods and chattels of an Austrian residuary estate up to a value of S 5,000 for each foreign beneficiary; payments of debts of an Austrian residuary estate to a foreigner. Debts of a foreign estate due to a resident could be settled from a blocked account and from the proceeds of the estate.

May 4

The par value of the Austrian schilling was established at S 26 per US$1, and the multiple exchange rate system was abolished.

The issuance of licenses for “linked” transactions4 was discontinued.

June 15

Austrian residents traveling abroad were permitted to export foreign banknotes up to the equivalent of S 150, in addition to the amount of S 1,000 in Austrian banknotes they were already allowed to take. Nonresident travelers could export S 5,000 in Austrian banknotes, i.e., S 4,000 more than before, provided they could produce a valid frontier certificate showing that the amount of S 4,000 was originally imported by them. In addition, nonresident travelers could export foreign banknotes up to the equivalent of S 300 without any formalities, and any additional amount in foreign banknotes provided they could produce a valid frontier certificate showing that such additional amount was previously brought in by them.

Travelers (both residents and nonresidents) could bring into Austria up to S 5,000 in Austrian banknotes (previously, only S 1,000) and any amount in foreign banknotes (as previously).

Regulations concerning the importation and exportation of currency by persons living near the frontier were also liberalized.

July 1

Imports from OEEC countries were liberalized to the extent of 35 per cent of total imports in 1952.

July 7

Proceeds accruing from Austrian exports to Egypt were exempted from the surrender obligation and could be sold by foreign exchange dealers to Austrian residents, at freely formed rates, for authorized payments to Egyptian residents.

November 1

Residents traveling as tourists to OEEC countries were granted a yearly exchange allocation of S 2,600 per adult.

December 6

Exporters could, upon application, be authorized to hold foreign exchange accounts (see section on Exports and Export Proceeds, above).

December 8

Banknotes for which rates are quoted by the National Bank5 up to the equivalent of S 500, as well as banknotes in other currencies up to any amount, were exempted from the surrender obligation.

Residents traveling abroad were free to take with them S 1,000 in Austrian banknotes, as previously, but now up to S 500 of this amount could be in foreign banknotes quoted by the National Bank, plus any amount in foreign banknotes not quoted by the Bank.

Nonresidents could take with them, in addition to S 5,000 in Austrian banknotes (see June 15, above), S 500 in foreign banknotes quoted by the National Bank and any amount in foreign banknotes not quoted by the Bank.

Regulations concerning the importation and exportation of currencies by persons living near the frontier were further liberalized.

December 15

Imports from OEEC countries were liberalized to the extent of 50 per cent of total imports in 1952.

Belgium-Luxembourg

Origin and Essential Features

Exchange restrictions were introduced in Belgium on May 10, 1940. During the war, restrictions were applied separately in Belgium and Luxembourg. Under the present system, established in 1944-45, the Belgium-Luxembourg Economic Union constitutes a single exchange control authority, since Luxembourg, in agreement with Belgium, introduces and applies in Luxembourg the same control legislation applied in Belgium; Belgian and Luxembourg residents have the same exchange rights and obligations in both countries.

All incoming and outgoing payments must be made through authorized banks, or in certain cases through authorized stockbrokers. Restrictions are exercised through authorization requirements for imports and for nontrade payments. Exchange is granted for such payments only after an authorized bank has observed that the conditions under which the exchange control authority permits automatic granting of exchange have been fulfilled or, where required, authorization has been obtained from the central exchange control authority. Most exports require licenses. Foreign exchange in certain currencies from commercial transactions must be surrendered; proceeds in these currencies from other transactions may be retained, but the disposal of such exchange requires a license. Foreign currencies which need not be surrendered can be utilized only on the basis of a general or special authorization; the surrender of such currencies to authorized banks is likewise subject to authorization.

Special conditions exist with respect to payments to EPU countries,1 their monetary areas, Bulgaria, Finland, Hungary, Poland, Rumania, U.S.S.R., and Yugoslavia. Residents are authorized to make payments to these countries without limitations.

Exchange Rate System

The par values are Belgian Francs and Luxembourg Francs 50 = US$1. Buying and selling rates for Canadian dollars, Danish kroner, deutsche marks, French francs, Netherlands guilders, Norwegian kroner, Portuguese escudos, pounds sterling, Swedish kronor, Swiss francs, and U.S. dollars are determined through the exchange market in which the banks may operate to effect authorized transactions; these rates are operative within official limits corresponding to Bfr 49.50 and Bfr 50.50 per US$1. Fixed buying and selling rates are established for other officially quoted currencies. The currencies of EPU countries may be negotiated in a free market at fluctuating rates, but the use of exchange thus acquired is limited to a few invisible transactions. The Belgium-Luxembourg Economic Union participates with Denmark, France, the Federal Republic of Germany, the Netherlands, Norway, Sweden, Switzerland, and the United Kingdom in a multilateral foreign exchange arbitrage arrangement, under which authorized banks in these territories may conclude spot transactions, and forward transactions for up to three months’ delivery, with other authorized banks in any of these territories.2 The spot exchange rates fluctuate between the official limits agreed by the exchange authorities of the country concerned, while the forward premiums and discounts are left to the interplay of market forces. There being in practice no active spot market in Egyptian pounds, transactions with Egypt are settled only on a forward exchange basis at freely determined rates.

Exchange Control Territory

The Belgian Monetary Area, which consists of Belgium, Luxembourg, the Belgian Congo, and the Trust Territory of Ruanda-Urundi, is treated as a single exchange control territory in relation to countries with which Belgium has concluded payments agreements. Although the Belgian Congo and the Trust Territory of Ruanda-Urundi have their own exchange control system, very few restrictions are in force between the Belgium-Luxembourg Economic Union on the one side and the Belgian Congo and the Trust Territory of Ruanda-Urundi on the other.

Administration of Control

The ultimate responsibility for the administration of exchange control in the Belgium-Luxembourg Economic Union is exercised by the Institut Belgo-Luxembourgeois du Change, which is the central exchange control authority for the Union. Administrative powers for most payments and transfers are delegated to authorized banks, or in certain cases to authorized stockbrokers, but in special cases authorized banks must submit requests for authorization to the central authority.

Certain imports and exports require licenses issued by the trade authorities, but licenses must be stamped by an authorized bank in order to ensure that regulations are complied with before import or export can be effected and payment made. With regard to certain dollar imports not subject to import licensing, the central exchange control authority seeks the advice of the trade authorities before authorizing a bank to permit payment.

Prescription of Currency

The prescription of currency is an integral part of the restrictive system of the Belgium-Luxembourg Economic Union; it seeks to limit payments in hard currencies to imports and services that require payment in such currencies, and to facilitate the reduction of soft currency surpluses.

The regulations detail the currency which is appropriate for payment of imports and invisible transactions. In the main, payment must be made by transferring Belgian or Luxembourg francs to a nonresident account related to the country of residence of the beneficiary; or (1) in the currency of the country of residence of the beneficiary if he resides in Czechoslovakia or an EPU country (except Austria, Greece, and Turkey); (2) in U.S. or Canadian dollars if he resides in the “dollar area”;3 (3) in U.S. dollars if he resides in Japan; or (4) in sterling if he resides in the Anglo-Egyptian Sudan, Egypt, Eritrea, Ethiopia, Iran, Lebanon, Syria, or Thailand.

Similar principles covering the prescription of currency apply to inward payments. In addition, payment can always be received in U.S. or Canadian dollars. When imported goods are re-exported from Belgium or Luxembourg, the currency received for the export must be as “hard” as that paid out for the importation of the goods; and when Belgian or Luxembourg exports are to be subsequently re-exported from the country of original destination, the currency received must be as “hard” as the currency received by the re-exporting country or be appropriate to the country of ultimate destination. Exceptions to these general principles require individual licenses.

Nonresident Accounts

Belgian or Luxembourg franc accounts of nonresidents may be classified into three groups:

1. Nonresident accounts kept with authorized banks for account holders residing abroad (except those in Categories 2 and 3, below). These are called foreign B-accounts and are designated according to the country or monetary area appropriate to the residence of the account holder.

Credits to foreign B-accounts require general or special authorization from the exchange control authority; the accounts cannot be credited with banknotes or coin. Only the foreign B-accounts of banks located in EPU countries may be credited for payments for goods and services from those countries. Foreign B-accounts can always be utilized for payments of subscriptions to new shares issued by Belgian, Luxembourg, or Congolese companies in Belgian, Luxembourg, or Congolese francs; but to use funds in a foreign B-account related to an EPU country to purchase securities, authorization by the exchange control authority is required.

Foreign B-accounts may be freely debited:

  • For payments to residents of the Belgian Monetary Area, except for payments related to EPU countries and payments related to the purchase of domestic or foreign securities from residents. Payments of the last type do not, however, require authorization if the foreign B-account relates to a resident of Canada or the United States. Authorized banks must conform with special requirements in order to be able to make a payment in Belgian or Luxembourg francs to the debit of a foreign B-account related to one of the EPU countries.

  • For payments to other foreign B-accounts of account holders who reside in the same country or monetary area.

  • For payments to foreign B-accounts of account holders residing in any country except Switzerland, provided the holder of the account to be debited is resident in Canada or the United States.

  • For payments to foreign B-accounts of other countries, except that special authorization from the exchange control authority is required (i) for credits and debits to foreign B-accounts related to Argentina, Austria, Bulgaria, Czechoslovakia, Denmark, Finland, French Monetary Area, East Germany, Federal Republic of Germany, Greece, Hungary, Italy, Japan, Lebanon, Netherlands Monetary Area, Norway, Poland, Portuguese Monetary Area, Rumania, Spain, Sweden, Switzerland, Syria, Turkey, U.S.S.R., Uruguay, Yugoslavia, and the Sterling Area; (ii) for debits to foreign B-accounts related to Brazil, Chile, and Egypt; and (iii) for credits to foreign B-accounts related to Andorra, Canada, Tangier, and the United States.

  • For payments to authorized banks in Denmark, France, Federal Republic of Germany, Netherlands, Norway, Sweden, and the United Kingdom, where the foreign B-account to be debited is that of another authorized bank in any of these countries.

  • For payments, to a maximum of Bfr 10,000 per day, to nonresidents who are traveling in Belgium-Luxembourg. This limit is reduced to a maximum of Bfr 5,000 per day if the accounts to be debited are in the names of banks established in EPU countries. There is no limit to the amount per day that can be made available for this purpose from foreign B-accounts of account holders residing in Canada or the United States.

Convertibility of balances in foreign B-accounts into the currency of the account holder is provided for account holders who reside in Canada, Czechoslovakia, Denmark, France, Italy, Netherlands, Norway, Portugal, Sweden, Switzerland, United States, and the Sterling Area.

2. Nonresident accounts kept with authorized banks for account holders residing in Germany, Japan, and Spain. These accounts are subject to special authorization for all entries, unless the account holder is a Belgian or Luxembourg national or a bank established in the Federal Republic of Germany.

3. Emigrants’ nonresident accounts, i.e., those of former residents in Belgium-Luxembourg who established their principal residence abroad after September 1, 1949. These accounts can be debited or credited only on special authorization.

Imports and Import Payments

Most imports are free of import license, but an import declaration must be filled out for them. However, certain imports from any country require import licenses, which are issued by the trade control authorities. The goods which need a license are listed by an intergovernmental Belgium-Luxembourg commission.

Both import licenses and import declarations must be stamped by an authorized bank before exchange can be made available and before importation can take place. The authorized bank is required to make certain that payment will be made by one of the methods laid down in the regulations (see section on Prescription of Currency, above). Various other requirements of the regulations must also be fulfilled before the documents can be stamped. In cases where these requirements are not fulfilled, the authorized bank may request the central exchange control authority for special permission to stamp the document. For a number of imports subject to the import declaration procedure and payable in Canadian or U.S. dollars or in Belgian or Luxembourg francs to the credit of a nonresident account related to Canada or the United States, approval of the central exchange control authority is required before the bank can affix its stamp, and the central exchange control authority may consult the trade control authorities before giving its approval.4

Payments for Invisibles

Many payments for invisible transactions require licenses, but there is a general allowance for normal invisible payments, subject to limitations as to maximum amounts for payments to certain countries. Invisible payments to EPU countries, Bulgaria, Hungary, Poland, Rumania, U.S.S.R., and Yugoslavia may be made without limitation as to amount. The export of domestic and foreign banknotes by travelers is allowed up to Bfr 25,000, but nonresident travelers may export more than Bfr 25,000 in foreign banknotes if they can show that they brought in an amount equal to or higher than the amount which they want to export.

Exports and Export Proceeds

Except for minor cases where the goods have a limited value, all exports require either an export license issued by the trade control authorities or an export declaration filled out by the exporter. An intergovernmental Belgium-Luxembourg commission lists the goods that require an export license. Before the export can take place, the license or the declaration must be stamped by an authorized bank, in order to ensure that the proceeds will be received in accordance with the regulations (see section on Prescription of Currency, above).

Export proceeds in other than EPU currencies must be surrendered to an authorized bank. The recipient of export proceeds of more than Bfr 20,000 in EPU currencies sold to authorized banks or debited to a nonresident account related to an EPU country must pay 3, 5, 6½, 9½ 13, or 16 per cent (according to the nature of the merchandise) of the proceeds into a special account to be opened in his name at an authorized bank, which will not release the funds for six months.5 The holder of such an account may discount it with an authorized bank during the six-month period or use it as collateral for a loan. That part of the export proceeds in an EPU currency which is not sold to an authorized bank may be retained by the exporter, and he may sell it in a free market to other residents who may use it for a few specified invisible payments (e.g., tourism and certain capital items), or may use it himself for similar payments.

Proceeds from Invisibles

Only exchange proceeds from commercial transactions in the currencies of non-EPU countries need be surrendered. All other exchange proceeds may be retained, but, with the exception of some payments in EPU currencies, their disposal requires a license. There is no restriction on the amount of foreign or domestic banknotes which travelers may bring into Belgium or Luxembourg.

Capital

Residents desiring to import foreign capital must consult the exchange control authority for authorization. As a general rule, the inflow of foreign capital for investment purposes is authorized. The exchange control authority may guarantee the repatriation of foreign capital invested in Belgium-Luxembourg. Capital transfers from EPU countries are, as a general rule, allowed only when they are effected outside the channels instituted by payments agreements, e.g., through the utilization of the proceeds of the sale of Belgian, Luxembourg, or colonial securities or through a transfer of convertible currencies. When, by exception, such transfers are allowed through current channels, an amount equal to 25½ per cent of the total must be held for six months in a special account,6 provided that the amount received is not less than Bfr 1,000. The same rule applies to transfers of capital incomes.

If a resident has complied with certain formalities, he may use for current payments and for investments abroad his foreign exchange receipts derived from capital. However, such receipts in EPU currencies may be used only for investments and a few specified invisible payments.

Capital transfers to EPU countries, Bulgaria, Hungary, Poland, Rumania, U.S.S.R., and Yugoslavia can be made without restrictions. Capital transfers to other countries require individual authorization. Such authorization is usually granted when an economic interest is the basis for the transfer, or if the transfer is aimed at maintaining the percentage of the investment in companies abroad when these companies increase their capital.

Banknotes

Authorized banks and other exchange dealers are permitted to buy from, and sell to, residents and travelers foreign banknotes, at free market rates. Residents holding foreign exchange assets, other than those which have to be surrendered to an authorized bank, are authorized to repatriate these assets through authorized banks in the form of foreign banknotes. Banknotes cannot be used to settle trade transactions; neither can they be paid into nonresident accounts. Authorized dealers are not allowed to obtain foreign banknotes by crediting customers in foreign currencies or by debiting their foreign correspondents in domestic or foreign currencies.

Changes during 1953

January 26

Authorized banks were permitted to deal in spot and forward transactions in Netherlands guilders against Belgian francs, in the Brussels exchange market and with authorized banks in the Netherlands.

February 1

The list of goods for whose import the authorized banks could approve declarations and which could be imported, without reference to the exchange control authority, against payment in U.S. or Canadian dollars or in Belgian francs to the credit of a U.S. or Canadian account, was considerably enlarged.

February 23

Authorized banks were permitted to deal in spot and forward transactions in Swedish kronor against Belgian francs, in the Brussels exchange market and with authorized banks in Sweden.

May 4

The amount that could be used from B-accounts of banks in EPU countries for travel in Belgium was raised from Bfr 2,000 to Bfr 5,000 per individual per day.

Authorized banks were permitted to deal in spot and forward transactions in deutsche marks against Belgian francs, in the Brussels exchange market and with their correspondents in Germany.

Authorized banks could approve import declarations only if the country of origin and of dispatch and the country of residence of the seller were the same; otherwise reference to the exchange control authority was necessary.

May 6

The amount of old Italian balances which could be made freely available to B-account holders was raised from Bfr 10,000 to Bfr 250,000. Security holdings of residents in Italy were unblocked.

May 18

Authorized banks were permitted to deal in Danish kroner against Belgian francs, in the Brussels exchange market and with authorized banks in Denmark.

Authorized banks were permitted to effect foreign exchange transactions with authorized banks in Denmark, France, Federal Republic of Germany, Netherlands, Sweden, Switzerland, and United Kingdom in the currencies of any of those countries or against Belgian francs on a nonresident B-account related to any one of those countries. Transfers between the nonresident B-accounts of authorized banks in those seven countries could be effected freely.

May 28

In accordance with a Belgian-Egyptian payments agreement, payments to and from Egypt had to be made through the accounts of authorized banks in the currency of one of the partners to the agreement. The exchange rate for such transactions was fixed by the terms of the agreement on the basis of the parities agreed with the Fund, but the possibility was created of concluding forward exchange transactions in respect of payments for merchandise. For these, the forward premium or discount on the parity rate was to be determined freely between authorized banks and their customers, according to supply and demand.

July 6

All balances in Belgian francs with authorized banks in the names of residents of Italy were made available to them (see May 6, above).

October 5

Authorized banks were permitted to conclude arbitrage transactions in forward exchange, not exceeding three months, in the currencies of Belgium, Denmark, France, Federal Republic of Germany, Netherlands, Sweden, Switzerland, and the United Kingdom, with authorized banks in any of these countries.

November 1

The blocked percentages of the proceeds of Belgian exports to EPU countries were reduced from 20, 16, 12, 8, 6, and 4, to 16, 13, 9½, 6½, 5, and 3, respectively. The blocked percentage of proceeds from capital transfers, and of income from capital transferred from EPU countries into Belgium, was reduced from 32 to 25½ See also footnote 5, above.

November 16

The time limit in which goods purchased from other EPU countries must be paid for was increased from two to three months after date of importation.

December 14

Authorized banks were permitted to deal in spot and forward transactions in Norwegian kroner against Belgian francs, in the Brussels exchange market and with authorized banks in Norway. Spot (but not forward) transactions involving Norwegian kroner or authorized banks in Norway were included in the multilateral arbitrage arrangements (see May 18, above).

Bolivia

Origin and Essential Features

Control over exchange transactions was introduced in Bolivia in 1932 and has been amended at various times. In June 1937, the compulsory surrender of exchange from exports was introduced by a decree, which also gave a priority criterion for the sale of exchange by the Central Bank of Bolivia and contained a list of prohibited exports. Revisions introduced on April 8, 1950 produced a new set of exchange rates for the various specified types of transactions. Various exchange rates and taxes were established for the categories of transactions.

The last major revision was introduced in May 1953. A new par value was established for the boliviano and the exchange system was simplified. All previously existing exchange taxes, multiple import and export rates, retention quotas, and compensation and divisas propias arrangements were eliminated, but the restrictive system continued to be based on multiple exchange rates and quantitative restrictions on imports applied through individual licenses granted on the basis of an exchange budget prepared by the Central Bank and the Ministry of Finance. A tax is levied on sales of exchange at the official rate arising from major mining exports.

Private exports are subject to license. Exports of several minerals are effected by the Banco Minero de Bolivia, which, by law, buys them from private companies. All export receipts must be surrendered at the official market rate. Private gold exports are prohibited. The proceeds of gold produced locally can be negotiated in the free market.

Exchange Rate System

The par value is Bolivianos 190 = US$1. The exchange rate system consists of an official market, where the rates are fixed on the basis of the new parity, and a fluctuating free market, where the rate is regulated by demand and supply. The official market is for all trade transactions, government payments, registered capital, and certain specified invisibles; the free market is for all other items, and is not supervised by the Central Bank. A tax equivalent to Bs 35 per US$1 is levied on sales of exchange at the official rate arising from exports of the Bolivian Mining Corporation.

Producers of domestic gold must surrender the ore to the Banco Minero, which pays them by promissory notes in dollars at the rate of $35 per troy ounce. These notes can be negotiated in the free market, and holders may exchange them for sight drafts in dollars or other currencies at the Central Bank.

Administration of Control

The control system is administered by the Central Bank. As agent of the Ministry of Finance, the Bank prepares annually an exchange budget for various categories of import commodities, which is the basis for granting import licenses, and issues export licenses.

All sales of official exchange are made through the Central Bank or the authorized banks. Banks, hotels, and other private firms may be authorized to operate in the free market. The Central Bank does not intervene in the free market, which is regulated by demand and supply.

Foreign exchange transactions involving the exports of minerals are effected only by the Banco Minero or by the Bolivian Mining Corporation.

Prescription of Currency

Payments with payments agreement countries are made in the currencies and according to the methods laid down in the exchange control regulations for each of the countries involved. Payments for transactions with other countries are usually made in U.S. dollars.

Imports and Import Payments

Within the limits of the exchange available, as indicated by the exchange budget, the Central Bank grants import licenses for the various commodities and for various currencies. Global quotas are established for different commodities and are distributed among the importers. For essential commodities and certain essential consumers’ goods, the sole importer is the Government which, in turn, distributes the goods among merchants or sells directly to the public.

When an approved import license is presented, and after the merchandise has arrived in the Bolivian customs or a letter of credit for import has been opened, authorized banks grant the exchange in the currency and for the amount therein specified.

Payments for Invisibles

Payments for invisibles are subject to a special permit if they are to be eligible for the official market rate. Payments for invisibles incidental to import transactions are treated in the same way as the corresponding imports. Purchases of exchange for government payments and the servicing of registered capital are effected at the official market rate. Exchange for other invisible transactions, with some exceptions, is obtained at the free market rate, without a license being required.

Exports and Export Proceeds

The exportation of a number of specified commodities considered necessary to the national economy is prohibited. All other exports are subject to license. The export of minerals produced by small and medium-sized mining firms is effected through the Banco Minero. The Bolivian Mining Corporation is responsible for exports of the large mining companies (now nationalized).

All exchange receipts from exports, except those received by the Banco Minero, must be surrendered through the authorized banks within 90 days from the issuance of the export license. The Banco Minero surrenders to the Central Bank, 30 days after exportation, the exchange derived from exports of minerals.

A tax equivalent to Bs 35 per US$1 is levied on purchases of exchange at the official market rate arising from exports of the Bolivian Mining Corporation.

Proceeds from Invisibles

Government receipts are surrendered at the official market rate. Exchange derived from other invisibles is negotiated at the free market rate.

Capital

The investment of foreign capital must be registered, and the capital surrendered at the official market rate, in order to obtain the privilege of remitting amortizations and earnings at the official market rate. Earnings up to 15 per cent per annum of registered capital and amortization quotas up to 30 per cent can be remitted abroad at the official rate. Nonregistered capital and earnings thereon are negotiated at the free market rate, without a license being required.

Table of Exchange Rates (as at December 31, 1953)(bolivianos per U.S. dollar)
BuyingSelling
155.00 (Official Rate minus Bs 35 Tax)
Exports of Bolivian Mining Corporation.
190.00191.90
All export proceeds. Registered capital.Government payments. All imports and incidental invisibles. Registered capital.
900.00 (Fluctuating Free Market Rate)900.00 (Fluctuating Free Market Rate)
Invisibles. Nonregistered capital.All other invisibles. Nonregistered capital.

Changes during 1953

May 14

The par value of the boliviano was changed from Bs 60 to Bs 190 per US$1, and the exchange system was simplified. All previously existing exchange taxes, multiple import and export rates, retention quotas, and compensation and divisas propias arrangements were eliminated. The exchange system now consisted of an official market, where the rates were fixed on the basis of the new parity, and a free market, where the rates fluctuated. The official market was for all trade transactions, government payments, registered capital, and certain specified invisibles; the free market was for all other items. A tax equivalent to Bs 35 per US$1 was levied on sales of exchange at the official rate arising from exports of the Bolivian Mining Corporation.

Brazil

Origin and Essential Features

Control over exchange transactions was introduced in Brazil in 1931 and has been amended at various times. In October 1949 practically all imports and exports were made subject to official authorization.

On February 21, 1953 a free market was introduced where invisible and most capital transactions, as well as transactions relating to many minor exports and some specially authorized imports, were effected. On October 9, 1953 the use of this free market was limited to invisible and capital transactions, and an auction system for imports was introduced. Under this system, exchange certificates are auctioned for five different categories of commodities established on the basis of their essentiality. This system provides also for fixed bonuses to be paid to exporters on the basis of exchange surrendered.

Practically all private imports and all exports are subject to licenses or special authorizations. In addition, exports are subject to shipping permits, which are provided if the applications comply with all the regulations in force. Licenses for imports are granted freely to holders of exchange certificates purchased at auction. An exchange tax of 8 per cent on the official rate is applied to nearly all foreign payments except those made through the free market.

Exchange Rate System

The par value is Cruzeiros 18.50 = US$1. The official buying rate is Cr$18.36 per US$1; for specified transactions an official selling rate of Cr$18.82 per US$1 is applied. A surcharge fixed by the Superintendency of Money and Credit is applied to government imports, petroleum products,1 and some other imports (see section on Imports and Import Payments, below). As at December 31,1953, this surcharge was Cr$7.00 per US$1, corresponding to the estimated weighted average of bonuses paid to exporters of coffee and other products. For all other payments an 8 per cent exchange tax applies, resulting in a rate of Cr$20.3256 per US$1, but the effective rate for most private import transactions is obtained by adding to this the price of the related exchange certificate obtained at the auction. These prices, and consequently the effective rates, fluctuate. The effective rate for the proceeds of coffee exports is Cr$23.36 and the effective rate for all other export proceeds is Cr$28.36. These are obtained by adding, to the official rate, bonuses of Cr$5.00 (coffee exports), and Cr$10.00 (other commodities), per US$1. All invisible transactions not directly related to the movement of goods and most capital transactions are effected at a fluctuating free market rate (see Table of Exchange Rates, below).

Administration of Control

The control system is operated by the Bank of Brazil under the direction of the Council of Superintendency of Money and Credit. The Exchange Department of the Bank authorizes incoming and outgoing payments related to most trade transactions and to capital transactions in specified cases. It organizes the auctions of exchange for imports, establishes the total amount and the distribution among the various cities in Brazil where the exchange is auctioned, and issues exchange certificates. Government payments are subject to authorization, but the Exchange Department has no authority to restrict them, provided they are within the budgetary quotas. The Foreign Trade Department issues export and import licenses, classifies import commodities into categories—subject to the approval of the Council of Superintendency of Money and Credit—for the purpose of distribution of exchange availabilities, determines the percentage of total exchange auctioned to be distributed to each category of import commodity, and exercises control over prices, weights, measures, classification, and types declared in export and import operations. The Advisory Commission on Foreign Trade makes suggestions to the Foreign Trade Department regarding the classification of the import products into categories and on those measures which it considers advisable for the development of foreign trade. It also suggests general criteria concerning export and import licensing. Government imports have to be approved by the President of the Republic. Imports of wheat, newsprint, and petroleum products are subject to specific treatment by specialized agencies. All sales and purchases of exchange pass through banks authorized for this purpose.

Prescription of Currency

Prescription of currency is enforced in relation to the currency of the country of origin of the imports, and of the country of final destination of exports, unless specifically authorized otherwise. Payments with payments agreement countries are effected through the respective agreement accounts, usually maintained in “accounting” dollars or in Brazilian cruzeiros; payments with the Sterling Area are effected through Brazilian sterling accounts. Payments with countries with which Brazil has no payments agreements are usually made in U.S. dollars or other freely convertible currencies.

Imports and Import Payments

Except for a few specified items, all private imports into Brazil require import licenses, which, provided the application complies with the regulations in force, are granted freely to holders of exchange certificates purchased at auction, and which are prerequisites for obtaining official exchange at the official rate. The licensing of imports and payments therefor are thus strictly related, and for both purposes imports can be divided into the following groups:

1. Specified commodities for which payment, if necessary, is not effected through the auction system and which are exempt from import licensing; government imports, including imports of wheat; imports without exchange cover; imports by foreign diplomats; tools, capital goods, and luggage belonging to immigrants; goods belonging to persons transferring their permanent residence to Brazil provided these goods are not intended for commercial use; personal luggage of travelers, within value limits; newsprint and paper imports by publishing companies or book printers; maps, books, newspapers, magazines, etc.; objects and materials for educational, social assistance, or religious institutions. Exchange for government imports and for imports of newsprint and other printing paper is allocated directly by the Council of Superintendency. Payments for government imports, including wheat, and for maps, books, newspapers, magazines, etc., are subject to a surcharge of Cr$7.00 per US$1 or the equivalent in other currencies.

2. Imports of petroleum products. In addition to being subject to import licensing, these imports must be authorized by the National Petroleum Council. Exchange is allocated on a half-yearly basis, and purchase of exchange is not effected through auctions, but is subject to a surcharge of Cr$7.00 per US$1 or the equivalent in other currencies (see footnote 1, above).

3. Imports of machinery considered of highest essentiality for the economic development of the country; imports of machinery, equipment, and tools considered of interest to the national economy and financed in foreign currency for a minimum period of one year. Both groups are subject to import licensing. Payments for the former are subject to a surcharge fixed by the Council of Superintendency of Money and Credit, whereas payments for the latter are subject to a surcharge corresponding to the average price of exchange certificates in the relevant category (see 4, below) at the last three auctions.

4. All other imports. These imports are subject to the purchase of exchange certificates at auction and to subsequent import licensing. For the purpose of allocating exchange in accordance with essentiality, these imports are classified into five categories according to the following general criteria:

  • Category I: Essential commodities necessary to promote employment and agricultural production, as well as pharmaceutical products, etc.

  • Category II: Essential raw materials.

  • Category III: Raw materials, highly essential spare parts and equipment.

  • Category IV: Fresh fruits, less essential spare parts and equipment, including those used by very high-cost activities, not to be encouraged.

  • Category V: All other products.

Minimum premiums per U.S. dollar, or the equivalent in other currencies, have been established for each category of imports (see section on Changes during 1953, October 30, below). The minimum and maximum premiums per US$1, for each of the five categories, actually obtained at the auction held on December 29, 1953 were as follows:

Minimum PremiumMaximum Premium
Category ICr$ 16.00Cr$ 18.00
Category II25.0028.00
Category III38.0047.00
Category IV55.0062.00
Category V103.00126.00

The price of the exchange certificates purchased at auction has to be paid within 48 hours2 from the moment of the purchase, and the application for an import license must be filed within the following 8 or 15 days.3 Importers in possession of an exchange certificate and an import license may purchase the exchange at the official rate at any time, for delivery in accordance with the terms of the exchange certificate. However, goods must be shipped within the period of validity of the import license. All payments for private imports are subject to a remittance tax of 8 per cent on the official rate.

As a rule, importers cannot purchase more than US$10,000 worth of exchange certificates at each single auction.4

Payments for Invisibles

Payments for expenses incidental to trade transactions are effected at the same effective rates and conditions as the corresponding imports. All other invisible transactions are effected through the free market and are not subject to the 8 per cent remittance tax.

Travelers may take out freely domestic and foreign currency notes.

Exports and Export Proceeds

All exports, except coffee exports, are subject to export licensing. Coffee exports are subject to authorization by the Brazilian Coffee Institute. Export licenses are granted without limitation except when the exportation is contrary to national security interests or to obligations arising from international agreement. Export licenses are not granted when payment is to be made in an inconvertible currency, the acceptance of which is considered by the Exchange Department to be inconvenient, or when an accumulation of stocks to guarantee domestic supplies is advisable.

All exports are subject to shipping permits, which are issued by the Exchange Department of the Bank of Brazil.

Export proceeds must be surrendered through an authorized bank. A bonus of Cr$5.00 per US$1 or the equivalent in other currencies is paid to exporters of coffee on an f.o.b. basis, and a bonus of Cr$10.00 per US$1 or the equivalent in other currencies is paid to exporters of all other commodities on an f.o.b. basis.

Proceeds from Invisibles

Exchange proceeds from invisibles are transacted through the free market.

Travelers may bring in freely domestic and foreign currency notes.

Capital

The treatment of capital depends on the “degree of interest” it represents for the national economy. Registered loans, credits, and financing of “unquestionable” interest to the economy are transacted at the official exchange rate. The repayment of these loans, and also the transfer of interest thereon up to the annual limit of 8 per cent of the principal, are effected at the official rate, but the surcharge of Cr$7.00 per US$1 is applied. For foreign capital that is of “special” interest to the country and is granted registration, the inflow and outflow are effected through the free market. The transfer of income from such capital, up to 10 per cent, is effected at the official exchange rate plus a surcharge fixed by the Council of Superintendency of Money and Credit. For capital that is of “relevant” interest to the country and is granted registration, the inflow and outflow, as well as the transfer of income, are effected freely at the free exchange rate. However, an executive decree permits the repatriation of such capital, after ten years from the date of its entry into Brazil, at the official rate plus a surcharge to be fixed by the Council of Superintendency of Money and Credit, up to the limit of 10 per cent each year, without prejudice to the right of transfer, at any time, through the free market. The transfer of all other capital and income thereon is effected at the free market rate. The 8 per cent remittance tax is not applied to payments in respect of capital or earnings thereon.

Table of Exchange Rates (as at December 31, 1953)(cruzeiros per U.S. dollar)
BuyingSelling
18.3618.82
Government and official services. Registered loans, credits, and financing of “unquestionable” interest.Government payments. Government imports of wheat. Imports of newsprint. Amortization of registered loans of “unquestionable” interest, within prescribed limits.
23.36 (Cr$18.36 plus Cr$5 Bonus)
Coffee exports.25.82 (Cr$18.82 plus Cr$7 Surcharge)
28.36 (Cr$18.36 plus Cr$10 Bonus)Government and official agencies’ imports. Imports of petroleum products in Category I. Remittance of interest and earnings on registered loans and capital of “unquestionable” and “special” interest, within prescribed limits.
All other exports.30.82 (Cr$18.82 plus Cr$12 Surcharge) Imports of petroleum products in Category II.

36.3256-38.32565 (Cr $18.82 plus 8% Remittance Tax plus Cr’$16-18 Auction Premium)

Category I imports: Coal, agricultural supplies (machinery, fertilizers, insecticides, barbed wire).

45.3256-48.32565 (Cr $18.82 plus 8% Remittance Tax plus Cr $25-28 Auction Premium)

Category II imports: Gasoline, codfish, ores, scrap metals.
52.25 (Fluctuating Free Market (approx.) Rate)53.25 (Fluctuating Free Market (approx.) Rate)
Registered capital of “special” interest and of “relevant” interest. Travel exchange and other items not dealt with in official market.Registered capital of “special” interest and of “relevant” interest, and unregistered capital and earnings thereon not benefiting from other rates. Tourist expenditures.

58.3256-67.32566 (Cr$18.82 plus 8% Remittance Tax plus Cr$38-47 Auction Premium)

Category III imports: Wood, industrial machinery (railway rolling stock, textile machinery, industrial vehicles, aircraft, diesel engines, generators).

75.3256-82.32566 (Cr$18.82 plus 8% Remittance Tax plus Cr$55-62 Auction Premium)

Category IV imports: Fresh fruits, office machinery.

123.3256-136.32566 (Cr$18.82 plus 8% Remittance Tax plus Cr$103-126 Auction Premium)

Category V imports: Commodities not included elsewhere.

Changes during 1953

February 21

Law No. 1807 went into effect, establishing a free market for invisible and most capital transactions, as well as for exchange transactions connected with imports and minor exports. (For a summarized list of the changes introduced by this law, see Fourth Annual Report on Exchange Restrictions, pages 83-85.)

February 24

A list of export products permitted to benefit from the free market arrangement was published. These products were divided into three groups according to the different percentages (15, 30, and 50 per cent) of exchange receipts that could be sold in the free market.

February 25

A list of import products to be transacted at the official rate was published. Only a few import products were not included.

April 27

Two products were added to the list of imports to be effected at the official rate. Some products were added to the list of exports benefiting from the 30 per cent and 50 per cent “mixing” arrangements.

June 15

One export product was granted the 30 per cent “mixing” arrangement.

July 1

It was established that all imports should be effected at the official rate.

July 7

The “mixing” proportion for export products subject to this arrangement was made uniform at 50 per cent.

July 14

A few products were added to the list of exports benefiting from the 50 per cent “mixing” arrangement.

August 1

A readjustment was made of the purchases and sales of exchange at the official rate resulting from the collection of the stamp tax that had been put into force previously (January 1, 1953). Thus the buying rate was fixed at Cr$18.36 instead of Cr$18.38, and the selling rate at Cr$18.82 instead of Cr$18.72.

August 8

The list of export products benefiting from the “mixing” arrangement was reduced, but at the same time the surrender requirement for a number of exports was established at a level significantly below foreign prices.

September 26

Law No. 1991 extended to December 31, 1953 the effectiveness of Law No. 842 (October 4, 1949) regulating foreign trade and establishing the prior license regime.

October 9

Instruction No. 70 of the Council of Superintendency of Money and Credit abolished the free market arrangements for exports and established the auction system for private imports, as well as export bonuses of Cr$5.00 (for coffee), and Cr$10.00 (for other exports), per US$1.

October 30

Instruction No. 74 of the Council of Superintendency of Money and Credit established the following minimum premiums, per U.S. dollar or its equivalent, to be applied to sales of exchange at auction:

Category ICr$10.00
Category IICr$12.00
Category IIICr$15.00
Category IVCr$20.00
Category VCr$50.00

December 29

Law No. 2145 went into effect, regulating foreign trade, creating a new Foreign Trade Department, and regulating the auction system for imports.

Burma

Origin and Essential Features

Exchange control was introduced in Burma in February 1940 arid followed the pattern of exchange control common throughout most of the Sterling Area. The foreign exchange control regulations were codified in 1947. Burma achieved the status of an independent state on January 4, 1948, and has continued as a member of the Sterling Area. Burma’s restrictive system is based on the complete surrender of foreign exchange, which is then allocated by the control authorities for payments for goods, services, capital transfers, and other transactions.

Exchange Rate System

The par value is Kyats 4.76190 = US$1. The kyat has a fixed relationship to the pound sterling of K 13.333 = £1. Rates for other currencies are determined on the basis of the kyat-sterling rate and the rates for other currencies in London, maintained within official limits.

Administration of Control

Exchange control is administered by the Union Bank of Burma, with certain powers delegated to commercial banks authorized for that purpose. Import and export controls are managed by the Ministry of Commerce, but export control powers are also exercised by the State Agricultural Marketing Board, the State Timber Board, and the State Mineral Marketing Board, according to the commodities concerned.

Prescription of Currency

Since Burma avails itself of the payments mechanism provided by the monetary and payments agreements made by the United Kingdom with foreign countries, Burma has detailed regulations prescribing the currencies in which transactions are to be settled. These prescriptions of currency are similar to those used by the United Kingdom and other Sterling Area countries. Payments to other parts of the Sterling Area must be effected in sterling or in the appropriate Sterling Area currency.

Imports and Import Payments

The importation of all goods is subject to regulations, but the prohibition of nonessential and luxury items is largely nominal, except for dollar goods. Certain imports are permitted freely under open general license, while other imports require individual licenses which must be obtained before the goods are shipped from the country of exportation. Licenses normally are granted freely to effect imports from all countries except Canada and the American Account countries.1 If evidence of importation has been or will be produced, the authorized banks automatically provide exchange in the form prescribed in the regulations (see section on Prescription of Currency, above) in payment for all permitted imports.

Payments for Invisibles

All payments for invisibles are subject to licensing, but authorized dealers may sell foreign exchange in accordance with the regulations. In general, payments for items connected with trade are allowed, and payments for other purposes are considered on a case-to-case basis. Remittances of income arising from previous investment are permitted freely on application, subject to presentation of evidence that all taxes due in Burma have been paid.

Exports and Export Proceeds

Burma has a list of prohibited exports: iron and steel, brass, copper and aluminum and scraps thereof, foreign manufactures, and commodities of local origin which it is desired to conserve for local requirements. No license is required for the export of commodities not specifically included in the lists of items subject to license, but the exporter must obtain the export proceeds in a manner satisfactory to the exchange control authorities.

Exporters, except some “established firms,” are required to surrender their foreign exchange proceeds to an authorized dealer in foreign exchange. These “established firms” are permitted to retain the proceeds of their exports to the Sterling Area to pay for imports or for other specified purposes; but for some payments abroad—such as dividends—prior approval is necessary. “Established firms” are required to present monthly statements which are analyzed by the authorities in order to make certain that balances held abroad are not excessive.

Proceeds from Invisibles

Exchange receipts arising from invisibles must be surrendered.

Capital

All outward movement of capital is subject to strict control. However, foreign business enterprises are permitted to repatriate their capital, on clear evidence of having finally wound up business in Burma. Short-term or seasonal capital that has come into Burma with the approval of the exchange control may be repatriated without evidence that the owner has finally wound up business in Burma. Foreign nationals are allowed to repatriate all their personal assets when they retire. It is not the present policy to grant permission to residents to remit funds abroad for investment, but foreign insurance companies operating in the country are permitted to remit their surplus funds to their home offices for this purpose.

Changes during 1953

August 7

The initial par value of the kyat was established at K 4.76190 = US$1.

September 25

Authorized dealers were informed that, when letters of credit covering imports are opened by them, their correspondents overseas should be instructed not to negotiate any draft under letters of credit unless a survey report furnished by an official surveyor or a firm of official surveyors in the country from which the goods are consigned is presented with other relative documents; these instructions would come into force on October 26, 1953 and apply to all imports from Hong Kong, India, Japan, and Malaya.

October 2

Importers were informed that the shipping period to be allowed in import licenses issued by the Minister of Commerce would, in the future, be one year.

October 30

The import of goods with freight payable at destination in kyats was permitted.

November 4

Authorized dealers were advised that the requirement of a survey report (see September 25, above) would, from January 1, 1954, apply to imports from all countries. Exceptions were to be made for certain categories of production and for certain specified importers. (Minor modifications in the list of exceptions were made November 25 and December 15.)2

November 9

Residents and certain other specified persons were permitted to pay all foreign transportation expenses in kyats.

Ceylon

Origin and Essential Features

Ceylon introduced exchange control in September 1939. Since that time it has maintained an exchange control and restrictive system and policies similar, in major respects, to those of other members of the Sterling Area. The last major revision was on June 1, 1948, when exchange control was extended to include transactions with the Sterling Area. Ceylon’s restrictive system is based on the principle of complete surrender of foreign exchange, which is then allocated by the control authorities to payments for goods, services, capital transfers, and other transactions.

Exchange Rate System

The par value is Ceylon Rupees 4.76190 = US$1. The exchange rate system is uniform, the rate for the U.S. dollar being based on the fixed sterling-Ceylon rupee rates and the sterling-U.S. dollar rates in London, maintained between official limits. The market rate as at December 31, 1953 was Cey Rs 4.7375 buying, Cey Rs 4.7625 selling, per US$1.

Administration of Control

All transactions in foreign exchange in Ceylon must be made through authorized dealers, which are banks authorized to transact business in specified currencies in accordance with the exchange control regulations prescribed by the Controller of Exchange. Remittances may also be made through post offices on permits issued by the Controller of Exchange.

Prescription of Currency

Since Ceylon avails itself of the payments mechanism provided by the monetary and payments agreements made by the United Kingdom with foreign countries, Ceylon has detailed regulations prescribing the currencies to be received from abroad in payment for all exports and invisible transactions, and prescribing the currencies to be used for payment for all imports and invisible transactions, depending upon the country or monetary area with which the transactions are conducted. These prescriptions are similar to those used by the United Kingdom and other Sterling Area countries. In general, the regulations governing payments provide that beneficiaries resident in the Sterling Area are to be paid in any currency of the Sterling Area; beneficiaries resident outside the Sterling Area are to be paid only in the currency of the country of origin of the goods, or in sterling or rupees, to the credit of an account in favor of a person in the country of origin or in the same monetary area. Receipts from foreign transactions, in general, may be in local currency, through appropriate nonresident sterling accounts in the United Kingdom, or, in some cases, in specified foreign exchange. Transactions involving deviation from the regulations on prescription of currency require the prior approval of the Controller of Exchange.

Nonresident Accounts

Nonresident accounts consist of accounts of individuals resident outside, and of firms or banks situated outside, Ceylon. The nature and types of nonresident accounts are determined by the payments and monetary agreements made by the United Kingdom (and operative throughout the Sterling Area) with the non-Sterling Area countries. Certain rules apply to the use of these accounts, which differentiate between the accounts of banks and of persons and firms. Although there are no specific provisions to enable the individual nonresident to obtain conversion into his own currency of amounts credited to his account, transfers for banks and correspondents from rupee accounts in Ceylon to the corresponding sterling accounts in the United Kingdom are allowed.

Imports and Import Payments

With the exception of a few items, such as firearms for use by the armed forces, imports of goods are subject to regulation. However, many commodities are governed by Open General Licenses and may be imported freely without individual licenses. Open General License No. 1 authorizes the import of a wide range of commodities from all sources except the dollar area1 and certain other countries.2 Open General License No. 2 lists items that may be imported from the dollar area. Open General License No. 3 permits the import of a few items from all sources except Australia and certain other countries.3 Open General License No. 4 applies to certain goods which may be imported from all sources except the dollar area and certain other countries.4 Open General License No. 5 permits the import of fish from the Maldive Islands. In addition, General Import Licenses are issued to registered Ceylonese importers, enabling them to import specified commodities without quantitative restrictions from certain countries5 excluded from the Open General License facilities. All other items require individual import licenses, and policy concerning their issue is announced annually. No licenses are issued for some products grown or manufactured locally. Some essential items, such as sugar, flour, and rice, are imported only on government account.

An authorized dealer may approve an application for the remittance of foreign exchange or for the transfer of rupees to a nonresident account when the applicant furnishes, or undertakes to furnish, evidence of importation and cost of goods together with a valid importer’s and exchange control copy of the import license. When the goods are under Open General License, the applicant must have made a declaration to that effect on the application. Regulations also prescribe the currencies to be used for payments to different countries and monetary areas (see section on Prescription of Currency, above).

Payments for Invisibles

All payments for invisibles are subject to exchange licensing. Authorized dealers may sell foreign exchange in accordance with a detailed set of regulations. Payments for freight and other services in connection with the international transportation of goods are allowed. Payments for international travel fares are permitted, provided certain conditions are met. Payments for business travel are also allowed, on application. The allocation of exchange for tourist travel is subject to basic rations, which vary according to the country to be visited; however, no basic ration is allowed for tourist travel to the dollar area. Other remittances of a personal nature are granted for reasonable requirements for education, travel, health, or family reasons. Business remittances to any country normally are approved, particularly when they are of a recurring or contractual nature, e.g., insurance premiums. Emigrants (Ceylonese nationals) are permitted to transfer their entire assets if emigrating to a Sterling Area country or to Denmark, Norway, or Sweden, but only up to certain limits if emigrating to any other non-Sterling Area country. Remittances of profits and dividends of nonresidents are permitted freely. Travelers may export foreign exchange declared at the time of entry. The exportation of currency notes is limited to Cey Rs 50 per person per six months.

Exports and Export Proceeds

All exports are subject to licenses issued by the Controller of Exchange. Exports of certain manufactured goods and re-exports of foreign manufactured articles are not allowed except under special permit. Re-exports of nonmonetary gold, silver, and diamonds are not allowed except in special circumstances. In addition to the export licenses for exchange control purposes, issued by the Controller of Exchange, export licenses from the Controller of Exports are required for all but a few commodities.

The exchange control export licenses are not issued unless the exporter undertakes to recover payment for the full value of the goods and to deliver the export proceeds to an authorized dealer in a prescribed manner within six months from the date of shipment. The currencies in which payment for exports to different countries or monetary areas must be received are stipulated in the control regulations (see section on Prescription of Currency, above).

Proceeds from Invisibles

The surrender of incoming foreign exchange at official rates is required for invisible transactions. In addition, specified currencies have to be received for invisible transactions, following the prescription of currency applicable to commodity exports.

Travelers are not restricted in the amounts of foreign funds they may carry into Ceylon in the form of travel credit instruments, but they are obliged to declare, upon entering, their holdings of currency notes and coin. The import of sterling notes in excess of £10 is allowed only with the permission of the Controller, and the import of Indian and Pakistan currency notes, as well as of Ceylon notes, is restricted to a maximum of Rs 100, of which Pakistan notes should not exceed Rs 50. No restriction on the import of other currency notes and coins is in force.

Capital

Certain capital movements between Ceylon and the rest of the Sterling Area are permitted freely; these are the voluntary repatriation of investments of persons resident in the rest of the Sterling Area, the transfer of savings by persons temporarily resident in Ceylon and returning to another Sterling Area country for permanent residence, and the transfer to Ceylon of capital held in the rest of the Sterling Area by Ceylonese nationals. Also, transfers of capital into Ceylon are permitted for direct investment in Ceylonese businesses or for the establishment of branches or agencies of concerns resident in the United Kingdom or in the rest of the Sterling Area, if the authorities are satisfied that such transfers are for desirable trade and commercial purposes.

Different regulations cover capital movements between Ceylon and non-Sterling Area countries. Generally, inward transfers for investment in approved projects are permitted freely. Remittances of a capital nature—e.g., to purchase securities, properties, annuities, etc., abroad—are restricted. Securities owned by residents and on which the principal, interest, or dividends are payable (or the holder has an option to require payment of the principal, interest, or dividends) in either U.S. dollars or Canadian dollars have to be registered with the Controller, and no person is allowed, except with the permission of the Minister of Finance, to sell or transfer such securities. Since the end of 1949, capital invested in Ceylon by a non-Sterling Area resident may be repatriated at his request up to the amount of the original investment, provided the investment has received prior approval.

Changes during 1953

March 11

Free limits for personal remittances to Sterling Area countries through post offices were reduced from Cey Rs 100 to Cey Rs 50 per month for non-nationals only; and for those who maintain current bank accounts, from Cey Rs 200 to Cey Rs 100 per month.

Basic travel rations were changed as follows: (1) for travel to India, limits were raised from Cey Rs 500 to Cey Rs 1,000 per adult for one calendar year, except that the ration for travel to South India was limited to Cey Rs 400 per adult; (2) the basic ration of £500 per adult for travel to non-dollar countries other than Burma, India, Malaya, and Pakistan was to cover a four-year period instead of the previous three-year period, which commenced on July 1, 1951.

The amount in currency notes and coin that travelers were allowed to take out of Ceylon was reduced from the equivalent of Cey Rs 140 per month to the equivalent of Cey Rs 100 per quarter.

March 26

All exports of Ceylonese produce to China were brought under license, and the Rubber Commissioner was designated as the sole exporter of all Ceylonese produce.

March 30

The sale of foreign exchange or the opening of letters of credit in foreign currency, for the following purposes, was made subject to prior approval of the Controller of Exchange: (1) shipments from countries outside the Sterling Area to countries in the Sterling Area other than Ceylon; (2) shipments between Sterling Area countries other than Ceylon; (3) imports intended for transshipment or reshipment outside Ceylon.

May 1

All trade between Ceylon and Austria, as well as between Ceylon and countries in Eastern Europe,6 was brought under government control. Imports from these sources by non-Ceylonese nationals were restricted to items imported by them in 1952, but without limitation as to quantity and value.

May 5

The period allowed for the submission of the exchange control copy of the customs entry and the customs stamped invoice, in respect of imports for which exchange has been released, was reduced as follows: (1) from three months to one month from the date of release of the exchange for imports from Burma, India, Iran, Iraq, Malaya, Pakistan, and Saudi Arabia; (2) from three months to two months from the date of release of the exchange for imports from other territories.

May 13

Free limits for personal remittances to Sterling Area countries through post offices were reduced from Cey Rs 50 to Cey Rs 30 per month for non-nationals only; and for those who maintain current bank accounts and also pay income tax, from Cey Rs 100 to Cey Rs 50 per month.

Basic travel rations were changed as follows: (1) for Malaya, Burma, Pakistan, and India other than South India, the limits were to cover a period of two years commencing January 1, 1953 instead of one calendar year, and Indonesia, Iran, Iraq, and Saudi Arabia were added to this group; (2) for South India, the basic ration was reduced from Cey Rs 400 per adult for one calendar year to Cey Rs 250 per adult once in every two years beginning January 1, 1953; (3) for other countries (excluding the American Account Area and Canada), the basic ration was reduced from £500 per adult for a four-year period to £400 per adult for the same period. Further, the permissible amount of notes and coins that travelers were allowed to take out was reduced from the equivalent of Cey Rs 100 per person per quarter to Cey Rs 50 per adult per six months.

July 1

The Government of Ceylon’s import monopoly of rice, flour, and sugar, which was due to expire in June 1953, was extended for four more years commencing July 1953.

August 15

The temporary exchange control legislation under the Defence (Finance) Regulations as extended were superseded by bringing into operation Exchange Control Act No. 24 of 1953.

September 30

All trade with Yugoslavia was brought under government control. Imports from Yugoslavia by non-Ceylonese nationals were restricted to items imported by them in 1952, but without limitation as to quantity and value.

November 16

Amendments were published adding further commodities to the lists of goods importable under Open General Licenses and under General Import Licenses. The latter were made applicable to imports from Albania, Austria, Bulgaria, China, Czechoslovakia, Estonia, Hungary, Latvia, Lithuania, Poland, Rumania, U.S.S.R., and Yugoslavia, and these countries were excluded from the facilities of the Open General Licenses.

November 26

Restrictions on certain imports from dollar and soft currency countries were relaxed by revising the Open General Licenses for imports.

Open General License No. 5 was introduced for imports from the Maldive Islands.

Chile

Origin and Essential Features

Exchange control was introduced in Chile in 1931 and has since undergone a number of changes. Under a new exchange control law of November 21, 1950, the system was codified and certain administrative changes made. Payments and receipts of exchange for nontrade transactions were permitted freely through the free market, although payments by commercial enterprises continued to be subject to license. Provision was made for a transfer guarantee to be extended to registered foreign capital. On July 7, 1953, two decrees were enacted for the purpose of simplifying the rate structure by eliminating the granting of preferential rates for nearly all payments; but subsequent decrees largely re-created the situation which had existed before that date, although nearly all private imports continued to be effected in the banking rate sector (see note to Table of Exchange Rates, below).

The main features of the restrictive system, at present, are multiple exchange rates on both the buying and selling sides, a legal fluctuating free market for minor transactions, and quantitative restrictions on imports. In addition, special compensation arrangements are in effect between gold and wine exports on the one hand, and specified less essential and luxury imports on the other.

Exports are subject to license, except exports of copper, iron, iodine, and nitrates. Export proceeds must be surrendered, with certain exceptions.

Exchange Rate System

The par value is Chilean Pesos 110 = US$1, which applies to most exchange transactions. For exports of goods and services, however, there are several other rates, including two rates resulting from compensation arrangements for exports of wine and newly mined gold. For imports of goods and services, there are two additional fixed official rates, plus a free market rate and the two rates resulting from compensation arrangements mentioned above. Each of these rates applies to a specified category of goods and services (see Table of Exchange Rates, below).

Administration of Control

The exchange control system is operated by the National Foreign Trade Council, an autonomous public agency. The Council grants export and import licenses, and it must be consulted by the banks before they sell exchange to licensed importers. All exchange transactions are carried out through the Central Bank of Chile or the authorized banks, except those made on the “nonbanking free market” at the fluctuating free brokers’ rate (see Table of Exchange Rates, below).

Prescription of Currency

Payments for transactions with Argentina, Brazil, Ecuador, France, the Federal Republic of Germany, Spain, and the United Kingdom must be made according to the method and in the currency established in the regulations that give effect to the terms of the payments and compensation agreements with these countries. This applies also to the payments under special arrangements entered into by the Nitrate and Iodine Sales Corporation (a public agency) for exports of nitrates and iodine to Belgium, Denmark, Italy, Netherlands, Portugal, Spain, and Sweden. Exports of copper and iron must be paid for in U.S. dollars.

Imports and Import Payments

All imports are subject to license. The importation of certain luxury goods and of goods of a type produced domestically is prohibited. Licenses are granted to established importers up to the limit of their individual quotas, which are fixed on the basis of an exchange budget prepared by the National Foreign Trade Council. Exchange to pay for nongovernmental imports of an essential nature is provided at the official rate. For permitted imports of listed luxury goods, import licenses are granted up to the limit of the exchange receipts from exports of wine and newly mined domestic gold. Exchange quotas are fixed on the basis of the availabilities of the various types of exchange and, particularly, on the basis of trade and payments agreements.

Payments for licensed imports must be approved by the National Foreign Trade Council. Payments for import transactions with payments agreement countries must be made in the currencies and according to the methods laid down in the exchange control regulations (see section on Prescription of Currency, above).

Payments for Invisibles

Payments abroad at fixed rates in respect of invisibles require licenses; minor payments may be made through the free market.

Exports and Export Proceeds

With the exception of copper, iron, nitrates, and iodine, exports require licenses. The exportation of certain specified commodities is prohibited by the Government. For exports of agricultural products, the Minister of Economy has issued specific regulations that must be followed by the National Foreign Trade Council, which grants the export licenses.

Export proceeds must be surrendered to the Government at the exchange rate established for each transaction. Foreign exchange derived from exports of copper, nitrates, iodine, and iron by foreign-owned mining companies must be surrendered at the rate of 19.37 pesos per US$1 up to an amount equivalent to the legal cost of production, which is fixed quarterly. All other exchange proceeds from exports must be surrendered entirely. The proceeds of exports of wine and newly mined domestic gold may be used for the importation of designated luxury goods.

Proceeds from Invisibles

Receipts from invisibles are dealt with at the various fixed rates. Exchange receipts from tourists may be sold in the free market.

Capital

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

A decree, effective November 26, 1953, makes new foreign investments subject to separate, individual agreements, under which interest and profits can be freely remitted abroad. Under such agreements, however, amortization will not normally be allowed to commence before five years have elapsed, and only in exceptional cases will full repatriation within ten years be permitted.

Table of Exchange Rates (as at December 31, 1953)(pesos per U.S. dollar)
BuyingSelling
19.37
Sales of exchange by the large mining companies to cover legal cost of production.
31.00131.101
Consular fees and other taxes.Imports of drugs, sugar, newsprint tallow, and certain government imports.
48.401
Exports of processed and semiprocessed copper.
60.00160.101
Exports of quillai, alpaca and llama wool, oak and laurel lumber, untanned hides and skins. Insurance and rail freights.Other government imports and payments.
77.50*1
Exports of sheepskins and sheep’s wool.
85.00*1
Exports of seaweed.
94.20*1
Exports of imported products.
100.00*1
Exports of lentils, certain types of beans, and rice.
110.00* (Official Rate)110.00* (Official Rate)
Most exports and invisibles. Approved capital.Most imports and invisibles. Approved capital.
170.00* (Official Rate plus 60 Pesos)170.00* (Official Rate plus 60 Pesos)
Wine exports.Certain specified less essential and luxury imports.
220.00 (Fluctuating Free Brokers’ Rate)220.00 (Fluctuating Free Brokers’ Rate)
Travel receipts.Travel expenses.
248.00 (Fluctuating Rate)2248.00 (Fluctuating Rate)
Exports of newly mined gold.Certain specified luxury imports.
* See Note to table, p. 82.* Note: Since this table is expressed in terms of U.S. dollars, it does not reflect the rates effective for other currencies. In the Chilean regulations establishing the application of the various rates, the banking rate (corresponding to the par value) is referred to without mentioning specifically a rate of 110 pesos. The rates of 77.50 pesos, 85.00 pesos, 94.20 pesos, and 100.00 pesos represent “mixing” rates, obtained by calculating prescribed percentages at the rate of 60 pesos and the balance at the banking rate. Receipts in all currencies are treated in this way, but since the banking rate of the free U.S. dollar is stabilized, while the rates for other currencies fluctuate, the latter are not related to the U.S. dollar rate at the par values agreed with the Fund. For example, accounting dollars established under the terms of payments agreements with the Federal Republic of Germany and Brazil were quoted at 145 pesos and 130 pesos, respectively, while the free sterling rate at 418 pesos gave a cross rate for the free U.S. dollar of approximately 149 pesos. In view of the fact that products, some or all of whose export proceeds involve surrender at the banking rate, are exported for non-dollar currencies the cross rates of which are not related at the par value of 110 pesos, the figures marked with an asterisk are only approximate.

Changes during 1953

February 16

A decree was issued listing imports that could be effected at the preferential exchange rates of 31.10 pesos and 60.10 pesos per US$1 and those that could be imported only against the surrender of gold, i.e., at the “gold” rate.

May 19

Importers of commodities payable at the free banking rate were required to provide 30 per cent of the exchange within 30 days of the issuance of the license.

July 7

Decree No. 742 stipulated that the free banking rate of 110 pesos per US$1 would apply to all merchandise imports included in Chile’s 1953 exchange budget. Decree No. 741 provided that the free banking rate would apply to most outgoing invisibles in the exchange budget. Decree No. 737 decreased the list of items that could be imported against the surrender of gold.

The requirement that importers of commodities payable at the free banking rate provide 30 per cent of the exchange within 30 days (see May 19, above) was canceled.

September 17

Decree No. 985 re-established preferential rates for various invisibles and capital movement payments.

October 5

The par value of the Chilean peso was changed from 31.00 pesos to 110.00 pesos per US$1. The “wine” rate was changed from 20 pesos over the free banking rate to 60 pesos over the par value rate.

October 16

Decree No. 119 changed to 110 pesos per US$1 the rate applicable to the major portion of proceeds of nitrate exports.

November 26

A new decree established the conditions for the servicing and repatriation of new foreign investments. All future capital transfers would be subject to separate agreements, under which interest and profits on such investments could be remitted freely abroad, but amortization could not commence before five years had elapsed.

China (Taiwan)1

Origin and Essential Features

Exchange control was first introduced in Taiwan on June 15, 1949. The present system has operated since April 9, 1951. Control is applied to all foreign trade and exchange transactions and there is no recognized free market. The structure of the restrictive system in Taiwan rests on a restrictive import licensing policy and restrictions on payments for invisibles and capital.

Exchange Rate System

There is no par value for the New Taiwan Dollar. All exchange transactions take place at officially fixed foreign exchange deposit certificate rates, which for the U.S. dollar are NT$15.55 buying, and NT$15.65 selling, per US$1. The Bank of Taiwan also quotes foreign exchange deposit certificate rates for pounds sterling, Hong Kong dollars, and Malayan dollars, but these rates are not related at the par values agreed by the Fund for these currencies.2 A 20 per cent defense tax on the amount of the foreign exchange allocated is levied on most imports.

Administration of Control

The exchange control system in Taiwan is operated by the Bank of Taiwan, through which all sales and purchases of foreign exchange must be effected.

Prescription of Currency

Export receipts must be obtained in U.S. dollars, Hong Kong dollars, pounds sterling, or, in a few cases, Malayan dollars. There are no legal obligations prescribing the method or channel of payment to persons abroad (except for Japan, trade with which is conducted through a special settlement account under the terms of an agreement). Payments must be made in U.S. dollars or pounds sterling, according to the currency area involved, and hard currency generally is not provided for payments to soft currency countries where the Bank of Taiwan has balances in those currencies.

Nonresident Accounts

The exchange control system does not differentiate between the accounts of residents and those of nonresidents.

Imports and Import Payments

All imports require individual import licenses. Imports of certain specified luxuries are prohibited, and imports of specified commodities, which may be produced locally or of which there are sufficient stocks, are temporarily suspended. Private importers must submit applications to a Preliminary Screening Committee on Imports, whose recommendations are subject to the final approval of the Foreign Exchange and Trade Control Commission. Private imports are subject to a 20 per cent defense tax on the amount of the foreign exchange allocation, but imported industrial supplies, equipment, and raw materials allocated directly to final users are exempted from payment of the tax, subject to the approval of the Foreign Exchange and Trade Control Commission. This defense tax on imports is collected by the Bank of Taiwan on behalf of the Government at the time when payment is made for the necessary exchange. The proceeds of the tax are deposited in a special account with the Bank of Taiwan.

When the import license is granted, the holder is automatically entitled to obtain the necessary foreign exchange from the Bank of Taiwan. Payments are effected either in U.S. dollars, pounds sterling, Hong Kong dollars, or Straits dollars, for which currencies there are officially quoted rates.

Payments for Invisibles

Payments to nonresidents in respect of invisibles are restricted by a quota fixed monthly by the authorities (except government payments and trade items, such as freight and insurance, where permission to effect payment is determined by the approval to import the related commodities). Applicants for exchange for invisibles must apply to the Preliminary Screening Committee for Outward Remittances, which passes its recommendations to the Foreign Exchange and Trade Control Commission for final decision. In general, reasonable amounts of foreign exchange are granted for transfer of reinsurance premiums and for travel other than pleasure. Payments in respect of invisibles are authorized at the certificate rate. Travelers leaving Taiwan may take with them no more than US$200 of foreign currency. There are no limitations on the export of domestic currency.

Exports and Export Proceeds

All exports require licenses, which are granted after the Bank of Taiwan has examined and verified the amount of foreign exchange involved in the export.

All export proceeds must be obtained in U.S. dollars, Hong Kong dollars, pounds sterling, or, in a few cases, Straits dollars. These export proceeds must be surrendered to the Bank of Taiwan, either for local currency or for foreign exchange deposit certificates. The foreign exchange deposit certificates are of two kinds—transferable and nontransferable. The nontransferable certificates can be used only in payment for imports and are valid for four months, after which they can only be sold for local currency to the Bank of Taiwan. The transferable certificates are issued to any person against payment in U.S. dollar notes or gold and are valid for two months, during which time they can be sold to the Bank of Taiwan or exchanged for nontransferable certificates.

Proceeds from Invisibles

All residents of Taiwan receiving foreign exchange are required to surrender their receipts to the Bank of Taiwan and may take either exchange certificates or local currency in return. Current accounts in foreign currencies may be maintained with the Bank of Taiwan with deposits of foreign currencies or proceeds of inward remittances. Such deposits may be remitted outward or withdrawn in local currency at the prevailing certificate rate, at the depositor’s option. Travelers entering Taiwan may bring in any amount of foreign currency and either hold or surrender it. There are no limitations on the import of domestic currency.3

Capital

Capital payments due to nonresidents normally are not approved, and the repatriation of foreign capital is allowed only in special circumstances. New capital investments abroad by residents are prohibited. Residents are permitted to hold foreign exchange representing capital receipts and may dispose of this exchange by surrendering it to the Bank of Taiwan for exchange certificates or local currency or may deposit it in a current account in foreign currency.

Changes during 1953

January 5

The mixed buying rate of NT$12.37 per US$1, applicable to government exports of camphor and salt, was eliminated. The NT$14.49 rate was limited to sugar and rice exports, while all other receipts and payments were settled at the certificate rates of NT$15.55 buying, and NT$15.65 selling, per US$1.

September 12

The import-exchange system was simplified. The allocation of import exchange, previously on a weekly basis, was changed to a bimonthly basis; the 100 per cent deposit required at the time of application for import licenses was abolished; an exchange budget showing the exchange available for each importable commodity for each bimonthly period was published; exporters were explicitly permitted to engage in importing; import quotas would be allocated equally to both importers and exporters (previously a larger allocation had been given to importers than to exporters) and a 20 per cent defense tax on most private imports was introduced.

September 14

An import budget with commodity quotas was introduced; the import procedure was simplified and advance deposits eliminated.

Note: Effective January 1, 1954, the use of the NT$14.49 rate was abolished, so that all receipts and payments in U.S. dollars would be settled at the certificate rates of NT$15.55 buying, NT$15.65 selling, per US$1.

Colombia

Origin and Essential Features

Exchange controls and restrictions were originally introduced in Colombia in September 1931. The last major revision occurred on March 20, 1951, when a complete change in the exchange and import control system took place. Except for a list of prohibited imports (specified luxury or locally produced items), practically all licensing restrictions on imports were removed, leaving only a prior registration procedure for permitted imports; the basic buying and selling rates of Ps$1.95 and Ps$1.96 per US$1 were depreciated to Ps$2.50 and Ps$2.51, respectively; the multiple exchange rates were considerably simplified. However, multiple rates still result from the application of exchange taxes, the existence of a mixed effective rate for proceeds of coffee exports, the use of negotiable “export vouchers” for minor exports and nonessential imports, and the existence of a gold exchange market.

Exchange Rate System

The par value is Colombian Pesos 1.94998 = US$1. The official rates are Ps$ 2.50 buying, Ps$2.51 selling, per US$1. Taxes of 2 per cent, 3 per cent, and 6 per cent yield three additional selling rates of exchange, and a mixing arrangement for proceeds of coffee exports yields another buying rate. Other effective buying and selling rates arise from an “export voucher” system, under which the exchange accruing from certain minor exports may be used to pay for specified imports that otherwise are prohibited. These vouchers are negotiable and command a premium in a free market. Another free market exists in which gold export proceeds may be acquired to make payments not authorized at the official rate (see Table of Exchange Rates, below).

Administration of Control

To make imports, exports, or exchange payments to foreign countries, prior application for the registration of the transactions must be made at the Exchange Registration Office, which is part of the Bank of the Republic. Purchases and sales of exchange may be effected either with the Bank of the Republic or with the commercial banks, which act as authorized agents of the Bank of the Republic.

Prescription of Currency

Payments to and receipts from the Belgian Monetary Area, Denmark, Ecuador, Finland, Federal Republic of Germany, Italy, and Spain, including payments for goods originating in those countries purchased from third countries, must be effected through the clearing account appropriate to the origin of the goods in accordance with the provisions of the respective bilateral payments agreements. Payments to and from the Sterling Area are made in U.S. dollars or “American Account” sterling. Payments to Austria, France, and Sweden, in accordance with commercial arrangements with those countries, are made in U.S. dollars.

Nonresident Accounts

Nonresident accounts consist of sight, time, savings, and current account peso deposits held in Colombia in favor of nonresidents. Prior registration for credits and debits to these accounts is not required, with the exception of debits representing remittances abroad. Balances in these accounts may be converted into foreign exchange only when they are derived from imported and registered capital, or when the transfers are intended to pay for a transaction of obvious advantage to the country.

Imports and Import Payments

The import is prohibited of certain luxury goods and goods of a type produced locally.1 All other imports require prior application for registration. If the application meets all legal requirements, approval is stamped on the application form, i.e., registration is granted. A stamp tax of 3 per cent is collected on each import registration, except for official items, when they are not for commercial use, and imports of foreign capital goods. The tax is not refundable. In addition, a cash deposit of 10, 12, 15, 20, or 30 per cent of the value in Colombian pesos of the import, depending on the class of the import, has to be made as a prerequisite to the registration.

Certain items in the prohibited list (lightweight automobiles weighing up to 1,240 kilograms, wines, chinaware, glass objects, radios, ceramics, and dried fruits) may be imported when they originate in, and are imported from, countries maintaining a balanced trade with Colombia or having trade agreements with Colombia. In this respect, the following countries have been specified to date: Austria, Belgium-Luxembourg, Canada, Denmark, Ecuador, Finland, France, Federal Republic of Germany, Italy, Spain, Sweden, United Kingdom, and United States.

Under the “export voucher” system, other prohibited imports (such as automobiles weighing over 1,240 kilograms, preserved or canned meats and fish, radio-electric appliances, cosmetics, watches, lighting fixtures, motor and sailing craft) may be imported into Colombia with “export vouchers” received upon the surrender of exchange earned from certain minor exports.

Payments for imports require exchange registration. Registration is granted upon submission of the import registration and evidence that the goods have been shipped. Payments are effected at the basic selling rate of Ps$2.51 and must be made in the appropriate currency (see section on Prescription of Currency, above) and, in some cases, require the payment of taxes and for certain nonessential items, the surrender of an “export voucher.”

Payments for Invisibles

Payments and remittances abroad require prior registration. Certain essential payments may be effected at the selling rate of Ps$2.51 without tax. Other authorized payments are effected at this rate plus the stamp tax or both the stamp tax and the resident tax. Exchange for travel abroad is granted up to a limit of US$300 per year per person at the rate of Ps$2.51 plus taxes totaling 6 per cent. Students meeting the legal requirements are allowed remittances of up to US$250 or US$150 per month, depending on the type of study, at the rate of Ps$2.51 free of tax. For medical treatment outside Colombia, up to US$1,500 is granted at the selling rate of Ps$2.51 plus 6 per cent total taxes. Earnings on registered foreign capital may be transferred at any time at the rate of Ps$2.51 plus a 3 per cent stamp tax. All other nontrade payments may be effected freely in the gold exchange market.

Exports and Export Proceeds

All exports require prior application for registration. If the application meets all legal requirements, approval is stamped on the application form, i.e., registration is granted. Exchange proceeds must be surrendered as follows: within 10 days for foreign exchange derived from coffee exports or other exports payable by letter of credit usable upon presentation of the bill of lading; within 6 months for foreign exchange from shipments on consignment or from exports other than coffee, not reimbursable by credit payable upon presentation of the bill of lading; within one year for foreign exchange derived from the export of articles manufactured in the country. Minimum surrender prices are established for some exports, for example, coffee and bananas. Part of the proceeds from coffee exports are purchased at the Ps$1.95 rate and the balance at the Ps$2.50 rate. The percentage to be surrendered at the Ps$2.50 rate is increased by 1½ Per cent each month until the rate reaches the Ps$2.50 level.2 All other export proceeds are surrendered entirely at the Ps$2.50 rate. However, exporters of specified minor exports (some agricultural products, salt, tanned hides, leather manufactures, designated textiles, cement, beer, sugar, sulphur, tobacco, nonprecious metals, nonmetallic minerals) are granted, upon surrender of the exchange, “export vouchers” which give the exporter the right to import, in an amount equivalent to the value of the exchange surrendered, specified goods in the prohibited list. These vouchers are negotiable and are sold at a premium in a free market. Proceeds from exports of gold are exempt from the surrender requirement; such exchange may be sold in a free market, at fluctuating rates, for making payments for nontrade transactions. Exchange receipts accruing from exports and services must be in the appropriate currency.

Proceeds from Invisibles

All exchange receipts from invisibles must be surrendered at the Ps$2.50 rate.

Capital

The importation of foreign capital in the form of foreign currency or industrial, farming, or mining machinery and equipment is freely permitted. Such capital, however, must be registered and the imported foreign exchange must be surrendered at the Ps$2.50 rate, if the investor wishes to retain the right to re-export the capital or to remit profits. The same regulations and rights apply to foreign cash credits granted to persons domiciled in Colombia, provided the time for reimbursement of the credits is not less than one year and the interest does not exceed 8 per cent annually; profits over this amount of interest are not considered as earnings on foreign capital entitled to the official exchange rate. Transfers of capital abroad require prior approval, which is granted automatically if the capital investment has been properly registered. Transfers of capital are subject to a 3 per cent stamp tax.

Table of Exchange Rates (as at December 31, 1953)(pesos per U.S. dollar)
BuyingSelling
2.384 (21% at Ps$1.95 and 79% at Ps$2.50)
Exports of coffee.
2.502.51
All other exchange proceeds, except from gold exports.Official payments, including imports for use or consumption by the organizations concerned. All other permitted imports3 not payable with “export vouchers” (see note, below). Certain invisibles, e.g., students’ essential expenses up to specified limits.
2.56 (Ps$2.51 plus Reduced Stamp Tax of 2% at Ps$2.50)
Certain foreign banking services and payments of certain organizations.
2.585 (Ps$2.51 plus Stamp Tax of 3% at Ps$2.50)
Most commercial invisibles. Registered capital.
2.66 (Ps$2.51 plus Stamp Tax of 3% and Resident Tax of 3%, both at Ps$2.50)
Other specified invisibles, e.g., travel abroad up to certain limits and additional transfers to make up the cost of aviation courses.
3.16 (Fluctuating Gold Market Rate)3.16 (Fluctuating Gold Market Rate)
Exports of gold.All other nontrade payments.
Note: Other effective buying and selling rates based on the official rates of Ps$2.50 and Ps$2.51 plus a free market premium (about Ps$0.98 per US$1 as of December 31, 1953) arise from the “export voucher” system (see section on Exports and Export Proceeds, above). These rates apply to minor exports and nonessential imports.

Changes during 1953

February 10

Customs houses were allowed to clear into Colombia merchandise for which the import registration had expired, provided it arrived within 30 days after expiration of the license and was still a permissible import.

April 16

The list of imports permitted under the “export voucher” system but otherwise prohibited was considerably expanded by the inclusion of such products as automobiles weighing over 1,240 kilograms, various canned foods, perfumes and cosmetics, tableware, precious and semiprecious stones, watches, pianos, and radio-electric appliances.

April 23

Commercial banks were permitted to debit and credit nonresident accounts in local currency without the requirement of prior registration. However, a prior license was still required for debits representing remittances abroad.

May 22

Foreign merchandise offered in bids for official or semiofficial contracts or purchases would be acceptable only if the country of origin of the merchandise had balanced trade or a trade agreement with Colombia.

June 1

The cash deposit requirement of 10 per cent on import registrations was raised to 12, 15, 20, or 30 per cent for specified classes of imports.

July 22

Free trade in gold, including exports, was established, and the surrender requirement for gold export proceeds was removed. Foreign exchange from gold exports could be deposited in authorized banks and sold freely at a fluctuating exchange rate. Exchange purchased on this market could be used for any purpose. Exports of gold manufactures were removed from the “export voucher” system.

August 20

The list of imports authorized under the “export voucher” system was extended considerably, to include such items as certain foodstuffs, cigars, furniture, lighting fixtures, inland motor vessels, some games and musical instruments, and smoking accessories. The list of eligible exports was expanded to include certain kinds of lumber.

August 28

The amount of exchange granted for travel abroad was reduced from US$1,200 to US$300 per year, but exchange allocations for persons traveling abroad for medical treatment, and for students, were not affected.

September 7

It was specified that for foreign cash credits granted for at least one year, only the interest payments on the loans and the principal could be withdrawn at the official rate of exchange. Profits over the amount of interest were not considered as entitled to the official rate.

October 6

The provisions of the decree relating to official and semiofficial purchases abroad (see May 22, above) were no longer applicable to countries maintaining freedom of exchange and of imports.

Costa Rica

Origin and Essential Features

Exchange control was introduced in Costa Rica on January 16, 1932, and since then has been subject to various modifications. The last major revision was made on September 29, 1951, when the present International Payments Law was enacted and various exchange surcharges applied to imports were abolished. There are virtually no restrictions applied to transactions eligible for the official exchange market, and the exchange controls are operated principally to ensure that such transactions pass through that market. All other exchange transactions are permitted freely through a free market where a higher exchange rate prevails. Foreign exchange derived from exports and certain invisibles must be surrendered in the official market, but the sale in the free market of a specified percentage of the proceeds of certain exports is permitted.

Exchange Rate System

The par value is Costa Rican Colones 5.615 = US$1. Multiple rates arise from the coexistence of an official and a free market. The official rates are Ȼ 5.60 for exports, Ȼ 5.67 for essential imports, per US$1. The selling rate in the free market, covering all other imports and almost all invisibles, has been maintained at Ȼ 6.65 per US$1 since July 23, 1952. The use of this market for part of the proceeds of some exports results in an effective rate of Ȼ 6.27 (see Table of Exchange Rates, below).

Administration of Control

The exchange control system is operated by the Central Bank of Costa Rica, and all official market transactions must be licensed by the Bank, which processes applications for payments in chronological order. Purchases and sales of official market exchange are conducted through the Central Bank or through authorized banks. Free market transactions are conducted through the commercial banks and private dealers, independently of the Central Bank, but the Central Bank has the right to conduct operations on the free market with the object of trying to regulate the rate of exchange in that market.

Prescription of Currency

Nearly all exchange transactions in Costa Rica are effected in U.S. dollars. Costa Rica does not maintain any payments or clearing agreements with other countries.

Imports and Import Payments

An importer may order any goods from abroad and have them entered through the Costa Rican customs without any controls or restrictions. Control over imports arises only in regard to payments for essential imports at the Ȼ 5.67 rate. These imports consist of about 512 items included in a “List of Primary Needs,” and represent approximately 40 per cent of total imports.

An exchange license from the Central Bank must be obtained to effect payments for imports at the official market rate. In general, these licenses are issued automatically and without delay. Payments for nonessential and luxury imports must be made through the free market, where the importer can purchase the necessary exchange without limitation. Under contracts signed with the Costa Rican Government, a foreign-owned banana company can effect certain essential imports in lieu of surrendering exchange proceeds arising from the export of its products.

Payments for Invisibles

Invisibles which are permitted at the official selling rate are government payments, earnings of registered foreign capital invested after January 30,1933 (other than of foreign investments governed by special contracts), up to 10 per cent annually of the investment, and specified expenses of students who are taking specialized courses abroad and are registered with the Central Bank. These transactions require an exchange license, which is obtainable upon presentation to the Bank of an application with appropriate substantiating documents. Payments for all other invisibles are not controlled and are effected through the free market.

Exports and Export Proceeds

The Central Bank supervises exports to assure a supply of exchange for the official market. Export licenses from the Central Bank are necessary for the physical exportation of merchandise, and they are usually granted if the exporter agrees to surrender the exchange proceeds at the official rate; the Bank may require the exporter to provide a guaranty in this respect. Exports of goods in domestic short supply may be restricted. There is a list of strategic materials, whose export to communist-dominated countries is prohibited.

Exchange proceeds of exports must be surrendered at the Ȼ 5.60 rate. However, for certain commodities, such as bananas grown by independent producers, tuna fish, gold, tomatoes, cardboard, furniture, etc., the Central Bank, following approval by the Ministry of Economic Affairs and the Ministry of Agriculture, has authorized exporters to retain 65 per cent of their export exchange for sale in the free market, resulting in an effective rate of about Ȼ 6.27 per US$1.

Re-exports of foreign goods are subject to the regulations applying to exports; but if the goods have been imported at the free market rate, this rate will apply to their re-export.

Proceeds from Invisibles

The only exchange receipts from invisibles required to be surrendered at the official rate are insurance indemnities covering imports, receipts of the Government and public entities, and sales of exchange by foreign concessionnaires whose contracts require such sales in the official market. Receipts from other invisibles may be sold in the free market.

Capital

Exchange receipts from foreign capital registered with the Central Bank must be surrendered at the official rate. Receipts from nonregistered and repatriated capital may be sold in the free market. The granting of official market exchange for amortization of registered foreign capital is subject to exchange license by the Central Bank, which decides on the applications on a case-to-case basis and in the light of availability of exchange for that purpose. Certain foreign-owned investments are dealt with individually under special contracts. Transfers of nonregistered capital may be effected without limitation at the free market rate.

Table of Exchange Rates (as at December 31, 1953)(colones per U.S. dollar)
BuyingSelling
5.605.67
All exports except those at Ȼ 6.27 rate. Certain invisibles. Registered capital.Government payments. Essential imports. Students’ expenses. Registered capital.
6.27 (35% at Ȼ 5.60 and 65% at Free Market Rate)
Certain exports by special authorization from the Central Bank.
6.63 (Free Market Rate)6.65 (Free Market Rate)
All other receipts.All other payments.

Changes during 1953

February 5

Exporters of lead were permitted to sell in the free market 65 per cent of their export proceeds, the balance being surrenderable at the official rate.

April 10

Exporters of canned fruits and fruit juices were permitted to sell in the free market 65 per cent of their export proceeds, the balance being surrenderable at the official rate.

June 21

Exporters of cottonseed were permitted to sell in the free market 65 per cent of their export proceeds, the balance being surrenderable at the official rate.

July 31

Exporters of tanned hides were permitted to sell in the free market 65 per cent of their export proceeds, the balance being surrenderable at the official rate.

Exporters of 2,250 quintals of cotton of the 1952-53 crop were permitted to sell in the free market 90 per cent of their export proceeds, the balance being surrenderable at the official rate.

September 15

Independent banana producers were permitted to sell in the free market 65 per cent of their export proceeds; previously this facility applied to their export proceeds in excess of US$1.10 per 100 pounds of bananas.

November 7

Exporters of cocoa butter and locally made articles of wood were permitted to sell in the free market 65 per cent of their export proceeds, the balance being surrenderable at the official rate.

November 14

Permission to exporters of clay, earthenware, or porcelain to sell 90 per cent of their export proceeds in the free market was withdrawn.

Czechoslovakia

Origin and Essential Features

Exchange control was introduced in Czechoslovakia October 31, 1931. The last major revision reported in the exchange control mechanism took place on April 11, 1946, but on June 1, 1953, the par value was altered as part of a series of measures of monetary reform. The exchange control law was recodified ih December 1953, effective January 1, 1954. Authorizations of imports and exports are determined within the economic plan. Foreign trade is organized on the basis of monopolistic trade organizations dealing in specific commodities. Exchange is granted for all authorized payments. Foreign exchange must be surrendered.

Exchange Rate System

On June 1, 1953, Czechoslovakia changed the par value of the koruna from 0.0177734 grams of fine gold per koruna, or 50 korunas per US$1, which had been agreed with the Fund, to 0.123426 grams of fine gold per koruna, or 7.20 korunas per US$1. This change was made by Czechoslovakia without consulting the Fund or seeking its concurrence, on the ground that the change came under Article IV, Section 5(e) of the Fund’s Articles of Agreement because it did not affect the international transactions of members of the Fund. The Fund has concluded that the change of par value does not come under this provision.

Imports and Import Payments

The policy concerning import licensing is determined in the economic plan. Exchange is granted for authorized imports.

Payments for Invisibles

Payments abroad require licenses. The export of Czechoslovak banknotes is prohibited. The export of foreign banknotes requires a license.

Exports and Export Proceeds

Authorizations of exports are determined within the economic plan. Exchange receipts must be surrendered.

Proceeds from Invisibles

Exchange receipts from invisibles must be surrendered. The import of Czechoslovak banknotes is prohibited.

Capital

Transfers of capital and the investment of foreign capital require approval. Exchange receipts from capital must be surrendered.

Changes during 1953

June 1

Under the provisions of Act No. 41, a monetary reform was brought into effect. As part of these measures, the par value of the Czechoslovak koruna was changed from 50 korunas to 7.20 korunas per US$1 (see section on Exchange Rate System, above).

The import and export of Czechoslovak banknotes was prohibited.

December 22

A new Foreign Exchange Control Law was issued, to be effective January 1, 1954. It replaced the previously existing Foreign Exchange Law of April 11, 1946, as amended, and all regulations issued thereunder were repealed.

Denmark

Origin and Essential Features

Exchange restrictions were first introduced in Denmark on November 18, 1931. Early in 1932, Denmark established central control over foreign exchange allocations, not only in order to regulate imports and capital transfers, but also to control the direction of imports in return for concessions under bilateral trade agreements. The basic features of the system were the compulsory surrender of foreign exchange receipts and the reservation of dealings in foreign exchange (including foreign-owned Danish kroner) to the Danmarks Nationalbank and dealers authorized by it. While both imports and payments have been liberalized to a very high degree, these basic principles are still applied.

At the beginning of World War II, restrictions were extended to cover exports and current payments for invisibles, and at the end of the war, a system of tight restrictions was in force. After a short period of relative relaxation, restrictions were intensified on March 19, 1946. This policy was continued throughout 1947 and 1948. Since 1949, however, exchange restrictions have been relaxed continuously, and nearly all current payments for invisibles may now be effected freely.

Import restrictions are based essentially on balance of payments considerations; they are applied leniently to imports from the OEEC and some other countries.

As a general rule, all foreign exchange proceeds must be transferred to Denmark and surrendered. Export licenses are required for all exports of major agricultural products and of a range of industrial products and for most exports to countries outside the OEEC and dollar areas. Capital movements are, as a general rule, subject to control, although the authorized dealers are allowed freely to effect several types of capital transfer.

The prescription of currencies for foreign payments and receipts is an integral part of the Danish exchange system. In general, payments must be made either in the currency of the creditor country or in the Danish kroner through a nonresident account related to the country of residence of the foreign creditor.

Exchange Rate System

The par value is Danish Kroner 6.90714 = US$1. The official rates are DKr 6.895 buying, DKr 6.920 selling, per US$1.

Denmark participates with Belgium, France, the Federal Republic of Germany, the Netherlands, Norway, Sweden, Switzerland, and the United Kingdom in a multilateral foreign exchange arbitrage arrangement, under which authorized banks in these territories may conclude spot transactions, and forward transactions for up to three months’ delivery, with other authorized banks in any of these territories.1 The spot exchange rates fluctuate between the official limits agreed by the exchange authorities of the countries concerned, while the forward premiums and discounts are left to the interplay of market forces.

Administration of Control

The exchange control is administered by the Danmarks Nationalbank, which is the central exchange control authority in Denmark. However, administrative powers for most payments and transfers are delegated to the authorized exchange dealers, i.e., the banks and stock exchange brokers who are members of the Copenhagen Stock Exchange.

Licenses for imports and exports, when they are required, are issued by the Directorate of Supply (an agency of the Ministry of Commerce, Industry, and Shipping), by the Ministry of Agriculture, or by the Ministry of Fisheries.

Prescription of Currency

As a general rule, outgoing payments must be made in the currency of the recipient country, or in Danish kroner by crediting a nonresident account of an account holder of the country concerned. However, payments for invisibles may be effected in sterling to some countries outside the Sterling Area. Payments to most countries are effected through the authorized exchange dealers, but payments to Bulgaria, Colombia, Greece, Hungary, Israel, Paraguay, Poland, Turkey, U.S.S.R., and Yugoslavia are channeled through the Danmarks Nationalbank.

Payments from abroad must, as a general rule, also be effected in the related foreign currency, or in Danish kroner by debiting a nonresident account of an account holder of the country concerned. Payments from countries classified as “Transferable Sterling Account” countries or as “Residual Group Account” countries in the United Kingdom exchange control system (see United Kingdom, section on Nonresident Accounts) may be received in sterling. Payments from countries having no payments arrangements with Denmark may be received in U.S. dollars, Canadian dollars, or free Swiss francs.

Nonresident Accounts

The accounts in Danish kroner of nonresidents are divided into four different types—Krone Accounts I, II, III, and IV — designated by nationality according to the country of residence of the account holder. These various types of accounts are held for the following purposes:

1. Krone Accounts I may be used for settlement of current transactions between Denmark and the country where the account holder resides. These accounts are permitted to be held primarily by banks residing in foreign countries.

2. Krone Accounts II may be used for making payments in Denmark for the settlement of current transactions with the country of the account holder. These accounts are held mainly by commercial firms. New funds may be credited to the accounts only by transfers from Krone Accounts I belonging to banks with the same designation of nationality.

3. Krone Accounts III are established for insurance companies abroad for use in the settlement of insurance and reinsurance transactions between Denmark and the country where the insurance company is domiciled.

4. Krone Accounts IV comprise all other foreign Krone Accounts. They are generally used for the crediting of private amounts that foreign owners wish to retain in Denmark or that cannot be transferred abroad. Crediting and debiting of these accounts may, in principle, take place only with special permission of the Danmarks Nationalbank. The Danmarks Nationalbank has, however, permitted the authorized exchange dealers and the savings banks to effect a wide range of specified transactions.

Balances on Krone Accounts I, II, or III related to most countries can at any time be transferred abroad in the currency of the nationality of the account holder. Where transfers between these three types of accounts are allowed, they can usually be made only between accounts of the same designation of nationality. However, transfers between Krone Accounts of I EPU nationality, transfers from Krone Accounts I to Krone Accounts III of different nationality, and transfers between Krone Accounts III of different nationality are permitted.

Imports and Import Payments

Most imports from EPU countries and their associated territories,2 and from Argentina, Brazil, Finland, Israel, Spanish Monetary Area, U.S.S.R., and Yugoslavia, are either free of import license or licenses are issued freely. Licenses are required for most imports from other countries.

In addition, about 7 per cent of imports require advance deposit payments. These deposits, varying between 30 and 45 per cent of the import value, must be made to an authorized exchange dealer, who must deposit them with the Danmarks Nationalbank. The deposits will be refunded 12 months after they are made.

Import declarations, when certified by the customs authorities, serve as an authorization to pay for the corresponding goods and the related shipping expenses. However, the authorized dealers may effect payment before clearance of the goods if the importer submits a statement promising to produce the import declaration later. Foreign exchange can be made available only by the Danmarks Nationalbank or — insofar as payments agreements do not prevent them from effecting foreign exchange transactions — by authorized exchange dealers. The form or currency for such payments is specified (see section on Prescription of Currency, above).

Payments for Invisibles

The authorized exchange dealers are permitted to effect freely most payments for invisibles; only in a few cases is approval from the Danmarks Nationalbank or from a special authority required. Foreign exchange for travel outside the dollar area is allocated freely and an annual exchange allocation of US$100 per adult is given for tourist travel to the dollar area.3

Travelers may take out of the country DKr 300 in domestic banknotes without special authorization from the Danmarks Nationalbank. Residents and nonresidents may take out foreign banknotes that have been purchased from the Danmarks Nationalbank or from an authorized exchange dealer. Nonresident travelers may also take out foreign banknotes brought in by them.

Exports and Export Proceeds

Exports of major agricultural products and of a range of industrial products and most exports to countries outside the OEEC and dollar areas require export licenses; these are issued by the Directorate of Supply (an agency of the Ministry of Commerce, Industry, and Shipping), by the Ministry of Agriculture, or by the Ministry of Fisheries. Certain exports are made subject to restrictive licensing to safeguard the fulfillment of bilateral obligations, to avoid excessive credits to importing countries, to serve strategic purposes, to avoid re-export and transit transactions involving loss of hard currency, and to secure the domestic supply of essential goods.

Foreign exchange proceeds must be transferred to Denmark unless the Danmarks Nationalbank permits otherwise. If recipients show evidence to the Danmarks Nationalbank that they require foreign exchange in that currency to cover their own obligations due within three months, or to maintain their business interests abroad, or for other purposes deemed necessary, the Danmarks Nationalbank may exempt them from the general obligation to surrender these exchange proceeds. Transferred foreign exchange must be offered for purchase to the Danmarks Nationalbank or to an authorized exchange dealer within eight days after receipt. The type of currency to be received for exports is prescribed (see section on Prescription of Currency, above).

Exporters of most goods paid for in U.S. or Canadian dollars (or in Danish kroner from a U.S. or Canadian Krone Account I) obtain, against surrender of their dollar receipts at the official rate of exchange, a “title to import license” for 10 per cent of their export proceeds. This “title to import license” grants the right to import, against payment at the official rate of exchange, otherwise restricted goods from EPU countries and their associated territories, Argentina, Brazil, Chile, Finland, Israel, Spanish Monetary Area, U.S.S.R., and Yugoslavia. These import rights are transferable. In order to limit the market price of the import rights to 80 per cent of the face value of the import license, the Government makes the necessary “titles to import license” available to the market as loans at that price. These “titles” (called “L-titles to import license”) are nonnegotiable and the importers are under obligation to settle the loans later on by purchasing ordinary “titles” in the market.

Proceeds from Invisibles

Foreign exchange receipts derived from invisibles must be transferred to Denmark unless the Danmarks Nationalbank permits otherwise (see section on Exports and Export Proceeds, above). Transferred foreign exchange must be offered for purchase to the Danmarks Nationalbank or to an authorized foreign exchange dealer within eight days after receipt.

Travelers may bring into Denmark up to DKr 300 in domestic banknotes. Foreign banknotes may be imported freely in any amount.

Capital

Anyone receiving from abroad a payment exceeding DKr 500 must submit a report concerning this receipt to an authorized exchange dealer. If the authorized exchange dealer considers that the purpose of the payment reported is not of a current nature, settlement or payment can take place only after the Danmarks Nationalbank has given authorization.

As a general rule, capital transfers, both outward and inward, require approval by the Danmarks Nationalbank. However, transfers of foreign-owned capital of a noncommercial nature to Finland, Norway, Sweden, and the Sterling Area are free; those to other EPU countries, their associated territories, Canada, and United States may be transferred up to DKr 25,000 a year per person. If the owner of such foreign-owned capital is a Danish national, he must not have been a permanent resident of Denmark within the last three years. Inward capital transfers of up to DKr 100,000 a year per person from present and former Danish nationals living abroad are permitted freely.

Applications for capital transfers for the purpose of making direct investments abroad or in Denmark are considered upon their individual merits. In handling such applications, the Danmarks Nationalbank follows a liberal practice. Danish nationals living abroad are freely permitted to invest noncommercial capital held in Denmark in securities payable exclusively in Danish kroner and in real estate. Foreign nationals normally are permitted to make such investments only if they have close connections (i.e., by family, business, or the like) with Denmark.

Securities other than securities payable exclusively in Danish kroner, held in Denmark for the account of nonresidents, may be sent freely to the owner or custodian. Proceeds of the sale in Denmark of securities payable exclusively in Danish kroner, belonging to nonresidents, may be transferred to Finland, Norway, Sweden, and the Sterling Area without limitation, and to other EPU countries and their associated territories, Canada, and the United States in amounts which, together with other capital transfers (see above) may not exceed DKr 25,000 a year per person. If the owner of the securities is a Danish national, he must not have been a permanent resident of Denmark within the last three years.

Changes during 1953

January 24

Authorized exchange dealers were permitted to buy Danish kroner from banks in Belgium, the Federal Republic of Germany, Italy, the Netherlands, Norway, Portugal, and Sweden against their respective currencies.

Maximum amounts for gifts and maintenance payments abroad, as well as for payments of interest and dividends to Danes residing abroad, were raised, from DKr 100 to DKr 500 for gifts, from DKr 100 to DKr 200 per month for maintenance, and from DKr 20,000 to DKr 25,000 per year for interest and dividends to Danes residing abroad.

The period of time that Danish citizens must have resided abroad before payments for certain purposes could be made to them without special authorization was lowered from 7 years to 6 years.

Payments for film royalties were allowed to all EPU countries and their associated territories without special permission; previously, such payments could be made only to Norway, Sweden, and the Sterling Area.

February 12

The annual exchange quota for tourists visiting the EPU area (except Norway, Sweden, and the Sterling Area, for which larger quotas were in force), Yugoslavia, and the Spanish Monetary Area was increased from DKr 750 to DKr 2,000 per adult.

Payments abroad of debts incurred during travel abroad for automobile repairs, hospitalization, and medical attention were generally allowed.

An allocation of US$60 or Can$60 was made available to Danish residents for the purpose of visiting close relatives in the United States or Canada.

March 25

The area from which imports under the dollar export premium scheme (see Fourth Annual Report on Exchange Restrictions, page 126) could be effected was extended by the inclusion of Argentina, Brazil, Chile, and Israel.

April 14

Measures were taken to stabilize the price charged for “titles to import license” issued under the dollar export premium scheme: nonnegotiable “titles” (called “L-titles to import license”) were made available through authorized exchange dealers to anyone at a price of 80 per cent of the face value; “L-titles” were considered as loans and the settlement of the loans was made by eventual purchase in the market of ordinary “titles” based on actual exports.

April 21

The allocation granted to residents emigrating to, or visiting, the United States or Canada was raised from US$60 or Can$60 to US$75 or Can$75, Payments for the chartering of ships of 500 gross register tons or more to all EPU countries and their associated territories were made free of license; previously, such payments could be made only to Norway, Sweden, and the Sterling Area. On the other hand, payments to all countries for general cargo freight on individual consignments of 30 metric tons by weight or 30 cubic meters by volume or more were made subject to special authorization.

May 18

A system of multilateral arbitrage for spot transactions was introduced among eight Western European countries, viz., Belgium, Denmark, France, the Federal Republic of Germany, the Netherlands, Sweden, Switzerland, and the United Kingdom; authorized banks in these countries were permitted to conclude spot transactions with each other in the currencies of any of these countries at rates within specified margins of approximately ¾ of 1 per cent on either side of the parity values.

Authorized banks in Denmark were permitted to conclude forward transactions in EPU currencies against Danish kroner with Danish residents, and, bilaterally, with authorized banks in EPU countries. Forward transactions with Danish residents had to be on a strictly commercial basis.

The maximum amount in Danish banknotes which could be brought in or taken out of Denmark by travelers was increased from DKr 100 to DKr 300.

May 21

Centralized purchases of oilseed cakes, rye and oat brans, etc., were discontinued; these commodities could be imported from the OEEC countries and their associated territories, Finland, the Spanish Monetary Area, and Yugoslavia without import licenses.

June 11

Transfers from any EPU Krone Account I could be made to any other EPU Krone Account I regardless of nationality.

Certain specified transactions were permitted to be made over Krone Accounts IV without special authorization.

Transfers of up to DKr 25,000 a year resulting from inheritances could be made without special permission to beneficiaries residing in the EPU countries and their associated territories, Finland, Canada, and the United States. On similar terms, transfers of proceeds from the sale of Danish securities deposited in a blocked account and of drawings on Krone Accounts IV were permitted to persons residing in Finland, Norway, Sweden, and the Sterling Area.

The period of time that Danish citizens must have resided abroad before payments for certain purposes could be made to them without special authorization was lowered from 6 years to 3 years.

Transfers of fees and honoraria to foreign entertainers, musicians, and actors, as well as expenses in connection with sports events, could be made freely to any country; previously, such transfers were allowed only to the EPU countries and their associated territories.

A special tourist exchange quota of DKr 2,000 per adult per year was established for visits to Iceland.

June 30

Certain dollar imports, e.g., motor vehicles and parts, were partially relaxed.

July 6

Licenses for the importation of commodities falling under the advance deposit arrangement and the open general licensing system were granted to any firm or individual desiring to take up the business of importing such commodities; previously, licenses were granted only to established traders.

July 20

Transfers of margins and expenses in connection with forward transactions in recognized international commodity markets were permitted without special licenses.

The tourist exchange quota for visits to most EPU countries and certain other countries was extended to travel to Israel.

August 15

The controls on exports were revised. With the exception of certain categories of goods (e.g., major agricultural products, strategic commodities, and essential goods in short supply), exports to the OEEC and dollar areas were free of license, while for exports to countries outside these areas, licenses were still required.

September 26

All payments for ocean freight pertaining to Danish imports and exports (and re-exports), as well as transit transactions approved by the Danmarks Nationalbank, were permitted generally to EPU countries and their associated territories.

October 5

The multilateral arbitrage arrangement (see May 18, above) was extended to cover forward transactions for periods up to three months.

October 26

The regulations requiring advance deposits for certain imports, mainly textile goods (see Fourth Annual Report on Exchange Restrictions, page 124) were eased. The amounts of the deposits were reduced from a range of between 90 and 135 per cent of the import value to between 30 and 45 per cent. The deposits would be refunded to the importer after 12 months.

December 11

The dollar export premium scheme was amended in such fashion that the amount of “titles to import license” required for obtaining import licenses for cars was reduced from 100 to 75 per cent of the import value; for other goods imported under the scheme, “titles” were still required for 100 per cent of the import value.

December 14

Norway joined the multilateral arbitrage arrangement for spot transactions, which had been introduced among eight Western European countries (see May 18, above); authorized banks in Denmark could deal in Norwegian kroner (and with authorized banks in Norway) on a multilateral basis on the same terms as in the currencies of the other participating countries.

Ecuador

Origin and Essential Features

Exchange control was established in Ecuador in 1932. In 1947 exchange surcharges went into effect. In 1949 a system of compensation for minor exports, matching them against otherwise prohibited luxury imports, was established; the compensation rate was determined in a separate market. The surcharges were eliminated on December 1, 1950, and a new par value established. In February 1952 the compensation system was merged with the free market. Ecuador’s present exchange system comprises a multiple exchange rate structure, which arises from the coexistence of an official and a free market. Quantitative restrictions are not relied upon to restrain imports, although some commodities are prohibited.

Exchange Rate System

The par value is Sucres 15.00 = US$1. This rate applies to most exports, essential and semi-essential imports, registered private capital, and certain other specified transactions. Higher rates operate in a free market for exchange transactions related to selected minor exports, luxury imports, unregistered capital, and invisibles. Another effective rate results from the “mixing” arrangements for exchange proceeds from exports of bananas, chemical products, and medicines (see Table of Exchange Rates, below).

Administration of Control

The authorities of the Central Bank of Ecuador control and supervise the transactions permitted to pass through the official market. All transactions that do not qualify for the official market may enter the free market, which is regulated by the Central Bank, although such transactions are free of supervision by the exchange control authorities.

Prescription of Currency

In principle, exchange proceeds must be received in dollars, but bilateral agreements with Argentina, Chile, Colombia, France, the Federal Republic of Germany, and Italy require payment through special dollar accounts at the central banks of the countries concerned.

Imports and Import Payments

A prior import license is required for substantially all imports other than those representing foreign loans and those of certain foreign companies; but apart from prohibited imports, import licenses are, with a few minor exceptions, issued freely. Import licensing enables specified transactions to obtain the official market rate and ensures that taxes levied on imports are collected and that imports are restricted to permissible goods. Imports are divided into three categories—essential (List A), semi-essential (List B), and luxury (List C)—and goods not included in these three classes are prohibited. Nevertheless, the Central Bank may authorize the importation of goods not included in the three categories.

The granting of an import license, issued by the exchange department of the Central Bank, carries with it the right to the required foreign exchange. Legally, the Bank must act on the application within three days, stating the taxes—33 per cent on semi-essentials (List B) and 44 per cent on luxuries (List C) — and any advance deposits which must be paid before the license is issued.1 The Central Bank will issue the import license as soon as the importer has paid the specified taxes and made any advance deposits required. For luxury imports, foreign exchange to cover the import must be deposited with the Central Bank prior to the issuance of the import license.

For imports of essential and semi-essential goods, the Central Bank has the power to impose a requirement for prior deposits of local currency in certain circumstances, but this authority is not now exercised.

Payments for Invisibles

Most payments for invisibles are made through the free market and are not subject to control by the exchange control authorities. Certain invisibles can be paid for at the official rate but require an exchange license from the Central Bank, which grants such licenses for contractual interest payments, amortization of loans, and other obligations abroad which are registered at the Central Bank; payments of dividends, profits, interest, and amortization on registered foreign investments up to a specified amount but not less than 12 per cent annually; indispensable payments and remittances of the Government and official entities; and foreign exchange required by persons taking specialized courses abroad, provided that such persons register with the Central Bank and that the amounts do not exceed passenger fares, expenses of travel, tuition, and specified amounts for living expenses.

Exports and Export Proceeds

All exports other than those of certain foreign companies are subject to licenses, which are issued by the Central Bank to ensure surrender of foreign exchange proceeds or their sale in the free market.

Export licenses are issued after application has been presented by the exporter and arrangements have been made either for the surrender to the Central Bank of freely convertible foreign exchange or for remittance through a payments agreement account—in both of which cases the official rate is applicable—or for the return of the exchange to Ecuador in cases where it is eligible for sale on the free market. The official rate applies to most exports, with the exception of certain minor ones. Banana exporters surrender exchange for a fixed amount per stem at the official rate; the balance may be sold at the free market rate or transferred abroad. A mixing arrangement applies to exports of chemical products and medicines (see Table of Exchange Rates, below).

Proceeds from Invisibles

Most receipts from invisibles are sold through the free market and are not subject to control by the exchange control authorities.

Capital

Receipts of foreign capital may enter at the official rate if they are for approved purposes and registered at the Central Bank. Registered capital and earnings may be transferred at the official rate (see section on Payments for Invisibles, above). The Central Bank may refuse to register capital. Unregistered capital is free to enter through the free market in unlimited quantities. Foreign nonmonetary capital entering in the form of machinery, tools, etc., is treated like foreign monetary capital and requires a license, except when it represents foreign loans or the capital of certain foreign companies.

Table of Exchange Rates (as at December 31, 1953)(sucres per U.S. dollar)
BuyingSelling
15.0015.15
Most exports, except certain minor ones. Requirements of foreign companies for actual operating costs. Registered capital.Essential and semi-essential imports. Government payments. Interest, dividends, and amortization on registered foreign capital. Approved expenses of students.
15.92 (60% at Sf 15 and U0% at Controlled Free Market Rate)
Exports of chemical products and medicines.
17.45 (Controlled Free Market Rate)17.45 (Controlled Free Market Rate)
Invisibles. Unregistered capital. Certain minor exports.Luxury imports. Unregistered capital. Other invisibles.

Changes during 1953

January 23

The exchange surrender requirement for banana export proceeds was temporarily reduced from US$1.50 to US$1.00 per stem; the balance was permitted to be negotiated at the free market rate.

At the request of the Minister of Economic Affairs, the granting of licenses for the export of barley was suspended. Previously, the export proceeds of this product had been intended for the free market.

January 30

The mixing arrangements applied to rice exports of the 1952 crop were eliminated by a requirement that the proceeds of rice exports be surrendered entirely at the official rate.

February 28

Lard imports were shifted from List B to List C.

March 16

Wheat flour imports were shifted from List A to List B.

March 23

As a result of damage and disruption by winter floods, the free importation of a number of foodstuffs and fuels was permitted on an emergency basis until May 15, 1953 (later extended to June 15, 1953). Most of these foodstuffs had been in the prohibited category.

April 7

Approximately 40 import items were reclassified from List C to Lists B and A and from List B to List A.

April 22

The exchange surrender requirements for banana export proceeds were re-established at US$1.20 per stem for the period from June 1 to September 30, and at US$1.50 per stem from October 1 to May 31.

July 8

Trade transactions with Belgium heretofore settled in dollars could be settled directly in Belgian francs.

July 23

It was required that the 33 per cent tax applied to List B imports be paid in full as a prerequisite to the granting of import licenses for such imports.

July 27

Import licenses for certain knitted fabrics would be granted upon a prior deposit of 50 per cent of the c.i.f. value of the products concerned.

August 19

Licenses for imports effected by the Government and official entities would be granted upon a prior authorization of the Ministry of the Treasury, who would ascertain whether these imports were to be used to satisfy the needs of the interested agencies.

October 27

The import of cotton in quantities sufficient to satisfy the needs of the textile factories was authorized.

December 10

A Basic Trade Treaty between Ecuador and the Federal Republic of Germany was approved.

December 14

A trade agreement and a payments agreement between Ecuador and Argentina were approved.

December 31

Certain changes were made in the International Exchange Law to be effective January 1, 1954, for the purpose of bringing its provisions into line with those of the Organic Law and the Customs Tariff.

Egypt

Origin and Essential Features

A system of exchange control was initially introduced in Egypt on September 28, 1939. Restrictions were placed on nonessential imports in 1952, and individual licensing was applied to all imports as from October 7, 1952. In October 1949, a system of Export Accounts was introduced, by which payments in Egyptian pounds for imports of hard currency goods through soft currency countries were allowed. The use of this mechanism has been extended significantly in subsequent years.

Basically, a unitary exchange rate system operates in Egypt. However, a tax of 10 per cent on certain transfers abroad on account of specified invisibles, the Import Entitlement Account arrangements, and settlements made through Export Accounts held by nonresidents give rise to multiple exchange rates.

The issuance of an individual license, to which practically all imports are subject, depends on the currency and method of settlement of the payment and the category of the merchandise to be imported. Exchange or permission to credit a nonresident account to pay for authorized imports is authorized automatically upon presentation of a valid import license. Payments by residents to nonresidents require prior approval of the exchange control authorities, with the exceptions of specified categories of invisible payments, and payments within specified limits in some cases.

Exports are subject to extensive controls. Export proceeds, as well as other exchange proceeds, are subject to surrender.

Most capital transactions between residents and nonresidents are subject to individual licensing.

Exchange Rate System

The par value is Egyptian Pound 1 = US$2.87156. Commercial banks’ rates as at December 31, 1953 were $2.8805 buying, $2.8619 selling, per LE 1. A tax of 10 per cent is charged in most cases on exchange allocated for travel, maintenance remittances if the beneficiary is either an Egyptian national or a foreigner holding an Egyptian residence visa, and revenue remitted to Egyptian nationals residing permanently abroad.

The negotiation of rights on Import Entitlement Accounts also gives rise to multiple exchange rates. These rates, as at December 31, 1953, represented a discount on the official rates ranging between 5 and 11 per cent.

Administration of Control

Exchange control in Egypt is supervised by the Supreme Committee for Foreign Exchange set up by the Minister of Finance and Economy. The exchange control laws, ministerial arrêts, decree-laws, and instructions of the Minister of Finance and Economy and of the Supreme Committee are carried out by a Director of Exchange Operations appointed by the Minister of Finance and Economy. The technical work of the Exchange Control is performed, under the supervision and the instructions of the Director of Exchange Operations, by the Central Exchange Control.

Prescription of Currency

The prescription of the manner and currency for effecting settlements on account of merchandise transactions and invisibles depends on the country or monetary area involved, the type of transaction, and, in particular, the category of import concerned. Settlements may be effected in one or more of the following ways: (1) in sterling through an Egyptian Transferable Account in the United Kingdom; (2) in Egyptian pounds through an appropriate nonresident account (ordinary nonresident account), through Export Accounts, or through accounts maintained in accordance with payments agreements; (3) in the currency of the country with which the transaction is to be carried out, under special regulation or in accordance with payments agreements; or (4) in dollars or pounds sterling in respect of exports and imports effected under the retention quota arrangements (see section on Exports and Export Proceeds, below). The exchange control authorities can permit exceptions to, or exemptions from, the generally established prescription of currency rules. As a general rule, transit trade and re-export transactions must be settled on the basis that the same currency is paid and received.

Nonresident Accounts

The main categories of nonresident accounts are as follows:

1. Nonresident (ordinary or so-called “free”) accounts named according to the country or monetary area in which the holder resides, except that in the case of the United States, Canada, Switzerland, and Portugal the nonresident status is granted only to nationals of these countries actually residing in their own country. Ordinary nonresident accounts may be credited freely with transfers from nonresident accounts of the same monetary area and with payments on account of imports from countries with which Egypt has payments agreements. These accounts may be debited with payments to residents, including payments for exports to the monetary area in which the account holder is resident and direct remittances in the currency of the monetary area related to the designation of the account.

2. Export Accounts in the names of nonresidents and without geographical distinction. These accounts can be credited with (a) payments for specified goods imported into Egypt under import permits stipulating settlements in Egyptian pounds through an Export Account; (b) transfers from other Export Accounts; and (c) amounts specifically approved by the Central Exchange Control (e.g., balances on Provisionally Blocked Accounts). Balances on these accounts may be utilized for (a) payments to residents of Egypt in settlement of the value of goods exported from Egypt to soft currency countries that have not concluded payments agreements with Egypt1 (provided permission has been given to accept payment from an Export Account); (b) payments to residents of Egypt in settlement of up to 75 per cent of the value of goods exported to the dollar area or the Sterling Area; (c) payments to residents of Egypt for services, on a limited scale only; and (d) transfers to other Export Accounts. Advance payments from these accounts are permitted, subject to approval in each case.

3. Special Nonresident Accounts. These accounts are established and operated in accordance with bilateral payments arrangements.

4. Blocked Accounts. These accounts are credited with any payment to a nonresident not remittable under the exchange control regulations and not creditable to Provisionally Blocked Accounts (see 5, below). These accounts may be debited freely (a) with amounts up to LE 1,000 per annum for living expenses of the account holder in Egypt; (b) for investments in Egyptian Government securities and shares of companies established in Egypt (not redeemable on a date earlier than 10 years); (c) for subscription to increases of capital in Egyptian companies in which the account holder is already a shareholder. Income derived from shares mentioned under (b) can be credited to an appropriate ordinary (“free”) nonresident account.

5. Provisionally Blocked Accounts. These accounts are opened for residents of certain countries (Argentina, Brazil, Canada, Portugal, and United States) when funds due to them in respect of capital or revenue are temporarily nontransferable because of a shortage of the corresponding currencies. Balances on these accounts are used for the same purposes as those indicated above under Blocked Accounts, 4(b) and 4(c), and also for living expenses of an account holder in Egypt and allowances to his relatives in Egypt, for transfers in the form of monthly allowances in cases of justified need, and for transfers to other Provisionally Blocked Accounts related to the same monetary area.

Imports and Import Payments

Practically all imports are subject to individual licenses, the issuance of which is dependent on the currency and method of settlement and the category of the goods to be imported. Specified essential imports from the dollar area and from countries other than payments agreement countries are licensed fairly freely if paid in “export pounds,” i.e., through Export Accounts. These same imports also are licensed freely under the Import Entitlement Account procedure (see section on Exports and Export Proceeds, below). Licenses for imports are issued on a restrictive basis if they involve the allocation of dollars or pounds sterling by the exchange control authorities. Licenses for imports from countries with which Egypt has payments agreements are issued freely. Exchange or permission to credit a nonresident account to pay for authorized imports is granted automatically upon presentation of a valid import license.

The importation of specified nonessentials is permitted on a semi-barter basis provided that goods equal to double the value of the imports in question are exported, and that half the value of such exports is paid in sterling. Similarly, certain goods may be imported from the dollar area against half the value of goods exported in exchange, the other half to be repatriated in dollars or against the surrender of dollar Import Entitlements (see section on Exports and Export Proceeds, below), equal to one and one-half times the value of the import.

Payments for Invisibles

Banks are authorized to effect certain invisible transactions without prior exchange control approval; other invisibles require prior approval of the Central Exchange Control. Exchange is generally made available for expenses associated with approved trade transactions and other current payments. Expenses for travel, family maintenance, film royalties, and subscriptions and fees of professional organizations usually are approved by the Central Exchange Control within specified quotas. Remittances for travel and maintenance on behalf of Egyptian residents, either nationals or foreigners, are subject to a 10 per cent tax. Exemptions from this tax are granted on remittances of diplomats, students, certain officials, etc. Persons leaving Egypt can take with them Egyptian banknotes in amounts not exceeding LE 20. Foreign banknotes up to the equivalent of LE 20, purchased with the approval of the Central Exchange Control, and foreign banknotes brought in and declared by transit travelers or tourists can be taken out by the travelers concerned.

Exports and Export Proceeds

Exports are allowed without restriction except if the commodity is required for the national economy, in which case the export may be prohibited or allowed only under quota. All export proceeds must be repatriated within six months from the date of shipment of the goods, and the foreign exchange proceeds surrendered.

Exporters who sell to an authorized bank export proceeds in U.S. dollars, Canadian dollars, or pounds sterling, at the official buying rate, are credited on Import Entitlement Accounts for 100 per cent of the value of their earnings from exports of cotton yarn and cloth and 75 per cent of the proceeds of other goods. In the case of proceeds of exports to the Federal Republic of Germany, the percentage is approximately 66 per cent. The balances on these accounts are transferable and entitle the holder to receive import licenses for listed goods (these are the same as those importable under the Export Account system) and to purchase appropriate exchange from an authorized bank to pay for such imports. Import Entitlement Account balances are canceled automatically if not utilized by the end of the sixth month following that in which the original sale of exchange was made.

Proceeds from exports to payments agreement countries must be obtained in accordance with the provisions of the respective agreements. Egyptian exports to countries other than dollar area, Sterling Area, and payments agreement countries can be paid for in “export pounds.”

Proceeds from Invisibles

All persons and legal entities in Egypt are obliged to offer to authorized banks for sale at the official exchange rate all proceeds payable in foreign currencies, within one month from the date of their collection abroad or their transfer to Egypt. Persons arriving in Egypt from abroad can bring in not more than LE 20 in Egyptian banknotes.

Capital

Transfers abroad by residents for the purpose of acquiring capital assets or securities outside Egypt require individual licenses, which normally are not granted. The import and export of securities and similar items require licenses.

The import and export of securities and similar items by or on behalf of nonresidents, and transfers of securities in Egypt from one nonresident to another, require approval of the Central Exchange Control unless such residents belong to the same monetary area. Exchange is not granted for the remittance abroad of funds due to nonresidents from the sale of their securities in Egypt; such proceeds, as well as any payments of a capital nature to nonresidents not permitted under the exchange control regulations, must be credited to a Blocked Account (see section on Nonresident Accounts, above).

Transfers abroad are permitted in payment of (1) securities drawn or matured in accordance with the original terms of issue, (2) the proceeds of income from securities quoted on the Egyptian Stock Exchange on account of customers resident abroad, if the payment is made to the country of residence of the owner of the securities, and (3) matured mortgages.

An amount not exceeding LE 5,000 per family—irrespective of whether the sum is made up of capital or income—may be released from the family’s assets in Egypt to foreign residents who acquire nonresident status. Any amount above this limit is credited to a Blocked Account, with the exception of Switzerland and the Sterling Area, capital transfers to which may exceed LE 5,000.

The Foreign Investment Law of April 2, 1953 provides for preferential treatment of new foreign investments that contribute to the development of the Egyptian economy in the fields of industry, agriculture, metallurgy, mechanization, transport, and tourism. Earnings accruing from such investments can be transferred abroad in the original currency of the investment, at a rate not exceeding 10 per cent per year, at the exchange rate prevailing at the time of repatriation. After five years, the capital can be transferred abroad in yearly installments not exceeding 20 per cent of the value of the original capital. In addition, earnings and capital can be repatriated abroad, subject to a license being obtained, through the exportation of goods.

Changes during 1953

During 1953, Egypt concluded payments agreements with the following countries: Austria, Belgium-Luxembourg Economic Union, Eastern Germany, Greece, India, Japan, Netherlands, Spain, Turkey, and U.S.S.R.

January 13

The Ministry of Finance and Economy issued instructions permitting Egyptian manufacturers of textiles and yarn to export their products and use the foreign exchange proceeds, provided that the currencies were not those of countries with which Egypt has payments agreements.

January 30

The use of balances on Export Accounts was extended. Exports of Egyptian goods to the dollar area and the Sterling Area could be paid 50 per cent in “export pounds” and 50 per cent in the currency appropriate to the importing country.

February 9

The percentage of export payments that could be received in “export pounds” (see January 30, above) was raised from 50 per cent to 75 per cent.

February 10

Under the terms of an agreement with the Netherlands, it became possible to conduct trade between the two countries through the use of Egyptian Export Accounts. Balances on these accounts could be transferred freely between residents of the Netherlands, in respect of whose exports to Egypt the Egyptian authorities would grant import licenses freely.

February 11

Capital transfers and current transactions between Egypt and the Sudan were made subject to controls. Transfers of LE 10,000 or more during a month, as well as the exportation of movable property, jewelry, gold, silver, precious stones, etc., required approval of the Ministry of Finance. Imports of books and periodicals were exempted from import licensing procedure.

February 28

Persons who export goods not covered by export quotas or not subject to export permits or restrictions regarding the currency of payment, against payment in full in U.S. or Canadian dollars or pounds sterling, and who surrender their export proceeds, would be credited on Import Entitlement Accounts for 100 per cent of the value of their earnings from exports of yarn and cloth and 75 per cent of the proceeds of other goods. The balances on these accounts, which are transferable, entitled the holder to receive import licenses in respect of those goods also importable under the Export Account system and to purchase exchange from an authorized bank to pay for such imports. These rights would be canceled automatically if not utilized by the end of the third calendar month following that in which the export proceeds had been sold to an authorized bank.

March 20

The Import Entitlement Account procedure was extended to cover exports under “quota” and against export permit.

April 2

A Foreign Investment Law providing preferential treatment of new, approved foreign investments became effective (see section on Capital, above).

May 21

Allowances for medical treatment abroad were granted on an administrative basis upon recommendation from an Advisory Medical Commission set up to examine the medical aspect of 1 applications.

June 15

The period during which the Import Entitlement remained valid (see February 28, above) was extended, from the end of the third to the end of the sixth month following that in which the sale of exchange was made to an authorized bank.

August 3

Export earnings in deutsche marks were covered by the Import Entitlement Account arrangement, the import entitlement percentage being 66 per cent.

September 1

The requirement that specified products could be exported only against payment in U.S. dollars or pounds sterling was abolished. All exports paid for in dollars or pounds sterling would be granted the facilities arising from the Import Entitlement Account procedure.

Ethiopia

Origin and Essential Features

Exchange control was established in Ethiopia on October 31, 1942. A significant revision occurred on September 11, 1949, when the controls were broadened and various restrictions were introduced. During 1953, however, imports were completely liberalized. The exchange system is characterized by exchange licensing for all payments, surrender of all foreign exchange receipts, and prescription of currencies for exchange payments and receipts. Restrictions are exercised on payments for invisibles and capital transactions.

Exchange Rate System

The par value is Ethiopian Dollars 2.48447 = US$1. The official rates are Eth$2.48 buying, Eth$2.53 selling, per US$1; the official selling rate represents a spread of more than 1 per cent from the par value.

Administration of Control

All transactions in foreign exchange must be effected through the State Bank of Ethiopia. All payments abroad and exports are subject to the supervision of the Exchange Controller, whose office is a Department of the State Bank.

Prescription of Currency

Payments outside Ethiopia must be effected in foreign exchange appropriate to the country of the recipient. Foreign exchange from exports must be received in the appropriate currency, usually that of the country of final destination; however, the proceeds of coffee exports must at present be obtained 50 per cent in U.S. dollars.

Imports and Import Payments

There are no import licenses, but payments outside Ethiopia for imports require exchange licenses, which are granted freely for all goods in the appropriate currency of the country of origin or in a softer currency when the goods are ordered through a third country. Application for a license must be made prior to the arrival of the goods.

Although the exchange license mentions that “Method of Payment must be Letter of Credit unless otherwise permitted,” cash-against-documents, mail-transfer, and telegraphic-transfer payments are, for the most part, allowed.

Payments for Invisibles

Payments for invisibles require exchange licenses, and for invisibles connected with trade transactions these are allowed on the same basis as licenses for the goods to which they relate. Persons traveling abroad are granted foreign exchange in the currency of the country of destination on a case-to-case basis. They may take with them a maximum of Eth$150 in Ethiopian banknotes. Exchange for education is granted within reasonable limits in each case. Exchange for such purposes as charity and maintenance is granted in moderate amounts to residents not permanently domiciled in Ethiopia for remittances to their own country; family maintenance remittances are usually limited to Eth$105 per month, but higher amounts may be sent by foreign employees in Ethiopia under special contracts. The transfer of “reasonable” amounts of dividends and similar current earnings due to nonresidents is permitted in the currency of the original investment.

Exports and Export Proceeds

All commodities require export licenses. When applying for a license, an exporter must state the amount of foreign exchange he expects to receive. Minimum requirements are established for all exports. The granting of the license by the Exchange Controller enables the goods to pass through the customs. The licensing system is used to ensure that foreign exchange receipts are surrendered to the State Bank of Ethiopia, and that export proceeds are received in appropriate exchange (see section on Prescription of Currency, above).

In due time, exporters must surrender at the official rate the promised amount of foreign exchange. Fifty per cent of the proceeds of exports of coffee must be obtained in U.S. dollars, while the remainder may be obtained in sterling. Thus, should an exporter export 10 tons of coffee against payment in U.S. dollars, he may export 10 tons to any destination against payment in sterling (see section on Prescription of Currency, above).

Proceeds from Invisibles

Exchange receipts from invisibles must be surrendered. Persons may bring in a maximum of Eth$150 in Ethiopian banknotes. All foreign exchange must be declared by travelers on entry, and its subsequent use or re-export is subject to license.

Capital

All foreign exchange receipts in the form of capital must be surrendered. There is no discrimination regarding the currencies in which foreign investments are accepted. All payments to countries abroad on account of capital are subject to individual exchange licenses. Foreign exchange is granted for repayment abroad of matured capital obligations of temporary residents. Other types of capital transfer are handled on a case-to-case basis.

Changes during 1953

January 1

The regulation requiring the sale of coffee and goatskins exclusively for U.S. dollars was changed to require that 60 per cent be sold for dollars; the remainder could be sold for sterling.

August 14

The proportion of coffee exports to be sold for U.S. dollars was reduced from 60 per cent to 40 per cent, with a corresponding increase from 40 per cent to 60 per cent in the proportion which could be sold for pounds sterling.

December 1

The proportion of coffee exports to be sold for U.S. dollars was increased from 40 per cent to 50 per cent, with a corresponding reduction from 60 per cent to 50 per cent in the proportion which could be sold for pounds sterling.

Finland

Origin and Essential Features

Exchange control was introduced in Finland on October 26, 1939. Among the restrictions on current transactions, the licensing of imports as the basis for exchange allocation is the central factor. Furthermore, through the prescription of the currency of payment, the currency composition of outward payments is adjusted to that of exchange receipts available from exports and other sources. Import licensing, like the licensing of exports, also serves to ensure that actual trade conforms to Finland’s trade agreements. Special arrangements involving higher rates of exchange apply to exchange for travelers. Finland applies a system of subsidization of certain exports, financed by fees levied on certain imports.

Exchange Rate System

The par value is Markkas 230 = US$1. The official rates are Fmk 229 buying, Fmk 231 selling, per US$1. Finland operates basically a single rate structure with the maintenance of parity values and orderly cross rates, but rates representing a premium of approximately 50 per cent on the official rate are in effect for transactions involving exchange for travelers.

Administration of Control

The Bank of Finland operates the exchange control system, with the assistance of exchange dealers (commercial banks) authorized for this purpose. Foreign exchange can be purchased only from the Bank of Finland or the authorized exchange dealers. The latter, however, but not the Bank of Finland, can deal in travelers’ exchange at other than official rates. The current administration of import licensing is handled by an office in the Ministry of Commerce, the Licensing Office, which is presided over by a Licensing Board composed of government officials; limits for import licensing are set by the Bank of Finland through periodical exchange allocations. The system of export subsidization is administered by a trade clearing agency (Ulkomaankau-pan Clearingkunta) under the supervision of the Finnish authorities.

Prescription of Currency

The comprehensive licensing of exports and imports ensures that the methods of payment conform to the provisions of existing payments agreements and serves to protect Finnish exchange reserves. Sterling is a key currency in Finnish trade with western countries, and Finland has the facilities of the Sterling Transferable Account arrangements (see United Kingdom, section on Nonresident Accounts).

Nonresident Accounts

A system of four types of nonresident accounts is operated under the control of the Bank of Finland. (1) Exchange markka accounts are, for exchange control purposes, equivalent to foreign exchange and may be freely transferred abroad to the country and in the currency of the account holder. (2) Inland markka accounts are not transferable abroad, and the debiting of these accounts cannot substitute for payment in foreign exchange from abroad. Certain expenditures in Finland may, however, be defrayed from inland accounts, and transfers are allowed between nonresidents, irrespective of country or monetary area. These accounts are credited with those current payments whose transfer abroad is not allowed. (3) Blocked markka accounts are not transferable abroad, nor can they, without the consent of the Bank of Finland, be transferred between nonresidents. Certain expenditures in Finland may, however, be defrayed from blocked accounts. These accounts are credited with noncurrent payments. (4) Travel markka accounts cannot be transferred abroad. They arise out of transfers from the country of the account holder of foreign exchange converted into Finnish markkas at the preferential tourist rates of exchange and can be used only for the sale abroad of Finnish exchange to travelers going to Finland and for certain settlements related to tourism.

Imports and Import Payments

All imports are subject to licensing. Licenses are allocated to individual importers primarily on the basis of past imports, but to some extent the past record of importers with regard to the price and quality of imports is taken into account. Exchange in the form prescribed in the license normally is granted without delay. For a limited range of goods, the allocation of exchange is subject to the payment to the agency Ulkomaankaupan Clearingkunta of an import fee amounting to 30 per cent1 of the import value of dollar imports and to 20 per cent of that of other imports.

Payments for Invisibles

Payments not arising out of imports are subject to the approval of the Bank of Finland in each case, and all contracts involving payments to nonresidents must be submitted to the Bank for approval. Royalties, interest, dividends, and other income from capital owned by nonresidents must as a rule be paid into an inland markka account and cannot be transferred abroad (see section on Nonresident Accounts, above). However, if the Bank of Finland has approved a contract providing for transfer abroad, exchange is granted automatically for the individual payments. For certain purposes, e.g., education, scholarships, etc., the Bank of Finland may also sell foreign exchange at the official rate.

A special system was instituted June 3, 1952, and revised February 1, 1953 and November 1, 1953, establishing higher rates for travelers’ exchange. A Finnish resident going abroad may, for each journey, take with him Fmk 10,000 in Finnish notes and, in addition, purchase from commercial banks up to Fmk 25,000 worth of foreign travel exchange for visits to the Scandinavian countries and up to Fmk 35,000 for visits to other countries, at the tourist rates of exchange involving a premium of about 50 per cent over the official rates. The commercial banks acquire the foreign exchange for such sales by purchasing foreign exchange at the tourist rate from foreign travelers in Finland and from holders of travel accounts. No amount larger than he has been allowed by the exchange regulations of his own country to take out from that country may be bought from a foreign traveler.

Exports and Export Proceeds

All exports are subject to licensing and all foreign exchange acquired through exports must be surrendered to the Bank of Finland or an authorized exchange dealer. Through the licensing of exports and the control of the currency of payments, the authorities are able to assure that exports conform to Finnish trade agreements and the fulfillment of exchange surrender requirements. The authorized banks and a few large export and shipping firms are allowed to maintain their own working balances in foreign exchange, under the supervision of the Bank of Finland.

On application, subsidies determined on a case-by-case basis and varying between 3 and 30 per cent of export proceeds are granted by the licensing authorities to exporters of certain products. These subsidies are paid by the agency Ulkomaankaupan Clearingkunta, upon evidence that the related export proceeds have been surrendered, out of funds derived from fees charged on certain imports (see section on Imports and Import Payments, above).

Proceeds from Invisibles

All foreign exchange acquired must be surrendered to the Bank of Finland or an authorized exchange dealer. Nonresident travelers may bring in a maximum of Fmk 20,000 in Finnish banknotes; Finnish residents are limited to Fmk 10,000, as they are not permitted to purchase Finnish currency abroad.

Capital

Each outward payment on capital account is subject to approval by the Bank of Finland. The following capital transfers abroad, however, are provided for by agreement with other countries: (1) Inheritances of Swiss and U.S. citizens may, to a “reasonable extent,” be transferred abroad, and Swiss nationals giving up residence in Finland may be allowed to take out capital from Finland. (2) Agreements with Denmark and Norway provide for capital transfers on a compensation basis, but these agreements are seldom operative owing to the lack of Finnish capital claims on Denmark and Norway.

Changes during 1953

February 1

A new Cabinet Ordinance on Exchange Controls, promulgated on January 15, 1953 and superseding a Cabinet Ordinance dated December 20,1948 with subsequent amendments, came into force. It involved an organizational change in the import licensing procedure.

A thorough revision of the rules governing travel exchange took place. The amounts of Finnish notes that could be exported and imported by travelers were reduced from Fmk 30,000 to Fmk 10,000 and from Fmk 30,000 to Fmk 20,000, respectively; the amount of travel exchange placed at the disposal of Finnish residents at the tourist rates of exchange was increased; and the limitations on the number of journeys abroad entitling the traveler to travel exchange allocation were abolished.

The regulations respecting operations over travel markka accounts were amended. Only funds originating from transfers of foreign exchange of the nationality of the account holder, converted into markkas at the tourist rate of exchange, could be credited to such accounts; and balances on these accounts could be used for certain settlements related to tourism—in addition to providing foreign travelers to Finland with travel exchange.

March 13

The more important Finnish concerns engaged in import and export trade founded a trade clearing agency, called Ulkomaan-kaupan Clearingkunta, for the administration, under the supervision of the Finnish authorities, of a system of subsidization of certain exports financed by fees levied on certain imports.

November 1

The rules governing travel exchange were again revised. The allocations of travel exchange at the official rates, varying according to the countries to be visited, were discontinued; the allocations at the tourist rates of exchange were appreciably reduced; settlements of tickets for journeys abroad could be made only with exchange at the tourist rates; and the broken cross rates applied to dealings in travel exchange at the tourist rates were abolished.

France

Origin and Essential Features

Exchange control was introduced in France on September 9, 1939. A general overhauling and codification of the system was effected in July 1947. Changes in the system of exchange rates on January 26, 1948 and October 17, 1948 resulted in the establishment of two rates for “convertible” currencies and one rate for other currencies; but on September 20, 1949 a uniform rate system was established. In addition, restrictions have been modified on several occasions in the postwar period.

Almost all imports are subject to individual licensing, which is applied more restrictively to “hard” currency imports. Payments for authorized imports are allowed automatically, subject to the presentation of supporting documents and provided the method of payment is in accordance with the regulations. Invisibles relating to trade transactions are allowed freely where the basic trade transaction has been approved. Other invisible payments are either permitted freely or subjected to varying degrees of restriction according to the category of the invisible.

Residents are obliged to collect and surrender amounts due from nonresidents representing the proceeds of the sale of goods and services. Varying essentially according to whether or not the currency is considered “hard,” certain percentages of export and other specified proceeds are allowed to be retained and utilized for specified purposes.

Exchange Rate System

Since January 1948, France has not maintained an official par value in terms of the Fund’s Articles of Agreement. In practice, however, exchange rates in France are stable and of an essentially unitary character, with orderly cross rates. The rate for the U.S. dollar remained between fr 349.95 and fr 350 during 1953.

Exchange rates for the Canadian dollar, the Djibouti franc, and the U.S. dollar are formed through the interplay of authorized demand and supply and the intervention of the exchange authorities in the market. Exchange rates for 15 other currencies fluctuate according to authorized demand and supply, between limits approximately ¾ of 1 per cent on either side of the parities based on fr 350 per US$1. In respect of 8 of these currencies,1 authorized banks are free to conclude spot exchange arbitrage transactions with authorized banks in any of the countries concerned at or within the official limits, or forward exchange transactions for periods not exceeding three months, at rates determined by the interplay of demand and supply based on authorized transactions. These arbitrage arrangements are not in operation for the other 7 currencies.2

Rates for other currencies are published by the Bank of France either on the basis of their quotations in London and New York and the quotation of the dollar rate in France, or on the basis of the official quotations of the respective foreign central banks. These rates are published mainly in order to determine the equivalent in French francs of payments expressed in such currencies, since practically all settlements between France and countries whose currencies are not mentioned above are, as a general rule, effected through appropriate nonresident accounts in French francs.

Other rates, representing a slight discount on the officially published rates, derive from the sale of “capital” francs by nonresident owners to other nonresidents of the same monetary area, for investment or for tourist expenses in France. The “capital” account rate as at December 31, 1953 was approximately fr 360 per US$1.3

Exchange Control Territory

Continental France (including Corsica), the Principality of Monaco, the Territory of the Saar, the French Overseas Departments,4 the Protectorates of Morocco and Tunisia, the French Overseas Territories,5 and the Associated States of Cambodia, Laos, and Vietnam constitute the French Franc Area. Most payments agreements relate to settlements between the French Franc Area as a whole and the other country concerned. Restrictions between the various territories of the French Franc Area either are not applied or are applied only to minor parts of the Area, although such territories are formally independent exchange control units, each with its own local exchange control. The foreign exchange reserves of the French Franc Area are managed centrally; and the exchange rates of the local currencies of these territories are fixed in relation to the French franc.

Administration of Control

The minister of Finance is granted extensive authority in the field of exchange control. The Exchange Office (Office des Changes), which is administered by an Administration Committee whose president is the Governor of the Bank of France, and by a Director designated by the Minister of Finance, carries out French exchange control policy. The Exchange Office issues import licenses in accordance with specific and general directions formulated by various governmental bodies. The Exchange Office is subject to the control of a financial controller appointed by the Minister of Finance. Much of the detail of exchange control is carried out by authorized banks designated by the Minister of Finance on the proposal of the Governor of the Bank of France.

Prescription of Currency

General exchange control regulations and, in specific cases, individual decisions of the Exchange Office prescribe the currency and form in which settlements between residents and nonresidents may be effected—usually payment to or from an appropriate nonresident account in French francs and/or the currency of the country of residence of the foreign beneficiary or debtor. For international payments subject to bilateral trade and payments agreements, the provisions of these agreements determine the prescription of currencies. In all other cases, the country of origin or destination of the goods or services constitutes the basis for the determination of specific provisions applicable to the prescription of the currency.

Nonresident Accounts

Nonresident accounts in French francs are classified either as (1) “free franc” accounts, balances on which derive from franc proceeds of the sale of currencies considered as convertible (namely, Canadian dollars, Djibouti francs, and U.S. dollars), from transfers from other nonresident accounts in “free francs,” and from authorized credits; or (2) nonresident accounts in French francs related to a particular country or monetary area. These accounts (other than “tourist” accounts, described below, and “capital” accounts, described in the section on Capital, below) are convertible into the currency of the country of residence of the account holder, provided that the currency in question is one of those dealt in on the exchange market.6 Balances on all other nonresident accounts7 normally are not convertible in France.

All debits and credits to nonresident accounts are subject to control. Nonresident accounts can be credited or debited freely in connection with specified transactions, such as (1) the crediting of any account with the proceeds of sale of convertible currencies on the “free” market, (2) transfers from “free franc” accounts, (3) the crediting of an appropriate nonresident account with the proceeds of the sale of the currency related to the same country as the account, (4) transfers between accounts related to the same country or monetary area, (5) any payments in the French Franc Area, including payments on account of merchandise transactions. In addition, transfers may be made freely between the accounts of authorized banks in Belgium, Denmark, Federal Republic of Germany, Netherlands, Norway, Sweden, Switzerland, and the United Kingdom. Other credit or debit operations on nonresident accounts are subject to approval.

“Tourist” accounts, which must be opened in the names of foreign individuals, can be credited freely with (1) French banknotes deposited-by the owner in person; (2) funds from a “free franc” account or from any other nonresident account in francs, the holder of which is of the same nationality as the tourist’s country of residence (except in the case of Lebanon, Syria, and Tangier); (3) francs obtained by conversion of travelers’ negotiable instruments at the official rate; and (4) foreign currency banknotes corresponding to the tourist’s country of residence. Balances in the “tourist” accounts are not transferable to third parties and cannot be withdrawn by check. Withdrawals can be made only at the bank of account by the owner in person, payment being made to him either in French franc notes or in French franc letters of credit or traveler’s checks payable in the French Franc Area (except New Hebrides and the Associated States of Cambodia, Laos, and Vietnam).

Imports and Import Payments

Most imports are subject to individual licensing. However, licenses are granted freely for the following: (1) specified, liberalized imports from OEEC countries; (2) goods liberalized within specified quotas (this subgroup is of limited significance); (3) goods that are reimported, subject to various limitations, and a list of goods that includes such items as commercial samples, items brought in for or by diplomats, and a few other goods; (4) goods imported under the EFAC arrangements (see section on Exports and Export Proceeds, below); and (5) specified equipment goods, raw materials, and semifinished products for export-producing industries. Subgroup (5) includes only imports under the so-called “10 per cent equipment” arrangement, under which producers of specified export products or groups of products may obtain from the Exchange Office, through the intermediary of their professional organizations, licenses for importing investment goods and raw materials needed for their producing activity.

Other imports subject to individual import licensing can be distinguished in accordance with the degree of restrictiveness applied: (a) individual import licenses usually are granted for specified raw materials or other goods needed for the production of goods to be exported (IMEX or EXIM procedure); (b) imports from OEEC countries receive relatively liberal treatment, at least as far as raw materials are concerned; (c) imports from other countries with which France has concluded bilateral trade and payments arrangements are treated more or less liberally in accordance with quota and other arrangements and with fluctuations in bilateral balances; and (d) dollar imports, in general, are characterized by a certain degree of restrictiveness.

Licenses are issued automatically for purchases of coal and steel products from the other member countries of the European Coal and Steel Community (Belgium, Federal Republic of Germany, Italy, Luxembourg, and Netherlands). Under one category of compensation arrangements, noncompetitive exports are linked with certain preferred imports (of “nonessentials”), which otherwise are restricted.

The determination of the over-all limits to be imposed upon particular classes of imports is made at a ministerial or cabinet committee level, and the more detailed allocation is effected by or with the advice of trade authorities.

The import licenses, which are issued by the Exchange Office, constitute authorization to authorized banks to effect payments.

Payments for Invisibles

Control over payments in respect of many categories of invisibles is supervisory, to ensure that other aspects of the control are not being circumvented. Payments for invisibles relating to trade are permitted freely when the basic trade transaction has been approved. Income accruing to nonresidents in the form of profits, dividends, and royalties is remittable, subject to supervision. Quantitative restrictions are applied to the allocation of exchange for travel; special facilities, however, exist for business travel, particularly for exporters who have been allowed to retain a percentage of their export proceeds (see section on Exports and Export Proceeds, below). Foreign exchange is granted on an individual basis in reasonable amounts for travel abroad for education, health, and family reasons. Appropriate foreign exchange is granted for normal insurance commitments (except in a few specified cases), banking commissions, patents and royalties, and specified categories of taxes. Transfers to nonresidents of current earnings from film rentals and royalties are approved on a liberal basis; however, amounts due to U.S. film companies may be partly transferred to the United States and partly credited to “capital” accounts. Transfers on account of membership fees, subscriptions, donations, remittances for family maintenance, and movements of emigrants’ funds are permitted up to specified limits.

Travelers, as well as residents and nonresidents living near French frontiers, can bring in any amount of banknotes or coins (except gold coins) in metropolitan francs, CFA francs, or CFP francs.

Exports and Export Proceeds

Some exports are subject to individual licensing. Export proceeds must be collected within 90 days from arrival of the goods at destination and in the manner set forth in the regulations (see section on Prescription of Currency, above). Foreign exchange proceeds must be surrendered within a month of the date of their receipt. However, the following percentages of export proceeds are exempt from the surrender requirements:

  • Fifteen per cent of proceeds from exports

    • To Mexico, payable in Mexican pesos or their equivalent in francs from appropriate nonresident accounts; to Peru, payable only in francs from a Peruvian account; and to Cuba, in accordance with the Franco-Cuban agreement of September 5, 1952;

    • To any country, payable in U.S. dollars, Canadian dollars, Djibouti francs, or francs from a “free franc” account;

  • Ten per cent of the proceeds of exports paid for in any other manner;

  • Six per cent of the proceeds of exports on consignment.

These retained percentages of export proceeds are kept in special EFAC accounts, which are separate for each foreign currency or, for export proceeds received in francs, separate according to the designation of the nonresident franc account debited for the payment.

The proceeds that are retained must be used by the original exporter or supplier of the goods either for meeting incidental expenditures or for certain imports, which are limited to raw materials, capital goods, and merchandise used directly by the importing firm. The Exchange Office can, on an individual basis, permit exporters to retain a percentage of export proceeds higher than indicated above; such permits are granted particularly for exports that require considerable publicity expenses abroad.

Proceeds from Invisibles

Residents are obliged to collect and surrender within a month from the date of receipt amounts due from nonresidents in respect of services. When foreign securities are kept abroad in an account in the name of the owner, he is not obliged to surrender the annual income if it does not exceed fr 10,000. Hotels and similar establishments dealing with foreign tourists are permitted to retain a percentage of exchange proceeds under conditions similar to those applicable to exporters.

Travelers, as well as residents and nonresidents living near French frontiers, can take with them out of France banknotes or coins (except gold coins) in metropolitan francs, CFA francs, or CFP francs, up to the value of fr 10,000.

Capital

All outward transfers of capital require approval and generally they are not allowed for residents. Capital assets abroad belonging to or acquired by residents are not subject to repatriation or surrender requirements, and their holders are permitted to reinvest them either in quoted securities in accordance with a general authorization or in other investments under an individual permit.

New investments by nonresidents in France or the French Franc Area can be given an unconditional guarantee of repatriation. Nonresidents who, since September 1, 1949, have made specified investments in the French Franc Area financed through the sale of U.S. dollars, Canadian dollars, or free Swiss francs, or through the utilization of balances on a nonresident “free franc” account, are granted the right to transfer at any time, in the currency in which the investment was made, the proceeds of the sale of these investments, including any possible capital gains. This facility can also, under a special authorization of the Exchange Office, be accorded to new foreign investments effected by residents of EPU countries through the sale of the currency of, or through French francs in a nonresident account related to, the country of residence. However, this repatriation guarantee applies only to investments that are effected according to the general Exchange Office Regulations, i.e.: (a) without prior authorization of the Exchange Office if the investment is made by purchasing stocks quoted on any stock exchange in France, by purchasing real estate through a notary public, or by making a loan denominated in French francs of a maximum value of 10 million francs; (b) with the authorization of the Exchange Office for any other operation, especially nonquoted stocks or a business or by making loans for amounts exceeding 10 million francs.

Other investments by nonresidents, namely, those made before September 1, 1949 or since then without being entitled to the facility mentioned above, do not (except for contractual amortization) benefit from this repatriation guarantee, and the proceeds accruing from the liquidation of such investments are credited to a “capital” account in the name of the foreign owner of the investment. Transfers between “capital” accounts of the same nationality are permitted freely. Balances on these accounts can be utilized freely for such purposes as purchasing investments quoted on stock exchanges in France and for the personal tourist expenses in France of the account holder, his family, or persons resident in the same country or monetary area as that of the account holder; use of balances for the latter purpose is limited to fr 10,000 per person per day, with a maximum of fr 500,000 for a month’s stay of a family in France.

Banknotes

1. Banknotes in Belgian francs, Canadian dollars, Djibouti francs, Portuguese escudos, Swiss francs, and U.S. dollars can be purchased by the authorized banks, without any limitation on the amount, at the rates of the market prior to the day of transaction.

2. Banknotes in Italian lire may be purchased by authorized banks at the market rate.

In both these cases, authorized banks holding an amount of banknotes higher than that needed for their transactions may sell them to other authorized banks or to the Bank of France.

3. Other foreign banknotes may be purchased by authorized banks from their customers at any agreed rate and sold to other authorized banks.

Authorized banks may sell banknotes to residents traveling abroad, under conditions established by an open or individual license of the Exchange Office, up to the maximum amounts that other foreign exchange control authorities permit nonresident travelers to import.

Changes during 1953

January 1

Residents going abroad for tourist purposes to countries other than Canada, Central America, Colombia, Ecuador, Liberia, Peru, United States, and Venezuela were allowed only two exchange allocations of up to fr 30,000 each in a year, subject to the proviso that a period of at least two months must elapse between the granting of the first and the second allocations. Previously, one allocation (limited to fr 30,000) was available once a year in respect of as many of these countries as were visited by the applicant.

January 11

The amount in French franc banknotes and coin that could be taken out of France by travelers was reduced from fr 20,000 to fr 10,000.

February 10

Import licenses were to be issued automatically for purchases of coal from the other member countries of the European Coal and Steel Community.

April 3

A new type of franc account, known as a “tourist” account, was created, enabling tourists to hold francs in bank accounts rather than as currency notes or traveler’s checks.

May 1

Licenses were to be issued automatically for purchases of steel products from the other member countries of the European Coal and Steel Community.

May 11

The rate for the Indo-Chinese piastre was changed from fr 17 to 10 per piastre.

May 18

Authorized banks were permitted to effect spot foreign exchange transactions with authorized banks in Belgium, Denmark, Federal Republic of Germany, Netherlands, Sweden, Switzerland, and United Kingdom, in the currencies of any of those countries or in French francs. Transfers between the nonresident accounts of authorized banks in those seven countries could be effected freely.

September 25

The EFAC account system was modified in the following respects: (1) The system of freely disposable EFAC accounts was abolished with effect from November 1, 1953, except for temporary provisions. Previously, 3 per cent of the proceeds of exports to certain countries or in certain currencies could be used freely by the exporters for any payment abroad. (2) Imports financed out of balances in the EFAC accounts were limited to raw materials, capital goods, and merchandise used directly by the importing firm. Previously, the retained proceeds (12 per cent of proceeds of exports to certain specified countries or in certain currencies and 10 per cent of all other export proceeds) could be used by the original exporter either for meeting accessory expenditures or for importing certain goods directly connected with the exporting industry concerned. Under the new regulations the import of goods intended for resale was prohibited, even though the nature of the goods might bear some relation to the business of the EFAC account holder. (3) Provision was made for the compulsory surrender, at the end of each quarter, of 10 per cent of the unused balances on the EFAC accounts.

October 1

Import licenses were granted without quantitative restriction for certain imports from OEEC countries.

October 5

The multilateral foreign exchange arbitrage arrangements (see May 18, above) were extended to cover forward transactions for periods of not more than three months.

October 10

The regulations relating to the service of French securities held by nonresidents were modified. Certification of non-enemy property was no longer required and the date for the certification of property in the country in whose currency the service was to be made was set at July 1,1953 for all countries.

December 1

Import licenses were to be granted without quantitative restriction for further imports from OEEC countries, raising the liberalization figure from 8 per cent to 20 per cent.

December 14

Norwegian authorized banks and Norwegian kroner were included in the multilateral foreign exchange arbitrage arrangements (see May 18, above) for spot transactions only. Balances on French franc accounts of authorized banks in Norway could be transferred freely to other authorized banks in any of the territories included in the arbitrage arrangements.

Germany, Federal Republic1

Origin and Essential Features

Exchange control was introduced in Germany on July 15, 1931. After World War II, foreign exchange was controlled by the Allied Military Governments. These powers were transferred in full to the Federal Republic after the London Debt Agreement was signed.

The restrictive and control systems applicable to imports, operated through purchase authorizations.to be obtained prior to conclusion of a contract with a foreign supplier, have been relaxed for all liberalized imports. Import and exchange licenses have only a formal technical character. Imports from EPU countries have been largely liberalized, while imports from the dollar area have been liberalized to a lesser extent. In addition, restrictions on invisibles have been eliminated to a large extent.

Capital transactions involving nonresidents and transfers on account of capital are subject to individual licensing. In connection with the London Debt Agreement, however, and with the relaxation of blocked deutsche mark controls, transfers were facilitated to a certain degree. The transfer of earnings on capital invested in Germany2 is free, though some categories are still subject to individual licensing.

Exchange Rate System

The par value is Deutsche Marks 4.20 = US$1. The official market limits are DM 4.195 buying, DM 4.205 selling, per US$1. Basically, exchange transactions are effected at uniform rates based on the par value. However, under a payments agreement with Brazil, special arrangements provide for a free market in Germany for “Brazilian account dollars,” in which the cruzeiro, in practice, is at a discount in relation to the deutsche mark. All proceeds of exports effected after the date of the agreement are sold in this free market, while 80 per cent of foreign exchange payments for imports (in the case of coffee, 50 per cent) from, and related invisible transactions with, Brazil are made through this market.

Authorized banks may carry out spot exchange transactions in Belgian francs, Danish kroner, French francs, Netherlands guilders, Norwegian kroner, Swedish kronor, pounds sterling, and Swiss francs, at rates within specified limits (intervention points), among themselves, with their customers, and with authorized banks in any of the countries of these currencies; in freely transferable Swiss francs, U.S. dollars, and Canadian dollars between themselves, with their customers, with banks in the United States, with Canadian chartered banks, and with authorized banks in any country. Authorized banks in Germany are permitted to carry out forward exchange transactions in all currencies in their own name and at their own risk; they may carry out forward transactions on a multilateral basis, for a period not exceeding three months, in the following currencies: (1) Belgian francs, Danish kroner, deutsche marks, French francs, Netherlands guilders, Norwegian kroner, pounds sterling, Swedish kronor, Swiss clearing francs, and (2) U.S. and Canadian dollars and free Swiss francs. The Bank deutscher Länder, if it is considered necessary, can intervene on this market. German authorized banks may hold their own positions on account of forward exchange transactions only when the transactions are based on underlying merchandise or service transactions.

Administration of Control

The administration of controls in Germany is operated by various offices and authorities, according to the category of the imports or exports involved and the category of payment. However, the Bank deutscher Länder is in most cases the authority in charge of exchange control.

Prescription of Currency

Settlements with countries with which Germany has concluded payments agreements are effected through the channels and in the currencies specified in the provisions of the agreements. Sterling can be used for settlements with Transferable Account countries, as Germany is also a Transferable Account country in the United Kingdom’s exchange control system. In cases where a payments agreement or a special payments arrangement does not exist, settlements are usually effected in U.S. dollars, unless some other currency is specifically prescribed.

Nonresident Accounts

There are four main categories of nonresident DM accounts:

1. Freely Convertible DM Accounts. These accounts may be credited with payments that are authorized to be made in freely convertible currencies, with proceeds from the sale of freely convertible currencies, and with transfers from other freely convertible DM accounts. Balances on these accounts may be remitted abroad, transferred to other nonresident accounts in Categories 1 and 2, paid to residents for all current transactions, and used for the purchase of freely convertible currencies on the Frankfurt exchange market.

2. “Partly Convertible” DM Accounts. These accounts may be credited with authorized payments not freely convertible, with transfers from accounts in Category 1, and with transfers from other “partly convertible” DM accounts. However, for the time being, accounts maintained by residents of Brazil, Turkey, and Yugoslavia may not be credited with the proceeds of commodity exports from these countries. Balances on “partly convertible” DM accounts may be transferred freely to other such DM accounts, they may be remitted abroad through the channels provided by the payments agreements,3 and they may also be used for all current payments to residents of Germany not required to be made in freely convertible currencies. “Partly convertible” DM accounts may be credited with balances held on blocked DM accounts in German banks as at March 31, 1954 (these balances can also be transferred directly to payments agreement countries).

3. Accounts Related to Payments Agreements. These DM accounts (in the names of authorized banks) are used for carrying out the terms of payments agreements.3 Although under these agreements balances are not generally transferable between countries, balances on accounts in the names of authorized banks in any of the EPU countries4 may be transferred freely from one account to the other.

4. Blocked Accounts. Blocked accounts may be maintained by nonresidents in financial institutions in Germany. Some of the chief sources of these accounts are the sale of German real property by foreign owners, the sale of securities held in Germany by nonresidents, and restitution and compensation due to nonresidents for confiscation or war damage. Certain foreign debts may be repaid in deutsche marks by crediting blocked accounts.

Transfers of blocked accounts from one nonresident to another are permitted. Balances thus transferred are held as “acquired” blocked accounts. Balances on both original and acquired blocked accounts may be used for specified investments in Germany (real property, securities, participation in German enterprises in Germany, and loans or credits to companies and individual persons).

The transfer of blocked deutsche mark balances to foreign countries has been freed to a limited extent. Individuals may transfer DM 500 per month from their original blocked DM accounts. Individuals whose balances on original blocked deutsche mark accounts did not exceed DM 10,000 on December 31, 1953 (Kleinkonten) may have such balances transferred in one sum to their country of residence. Original blocked balances may be used by holders to pay for travel and maintenance expenses in Germany of themselves, direct members of their families, and members of their households, up to DM 120 per day per person, provided that total withdrawals do not exceed DM 500 per day. Nonresident legal entities, companies, and other firms may use their blocked balances for travel and maintenance expenses in Germany of their employees, up to DM 120 per day per person and up to DM 20,000 yearly. Nonresidents living abroad may remit to residents in Germany, out of their original blocked balances, up to DM 1,000 per month for maintenance. In addition, balances on original blocked accounts may be used for payment of taxes, insurance premiums, and similar expenses in Germany.

Imports and Import Payments

Most imports from OEEC countries and their associated areas5 are authorized freely, while imports from the dollar area are liberalized to a lesser extent. About 80 per cent of imports from bilateral agreement countries are not restricted.

For all imports not liberalized, purchase authorizations are required. The purchase authorization constitutes an obligation on the part of the exchange and trade authorities to issue import and exchange licenses upon the presentation of a sales contract. Applications for purchase authorizations are finally processed by the Land Central Banks or the Federal authorities.

Payments for Invisibles

Payments for invisibles, particularly those connected with or related to foreign trade, are almost entirely free of individual licensing, though they are subject to certain controls.

Payments for invisibles that are neither directly related to merchandise transactions nor considered to be in the capital sphere, such as remittances of pensions and transfers of wages and salaries, are subject to separate regulations. Wage transfers up to DM 1,000 per month by foreign resident workers to OEEC countries are generally approved.6 Wages and salaries of border and migrant workers may be transferred to OEEC countries, after taxes and living expenses have been deducted; only migrant workers need a license.

Residents are permitted to make payments up to DM 200 per quarter to payments agreement countries, in accordance with the provisions of the related payments agreements, for any purpose other than on account of import or capital transactions. Persons accorded restitution payments can receive abroad amounts up to DM 500 a month.

Residents going abroad on business are granted foreign exchange on a per diem basis, ranging from DM 65 to DM 125, according to the country of destination.7

The yearly exchange allocation for tourist travel to OEEC countries is DM 800 per adult; to Finland, DM 1,000; to Egypt, DM 1,000; to Spain, DM 800; and to Yugoslavia, DM 800. For winter sports travel to OEEC countries, an additional DM 500 is granted.8

Residents are permitted to take out freely, in addition, German banknotes up to DM 300. Nonresident travelers may take out foreign exchange and deutsche marks in unlimited amounts, provided the import has been certified on entry into Germany.

Emigrants from Germany to OEEC countries are permitted to take with them the same amount of exchange as residents traveling for nonbusiness purposes and, in addition, DM 840 per family.9

The following categories of earnings accruing from foreign investments in Germany may be transferred abroad: (1) dividends and other profits accruing from partnership, due for the business year ending December 31, 1952 or later; (2) profits accruing from enterprises that are legally independent branches or shops, due for the business year ending December 31, 1952; (3) profits accruing after January 1, 1953 from real estate; (4) interest accruing after January 1, 1953 from investments in German currency (e.g., debts, mortgages) unless the transfer is already provided for in accordance with the London Debt Agreement (see below).

The proceeds of blocked DM investments also may be transferred abroad, provided such proceeds did not arise in any calendar year earlier than 1953. The transfer of bonds drawn by lot for repayment—payable as from January 1, 1954—also is authorized.

Special arrangements are applicable to transfers of interest and amortization on account of specified German external debts, in accordance with the London Debt Agreement, signed February 27, 1953 and effective September 16, 1953.10 Under this Agreement, the following categories of debts are to be settled:11 (1) noncontractual pecuniary obligations, the amount of which was fixed and due before May 8, 1945; (2) pecuniary obligations arising out of loan or credit contracts entered into before May 8, 1945; and (3) pecuniary obligations arising out of contracts other than loan or credit contracts and due before May 8, 1945, provided such debts are (a) covered by the Agreement, (b) owed by a person residing in the Deutsche Mark Currency Area at the time of settlement, (c) owed to the government of a creditor country or owed to a person residing in, or a national of, a creditor country at the time of settlement, or (d) arising from marketable securities payable in a creditor country.

A number of claims and debts were excluded from settlement under the Agreement, e.g., governmental claims against Germany arising out of World War I and claims arising out of World War II.

No repayment in foreign exchange of any debt covered by the Agreement will be made during an initial period of five years, except in special cases. No reduction in the outstanding principal was made; however, the claims of France, the United Kingdom, and the United States on account of postwar loans were significantly reduced.

For other debts, two thirds of the unpaid interest up to January 1, 1953 was funded and one third was waived. Such funded interest, together with the unpaid principal, constitutes the new principal amount. Interest on this amount becomes payable for the first time on January 1, 1953, at 75 per cent of the rates of interest provided for in the original contracts. Such new current rates of interest, however, may not exceed 5¼ Per cent on bonded debts and 6 per cent on nonbonded indebtedness, nor will it be below 4 per cent unless the rate below 4 per cent is already stipulated by the old contract.12 Foreign bank creditors under the German Credit Agreement of 1953, which forms Annex III of the London Debt Agreement, were permitted to recommercialize 15 per cent of their aggregate short-term credits outstanding on the date of the Agreement.13

Exports and Export Proceeds

All foreign exchange proceeds of exports must be reported and surrendered within the period permitted by the terms of the export regulations. In order that the surrender of exchange proceeds can be controlled, an export declaration is required for all exports. The exporter is responsible for obtaining the proceeds of the export. Foreign exchange proceeds must be received in specified currencies.

For certain exports—mostly strategic commodities—licenses are required; these are granted by the Federal Office for Merchandise Trade.

The customs authorities exercise control over export declarations and also check to see whether a license is required. Control over the receipt of export proceeds is undertaken by the Land Central Banks and the authorized banks, according to the instructions of the Bank deutscher Länder. The Bank deutscher Länder undertakes the evaluation of the returns, however, only for exports exceeding DM 1,000 in value.

Exporters are permitted to use without a license up to 5 per cent of their export proceeds to pay the customary commissions to their agents abroad, and, in individual cases, they may draw up to DM 5,000 for payments in settlement of claims arising from defects or to cover such usual discounts or other reductions in price as may have been agreed upon subsequently. Under the foreign exchange working fund procedure, 4 per cent of all export proceeds are credited to special accounts (pro memoria). Balances on these accounts, which are not transferable, may be used for the importation of raw materials and other commodities essential to export production, but commodities thus imported may be used only in the firm carrying the foreign exchange working fund. Exporters are permitted to maintain foreign currency accounts with German authorized banks, but these accounts can be used only for authorized payments.

In general, exports effected without payment require licenses (a “certificate of nonobjection”), although certain of these exports are exempt from this requirement.

Proceeds from Invisibles

Services are free of license, provided that reasonable payment has been agreed with the recipients of the services. A special license is required for transactions relating to the sale of, or the granting of licenses in connection with, inventions, patents, registered designs, trademarks, etc., as well as for the rendering of technical assistance through the delivery of constructional drawings, materials, and instructions for manufacture.

All residents are obliged to register at an authorized bank, and surrender, any claims that have arisen in their favor against debtors abroad.

Deutsche mark notes may be brought or sent into Germany in unlimited amounts.

Capital

The transfer of capital amounts to Germany for investment purposes may be authorized. Importation of capital equipment and services for purposes of investment in the Federal Territory are, as a rule, likewise authorized.

The transfer of capital by nonresidents from Germany to foreign countries generally is not permitted. However, the following transfers abroad may be made: the equivalents of bonds drawn by lot for repayment (see section on Payments for Invisibles, above); blocked DM balances in amounts not exceeding DM 10,000 (see section on Nonresident Accounts, above) old foreign capital claims not exceeding DM 50,000, including interest up to December 31, 1952; bonded debts in the total amount of not more than DM 600,000, including interest up to December 31,1952.

Current earnings on foreign capital invested in Germany may be transferred abroad in full (see section on Payments for Invisibles, above).

Securities payable in German currency may be transferred by nonresidents for sale or deposit to a financial institution in Germany. The proceeds of such sales must be credited to a blocked DM account (see section on Nonresident Accounts, above).

Residents may not dispose of prewar German assets abroad. New foreign investments by residents require a license from the Federal Ministry of Economy in cooperation with the Bank deutscher Länder; for amounts up to DM 50,000, licenses may be granted by the regional ministries and the Land Central Banks.14 The regulations specify that new foreign investments should be carried out in the best way from the point of view of the economy.

Changes during 1953

January 2

Authorized banks were permitted to conclude spot and forward transactions with authorized banks in EPU countries provided that (a) the currency dealt in was that of the country of residence of the bank with which the transaction was concluded and (b) transactions were effected at rates applicable by the Bank deutscher Länder.

January 24

The yearly exchange allocation for nonbusiness travel to OEEC countries was established at DM 500 per adult, with an additional allocation, until March 31, 1953, of DM 300 for winter sports travel to OEEC countries. Persons traveling to OEEC countries for nonbusiness purposes could purchase air tickets from companies authorized to operate in Germany, by payment in deutsche marks, outside their yearly exchange allocation.

February 13

Transfers between deutsche mark accounts of foreign banks having their seat in EPU countries were permitted.

February 27

The London Debt Agreement, providing for the settlement of many categories of prewar German external debts, was signed. (It became effective September 16, 1953.)

March 15

Liberalization of Germany’s imports from OEEC countries (including their dependent overseas territories) was increased to 84.4 per cent.

March 25

Claims related to incidental expenses and services need not necessarily be transferred to Germany but could be used to pay similar expenses and services abroad.

April 1

The percentage of liberalized imports from OEEC countries was further increased, to 90.12.

The yearly exchange allocation to persons traveling to OEEC countries for nonbusiness purposes was increased from DM 500 to DM 800 per adult.

Persons traveling to OEEC countries for nonbusiness purposes could purchase steamship tickets for direct line service from companies authorized to operate in Germany, by payment in deutsche marks, outside their yearly exchange allocation.

The granting of reimbursement credits to foreign banks in connection with export transactions was permitted.

April 23

Regional land ministries were authorized to permit investments, up to DM 50,000, in branches abroad.

April 30

Authorization to import was extended to additional groups of individuals or firms.

May 1

Purchase authorizations for imports of coal, iron ore, iron, steel, and scrap from members of the European Coal and Steel Community were no longer required.

May 4

Belgian francs, French francs, Netherlands guilders, and Swiss francs were quoted freely on the Frankfurt Exchange within the intervention points established by the Bank deutscher Länder. Authorized banks could conclude spot transactions in these currencies among themselves, with their customers, and with authorized banks in the countries of the currencies concerned, within the intervention points.

May 11

The Canadian dollar was quoted on the Frankfurt Exchange within intervention points. Authorized banks could conclude spot transactions in Canadian dollars with their customers and among themselves against deutsche marks, and with Canadian chartered banks and banks in the United States against U.S. dollars.

May 18

Danish kroner, pounds sterling, and Swedish kronor were added to the currencies permitted to be dealt in on the Frankfurt Exchange.

May 30

The Canadian dollar could be dealt in against U.S. dollars on a forward basis by authorized banks among themselves, with Canadian chartered banks, and with banks in the United States.

June 1

The Bank deutscher Länder would not intervene in transactions in foreign banknotes and coins other than U.S. dollars, and fixed rates, except for U.S. dollars, would not be maintained for foreign banknotes and coins.

Authorized banks were permitted (1) to buy foreign banknotes and currencies for their own account and for subsequent sale to resident travelers; (2) to negotiate them between themselves; (3) to sell them at the most advantageous rate, including disposal abroad; (4) to change them abroad, provided that the currency is the same; and (5) to purchase them from their foreign correspondents only when they cannot be obtained on the internal market. Foreign banknotes and coins could not be purchased by authorized banks against freely convertible currencies.

July 1

The import rights system, in force since the spring of 1952, was abolished. Import rights accounts No. 1 (i.e., accounts held in the names of original exporters) could be credited until December 31, 1953, and outstanding import rights could be utilized until the end of the first quarter of 1954.

July 9

Amounts owed in cases of individual indebtedness could be transferred, provided the total of principal plus interest accrued until December 31, 1952 did not exceed DM 10,000. Loans in the total amount of not more than DM 600,000, including interest up to December 31, 1952, likewise were released for transfer.

July 10

Enterprises could obtain a general license entitling them to pay any incidental expenses, instead of an individual license for each transfer.

July 22

The Bank deutscher Länder discontinued forward transactions in Italian lire, Norwegian kroner, Portuguese escudos, and U.S. dollars. Forward rates for these currencies would be formed freely on the market, in which the Bank deutscher Länder would intervene only if necessary.

July 24

The period for retention of foreign exchange in foreign currency accounts of importers and exporters was extended to one month, with a view to facilitating disposal of the foreign exchange balances or applications to effect authorized exchange payments.

July 25

Coffee imported from Brazil had to be paid at least 50 per cent in “Brazilian account dollars,” purchased at the official rate from the Bank deutscher Länder.

July 27

A rate for Swiss francs outside the payments agreement arrangements was quoted on the Frankfurt Exchange. Authorized banks could negotiate such free Swiss francs, spot and forward, against deutsche marks between themselves and with their customers, and against Canadian and U.S. dollars between themselves, with banks in the United States, with Canadian chartered banks, and with authorized banks in other countries.

July 29

Authorized banks were permitted to conclude spot and forward exchange transactions in Canadian dollars, against deutsche marks or U.S. dollars, with authorized banks in any country.

July 31

The Bank deutscher Länder abstained from transactions in U.S. dollar banknotes, which could be dealt in by authorized banks within the limitations indicated on June 1, above.

August 1

Emigrants to OEEC countries were permitted to take with them the same amount of exchange as resident travelers were allowed for nonbusiness travel, plus DM 840 per family.

August 10

The import procedure for liberalized goods was simplified by waiving the necessity for a purchase authorization.

The general license for payments in settlement of claims arising from defects was increased from $500 to DM 5,000.

U.S. dollars were quoted on the Frankfurt Exchange within intervention points. Authorized banks could make transactions in U.S. dollars, against deutsche marks with their customers and between themselves, and against free Swiss francs and Canadian dollars between themselves, with Canadian chartered banks, and with banks in the United States.

September 1U

Foreign bank creditors under the German Credit Agreement of 1953, which forms Annex III of the London Debt Agreement, were permitted to recommercialize 15 per cent of their aggregate short-term credits outstanding on the date of the Agreement.

September 16

The London Debt Agreement came into effect. The Allied High Commissioners transferred foreign exchange control in full to the Government of the Federal Republic of Germany.

September 17

The first basic facilities for transfer in the field of capital transactions were announced. The transfer of the proceeds of such foreign investments in Germany as were already in the possession of the foreign beneficiary on July 15, 1931 was resumed (see section on Payments for Invisibles, above).

September 21

Holders of original blocked balances could use, for payment of their own travel and maintenance expenses and those of direct members of their families and accompanying household members in Germany, up to DM 120 per day per person (previously DM 75), provided that total withdrawals per family per day did not exceed DM 500 (previously DM 200).

Nonresident legal entities, companies, and other firms were permitted to dispose of their blocked balances, up to DM 120 (previously DM 75) per day per person and up to DM 20,000 yearly, to cover travel and maintenance expenses in Germany of their employees.

October 5

Authorized banks were permitted to carry out forward transactions (for a period not exceeding three months), in their own name and at their own risk, in Belgian francs, Danish kroner, deutsche marks, French francs, Netherlands guilders, pounds sterling, Swedish kronor, and Swiss (clearing) francs, with any authorized bank in any of the countries of these currencies.

October 15

The limit on relief payments made to residents by debiting original blocked deutsche mark accounts was raised from DM 300 to DM 1,000. Existing restrictions on the category of persons eligible for such relief payments were lifted.

Nonresidents were permitted to bring in German banknotes up to DM 300 (previously DM 200) residents were permitted to bring in DM 100 (previously DM 40). Nonresidents leaving Germany were permitted to take out German banknotes up to DM 300 (previously DM 200) residents were permitted to take out German banknotes up to DM 100 (previously DM 40).

November 21

A general license was issued for the acquisition and maintenance of patents, trademarks, and copyrights.

December 1

The additional allocation of exchange for winter sports travel to OEEC countries was increased to DM 500, until March 31, 1954.

December 3

Payments abroad by residents were permitted freely, up to DM 200 per quarter, to countries with which Germany had concluded payments agreements and in accordance with the provisions of such agreements, for any purpose other than the settlement of trade transactions, of obligations due prior to May 9, 1945 or of obligations due on account of foreign investments in Germany, or for building up assets abroad.

December 14

The Norwegian krone was added to the currencies permitted to be dealt in on a spot basis on the Frankfurt Exchange and by authorized banks with authorized Norwegian banks and other foreign banks admitted to the multilateral exchange arbitrage arrangements (see May 4 and 18, above).

December 19

It was announced that, effective January 1, 1954, resident travelers would be allowed to import and export freely German banknotes up to a limit of DM 300, aside from their allocation of exchange for business and nonbusiness travel (see section on Proceeds from Invisibles, above).

December 21

Approved payments for certain incidental expenses could be transferred without control by the central exchange authorities.

December 23

Permission to transfer capital earnings was extended to all investments, provided these had not been acquired from blocked deutsche mark balances after August 8, 1950. At the same time, the limitation on transfers to those countries which had ratified the London Debt Agreement was abolished.

December 24

Persons accorded restitution payments could have amounts up to DM 500 per month transferred to them abroad.

The limit up to which claims may be transferred immediately under the London Debt Agreement as so-called minor amounts (Kleinbeirädge) was raised from DM 10,000 to DM 50,000.

Transfer to the debit of original blocked deutsche mark accounts of individuals was permitted up to DM 500 (formerly DM 300) per month, and transfer was no longer restricted to hardship cases. Original blocked deutsche mark balances not exceeding DM 10,000 as of December 31, 1953 (Kleinkonten) could be transferred in one sum.

Note: Changes that have taken place during the first months of 1954 are listed below:

January 1

The amount of pensions that could be transferred to the dollar area and to bilateral agreement countries was increased from DM 300 to DM 500 per month.

January 8

The period for retention of foreign exchange in foreign currency accounts of importers and exporters with German authorized banks was extended to three months.

January 12

Claims expressed in German currency arising out of financial transactions before May 8, 1945 could be transferred abroad up to an amount of DM 50,000.

January 13

Importers were authorized to maintain foreign exchange accounts in the currencies admitted for multilateral exchange arbitrage in the Federal Republic. Amounts needed to pay for imports could be bought and credited to such accounts prior to the due date of the payments.

January 20

The Norwegian krone was added to the currencies which could be dealt with forward up to three months in the multilateral exchange arbitrage arrangements (see October 5, above).

February 1

The proceeds of blocked DM investments could be transferred. At the same time, the transfer of bonds drawn by lot for repayment—payable as from January 1, 1954—was authorized.

The percentage of liberalized imports from OEEC countries was further increased, to 92.

February 17

Imports from the dollar area were liberalized to an extent of 40 per cent of goods privately imported in 1953 from the dollar area.

March 1

Transit trade regulations were relaxed inter alia: by raising the amount of general licenses for transit transactions with EPU countries from DM 100,000 to DM 500,000; by the admission of transit transactions involving storage, which opened the possibility of making speculative purchases; and by the establishment of transit trade funds in the EPU currencies admitted to multilateral exchange arbitrage (such funds were previously permitted in dollars only).

March 16

Liberalization was extended to those countries belonging to monetary areas of EPU members and making settlements in EPU currencies.

April 1

Deutsche mark notes could be brought or sent into Germany in unlimited amounts.

Two new categories of DM accounts for nonresidents were created: (1) Freely convertible DM accounts, available for the receipt of payments authorized to be made in freely convertible currencies. Balances on these accounts may be remitted abroad or credited to any DM account, including all current payments in Germany. (2) “Partly convertible” DM accounts, available for the receipt of all other authorized payments. Balances on these accounts may be remitted abroad through the channel provided by the payments agreements, transferred to other “partly convertible” DM accounts, or paid to a resident of Germany for any current payment that does not have to be made in freely convertible currencies. Representative DM accounts D and Z and DM Agent accounts were abolished and their balances transferred either to freely convertible or to “partly convertible” DM accounts.

April 8

Balances held on blocked DM accounts in German banks as at March 31, 1954 could be transferred to payments agreement countries or credited to “partly convertible” DM accounts.

Greece

Origin and Essential Features

A system of controls was introduced in Greece on September 28,1931. The most recent revision took place on April 9,1953, when existing multiple exchange rate practices were discontinued and the official rate of the drachma was raised from Dr 15,000 to Dr 30,000 per US$1, this rate in principle being applied to all settlements for imports, exports, and invisibles. In general, there are no quantitative restrictions on imports. Import restrictions are maintained on approximately one dozen unimportant commodities of a luxury nature. All payments for invisibles require individual licenses, which are granted freely for expenses incidental to authorized trade transactions. Most exports are free of quantitative restrictions. Export proceeds as well as other proceeds must be surrendered. Barter transactions are permitted with certain countries, subject to license. All capital transfers are subject to individual approval. Preferential treatment is granted to approved new foreign investments. Prescription of currency requirements are applied to exchange receipts and payments.

Exchange Rate System

There is no established par value for the Drachma. The official rates are Dr 29,900 buying, Dr 30,100 selling, per US$1.1 The rate of the drachma in relation to other currencies is determined by the Bank of Greece on the basis of the parity relationship of each of these currencies to the U.S. dollar.

Administration of Control

Controls are administered on the policy level by the Ministry of Commerce, the Foreign Trade Board, the Ministry of Finance, and a Currency Committee, and are carried out by an Exchange Control Committee, the Executive Committee of the Foreign Trade Administration, the Bank of Greece, and authorized commercial banks.

Prescription of Currency

Settlements on account of merchandise transactions and invisibles are effected in the currency and manner provided for by trade and payments agreements, or on the basis of the origin and destination of the goods and services involved. Under the terms of most of the trade and payments agreements, settlements are effected through controlled accounts, with the U. S. dollar as the currency of account, or in the currency of the partner country.

Imports and Import Payments

A general license permits the opening of letters of credit freely for all commodities, and import licenses are granted freely for all commodities for payment against documents and for certain commodities for payments on time settlement, in cases where the commodities originate in and are consigned from (1) countries participating in EPU provided payment of their value is effected through EPU; (2) other countries with which Greece has bilateral payments agreements2 provided payment is effected through the corresponding clearing accounts; (3) any other country except Albania, Mainland China, Israel, Japan, North Korea, and Rumania provided payment is effected through EPU. Exchange in payment thereof is allocated automatically.

Import licenses, which are granted freely, are required for goods originating in and consigned from (a) countries specified in Procurement Authorizations for all transactions financed with Foreign Operations Administration funds, and (b) United States and possessions, as well as Canada, when payment is made in free dollars. Individual import licenses are required for commodities with a country of origin, consignment, and method of payment other than those listed above. In addition, 12 commodities and groups of commodities (List “A”), which include textiles, natural silk, wheat, flour, passenger cars with a value exceeding $1,800 f.o.b. factory, and a few commodities of a luxury character, also require individual licenses. Certificates issued by the Ministry of Industry are required for imports of certain specified types of machinery, and machinery spare parts. After payment has been made or the importer has accepted a draft, the banks issue customs clearance permits, which enable the importer to take delivery of the goods. Special regulations govern imports by state agencies, legal entities, and public utility companies.

Payments for Invisibles

Payments on account of invisibles require individual licenses, but these are granted freely for expenses incidental to authorized trade transactions. Transfers abroad on account of specified categories of insurance (e.g., ships and airplanes, merchandise transportation, fire, accident, and life insurance) are authorized by the Bank of Greece up to specified percentages of the amounts owed. Persons traveling abroad may take with them a maximum of Dr 200,000 in Greek banknotes.

Exports and Export Proceeds

All exports are subject to individual licensing, but most exports are free of quantitative limitations. An export tax of between Dr 1,000 and Dr 5,000 per US$1 is charged on exports of a number of commodities. Export proceeds have to be surrendered in the appropriate currency.

Proceeds from Invisibles

Exchange receipts representing payments for services must be surrendered. Foreign exchange proceeds from shipping are exempt from the surrender requirement; however, shipowners have to pay taxes, fees, etc., and have to cover their disbursements and expenses in Greece in local currency obtained through the sale of foreign exchange to the Bank of Greece at the official rate. Individuals may bring in a maximum of Dr 200,000 in Greek-anknotes.

Capital

Transfers of capital abroad require approval. Interest and amortization service on Greek securities is suspended. All drachma assets of nonresidents are required to be declared and held in blocked accounts. Subject to the approval of the exchange control authorities, however, balances on such accounts may be utilized for the purchase by a nonresident of real estate in Greece; the sale of such real estate is permitted provided that the sale proceeds are credited to a blocked account opened in the name of the nonresident seller.

Under Legislative Decree No. 2687 of October 31, 1953, an approved specified foreign investment in Greece can be granted preferential treatment, but is not repayable before one year from the date of its importation or before one year from the date the enterprise begins to operate productively. Approved foreign capital may be repatriated at an annual rate not exceeding 10 per cent; transfers for dividend payments on equity capital may not exceed 12 per cent per year, and those for payments of interest on loan capital may not exceed 10 per cent. Rentals payable on foreign machinery, and materials, patents, technical processes, and trade marks may be transferred freely.

Enterprises established or assisted financially with foreign capital are permitted to employ in high positions foreign nationals, whose salaries may be freely transferred abroad as provided in the instrument of approval.

Special regulations are applicable to foreign capital invested in marine enterprises. Deviation from general regulations can be approved if foreign capital is imported to develop exports of agricultural and mining products or is invested in enterprises of special importance to the economy of Greece. Specified foreign short-term investments also are granted preferential treatment in respect of the repayment of capital and the transfer of interest.

Changes during 1953

March 2

The importation of 105 commodities or groups of commodities (List E.1) and 32 commodities (List E.2) from EPU and other payments agreement countries could be effected without quantitative restrictions; however, imports included in List E.2 were subject to approval by the Central Price Control Committee.

March 5

Thirty per cent of exchange accruing to legal entities from legacies abroad or from collections made among Greeks living abroad could be used for specified imports from EPU or clearing agreement countries. The import rights in question could be ceded to third persons.

April 9

The official parity was changed from Dr 15,000 to Dr 30,000 per US$1. Existing multiple exchange rate practices were abolished.

April 19

Except for specified commodities, quantitative restrictions were abolished on imports from (1) bilateral payments agreements countries, when paid for according to the provisions of the agreements; (2) from EPU and other countries (except Mainland China and North Korea), if payable through the EPU mechanism; and (3) from United States and Canada.

Quantitative export controls in respect of many commodities were also abolished.

A tax of from Dr 1,500 to Dr 9,000 per US$1 was imposed on exports of a number of commodities: cotton by-products, Dr 1,500; rice and by-products, and scrap iron, Dr 5,000; cotton, and olive oil in 5-kilogram cans, Dr 6,000; olive oil in barrels, Dr 9,000.

May 11

The Bank of Greece was authorized to issue export licenses in respect of 100 commodities.

July 7

Import procedure permitted payments for imports to be made against documents and, for certain commodities, on a time settlement basis.

September 3

The tax on exports of cotton was reduced from Dr 6,000 to Dr 4,000 per US$1.

September 16

The tax on exports of ordinary olive oil was reduced from Dr 9,000 to Dr 5,000 per US$1, and for refined or blended olive oil, from Dr 5,000 to Dr 4,000 per US$1.

November 10

Legislative Decree No. 2687 of October 31, 1953 became effective. Under its terms, approved foreign investments were granted preferential treatment in respect of taxes, duties, the repatriation of capital, and the transfer of earnings.

November 21

The tax on exports of ordinary olive oil was reduced from Dr 5,000 to Dr 4,000 per US$1, and on refined or blended olive oil from Dr 4,000 to Dr 2,000 per US$1, with an intermediate quality on which a tax of Dr 3,000 per US$1 was imposed.

Hong Kong

Origin and Essential Features

Exchange control was introduced in Hong Kong on September 8, 1939. Since then various measures have been taken to secure control over most non-dollar transactions. Control is applied to most trade and exchange transactions. As an exception, certain exchange transactions and trade with nearby territories are effected without control or restrictions; and other transactions, mainly in U.S. dollars against Hong Kong dollars, are freely effected through a free market. Since the former are dealt with at official rates and the latter at free market rates, a multiple exchange rate practice results.

Exchange Rate System

The par value is Hong Kong Dollars 5.71429=US$1, but there is a multiple exchange rate system comprising the official rates, free market rates, and four mixed rates (see Table of Exchange Rates, below). The official rates are those of the authorized banks based on the sterling-Hong Kong dollar rates (established by agreement between the three note-issuing banks and the Hong Kong Official Exchange Fund) and the sterling-foreign currency rate in the London foreign exchange market. The official rates apply to all transactions in Hong Kong dollars against sterling, to the U.S. dollar proceeds of exports not of local origin (exceptionally, in the case of seven local commodities, a percentage of the proceeds must be surrendered at the official rate), and to most authorized non-dollar transactions. The free market rate applies to all other transactions.

Exchange Control Territory

The Colony of Hong Kong is a part of the Sterling Area—the Scheduled Territories of the United Kingdom’s exchange control system.

Administration of Control

The exchange control system in Hong Kong is operated by 25 banks 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 not permitted to conclude exchange transactions at other than the official rates.

Prescription of Currency

All payments and receipts except those effected through the free market must be made by the method and in the currency prescribed in the United Kingdom’s Exchange Control Regulations. (For details, see United Kingdom, section on Prescription of Currency.) In addition, payments and receipts may be made in Hong Kong dollars through the account of a bank established in the other country concerned.

Nonresident Accounts

Credits to the accounts of banks situated outside the Sterling Area, Mainland China, the Republic of Korea, Macao, and Taiwan require licenses. Payments from these accounts, including payments for exports to the respective countries invoiced in Hong Kong dollars, may be made to residents of Hong Kong. Credits to the accounts of persons and firms resident in the North American continent and the Philippine Republic require licenses; but credits to accounts of persons and firms in other countries do not require licenses. All transfers between Hong Kong and other Sterling Area territories require licenses, but authorized exchange banks may make or receive such payments without license if the transaction is in respect of (1) bona fide trade between Hong Kong and other Sterling Area territories, (2) dividends and interest payments, or (3) small bank charges.

Imports and Import Payments

Except for certain strategic materials and for some other items from specified countries, imports are free of import licensing. Exchange licenses are required, even if the importer provides his own exchange, for imports from all countries except other parts of the Sterling Area, North America, Mainland China, Indo-China, Indonesia, the Republic of Korea, the Philippine Republic, Taiwan, and Thailand. The exchange licenses are freely granted provided payment is made in accordance with the regulations laid down in the United Kingdom (see section on Prescription of Currency, above). Foreign exchange, except U.S. dollars, in payment for authorized imports may be obtained at the rate corresponding to the official rate, but U.S. dollar exchange at this rate is normally authorized only for a few imports regarded as strictly essential. For other authorized imports payable in U.S. dollars, foreign exchange can be obtained in the free market.

Payments for Invisibles

To obtain exchange at the official rate, an exchange license is required. These are granted to local residents for most invisible transactions on criteria similar to those applied in the United Kingdom, e.g., exchange at the official rate for travel, personal remittances, and similar purposes is limited. If exchange at the official rate is not authorized, exchange licenses can be issued upon evidence of the prior sale to an authorized exchange bank of the equivalent in U.S. dollars (which can be purchased on the free market). In any event, payments may be freely effected through the free market by holders of Hong Kong dollars. All transfers to other parts of the Sterling Area require licenses, except that authorized exchange banks may make remittances for dividends and interest payments without licenses.

Exports and Export Proceeds

Exports of certain strategic articles and of a few commodities in short supply to any destination require licenses.1 For exports to all countries other than the Sterling Area, Mainland China, the Republic of Korea, Macao, and Taiwan, a declaration by the exporter, showing how the export proceeds will be collected, must be approved by the Department of Commerce and Industry.

Payments for exports to countries other than Mainland China, the Republic of Korea, Macao, Taiwan, and the Sterling Area must be collected by one of the methods prescribed in the exchange control regulations of the United Kingdom as being appropriate to the country of destination of the goods, or in Hong Kong dollars from the account of a bank established in the country of destination of the goods. The U.S. dollar f.o.b. proceeds of most Hong Kong exports originating in Mainland China, Hong Kong, the Republic of Korea, Macao, and Taiwan are freely disposable. The U.S. dollar proceeds from exports originating in other countries must be entirely surrendered. The U.S. dollar f.o.b. proceeds of exports originating in Mainland China, Hong Kong, the Republic of Korea, and Macao must be surrendered to the extent of 50 per cent for cotton yarn, 25 per cent for lead, silver (subject to prior permission), and tin, 20 per cent for copper and feathers, and 15 per cent for wood oil. The remaining percentages may be sold in the free market. Exchange proceeds in other currencies from exports to countries other than Mainland China, the Republic of Korea, Macao, and the Sterling Area must be received in foreign exchange appropriate to the country of destination (see section on Prescription of Currency, above) and surrendered.

Proceeds from Invisibles

The receipt of transfers from other parts of the Sterling Area requires permission, unless in respect of dividends or interest. The proceeds of freight and insurance payable on exports originating in Mainland China, Hong Kong, the Republic of Korea, Macao, and Taiwan and financed in U.S. dollars must be surrendered at the official rate if they have been paid by the exporter in Hong Kong in pounds sterling or Hong Kong dollars. The surrender of other exchange receipts from invisibles is not insisted upon.

Capital

Outgoing transfers of capital in currencies other than U.S. dollars may be effected at the official rate, but they require licenses, which are granted only for approved purposes or at the discretion of the local control provided the equivalent in U.S. dollars has been sold to an authorized exchange bank. Transfers of capital can be effected freely through the free market by holders of Hong Kong dollars, but all transfers to and receipts from other parts of the Sterling Area require licenses, which are granted for all bona fide transactions effected between Hong Kong and other parts of the Sterling Area.

Table of Exchange Rates (as at December 31, 1953)(sterling per Hong Kong dollar or Hong Kong dollars per U.S. dollar)
BuyingSelling
1s. 2 15/16d.1s. 2 27/32d.
All transactions in sterling against Hong Kong dollars. (Rates for nondollar currencies are based on the sterling rate.)All transactions in Hong Kong dollars against sterling.

or
HK$5.694HK$5.776 as appropriate.
Exports not originating in Mainland China, Hong Kong, Republic of Korea, and Macao payable in U.S. dollars.A few essential imports payable in U.S. dollars. Authorized invisibles and capital. All non-dollar imports.
HK$5.790 (50% at HK$5.6U and 50% at Free Market Rate)
Cotton yarn exports.2
HKS5.837 (25% at HK$5.694 and 75% at Free Market Rate)
Lead, silver, and tin exports.2
HK$5.847 (20% at HK$5.694 and 80% at Free Market Rate)
Copper and feather exports.2
HKS5.854 (15% at HK$5.6U and 85% at Free Market Rate)
Wood oil exports.2
HK$5.885 (Fluctuating Free Mar-(approx.) ket Rate)HK$5.885 (Fluctuating Free Mar-(approx.) ket Rate)
All other exports. Invisibles and capital.All other imports payable in U.S. dollars. Other invisibles and capital.

Changes during 1953

March 24

The basic travel allowance of exchange at the official rate for residents (for exchange control purposes) of Hong Kong traveling in certain countries was increased from £25 to £40 per person for the 12 months ending October 31, 1953.3

November 3

The basic travel allowance of exchange at the official rate for residents (for exchange control purposes) of Hong Kong traveling in certain countries was increased from £40 to £50 per person for the 12 months commencing November 1, 1953.3

Iceland

Origin and Essential Features

Exchange control was introduced in Iceland on October 2,1931. The exchange and import regulations now in force date from an Act of June 5, 1947. The system has been subject to several important changes, the latest being on March 8, 1951, when import certificates were introduced, and on April 6, 1951, when designated goods could be imported freely from any source. The restrictive system in Iceland is comprised of (1) restrictions on imports, (2) restrictions on all exchange payments (including those in respect of imports), (3) import certificates applied to certain exports and imports, and (4) license fees.

Exchange Rate System

The par value is Icelandic Krónur 16.2857=US$1. The official rates are IKr 16.26 buying, IKr 16.32 selling, per US$1. Exports of most products of the small fishing boat industry benefit from the distribution of additional local currency in a pool derived from the surcharge payable by certain importers.

Exchange Control Territory

Iceland is a part of the Sterling Area—the Scheduled Territories of the United Kingdom’s exchange control system.

Administration of Control

The granting of import licenses, where required for goods not on the free lists, is in the hands of the Import and Exchange Division of the Economic Board, which is also responsible for the over-all administration of exchange control.1 The two largest Icelandic banks have the exclusive right to buy and sell foreign exchange, and determine from time to time the extent to which exchange is available to pay for imports.

Prescription of Currency

Payments to and receipts from certain countries in respect of specified transactions must be effected in the currency and by the method laid down in the payments agreements concluded with those countries.

Imports and Import Payments

Regardless of other requirements, prior certification is required from an Icelandic bank that exchange is available to make payment for an import before the import can be effected.

Certain imports require import and exchange licenses, which are issued in combined form. These licenses are granted on a consideration of the essentiality of the goods and the availability of exchange to pay for them. Certain specified goods from any source and certain other specified goods from the “clearing” countries2 can be imported without such licenses. Certain goods may also be imported without such licenses with certificates derived from the proceeds of specified exports—products of the small fishing boat industry, except cod-liver oil, herring, and herring products. Such certificates are acquired through the payment of a premium according to the country from which the import is to be obtained: 60 per cent (plus 1 per cent fee) of the nominal value for imports from EPU and dollar area countries and 25 per cent (plus 1 per cent fee) for imports from “clearing” countries. When import licenses for passenger automobiles are issued, a fee amounting to 35 per cent of the amount licensed must be paid in Icelandic currency.

Payments for Invisibles

All outgoing payments require licenses, which are granted only on a basis of essentiality and the availability of the required foreign exchange. At the time of issuance of exchange licenses for travel purposes a fee of 25 per cent of the amount involved is payable.

Residents traveling abroad may take with them foreign banknotes and coins to a maximum of IKr 150. The exportation of Icelandic banknotes and coins is prohibited. Nonresidents may re-export unexpended amounts of foreign banknotes and coins that were declared on entry.

Exports and Export Proceeds

All exports require licenses. Exchange receipts must be surrendered; and exporters of products of the small fishing boat industry, except cod-liver oil, herring, and herring products, obtain, in addition to the local currency equivalent of the exchange surrendered, a certificate nominally equivalent to 50 per cent of the f.o.b. value of the goods exported. These certificates can be exchanged for other certificates, which may be sold at a fixed premium to importers through a pool of exporters or used by the Federation of Cooperative Societies; they can be used to import designated less essential goods, which, when imported, are not subject to domestic price control. The surcharge payable on these certificates is 60 per cent for exports to EPU and dollar area countries and 25 per cent for exports to “clearing” countries; the proceeds derived from their sale are collected in a central pool, from which a distribution is made periodically to exporters.

Proceeds from Invisibles

Exchange receipts from invisibles must be surrendered. Shipowners and insurance companies are permitted to use a portion of their exchange earnings for operating purposes. The importation of Icelandic banknotes and coins is prohibited.

Capital

Outgoing transfers of capital require approval, which is granted only in exceptional circumstances. Exchange receipts from capital must be surrendered.

Changes during 1953

February 12

A few items on the list of goods that can be imported freely from all countries under the certificate system were transferred to the list of goods permitted as imports under that system from the “clearing” countries. Eastern Germany was listed as a “clearing” country; in practice, it had been treated on this basis since December 4, 1952.

June 6

Austria ceased to be treated as a “clearing” country, when the former trade agreement lapsed.

June 25

The temporary suspension of part of the Icelandic liberalization of imports from the OEEC and dollar areas undertaken in August 1952 was formalized by an amendment to the “free list.”

The “free list” was divided into two sections: (1) goods that could be imported freely from any country, and (2) goods that could be imported freely only from “clearing” countries.

August 1

The U.S.S.R. was added to the list of “clearing” countries.

December 24

Law No. 88 (which took effect January 1, 1954) abolished the Economic Board, and the powers of the Import and Exchange Division were transferred to a new institution, named the Import Office.

India

Origin and Essential Features

Exchange control was introduced in India in September 1939, at the outbreak of World War II. The Foreign Exchange Regulation Act, 1947, extended in 1952 with some modification, empowers the Central Government and the Reserve Bank of India to control and regulate dealings in foreign exchange and foreign securities in India, receipts from and payments to nonresidents, the export and import of currency and bullion, and transfers of securities to nonresidents. The Indian restrictive system is based on the principle of surrender of foreign exchange receipts and their allocation by the control authorities to payments for goods, services, and other transactions on the basis of priority of needs and the “hardness” of the currency involved.

Exchange Rate System

The par value is Indian Rupees 4.76190=US$1. Exchange transactions are effected at uniform rates. All transactions in foreign exchange must be conducted through the medium of authorized dealers, whose dealings with the general public must be effected at rates arrived at on the basis of par values established by the Fund and its members. Authorized dealers in India are permitted to cover their requirements of certain specified foreign exchange in the London market. They can also cover their permitted transactions in the specified currencies, either spot or forward, with their agents in the respective countries against sterling or rupees.

Administration of Control

Like other Sterling Area countries, India has an exchange control system similar to that in operation in the United Kingdom but adapted to suit local requirements. The administrative work and decisions on exchange control matters are handled by the Reserve Bank, in accordance with the general policy laid down by the Indian Government in consultation with the Reserve Bank. A great deal of routine work on 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

Transactions with nonresidents are subject to the prescription of currency requirement; that is, payments to or from foreign countries must be effected in the appropriate currency prescribed by the exchange control authority. Transactions with a large number of countries are governed by sterling payments and monetary agreements entered into with them by the United Kingdom and available to the whole Sterling Area. In a number of cases, payments may be made either in the currency of the country concerned and/or by the transfer of sterling or rupees to the account of a resident therein, while in others, the transfer of sterling or rupees to or from the appropriate accounts for the country concerned constitutes the only method of settlement allowed. Exceptionally, in the case of exports to Egypt, payment may be received only in Indian rupees from the accounts of Egyptian banks.

India’s transactions with Sterling Area countries other than Pakistan are governed by the multilateral settlement principle among Sterling Area countries, under which payments may be made either in the currency of the Sterling Area country involved or in the currency of any other country or territory in the Sterling Area. Payments between India and Pakistan, however, can be effected in only Indian or Pakistan rupees according to special arrangements between the two countries.

Nonresident Accounts

Nonresident accounts consist of rupee accounts belonging to persons, firms, or banks resident outside India. Payments to the accounts of nonresident banks for imports, interest, dividends, or allowances can be made by authorized dealers without prior approval. Other payments from residents to such accounts must be approved by the Reserve Bank. The nonresident accounts of foreign banks can be drawn on to pay for Indian exports and other payments if the amount of an individual transaction does not exceed Rs 20,000. In all other cases, prior approval of the Reserve Bank must be obtained.

Rupee balances of banks in other Sterling Area territories can be transferred freely from one to another. Those of non-Sterling Area banks can also be transferred freely to nonresident rupee accounts in banks within the Sterling Area. Transfers between rupee accounts of banks belonging to the same country or monetary area are also allowed. All other interbank transfers require the prior approval of the Reserve Bank.

Payments of dividends and interest on securities and proceeds of small checks up to certain limits can be credited, without prior approval, to nonresident accounts of private individuals and firms. The same applies to such debit items as payments for insurance premiums, income taxes, and remittances to relatives, subject to the limit of Rs 500 for each transaction. All other credits and debits require the prior approval of the Reserve Bank. Transfers normally are not permitted from these accounts to nonresident accounts of banks belonging to the same country or monetary area as the account holder, unless the items originally credited to such accounts were “currently remittable” in nature.

Proceeds from capital assets belonging to residents retiring or emigrating to other countries and which cannot be transferred are deposited in blocked accounts. This applies also to the proceeds from the liquidation of certain nonresident-owned investments which cannot be repatriated. Balances in blocked accounts may be placed on fixed deposit or invested in approved Indian rupee securities. The income derived from such investments may be remitted to the owner’s country with the approval of the Reserve Bank.

Imports and Import Payments

In allocating exchange among different imports, the import control authority has three principal considerations: essentiality, the domestic supply situation, and the “hardness” of the currency involved. Only essential goods unobtainable in sufficient quantities in “soft” currency areas are permitted to be imported from dollar area countries. Nevertheless, if certain goods available in “soft” currency areas are too high in price or their delivery is too slow, their import may be permitted from a “hard” currency country.

Goods can be imported into India under either an open general license or an individual license. An open general license permits an individual or firm to import the goods listed therein without quantitative limitations from the respective country or monetary area specified. Individual licensing can be by quotas allocated to established importers and actual users or by ad hoc licensing. Currency-wise, there are two kinds of licenses: world-wide, applicable to imports from all countries, and “soft” currency, for imports from “soft” currency countries.

Before the start of each half-yearly licensing period, the import control authority makes an announcement concerning goods that are to be admitted under the quota procedure: for established, importers, the quota is based on the percentage of goods imported by them during a basic period; and for actual users (factories and enterprises employing a minimum of 50 factory workers), the quota is sufficient to meet the requirements in each commodity over a certain number of months. There are also special procedures applicable to capital goods, heavy electrical plant, and goods imported to fulfill government contracts and irrigation projects.

The payment procedure for imports requires the presentation of a valid import license or, for goods covered by an open general license, reference to the open general license number. Authorized dealers can effect payments for clients by opening letters of credit or making remittances or transfers when the above requirements are met and when both the currency and method of payment are appropriate (see section on Prescription of Currency, above). In principle, advance remittances for payment of imports before shipping documents are received are not normally permitted. But for 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

Payments for invisibles abroad generally require approval. However, except for travel, insurance, and a few other items, foreign exchange is granted freely for such payments. This is especially so for expenses incidental to trade transactions and transfers of recurring contractual obligations.

Foreign exchange facilities are granted for business travel and education abroad according to a scale of allowances fixed for each country. Foreign exchange normally is not granted for travel, other than for purposes of business, health, and education, to the Philippine Republic or to countries on the American continents, except Brazil, Chile, Paraguay, Peru, and Uruguay. A basic ration of £600 per adult and £300 per child, plus allowances for return fares, is available during a period of two years ending December 31, 1954 to all persons resident in India for personal trips to “soft” currency areas other than neighboring countries; for neighboring countries, a special allowance of Rs 2,000 per adult and Rs 1,000 per child, plus return fares, is available for the same period. Special provisions govern the granting of exchange for travel connected with medical treatment, visits to “hard” currency countries being subject to severe restrictions.

Premiums on insurance policies issued to residents in foreign currency may be paid in rupees or in the currency in which the policy is issued. Indian residents are prohibited from taking out life policies in foreign currencies.

There are no restrictions on the remittance of profits, dividends, and interest to beneficiary owners permanently resident in any country outside India.

Foreign employees are permitted to make reasonable remittances to their own countries in payment of insurance premiums or other expenses and for the support of their families. Authorized dealers can allow to Sterling Area nationals, other than nationals of Pakistan, such remittances by the principal member of a family, up to a maximum of £150 per month in the currency of any Sterling Area country. Nationals of Pakistan are allowed to remit up to Rs 50 per month for the support of their dependents in Pakistan. Each application from non-Sterling Area nationals is considered on its own merits, and facilities are provided for the remittance of savings that the applicant may reasonably be expected to make.

Persons leaving India, except those going to Pakistan and Afghanistan, may take out Indian and foreign currency notes or coins not exceeding a total value of Rs 270 per month. Persons leaving for Pakistan may take out not more than Rs 50 per day in Indian notes and coins and another Rs 50 in Pakistan notes and coins. Persons leaving for Afghanistan may take out Afghan currency without limit and Indian currency in notes and coins up to Rs 50 per day.

Exports and Export Proceeds

The export of certain commodities is controlled by the Chief Controller of Imports and Exports of the Ministry of Commerce and Industry and can be effected only under an open general license or a special license. Goods on open general license are not subject to quantitative restrictions and may be exported to any destination unless the open general license is valid only for the dollar area or for Pakistan. Controlled exports not under open general license may be licensed either freely or under global or destinational quotas.

The export of goods is permitted only if the exporter makes a declaration on the prescribed form to the Collector of Customs that foreign exchange representing the full export value of the goods has been or will be disposed of in a manner and within the period specified by the Reserve Bank. The currencies in which the export proceeds may be received are prescribed (see section on Prescription of Currency, above).

Proceeds from Invisibles

Exchange receipts from invisibles in U.S. dollars and Philippine pesos must be surrendered. All other receipts may be retained, but their disposal is subject to license.

General permission has been granted by the Reserve Bank for any person to bring or send into India without limit Indian currency and banknotes from any foreign country, except Pakistan, Afghanistan, and Burma, where special limitations apply. With the exception of Bank of England notes and the currency notes of Burma, foreign currency notes may be brought into India without limit, provided a declaration of the total amount brought in is made to the customs authorities upon arrival. Persons holding duly certified declaration forms may sell the relevant currency notes to any money changer or authorized dealer in foreign exchange.

Capital

The inward movement of capital is practically free, except when it forms part of an investment requiring the prior approval of the Indian Government; in such cases, applications have to be made to the Reserve Bank, which refers them to the Indian Government. Exchange receipts from approved foreign capital investment and from capital in Philippine pesos and U.S. dollars have to be surrendered; all other exchange may be retained but its disposal requires a license. Foreign investments once admitted are eligible for the same treatment as Indian enterprises. Outward movements are subject to control. Repatriation of capital owned by persons residing in Sterling Area countries other than Pakistan, and of capital invested in India by residents of Denmark, Norway, and Sweden, is freely authorized. Capital invested in approved projects after January 1, 1950 by residents of other countries may be repatriated at any time, including capital appreciation on the original investment. The proceeds from liquidated foreign investments not eligible for repatriation are blocked and may only be placed on deposit or be invested in approved Indian securities.

Transfers of capital for purposes other than investment, such as retirement, emigration, and legacies, are also subject to control. More favorable treatment is given to Sterling Area nationals and transfers to Sterling Area territories.

The export and transfer of securities to nonresidents are under control. There are no restrictions on the bringing or sending into India of securities.

Changes during 1953

January 1

For the first half of 1953, import quotas on over 100 items, which had been reduced in the second half of 1952, were restored to the levels of the first half of 1952.

March 3

It was announced that capital invested after January 1, 1950 in projects approved by the Government of India could be repatriated at any time, not only to the extent of the original investment but including any capital appreciation. The repatriation of capital to countries of the Sterling Area, Denmark, Norway, and Sweden continued to be authorized freely.

April 1

Import quotas applied to certain luxury and semi-luxury items were increased for the first half of 1953.

June 8

Deutsche marks were added to the list of specified currencies that must be sold to an authorized bank. They also became an accepted means of payment for exports to the Federal Republic of Germany and the British, French, and U.S. Sectors of Berlin.

July 1

For the second half of 1953, import quotas for certain items, including imports from hard currency countries, were increased. These items included machinery, certain industrial raw materials, and a few consumers’ goods. For a few items, produced or available locally, import quotas were reduced, and some items formerly freely importable under open general license were made subject to import quotas.

July 9

Trade between India and Egypt could be financed only in rupees. Forty per cent of the value of Egypt’s exports to India had to be retained in separate rupee accounts, which could be used only for payment of Indian exports to Egypt. The remaining 60 per cent continued to be convertible into sterling.

September 21

Open General Licenses XXXI and XXXII, covering imports from all sources and from soft currency areas, respectively, superseded Open General Licenses XXVIII, XXIX, and XXX, which expired on September 30.

October 26

Exports to Japan were treated, from this date, on the same basis as shipments to other countries, and the requirement that Japanese importers had to open letters of credit in favor of the exporter before exports would be permitted was discontinued.

November 8

The trade agreement with Yugoslavia provided that payments and other charges in connection with the trade between the two countries would be settled in rupees or sterling, as mutually convenient.

November 14-17

The export quota for raw wool was increased, and additional quotas were granted for the export of manganese and iron ore.

November 17

The trade agreement with Czechoslovakia provided that all inward and outward payments would be made in sterling or in rupees. The State Bank of Czechoslovakia would open one or more accounts with Indian banks and, if necessary, another with the Reserve Bank of India. Residual balances would be convertible into sterling, and Czechoslovakia would be allowed to replenish rupee balances by the sale of sterling.

December 2

A trade agreement with the U.S.S.R. provided that all payments to or from that country could be made in rupees. The State Bank of the U.S.S.R. would maintain accounts with Indian commercial banks and the Reserve Bank of India. The residual rupee balances would be convertible into sterling and the U.S.S.R. would be allowed to replenish rupee balances by the sale of sterling.

December 29

Open General License XXXIV, covering imports of certain items from Pakistan, was announced as effective January 1, 1954, superseding Open General License XXVI, which expired on December 31, 1953.

December 30

The import policy for the period January to June 1954 was announced. The scheme of token imports, developed mainly in order to set a standard for indigenous production, was continued. Provision for increased imports of essential consumers’ goods, and also for goods on which the import duty was increased at the beginning of the financial year, was maintained, and the import quotas for 22 items were increased.

Indonesia1

Origin and Essential Features2

Exchange controls were introduced in Indonesia on May 10, 1940. Since then they have been changed considerably. Restrictions are exercised through licensing and restrictions on imports. Official basic buying and selling rates apply to payments for most exports and essential imports. There are also, through the use of “inducement” certificates, other effective rates applicable to the proceeds of exports of certain native products and to payments for certain luxury imports. Payments for invisibles are limited to some extent. The currency and method of payment are prescribed for each transaction. Exports are subject to license, and all foreign exchange proceeds must be surrendered. Dollar exchange certificates, which gave a small premium on the official rate for dollar export and import payments, were introduced February 4, 1952 and abolished December 31, 1953.

Exchange Rate System

The middle rate for the Indonesian Rupiah is Rp 11.40 per US$1, the official rates being Rp 11.355 buying, Rp 11.445 selling, per US$1. These rates are applicable to most transactions.

There is also a system of “inducement” certificates, which applies to a small segment of Indonesia’s foreign transactions. Exporters of the undermentioned native products receive a certificate for the indicated percentage of the total value of the export proceeds surrendered:

Smallholders’ rubber:
Grades RSS I and RSS II10%
Grades RSS III and RSS IV8%
Grade RSS V, Blankets, and Crepes6%
Copal, damar, and rattan:
Graded10%
Not graded5%
Cows, pigs, water buffaloes, hides (except cowhides), cajuput oil, jelutong, merah, hangkang and ketijan gutta, incense, and art objects (silver work, wood carvings, pandan hats, etc.)10%

These inducement certificates are expressed in rupiah and are valid for two months; they are required for the importation of all foodstuffs in Import Category B.II and most articles in Import Category C (see section on Imports and Import Payments, below), as well as a few other specified luxury items. The certificates are negotiable, and the premium at which they change hands creates additional effective rates (see Table of Exchange Rates, below). The rate for these certificates as at December 31, 1953 was Rp 0.95 per “inducement” rupiah.

In addition, the Foreign Exchange Institute collects a fee of ¾ of 1 per cent and a statistical tax of ¼ of 1 per cent on all imports and exports.

Administration of Control

Exchange control is administered by the Foreign Exchange Institute, on whose behalf combined import and exchange licenses are issued by a Central Bureau of Imports. Control is actually managed by the Bank Indonesia, the commercial banks authorized for this purpose, and the customs.

Prescription of Currency

Payments and receipts must be effected through the authorized exchange banks and in the currency stipulated on the license. Payments to and from OEEC countries can be settled in Netherlands guilders through Indonesia’s account with the Netherlands Bank. Payments to and receipts from South American countries are also settled largely through that account. By arrangements with the governments concerned, Indonesia obtains reimbursement of foreign exchange from the Netherlands for Indonesian goods re-exported through the Netherlands and from Singapore and Malaya for Indonesian goods re-exported to the dollar area. Payments to Czechoslovakia, Hungary, Japan, Poland, and Yugoslavia, with which Indonesia has payments agreements, are settled through special clearing accounts.

Nonresident Accounts

There are two classes of nonresident accounts:

  • Accounts of foreign banks. These are freely convertible into the currency of the country of the operating bank, and the balances may be freely transferred to accounts of nonresident banks of the same monetary area.

  • All other nonresident accounts. The opening of these accounts and all entries require permission from the Foreign Exchange Institute. For nonresident accounts of private persons, the authorized exchange banks have been given permission to make routine personal payments in Indonesia and yearly transfers up to a maximum of Rp 15,000 in the currency of the nonresident out of his current income. These accounts are designated as Capital Accounts and Income Accounts, respectively, transfers from the former to the latter requiring approval.

Imports and Import Payments

A provisional import license is first issued by the Central Import Regulation Office on behalf of the Foreign Exchange Institute. Before this provisional document can be transformed into final form, i.e., a combined import and exchange license, the importer must obtain a statement from an authorized bank showing that (1) an advance deposit of 75 per cent (50 per cent for raw materials for industry and for capital goods for industrial enterprises) of the rupiah equivalent at the official selling rate of exchange has been paid to the Foreign Exchange Fund; (2) the appropriate additional import levy (“TPI” certificate) has been paid to the bank; and (3) if inducement certificates are required, the importer has surrendered them to the Central Import Regulation Office. The combined import and exchange license enables the import to be effected and the foreign exchange specified on the license (see section on Prescription of Currency, above) to be obtained from an authorized exchange bank.

The additional import levy, referred to above, is paid by the importer through the purchase of a “TPI” certificate from his bank at the time he applies for the import-exchange license. These purchases are made in rupiah at a percentage of the nominal c.i.f. i.e.3 value converted at the official bank selling rate. The percentage varies, depending on the commodity to be imported (see table, page 193). The amounts received from the sale of “TPI” certificates are transferred weekly for the account of the Foreign Exchange Fund.

The categories of imports and the requirements for obtaining an import-exchange license are shown in the table below. Category D comprises items for which no official exchange is provided, so that their import is confined largely to resident foreign nationals who are permitted to retain nontrade exchange holdings in their own currency.

Import Categories and Requirements for Obtaining Final Import-Exchange License
CategoryAdvance DepositAdditional Import Levy (“TPI”)Inducement Certificate
A. Prime necessities for local industry50%nilnil
Other essentials75%nilnil
B.I Ordinary textiles, small tools, paper, essential foodstuffs (except rice), etc75%33⅓%nil
B.II Household articles, office equipment, motor vehicles valued at less than $2,100, etc.75%100%nil
Less essential foodstuffs75%100%100%
C. Specified luxury articles: refrigerators, motor vehicles valued at $2,100 to $2,400, etc. Other luxury articles75%200%100%
D. Motor vehicles valued at over $2,400, air conditioning apparatus, etc.nil200%nil

Payments for Invisibles

Most payments for invisibles are subject to special licenses from the Foreign Exchange Institute, although for items that represent the current income of individuals abroad, and for such items as rents, dividends, etc., foreign exchange is granted freely up to certain limits in accordance with general licenses issued by the Foreign Exchange Institute to the authorized banks.4 To foreign nationals resident in Indonesia, foreign exchange is supplied, up to certain limits, for private remittances, such as the maintenance of families abroad, children’s educational expenses, the remittance of savings, and the transfer of capital after the owner’s repatriation. For remittances in respect of profits, dividends on direct investments, insurance, etc., general regulations have been issued by the Foreign Exchange Institute. For such items as advertising, film rentals, charitable remittances, legacies, etc., exchange is granted at the discretion of the Foreign Exchange Institute, on individual application. Authorized payments for nontrade invisibles are effected at the official rate. The export of Indonesian and foreign banknotes and coin is prohibited, but residents going abroad are provided with small amounts of foreign banknotes to meet traveling expenses.

Exports and Export Proceeds

All exports require licenses. Exporters (with the exception of the oil companies, to which special arrangements apply) are required to surrender to an authorized bank in Indonesia all foreign exchange to which they are entitled. Exports must, as a rule, be financed by irrevocable bank credits, and the drafts drawn on such credits must be sight drafts or short-term drafts. Exports may not be invoiced in rupiah, but must be invoiced in a currency acceptable to the Bureau for Exports. There are no general limitations as to the destination of exports, but the Bureau for Exports may withhold licenses for certain exports if, for example, the shipment should not conform with existing trade agreements. Exporters of certain native products are given negotiable inducement certificates (see section on Exchange Rate System, above) denominated in rupiah in respect of a proportion (5, 6, 8, or 10 per cent according to the commodity) of their export proceeds. These certificates, which are valid for two months, entitle the holder to import certain semi-luxury and luxury goods.

Proceeds from Invisibles

Residents are required to surrender to an authorized bank in Indonesia all foreign exchange to which they become entitled. Foreign nationals resident in Indonesia may retain any income in the currency of the country of their nationality, provided the income does not arise from foreign trade. The import of Indonesian banknotes and coin is prohibited. Foreign banknotes and coin may be imported on the condition that they are surrendered to the Bank Indonesia at the official buying rate. Visitors staying in Indonesia no longer than three months may have their foreign currency returned to them when they leave, insofar as it has not already been sold to an authorized bank. They may exchange only the following currencies, and only with an authorized bank: (1) U.S. banknotes (denominations not exceeding $50) and U.S. traveler’s checks; (2) sterling banknotes (denominations not exceeding £1) and sterling traveler’s checks (payable outside the Sterling Area); and (3) Malayan banknotes (denominations not exceeding $M 10). After 90 days, the visitor intending to re-export his foreign currency must apply for a special license.

Capital

Residents are required to surrender exchange from capital, and approval is not normally given for capital payments abroad. There are no limitations on the remittance into Indonesia by non-residents of capital which, if it were in the form of foreign exchange, would have to be surrendered in accordance with the regulations. The repatriation of capital on behalf of nonresidents is subject to individual consideration by the Indonesian authorities.5 Foreign firms operating in Indonesia may transfer 40 per cent of their gross profits earned in any accounting period which began in 1952.

Table of Exchange Rates (as at January 1, 1954)(rupiah per U.S. dollar)
BuyingSelling
11.355 (Official Rate)11,445 (Official Rate)
Most exports and related expenses. All other invisibles and capital.Most imports and related expenses. Authorized invisibles and capital.
11.894-12.434 (Offical Rate plus 5%, 6%, 8%, or 10% at Inducement Certificate Rate)
Exports of certain native products.22.318 (Official Rate plus Inducement Certificate Rate)
Certain luxury imports.
Note: Additional import levies (“TPI” certificates) amounting to 33⅓%, 100%, or 200% (according to the nature of the goods) of the c.i.f.i.c. value are payable on certain imports.

Changes during 1953

January 28

The name “inducement” certificate was replaced by the name “TPI” certificate (additional import levy) in accordance with the historical development of these certificates.

Import Category B was subdivided into B.I and B.II, the former requiring “TPI” certificates for 33⅓ per cent of the value, and the latter requiring certificates for 100 per cent as previously. Several items in Category A were transferred to the newly created Category B.I.

April 1

The advance payment required for most imports was raised from 40 per cent to 75 per cent.

April 20

New regulations were issued prescribing the transfers of savings for the year 1952 that could be made by foreigners employed in Indonesia. Transfers could be effected, up to a maximum of Rp 7,500, on a sliding scale ranging up to 25 per cent on taxable income earned in Indonesia.

July 1

The Javasche Bank became the Bank Indonesia, and took on the functions of a central bank.

July 27

Foreign firms were permitted to transfer 40 per cent of their gross profits earned in any accounting period which began in 1952.

September 14

New regulations for visitors to Indonesia were issued. They could exchange only certain foreign currencies, with specified banks; other currencies must be re-exported on departure.

October 1

The advance payment required for certain imports was reduced from 75 per cent to 50 per cent for raw materials for industry and for capital goods for industrial enterprises.

October 12

Inducement certificates were issued to exporters of certain native products enabling them to import, and obtain exchange in payment of, certain luxury and semi-luxury goods.

December 3

New. regulations governing transfers abroad by foreigners employed in Indonesia were announced, to be effective January 1, 1954.

December 29

It was announced that the use of dollar export certificates would be abolished as from January 1, 1954.

Iran

Origin and Essential Features

Exchange restrictions were originally introduced in Iran in February 1930. Recent major revisions include the intensification of restrictions in December 1951, the introduction of a dual certificate rate system in April 1952, the introduction of a third certificate rate in March 1953, the subsequent unification and pegging of the rates for Categories I and II certificates, used in most commercial transactions, and the relaxation of quota restrictions in the fall of 1953.

Restrictions are exercised through import prohibitions, exchange licenses for certain nonprohibited imports and nontrade payments, and a multiple exchange rate system. In general, exchange receipts must be surrendered, but exporters to countries whose currencies are not accepted for the settlement of their foreign exchange undertakings may utilize their export proceeds to make authorized imports.

Exchange Rate System

The par value is Rials 32.25 = US$1. The effective rates of exchange for most commercial transactions on private account are based on the official parity rates of Rls 32.00 buying, Rls 32.50 selling, per US$1, plus the pegged rate at which exchange certificates are bought and sold by the Bank Melli Iran; as at December 31, 1953, the pegged rate was Rls 58.00 per US$1. Exports and imports are classified in three categories. The effective buying rate for exchange proceeds from exports classified in Categories I and II is Rls 87.10; this rate results from a mixing arrangement under which export proceeds are surrendered at Rls 32.00 (the parity buying rate) plus 95 per cent at Rls 58.00 (the fixed certificate rate). The effective selling rate applicable to all imports in Categories I and II is Rls 90.50 (Rls 32.50 plus Rls 58.00).

The effective selling rate for Category III imports equals the official selling rate plus the rate for Category III certificates. These certificates are issued to exporters of Category III commodities when they surrender foreign exchange at the official buying rate; they are negotiable in a free market for such certificates. For example, on December 20, 1953, the (fluctuating) rate for Category III certificates was Rls 65.00, resulting in effective rates for Category III transactions of Rls 93.75 buying and Rls 97.50 selling.

Purchases and sales of noncommercial exchange on private account take place at rates fixed by the Bank Melli: Rls 80.00 buying, and Rls 32.50, Rls 82.00, or Rls 90.50, selling, per US$1. All government invisibles (e.g., diplomatic expenses) and specially approved medical and students’ expenses are transacted at the rate of Rls 32.50. The rate of Rls 82.00 is applicable to other approved medical and students’ expenses. For all other purposes (e.g., foreign travel by Iranian residents), the (commercial) selling rate of Rls 90.50 is applied. In addition, a rate of Rls 41.00 per US$1 is used in paying the rial equivalent of dollar exchange provided by the U.S. Point Four Program to Iranian students. (See Table of Exchange Rates, below.)

Administration of Control

Exchange control is vested in the Exchange Control Committee, composed of representatives from the Ministry of National Economy, the Ministry of Finance, and the Bank Melli Iran. Exchange licenses are issued by the Exchange Control Committee. All foreign exchange transactions must be effected through authorized banks, with the exception of Category III exchange certificates, which are negotiated in a free market for such certificates. The Ministry of National Economy determines the classification of imported and exported commodities.

Prescription of Currency

Payments and receipts must be settled in specified currencies. Transfers to the United States and other countries in the dollar area are made in U.S. dollars. The free Swiss franc is payable only vis-à-vis Switzerland.

Transactions with countries having payments or clearing agreements with Iran must be conducted in the currencies specified in the agreements. U.S. dollar accounts are used for transactions under the agreements with Germany and Italy; the Swiss franc is specified in the agreements with Czechoslovakia, Hungary, and Poland; and the French franc is used in the agreement with France. Dollar aid received from the United States enables Iran to use U.S. dollar accounts for transactions under agreements with other countries, in addition to Germany and Italy.

Nonresident Accounts

Nonresidents are freely permitted to maintain accounts, in rials as well as in foreign currencies, with the authorized banks. Rial accounts may be used only to effect payments in Iran. Foreign currency accounts may be used for transfers abroad or for sales to authorized banks.

Imports and Import Payments

Imports are classified in three categories; each commodity in a category receives a quota established in rials. In addition, there is a lengthy prohibited list, which has remained unchanged since 1951. The Ministry of National Economy decides both the quota and the prohibition regulations. Under a general license, authorized banks may make payments for nonprohibited imports, provided the Ministry of National Economy has not announced that the quota of the import commodity concerned is filled. Before clearing goods, the customs authorities require an import license, which is automatically granted by the Ministry of National Economy upon presentation of documents indicating that payment for these goods has been or will be effected through an authorized bank. In addition, the customs authorities check whether the import is authorized (i.e., not prohibited) and under which category the import falls.

Payments for Category III imports are made when the importer delivers to an authorized bank a valid Category III certificate. The importer may acquire such a certificate by purchasing it in a free market, or by surrendering exchange proceeds from Category III exports.

No quotas are set for commodities imported under state monopoly (sugar, silkworm eggs, tobacco, cigarette paper, railway equipment, explosives, arms and ammunition). Special permits may be issued to private traders or institutions to import these commodities.

Persons holding “own exchange” are permitted to utilize the exchange for imports in Categories I and II only, provided they pay to the authorized bank, at the certificate rate, the equivalent of 5 per cent of the import value. Imports effected with “own exchange” should fall within the quotas.

Imports of precious metals, such as silver, gold, and platinum, are permitted, provided no exchange is transferred therefor; in such cases, an import license is not required.

Agreements concluded between private merchants or commercial firms in Iran with private concerns abroad for the exchange of permitted products may be approved by the Ministry of National Economy upon submission of a detailed list of the goods to be exported and imported. Importation of Category III commodities under barter is approved upon submission of evidence that a corresponding amount of Category III exports has been received in the country of destination. The prohibited list and the quota regulations are applicable to imports under barter.

Payments for Invisibles

All payments for noncommercial purposes require licenses issued by the Exchange Control Committee. The Committee determines whether the exchange may be purchased at a rate of Rls 32.50, Rls 82.00, or Rls 90.50. Licenses are issued mainly for expenses of Iranian students studying abroad, according to the availability of foreign exchange, and for medical treatment and living expenses abroad, according to existing regulations. Residents going abroad for tourist purposes may acquire a license to purchase exchange at the Rls 90.50 rate.

Travelers may take Rls 2,000 in Iranian banknotes with them when going abroad. Iranian pilgrims going to Iraq, however, may take Rls 3,600 in Iranian banknotes with them. Travelers of Iranian nationality may export foreign currency as authorized by the Exchange Control Committee. Nonresident travelers may not export foreign currency in excess of the amount they imported less the amounts they have sold to authorized banks.

Exports and Export Proceeds

The export of some commodities, mainly wheat, barley, and rice, is prohibited.

Nonprohibited export commodities are classified in three categories. Upon the surrender of exchange proceeds, the exporters receive a “declaration of sale.” Exporters of commodities in Categories I and II receive, for their export proceeds, the rial equivalent at an effective rate of Rls 87.10; the “declaration of sale” for these two categories of exports does not represent any import right. Exporters of goods in Category III receive the rial equivalent at the Rls 32.00 rate plus Category III certificates for 95 per cent of the export value. Within their one-month validity period, these Category III certificates, which entitle the holder to purchase exchange to pay for Category III imports, may either be used by the exporter or be sold in a free market.

Export receipts must be offered for sale to an authorized bank within six months after the export takes place. Exporters surrendering foreign exchange in excess of the export value as appraised by the customs authorities receive certificates for the full value of the additional amount; proceeds exceeding the appraised value by more than 20 per cent are surrendered at the Rls 80.00 rate. Under private clearing arrangements approved by the Ministry of National Economy, export proceeds need not be surrendered.

If the export exchange is transferred to Iran and sold by the exporter to an authorized bank prior to exportation, the bank credits the exporter with rials computed at the effective rate of Rls 87.10. In such cases, however, an amount in rials equivalent to the difference between the effective commercial rate of Rls 87.10 and the noncommercial buying rate of Rls 80.00 is kept in a blocked account until the commodities concerned have actually been exported.

Within the regulations (see section on Prescription of Currency, above), authorized banks accept export proceeds in Belgian francs, French francs, Indian rupees, Netherlands guilders, Pakistan rupees, pounds sterling, Swedish kronor, Swiss francs, and U.S. dollars. Export proceeds in other currencies may be used by the exporter to purchase imports payable in the same currency.

Re-exports, other than those financed with “own exchange,” are prohibited. Re-exports of goods, to the value of which 50 per cent or more has been added by manufacture, are permitted provided that foreign exchange of 150 per cent of the original landed value is liquidated on reshipment.

Proceeds from Invisibles

Exchange receipts derived from invisibles connected with commercial transactions must be surrendered at the same rate as the related commercial transactions. All noncommercial foreign exchange proceeds must be surrendered at Rls 80.00.

Travelers, when they enter Iran, are permitted to bring with them an unlimited amount in foreign currencies and Iranian banknotes.1 Travelers of Iranian nationality must surrender their foreign exchange holdings to an authorized bank within 15 days after their arrival in the country. Other travelers, during their stay in Iran, may sell their exchange only to an authorized bank at the bank’s noncommercial buying rate (Rls 80.00).

Capital

Transfers of capital abroad require the approval of the Exchange Control Committee, which is given only in exceptional circumstances. Incoming capital must be registered and offered for sale to an authorized bank at the official rate within three days of receipt.

Table of Exchange Rates (as at December 31, 1953)(rials per U.S. dollar)
BuyingSelling
32.00 (Official Rate)32.50 (OfficialRate)

Government invisibles and specially approved medical and students’ expenses.

41.00
….Students’ expenses under Point Four Program.
80.0082.00
All noncommercial foreign exchange proceeds.Other approved medical and students’ expenses.
87.10 (Official Rate plus 95% at Fixed Certificate Rate)90.50 (Official Rate plus Fixed Certificate Rate)
Categories I and II exports.Categories I and II imports; noncommercial expenditures not approved at other rates.
88.05 (Official Rate plus 95% at Fluctuating Certificate Rate)91.50 (Official Rate plus Fluctuating Certificate Rate)
Category III exports.Category III imports.
Note: The actual certificate rates as at December 31, 1953 were Rls 58.00 (fixed) for Categories I and II, and Rls 59.00 (fluctuating) for Category III, Per US$1.

Changes during 1953

March 21

The annual import exchange quotas were announced. A third category for both imports and exports was introduced; exporters of commodities in this category would receive Category III certificates up to 95 per cent of the export proceeds surrendered; exchange for Category III imports could be purchased with these certificates (see section on Exports and Export Proceeds, above).

April 23

The buying rate for noncommercial foreign exchange proceeds was set at Rls 32.00 plus 88 per cent of the average Category I certificate rate for the previous quarter. Previously, the Exchange Control Committee had issued permits for the purchase of noncommercial exchange at the official selling rate of Rls 32.50, on condition that an equivalent amount of noncommercial exchange proceeds had been surrendered to an authorized bank. Sellers and purchasers of noncommercial exchange had been brought together by brokers. Upon surrender of exchange at the Rls 32.00 rate, sellers had received an additional amount in rials from brokers, who in turn found purchasers holding permits. During the spring of 1953, the effective rates resulting from this arrangement fluctuated widely and were as high as Rls 125.00 per US$1.

June 28

The Decree on the Stabilization of Foreign Exchange was issued. The Bank Melli Iran became the sole purchaser and seller of Categories I and II certificates, for which one rate was introduced amounting to Rls 68.00 per US$1. This resulted in an effective selling rate for Categories I and II imports of Rls 100.50 (Rls 68.00 plus the parity selling rate of Rls 32.50). Imports effected without transfer of foreign exchange (i.e., with “own exchange”) were no longer permitted.

July 1

The buying rate for noncommercial exchange proceeds was pegged at Rls 83.70 per US$1.

August 10

The pegged rate for Categories I and II certificates was reduced from Rls 68.00 to Rls 66.00 per US$1, resulting in an effective selling rate of Rls 98.50 for imports in these two categories.

September 1

Imports effected without transfer of foreign exchange (i.e., with “own exchange”) were again permitted.

September 2

The pegged rate for Categories I and II certificates was reduced from Rls 66.00 to Rls 64.00 per US$1, resulting in an effective selling rate of Rls 96.50 for imports in these two categories.

September 13

A general license issued by the Exchange Control Committee permitted authorized banks to make payments for nonprohibited imports, provided the Ministry of National Economy had not announced that the quotas for those import commodities were filled. Before clearing goods, the customs authorities would require an import license, which would be granted automatically by the Ministry of National Economy upon presentation of documents indicating that payment for the goods had been or would be effected through an authorized bank.

September 30

Orderly cross rates were introduced for all commercial transactions.

October 13

Orderly cross rates were introduced for all noncommercial transactions.

December 2

Quotas were no longer applied to imports from countries with which Iran does not have barter agreements.

December 22

The pegged rate for Categories I and II certificates was changed from Rls 64.00 to Rls 58.00 per US$1, making the selling rate Rls 90.50. The effective buying rate applicable to Categories I and II exports became Rls 87.10. The buying rate for all noncommercial foreign exchange proceeds was changed from Rls 83.70 to Rls 80.00 per US$1; the noncommercial selling rate of Rls 85.00 was lowered to Rls 82.00. The rate for Category III certificates continued to be determined on the free market; it was announced that the Bank Melli Iran would support the effective selling rate for Category III transactions when it fell below Rls 90.50.

Iraq

Origin and Essential Features

Exchange control was introduced in Iraq on November 24, 1941 by Exchange Control Law No. 71 of 1941, which was superseded in 1950 by Exchange Control Law No. 18 of 1950. As in other Sterling Area countries, the Iraqi exchange control system is modeled after the U.K. system, modified to suit local requirements. It is based on the principle of surrender of foreign exchange receipts (with a few minor exceptions). Imports from hard currency countries are restricted on the basis of annual quotas; but imports from soft currency countries are, with few exceptions, permitted freely.

Certain exports to neighboring countries are exempt from exchange surrender requirements, and import licenses are granted for certain goods from soft currency areas provided the importer makes his own arrangements for the amount of foreign exchange necessary to order the goods from abroad.

Exchange Rate System

The par value is Iraqi Dinar 1 = US$2.80. In the official market, most transactions are effected in sterling. For certain specified currencies, licensed dealers are authorized to deal on the basis of London rates. For the U.S. dollar, the National Bank of Iraq quotes an official rate at which it will sell exchange to licensed dealers to cover the excess of their dollar requirements over their purchases from customers or other banks.

Administration of Control

Exchange Control Law No. 18 of 1950 entrusts the Board of Administration of the National Bank of Iraq with all powers and responsibility in connection with exchange control. However, in practice, the Board has delegated most of its administrative authority to the Directorate of Foreign Exchange of the Bank. All foreign exchange transactions must be effected through licensed dealers unless especially authorized by the Bank. Import and export licenses, where required, are issued by the Director General of Imports.

Prescription of Currency

Transactions with most non-Sterling Area countries are governed by the terms of sterling payments agreements and monetary agreements entered into between those countries and the United Kingdom and available to the whole Sterling Area. Payments must be effected in acceptable foreign currency appropriate to the country concerned, in sterling through an appropriate account in London, or in dinars through an appropriate dinar account of a nonresident.

Nonresident Accounts

The exchange control system designates nonresident accounts according to the foreign residence of the account holder. The regulations governing the operation of these accounts are similar to those of the United Kingdom and other Sterling Area countries.

Imports and Import Payments

The import control policy aims at allowing adequate importation of all essential goods for domestic consumption and development purposes. The import of certain nonessentials is restricted. Partly for protective reasons, certain other imports are prohibited; these include a variety of agricultural products, such as sesame seed and cottonseed and their oils, and the products of certain newly established industries, such as beer and certain types of aluminum ware.

All imports from hard currency countries require licenses, which are granted in accordance with an annual program specifying both the categories and the values or quantities of the goods.

For imports from soft currency areas, both the control policy and the licensing procedure are more liberal. The licensing procedure does not apply to imports from soft currency countries (except certain goods specially listed and goods admitted only with self-provided exchange), but the authorities require full documentary evidence that the goods are actually imported and that the prices are reasonable.

All payments are subject to prescription of currency requirements, and payments to Cyprus require special authorization. For goods subject to license, the licensed dealer can make the exchange available upon presentation of the exchange control copy of the import license; for goods not subject to license, exchange is provided on application. The licensed dealers do not, of course, provide exchange for the importation of goods licensed under the condition that the importer provide his own exchange.

Payments for Invisibles

All payments for invisibles require permission. Exchange granted for payments for invisibles normally is restricted to travel, educational, and medical expenses abroad, insurance premiums, and freight on exports if carried on a c. & f. or c.i.f. basis. Exchange is also provided for the transfer of interest and profits if the amounts applied for are considered reasonable.

Foreign exchange is allocated, within certain limits, to foreign nationals resident in Iraq for family maintenance in their home countries and for foreign travel. The allocation of foreign exchange to nationals of Iraq for these purposes is subject to administrative decision on individual applications. For residents traveling abroad, there is a basic allowance of ID 100 per person per month for not more than three months in any one year. Travelers may take out only ID 15 in Iraqi currency notes or the equivalent of ID 25 in foreign currency.

Exports and Export Proceeds

Certain exports are prohibited: these are certain kinds of livestock; certain foodstuffs in short supply, including dairy produce, cereals, and fruit; and raw materials in short supply, including cement and scrap metals. However, commodities on the prohibited list may be exported if specially authorized by the High Supply Committee. Exports of essential goods in short supply require licenses. Generally, goods imported into Iraq may not be reexported.

Exporters must declare their exports to ensure that foreign exchange proceeds are received. However, foreign exchange proceeds arising from the export of dates to India, Pakistan, Syria, Lebanon, Jordan, Saudi Arabia, Kuwait, and the Persian Gulf Protectorates are exempt from the surrender requirement. Prescription of currency requirements are applied to the surrender of export proceeds, but not in respect of certain commodities exported to neighboring countries.

Proceeds from Invisibles

Foreign exchange receipts from invisibles must be surrendered. Foreign currency, including notes, may be brought into Iraq by travelers in unlimited amounts provided they are declared to the Iraqi customs, and the unused amount may be re-exported. Travelers may bring in only ID 15 in Iraqi currency notes.

Capital

In general, all transfers of capital abroad require special exchange control approval. Incoming capital funds must be deposited with licensed dealers. The National Bank may authorize the deposit of incoming capital funds in their original currency, which may be converted later into dinars at the official rate of exchange. The repatriation of foreign capital invested in Iraq is subject to the approval of the National Bank.

Changes during 1953

August 4

The Iraqi Exchange Control Committee decided to allow each pilgrim to Saudi Arabia carrying a valid Iraqi passport to take out of the country up to ID 150; this ruling to remain in force until September 20.

The Committee also prohibited payments to Cyprus without special authorization.

September

A reclassification of commodities took place within the Iraqi licensing program.

Italy

Origin and Essential Features

Controls on international transactions were introduced in Italy on September 29, 1931. They were established on a more systematic basis in 1934, when the compulsory surrender of all foreign exchange and foreign assets was introduced; in 1939, with the prohibition of imports without a license; and in 1940, with the prohibition of exports without a license. The introduction in 1946 of a “free” market for receipts in U.S. dollars, Swiss francs, and pounds sterling resulted in a dual rate system for these currencies and in broken cross rates. Subsequent changes led to the elimination of the broken cross rate for pounds sterling and other currencies and in the actual unification of the exchange rate system. In connection with participation in EPU, Italy has gradually enlarged the number of commodities that can be imported without a license from OEEC countries.

The general regulation that the import of commodities and services must be authorized is waived for a short list of commodities, whatever their origin, and for the great majority of commodities originating in EPU countries and associated territories.

The general regulation that the export of commodities must be authorized is waived except for those commodities included in a list that differentiates to a certain degree between exports paid for in U.S. dollars, Canadian dollars, or freely transferable Swiss francs and other exports.

All foreign exchange must be surrendered, but 50 per cent of receipts in U.S. or Canadian dollars may be retained by the recipient and either sold or used for authorized transactions during a period of 60 days. Payments abroad for authorized current transactions are approved provided they are effected in accordance with the methods laid down in the Italian exchange control instructions.

Payments abroad for capital transactions must be authorized by the monetary authorities except in a few cases.

Exchange Rate System

No par value for the Italian Lira has been established with the Fund. The exchange rates between the lira and other currencies are related to the exchange rate for the U.S. dollar, which is determined on the basis of daily “free” market quotations. These quotations result from the negotiation of 50 per cent of dollar proceeds from current account transactions, which can be retained by the recipient for a period of 60 days. During such a period the recipient may, among other things, sell the exchange so retained to importers, who may use it for authorized import transactions. The average of the closing market rates for the U.S. dollar on the Rome and Milan “free” markets is recognized as the official rate of the day. The daily official rate for the Canadian dollar is established in the same way. To establish the official rate for some other currencies, the lira-U.S. dollar official rate is related to the gold parity of the other currency with respect to the U.S. dollar; in other cases, the official rate is sometimes expressly stated in a payments agreement.

During 1953, the rate for the U.S. dollar remained between Lit 624 and Lit 625 per US$1. The relative stability of the dollar in the “50 per cent account” arrangement results from the fact that between the supply of dollars derived from exports and invisibles and the demand for dollars for imports and invisible payments there is an equilibrium achieved by quantitative restrictions on imports, control of payments for incidental commercial expenses and invisibles, and control of terms of payments.

Exchange Control Territory

Exchange control is not exercised over payments from the Italian Republic to the Republic of San Marino or Zone “A” of the Free Territory of Trieste. There are special arrangements for payments between Italy and the territory of Somaliland under Italian administration.

Administration of Control

The exchange control system is operated by the Italian Exchange Office (Ufficio Italiano dei Combi) on the basis of instructions issued by the Ministry of Foreign Trade. All sales and purchases of exchange, including those negotiated on the “free” market, pass through banks authorized for this purpose.

Prescription of Currency

Incoming and outgoing payments for transactions with countries of the dollar area or with countries with which there are no payments agreements generally are made in U.S. dollars, Canadian dollars, Swiss francs, or pounds sterling. Incoming and outgoing payments for transactions with countries with which there are payments agreements must be made according to the methods and in the currencies established by the agreements.

Imports and Import Payments

For most imports from EPU countries and their associated territories,1 import licenses are not required. Imports from other countries with which Italy has payments agreements are subject to the licensing system or to customs authorization in accordance with the lists provided by the agreements. Most imports for which payment must be made in convertible currency are subject to licensing. As to the countries with which payments in currency cannot be arranged, trade is settled on a compensation basis (private compensations, global compensations, and transactions on a reciprocal basis).

For all authorized imports, the exchange control authorities grant exchange or approve payment forthwith for the necessary amount and in accordance with the established methods of payment (see section on Prescription of Currency, above). For private imports of goods and services, importers are authorized to acquire on the “free” market the U.S. or Canadian dollars they need for payment.

Payments for Invisibles

As a general rule, payments abroad for invisibles require licenses, which are issued by the exchange control authorities. Foreign exchange is granted freely for expenses incidental to trade transactions. Holders of “50 per cent accounts” (see section on Exports and Export Proceeds, below) are entitled to use freely U.S. and Canadian dollars available in these accounts for such expenses. For other types of expenditures, such as travel for business and tourism, health and education, patents and trademarks, the authorized banks are permitted to approve payments abroad up to various specified limits. Tourists traveling to EPU countries may obtain from the banks exchange to the value of Lit 200,000 per person per year.2 Remittances to cover health and education expenses and business travel in EPU countries can be authorized by the banks up to the value of Lit 150,000 per person per year.2

Persons traveling abroad may take with them a maximum of Lit 30,000 in banknotes.

Favorable treatment is accorded to earnings on investments in Italy made in freely transferable Swiss francs or in U.S. dollars or Canadian dollars (see section on Capital, below). Favorable treatment is also accorded to earnings on investments of residents of EPU countries. Shipping and insurance companies and travel and forwarding agencies may maintain operating accounts in U.S. and Canadian dollars, freely transferable Swiss francs, and pounds sterling.

Exports and Export Proceeds

Certain commodities listed in a special table (Tabella Esport) require export licenses. This requirement is waived for a few commodities if they are paid for in U.S. or Canadian dollars or freely transferable Swiss francs. Special credit facilities are provided to promote exports of special supplies, and tax refunds of 2½ to 5 per cent are granted on a few exported commodities. Licenses for exports to Argentina require that such exports be linked to an equivalent value of imports from Argentina. In the case of exports to Brazil, export licenses are linked 70 per cent to the value of imports from Brazil.

Exchange receipts in all foreign currencies must be surrendered entirely. Fifty per cent of exchange receipts in U.S. or Canadian dollars are credited by the banks to the recipient in a “50 per cent account” and may be retained for a period of 60 days. During such a period the sums in such accounts may be disposed of by the recipient in one of the following ways: (1) they may be used for authorized payments; (2) they may be sold on the free market (the buyer must use them for an import or an authorized payment abroad); or (3) they may be sold to the Exchange Office.

Proceeds from Invisibles

Receipts from invisibles are subject to the same surrender requirements as receipts from exports, except that shipping and insurance companies and travel and forwarding agencies may keep operating accounts in U.S. and Canadian dollars, freely transferable Swiss francs, and pounds sterling.

Persons may bring in Italian banknotes in any amount.

Capital

As a general rule, inward and outward capital movements require approval. Special regulations are in effect for transfers of foreign capital and income therefrom derived from investments made since April 7, 1948 with freely transferable Swiss francs, U.S. dollars, or Canadian dollars. Transfer abroad in the currency originally surrendered is granted freely for (1) earnings from such investments up to 1 per cent in excess of the legal rate of interest (currently 5 per cent); (2) sums deriving from the disinvestment of capital, within the limit of the exchange originally transferred from abroad, and provided that the transfer is not requested earlier than two years after the time of the investment and does not exceed 50 per cent of the capital for each succeeding period of two years; and (3) sums corresponding to the exchange invested in machinery for industrial plants, provided that the transfer is not requested earlier than five years after the time of investment.

Banknotes

Banks are authorized to buy banknotes in U.S. dollars, Canadian dollars, and Swiss francs at the official rates, and banknotes in other currencies at a price corresponding to the rate of exchange for such notes in foreign free markets.

Changes during 1953

April 27

Operators in transit trade were required to obtain an individual license before buying abroad a commodity which, if exported directly from Italy, would have to be paid for in U.S. dollars, Canadian dollars, or freely transferable Swiss francs and which would require an export license.

May 4

The refund of turnover tax on certain exports paid for in U.S. dollars, Canadian dollars, or freely transferable Swiss francs was extended to certain supplementary items.

May 14

The refund of turnover tax on exports was extended to a few more items and to their export to all countries.

October 28

The maximum denomination of Italian banknotes that could be taken in or out of Italy was increased from Lit 1,000 to Lit 10,000.

Japan

Origin and Essential Features

Exchange controls, mainly intended to prevent a flight of capital, were initially introduced in Japan on July 1, 1932. They were made more stringent on January 8, 1937, and gradually increased later. After the war, Japan’s trade and exchange transactions were subject to the strict control of the Supreme Commander for the Allied Powers (SCAP). The exchange rates established in the immediate postwar years were of limited use and settlements for trade abroad gave rise to multiple rates. A unitary exchange rate was established in April 1949. An entirely revised foreign trade and exchange control law was put into effect December 1, 1949. The Japanese Government took over from SCAP the administration of control of export trade from December 1, 1949 and of import trade and invisibles from January 1, 1950.

Settlements on account of merchandise transactions and invisibles are effected, according to the territory related to the transaction, in pounds sterling, U.S. dollars, or “accounting” dollars through prescribed channels. Practically all imports are subject to individual licensing and registration, and almost all payments on account of invisibles require individual licenses. All exports are subject to registration, and certain exports are subject to individual licensing. Export proceeds as well as exchange proceeds from invisibles must be surrendered, but 10 per cent of export proceeds can be used for specific purposes.

All capital transactions and transfers having an exchange control aspect are in principle subject to individual licensing. However, foreign investments within the terms of a foreign investment law are accorded preferential treatment as to the repatriation of capital and income.

Exchange Rate System

The par value is Japanese Yen 360 = US$1. The official rates are ¥ 359.20 buying, ¥ 360.80 selling, per US$1. Exchange rates are uniform.

Administration of Control

A Ministerial Council whose main function is the drafting of exchange budgets is the highest control authority on the policy level. The Ministry of International Trade and Industry carries out exchange and trade control policy in respect of merchandise transactions, while the Ministry of Finance—through its Foreign Exchange Bureau and the Foreign Exchange Council—does so in respect of prescription of currency and method of settlement, the operation of the foreign exchange fund, payments for non-merchandise transactions, and capital transactions and transfers. The Ministry of Finance also has the right to determine exchange rates. The Bank of Japan and authorized banks carry out the controls on the technical administrative level.

Prescription of Currency

Settlements on account of merchandise transactions and invisibles are effected in (1) sterling in respect of the Sterling Area; (2) U.S. “accounting” dollars through accounts established in accordance with payments agreements with Argentina, Brazil, China (Taiwan), Egypt, Finland, French Monetary Area, Federal Republic of Germany, Indonesia, Italy, Republic of Korea, Netherlands Monetary Area, Philippine Republic, Sweden, and Thailand (the “open account” countries); and (3) U.S. dollars in respect of all other countries and monetary areas. Exports to the Sterling Area and the “open account” countries may also be settled partially or wholly in U.S. dollars if the authorities of the importing country agree or such agreement is not required. The prescribed technical and banking form and channel for effecting settlements differ according to various characteristic features and the category of transaction involved. Deviations from these prescription requirements are subject to individual license from the control authorities.

Nonresident Accounts

1. Nonresident Yen Deposit Accounts. Nonresidents may be authorized individually to keep nonresident yen deposit accounts, designated according to the residence of the account holder. Debits to these accounts for the personal needs of the account holder or for certain payments in yen without compensation to a resident or to a nonresident are freely authorized. Debits to these accounts for conversion into foreign currency require individual licenses.

2. Nonresident Foreign Currency Deposit Accounts. As a measure to facilitate the application of exchange control, specified nonresidents are authorized to keep deposit accounts with banks in U.S. dollars.1

3. Foreign Investors’ Deposit Accounts. Certain proceeds of foreigners’ liquidated investments may be put in foreign investors’ deposit accounts. These accounts may be used for remittances abroad or for making other investments under certain conditions.

Imports and Import Payments

Practically all imports are subject to individual import licensing and, where payment is to be made, to registration with an authorized bank (“bank certification”) for prescription of currency purposes. Import licenses are granted rather freely for specific types of goods, e.g., foodstuffs, basic raw materials, and specified machinery and equipment. Many of the authorized imports are planned in the exchange budget and communicated through “Import Announcements.” These include specified imports for which an exchange allocation must be obtained prior to the issuance of an import license, and imports for which licenses are issued up to exchange quota limits for specified commodities. Authorized imports that are not listed in the “Import Announcements” are such items as operating supplies and maintenance materials required for export or essential domestic production, and imports through compensation arrangements or under the “Special Foreign Exchange Allocation System.”

Other imports authorized outside the above arrangements include imports not requiring payment and those imported for processing and re-exportation.

Licenses are issued by authorized banks for imports covered by exchange allocation; but when the proposed payments are not in accordance with the prescribed method of settlement, such imports require prior approval of the Ministry of International Trade and Industry. In the case of other imports, licenses are issued by the Ministry of International Trade and Industry.

As a general rule, applicants for import licenses must make a deposit, the amount of which is calculated by multiplying the value of the intended import by a coefficient that differs for various categories of goods. The deposit is returned after the goods have been imported or if the import transaction is canceled for a reason acceptable to the control authorities.

Exchange is automatically available for authorized imports requiring an exchange allocation.

Payments for Invisibles

Contracts for specified services are subject to individual licensing, e.g., services between, residents giving rise to foreign claimable assets, services between residents and nonresidents when payment is to be effected by a nonstandard method of payment or over a period longer than three months. Payments are subject to individual licensing; however, payments considered as part of a transaction which has been authorized can be freely effected. Payments on account of incidental costs in respect of authorized imports and exports and specified categories of transfers—e.g., those in connection with insurance, shipping, etc.—are permitted freely. Residents can take out of Japan ¥ 2,000 in Japanese currency to be spent only on Japanese vessels. Applications to take larger amounts are considered on a case-to-case basis.

Exports and Export Proceeds

All exports are subject to registration with an authorized bank (“bank certification”) in order to enforce the requirements concerning the prescription of currency and the surrender of proceeds. The exportation of 32 groups of commodities and of precious metals and goods exported for consignment or under processing or compensation contracts are subject to individual licensing. Export proceeds have to be surrendered within ten days from the date of their acquisition. However, exporters are permitted to use, through simplified procedures, 10 per cent of their export proceeds for specific purposes, which are listed as follows: traveling and living expenses abroad related to the promotion of foreign trade; expenses of overseas branch offices; imports (including related incidental costs) needed for the promotion of exports and/or economic recovery; imports of bona fide samples; and catalogues, financial directories, and other similar trade publications.

Proceeds from Invisibles

Receipts by the standard methods of settlement may be accepted without a license. However, contracts for specified services are subject to individual licensing, e.g., services between, residents giving rise to foreign claimable assets, services when payment is to be received by a nonstandard method. Exchange receipts from invisibles must as a rule be surrendered. Residents can bring into Japan in Japanese currency any unspent balance of the amount which they legally took out.

Capital

All purchases of stocks, debentures, bonds, and investment trust certificates by foreign investors are subject to individual license if remittance of income or principal is desired. Such purchases must be effected against the yen proceeds arising from the sale of foreign exchange or its equivalent. However, 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. Proceeds from the sale of debentures before maturity may not be reinvested.

The principal and capital gain from shares of stock, whether purchased or received as stock dividends, may be withdrawn in five equal annual installments, starting two years after the original acquisition. For stocks purchased with proceeds from the sale of other stocks, the two-year period runs from the date of the last purchase. In the event of capital loss, only the actual proceeds may be remitted.

For bonds, the principal may be entirely remitted at maturity only. The principal in respect of investment trust certificates may be remitted at the time of their redemption in five equal annual installments.

Purchase rights on stocks may be sold if the issuing company gives its consent, or the value of the rights can be realized by selling the stocks with rights and purchasing the same stocks without rights or purchasing other stocks. This constitutes a preferential treatment of foreign investors, as under the Japanese commercial code stock purchase rights may not be sold.

All other capital transactions and transfers having an exchange control aspect are subject to individual license.

Changes during 1953

January 12

The official rates were revised from ¥ 358.95 to ¥ 359.20 buying, and from ¥ 361.05 to ¥ 360.80 selling, per US$1.

January 15

A new agreement establishing an “open account” with Italy became effective.

May 11

The par value for the yen was established with the Fund at ¥ 360 = US$1.

May 20

Exporters to the Sterling Area and the “open account” countries were authorized to accept a part of their export proceeds in U.S. dollars under certain conditions.

August 20

The “Exchange Promotion Foreign Exchange Allocation System” was rescinded and the “Special Foreign Exchange Allocation System” was established, giving every exporter access to the use of 10 per cent of his export proceeds for payment of certain imports and invisible transactions.

November 28

A new agreement establishing an “open account” with Egypt became effective.

Jordan, Hashemite Kingdom

Origin and Essential Features

Trans Jordan as part of the Mandated Territory of Palestine became a member of the Sterling Area on September 21, 1939 and exchange restrictions were introduced. On February 22, 1948, owing to the impending termination of the British Mandate for Palestine, this area ceased to be a territory within the Sterling Area. On July 1, 1950, the Hashemite Kingdom of the Jordan was included in the Sterling Area.

As a member of the Sterling Area, Jordan imposes a system of exchange control similar to that imposed by other members of the Sterling Area. There exists, however, local control over payments to and from territories both inside and outside the Sterling Area.

Restrictions are exercised through import licensing and exchange permit requirements to obtain exchange at the official rate. Fees are payable on these import licenses. A tax is applied to payments for invisible transactions together with an Air Force Tax calculated at 100 per cent on the original tax. Export proceeds must normally be repatriated within six months of export.

Exchange Rate System

The par value is Jordan Dinar 1 = US$2.80. The official rates are US$2.82 buying, US$2.78 selling, per JD 1. The official rates are applicable to most trade transactions, but special taxes are applicable to payments for invisibles (see Table of Exchange Rates, below). Special arrangements with all Arab League States apply to imports and exports commodities produced in any of the countries concerned,1 such transactions generally being financed with the exchange obtained from unofficial sources.

Administration of Control

The administration of exchange control is exercised by the Exchange Control Department of the Ministry of Finance under the responsibility of the Controller of Currency. Exchange is granted automatically for payment of almost all imports authorized by the Director of Imports and Exports.

Prescription of Currency

Prescription of currency requirements are given on the individual import licenses, and, in general, follow the pattern of the United Kingdom’s exchange control system. The same principles apply to export proceeds as a condition of export.

Nonresident Accounts

Authorized banks may open nonresident accounts, subject to prior approval of the Controller of Currency, when they are satisfied that the accounts are acquired for legitimate business purposes and provided they are fed by the appropriate funds. Transfers between nonresident accounts of different countries or monetary areas, and transfers from resident accounts to nonresident accounts, require the approval of the Controller of Currency.

Imports and Import Payments

Imports may be carried out only by registered importers, who receive foreign exchange allocations in hard and in soft currencies2 on the basis of the Government’s import program for each commodity group. The Director of Imports and Exports issues licenses for individual imports on the basis of these allocations. An importer who has been granted a license to import goods may arrange with his bank to apply on his behalf to the Controller of Currency for permission to open an irrevocable documentary credit within two months3 after issuance of the import license; or he may order the goods and arrange with his bank to apply for exchange after the shipping documents arrive in Amman; or he may clear the goods on arrival in Amman, on the presentation of the relevant import license, and arrange for his bank to submit the customs declaration to the Controller of Currency and apply for exchange. In all cases an exchange permit must be issued by the Controller of Currency in order to obtain foreign exchange at the official rate. Import licenses without exchange are issued for locally produced commodities originating in Lebanon and Syria; otherwise exchange permits are always granted when an import license has been obtained.4

License fees amounting to 2 per cent for soft currency imports and 6 per cent for hard currency imports (this includes an Air Force Tax on the basic license fees) are collected on import licenses.

Payments for Invisibles

A tax of 2 per cent for soft currency payments and 6 per cent for hard currency payments (including an Air Force Tax) is applied on all payments for invisibles connected with commercial transactions.

Exchange is made available to pay for the following types of invisibles: income of nonresidents; savings up to JD 5,000 of foreign nationals who intend to return to their own countries; remittances to refugee dependents outside Lebanon and Syria, living expenses of Jordan nationals abroad, travel expenses of Jordan residents abroad (except to Syria and Lebanon), education expenditures, and medical treatment up to certain limits; business expenses abroad, insurance and insurance premiums in accordance with special regulations.

Persons leaving Jordan for Lebanon or Syria may take out up to JD 100, and persons leaving for any other country, JD 20. Persons leaving Jordan may take out the equivalent of JD 10 in banknotes other than those of the Jordan Currency Board, and any amount of notes previously brought into the country. Remittances up to JD 5 per month per person may be made by postal or money order to other parts of the Sterling Area and to neighboring Arab countries.

Exports and Export Proceeds

Exports are not allowed to be shipped unless the exporter has satisfied the Controller of Currency as to the manner in which payment for the goods will be received. Exporters are normally required to repatriate the value of exports within six months of export. However, exemption from this repatriation requirement is granted for all exports to Syria and Lebanon, and for all exports of such commodities as vegetables, fruits, leather, olive oil, soap, olive seeds, and straw mats to any destination.

Proceeds from Invisibles

Persons entering Jordan from Lebanon or Syria may bring in a maximum of JD 100, and those entering from other countries, JD 20, in domestic currency. All persons may bring in any amount in foreign currencies.

Capital

Capital may be imported freely. Capital exports require approval.

Table of Exchange Rates (as at December 31, 1953)(U.S. dollars per dinar)
BuyingSelling
2.822.785
All incoming payments.Government payments and imports authorized at the official rate.
2.7244 ($2.78 with 2% Tax) Invisibles authorized at the official rate to soft currency countries.
2.6132 ($2.78 with 6% Tax)
Invisibles authorized at the official rate to hard currency countries.

Changes during 1953 April 17

The import of goods without a license was prohibited, and any such imports were subject to confiscation, the fines, accordingly, being abolished. (See also footnote 4, above). The essential commodity list was extended.

October 2

The initial par value for the Jordan dinar was established at JD 1 = US$2.80.

Lebanon

Origin and Essential Features

Exchange control was first introduced in Lebanon on December 3, 1939. Significant changes were made in 1944, 1945, and 1948. Subsequently, exchange controls were gradually relaxed, and on May 24, 1952 the last remaining exchange control requirement was officially abolished. There is a complete absence of controls and restrictions on payments and of government interference in the free market. There is a multiple exchange rate structure, since official exchange is reserved for government purposes while nongovernmental transactions are effected in the free market in which rates remote from the par value rates are in effect and in which there are broken cross rates.

Exchange Rate System

The par value is Lebanese Pounds 2.19148 = US$1. The official rates are LL2.19 buying, LL 2.21 selling, per US$1. These rates apply only to government payments, and all other transactions take place at free market rates (see Table of Exchange Rates, below).

Prescription of Currency

In general, no requirements are attached to exchange payments or receipts in Lebanon; but in some cases transactions with certain countries, with which Lebanon has concluded payments agreements specifying the method or channel of payment, should be made through specific accounts.1

Imports and Import Payments

Import licenses are required for all commodities, but licenses are issued freely (often after the arrival of the goods) except for a few commodities, mostly of a type produced locally. Exchange may be obtained freely through the free market.

Payments for Invisibles

Exchange may be obtained freely through the free market or payment may be made freely in local currency to any account.

Exports and Export Proceeds

Export licensing is applied to only a few items, such as livestock, wheat, barley, jute goods, cement, caustic soda, petroleum and petroleum products, and certain metals.

There are no surrender requirements attached to exchange receipts, which may be retained, used, or freely sold in the free market.

Proceeds from Invisibles

There are no surrender requirements attached to exchange receipts, which may be retained, used, or freely sold in the free market.

Capital

There are no limitations on capital payments or receipts, and exchange in respect of capital movements may be obtained freely or sold through the free market.

Table of Exchange Rates (as at December 31, 1953)(Lebanese pounds per U.S. dollar)
BuyingSelling
2.192.21
….Government payments.
3.1875 (Fluctuating Free Market Rate)3.1875 (Fluctuating Free Market Rate)
Exchange receipts.All other payments.

Changes during 1953

No significant changes took place during 1953.

Netherlands

Origin and Essential Features

Exchange control was introduced in the Netherlands May 10, 1940. The present exchange control system has its legal basis in a decree of October 10, 1945 (Foreign Exchange Decree 1945), which became effective October 20, 1945. The basic structure of the system has remained unchanged since then, although there has been considerable relaxation in detail. The restrictive system is implemented through licensing of all imports, exports, and payments to and receipts from nonresidents, but many transactions are covered by general licenses. The prescription of currencies for foreign payments and receipts is an integral part of the exchange control system. Import restrictions and restrictions on payments for invisibles and on capital account are applied less severely to countries with which there are payments agreements1 and other soft currency countries. Since 1949, restrictions on payments in connection with intra-European trade and services have been relaxed considerably. During 1953, restrictions on payments for most purposes, to all destinations, were further relaxed.

Exchange Rate System

The par value is Netherlands Guilders 3.80 = US$1. The official rates are f 3.77 buying, f 3.83 selling, per US$1. Basically, exchange transactions are effected at uniform rates based on the above par value.

For U.S. dollars, sterling, Belgian francs, French francs, Swiss “agreement francs,” deutsche marks, Danish kroner, Norwegian kroner, Swedish kronor, and Brazilian “agreement dollars,” free spot and forward exchange markets have been established. Authorized banks are allowed to cover both spot and forward permitted transactions in these currencies, in the Amsterdam exchange market and with banks in the country of the currency concerned, against guilders. Spot transactions take place at rates within a fixed spread of 1 per cent either side of parity. Forward transactions must be based on permitted merchandise or service transactions.

The Netherlands participates with Belgium, Denmark, France, the Federal Republic of Germany, Norway, Sweden, Switzerland, and the United Kingdom in a multilateral foreign exchange arbitrage arrangement, under which authorized banks in these territories may conclude spot transactions, and forward transactions for up to three months’ delivery, with other authorized banks in any of these territories.2 The spot exchange rates fluctuate between the official limits agreed by the exchange authorities of the countries concerned, while the forward premiums and discounts are left to the interplay of market forces.

Special arrangements apply to exchange proceeds from exports to certain countries or in certain currencies, as follows:

1. Importers from Argentina are granted negotiable “import payment certificates” for the value of their imports, and, in principle, exporters to Argentina are required to submit such certificates to an amount of 1.67 times the value of their proposed exports in order to qualify for an export license.

2. Egyptian pounds are traded in a spot market without official buying or selling rates, as well as in a free forward market.

Exchange Control Territory

All transactions with the Netherlands overseas territories (the Netherlands Antilles, Surinam, and New Guinea) are subject to exchange control. However, vis-å-vis third countries with which payments agreements are in force, the Netherlands and its overseas territories constitute the Netherlands Monetary Area. The Republic of Indonesia participates in several of the Netherlands’ payments agreements, and in those cases it also constitutes a part of the Netherlands Monetary Area.

Administration of Control

The administration of exchange control is conducted by the Netherlands Bank on behalf of the Ministers of Foreign Affairs, Overseas Territories, Finance, Economic Affairs, and Agriculrture. Import licensing and export licensing are handled by the Central Import-Export Agency (CDIU) and its delegated offices, under directives from the Directorate-General for Foreign Economic Relations. Invisibles and capital transactions are licensed by the Netherlands Bank, as are all transit trade transactions. Sixty-six authorized banks are permitted to handle foreign exchange transactions within the scope of general and special licenses granted by the licensing authorities.

Prescription of Currency

Payments to nonresidents, if eligible for transfer abroad, must always be made through an authorized bank, either to the credit of a transferable nonresident guilder account held by a foreign bank with an authorized bank in the Netherlands or to the debit of the authorized bank’s holdings abroad of the currency concerned. Such payments to nonresidents must be made in accordance with the prescriptions of Foreign Exchange Notice 1/53, unless approval has been given to effect the payments in another way, viz., (1) where a two-account payments agreement is in force, either in guilders held in a nonresident account related to the partner country or in the partner country’s currency; (2) for a single-account agreement, in the currency of the agreement; (3) in transactions with the United States and Canada, either by debiting an authorized bank’s holdings of the respective currencies in the United States or Canada, or by crediting an appropriate transferable guilder account (American or Canadian Account) held by a U.S. or Canadian bank with an authorized bank; (4) in all other cases except that of Egypt, in the way indicated in the individual authorization, usually in U.S. dollars or sterling; (5) to Egypt, in Egyptian pounds for most commercial payments and in guilders for most other payments.

The prescription of currencies for exchange receipts is similar to that for exchange payments.

Nonresident Accounts

There are three types of nonresident account held in guilders with Netherlands authorized banks: “guilder agreement accounts,” other “transferable accounts” (T and TN accounts), and “capital accounts” (N, K. and Z accounts), All are designated by nationality according to the country of residence of the account holder.

“Guilder agreement accounts” are transferable accounts in the names of foreign banks; they are used for payments and receipts mainly on account of current transactions. Balances on T accounts may at any time be transferred freely to the holder’s country of residence, and to T, K, or N accounts related to that country. Balances on T accounts may be used to pay for Netherlands exports. They may be credited freely for coupons, dividends, and contractual amortization, if a payments agreement provides for such transfers or the account relates to Canada or the United States; in the case of most other countries also, credits to T accounts are permitted for these items. TN accounts are accounts in the names of nonresident Netherlands nationals. To these accounts are credited, for transfer to the holder’s country of residence, his capital earnings, contractual amortization, and pensions accruing in the Netherlands. These facilities vary for different categories of TN accounts.

K accounts are held by foreign nonresidents. N accounts are in the names of nonresidents having Netherlands nationality or domiciled in Indonesia or one of the Netherlands overseas territories. In certain cases, capital earnings, amortization, and pensions must be credited to K or N accounts. Proceeds of the sale of real estate, Netherlands securities, and other capital assets held in the Netherlands must be credited to K or N accounts; such proceeds are subject to a reinvestment obligation unless accruing to nonresidents domiciled in Indonesia or one of the overseas territories. Balances on K and N accounts may be used in the Netherlands, without a special license, for travel expenses up to a daily maximum of f 100. K accounts may be debited in payment of taxes of a capital character, but N accounts may be debited in payment of all taxes, dues, and excises. Locally traded Netherlands securities may be purchased by debiting K and N accounts, but N accounts may be used also to purchase internationally traded Netherlands securities. Thus, greater freedom exists with regard to the use of N accounts than of K accounts. Within the N group, accounts related to Indonesia or the Netherlands overseas territories can be debited more freely than those related to other countries. Z accounts are those containing sums of doubtful origin; they may not be debited or credited without special license.

Imports and Import Payments

A few commodities (wheat, oil seeds, and fats) are imported on government account, but most imports are effected by private dealers.

A large number of listed goods imported from OEEC countries in consignments of f 10,000 or less do not require licenses. All other imports require a combined import and exchange license. For most goods from OEEC countries and their associated areas,3 licenses are issued automatically upon application; the related liberalization list also applies to Egypt, Indonesia, New Guinea, Surinam, and the Netherlands Antilles. For nearly all imports from the Belgian Monetary Area also, licenses are issued upon application. Import licenses for many raw materials and semimanufactures, as well as for some machinery from the dollar area, are granted upon application, other imports from the dollar area being licensed individually in accordance with an annual dollar import program.

Import, export, and transit licenses are combined with exchange licenses. In principle, whenever an import and exchange license is obtained, or if no license is required, payment may be effected without delay, provided that the method of payment is in conformity with the general rules (see section on Prescription of Currency, above). However, payment for imports prior to their dispatch to the Netherlands is prohibited if settlement is to be made in U.S. dollars, Canadian dollars, or free Swiss francs, or to the credit of any U.S. or Canadian nonresident guilder account.4

Payments for Invisibles

All payments for invisibles are subject to exchange licensing. Many categories of invisibles, however, particularly if payable to OEEC countries or their associated territories and to certain other payments agreement countries, are covered by general licenses in these cases the supervision of payments rests with the authorized banks. Licenses for the payment of invisibles in hard currencies are granted less liberally than those for payments in other currencies. Tourist exchange, exclusive of the payment of fares, is provided up to the countervalue in the appropriate currency of f 1,000 per person per trip for travel to any OEEC country, Finland, Spain, Yugoslavia, and the monetary areas of these countries. This general license also extends to nonresidents who are domiciled in Indonesia or any of the overseas territories but are staying in the Netherlands temporarily.

Residents may export all foreign notes acquired in accordance with a general or special license, and a maximum of f 50 in domestic notes, which may be spent abroad. Nonresidents may, when leaving the Netherlands, export the unused portion of any foreign exchange they declared at the time of entry, as well as f 100 in Netherlands banknotes.

Exports and Export Proceeds

All exports are subject to a combined export and exchange license. No special license, however, is required for a large number of goods exported to certain destinations in consignments not exceeding f 1,000 in value and provided that payment is received from the country of destination. The method of payment must be in conformity with the regulations (see section on Prescription of Currency, above).

The prohibition of certain exports to most Eastern European destinations is based on NATO agreements. The exportation of a very few goods is prohibited in order to conserve domestic supplies.

Surrender of export proceeds is not obligatory; but if they are surrendered, it must be at the official rate. The collection of export proceeds is obligatory; they must be received in accordance with the prescription of currency, and may then be held on appropriate “foreign currency accounts” with authorized banks. The use of such funds is subject to the usual licensing requirements.

As a rule, no licenses are granted for exports to Argentina unless the exporter submits “import payment certificates” (see section on Exchange Rate System, above) to an amount 1.67 times that of his proposed export. The export proceeds must be settled at the official rate.

Proceeds from Invisibles

Exchange receipts from invisibles need not be surrendered and may be credited to “foreign currency accounts” instead. For settlement in guilders of incoming exchange from invisibles or capital, the recipient must submit to an authorized bank a form “B” indicating the nature of the underlying transaction as well as the amount and currency received. The authorized banks must also verify that the underlying transaction comes within the scope of the categories of transactions for which the Netherlands Bank permits payments to be received from the remitting country by the method chosen, if payment in that case would have to pass through a transferable account held by a Netherlands or foreign central or private bank. This verification is not required in the case of receipts from Canada, the United States, Indonesia, the Netherlands Antilles, New Guinea, and Surinam. The Netherlands Bank may prescribe the submission of evidence as to the origin of each claim and give other directives to the authorized banks as to such exchange receipts.

Nonresidents may bring into the Netherlands f 100 in Netherlands banknotes and unlimited amounts of foreign banknotes and negotiable instruments. They may be sold only to an authorized bank or an authorized exchange office.

Capital

Inward and outward capital transfers, and the shifting of foreign-owned capital within the Netherlands from one asset to another, are subject to control. However, for the acquisition by nonresidents of real estate in the Netherlands and of Netherlands securities, as well as for the shifting of the latter, general licenses have been granted. Payments for contractual amortization to nonresidents of foreign nationality are permitted freely to the country of their residence, if a payments agreement with that country provides for such transfers; they are also permitted in favor of residents of the United States or Canada. Moreover, settlement of contractual amortization on Netherlands securities and on foreign bonds, exclusively denominated in guilders and exclusively payable in the Netherlands, has been authorized by a general license, as from July 17, 1953, for nonresidents in countries with which the Netherlands has not concluded payments agreements providing for such transfers. These settlements may be made in the following manner: (1) in U.S. dollars or by crediting an American Account (a transferable guilder account in the name of an American bank) in those cases in which the related country (Dominican Republic, El Salvador, Guatemala, Honduras, Mexico, Panama, and Venezuela) authorizes unrestricted transfer of this item to the Netherlands; (2) by crediting T accounts in the case of all other countries, with the exception of those countries that have confiscated Netherlands property. On July 31, 1953, the same manner of settlement was introduced for amortization of loans secured by mortgage. Nonresident Netherlands nationals living uninterruptedly abroad since at least January 1, 19495 are permitted to transfer, to their country of residence, contractual amortization accruing to them in the Netherlands after April 1, 1952. As from June 26, 1953, Netherlands nationals in EPU countries who are 60 years of age or older may have contractual amortization accruing to them transferred to them, irrespective of the date on which they took up residence abroad. As from November 9, 1953, this facility was extended to all countries.

Netherlands or foreign securities held in the Netherlands for the account of nonresidents may be returned to the owner or be sold with special or general license from the Netherlands Bank, provided certain conditions are fulfilled. Sales proceeds of capital assets (including securities) accruing in the Netherlands to nonresidents of any nationality must be credited to nontransferable, nonresident, guilder accounts, and usually are subject to a specific reinvestment obligation. In cases of hardship, the export of moderate amounts of nonresident-owned capital is permitted. Industrial investment capital supplied from free exchange or transferable guilder accounts after November 1, 1950 is covered by a retransfer guarantee effective three years after the date on which final payment was received.

Emigrants leaving on or after September 1,1953 are permitted to export foreign exchange to the countervalue of f 1,500, and members of their families may export f 1,000 each, in addition to personal effects. Persons who emigrated after December 31,1949 have the option of transferring up to f 15,000 for housing purposes and the purchase of tools in the country of immigration, or of exporting goods up to the value of f 15,000 (f 25,000 for persons having an independent trade or profession) and transferring f 1,000 a year for four years.

Changes during 1953

January 1

In addition to the liberalization of imports from OEEC countries, licenses for imports of certain other listed goods from OEEC countries were issued upon application, raising the effective liberalization of imports from OEEC countries (other than from Belgium-Luxembourg) from 75 per cent to 82 per cent.

Capital earnings accruing after December 31, 1952 from domestic assets given by residents to nonresidents could be transferred to the owner.

Reinsurance, in the currency of the original insurance, which formerly could be effected abroad only up to specified percentages, could be placed entirely with foreign companies. Insurance brokers were allowed to cover risks abroad for account of residents.

The permitted export of capital by persons emigrating, or having emigrated after December 31, 1949, was increased. Persons having an independent trade or profession could export to nondollar area countries either f 25,000 worth of goods plus f 4,000 in cash (in four equal annual installments starting one year after departure) or f 15,000 in cash only. For other emigrants, the amount of goods was fixed at f 15,000. The cash amounts granted for dollar area countries were established at 60 per cent of those mentioned, i.e., at f 2,400 and f 9,000, respectively.

January 2

Nonresidents not domiciled in Indonesia or the overseas territories were permitted to transfer to their country of residence the stock dividends accruing from current profits on Netherlands stocks after January 1, 1953.

The official rates for the U.S. dollar were widened, from f 3.795 buying and f 3.805 selling, to f 3.77 buying and f 3.83 selling. Authorized banks were allowed to cover permitted transactions at rates between these limits.

January 9

Authorized banks were obliged to verify that in cases of incoming exchange the underlying transactions came within the scope of the categories of transactions for which the Netherlands Bank permits payments to be received from the remitting country by the method chosen, if payment in that case would have to pass through a transferable account held by a Netherlands or foreign central or private bank. This verification was not required in the case of currency received from Canada, the United States, Indonesia, the Netherlands Antilles, New Guinea, or Surinam. The Netherlands Bank could prescribe the submission of evidence as to the origin of each claim and give other directives to the authorized banks regarding such exchange receipts.

January 14

The general license permitting exporters to sell their balances on nontransferable “Egyptian nonresident accounts” to importers at or below the rate corresponding to the official par values of the Netherlands guilder and the Egyptian pound was canceled. The permission to negotiate Egyptain export pounds was extended, on both the selling and the buying side, to resident transit traders.

The list of U.S. securities which could be acquired from the United States by arbitrage of dollar securities on the basis of so-called DERA and ARBUS licenses was greatly expanded.6 Many Canadian securities also could be acquired in arbitrage transactions under individual licenses.

January 24

The spread between the official buying and selling rates for the Belgian franc was widened to approximately % of 1 per cent on either side of parity, authorized banks being permitted to cover permitted transactions between these limits.

January 26

The right to hold TN accounts, entitling the holder to transfer capital earnings, contractual amortization, and pensions accruing in the Netherlands on or after April 1, 1952, was extended to all Netherlands nonresidents living abroad since January 1, 1948 and currently domiciled in a country with which a payments agreement was in force.

February 11

The Netherlands Bank announced its willingness to pay in guilders at the official rate the Bank of Brazil’s payment orders for commercial contracts concluded after February 11, 1953. The corresponding cruzeiro receipts were credited to a special cruzeiro account and would be settled in guilders, at the fixed official buying rate for cruzeiros, as soon as the agreement balance permitted, provided the Netherlands Bank was informed of these contracts within a fortnight of their signature. Amounts thus communicated could be sold immediately in the free forward market for cruzeiros. For the settling in guilders of accrued cruzeiros, priority would be given to amounts resulting from commercial contracts concluded before October 11, 1952.

A general license permitted the negotiation, between residents, of German bonds that are officially quoted on a Netherlands stock exchange, if expressed in guilders, pounds sterling, Swiss francs, U.S. dollars, deutsche marks, or Reichsmarks.

February 13

Netherlands authorized banks’ correspondents in the Belgian Monetary Area and the United States were permitted to invest their balances on guilder agreement accounts in Netherlands treasury bills and guilder bank acceptances, to resell these, and have the proceeds recredited to guilder agreement accounts.

February 17

As a result of the coming into effect of a payments agreement between Hungary and Indonesia, payments between these countries would no longer be settled in accordance with the terms of the Netherlands-Hungarian payments agreement.

March 4

Netherlands nonresidents domiciled in Indonesia or the overseas territories could obtain annually f 3,000 from their N accounts for payments in respect of specified professional services or for the purchase of goods for shipment, subject to individual export license, to their domicile.

March 13

Until May 15, the balances as of June 30, 1952 in K accounts held by residents of the Belgian Monetary Area could be trans ferred to corresponding T accounts or debited to Belgian franc accounts with correspondents of Netherlands authorized banks. Those balances had been freed effective October 8, 1952, but their inward transfer had only in exceptional cases been permitted by the Belgian-Luxembourg exchange control.

March 16

General licenses were issued permitting resident transit traders to buy and sell goods abroad in convertible currencies and/or EPU currencies, provided they surrendered, within six months after the initial purchase of convertible currencies, the sales proceeds in convertible currencies amounting to at least 103 per cent of the purchase price, or the sales proceeds in EPU currencies or convertible currencies if the initial purchase was made in EPU currencies. Individual transactions under these licenses still had to be approved by the Netherlands Bank. Authorized banks were permitted to negotiate convertible and EPU currencies with residents in accordance with the general licenses referred to, all transactions to be effected in guilders at rates fixed by the Netherlands Bank or quoted in the Amsterdam spot or forward market, and provided the banks verified that at least 103 per cent of any convertible currencies taken up by the trader was returned in convertible currencies.

March 21

A payments agreement was signed with Egypt. In principle, commercial payments were to be made in Egyptian pounds at a fluctuating rate, whereas Suez Canal dues, all other invisibles, and certain long-term commercial transactions would be settled in Netherlands guilders at a fixed rate of f 10.91 per LE 1. Netherlands imports from Egypt were liberalized completely.

March 23

A free spot and forward market was established for Egyptian pounds. No margins were established for spot transactions. The general license regarding Egyptian export pounds (see January 14, above) was canceled.

April 22

The transfer to the Federal Republic of Germany of balances as at June 30, 1952 in German-held K accounts was permitted until August 1,1953.

May 4

A free spot and forward market was established for the deutsche mark, and the official spread for spot transactions was widened to approximately ¾ of 1 per cent on either side of parity.

May 12

The liberalization of imports from OEEC territories was further increased, unilaterally, from 82 to 92 per cent.

May 18

A free spot and forward market was established for the Danish krone and the spot margins were widened to approximately ¾ of one per cent either side of parity.

Authorized banks were permitted to engage in multilateral spot arbitrage, in guilders and the currencies of Belgium, Denmark, France, Federal Republic of Germany, Sweden, Switzerland, and United Kingdom, with authorized banks in any of the countries concerned.

May 22

The facilities previously granted to the correspondents of Netherlands authorized banks in several countries for investing balances on their guilder agreement accounts (see February 13, above) were extended to correspondents in Denmark and the Federal Republic of Germany.

May 23

Imports of liberalized listed goods from OEEC countries, Egypt, Indonesia, and the overseas territories, which had required import licenses for shipments in excess of f 400, could be effected under a declaration procedure if valued at less than f 10,000. Exports to a value of f 1,000 of listed goods to a large number of countries could be effected upon declaration, compared with the previous limit of f 400.

May 28

Residents leaving the Netherlands temporarily were permitted to export f 50 in Netherlands banknotes and coin for use abroad.

June 2

Authorized banks could export banknotes in U.S. dollars, Canadian dollars, and Belgian francs obtained from travelers, for credit to their accounts with correspondents in the respective countries.

June 5

A general license permitted residents to defray, out of the rents obtained from their real estate abroad, the maintenance, repairs, taxes, and mortgage charges on such real estate, provided the net proceeds were collected at least once a year and repatriated.

June 10

A new payments agreement with Brazil replaced the provisional payments agreement of August 23, 1948. The new agreement account was conducted in U. S. dollars. Forward transactions in cruzeiros were prohibited for contracts other than those entered into between October 10, 1952 and June 20, 1953. The Brazilian “agreement dollar” could be traded on the Amsterdam spot and forward markets, if there was a real underlying transaction. The spot margins were established at f 3.77 and f 3.83 to the dollar. Re-exports of coffee and cocoa paid for through the Netherlands-Brazilian payments agreement were prohibited to the United States, Canada, Switzerland, and the port of Antwerp.

June 15

The exchange allocation for tourist travel in most European countries and their monetary areas was raised, from f 600 per calendar year for adults to f 1,000 per trip per person, the number of trips not being subject to a limit; the allocation was also granted to nonresidents domiciled in Indonesia or the overseas territories and for business travel.

Wages, salaries, and fees earned by nonresident employees could be transferred freely to their country of residence, unless the transfer involved payment in U.S. or Canadian dollars.

Residents were permitted to transfer royalties freely to nonresident authors, playwrights, and journalists, unless such transfer involved payment in U.S. or Canadian dollars, and to acquire copyright to foreign publications belonging to nonresidents provided the nonresident was not domiciled in Canada, the United States, or any other country with which payments are made in Canadian or U.S. dollars, and that no obligations resulted entailing settlement in free Swiss francs.

Exporters could make reasonable and customary commission payments to nonresident agents from, or in the currency of, the export proceeds, regardless of whether the agent was a resident of the country of that currency, or in the currency of the agent’s country of residence, except when that country was the United States or Canada. Alternatively, such payments could be made to the credit of an N account held by a resident of Indonesia or the overseas territories, or a T account related to the agent’s country of residence except Argentina and Brazil; the crediting of U.S.-held or Canadian-held T accounts was permitted only if the export proceeds were received from the United States or Canada.

June 26

Netherlands nationals resident in the monetary areas of EPU countries, or emigrating after the effective date of the new regulations, could open TN accounts for the transfer of capital earnings, provided they were 60 or over, and could have their pensions transferred regardless of their age.

July 4

Shipbrokers were granted a general license permitting them to make transfers to countries other than Canada and the United States for the chartering of foreign ships, and to enter freely into voyage charter contracts. In such cases, payments to any EPU country could also be made in sterling. For transfers to Canada and the United States special licenses are required. Shipowners were authorized to conclude, with nonresidents, time and voyage charters for ocean-going vessels on the condition that the ships chartered were used only in their own usual and regularly scheduled line traffic.

July 14

The limit of f 3,000 on the privileges granted to Netherlands nonresidents domiciled in Indonesia or the overseas territories (see March 4, above) was removed. Export licenses for goods, however, were granted only if they were for personal use.

July 15

Authorized banks could engage in forward transactions in pounds sterling with banks in Surinam, spot transactions in sterling being permitted only if required to close a forward transaction.

July 17

A general license was issued, permitting the transfer of earnings and contractual amortization on Netherlands securities and on foreign guilder bonds exclusively payable in the Netherlands to nonresidents domiciled in 40 dollar area and non-dollar area countries with which no payments agreement providing for the transfer of capital earnings is in force. The relevant amounts could be credited to appropriate T accounts, and, in the case of 7 dollar countries,7 be transferred in U.S. dollars.

July 20

The facilities for transfers, in respect of specified invisibles, of up to f 1,000 to EPU countries and their nonmetropolitan areas, including the Netherlands overseas territories and Indonesia, were extended to cover further listed invisibles.

July 27

The use of a travel exchange book or an entry-exit form was no longer required if travel exchange purchased did not exceed f 1,000.

July 30

Balances in American guilder agreement accounts and in the T accounts of residents of the United States and seven other dollar area countries7 could, regardless of the country designation of the account, be transferred in U.S. dollars to any of those eight countries. Balances in Canadian-held guilder agreement accounts and T accounts could be transferred to Canada in Canadian dollars.

August 1

Payments representing indemnification for wartime destruction, granted by the Guarantee Fund for Restitution of Rights, became transferable until June 30,1954.

August 8

The surrender requirement in respect of accruing foreign exchange was abrogated for the currencies of all payments agreement countries, the United States, and Canada. (Other currencies have never been subject to a surrender requirement.) Non-surrendered exchange could be held only as demand deposits in foreign currency accounts with authorized banks. The obligation to collect all claims on nonresidents when due was continued in force, and all those expressed in U.S. dollars, Canadian dollars, or free Swiss francs must be collected in the respective currency regardless of the debtor’s country of residence. Authorized banks holding foreign exchange for residents could invest that foreign exchange in foreign bank acceptances and treasury bills or put it on time deposit with their correspondents abroad.

August 26

Various kinds of insurance payments between the Netherlands and Switzerland were liberalized and could be transferred through the payments agreement with that country.

September 1

The allocation of exchange to emigrants was raised. Emigrants leaving on or after September 1, 1953 could on departure export foreign exchange to the countervalue of f 1,500 regardless of destination, and members of their families could export f 1,000 each. The exchange allocation to persons emigrating after December 31, 1949 to dollar area countries, and having an independent trade or profession, was raised from f 9,000 to f 15,000. Persons who did not avail themselves of this transfer facility were, as formerly, allowed to export goods to the value of f 25,000 and could have, in addition, four yearly transfers of f 1,000 (formerly f 600 for dollar countries). The exchange allocation to persons emigrating after December 31, 1949 to dollar area countries, and not having an independent trade or profession, was likewise raised from f 9,000 to f 15,000. Optionally, these persons were allowed to export, as formerly, goods to the value of f 15,000, plus four yearly transfers of f 1,000 each (formerly f 600 to dollar countries). Persons emigrating after December 31, 1949 who are not heads of families could have only four yearly transfers of f 1,000 (formerly f 600 to dollar countries).

September 23

The Rotterdam corn futures market was reopened. A general license permitted residents to engage in future purchases and sales for account of nonresidents. Sureties and settlements of price differences in respect of forward transactions concluded for account of nonresidents must be in U.S. dollars, Canadian dollars, free Swiss francs, or any EPU currency (or the appropriate guilder agreement accounts); price differences were to be settled in the currency used for the surety. Spot delivery to residents must, in principle, be settled in the currency of the country of origin, while spot delivery to nonresidents must be settled in U.S. dollars, Canadian dollars, or free Swiss francs, both sales and purchases remaining subject to special license, on the understanding that corn originating in countries other than those with which payments are effected through agreement accounts of, or with banks in, the United States or Canada may be paid for in EPU currencies.

September 25

The daily amount which nonresidents holding N and K accounts could draw against those accounts while temporarily in the Netherlands was raised from f 60 to f 100, and the f 60 limit on the use of Argentine-held and Brazilian-held T accounts was removed. Nonresidents traveling in the Netherlands were permitted to exchange imported foreign currencies without limit for any other currency except U.S. and Canadian dollars, but they could obtain only 100 Swiss francs per person per trip.

October 5

Authorized banks were permitted to engage in multilateral forward arbitrage, for periods up to three months, in the currencies mentioned under May 18, above.

Residents could transfer up to f 400, for specified invisibles, to the United States, Canada, and seven other dollar countries.8

Balances in T accounts held by residents of the United States, Canada, and seven other dollar countries8 could be freely transferred to T accounts held by other residents of any country in the group.

October 15

Import licenses for listed goods (mainly raw materials, semi-processed commodities, and some machinery) originating in substantially all dollar area countries were granted upon application, provided payment was made in an approved manner to any one of the countries listed. Their re-exportation without processing was prohibited. Licenses for imports from the dollar area of goods not listed were granted more liberally, as were licenses for invisibles payable to the dollar area.

October 19

The 10 per cent retention quota in respect of proceeds of direct dollar exports (Export Bonus dollar system) was discontinued for goods exported by virtue of export licenses dated October 19, 1953 or later. EB dollars accruing under earlier export licenses could still be credited to EB dollar accounts. The discontinuation of those accounts, the use of which remained unaffected, would be made dependent on the progress made with the liquidation of EB dollar balances.

October 23

Residents could collect abroad payments for services in foreign means of payment and/or foreign negotiable instruments, dispose of them to defray related expenses, and import and surrender the remaining exchange and negotiable instruments.

Residents could without limit pay freight to nonresident canal and river shippers, either in guilder banknotes or through an authorized bank, and such nonresident shippers could use any Netherlands banknotes thus collected for expenditures in the Netherlands related to their voyages.

November 7

Some authorized banks were granted licenses to effect payments to and from Iran through accounts carried on their books in the name of the Bank Melli Iran.

November 9

The transfer facilities granted to Netherlands nonresidents in respect of the transfer of capital earnings and pensions (see June 26, above) were extended to all countries.

November 23

Authorized banks were granted a general license permitting them (1) to buy, in the country of issue, Italian and Portuguese banknotes; (2) to buy, in EPU countries other than Belgium, Luxembourg, and Switzerland, foreign banknotes in a currency other than that of the country where the purchase is made; (3) to pay for purchases under (1) and (2) in accordance with the usual prescription of currency; (4) to sell foreign banknotes, other than those of Italy, Portugal, Austria, and the overseas territories, to EPU countries, Canada, and the United States in exchange for other foreign banknotes or against payment in accordance with the usual prescription of currency applicable to the country of destination, and to any other foreign country for any other foreign banknotes; (5) to import the foreign banknotes acquired; (6) to export foreign banknotes that were acquired in terms of (5) or bought domestically, except Canadian dollars, U.S. dollars, Italian lire, escudos, Austrian schillings, and the currencies of the overseas territories. All purchases and sales of foreign banknotes were to be made at or below the maximum rates set by the Netherlands Bank, except that Canadian and U.S. dollars could be traded domestically only at the official rates.

November 27

The transfer of annuities and pensions to nonresidents domiciled in any of the soft and hard currency countries to which the standard prescription of currency is applied was generally permitted in those cases where such transfers had previously been made under special license.

December 3

Registered transit traders were granted a general license to purchase or accept on consignment Indonesian export products, and to buy and sell such products among each other. The transactions need only be notified to the Netherlands Bank. Resale to nonresidents remained subject to individual licensing.

December 11

Residents were free to make customary and economically justified payments for commissions on imports and exports and for sales expenses of their foreign representatives.

December 14

The Norwegian krone was added to the currencies traded in the free spot and forward markets, and to the list of EPU currencies in which multilateral spot arbitrage was permitted. The official spread for spot transactions was widened to approximately ¾ of 1 per cent on either side of parity.

December 15

A general license was issued permitting residents to sell non-transferable claims on nonresidents to authorized banks.

December 22

A general license was issued, effective January 1, 1954, permitting the reinvestment of the proceeds of the sale or amortization of any foreign securities held abroad by Netherlands residents.

Nicaragua

Origin and Essential Features

Control over exchange transactions was introduced in Nicaragua on November 13, 1931. Subsequently, at various times, exports and imports have been made subject to government control. Certain changes were introduced later, affecting trade and payments transactions. The last major revision became effective November 9, 1950, when the exchange rate system was simplified by the elimination of compensation and certificate practices and of a system of individual import quotas.

The exchange system comprises a multiple exchange rate structure consisting of two official rates with, in addition, various surcharges. All exchange receipts must be surrendered at a fixed rate. There are no quantitative restrictions or prohibitions to restrain imports. There is a fluctuating free market for transactions of minor importance.

Exchange Rate System

The par value is Córdobas 5 = US$1. The rate system is based on two official rates of C$5 and C$7 per US$1. By mixing these rates in different proportions and by adding surcharges of C$1 and C$3 per US$1 to certain types of payments, other effective rates are obtained for the various categories of incoming and outgoing payments (see Table of Exchange Rates, below).

Administration of Control

The control system is administered by the Issue Department of the National Bank of Nicaragua, which issues import and export permits and allocates import commodities to the established categories of “essential,” “semi-essential,” and “nonessential” goods. All sales of exchange pass through the Issue Department and the Banking Department of the National Bank or through authorized banks.

Prescription of Currency

There is no prescription of currency, but incoming and outgoing payments normally are made in U.S. dollars.

Imports and Import Payments

For the purpose of applying the established exchange rates and surcharges, private imports are classified into three categories, to which the rate of C$7.0525 applies: Category I (essential imports), Category II (semi-essential imports), and Category III (nonessential imports). Surcharges of C$1 and C$3 per US$1 apply to payments for imports in Categories II and III, respectively. Government payments abroad are made at the rate of C$5.0375 per US$1. All imports are subject to license, but only to assure that the corresponding exchange transaction takes place at the applicable rate and that the relevant surcharge has been paid in advance.

Before making an application to import, the importer must deposit in domestic currency 75 per cent of the calculated value of the imports in Category I (except for some specified goods) and 100 per cent of the calculated value of Category II and Category III imports.

Payments for Invisibles

All invisibles are subject to authorization, in order to apply the appropriate rate of exchange. Payments for invisibles incidental to import transactions are subject to the same rate and procedure as the corresponding import.

Students’ expenditures, payments of insurance premiums, and remittances on account of foreign investments are made at the rate of C$7.0525 per US$1. Other invisibles are treated like Category III imports and are, therefore, subject to the C$3 per US$1 surcharge, added to the C$7.0525 per US$1 rate, and to a 5 per cent exchange tax;1 however, some invisibles are paid through the free market without payment of surcharge or tax.

Domestic currency notes can be exported freely.

Exports and Export Proceeds

Exports are subject to a licensing procedure similar to that for imports, which serves to assure that all exchange receipts are surrendered at the effective rate of C$6.60 per US$1 (20 per cent at C$5 per US$1 and 80 per cent at C$7 per US$1).

All exchange receipts from exports must be surrendered, with the exception of receipts of foreign concessionaires which, according to the terms of their contracts, usually surrender foreign exchange only to the extent corresponding to their local expenses.

Proceeds from Invisibles

Proceeds from invisibles are subject to the same regulations as proceeds from exports. Domestic currency notes can be imported freely.

Capital

Remittances abroad of income and amortization of registered foreign capital require the authorization of the National Bank. Remittances for amortization may not exceed 10 per cent per annum of the capital. The rate of C$7.0525 per US$1 applies to these remittances.

No official exchange is sold to residents for transfers of capital abroad.

Banknotes

Foreign currency notes may be negotiated in a free market.

Table of Exchange Rates (as at December 31, 1953)(córdobas per U.S. dollar)
BuyingSelling
5.005.0375
….Specified government payments.
6.60 (20% at C$5 and 80% at C$7)
All export proceeds. Most invisibles.
7.007.0525
Registered capital.Essential imports (Category I). Students’ expenses. Insurance premiums. Registered capital.
7.65 (Fluctuating Free Market Rate)7.65 (Fluctuating Free Market Rate)
Travel receipts.Travel and similar expenses.
8.0525 (C$7.0525 plus C$1 Surcharge)
Semi-essential imports (Category II). Medical expenses.
10.0525 (C$7.0525 plus C$3 Surcharge)
Nonessential imports (Category III). Other invisibles.

Changes during 1953

February 19

The requirement of a 100 per cent advance deposit in córdobas was eliminated in respect of a number of specified essential imports, mainly agricultural machinery and materials.

March 27

Exporters of bananas in the Atlantic region of the country were granted the right to export under compensation or to sell exchange proceeds at the rate of C$7 per US$1 to the National Bank of Nicaragua.

April 26

Various import commodities (about 30 customs classifications) were shifted from Category II to Category I.

May 15

Further shifts of imports (about 60 customs classifications) from Category II to Category I were effected, along with the shifting of several items from Category III to Category II.

August 31

The advance deposit requirement for Category I imports was reduced from 100 per cent to 75 per cent.

September 1

The Law of Freedom of Expression and Broadcasting of Thought came into effect. Article 45 of this law exempts from the prior deposit in córdobas and the payment of exchange surcharges the importation of printing machinery, radio broadcasting apparatus, television apparatus, and accessory parts and items related to their maintenance.

Norway

Origin and Essential Features

An exchange control law was introduced in Norway on May 18,1940 and revised on November 10,1944 and July 19,1946. A new law, embodying previous regulations, was issued on July 14,1950, but it has not yet been implemented. Severe restrictions on all foreign payments were applied up to the end of 1949. During the period 1950-52, restrictions were relaxed, especially in connection with intra-European trade and services.

Exchange Rate System

The par value is Norwegian Kroner 7.14286 = US$1. The official rates for telegraphic transfers are NKr 7.135 buying, NKr 7.150 selling, per US$1. Market rates for other currencies are based on the par value for the U.S. dollar.

Norway participates with Belgium, Denmark, France, the Federal Republic of Germany, the Netherlands, Sweden, Switzerland, and the United Kingdom in a multilateral foreign exchange arbitrage arrangement, under which authorized banks in these territories may conclude spot transactions with other authorized banks in any of these territories. The spot exchange rates fluctuate between the official limits agreed by the exchange authorities of the countries concerned.1

Administration of Control

In principle, all imports and exports require licenses granted by the Ministry of Commerce. However, goods listed on the so-called “free list” may be imported against a “declaration.” All payments to a nonresident, and vice versa, must be made through one of the Norwegian authorized banks or through the Norges Bank. Generally, all payments require approval from either the Ministry of Commerce (in respect of goods) or the Norges Bank (in respect of invisibles). However, the authorized banks may effect payments to nonresidents in settlement of goods on the “free list.” To a certain extent, payments to nonresidents in respect of invisibles may be effected without prior permission from the Norges Bank.

Prescription of Currency

The prescription of the methods in which payments to and receipts from nonresidents are to be made is set out in the payments agreements concluded with other countries. Usually, inward and outward payments must be made in either Norwegian kroner or the currency of the country of the nonresident (double-account payments agreements), or a single currency (single-account payments agreements). Payments effected in Norwegian kroner are made into and out of free accounts held in Norwegian kroner with the authorized banks (see section on Nonresident Accounts, below).

Nonresident Accounts

There are two types of nonresident accounts held in Norwegian kroner with the authorized banks: free accounts and blocked accounts. Free accounts may be used for all payments to and from the country of the nonresident holder in all cases where the payments agreement with the country concerned allows payment to be made in Norwegian kroner. Any balance in a free account may be converted at any time into the currency of the country of the holder.

Nonresident-owned capital, which normally cannot be transferred abroad, is deposited in blocked accounts. These accounts may be used by the holder to cover various expenses in Norway, such as personal taxes, insurance premiums, traveling expenses, etc., and for investment in bonds that are issued in Norwegian kroner only, are quoted on the Norwegian Stock Exchange, and do not mature earlier than five years from the date of purchase. Bonds acquired in this way may either be deposited with an authorized Norwegian bank, or be sent to the owner abroad.

Imports and Import Payments

All goods on the so-called “free list” can be imported freely from OEEC countries and their associated areas2 and from Czechoslovakia, Finland, Hungary, Israel, Poland, Spain and its associated areas, and Yugoslavia. All other imports require import licenses. Imports which must be paid for in U.S. dollars or other hard currencies are limited to goods considered essential to the Norwegian economy.

When an import license is obtained, or if no license is required, payment may be effected without delay, subject to presentation of a copy of the import license or of adequate documentation to prove the validity of the transaction, and provided that the method of payment is in conformity with the general rules (see section on Prescription of Currency, above).

Payments for Invisibles

Exchange for payments to nonresidents for most current invisible transactions is granted freely. Norwegian tourists to EPU countries, Finland, and Yugoslavia are granted the equivalent of NKr 700 per year for each adult.

Each person leaving Norway may export Norwegian banknotes up to a total amount of NKr 50. Nonresidents may, when leaving Norway, export foreign banknotes to the extent that they can prove that they brought the notes into the country.

Exports and Export Proceeds

With the exception of a few commodities that may be exported freely to certain countries, all exports are subject to license. Payment must be received in conformity with the regulations (see section on Prescription of Currency, above). All exchange resulting from exports as well as from invisible payments must be surrendered.

Proceeds from Invisibles

Incoming receipts from invisibles must be reported to the Norges Bank. Each person entering Norway may import NKr 50 in Norwegian banknotes and any amount in foreign banknotes.

Capital

Inward and outward capital transfers are subject to approval by the Norges Bank. Payments for contractual amortization are permitted freely. Proceeds from the redemption of securities are transferable. Capital transfers to Denmark, Sweden, and the United Kingdom normally are permitted. Transfers to the United States and Canada may take place within certain limits, depending upon the merits of the case. Furthermore, inherited capital assets owned by residents in the United States and Canada may be transferred. Repatriation of moderate amounts of other nonresident-owned capital is permitted in cases of hardship.

Changes during 1953

January 1

The export tax on sulphur, applied since August 1951, was abolished.

March 16

The annual tourist exchange allocation for travel to EPU countries was increased from NKr 500 to NKr 700, and the allocation was made applicable to travel to Finland, also.

July 15

A few goods were added to the so-called “free list” containing the goods that may be imported from OEEC and certain other countries without restrictions.

The authorized banks were permitted to effect payments for a wide range of invisibles to and from Finland, Israel, and Spain, without prior permission from the Norges Bank.

October 1

A few goods were added to the “free list” containing the goods that may be imported from OEEC and certain other countries without restrictions.

November 11

The annual tourist allocation granted for travel to EPU countries and Finland could also be utilized for travel to Yugoslavia.

December 14

Norway joined the multilateral exchange arbitrage system for spot transactions, which was introduced on May 18, 1953 among eight western European countries, viz., Belgium, Denmark, the Federal Republic of Germany, France, the Netherlands, Sweden, Switzerland, and the United Kingdom; authorized banks in Norway were permitted to conclude spot transactions with the authorized banks of these countries in any of their currencies, at rates within specified margins approximately ¾ of 1 per cent on either side of the parity rates.

Norwegian authorized banks were permitted to make forward transactions for periods of up to six months, at rates determined by market conditions, with Norwegian exporters and importers, other Norwegian authorized banks, and, bilaterally, with foreign banks, in the currencies of the countries participating in the multilateral arbitrage arrangement. Forward exchange contracts must be based on authenticated commercial transactions. (See footnote 1, above, concerning a subsequent extension of these arrangments.)

Pakistan

Origin and Essential Features

Exchange controls similar to those in effect in undivided India from September 1939 were continued by Pakistan in August 1947. On February 27,1951, remittances to and from India also became subject to exchange control. During 1953, the exchange made available for imports, particularly dollar imports, was severely curtailed. Pakistan’s exchange control system is for the most part similar to that of other members of the Sterling Area. In general, Pakistan exercises control over exchange receipts, and requires the surrender within prescribed periods of time of most incoming foreign exchange and the approval of the control authorities for payments to nonresidents. Pakistan also avails itself of the Sterling Area payments arrangements made by the United Kingdom. These arrangements are reflected in Pakistan’s exchange control system through the prescription of currencies for payments and receipts.

Exchange Rate System

The par value in Pakistan Rupees 3.30852 = US$1. Exchange transactions are effected at uniform rates. All transactions in foreign exchange must be conducted through authorized dealers, whose transactions with the general public must be effected at rates authorized by the State Bank of Pakistan on the basis of par values established by the Fund and its members. Authorized dealers in Pakistan are permitted to cover in the London market their requirements of certain specified foreign exchange. They can also cover their permitted transactions in specified currencies against sterling or Pakistan rupees either spot, or forward for a limited period, with their agents in the respective countries.

Administration of Control

All transactions in foreign exchange must be effected through authorized dealers. The State Bank of Pakistan has delegated to 22 commercial banks authority to deal in all foreign currencies, to supervise surrender requirements, and to sell exchange for specified purposes within limits prescribed by the State Bank.

Prescription of Currency

Regulations prescribe the currencies to be used for both trade and nontrade payments with different countries and monetary areas. The prescribed methods are similar to those of the United Kingdom and most other Sterling Area territories. Foreign exchange transactions have to be settled in local currency through the account of a bank in the foreign country concerned or through an appropriate nonresident sterling account in the United Kingdom and, in some cases, in specified foreign exchange. Receipts from Sterling Area countries (other than India) must be received in Pakistan rupees or sterling from the account of a resident in the Sterling Area other than a resident of India or Pakistan. Payments abroad by residents of Pakistan to countries within the Sterling Area are made by the transfer of sterling or any Sterling Area currency to the appropriate account of the nonresident; payments to countries outside the Sterling Area are made by the transfer of sterling or Pakistan rupees to accounts related to the country or monetary area of the nonresident or, in some cases, in the currency of the country concerned. Temporarily, however, imports from France and all cotton exports to France covered by special payments arrangements may be settled only in French francs. Exchange transactions with India are made only in Indian or Pakistan rupees; transactions with Afghanistan are made in Pakistan rupees.

Nonresident Accounts

Different rules apply to the use of Pakistan nonresident rupee accounts of individuals, firms, or companies, on the one hand, and to the nonresident rupee accounts of banks, on the other. Accounts of residents of India are governed by separate regulations. Authorized dealers may open Pakistan rupee accounts for foreign banks without reference to the State Bank, but approval is required for opening other nonresident accounts. Nonresident account holders must obtain permission from the control for transfers from their credit balances; transfers from nonresident banks’ rupee accounts in Pakistan to the corresponding sterling accounts in the United Kingdom are allowed.

Imports and Import Payments

All imports are subject to license, except goods imported by the Central Government for defense purposes and any goods for which orders are placed directly by the departments of the Central Government, goods imported over the land routes from Iran and Afghanistan, and certain other items permitted under a Ministry of Commerce Notification (No. 335/260/24, June 12, 1951). Individual import licenses are of three types: (1) those for the dollar area, which may be used for purchases in all other countries except Japan; (2) those for the non-dollar area, including Japan; and (3) single country licenses, valid for imports from a particular country only, in terms of the trade agreement with that country.

Foreign exchange under the regulations (see section on Prescription of Currency, above) is made available by an authorized dealer upon receipt of an import license from the applicant. However, approval to import capital goods from Japan, the United Kingdom, and other countries can, in some cases, be obtained provided payment for the import is made on a deferred payments basis. These arrangements provide for an advance remittance not exceeding 10 per cent of the value at the time of placing the order, 15 per cent on complete shipment of the goods, and the balance in approximately equal half-yearly installments over a period of five years from the date of contract or the date of shipment, as the case may be.

Payments for Invisibles

Payments for invisibles are controlled by the State Bank and require licenses. Authorized dealers may sell exchange or make remittances in accordance with detailed regulations. Although remittances for business and commercial purposes normally are permitted, remittances of a personal nature either are subject to annual quotas or are decided on their individual merits. Separate regulations govern payments for invisibles to India, including limitations on travel and similar personal remittances. Remittances by Pakistan nationals to their families abroad require special authority. Foreign exchange is granted for expenses incidental to trade transactions and for transfers abroad of dividends and other earnings due to nonresidents. Payment for international travel fares is permitted if certain conditions are met. The allocation of exchange for tourist travel is subject to basic annual rations, which vary according to the country to be visited. However, there is no basic ration for tourist travel to North, Central, and South America and the Philippine Republic. Nonresident travelers may take out foreign currency not exceeding the amounts they brought in. Residents of Pakistan leaving for Afghanistan may take with them Afghan currency without limit; for other countries, foreign currency notes up to the equivalent of PRs 50 per person at any one time or sterling notes not exceeding £10 may be taken out.

Exports and Export Proceeds

The export of selected commodities is allowed, without export control restrictions, under Open General License No. 7. Other commodities are subject to export licensing. In both cases, the State Bank exercises control over exchange receipts and requires a declaration by the exporter, which ensures surrender of the foreign exchange earned.

An authorized dealer is empowered to certify the export shipment after ensuring that the exporter’s declaration meets specified conditions. The exporter declares that, when payment in accordance with the prescribed method (see section on Prescription of Currency, above) is received, he will surrender the specified foreign currency within a certain period of time.

Proceeds from Invisibles

Incoming foreign exchange, with the exception of certain currencies,1 must be surrendered at the official rate within one month. Travelers entering Pakistan are permitted to bring with them Pakistan currency notes up to PRs 50 per person,2 sterling notes up to £10 per person, and coins that are legal tender in India up to Rs 5 per person. There is no limitation on the import of other currency notes, subject to customs declaration.

Capital

Regulations cover both inward and outward transfers of capital by residents and nonresidents. Detailed rules govern the transfer of capital by persons emigrating or retiring from Pakistan, depending upon the nationality of the person concerned and the country or monetary area to which transfers are to be made. Under an agreement with the United Kingdom, special treatment is given to transfers by U.K. nationals to the United Kingdom only. Other foreign nationals resident in Pakistan may be permitted to transfer capital assets up to £5,000. Residents are permitted to buy and sell foreign securities upon approval by the State Bank, provided the foreign exchange proceeds resulting from such sales are surrendered.

Changes during 1953

January 8

A notification by the State Bank of Pakistan required exporters to surrender foreign exchange corresponding to the full value of their exports within four months of the date of shipment (two months if the exports are consigned to India).

February 3

The Government announced a policy to permit barter transactions for the exchange of certain exportable commodities, particularly the exchange of cotton with essential items, such as machinery, iron and steel, cotton yarn, etc.

February 11

Open General License No. Ill, pertaining to imports by country crafts, was canceled.

February 19

The barter policy as announced on February 3 was modified to restrict its application to the exchange of old crop cotton with cotton yarn and/or certain items for government import only.

March 1

The import policy for the first half of 1953 was announced. The import of nonessentials and even some consumers’ goods, not immediately required, was drastically curtailed, and most of the available foreign exchange was earmarked for machinery and materials required for industrial and development projects.

March 2

Orders regarding deposit margins for opening letters of credit for imports were withdrawn.

March 18

The condition that irrevocable letters of credit be opened for forward sales of foreign currency for imports was withdrawn. With the removal of this restriction, foreign exchange for imports could be booked against valid import licenses.

June 23

The policy permitting the import of capital goods from Japan, United Kingdom, and other countries on a deferred payment basis was announced.

July 7

In order to meet the requirements of a trade agreement between France and Pakistan, special arrangements came into effect for financial settlements with France. Certain imports into Pakistan from France and all of Pakistan’s cotton exports to France, as covered by special payments arrangements, could be paid only in French francs. Proceeds of exports other than cotton could continue to be received in French francs, pounds sterling, or rupees from the account of a bank in the French Franc Area.

September 10

Import policy for the second half of 1953 was announced. Under this policy, 184 items could be imported into Pakistan, including 40 items from the dollar area. Single country licenses were provided for certain imports from France, Italy, and Japan, under trade agreements with those countries.

October 1

With the taking over by the Central Government of the control of all ports on the Makran coast, the exchange control procedure was made applicable to exports through Makran ports.

October 29

Following the policy statement of June 23 (see above), it was announced by the State Bank of Pakistan that arrangements had now been concluded with manufacturers in Japan, the United Kingdom, and other countries for the import of capital goods into Pakistan on a deferred payments basis, the payments to be made in installments spread over a period of five years.

December 16

The import policy for the first half of 1954 was announced. The number of items to be licensed was increased from 184 to 287.

December 26

It was announced that all import licenses would henceforth be issued on a c. & f. basis instead of a c.i.f. basis, insurance being taken out with insurance companies registered in Pakistan.

Paraguay1

Origin and Essential Features

Exchange control as an instrument of monetary policy has been maintained in Paraguay since 1932, the first exchange control commission having been created under a government decree of June 28, 1932.

The surrender of foreign exchange derived from exports was originally limited to 50 per cent and, with the agreement of the Ministry of Finance, full retention might take place for certain exports. Since February 1941, an exchange monopoly and total surrender of the foreign exchange proceeds from exports have been in effect. Foreign exchange is traded on the official market, a controlled “free” market, and a free market conducted by exchange houses. Imports and most noncommercial payments require exchange licenses. Exchange surcharges at a fixed rate are applied to payments for certain imports and services effected through the official market. The rate of surcharge is variable when it is determined through the auction system, and for restrictive purposes use is made of the controlled “free” market rates.

Exchange Rate System

The par value is Guaraníes 15 = US$1. The basic buying rate and the basic selling rate are ₲ 15 per US$1. An exchange surcharge of ₲ 6 per US$1 is applied to payments for imports generally intended for industry, and of ₲ 15 per US$1 for less essential imports. “Auction surcharges” of 65, 70, 75, and 80 per cent on the basis of the ₲ 30 rate are applied to payments for nonessential and luxury imports. Temporary subsidies are applied to various exports. A “free” market controlled by the Central Bank of Paraguay is used for certain invisibles, non-registered capital transactions, and some luxury imports. Other transactions may be effected freely at fluctuating rates in a market conducted by exchange houses (see Table of Exchange Rates, below).

Administration of Control

Exchange controls are operated by the Central Bank of Paraguay, which issues all exchange licenses required in the official market and the controlled “free” market. Such exchange transactions must be effected through the Central Bank. The Central Bank controls the operations and exchange rates in a free market, but not those of the exchange houses, to which no restrictions are applied.

Prescription of Currency

Paraguay maintains payments agreements with several countries, according to which exchange payments and receipts must be effected through clearing accounts in specified currencies. Most other exchange receipts and payments are effected in terms of U.S. dollars, with some payments in sterling.

Imports and Import Payments

Imports may enter Paraguay only if an exchange contract having the effect of an import and exchange license has been concluded with the Central Bank. The import of nonessential items is restricted.

Importers must place with the Central Bank advance deposits in local currency required by commercial banks for issuing letters of credit.

In concluding exchange contracts, there is, in certain cases, some discrimination based on the limited availability of convertible currencies. Prescription of currencies is applied to payments for imports from countries with which Paraguay has payments agreements.

Exchange is automatically granted at the rate of ₲ 15 per US$1 for licensed imports. The application of exchange taxes of ₲ 6 and ₲ 15 per US$1 for Group II and Group III imports, respectively, results in effective exchange rates of ₲ 21 and ₲ 30 per US$1. The application of multiple “auction surcharges” for Group IV imports results in effective rates of ₲ 49.50, ₲ 52.50, and ₲ 54.00 per US$1. Imports in Group V are subject to license and are paid for through the controlled “free” market. Licenses are granted for certain imports, provided the importer furnishes his own exchange.

Payments for Invisibles

Government payments are effected at the rate of ₲ 15, and in exceptional cases at the rate of ₲ 30, per US$1. Payments for certain essential invisibles are permitted at the ₲ 15 rate; there is a rate of ₲ 35 per US$1 for freight payments on account of exports and imports, and a rate of ₲ 45 per US$1 for other specified invisibles. All these payments are subject to individual exchange licenses. All other invisibles may be transacted through the exchange houses, and in exceptional cases are permitted through the controlled “free” market. No licenses are required for payments through the exchange houses.

Exports and Export Proceeds

The sales declaration must be approved by the Central Bank for all exports, and an obligation to return the exchange proceeds of exports to Paraguay must be undertaken before shipment of the goods. A few goods for domestic consumption that are in short supply also require export licenses from the Ministry of Commerce and Industry. The export of strategic materials to Mainland China, North Korea, and certain other countries is prohibited.

Exchange proceeds of exports must be surrendered to the Central Bank at the ₲ 15 rate, in accordance with the sales declaration, to the extent of the officially appraised value (aforo) of the goods; the difference between this value and the actual receipts may be sold in the “free” market, except export receipts in agreement account currencies,2 which must be surrendered entirely. Export taxes ranging up to 38 per cent are applied to a few exports, and many exports receive exchange subsidies under a temporary arrangement. The surrender requirement is waived in respect of the proceeds of certain minor exports, which may be used freely for minor imports; however, each transaction may not exceed the equivalent of US$133, and only one transaction a week may be effected. The foreign currencies to be received for exports are specified as the currencies of the clearing account for exports to countries with which Paraguay has payments agreements, and as U.S. dollars for most other exports.

Proceeds from Invisibles

Registered insurance and government receipts are the only invisibles for which exchange proceeds must be surrendered at the official rate. Receipts from all other invisibles may be negotiated freely in the “free” market.

Capital

Foreign capital registered by the Central Bank must be surrendered at the ₲ 15 rate, and transfers from Paraguay of such capital, through the official market, are subject to exchange licenses. Through a system of “exchange swaps” the Central Bank enters into simultaneous contracts with holders of foreign exchange for spot exchange purchases and equivalent sales of future exchange, at established rates and for a period of 180 days, renewable for further periods of 180 days. The guaraní countervalue of these transactions may be invested in manufacturing or export industries. An exchange rate of ₲ 40 per US$1 is applied by the Central Bank to these transactions. Non-registered foreign capital may enter freely through the controlled “free” market, but any outward capital payments through that market are subject to exchange licenses. No licenses are required for capital payments through the exchange houses.

Table of Exchange Rates (as at January 1, 1954)(guaraníes per U.S. dollar)
BuyingSelling
15.0015.00
All exports.3 Registered capital Government receipts.Group I imports. Certain government payments. Certain essential invisibles. Registered capital.
21.00 (₲ 15 plus ₲ 6 Surcharge) Group II imports.
30.00 (₲ 15 plus ₲ 15 Surcharge) Group III imports. Certain government payments.
35.00 (₲ 15 plus ₲ 20 Surcharge) Freight payments.
45.00 (₲ 15 plus ₲ 30 Surcharge) Certain authorized invisibles.
49.50, 51.00, 52.50, 54.00 (₲ 30 plus “Auction Surcharges”)
Group IV imports.
55.00 (Controlled “Free” Market Rate)56.00 (Controlled “Free” Market Rate)
Export aforo differentials. Invisibles. Nonregistered capital.Group V imports. Some authorized invisibles. Nonregistered capital.
59.00 (Fluctuating “Free” Market Rate)61.00 (Fluctuating “Free” Market Rate)
Export aforo differentials. Invisibles. Nonregistered capital. Some minor export proceeds.“Own exchange” imports. Other authorized invisibles. Nonregistered capital. Parcel post imports.
Note: The above rates are not applied to certain trade transactions with Argentina (see Changes during 1953, January 1, below).

Changes during 1953

January 1

Certain significant changes in the exchange system were introduced. The objective of the new arrangements was to stimulate exports by means of higher effective rates of exchange, allocation of exchange for imports and other payments in accordance with the exchange budget, gradual reduction and elimination of import subsidies, limitations of preferential import rates to essential goods, reintroduction of the exchange auction system for the payment of nonessential imports, normal operation of the “free” exchange market with fluctuating rates, encouragement of the inflow of foreign capital by guaranteeing the free withdrawal and remittance of income on foreign capital, and encouragement of the repatriation of Paraguayan capital through the “free” market by authorizing the import of capital goods without limitation, if paid for with funds held abroad.

The new arrangements provided for import categories with corresponding rates of exchange as follows: Group I—government and other official imports and very essential commercial imports—₲ 15 per US$1; Group II—essential imports, particularly for industry—₲ 21 per US$1; Group III—semi-essential imports—₲ 30 per US$1; Group IV (hitherto not provided for)—nonessential and luxury imports—₲ 30 per US$1 plus the “auction surcharge.” The temporary subsidy of 40 per cent of the basic rate of ₲ 15 per US$1 on imports of wheat, wheat flour, petroleum, and antibiotics was eliminated. For trade with Argentina, other arrangements were made applicable: Group I imports were moved from ₲ 1.40 to ₲ 2.50 per Argentine peso; Groups II and III imports became subject to the “free” market rate of about ₲ 2.75 per Argentine peso; Group IV imports were to be effected at the ₲ 2.50 rate plus the “auction surcharge.”

A subsidy of 40 per cent on freight payments to Argentina was established. Freight payments to other areas on account of exports in general and Group I imports were to be made at the rate of ₲ 15 per US$1. Freight payments for other imports were to be made at the ₲ 30 rate.

Any difference between the officially appraised (aforo) value of exports and the actual export receipts could be negotiated in the “free” market. The maximum amount of subsidies which the Central Bank could grant to exports was raised from 60 to 80 per cent.

The list of prohibited luxury imports was canceled.

It was also announced that the Central Bank would continue to operate in the “free” market and that holders of “free” market exchange would be permitted to maintain bank accounts in such funds locally or abroad.

February-June

The use of subsidies was extended to a number of additional exports, including some major commodities (cotton, tobacco, tannin, and meat products); and some subsidies in excess of the previous maximum limit of 80 per cent were permitted. The highest subsidy, 200 per cent, was that on exports of the 1952-53 cereals crop. Taxes on exports were generally reduced; and for some exports, they were eliminated.

February 21

The Central Bank established a system of “exchange swaps” whereby it entered into simultaneous contracts with a holder of foreign exchange for a spot purchase and a sale of future exchange, at established rates and for a period of 180 days, renewable for further periods of 180 days. The guaraní countervalue of these transactions could be invested in manufacturing or export industries.

March 5

Exports to Austria, Spain, and Yugoslavia were made subject to prior authorization of the Central Bank.

March 15

The advance deposit requirement of 15 per cent for Group II and Group III imports was canceled. Deposits collected by commercial banks from importers in guarantee of import letters of credit had to be lodged with the Central Bank. In compensation for the loss of these deposits, the banks were accorded the right to draw on the Central Bank for financing advances against exports to the extent of 75 per cent of their value, free of interest.

March 23

The first exchange auction for the importation of Group IV merchandise (less essential and luxury imports), divided into four subgroups, was announced. Importers were required to submit to the Central Bank their bids for such exchange between April 10 and April 20. The resulting “auction surcharges” were 65 per cent on subgroup 1; 70 per cent on subgroup 2; 75 per cent on subgroup 3; and 80 per cent on subgroup 4. The resulting effective rates were maintained for the issuance of the corresponding import licenses.

April 23

The importation of 100 automobiles to be paid for with importers’ own exchange (divisas propias) was authorized, and beneficiaries of such import permits were allowed to purchase the necessary foreign exchange in the controlled free market.

July 27

The divisas propias import system was modified in that an importer was required to present to the Central Bank a certificate from a bank proving his possession of foreign exchange, as a prerequisite to obtaining the import permit. Upon receipt of the license, the importer had to sell the corresponding exchange to the Central Bank, from which he could later repurchase it when payment for the goods was made.

September

The entire proceeds from exports to countries with which payments agreements exist were to be surrendered in the official exchange market at the rate of ₲ 15 per US$1 plus tax or subsidy, if any: thus, export receipts in excess of the official valuation (aforo) in such currencies could no longer be sold in the “free” market. In these cases, the relevant subsidy was to be calculated on the basis of the total value of the exports, instead of the aforo value, as for other exports.

September 23

The establishment of exchange houses to engage in exchange dealings at fluctuating rates was authorized. They could operate freely in transactions previously carried out through the parallel market, as well as transactions included in the controlled “free” market, subject to certain supervision by the Central Bank.

September 25

A new payments agreement with Argentina provided for the establishment of a dollar account for trade transactions between the two countries, to replace special accounts that had been maintained in Argentine pesos.

The preferential exchange rate for freight payments, established on January 1, was eliminated. A new rate of ₲ 35 per US$1 was established for freight payments on account of exports and imports, with the exception of wheat and flour imports, for which such payments were made subject to the ₲ 21 rate.

Note: On January 1, 1954 the par value of the guaraní was changed from ₲ 6 to ₲ 15 per US$1. The temporary subsidies on government payments abroad were abolished except for payments outstanding under the fiscal 1953 budget. A new rate of ₲ 45 was established for specified invisibles. A new Group V was created for imports, for which payment was to be made through the controlled “free” market.

Peru

Origin and Essential Features

Exchange controls were introduced in Peru on January 23, 1945, and the most recent important revision of the exchange system occurred on November 11, 1949, when the present rate structure was introduced. Peru has two free fluctuating market exchange rates: an exchange certificate rate applying to most trade transactions, and a draft market rate for other trade and for most nontrade transactions. Imports and other payments are permitted freely, but there is prescription of currencies for trade transactions. Foreign exchange from exports must be converted, either totally or partially, into exchange certificates.

Exchange Rate System

The initial par value of Peruvian Soles 6.50 = US$1, established on December 18, 1946, is not applied to any transactions under the present exchange system. No new par value has been proposed. Exchange certificates are issued for 100 per cent of U.S. dollar, pound sterling, and French franc export proceeds, and for 10 per cent of export proceeds in Argentine pesos. Dollar and pound sterling certificates are valid for 15 days, and the other certificates are valid for 60 days.1 These certificates are negotiable in the certificate market and may be used for imports and for certain nontrade transactions. All exchange transactions that do not qualify for the certificate market are permitted freely in the draft market. The exchange rates fluctuate and broken cross rates exist in both markets (see Table of Exchange Rates, below).

Administration of Control

Permits for exports and exchange licenses for the use of certificates for nontrade transactions are issued by the Ministry of Finance. The exchange certificates are issued by the Central Reserve Bank of Peru, which has conducted stabilization operations, from time to time, in the certificate market. Exchange certificate transactions and draft market transactions are conducted freely through banks and various other dealers, or directly between sellers and buyers.

Prescription of Currency

The issuance of exchange certificates only in certain currencies — at present, U.S. dollars, pounds sterling, French francs, and Argentine pesos — results in prescription of currencies for all transactions effected through the certificate market. Transactions through the draft market can be made in any currency.

Imports and Import Payments

Imports, other than from Eastern Europe and Mainland China, are permitted freely except for a temporary prohibition on imports of automobiles. Control over imports exists only in that commercial banks must ensure that certificate exchange is used to pay for an actual import and not for unauthorized purposes.

There are no licenses or other controls applying to payments for imports. Importers, at their option, may use either exchange market to pay for imports. However, in the certificate market, through which most imports are paid, certificates are denominated only in U.S. dollars, pounds sterling, French francs, or Argentine pesos; payments in other currencies can be effected through the draft market or by converting the certificate currency into that required. Importers opening documentary import letters of credit through commercial banks must make advance deposits in foreign currency of 100 per cent of the import value; banks may finance the local currency equivalent of such advance deposits—up to 100 per cent for wheat, meat, and milk, and up to 50 per cent for raw materials—but credit may not be extended to effect nonessential imports.

Payments for Invisibles

Exchange licenses are required in order to pay for invisibles with certificates. The types of invisibles eligible for, and usually allowed in, the certificate market include freight and transit expenses, interest payments and dividends, rents on property, royalties, agents’ commissions, remuneration of foreign technicians, repayments of commercial debts, insurance and reinsurance payments, pensions, and certain types of business travel. Exchange for all other invisibles, and for all invisibles in currencies other than the four in which certificates are denominated, is obtained in the draft market.

Exports and Export Proceeds

All exports are subject to license to assure the necessary supply of export proceeds to the certificate market. Export licenses are denied for goods in short supply domestically. The exportation of strategic materials to Mainland China and North Korea is prohibited.

Exports are authorized generally only against payment in the four currencies in which certificates are issued. The surrender requirements in respect of these currencies have been varied from time to time, and certificates in other currencies can be issued if it is considered necessary. The portions of export proceeds not subject to surrender against exchange certificates, and the proceeds of exports authorized in currencies for which no certificates are issued, may be sold in the draft market.

Proceeds from Invisibles

All receipts from invisibles are free of controls and may be sold in the draft market.

Capital

Inward and outward capital movements may be effected without control in the draft market. Capital remittances representing contractual amortization and depreciation of foreign capital and depletion of mineral investment, effected through the certificate market, require an exchange license and are allowed within certain limits.

Table of Exchange Rates (as at December 31, 1953)(soles per U.S. dollar)
BuyingSelling
19.89 (Fluctuating Exchange Certificate Market Rate)19.89 (Fluctuating Exchange Certificate Market Rate)
Exports (100% in French francs, pounds sterling, and U.S. dollars; 10% in Argentine pesos).Most imports. Certain invisibles and capital transfers.
19.96 (Fluctuating Draft Market Rate)19.96 (Fluctuating Draft Market Rate)
All other export proceeds. Invisibles and capital.Occasional imports. Other invisibles and capital.

Changes during 1953

March 11

Imports from Eastern Europe and Mainland China were suspended.

November 13

Imports of automobiles, including station wagons, were prohibited for a period of six months.

Philippine Republic

Origin and Essential Features

Import restrictions in the Philippine Republic were first imposed in January 1949 on certain luxury and nonessential commodities, and in May 1950 they were expanded to include all goods. Exchange controls and restrictions were introduced on December 9, 1949. On March 28, 1951, a 17 per cent exchange tax was levied on sales of foreign exchange for a two-year period; this tax has since been extended until June 30, 1954, with minor modification.

Exchange Rate System

The par value is Philippine Pesos 2 = US$1. The official rates are ₱ 2.00375 buying, ₱ 2.015 selling, per US$1. These rates represent the official minimum buying and maximum selling rates for commercial banks applied to demand drafts and telegraphic transfers of US$500 and over. A tax of 17 per cent imposed on most remittances yields an effective selling rate of ₱ 2.35755 per US$1 (see Table of Exchange Rates, below).

Administration of Control

Exchange controls are operated by the Central Bank of the Philippines, whose Monetary Board determines, on a six-month basis, the amount of exchange to be allocated for various purposes, including payment of imports. In the licensing of exchange for imports, the Monetary Board of the Central Bank is assisted by a committee of commercial banks in Manila appointed for this purpose. All sales and purchases of exchange must pass through authorized agent banks (the commercial banks, and the American Express Company for transactions connected with travel). Post offices are also authorized to sell U.S. dollar money orders payable in the United States and its territories and possessions for certain specific purposes, subject to certain conditions and restrictions. The authorized agent banks are permitted without prior approval of the Central Bank to issue exchange licenses and sell exchange for specified transactions and in specified amounts. Applications for exchange licenses outside the scope of authority of the authorized agent banks are referred to the Central Bank.

Prescription of Currency

On the payments side, there is no prescription of currency other than that payments to Japan must be effected through a clearing account maintained at the Central Bank. On the receipts side, it is required that all proceeds of exports be obtained in U.S. dollars, except exports to Japan, which must be settled through the clearing account.

Nonresident Accounts

Nonresident accounts are composed primarily of nonresident peso funds that were in the Philippines prior to exchange controls, savings of former residents, unremitted portions of income or other earnings of nonresidents, and other items of a similar nature. These balances are not ordinarily convertible into foreign exchange. They may be used for local investments or expenses.

Imports and Import Payments

Import licenses, as such, are not issued, but the Bureau of Customs will not permit the entry of goods without the presentation of a release certificate issued by an authorized agent bank in a form prescribed by the Monetary Board of the Central Bank. All payments for imports must be effected through letters of credit, except those made by importers who since 1950 have been permitted by the Monetary Board to remit such payments by demand draft, mail, or telegraphic transfer. All applications for the opening of letters of credit, customarily filed with authorized agent banks, are therefore considered as applications for licenses to purchase foreign exchange to pay for imports. Importers are classified, according to status, as government, old producer, new producer, old importer, new importer qualified under Republic Act No. 650, or new (1953) importer.

At the commencement of each half year, the Monetary Board certifies to each authorized agent bank the total amount of foreign exchange available to it for that period. This certification includes a breakdown by commodity categories and by importers based on their actual use of exchange in 1952. In addition, the Monetary Board sets aside a contingency reserve of foreign exchange to provide for sales to customers not provided for in the regular budget. This reserve, the distribution of which is controlled by a bankers’ committee, is used primarily for the requirements of old producers to expand production over their 1952 figures and of new producers to import machinery and raw materials, for adjustments of quotas of old importers, and for new (1953) importers. For those imports for which exchange is not requested, it is necessary to obtain a certificate of release from the Central Bank before the goods can be cleared through the customs. There are no prescription of currency requirements other than that payments to Japan must be effected through a clearing account maintained at the Central Bank. U.S. dollar exchange is provided for import payments to all other countries.

Payments for Invisibles

All payments and remittances abroad require exchange licenses. Such licenses are generally granted to effect full payment abroad for freight, insurance, cable and telephone services, interest and amortization, professional services, medical treatment, pensions, and similar items. Exchange licenses to effect payments for the following transactions are granted on a limited basis: travel, education expenses, maintenance, profits and dividends, income, royalties, salaries, etc. Travelers may take out with them a maximum of ₱ 100 in Philippine currency but the coins shall not exceed ₱ 5.

Exports and Export Proceeds

Generally, exports are not restricted; but they are controlled to ensure that the foreign exchange proceeds accruing from exports are surrendered to an authorized agent of the Central Bank. Exports of certain strategic materials are prohibited.

The proceeds of all exports except those to Japan must be obtained in U.S. dollars and surrendered to an authorized agent. No commodity may be exported from the Philippines unless covered by drafts drawn in U.S. dollars and unless collection of the proceeds is to be undertaken by an authorized agent. Exports to Japan are settled through the clearing account maintained at the Central Bank of the Philippines.

Proceeds from Invisibles

All exchange receipts from invisibles must be surrendered. Travelers may bring in a maximum of ₱ 100 in Philippine currency but the coins shall not exceed ₱ 50 for first class passengers, ₱ 20 for second class passengers, and ₱ 10 for third class passengers.

Capital

All exchange receipts from capital must be surrendered. The transfer abroad of capital invested prior to December 9, 1949 will not ordinarily be allowed, even if the transfer is to be made to the owner’s country of residence. The amount of exchange granted to transfer profits (40 per cent or more of capital invested) is considered as providing for a reasonable return of capital. Capital invested after December 9,1949 by nonresidents with the prior approval of the Central Bank is eligible for transfer abroad, but all transfers of capital require approval of the Central Bank.

Table of Exchange Rates (as at December 31, 1953)(pesos per U.S. dollar)
BuyingSelling
2.003752.015
All incoming exchange.Government payments. Imports of machinery, raw materials for new and necessary industries, basic foodstuffs, fertilizers, etc. Certain specified invisibles.
2.35755 (₱ 2.015 plus 17% Exchange Tax)
Other imports. Other invisibles and capital.

Changes during 1953

January 15

The Central Bank announced that remittances of U.S. income tax by U.S. nationals resident in the Philippines would be exempt from the 17 per cent exchange tax.

January 16

The Central Bank announced the exchange budget for the first half of 1953. In addition to maintaining the exchange allocation for controlled imports at the same rate as in 1952, an amount was also allocated for the remittance abroad during the first quarter of 1953 of 20 per cent of the pre-1949 backlog of profits and dividends.

April 22

The Central Bank announced an increased exchange allocation for imports of decontrolled items for the first half of 1953.

May 21

All transactions through Philippine banks and banking institutions in respect of exchange held by residents were made subject to prior approval of the Central Bank.

July 1

The authority of the Import Control Commission to administer import controls lapsed, and this function was taken on by the Central Bank. Actual import licenses were abolished, but the Bureau of Customs would not release imports without release certificates issued by the Central Bank or an authorized bank. Before the beginning of each semester, exchange quotas for that period would be allocated to each authorized bank by the Monetary Board of the Central Bank. All payments for imports had to be effected by letters of credit, except those by importers who since 1950 had been permitted to remit payments for imports by demand draft, mail, or telegraphic transfer.

October 19

The requirement of an 80 per cent cash margin on the establishment of letters of credit for imports of luxuries and nonessentials was abolished.

Sweden

Origin and Essential Features

In 1939, a law was passed in Sweden providing for the introduction of foreign exchange control. On February 25, 1940, exchange restrictions, based on this law, were introduced. The restrictions were more or less discontinued at the end of the war. In March 1947, however, a comprehensive system of controls on foreign payments was reintroduced, as a result of the deterioration in the Swedish balance of payments position. Since 1949, restrictions on payments in connection with intra-European trade and services have been relaxed considerably.

Exchange Rate System

The par value is Swedish Kronor 5.17321 = US$1. The official rates are SKr 5.17 buying, SKr 5.18 selling, per US$1.

All exchange transactions are effected at uniform rates, based on the above par value for the U.S. dollar. Sweden participates with Belgium, Denmark, France, the Federal Republic of Germany, the Netherlands, Norway, Switzerland, and the United Kingdom in a multilateral foreign exchange arbitrage arrangement, under which authorized banks in these territories may conclude spot transactions, and forward transactions for up to three months’ delivery, with other authorized banks in any of these territories.1 The spot exchange rates fluctuate between the official limits agreed by the exchange authorities of the countries concerned, while the forward premiums and discounts are left to the interplay of market forces.

Administration of Control

In principle, all imports and exports require licenses granted by the State Trade and Industrial Commission or, in the case of foodstuffs, the State Commission of Agriculture.

All payments to a nonresident, and vice versa, must be made through the Sveriges Riksbank or through one of the 16 Swedish authorized banks, and require approval by the Exchange Control Office, which has, however, delegated wide powers to the authorized banks to approve payments.

Prescription of Currency

The prescription of the methods in which payments to and receipts from nonresidents are to be made is set out in the payments agreements concluded with other countries. Usually, inward and outward payments must be made either in Swedish kronor or in the currency of the country of the nonresident (double-account payments agreements), or they must be made in a single currency (single-account payments agreements). Payments in Swedish kronor are made into and out of nonresident-owned “regular” (current) accounts held in Swedish kronor with authorized banks (see section on Nonresident Accounts, below).

Nonresident Accounts

Broadly speaking, there are two types of nonresident account held in Swedish kronor with authorized banks in Sweden: regular (i.e., current) accounts and restricted accounts. Regular accounts may be used for all payments to and from the country of the nonresident holder in all cases where the payments agreement with the country concerned allows payment to be made in Swedish kronor. All balances in a regular account may, as a rule, be converted at any time into the currency of the country of the holder. Transfers may be made freely between the accounts of authorized banks in Belgium, Denmark, France, the Federal Republic of Germany, the Netherlands, Norway, Switzerland, and the United Kingdom, insofar as arbitrage transactions are concerned (see section on Exchange Rate System, above).

Nonresident-owned capital that cannot be transferred abroad usually is allowed to be deposited in restricted accounts. A restricted account may be used to cover the holder’s and his family’s living expenses in Sweden up to a certain limit, for payment of the holder’s own taxes in Sweden, and for investment in bonds quoted on the Swedish stock exchange. Bonds purchased in this way must be deposited in a “restricted securities” account with an authorized bank.

Imports and Import Payments

Most goods from OEEC countries and their associated areas,2 Finland, and Yugoslavia, and also printed matter from all countries, can be imported freely. Most imports from other countries require import licenses. Imports that must be paid for in U.S. dollars or other hard currencies are limited to goods considered essential to the Swedish economy. When an import license has been obtained, or if no license is required, payment may be effected without delay, subject to presentation of evidence of the dispatch of the goods to Sweden, and provided that the method of payment is in conformity with the general rules (see section on Prescription of Currency, above).

Payments for Invisibles

Payments to nonresidents for most current invisibles are allowed freely through the authorized banks. Restrictions are applied to a few items, particularly for payments in U.S. dollars. Tourists traveling abroad are granted the equivalent of SKr 1,0003 yearly for each person for travel to OEEC countries, Egypt, Israel, Spain, and Yugoslavia, and the equivalent of SKr 500 yearly for travel to other countries. For travel to Denmark, Finland, Norway, and the Sterling Area countries, any reasonable amount of exchange can be obtained.

Each person leaving Sweden may export Swedish and/or foreign banknotes up to a total amount of SKr 100 per person, in denominations not exceeding SKr 50. Nonresidents may, when leaving Sweden, export foreign banknotes brought into the country by them. For this purpose, a certificate of “Means of Payment Imported and Intended for Re-Export” is issued on entry.

Exports and Export Proceeds

Most exports to North, Central, and South America (except Argentina) and all OEEC countries are exempt from licensing requirements. However, payment must be made within six months after the dispatch of the commodity and must be in conformity with the regulations (see section on Prescription of Currency, above). All proceeds from exports and from payments for invisibles received in hard currency (mainly U.S. dollars), or received in other currencies from North, Central, and South America, Portugal, and Switzerland, must be surrendered. For other currencies, there is no surrender obligation, and they may be kept in a currency account with a Swedish authorized bank. These currency accounts may, however, be used by the holder to make payments abroad only if authorized, or they may be sold against Swedish kronor at the official rate.

Proceeds from Invisibles

Incoming receipts from invisibles have to be reported to the Exchange Control Office. Each person entering Sweden may import SKr 100 in Swedish banknotes, in denominations not exceeding SKr 50, and foreign banknotes without any limitation.

Capital

Inward and outward capital transfers are subject to control. Payments for contractual amortization are permitted freely. Capital transfers between Sweden and Denmark, Finland, Norway, and the United Kingdom are generally permitted. Furthermore, inheritances may be transferred. In cases of hardship, repatriation of moderate amounts of other nonresident-owned capital is permitted.

Changes during 1953

January 2

Yugoslavia was added to the list of countries from which most imports may be effected without import licenses.

February 28

The Sveriges Riksbank withdrew its quotations for Belgian francs and permitted the authorized banks to conclude spot transactions in this currency with their customers and with other authorized banks in Sweden and Belgium at rates determined by demand and supply. These rates would, however, be kept by the authorities within specified margins.

The authorized banks were also permitted to enter into forward transactions in Belgian francs, at rates determined by market conditions, with Swedish residents, other authorized banks in Sweden, and authorized banks in Belgium. (Similar arrangements had previously been made for dealings in pounds sterling and Netherlands guilders.)

March 30

Arrangements similar to those made for Belgian francs (see February 23, above) were made for Swiss francs.

April 20

Arrangements similar to those made for Belgian francs (see February 23, above) were made for French francs.

May 18

A system of multilateral arbitrage for spot transactions was introduced among eight Western European countries, viz., Belgium, Denmark, France, the Federal Republic of Germany, the Netherlands, Sweden, Switzerland, and the United Kingdom; authorized banks in these countries were permitted to conclude spot transactions with each other in the currencies of any of these countries at rates set within specified margins approximately ¾ of 1 per cent on either side of the parity rates.

September 1

The annual tourist allocation for visits to OEEC countries was increased from SKr 750 to SKr 1,000. The special allocation granted to persons going abroad by private motor vehicle was increased from SKr 250 to SKr 300.

October 1

Certain commodities, chiefly commercial iron and steel and some chemicals, were added to the list of goods that may be exported to North, Central, and South America (except Argentina), as well as to the OEEC countries and their associated territories, without export licenses.

October 5

The multilateral arbitrage arrangement (see May 18, above) was extended to cover forward transactions for periods up to three months.

December 14

Norway was included in the multilateral exchange arbitrage arrangement (see May 18, above) for spot transactions only.

Syria

Origin and Essential Features

Exchange control was first introduced in Syria on December 3,1939, and subsequently the controls were relaxed gradually. The exchange control legislation was recodified and made more effective as from April 26, 1952, but it has subsequently become modified in its application. There is a multiple exchange rate structure consisting of an official rate and a fluctuating free market rate, but the area of application of the former has been progressively narrowed and most transactions take place in the free market, in which rates remote from the par value rates are in effect and in which there are broken cross rates. Certain imports and exports are entirely prohibited. Prescription of currency requirements apply to most export proceeds.

Exchange Rate System

The par value is Syrian Pounds 2.19148 = US$1. The official rates are LS 2.19 buying, LS 2.21 selling, per US$1. These rates apply only to petroleum imports and to purchases of local currency by an oil company. All other transactions take place at the higher free market rate (see Table of Exchange Rates, below). Since January 1953, the Exchange Office has been quoting daily rates at which it will buy and sell foreign exchange.

Administration of Control

A Decree Law of April 1952 established an Exchange Office, which is now the final authority on all matters pertaining to exchange policy and control. Import licenses are issued by the Ministry of National Economy. Authorized commercial banks have the responsibility of recording the exchange proceeds of most exports.

Prescription of Currency

Present regulations empower the Exchange Office to prescribe certain currencies in payment for exports of certain goods. In practice, however, the Exchange Office usually requests the currency of the country to which the goods are exported (if it is an acceptable currency) or a stronger currency, at the exporter’s choice. Prescription of currency requirements are not applied to outgoing payments.

Imports and Import Payments

All imports require prior licenses, which, except for a short list of prohibited items, are freely issued. Exchange may be obtained freely at free market rates.

Payments for Invisibles

Exchange for invisibles may be obtained freely at free market rates.

Exports and Export Proceeds

The export of a few goods essential to the domestic economy is prohibited. Most other exports are free of license. The proceeds of major exports1 to countries other than Bahrein, Iraq, Jordan, Kuwait, and Saudi Arabia have to be obtained in acceptable currencies (see section on Prescription of Currency, above) according to destination, and recorded with and repatriated through authorized banks in Syria. There is, however, no obligation on exporters or others to sell their export proceeds, which may be held. But a sale must be effected through an authorized bank, and as export exchange has, for all practical purposes, no other outlet than the Exchange Office, this institution is the actual buyer.

Proceeds from Invisibles

There are no requirements attached to the proceeds from invisibles and such exchange may be held, sold in the free market, or otherwise disposed of.

Capital

Imports and exports of capital are free of all restrictions and may be dealt with in the free market without limitations.

Table of Exchange Rates (as at December 31, 1953)(Syrian pounds per U.S. dollar)
BuyingSelling
2.192.21
Local currency purchases by an oil company.Petroleum imports.
3.57 (Fluctuating Free Market Rate)3.575 (Fluctuating Free Market Rate)
All other receipts.All other payments.

Changes during 1953

January 23

The Exchange Office quoted single rates, without discrimination between free and export exchange.

February 14

Banks were required to charge a single rate for all exchange not transacted at the official rate.

March 2

The distinction between the exportation exchange rate and the free market rate was abolished, and banks were required to charge a single rate for all exchange not transacted at the official rate. The banks were also required to buy and sell foreign exchange only at the rates published in the daily bulletin of the Exchange Office, with small charges fixed according to the currency concerned.

July 1

Governmental transactions still effected at the official rate (budgetary receipts, official and diplomatic missions’ expenses, expenses of students, etc.) were shifted to the free market rate.

July 27

The Exchange Office quoted daily forward buying rates for U.S. dollars, pounds sterling, French francs, and Belgian francs, limited to foreign exchange derived from exports.

August 11

Nonresident accounts opened with authorized banks could be overdrawn within the limits and during the time required for the settlement of normal commercial transactions.

Thailand

Origin and Essential Features

Exchange control in Thailand is based on the Foreign Exchange Control Act of January 27, 1942. A free market for sterling and U.S. dollars has existed since the end of World War II, but in March 1948 the Bank of Thailand began selling sterling, and in April 1953, U.S. dollars, to commercial banks for approved import payments. The latest modifications were on March 19, 1952, when limited controls on capital transactions became effective, and on November 16, 1953, when further restrictions on imports were introduced. The restrictive system comprises multiple rates for both exchange receipts and payments, capital controls, import licenses for all commodities, and import licensing and limitations on payments for invisibles under a trade and payments agreement with Japan. Otherwise, current payments can be made without restriction to any country through the free market.

Exchange Rate System

There is no agreed par value for the Baht. The official rates are B 12.45 buying, B 12.55 selling, per US$1. The official rates apply only to government transactions, both expenditures and receipts, to certain educational expenses, to expenditures for hospital equipment and drugs, and, on the receipt side, to 20 per cent of the proceeds of rubber and tin exports and to rice exports. The Bank of Thailand supplies sterling and U.S. dollar exchange, to pay for approved imports, at B 45 per £1 and B 16.75 per US$1. In transactions with Japan, the Bank of Thailand fixes twice a month a rate of exchange on the basis of the average free market rate for U.S. dollars in the previous period. The Bank also provides exchange for oil companies: sterling at the Bank of Thailand rate of B 45 per £1, and U.S. dollars at an equivalent rate calculated on the basis of the official sterling-dollar cross rate (see Table of Exchange Rates, below). The amount in either currency is limited to annual allocations agreed by the Ministry of Finance and the oil companies. All other transactions are effected at the fluctuating free market rate.

Administration of Control

Authorized banks and exchange dealers approved by the Ministry of Finance are responsible for certain specified transactions, primarily in the free market, while most transactions at the official rate are conducted through the Bank of Thailand. All imports and many exports are subject to licensing by the Ministry of Economic Affairs or by the Ministry of Finance.

Nonresident Accounts

In principle, no distinction is made between the accounts of residents and of nonresidents. There are no restrictions on nonresidents regarding the maintenance of accounts in baht or the use of such funds locally. The use of such accounts for making international payments or the conversion of amounts held into other currencies is subject to the capital control regulations.

Imports and Import Payments

All imports require import licenses. Payments for approved imports at the official rate are conducted through the Bank of Thailand, while payments for imports effected through the free market follow normal banking practice. In the case of oil companies, payments are effected with exchange purchased under special arrangements with the Bank of Thailand. Payments for imports from Japan must be effected by letter of credit. An import license permits a bank authorized to finance trade with Japan to arrange a letter of credit, after obtaining the approval of the Bank of Thailand. In trade with Japan, the importer pays in baht at the special exchange rate for transactions with that country, but for certain essential items he makes payment to the Bank of Thailand at the rate for approved imports (B 16.75).

Payments for Invisibles

Educational expenses of certain Thai students abroad may be remitted at the official rate. Other invisible transactions (except those with Japan) are at the free rate. Authorized exchange dealers may, without reference to the Bank of Thailand, sell exchange to pay for invisibles associated with trade transactions. For certain other payments—foreign travel and family remittances—the authorized exchange dealer may sell limited amounts of exchange, but if additional amounts are desired, approval must be obtained from the Bank of Thailand for the total sum to be exported or remitted. In most other instances, applications must be made to the Bank of Thailand, which permits the payment of exchange after receiving proof that the request covers bona fide payments for such items as salaries of foreigners, life insurance premiums, etc. The general rule has been that exchange will also be made available for remittance of earnings on foreign investment. Under the bilateral arrangement with Japan, payments for invisibles that can be made through the “open account” are limited to certain specified services. No remittance for family maintenance may exceed B 2,000 per month per beneficiary. No person may take out with him foreign currency notes exceeding B 3,500 in value (calculated at the official rate of exchange) without prior approval of the exchange control authorities. The corresponding maximum for families is B 7,000. There is no restriction on the export of local currency. Persons in transit may take out any foreign exchange they imported upon entry.

Exports and Export Proceeds

Rice exports are handled mainly by the Ministry of Economic Affairs. Exports of rice by private exporters must be licensed by, and made in the name of, the Ministry of Economic Affairs, to which the exchange proceeds corresponding to the standard price must be surrendered. Private exporters of rice as well as exporters of rubber and tin must obtain an export certificate to ensure the surrender of specified currencies. In addition, certain commodities require export licenses.1

Exporters of tin and rubber must surrender at the official rate 20 per cent of their export proceeds at the fixed standard prices; exporters of rice must surrender at the official rate 100 per cent of the fixed standard price. Other export proceeds, including that portion not surrendered of rice, rubber, and tin, must be accounted for either by sales to authorized dealers at the free market rate or by deposit with authorized dealers.

Proceeds from Invisibles

Receipts from invisibles, except for transactions with Japan, are disposed of in the free market. The Bank of Thailand’s “open account” arrangement for transactions with Japan can be used only for certain specified services. No person may bring into Thailand foreign currency notes exceeding B 3,500 in value without a permit. Imports of local currency are prohibited, but a person who arrives from a foreign country or a person in transit may bring with him local currency not exceeding B 200.

Capital

Regulations on invisibles as well as on capital transfers are designed to ensure that capital movements are subject to control. The Bank of Thailand has been entrusted with the general operation of capital controls, and only specific cases not provided for in the regulations of March 19, 1952 need be referred to the Ministry of Finance. The approval of the Ministry of Finance is required, however, to obtain exchange for the repatriation of investment capital. For transfer of funds of emigrants, charitable remittances, and legacies, the Bank of Thailand’s approval depends upon the amount involved and the destination of the funds.

Table of Exchange Rates (as at December 31, 1953)

(baht per U.S. dollar)2.

BuyingSelling
12.4512.55
Rice exports. Government receipts.Government payments. Student remittances.
16.07
Official sales of exchange to oil companies.
16.75 Specified approved imports.
19.34 (20% at B 1245 and 80% at Free Market Rate)
Rubber and tin exports.
20.20320.203
Exports to Japan except rice, tin, and rubber.Imports from Japan except government imports and a few luxury items.
21.05 (Fluctuating Free Market Rate)21.16 (Fluctuating Free Market Rate)
All other exports. Invisibles and capital.All other imports. Other invisibles and capital.

Changes during 1953

February 11

Remittance agents were required to be licensed by the Ministry of Finance.

April 30

The Bank of Thailand supplied U.S. dollar exchange to pay for specified approved imports at B 16.75 per US$1.

September 1

The trade and payments arrangement between Thailand and Japan was renewed.

November 16

A royal decree was enacted, entailing a licensing system for 35 categories of imports.

Turkey

Origin and Essential Features

A system of controls was initially introduced in Turkey on February 20, 1930. It was fundamentally revised by a Decree of May 26, 1947, to which several modifications have since been made.

Payments for merchandise transactions and invisibles are effected in accordance with the provisions of payments agreements when applicable, and in other cases, in U.S. dollars, free Swiss francs, sterling through a Turkish account, other EPU currencies, or in any other manner approved by the exchange control authorities.

The degree and character of restrictions applied to imports are differentiated according to the origin and category of goods and the currency of payment. All imports are subject to approval or registration, which is generally given automatically by the import control authorities for goods of primary necessity and for certain goods when imported on a long-term credit basis. For other goods, import licenses are issued according to the availability of exchange. Payments on account of invisibles are in most cases restricted and subject to individual exchange licenses.

Licenses are required for specified exports. Export proceeds and other exchange receipts have to be surrendered. Subsidies on export proceeds of 25, 40, or 50 per cent, according to the currency obtained, are paid on certain products out of the proceeds of import contributions imposed on certain secondary and luxury imports.

Capital transactions are subject to individual licenses. Foreign investments in projects considered useful for the Turkish economy may be given an official guarantee covering the repatriation of the capital and earnings.

Exchange Rate System

The exchange rate system is basically uniform, based on the par value of Turkish Liras 2.80 = US$1. The official rates are LT 2.80 buying, LT 2.8252 selling, per US$1.

Administration of Control

The administration of exchange control is carried out by the Ministry of Finance; exchange allocation for imports is effected by the Ministry of Economy and Commerce. A Technical Committee, including the representatives of various economic ministries and the Central Bank, makes policy decisions, which are subject to approval by the Ministerial Committee consisting of the Ministers of Finance, Economy and Commerce, and Exploitation. The Central Bank of the Republic of Turkey and the authorized banks operate the details of the exchange control.

Prescription of Currency

Settlements on account of merchandise transactions and invisibles must be effected in U.S. dollars, in free Swiss francs, in sterling through an account of the Central Bank, in other EPU currencies, or in any other currency or manner acceptable to the Central Bank, or in accordance with payment agreements, which provide for the following methods of settlement: (1) in U.S. dollars (as the currency of account in most cases) in respect to Austria, Denmark, Egypt, Finland, Federal Republic of Germany, Greece, Hungary, Israel, Italy, Netherlands, Norway, Poland, Spain, Sweden, and Yugoslavia; (2) in the currency of the partner country in respect to Belgium, Czechoslovakia, France, Sweden, Switzerland, and the United Kingdom (and other territories of the Sterling Area); (3) in Turkish liras in respect to Bulgaria and Spain; and (4) in sterling in respect to the U.S.S.R. An agreement with Switzerland provides for settlement in free Swiss francs of 20 per cent of payments by Switzerland in favor of Turkey.

Imports and Import Payments

All imports are subject to approval, which generally is given automatically for goods of primary necessity and for certain goods imported on a long-term credit basis. For other items, however, the issue of licenses is subject to the decision of the exchange and trade control authorities on individual applications. There may be some delay, however, between the granting of the license and the time that the exchange is actually made available. Imports on government account financed through intergovernmental loans and grants, which represent a considerable portion of the country’s imports, are not subject to these limitations. The Ministry of Economy and Commerce reserves the right to restrict imports from any particular country within the limits of exchange proceeds accruing from that country.

The Central Bank requires that applications for the allocation of foreign exchange for merchandise payments be accompanied by a deposit of 4 per cent of the value of the applications. If the allocation is not made within one month, the applicant is entitled to withdraw his deposit.

Payments for Invisibles

In principle, payments by residents to nonresidents on account of invisibles are restricted and subject to individual licensing, although payments incidental to merchandise transactions are permitted automatically. Exchange permits are usually given for payments on account of (1) interest, commissions, and similar payments connected with bank operations; (2) export commissions, registration fees, patent fees, etc.; and (3) advertisements and other expenses connected with trade. Exchange for business travel is granted within limits varying according to the country of destination. Payments effected by insurance companies also require permits, which usually are given.

Travelers are permitted to export Turkish banknotes and coins up to LT 100. Nonresident travelers may take out, without permission, the unspent portion of the foreign exchange recorded in their passports on entry. Foreign tourists can export freely foreign coins up to the equivalent of LT 15.

Exports and Export Proceeds

Certain goods may be exported freely, but specified goods require individual licenses, mainly in order to prevent triangular trade in such goods resulting in payment of a soft currency to Turkey for goods finally sold for hard currency. Exporters are, in general, required to sell to a bank in Turkey the foreign exchange proceeds of goods exported, within 3 months from the date of exportation and within 15 days from the date on which the foreign exchange in question has been placed at their disposal. The proceeds of certain exports benefit from subsidies of (1) 50 per cent for “free” dollars, (2) 40 per cent for EPU currencies, or (3) 25 per cent for settlements through clearing agreement accounts. These subsidies are paid from an “Equalization Account” at the Agricultural Bank from funds derived from taxes of 25, 50, or 75 per cent on specified secondary and luxury imports.

Proceeds from Invisibles

Foreign exchange accruing to residents on account of services rendered by them to nonresidents must be surrendered 3 months after the date on which the service was rendered or within 15 days from the date of acquisition.

Travelers are permitted to import Turkish banknotes and metallic currency up to LT 100.

Capital

Residents. Capital transfers abroad by residents and capital transactions between residents and nonresidents are subject to the approval of the exchange control authorities. The repatriation of foreign assets held by residents may, in cases specifically approved by the Ministry of Finance, be effected through the importation of specified commodities.

Nonresidents. Foreign companies and contractors established abroad who wish to do business in Turkey must import in the form of foreign exchange the capital and operating funds required by the business. In principle, assets and balances owned by, and earnings accruing to, nonresidents cannot be converted into foreign currency, and if they exceed LT 500 they are blocked. Subject to individual permit, blocked assets and balances may be utilized within Turkey, except as capital for business, or may be transferred abroad through the exportation of specified goods.

Foreign capital invested in Turkey within the terms of a Law to Encourage Foreign Investments is accorded preferential treatment.1 The investment may be made in the form of (1) capital brought into Turkey in the form of foreign exchange; (2) installations, machinery, tools, and instruments, or their spare parts, and such special construction materials as may be needed; (3) nonphysical assets such as concessions, trademarks, patents, etc. Under this law, as amended, annual profits, interest, and dividends on approved investments, and all or part of the invested capital can be remitted abroad in the original currency of the capital.

The capital and interest of long-term loans and credits made by nonresidents to enterprises in Turkey (including those of an agricultural character) may be accorded the same transfer benefits as those described above for foreign investment. The Ministry of Finance can guarantee such loans to a total of LT 1 billion, subject to the approval of the Council of Ministries.

Changes during 1953

March 23

A circular (No. 435) was issued setting forth new regulations for goods that could be imported from OEEC countries on a long-term credit basis. Applications to the Central Bank for exchange under these arrangements had to be accompanied by a deposit of 4 per cent. The Central Bank would forward the application to the Ministry of Economy and Commerce for its decision.

September 3

It was announced that all imports would be subject to strict official licensing. The retention quota arrangement in the form of the Takas system, by which exporters of certain marginal exports could sell freely their foreign exchange proceeds to importers of less essential commodities, was abolished. In its place, an “Equalization Account” was established at the Agricultural Bank, through which subsidies payable on certain marginal exports, according to the currency obtained (50 per cent for dollars, 40 per cent for EPU currencies, and 25 per cent for clearing agreement currencies), would be financed from taxes of 25, 50, or 75 per cent on specified secondary and luxury imports.

November 1

New import controls became effective. The list of liberalized imports was restricted to machinery, industrial raw materials, and spare parts, but the effective date was dependent on a further announcement. Other goods could be imported only if needed for economic development; priority ratings would be allocated to such imports and charges ranging from 25 to 75 per cent imposed on them. Barter transactions were prohibited.

December 14

A bill to replace the existing Law for the Encouragement of Foreign Investments of August 9, 1951 was approved. The new law (which was published on January 18, 1954) removed (1) the limitations on the percentage of annual profits, interest, and dividends on approved foreign investments that could be remitted, and (2) the time limits on the repatriation of such capital.

Union of South Africa1

Origin and Essential Features

Exchange controls and restrictions were introduced in the Union of South Africa on September 9, 1939. Under these controls and restrictions all payments to residents of countries outside the Sterling Area require exchange licenses, and all exchange receipts in currencies other than Sterling Area currencies must be offered for surrender. In November 1948, restrictions were introduced through a system of exchange quotas for imports from outside the Sterling Area and the implementation of a list of prohibited imports. On July 1, 1949, this system was replaced by an import licensing system, which also restricted imports from the Sterling Area other than goods produced in Southern and Northern Rhodesia. In January 1950, two types of import license were introduced: a general import license valid for imports from any country and a restricted import license valid only for imports from soft currency countries. On January 1, 1954, a substantial change was made in this system: discrimination in the application of import restrictions was abolished and all new import licenses were valid for purchases from any country.

Exchange Rate System

The par value is South African Pound 1 = US$2.80. Exchange rates are uniform and are based on the fixed rates for sterling-S.A. pounds and the London market rates for sterling against other currencies, maintained between official limits. The rates for the U.S. dollar as at December 31, 1953 were US$2.815 buying, US$2.7975 selling, per £SA 1.

Exchange Control Territory

There are no exchange or trade restrictions between the Union of South Africa, South West Africa, Basutoland, Swaziland, and the Bechuanaland Protectorate. These territories may be regarded as forming with the Union of South Africa a single exchange control territory.

Administration of Control

Import and export licenses are issued by the Director of Imports and Exports acting on behalf of the Secretary for Commerce and Industries. Exchange licensing is the responsibility of the Treasury, which has delegated this authority to the Reserve Bank, which, in turn, has delegated to the commercial banks some of its licensing power. Appropriate exchange for licensed imports is made available by the authorized dealers upon presentation of suitable documentary evidence.

Prescription of Currency

All approved payments to and receipts from residents outside the Sterling Area must be made in the manner prescribed by the South African Treasury. For most transactions, the prescribed method is in sterling to or from an account related to the country or monetary area of the nonresident, following the nomenclature of the United Kingdom’s exchange control system; in several cases, payments or receipts may alternatively be in the appropriate local currency; for Canada and American Account countries, they may be in U.S. dollars.

Nonresident Accounts

There are nonresident accounts for beneficiaries resident outside the Sterling Area, and Sterling Area accounts for beneficiaries resident in territories of the Sterling Area. Credits to the former are subject to control, and each deposit requires approval; withdrawals may be used to pay for exports to the country of the account holder, local payments, transfers to the country of the account holder or to other Sterling Area territories, and payments to a nonresident account of the same country or monetary area. Balances held in Sterling Area accounts may be used freely for local payments or transferred to any other territory of the Sterling Area.

Imports and Import Payments

A few items may be imported freely, but most imports require import licenses, which are valid for purchases from any country. There are, moreover, quantitative limitations on different types of imports. Thus, for raw materials, consumable stores, and maintenance spares, licenses are granted to importers on the basis of quotas fixed in accordance with previous consumption and estimated requirements; for general merchandise, licenses are granted to importers on the basis of their previous imports. Import licenses granted for general merchandise imports can be exchanged for permission to import a smaller amount of certain goods on a “restricted” list; otherwise, the issue of import licenses for goods on this “restricted” list is subject to administrative decision. Import licenses are issued freely for certain textile piece goods, provided the cost does not exceed certain ceiling prices and proof that firm orders have been placed is furnished.

A holder of a valid import license is granted exchange to pay for his imports upon presentation of satisfactory evidence that the transactions will be properly effected and payment made in the prescribed manner (see section on Prescription of Currency, above).

Payments for Invisibles

There are no restrictions on payments to residents of the Sterling Area, nor is any license required. All payments to residents of countries outside the Sterling Area require exchange licenses, which are freely granted for most invisibles. Non-sterling exchange to pay for film royalties, travel expenses, membership fees, maintenance, etc., is granted in limited amounts.

Exports and Export Proceeds

Export licenses, issued by the Secretary for Commerce and Industries, are required for exports to any destination (other than Basutoland, Swaziland, and the Bechuanaland Protectorate) of certain specific raw materials in short supply and manufactures therefrom. They are also required, for strategic reasons, for certain other goods exported to destinations other than the United Kingdom, any British Dominion, Colony, Possession, Protectorate, or Trust Territory, or the United States.

All foreign exchange other than Sterling Area currencies accruing from exports must be received in the prescribed manner and surrendered (see section on Prescription of Currency, above). Export control procedures operate to assure this.

Proceeds from Invisibles

Non-sterling exchange receipts from invisibles must be received in the appropriate manner and surrendered.

Capital

Non-sterling exchange receipts of capital must be received in the appropriate manner and surrendered. Transfers of capital to countries outside the Sterling Area require approval. This is granted to emigrants up to certain limits; otherwise residents are not normally allowed to export capital to countries outside the Sterling Area. Capital transferred directly to the Union from a country outside the Sterling Area normally may be retransferred to the country of origin and in the currency in which the original transfer was received.

Changes during 1953

January 1

For industrial raw materials, consumable stores, and maintenance spares, importers were issued initial letters of authority amounting to 50 per cent of their 1951 imports from both hard and soft currency countries. (A second issue was made later, increasing the initial allocations by 50 per cent.)

February 24

A second and final issue of licenses for consumer goods for 1953 was announced, bringing the total of such allocations to 45 per cent of 1948 imports. Seventy-five per cent of the total were to be issued in restricted licenses valid for imports from soft currency countries and the rest in general licenses valid for imports from all countries, making the total allocation for consumer goods in 1953 the same a§ in 1952.

September 11

The requirement that exporters of diamonds must obtain payment in hard currency for at least 40 per cent of the total value of their diamond exports during each calendar quarter was withdrawn.

October 19

Preliminary quotas for imports in 1954 of agricultural and industrial machinery (of less than £1,000 unit value) were an nounced at 50 per cent of total grants for 1953. For raw materials, consumable stores, and maintenance spares for industries generally, initial letters of authority for 1954 were to be issued on the basis of 55 per cent of the total allocations made to importers for the whole of 1953. Preliminary quotas for imports of all consumer goods in 1954 were fixed at 25 per cent of the 1948 level, compared with the preliminary 30 per cent in 1953.

November 27

The import control arrangements for 1954 were announced; all import licenses issued would be valid for importation from any country.

United Kingdom

Origin and Essential Features

Exchange control was introduced in the United Kingdom on September 3, 1939. Since then there have been a considerable number of developments in details, but the essentials of the system have, in principle, remained unchanged. Exchange control is not imposed on transfers to other countries in the Sterling Area, but all payments to non-Sterling Area countries require exchange control approval, which, upon verification of the amount and provided the method of payment is in accordance with the general prescription of currency requirements, is granted automatically for licensed imports, contractual payments (except films), and many types of noncontractual payments. Some types of noncontractual payments are subject to monetary limitations and, in some instances, to discrimination according to the country of receipt. Export proceeds must be received in the manner prescribed in the regulations, and certain currencies must be sold to an authorized bank.

Exchange Rate System

The par value is United Kingdom Pound 1 = US$2.80. Market rates for spot exchange transactions in most currencies dealt with in the United Kingdom are maintained between official limits corresponding to US$2.82 buying, US$2.78 selling, per £l.1 In general, authorized banks are allowed to cover spot and forward exchange transactions at market rates against sterling in the London exchange market or with banks in the country of the currency concerned, where the authorities of that country have given their approval. The United Kingdom operates a single rate system based on the Fund par values or, where countries have not an agreed parity, on official rates. The United Kingdom participates with Belgium, Denmark, France, the Federal Republic of Germany, the Netherlands, Norway, Sweden, and Switzerland in a multilateral foreign exchange arbitrage arrangement, under which authorized banks in these territories may conclude spot transactions, and forward transactions for up to three months’ delivery, with other authorized banks in any of these territories.2 The spot exchange rates fluctuate between the official limits agreed by the exchange authorities of the countries concerned, while the forward premiums and discounts are left to the interplay of market forces.

Exchange Control Territory

Exchange control is not imposed on transactions with other parts of the Sterling Area (“Scheduled Territories” in the nomenclature of the U.K. exchange control); in addition to the United Kingdom, the Sterling Area comprises Australia, Burma, Ceylon, Iceland, India, Iraq, Irish Republic, Hashemite Kingdom of the Jordan, Libya, New Zealand, Pakistan, Southern Rhodesia, and Union of South Africa, together with all British Colonies, Protectorates, Protected States, and Trust Territories. Exceptionally, sterling payments to Hong Kong are screened to ensure that residents in other parts of the Sterling Area do not have access to Hong Kong’s free market.

Administration of Control

The administration of exchange control in the United Kingdom is conducted by the Bank of England on behalf of the U.K. Treasury. However, much of the authority for approving normal payments is delegated to the commercial banks, practically all of which are authorized for this purpose. Import and export licensing is handled by the Board of Trade.3

Prescription of Currency

The prescription of the methods for making payments to and receiving payments from countries outside the Sterling Area is an integral part of the U.K. exchange control system and provides a mechanism for payments between all Sterling Area territories and the rest of the world. Payments to and receipts from countries with which the United Kingdom has negotiated Monetary Agreements,4 the American Account Area, and Canada may be made either in sterling or in the currency of the paying/receiving country or monetary area. Payments to and from all other countries are effected predominantly in sterling—in most cases in conformity with Sterling Payments Agreements negotiated by the United Kingdom, under the terms of which the nonresident recipient can obtain his own local currency. These arrangements are facilitated and controlled by designating all nonresident sterling accounts geographically according to the residence of the account holder, and by publishing general regulations which show those transfers permitted between the various sterling accounts without reference to the exchange control authorities (see section on Nonresident Accounts, below).

Nonresident Accounts

The sterling accounts (other than blocked accounts) of nonresidents, i.e., those resident outside the Sterling Area, are available for payments in the Sterling Area and for transfers to residents in the same country or monetary area as the account holder. The extent of transferability of these accounts to other nonresidents varies according to the groups described below. However, considerable (“administrative”) transferability is achieved by granting licenses to effect payments outside the prescribed arrangements.

1. American Accounts (Bolivia, Colombia, Costa Rica, Cuba, Dominican Republic, Ecuador, El Salvador, Guatemala, Haiti, Honduras, Liberia, Mexico, Nicaragua, Panama, Philippine Republic, United States and possessions, and Venezuela) and Canadian Accounts. Payments from these accounts may be made freely to any account related to countries in this group, the Transferable Account Area, and the Residual Group. Balances on American Accounts and Canadian Accounts may be converted freely into Canadian or U.S. dollars.

2. Transferable Accounts5 (Anglo-Egyptian Sudan, Austria, Chile, Czechoslovakia, Denmark,6 including the Faroe Islands and Greenland, Egypt, Ethiopia, Finland, Federal Republic of Germany,6 Greece, Italian Monetary Area, Netherlands Monetary Area,6 Norway,6 Poland, Spanish Monetary Area, Sweden,6 Thailand, and U.S.S.R.). In addition to Transferable Accounts, there are other accounts related to countries in this area. Payments from Transferable Accounts (mostly held by banks) may be made freely to any account related to the Transferable Account Area or Residual Group in respect of direct current transactions. Payments from other accounts of residents in the Transferable Account Area may be made freely to any account, including a Transferable Account, related to the same country or monetary area as that of the account holder.

3. Bilateral Accounts5 (Argentina, Belgian Monetary Area,6 Brazil, Bulgaria, Mainland China, French Franc Area,6 French Somaliland, Hungary, Iran, Israel, Japan, Lebanon, Paraguay, Peru, Portuguese Monetary Area, Rumania, Switzerland,6 Syria, Taiwan, Tangier, Turkey, Uruguay, Vatican City, and Yugoslavia). Payments from these accounts (excluding Mainland China, Iran, and Taiwan, to which certain restrictions apply) may be made freely to any account related to the same country or monetary area as that of the account holder.

4. Residual Group5 (unclassified countries not in the above groups, e.g., Afghanistan, Albania, Andorra, Nepal, Saudi Arabia, and Yemen). Payments from these accounts may be made freely to any account related to any country in this group.

5. Multilateral Arbitrage Countries (Belgium, Denmark, France, Federal Republic of Germany, Netherlands, Norway, Sweden, and Switzerland). Payments may be made freely from the accounts (including Transferable Accounts) of authorized banks in these territories to the accounts (including Transferable Accounts) of other authorized banks in any of these territories.

Imports and Import Payments

Imports on government account are not subject to import licenses, but imports on private account are subject to one of the following types of import license: World Open General License, Open General License, Open Individual License, Individual Import License.

Subject to the submission of evidence of importation or, where this has not yet taken place, the relevant import license, foreign exchange, or permission to credit a nonresident sterling account appropriate to the country of export (see section on Prescription of Currency, above) is granted automatically for imports. For imports from other parts of the Sterling Area, payment can be made freely in sterling or in any other Sterling Area currency.

Payments for Invisibles

An exchange license is required for all payments to countries outside the Sterling Area. These licenses normally are granted, without discrimination as to recipient countries, in respect of payments under contracts entered into up to September 3, 1939 and under contracts entered into with approval since that date. Films, however, are covered by special agreement. Applications for licenses for noncontractual payments are considered on their merits and are often subject to certain monetary limitations; in few instances they are subject also to discrimination as to the recipient country — e.g., in the case of tourists’ expenses, where a basic exchange allowance of £50 for each person of 12 years of age or over and £35 for each child under 12 years of age for the period November 1, 1953 to October 31, 1954 is available for use in all countries except the American Account Area, Canada, Mainland China, Japan, Korea, Taiwan, and Tibet.7 This does not apply to travel to Denmark, the Faroe Islands, Norway, and Sweden, for which bona fide travelers may obtain “any reasonable amount” of the appropriate exchange. The basic exchange allowance is exclusive of the payment of fares, which is not limited for direct journeys made to and from the United Kingdom and paid for in the United Kingdom. Not more than £5 in British banknotes may be taken out of the United Kingdom except by persons traveling directly to the Irish Republic or the Channel Islands. Certain freedom in exchange operations is granted to specified commodity markets, e.g., rubber, cocoa, coffee, wool tops, grain, and certain metals, and to the insurance market.

Exports and Export Proceeds

Certain exports, mostly of a strategic character, and all exports to China and Hong Kong require export licenses.8

The proceeds of all exports to countries outside the Sterling Area must be received in the manner prescribed in the regulations (see section on Prescription of Currency, above), and this is a condition on which the export is permitted without specific exchange control approval. Exchange receipts in specified currencies9 must be sold to an authorized bank.

Proceeds from Invisibles

Exchange receipts from invisibles in specified currencies9 must be surrendered. Permission is given for foreign exchange to be retained in controlled accounts if it is required for operating purposes. Not more than £10 in British banknotes may be brought into the United Kingdom except by persons traveling directly from the Irish Republic or the Channel Islands.

Capital

Transfers of capital to countries outside the Sterling Area require approval, and capital receipts in specified currencies9 must be surrendered. For a nonresident, foreign exchange or permission to credit sterling to a nonresident account related to his country or monetary area is granted freely for repayments abroad in respect of matured capital obligations; otherwise the proceeds of nonresident-owned capital may be credited only to Blocked Sterling Accounts, which may be used for reinvestment in sterling securities not maturing earlier than ten years from the date of purchase. However, special facilities permit residents of Denmark (including the Faroe Islands and Greenland), Norway, and Sweden to transfer their capital to their respective countries. Transfers between Blocked Sterling Accounts of residents of the same country or monetary area are permitted freely. Persons who reside outside the Sterling Area and make investments in the United Kingdom must provide appropriate foreign exchange or sterling from a nonresident account related to their country or monetary area. Capital directly invested, after January 1, 1950, in projects approved by the exchange control authorities may be repatriated at any time, together with capital profits.

Banknotes

The authorized banks may buy and sell foreign notes and coin, within certain limitations, at free rates of exchange. Purchases of foreign notes and coin from residents of the Sterling Area may be made without limitation, but purchases from persons resident outside the Sterling Area are limited to reasonable amounts for their current maintenance expenses while in the United Kingdom. The authorized banks may purchase Canadian and U.S. dollar notes from anyone, but they may purchase other currencies only from sellers resident in the same country or monetary area as that of the currency being sold. Authorized banks may, under certain conditions, sell foreign notes and coin for travel outside the Sterling Area, but not more than the equivalent of £10 per traveler.

Changes during 1953

February 19

It was announced that the facility introduced January 10,1950, by which capital invested after January 1, 1950 by nonresidents in approved projects could be repatriated at any time, would no longer be limited to the amount of the original investment, but would be extended to any distributions of a capital nature arising in respect of the investment and to the total proceeds of the realization thereof.

March 11

Transfers between Blocked Sterling Accounts of residents of the same country or monetary area could be made by banks without formality.

March 23

The basic exchange allowance for tourists traveling to certain countries was increased from £25 to £40 for each person of 12 years of age or over and from £15 to £30 for each child under 12 years of age, for the 12 months ending October 31, 1953.

April 10

Special facilities giving a certain freedom in exchange operations were made available to participants in the London Wool Terminal Market who deal in wool tops.

May 18

Authorized banks could cover permitted forward transactions in Danish kroner with banks in Denmark against sterling paid to or from a Danish Transferable Account or a Danish Account.

Authorized banks could cover permitted spot and forward transactions in deutsche marks with authorized banks in the Federal Republic of Germany (and in the British, French, and U.S. Sectors of Berlin) against sterling paid to or from a German Transferable Account or a German Account.

Authorized banks were permitted to conclude foreign exchange arbitrage transactions on a spot basis with authorized banks in Belgium, Denmark, France, Federal Republic of Germany, Netherlands, Sweden, and Switzerland in any of their currencies or against sterling. Balances on sterling accounts (including Transferable Accounts, where applicable) of authorized banks in these territories could be transferred freely to other authorized banks in any of these territories.

June 3

Deutsche marks were added to the list of currencies that residents must offer for sale to an authorized dealer.

June 24

Special facilities giving a certain freedom in exchange operations were made available to recommended persons and firms having a continuing interest in the import or marketing of grain.

August 15

Transfers between Blocked Sterling Accounts of residents in the American Account Area and residents of Canada could be made by banks without formality. Residents of the United Kingdom would normally be allowed to reinvest, outside the Sterling Area, the proceeds of the sale or redemption of their Canadian or U.S. dollar securities in either marketable Canadian or marketable U.S. dollar securities.

September 12

The following currencies were removed from the list of those which residents must offer for sale to an authorized dealer: Argentine pesos, Brazilian cruzeiros, Lebanese pounds, Syrian pounds, and Uruguayan pesos. Their disposal in other ways remained subject to exchange control permission.

October 5

The multilateral foreign exchange arbitrage arrangements (see May 18, above) were extended to cover forward transactions for periods not exceeding normal spot usance by more than three months.

October 7

It was announced that releases of French-owned blocked sterling, initiated on December 4,1952, had now been approved up to the agreed limit and consequently no further applications would be authorized.

November 1

The basic exchange allowance for tourists traveling to certain countries was increased from £40 to £50 for each person of 12 years of age or over and from £30 to £35 for each child under 12 years of age, for the 12 months ending October 31, 1954. This allowance was extended to cover travel in all countries except the American Account Area, Canada, Mainland China, Japan, Korea, Taiwan, and Tibet. It was announced that, for travel in Denmark, the Faroe Islands, Norway, and Sweden, “any reasonable amount” of appropriate exchange could be obtained by bona fide travelers to those countries.

December 14

Norwegian authorized banks and Norwegian kroner were included in the multilateral foreign exchange arbitrage arrangements (see May 18, above) for spot transactions only. Balances on sterling accounts (including Transferable Accounts) of authorized banks in Norway could be transferred freely to other authorized banks in any of the territories included in the arbitrage arrangements.

December 16

Authorized banks could cover permitted forward transactions in Norwegian kroner with banks in Norway against sterling paid to or from a Norwegian Account or a Norwegian Transferable Account.

Uruguay

Origin and Essential Features

Exchange control was introduced in Uruguay in May 1931. On January 10, 1941, the Office of Export and Import Control was established under the jurisdiction of the Ministry of Finance and was charged with the tasks of controlling the declared values and origin of imports, intervening in the distribution of foreign exchange, and granting import permits. On October 6, 1949, new multiple rates for imports and exports were established, together with lists of commodities to which the various rates applied. Since then, additional rates applicable to certain export proceeds have been introduced, and on April 17, 1953 an exchange tax of 6 per cent was levied on payments for nearly all imports and related services. During 1953, as a result of a decline in dollar exports, import quotas were, for the most part, limited to inconvertible currencies.

The restrictive system comprises a multiple exchange rate structure with various fixed rates for imports and exports, exchange quotas established for various currencies and categories of imports, exchange taxes on nearly all foreign payments, and a fluctuating free market for invisibles and capital transactions. However, invisible expenditures incidental to imports are transacted at the official rates plus, in most cases, the exchange tax.

All exports require licenses, and foreign exchange derived from exports must be surrendered entirely, except in a few cases.

Exchange Rate System

No par value for the Uruguayan Peso has been established with the Fund. There are several official buying rates for exports and three official selling rates for imports. In addition, fluctuating free market rates apply to certain invisibles and capital transactions (see above); and an exchange tax of 6 per cent is applied to nearly all payments abroad connected with imports of merchandise (see Table of Exchange Rates, below).

Administration of Control

The exchange control system is operated by the Bank of the Republic. Exchange transactions related to imports, exports, and some invisibles pass through the authorized banks. Import licenses are issued by the Office of Export and Import Control.

Prescription of Currency

With certain exceptions, payments with countries with which Uruguay has payments agreements are made through established compensation accounts kept in the currencies of the relevant partner countries; the exceptions are Brazil, France, and the Federal Republic of Germany, whose accounts function in nominal U.S. dollars. Payments to other countries are made in the currency indicated in the license.

Imports and Import Payments

Imports, with only minor exceptions, require licenses. The granting of these licenses is effected within the global exchange quotas established by the Bank of the Republic for various currencies according to their availability. The global quotas are distributed by fixing an individual exchange quota for each importer and by issuing import licenses up to the limit of each quota. Exchange quotas for dollar goods are not necessarily given in dollars; sometimes they are given in inconvertible currencies if there is a surplus of the latter. Payments for all imports, with a few exceptions, are subject to a 6 per cent exchange tax. Imports cannot be effected with exchange obtained in the free market.

Payments for Invisibles

Payments for invisible items covered by a payments agreement require a license. Expenditures in foreign exchange incidental to imports are authorized together with the payment for the corresponding imports, and are subject to a 6 per cent exchange tax if the merchandise for which the expenditure is made is subject to this payment. All other payments for invisibles can be made freely through the free market. There are no limitations on the exportation of foreign or domestic banknotes.

Exports and Export Proceeds

All exports require licenses, which are granted if the exchange proceeds have been sold contractually to an authorized bank. However, the export of essential goods in short supply may be prohibited.

Most export proceeds must be surrendered at the rates established for the various export commodities. Exporters of wool, wool tops, and leather to all destinations may retain 2 per cent, while exporters of greasy and scoured wool to the dollar area, and exporters of combed wool tops to countries other than the United States who obtain U.S. dollars, are authorized by administrative procedure to retain 5 per cent of their export proceeds for their own use or for sale in the free market. There is an exchange tax of 1 per cent applied to the exchange proceeds of exports.

Proceeds from Invisibles

The use of proceeds from invisible items covered by a payments agreement requires a license. All other invisible proceeds can be held, utilized, or sold in the free market. There are no limitations on the importation of foreign or domestic banknotes.

Capital

Inward and outward capital investments are free. The corresponding transactions can take place freely in the free market.

Table of Exchange Rates (as at December 31, 1953)(pesos per U.S. dollar)
BuyingSelling
1.5191.519
Basic exports (meat, wool, wheat, flour, cattle hides, sheepskins).Government payments. Imports of newsprint, inks, cardboard matrix, and seed potatoes.
1.60
Exports of washed wool.
1.78
Exports of inedible oils, paper, packing house products, bristles, other animal skins.
1.901.90
Exports of rice.Essential imports (exempt from exchange tax).
2.014 (Ur$1.90 plus 6% Tax) Other essential imports.
2.05
Exports of canned meat and meat extracts.1
2.06
Exports of combed wool tops and broken tops.2
2.10
Exports of crude crushed dolomite.
2.15
Exports of fabrics of rayon and rayon mixtures, wheat gluten, and native sandals.
2.20
Exports of iron bolts.
2.35
Exports of woolen manufactures, pork, bricks, and other manufactured products.
2.597 (Ur$245 plus 6% Tax) Nonessential and luxury imports.
3.04 (Fluctuating Free Market Rate)3.04 (Fluctuating Free Market Rate)
Invisibles and capital.Invisibles and capital.
Note: An exchange tax of 1% is applied to the purchase of certain export proceeds.

Changes during 1953

January 13

Exporters could retain 5 per cent (instead of only 2 per cent, as previously) of the f.o.b. value of scoured and greasy wool shipped to the dollar area, to cover commissions and expenses originating abroad, or they could negotiate this amount at the free market rate.

January 28

The 5 per cent retention quota privilege (see January 13, above) was extended to the proceeds of wool tops exported to the dollar area.

February 10

A new effective rate of Ur$1.60 was established for exports of washed wool, formerly negotiated entirely at the official rate of Ur$1.519.

April 17

A tax of 6 per cent was introduced on all transfers of funds abroad in payment of imports or related expenses. A few commodities were exempted from this tax.

April 22

A new effective rate of Ur$1.90 was applied to exports of rice.

May 19

A new effective rate of Ur$2.15 was applied to exports of wheat gluten.

June 25

A new effective rate of Ur$2.05 was applied to exports of canned meat and meat extracts produced after May 23, 1953, previously exported at an effective rate of Ur$2.14.

July 28

A new effective rate of Ur$2.06 was applied to exports of combed wool tops and by-products, previously negotiated at Ur$2.15. The 5 per cent retention quota arrangement applicable to exports of wool tops to the dollar area (see January 28, above) was abolished.

September 1

A new effective rate of Ur$2.15 was applied to exports of native sandals and fabrics of rayon and rayon mixtures.

September 3

Exporters of combed wool tops to countries other than the United States who obtain U.S. dollars could be authorized by administrative procedure to retain 5 per cent of their export proceeds for their own use or for sale in the free market.

November 10

A new effective rate of Ur$2.10 was applied to exports of crude crushed dolomite.

November 11

Forward exchange operations in the free market, except when related to commercial transactions, were prohibited. Import quotas were largely limited to inconvertible currencies.

Venezuela

Origin and Essential Features

Exchange control regulations were introduced in Venezuela in August 1934, but there was a major revision in July 1941. There is no system of payment licenses, and only a few import restrictions are maintained, principally for protection purposes. There is a multiple exchange rate system comprising preferential rates for both government imports and the proceeds of coffee and cacao exports, and penalty buying rates applied to purchases of exchange from the petroleum companies. A few exports require licenses.

Exchange Rate System

The par value is Bolivares 3.35 = US$1. There is an official selling rate of Bs 3.35 per US$1. The corresponding buying rate fluctuates around Bs 3.325 per US$1, and applies to all purchases of exchange except those from the petroleum companies and from cacao and coffee exporters. The official selling rate applies to all sales of exchange except for government imports, for which a favorable rate of Bs 3.09 per US$1 exists. Penalty buying rates of Bs 3.046259 and Bs 3.09 per US$1 apply to sales of exchange by the petroleum companies. Various rates between Bs 3.32 and Bs 4.25 per US$1 are applied to cacao and unwashed coffee exports, and between Bs 3.32 and Bs 4.80 per US$1 to washed coffee exports, in a proportion depending upon world prices (see Table of Exchange Rates, below).

Administration of Control

Certain imports require prior import licenses, which are issued by the government department concerned. Under the terms of a contract with the Government, the Central Bank has the responsibility for ensuring that the special exchange rates are applied to the appropriate transactions.

Prescription of Currency

There are no currency prescription requirements in force.

Imports and Import Payments

Some items are subject to import licensing by various government departments. Licenses for some products are issued on the condition that the importer has purchased domestic products equal to a prescribed percentage of the amount imported. No restrictions are imposed on payments for imports.

Payments for Invisibles

Payments for invisibles may be made freely at the Bs 3.35 rate.

Exports and Export Proceeds

There is no limitation on exports, but the export of strategic materials to certain countries is prohibited, and export licenses are required for a few products essential to the domestic economy. The oil companies must surrender export proceeds to the extent of their local currency requirements at the Bs 3.09 rate. A rate of Bs 3.046259 is applied to exchange surrendered by them in excess of the Central Bank’s sales of exchange to domestic buyers during any one year. The proceeds of exports other than petroleum are sold at the Bs 3.32 rate, but if the world prices for cacao and coffee are below certain levels, a proportion of the proceeds of cacao and unwashed coffee exports can be sold at the Bs 4.25 rate, and of washed coffee exports at the Bs 4.80 rate.

Proceeds from Invisibles

Exchange receipts from invisibles are freely disposable or can be sold at the Bs 3.32 rate.

Capital

Payments for transfers of capital may be made freely at the Bs 3.35 rate. Exchange receipts from capital are freely disposable or can be sold at the Bs 3.32 rate.

Table of Exchange Rates (as at December 31, 1953)(bolívares per U.S. dollar)
BuyingSelling
3.046259
Local currency requirements of petroleum companies in excess of the Central Bank’s foreign exchange sales during the given year.
3.093.09
Local currency requirements of petroleum companies up to the limits of the Central Bank’s foreign exchange sales.Government payments.
3.323.35
Coffee and cacao exports in a proportion depending on world prices. All other exports except petroleum. Invisibles and capital.All other payments.
4.25
Cacao and unwashed coffee exports in a proportion depending on world prices.
4.80
Washed coffee exports in a proportion depending on world prices.
Note: The above rates for coffee and cacao need not be effective rates since sales at these rates are varied in accordance with the world prices for these commodities. The special rates for coffee have, however, not applied in recent years, as the international price for coffee has been above the maximum level, below which the special rates would apply. Taxes of Bs 2 and Bs 1½ per 46 kilograms are levied on washed and unwashed coffee, respectively.

Changes during 1953

No significant changes took place during 1953.

Yugoslavia1

Origin and Essential Features

Exchange control was introduced in Yugoslavia on October 7, 1931. It has been subject to considerable change, and by 1948 the exchange system was determined almost entirely by a comprehensive economic plan. During 1950, however, individual enterprises were allowed to use freely exchange receipts realized in excess of the planned targets.

Since 1950, essential changes have been made in the economic system, the administration of which has been decentralized, and the market now plays a more important role than it did prior to 1952.

While exchange rates based on the par value exist, the multiplication of these rates by coefficients and the operation of “free” rates derived from retention quota arrangements, as well as the use of taxes and premiums applied to imports and exports, give rise to numerous effective multiple exchange rates over a wide range.

Export and import transactions are carried out by registered domestic economic organizations. Certain exports are subject to licensing. The composition, value, and direction of exports are in effect regulated by the effective multiple rates applied to the various categories of exporters and exports.

Invisible payments related to merchandise transactions are treated in a manner similar to that accorded to payments for merchandise transactions. All other invisible payments are subject to individual licensing, in many cases within annual exchange allocations. All capital transactions are subject to individual licensing.

Exchange Rate System

The par value is Yugoslav Dinars 300 = US$1. A system of coefficients varying for different export and import commodities and applied to the basic exchange rate, premiums on exports and imports, various exchange taxes on retained exchange proceeds not surrendered to the National Bank, and market rates existing under a retention quota arrangement procedure produce numerous effective exchange rates. As at December 31,1953, there were 29 coefficients for imports, ranging from 0.8 to 10, and 26 coefficients for exports, ranging from 0.8 to 6, and the free rate quoted under the retention quota arrangement was Din 1,834 per US$1, Din 364 per DM 1, and Din 384 per clearing Sw fr 1.2 In addition, taxes ranging from 50 to 70 per cent are imposed on the difference between the value of the retained export exchange calculated at the quoted market rate for retained exchange and the value calculated at the official rate. In certain cases, however, these taxes are not charged.

Administration of Control

All foreign exchange transactions have to be effected through the National Bank, which manages a Central Exchange Fund. The Central Exchange Fund administers exchange accruing from that part of exchange proceeds not retained by exporters and other exchange earners. Markets for the exchange representing the negotiable retention quotas are established at the central offices of the National Bank in the six Yugoslav republics.

Prescription of Currency

Payments are made according to the method or channel of payment provided for in the payments agreement with the country concerned. If no agreement exists, payment is usually made in U.S. dollars or Swiss francs.

Imports and Import Payments

Importing is confined largely to registered domestic economic organizations. In principle, payments are effected either with retained currency or with exchange officially allocated by the Central Exchange Fund within the government plan. In either case, payment at the rate established by the applicable coefficient and/or payment of the premium appropriate to the merchandise concerned is required.

Payments for Invisibles

Most payments for invisibles related to merchandise transactions and other services are effected under retention quota arrangements. Foreign exchange up to a maximum of Din 3,000 per person is allocated for travel expenditures. The Secretariat for the Budget allocates annual exchange quotas to the republics for education, health, and other purposes. Applicants for such exchange must obtain authorization from the authorities of the republics. For these transactions, exchange is sold at the official rate. Not more than Din 500, in notes of Din 50 or less, may be taken out by travelers.

Exports and Export Proceeds

The export of a number of goods is prohibited and the export of certain other goods requires an individual license; all other goods can be exported freely. A percentage of export proceeds, which varies, according to the category of exported commodities and of exporters involved, from 20 per cent to 70 per cent (in the case of grain, 100 per cent), is to be surrendered at the official rate multiplied by the applicable coefficient; the balance of export proceeds, which has to be sold to the National Bank, can be repurchased by the exporter to pay for his imports or be purchased by another importer to whom the original exporter has sold his right to repurchase. However, exchange taxes ranging from 50 to 70 per cent, according to the category of exports and exporters involved, are imposed on the difference between the value of the retained exchange calculated at the quoted market rate for retained exchange and the value calculated at the official rate. Agricultural organizations and cooperatives can be exempted from this tax if they use their retained currency to import machinery and equipment for processing of agricultural products.

The Economic Board of the Federal Executive Council can decide with respect to individual products and services abroad that a percentage of export proceeds exceeding the established limits may be retained by the exporter.

Proceeds from Invisibles

All exchange proceeds from invisibles must be surrendered to the National Bank against local currency at the official rate multiplied by the appropriate coefficient. However, a retention quota arrangement is applicable to exchange proceeds accruing from the sale of services abroad by Yugoslav enterprises. Not more than Din 500 in Yugoslav banknotes, in notes of Din 50 or less, may be brought in by travelers.

Capital

All outward and inward capital transfers require special authorization. Residents are required to surrender all foreign exchange held abroad.

Changes during 1953

May 6

Economic organizations receiving for their free disposal a part of exchange proceeds derived from trade in merchandise or services with foreign countries were obliged to pay a tax at the rate of 70 per cent on the difference between the value of the retained exchange calculated at the quoted market rate for retained exchange and the value calculated at the official rate.

The Federal Executive Council’s Committee for the Economy established the quotas of exchange earnings to be surrendered at the official rate at 80 per cent for production organizations and 95 per cent for trade enterprises.

June 10

Retention quotas were differentiated according to categories of exported commodities.

June 27

The regulation of June 10 was modified, although no essential changes were introduced. Exporting production organizations could be authorized to retain all exchange proceeds in respect of individual products. A tax on exchange transactions was levied on economic organizations earning foreign exchange through exports of agricultural products (except grains), nonferrous metals (except ferromanganese), and raw timber and other forest products. Trade enterprises were also made subject to an exchange transactions profit tax on earnings realized from their own exports; the tax was differentiated according to the category of exports involved. Agricultural cooperatives and other agricultural organizations could be exempted from the tax if they used their retained currency to import machinery and equipment for processing of agricultural products.

July 2

A decree authorized the sale in the official exchange markets of foreign exchange from the Central Exchange Fund, but only to importers of certain raw and other materials.

July 20

A number of agricultural goods was exempted from the export prohibition.

August 11

The export of most agricultural products, except corn and fruit, was prohibited.

October 14

All imports were freed of administrative restrictions.

The list of goods subject to export prohibitions and individual licenses was modified.

Coefficients applicable to imports were modified, some of them being increased and others decreased.

Retention quotas were differentiated according to the category of exported commodities or rendered services and the enterprises involved, ranging from 30 to 80 per cent of total exchange earnings.

Note: The following changes took place as from January 1, 1954:

1. The number of export coefficients was reduced from 26 to 15 and their range from 0.80-6.00 to 0.50-2.50. The number of import coefficients was reduced from 29 to 9 and their range from 0.80-10.00 to 1.00-4.00.

2. Import coefficients, previously applied to the official rate of exchange, were to be applied to whichever exchange rate was used in the transaction.

3. Export coefficients were applied to market rates of exchange and not, as before, to the official rate.

4. Export premiums in the form of additional coefficients expressed in terms of the basic coefficient were abolished.

5. The various tax rates (70 and 80 per cent), which were paid by those exporters entitled to retain part of their foreign exchange earnings and which had applied to the difference between the official rate and the market rate, were superseded by a uniform tax rate of 30 per cent.

6. Exchange retained by exporters and used to pay for their own imports was made subject to the provisions already applying to exchange sold on the market, so that as from January 1, 1954 an exporter using retained exchange to pay for imports had no advantage over an importer buying exchange on the official exchange market.

On February 27, 1954 the allowance for tourist travel in the Sterling Area and other non-dollar countries was further increased, to UK£1,300, of which UK£300 is available for travel in non-sterling, non-dollar countries.

A further relaxation of restrictions on imports from non-dollar countries became effective in April 1954.

Effective March 1, 1954, the percentage was raised to 60.

On March 27, 1954, this yearly allocation was increased to S 3,900 per adult and on May 26, 1954 to S 5,200.

Banknotes for which rates are quoted by the National Bank are those of the following countries: Belgium, Canada, Denmark, France, Federal Republic of Germany, Italy, Netherlands, Norway, Sweden, Switzerland, United Kingdom, and United States.

For a description of “linked” transactions, see Fourth Annual Report on Exchange Restrictions, p. 61.

For a list of the countries whose banknotes are quoted by the National Bank, see footnote 3, above.

These are listed as follows: Austria, Denmark, France, Federal Republic of Germany, Greece, Italy, Netherlands, Norway, Portugal, Sweden, Switzerland, Turkey, and United Kingdom (Sterling Area).

Norway was not included in the forward exchange arrangements until January 20,1954.

The following countries and territories are included in the “dollar area”: Canada, Costa Rica, Cuba, Dominican Republic, Ecuador, El Salvador, Guatemala, Haiti, Honduras, Mexico, Nicaragua, Panama, Paraguay, Peru, Philippine Republic, United States, Venezuela, and territories under the sovereignty of Canada and the United States.

Effective May 26, 1954, the requirement of the central exchange control authority’s approval for certain import payments in dollars (or to the credit of nonresident accounts related to Canada or the United States) was abolished.

Effective February 1, 1954, these percentages were reduced to 2½, 4, 5, 7½, 10, and 11, respectively, and on April 15, 1954, this system of partial blocking of receipts in EPU currencies was discontinued.

Effective February 1, 1954, this percentage was reduced to 20. See also footnote 5, above.

Beginning January 1, 1954, special auctions are held for petroleum products.

On March 31, 1954, this period was extended to 3 days.

On March 25,1954, this period was extended to 30 days.

On February 25, 1954, this limit was raised to US$50,000.

These figures are based on the auction price range for U.S. dollars 120 days’ delivery, as recorded at the weekly auction held on December 29, 1953. Auction prices for other currencies, which are sold spot, are not related to the prices for the U.S. dollar at the par values agreed by the Fund for these currencies. There are minimum premiums per U.S. dollar or the equivalent in other currencies established for each category of import (see section on Changes during 1953, October 30, below).

See footnote 5.

The American Account countries are listed as Bolivia, Colombia, Costa Rica, Cuba, Dominican Republic, Ecuador, El Salvador, Guatemala, Haiti, Honduras, Liberia, Mexico, Nicaragua, Panama, Philippine Republic, United States and possessions, and Venezuela.

The requirement of a survey report was subsequently suspended until March 31,1954, and has since been suspended indefinitely.

In the Ceylonese regulations, the dollar area comprises Bolivia, Canada, Colombia, Costa Rica, Cuba, Dominican Republic, Ecuador, El Salvador, Guatemala, Haiti, Honduras, Mexico, Nicaragua, Panama, Philippine Republic, United States and possessions, and Venezuela.

These countries are Albania, Austria, Bulgaria, China, Czechoslovakia, Estonia, Federal Republic of Germany, Hungary, Japan, Latvia, Lithuania, Poland, Rumania, U.S.S.R., and Yugoslavia.

See footnote 2.

These countries are those in footnote 2, together with Belgium, Denmark, France, Greece, Iceland, Italy, Luxembourg, Netherlands, Norway, Portugal, Sweden, Switzerland, and Turkey.

See footnote 2.

Albania, Bulgaria, Czechoslovakia, Estonia, Hungary, Latvia, Lithuania, Poland, Rumania, and U.S.S.R.

In 1954 these rates were abolished, and the corresponding transactions, except for outstanding commitments, were moved to the official rate.

As at the end of 1953, this rate had very little application, since the half-yearly decree that was to have established the products that could be imported with the proceeds of gold exports was not enacted in July 1953 or subsequently.

In view of the modification that took place in the exchange rate system on January 1, 1954 (see note at the end of this survey), this survey describes the position as of that date.

Effective April 14, 1954, the rates for pounds sterling and Hong Kong dollars were adjusted to conform with the agreed par values.

Effective March 5, 1954, the amount of New Taiwan dollar notes which each traveler could bring into Taiwan without a license was limited to NT$1,000.

Effective February 19, 1954, the list of prohibited imports was eliminated, and most of the items concerned could then be imported. However, a 40 per cent tax was imposed on such imports if they were not imported through the “export voucher” system (see section on Exports and Export Proceeds, below).

As of January 13, 1954, this arrangement was temporarily suspended, leaving the effective rate at Ps$2.384 per US$1.

These imports are subject to a 3 per cent stamp tax collected on the value in Colombian currency of each application for registration, at the rate of Ps$2.50.

Norway was not included in the forward exchange arrangements until January 20, 1954.

These countries are listed as follows: Austria, Belgium, France, Federal Republic of Germany, Greece, Italy, Luxembourg, Netherlands, Norway, Portugal, Sweden, Switzerland, Trieste, Turkey, their overseas territories, and all territories of the Sterling Area.

These increased travel exchange facilities were made effective on January 1, 1954.

As from January 1, 1954, the 33 and 44 per cent taxes were eliminated, through absorption into a new customs tariff structure. Lists A and B were grouped together and named List 1, and List C was renamed List 2.

Countries with which Egypt has concluded payments agreements are Austria, Belgium-Luxembourg Economic Union, Bulgaria, Czechoslovakia, France, Eastern Germany, Federal Republic of Germany, Greece, Hungary, India, Italy, Japan, Lebanon, Netherlands, Poland, Rumania, Saudi Arabia, Spain, Switzerland, Turkey, U.S.S.R., and Yugoslavia. However, payments from Export Accounts to residents of Egypt in settlement of Egyptian exports to these countries also are allowed, provided permission of the Egyptian exchange control authorities is obtained in each case.

Effective January 1,1954, this was reduced to 20 per cent.

The currencies of Belgium, Denmark, Federal Republic of Germany, Netherlands, Norway, Sweden, Switzerland, and United Kingdom.

The currencies of Austria, Czechoslovakia, Egypt, Italy, Mexico, Portugal, and Yugoslavia.

Since the beginning of 1954, the discrepancy between the official rate and the “capital” account rate has narrowed further.

Algeria, Guadeloupe, Martinique, Guiana, and Reunion.

French West Africa, French Equatorial Africa, Trust Territories of Cameroon and Togo, Madagascar and its dependencies, Comoro Islands, St. Pierre and Miquelon, French Establishments in India, New Caledonia and dependencies, French Establishments in Oceania, and the Condominium of New Hebrides.

At present, this provision applies to balances on nonresident accounts related to the following countries or monetary areas: Belgium-Luxembourg, Czechoslovakia, Denmark, Egypt, Federal Republic of Germany, Italy, Mexico, Netherlands Monetary Area, Norway, Portuguese Monetary Area, Sterling Area, Sweden, Switzerland, and Yugoslavia.

These are mainly accounts related to countries with which France has payments agreements in French francs, namely, Argentina, Austria, Bolivia, Brazil, Bulgaria, Chile, Ecuador, Finland, Eastern Germany, Greece, Hungary, Iran, Israel, Lebanon, Paraguay, Poland, Spanish Monetary Area, Syria, Tangier, Turkey, U.S.S.R., and Uruguay.

In view of the many developments which took place in the German exchange system during the first few months of 1954, this survey takes account of certain changes through April 30,1954.

The term “Germany” is used in this survey as an abbreviation for the Federal Republic of Germany. Trade and exchange control regulations established by the authorities of the Federal Republic of Germany are, for the most part, applied also in the British, French, and U.S. Sectors of Berlin. The Federal Republic of Germany and the Western Sectors of Berlin are together referred to as the “Deutsche Mark Currency Area.”

The territories to which this applies are Argentina, Austria, Belgian Monetary Area, Brazil, Bulgaria, Chile, Colombia, Czechoslovakia, Denmark, Ecuador, Egypt, Finland, French Franc Area, Greece, Hungary, Iran, Italy, Japan, Netherlands Monetary Area (including Indonesia), Norway, Paraguay, Poland, Portuguese Monetary Area, Spanish Monetary Area, Sterling Area, Sweden, Switzerland, Trieste, Turkey, Uruguay, and Yugoslavia.

Austria, Belgium, Denmark, France, Greece, Iceland, Ireland, Italy, Luxembourg, Netherlands, Norway, Portugal, Sweden, Switzerland, Trieste, Turkey, and United Kingdom.

These include Australia, Burma, Ceylon, India, Indonesia, Pakistan, New Zealand, Southern Rhodesia, and Union of South Africa.

Effective May 1, 1954, wage transfers up to DM 36,000 per year are permitted to all countries.

Effective May 1, 1954, exchange without limitation is granted for business travel in payments agreement countries; and exchange up to DM 150 per day is granted for business travel in dollar countries (larger amounts are granted in special cases).

Effective May 1, 1954, the exchange allocation for tourist travel in all payments agreement countries was increased to DM 1,500 per year.

Effective May 1, 1954, the exchange granted to emigrants to all countries (including the dollar area) for their initial expenses was increased to DM 1,500 per person.

The following creditor countries had ratified the Agreement by February 1954: Belgium, Cambodia, Canada, Denmark, Egypt, France, Iran, Ireland, Liechtenstein, Norway, Pakistan, Sweden, Switzerland, Trieste (Anglo-American Zone), Union of South Africa, United Kingdom, and United States.

According to the Agreement, transfers of interest and amortization are treated as payments for current transactions and, where appropriate, included in any arrangements relating to trade and/or payments between the Federal Republic of Germany and any of the creditor countries, regardless of whether such agreements are of a bilateral or a multilateral nature.

The London Debt Agreement settled German external debts of the total amount of DM 14 billion, of which DM 7.2 billion are due to the dollar area. Average annual transfers on account of interest on these debts amount to DM 590 million in the period 1953-57, of which DM 237 million is payable to the dollar area, and DM 735 million in the period 1958-62, of which DM 370 million is payable to the dollar area. (The figures, on the basis of December 1953, are partly estimated.)

Effective April 24, 1954, a further 60 per cent was released for recommercialization.

Effective May 1, 1954, the amounts for which licenses may be granted by the Land authorities were increased to DM 200,000 for commercial subsidiaries and DM 100,000 for industrial enterprises.

As of May 1, 1954, the Greek Government reformed the currency at the ratio of 1 to 1,000, so that the exchange rate became new Drachmas 30 = US$1.

These countries are Brazil, Bulgaria, Czechoslovakia, Egypt, Finland, Eastern Germany, Hungary, Poland, Spain, Uruguay, U.S.S.R., and Yugoslavia.

Export licensing in Hong Kong, as in some other areas, is not related to exchange control.

Originating in Mainland China, Hong Kong, the Republic of Korea, and Macao, and received in U.S. dollars.

These facilities, which are cumulative for a period of three years, are also available for residents of the United Kingdom and the Colonies who have been staying in Hong Kong for not less than three years.

Effective January 1, 1954, Law No. 88 of December 24, 1953 abolished the Economic Board, and the powers of the Import and Exchange Division were transferred to a new institution, named the Import Office.

These are listed as Czechoslovakia, Finland, Eastern Germany, Hungary, Israel, Poland, Spain, and the U.S.S.R.

The Republic of Indonesia became a member of the Fund on April 15, 1954.

This survey represents the position as at January 1, 1954, when the abolition of a small premium on dollar imports and exports took effect.

Cost, insurance, freight, including commission.

By an emergency law effective March 2, 1954, a 66⅔ per cent tax was imposed on transfers of foreign exchange for most invisibles not directly related to the movement of goods or to private remittances of a personal nature.

Effective January 1, 1954, the granting of licenses for remittances to the debit of private nonresident capital accounts, viz., capital remittances and remittances of inheritances, was suspended.

The facility for travelers to bring in unlimited amounts of Iranian bank-notes is temporary, and has lately been extended until May 13, 1954.

These are listed as Austria, Belgium, Denmark, France, Federal Republic of Germany, Greece, Iceland, Ireland, Luxembourg, Netherlands, Norway, Portugal, Sweden, Switzerland, Trieste, Turkey, United Kingdom, and their overseas territories.

Effective January 26, 1954, this allocation was reduced to Lit 130,000.

Specified residents, such as shipping companies, airlines, tourist services, and insurance companies, also are authorized to keep Foreign Currency Deposit Accounts in U.S. dollars or pounds sterling.

These arrangements have been in force with Syria and Lebanon for some time, but are not yet fully applied to the remaining Arab League States.

Canadian and U.S. dollars are considered hard currencies; all others are considered soft.

Effective January 1, 1954, this period was changed to three months.

Effective February 1, 1954, the import of goods without a license on payment of a fine was allowed under an arrangement similar to that existing in 1952 (see Fourth Annual Report on Exchange Restrictions, p. 219). Such imports were, however, restricted to goods for which no foreign exchange had been made available by the Jordan control.

The $2.78 selling rate does not include the license fee (and incorporated Air Force Tax) amounting to 2 per cent for imports from soft currency countries and 6 per cent for imports from hard currency countries (see section on Imports and Import Payments, above).

Lebanon has payments agreements with Czechoslovakia, Egypt, the Federal Republic of Germany, and Italy.

Payments agreements are in force with Argentina, Brazil, Bulgaria, Czechoslovakia, Egypt, EPU countries, Finland, Eastern Germany, Hungary, Indonesia, Israel, Japan, Netherlands Antilles, Paraguay, Poland, Spain, Surinam, U.S.S.R., Uruguay, and Yugoslavia.

Norway was not included in the forward exchange arrangements until January 20,1954.

These are listed as follows: Austria, Belgium, Denmark, France, Federal Republic of Germany, Greece, Iceland, Ireland, Italy, Luxembourg, Norway, Portugal, Sweden, Switzerland, Trieste, Turkey, United Kingdom, and their overseas territories.

Effective January 8, 1954, this prohibition was abolished.

Effective January 1, 1954, the date of January 1, 1949 was changed to January 1, 1950. A license for the opening of a TN account, granted after December 31, 1953, entitles the account holder to transfer from the beginning of the quarter in which the license was granted.

Effective January 1, 1954, residents were free to sell their foreign securities abroad and use the proceeds to buy any securities officially quoted in the country of the currency in which their claim was expressed. The so-called DERA licenses, permitting similar arbitrage transactions for dollar securities only, were canceled.

These are listed as Dominican Republic, El Salvador, Guatemala, Honduras, Mexico, Panama, and Venezuela.

See footnote 7.

A 5 per cent tax is levied also on the invoice value of all imports other than listed pharmaceutical products. This tax is collected by the Office of the Collector General of Customs.

Effective January 20, 1954, Norway permitted authorized banks, as an extension of these arrangements, to conclude forward transactions for up to three months’ delivery.

These are listed as follows: Austria, Belgium, Denmark, France, Federal Republic of Germany, Greece, Italy, Luxembourg, Netherlands, Portugal Sweden, Switzerland, Trieste, Turkey, their overseas territories, and the Sterling Area.

The currencies of Aden, Afghanistan, Belgian Congo, Burma, Ceylon, East Africa, French Africa, French and Portuguese territories in India, India, Madagascar, Malaya, Mauritius, Nepal, Persian Gulf Sheikdoms, South Africa, and Tibet.

Effective March 4, 1954, this amount was increased to PRs 100.

Since the par value of the guaraní was changed from ₲ 6 to ₲ 15 per US$1, effective January 1, 1954, this survey gives the position as of that date. (See also note at the end of this survey.)

For this purpose, the following agreement account countries are specified: Argentina, Austria, Czechoslovakia, France, Germany, Hungary, Italy, Spain, Uruguay, and Yugoslavia.

A few exports are subject to export taxes of up to 38 per cent, and many exports receive exchange subsidies as a result of the negotiation in the “free” market of export proceeds in excess of the officially appraised value (aforo differential).

In January 1954, the period of validity was reduced to 5 days for all certificates except those in Argentine pesos, which remained valid for 60 days.

Norway was not included in the forward exchange arrangements until January 20, 1954.

In Sweden, these are listed as Austria, Belgium, Denmark, France, Federal Republic of Germany, Greece, Indonesia, Italy, Luxembourg, Netherlands, Norway, Portugal, Switzerland, Trieste, Turkey, their overseas territories, and the Sterling Area.

As from January 1, 1954, SKr 1,500.

The commodities affected represent some 80 per cent of all exports and are listed as follows: living animals, eggs, animal casings, vegetables, apricot paste, barley, wheat, maize, cottonseed, raw cotton, cotton textiles, licorice, silk textiles, raw wool, hemp, olive oil, fruit, tobacco, soap, leather and hides, and footwear.

These commodities include timber (except teak), antimony, castor oil, castor seeds, iron, kapok, lead, rubber, tin, wolfram, zinc, gold, platinum, precious stones, certain chemical fertilizers, livestock, wild animals, meat, eggs, lard, sugar, river fish, rice, cotton textiles, machine-made gunny bags, machinery, cement, cow and buffalo hides, and all imported goods.

This table, being expressed in terms of U.S. dollars, does not take account of rates for sterling, which is at a discount in the free market when compared at the sterling-U.S. dollar parity rate. In addition, the Bank of Thailand sells sterling exchange to commercial banks for specified approved imports at a rate of B 45 per £1.

Rate established for transactions during the second half of December 1953.

The terms of this law of August 9, 1951 were liberalized by a further enactment published on January 18, 1954. The description given here takes account of the new law.

In view of the important change in the import-exchange arrangements, which became effective January 1, 1954, this survey describes the position as of that date.

Official rates are quoted for the following currencies: Belgian francs, Danish kroner, deutsche marks, French francs, Netherlands guilders, Netherlands Antilles guilders, and Surinam guilders, Norwegian kroner, Portuguese escudos, Swedish kronor, Swiss francs, and U.S. dollars.

Norway was not included in the forward exchange arrangements until January 20, 1954.

Export licensing in the United Kingdom, as in some other countries, is not related to exchange control.

Countries (monetary areas) covered by these Monetary Agreements are as follows: Belgian Monetary Area, Denmark (with the Faroe Islands and Greenland), French Franc Area, Federal Republic of Germany (and the British, French, and U.S. Sectors of Berlin), Netherlands Monetary Area, Norway, Portuguese Monetary Area, Sweden, and Switzerland (and Liechtenstein).

Effective March 22, 1954, the United Kingdom’s sterling account arrangements were simplified. All the accounts considered as in groups 2, 3, and 4, with the exception of those of Hungary, Iran, and Turkey, were brought together under the one general heading of Transferable Accounts; balances on these accounts may be transferred freely from one account to another without regard, so far as the exchange control regulations of the United Kingdom are concerned, to the country of residence of the account holder or to the purpose of the transfer. In connection with the reopening of the London gold market, which took place at the same time, there was created for residents of countries not in Group I an additional type of account—the Registered Account—through which entries related to the purchase and sale of gold in that market could be passed. In addition, Registered Accounts are freely convertible into Canadian or U.S. dollars. They may be credited with the proceeds of the sale of Canadian or U.S. dollars to an authorized bank in the United Kingdom and are available for transfer to any sterling account (except an Iranian account), including payments to residents in settlement of U.K. exports to any destination.

See also Group 5.

Effective February 4, 1954, the basic exchange allowance was also made available for use in Japan.

Export licensing in the United Kingdom, as in some other countries, is not related to exchange control.

These specified currencies are listed as follows: Belgian francs, Canadian dollars, Congolese francs, deutsche marks, francs of the French Franc Area, French Somali Coast (Djibouti) francs, Indo-Chinese piastres, Luxembourg francs, Netherlands, Surinam, and Netherlands Antilles guilders, Panamanian dollars, Philippine pesos, Pondicherry rupees, Portuguese escudos, Swiss francs, and U.S. dollars. (Danish and Faroese kroner, Norwegian kroner, and Swedish kronor were added to this list on March 22, 1954.)

Effective February 9, 1954, these items were moved to the Ur$2.20 rate.

Effective January 22, 1954, the proceeds of these exports were negotiated at a rate of Ur$1.97.

Although this survey represents the situation in Yugoslavia as at December 31, 1953, certain changes introduced from January 1, 1954 are given in the note at the end of the survey.

These are average rates during December 1953; after the changes introduced in the exchange system on January 1, 1954 (see note at the end of this survey), the average rates for these exchanges during January 1954 were Din 760 per US$1, Din 213 per DM 1, and Din 189 per clearing Sw fr 1.

    Other Resources Citing This Publication