Chapter

Countries Operating Under Article XIV

Author(s):
International Monetary Fund. External Relations Dept.
Published Date:
September 1958
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Afghanistan

Exchange Rate System

There is no agreed par value for the Afghani. There are two official exchange rates: a first category fate of Afg 20.00 buying, Afg 20.25 selling, per US$1, and a second category rate of Afg 28.00 buying, Afg 28.35 selling, per US$1. No transactions take place at the second category selling rate and the other official rates apply to specified transactions only. Allocations at the first category rate for certain consumer goods imported by the Government Monopolies Department are made at an effective rate of Afg 22.25 (the first category rate plus an exchange tax of Afg 2) and all allocations at the second category rate are made at an effective rate of Afg 32.35 (the second category rate plus an exchange tax of Afg 2 and a levy of Afg 2 used for export promotion). In addition, there are other effective rates arising from the obligations to surrender all proceeds from exports of karakul, cotton, and wool in mixed proportions at the specified official rates and to surrender part of the proceeds from six other exports in different proportions at specified official rates. There is a fluctuating free market for all other transactions. (See Table of Exchange Rates, below.)

Administration of Control

Foreign exchange is controlled by Da Afghanistan Bank, the central bank of Afghanistan. The control is facilitated by the existence of certain companies specializing in the export of such commodities as karakul and cotton.

Prescription of Currency

Transactions with countries with which Afghanistan has special trade and payments agreements1 must be effected in the foreign currencies specified in the agreements. Export proceeds from karakul, cotton, and wool must be surrendered in agreement currencies or in convertible or transferable currencies. There are no other prescription of currency requirements.

Imports and Import Payments

There are no quantitative restrictions on imports, but import licenses are required for imports from countries with which trade and payments agreements are in force. Exchange is provided for imports for government development projects at the first category rate, for essential industrial imports at the second category rate, and for certain other essential imports at the first or the second category rate. Most import payments at the first and second category rates are subject to an exchange tax of Afg 2; in addition, a surcharge of Afg 2 is levied on imports at the second category rate. Other imports have to be financed in the free market.

Payments for Invisibles

Government payments for invisibles and payments to foreigners on government contracts in Afghanistan are made at the first category rate. Foreigners employed in Afghanistan may, after having sold 30 per cent of their salaries in foreign exchange for afghanis at the first category rate, have the remainder transferred abroad. A few invisibles may be remitted at the first or the second category rate (see Table of Exchange Rates, below). AH other authorized payments are settled at the prevailing free market rate. Travelers leaving Afghanistan may not take out more than Afg 500 in domestic banknotes.

Exports and Export Proceeds

Exports to countries with which trade and payments agreements are in force require export licenses. All exchange proceeds from exports of karakul, cotton, and wool have to be surrendered to Da Afghanistan Bank in acceptable currencies and in certain proportions at the specified official exchange rates (see Table of Exchange Rates, below). Partial surrender requirements at official rates apply to six other exported commodities. All exchange proceeds from other exports may be sold in the free market.

Proceeds from Invisibles

Foreigners employed in Afghanistan and paid in foreign exchange must surrender at least 30 per cent of their earnings to Da Afghanistan Bank at the first category rate in order to obtain local currency for their local expenses. The remainder, and exchange receipts from other transactions in invisibles, may be sold in the free market. The first category rate, however, covers purchases of exchange from diplomatic establishments. Travelers entering Afghanistan may bring in banknotes not exceeding Afg 500.

Capital

Foreign capital permitted to be invested in Afghanistan, either jointly with Afghan capital or otherwise, must be conducive to the prosperity and economic and technical advancement of the country even if it does not receive special privileges. Under the Foreign Investment Law of April 24, 1954, the remittance of profits and the repatriation of registered capital in respect of all approved foreign investment in industry, mining, public works, agriculture, and transportation are guaranteed. If such capital is entered and registered at the second category rate, remittances may be made at that rate (effective rate, Afg 32.35); if capital is registered as entering through the free market, the transfer guarantee is in terms of the free market rate.

Table of Exchange Rates (as at December 31, 1957)(afghanis per U.S. dollar)
BuyingSelling
20.00(First Category Rate)20.25(First Category Rate)
30% of salaries of foreign employees. Exchange bought by Da Afghanistan Bank from diplomatic establishments.Budgetary expenditures of the Government. Purchases of monetary gold. Government expenditures for development projects and freight and insurance thereon. Certain students’ expenses abroad.
21.57(80% at First Category Rate and 20% at Second Category Rate)
Exports of karakul.22.25(First Category Rate plus Afg 2 Exchange Tax)
26.40(20% at First Category Rate and 80% at Second Category Rate)Imports of consumer goods by the Government Monopolies Department (sugar, gasoline, lubricants) and freight and insurance thereon.
Exports of cotton and wool.
28.00(Second Category Rate)

Registered capital.
28.35(Second Category Rate)
32.35(Second Category Rate plus Afg 2 Exchange Tax and Afg 2 Surcharge)
Essential imports (including freight and insurance): industrial equipment, automobiles and parts; cotton piece goods for cooperative depots; imports by municipalities; other essential goods (tea, cement, medicines) to counter domestic price increases. Business travel by industrial importers; medical expenses; other students’ expenses abroad; some pilgrims’ travel. Capital registered at Afg 28.00 and profits thereon.
42.40(40% at Second Category Rate and 60% at Free Market Rate)
Exports of sesame seeds.
45.60(20% at First Category Rate and 80% at Free Market Rate)
Exports of sheepskins and goatskins.
48.40(15% at Second Category Rate and 85% at Free Market Rate)
Exports of carpets and flaxseed.
48.80(10% at First Category Rate and 90% at Free Market Rate)
Exports of casings.
52.00 (approx.) (Fluctuating Free Market Rate)52.00 (approx.) (Fluctuating Free Market Rate)
All other receipts.All other authorized payments.

Changes during 1957

July 28. A payments agreement was concluded with Mainland China.

September 24. Requirements to surrender various percentages at the official rates were introduced for exchange proceeds of exports of sesame seeds, sheepskins, goatskins, carpets, flaxseed, and casings (see Table of Exchange Rates, above).

Argentina

Exchange Rate System

The par value is Argentine Pesos 18 = US$1. This rate applies to payments for essential imports, most government payments, and the proceeds of exports of many products. Other invisibles, capital, payments for other specified imports, and the proceeds of all other exports are negotiated at fluctuating free market rates. Surcharges are payable on the exchange proceeds of certain exports and on payments for certain imports. (See Table of Exchange Rates, below.)

Administration of Control

Exchange controls are administered by the Central Bank of Argentina. Exchange may be bought and sold only at institutions (including banks, firms, and agencies) authorized expressly for this purpose by the Central Bank. Purchases and sales of gold, foreign banknotes, or currency may be made without restriction in the free exchange market. All transactions in the official exchange market are controlled by the Central Bank.

Prescription of Currency

Under the bilateral agreements and multilateral arrangements concluded by Argentina with various countries, prescription of the currency for export receipts and import payments, according to the country of destination or origin of the goods, is as follows: (1) for transactions with Bolivia, Brazil, Chile, Czechoslovakia, Ecuador, Finland, Hungary, Paraguay, Poland, Rumania, the U.S.S.R., Uruguay, and Yugoslavia, in agreement dollars related to the respective country; (2) for transactions with Bulgaria and Israel, in free dollars for exports and in agreement dollars for imports; (3) for transactions with Japan, in transferable sterling, although in some cases under the Argentine-Japanese agreement, payments in dollars may be authorized; (4) for transactions with Austria, Belgium-Luxembourg, Denmark, France, the Federal Republic of Germany, Italy, the Netherlands, Norway, Sweden, Switzerland, and the United Kingdom, and their associated monetary areas—under multilateral trade and payments arrangements—in the currency of any of these countries. Transactions with other countries are settled in U.S. dollars.

Imports and Import Payments

Most imports considered essential are included in a list of commodities that may be paid for through the official market. These items require exchange licenses, which are granted either under the automatic licensing system or under the quota system. (In fact, no import licenses were granted under the quota system that was in effect for certain commodities in 1957.) For imports under the automatic licensing system, exchange licenses are granted at any time on application, to any firm registered as an importer, regardless of whether the firm was previously an importer or a consumer. However, imports of certain products are restricted according to the country of origin of the import (applicable principally to imports from the dollar area). The prices declared by importers for most articles imported under the automatic licensing system are subject to checking, mainly in order to adjust licenses to the prices effective in international markets. For other articles, price control is replaced by a system of announced official prices (aforos); the difference between the actual purchase price and the aforo established for the commodity at the official market rate is paid through the free market.

Imports of other merchandise are paid for through the free market, in which any firm may deal without limitation and without prior permission from the Central Bank. However, certain products may not be imported from certain countries—principally in the dollar area. Others may be imported only by the users and for specified purposes, and in this case without quantitative limitation. For certain parts and replacements for automobiles, replacements for industrial and other machinery, and certain other products imported through the free market, a surcharge of M$N 20 or M$N 40 per US$1 is applicable, and other surcharges are payable according to the legal weight of the article. These surcharges are also levied on imports of merchandise paid for without purchasing exchange. Certain types of machinery may be imported for the exclusive use of the importing firm at the free market rate plus a surcharge of M$N 20 or M$N 40 per US$1, according to the type. Such machinery may also be imported as a foreign investment or provided it is paid for with funds abroad available to the user. These machinery imports have to be approved by the Central Bank.

Imports of machine tools, welding machinery, and machinery for general use, whose f.o.b. unit value does not exceed US$15,000 (US$30,000 in the case of machinery for the production, transformation, and distribution of electric power), may be paid for in cash or by deferred payments, provided the import originates in one of the following countries or areas: (1) Austria, the Belgian-Luxembourg Economic Union, Bolivia, Brazil, the French Franc Area, the Federal Republic of Germany, Italy, the Netherlands, Norway, Paraguay, the Sterling Area, Sweden, Switzerland, Uruguay; (2) Chile, Czechoslovakia, Denmark, Finland, Hungary, Israel, Poland, Rumania, the U.S.S.R., Yugoslavia; (3) Japan. Other industrial machinery authorized for import, and the machinery referred to above when its f.o.b. value is higher than US$15,000 (or US$30,000), may be imported on deferred payment terms provided the financing period is at least four years and the machinery originates in one of the countries or areas listed above. For imports from other countries, the minimum financing period is eight years. In both cases, not more than 20 per cent may be made as a first payment.

In order to initiate clearance of goods, importers must prove that they have deposited with a bank in Argentina 20 per cent of the f.o.b. value for imports through the official market and 100 per cent for imports through the free market.1 These deposits are returned in not less than 120 days from the date they were made.

Payments for Invisibles

Payments for commercial invisibles are made solely through the free market, without restriction. Payments for other invisibles are also made through this market, with the exception of certain small payments (to holders of scholarships, for medical expenses, and for purchases of books by individuals), which are authorized through the official market after the necessary license has been obtained.

Gold in coins or bars, as well as Argentine and foreign banknotes, may be taken out freely.

Exports and Export Proceeds

The foreign exchange proceeds of exports of merchandise that must be negotiated through the official market must be received either by payment from abroad before shipment of the goods, or against irrevocable documentary credits payable against delivery in Argentina of the shipping documents. The exporter must present the shipping documents to the authorized institution for liquidation of the credit and cash sale of the foreign exchange within five working days after export. The foreign exchange must be negotiated in the official market on the basis of the announced official value (aforo) or the value fixed or accepted by official organizations. Any balance obtained in excess of this price is negotiated in the free market.

Upon liquidation in the official market of the foreign exchange proceeds from exports of certain goods, the authorized institutions withhold a percentage of the total amount in pesos ranging from 5 per cent to 25 per cent, according to the product (see Table of Exchange Rates, below).

The foreign exchange proceeds from exports of products not expressly indicated in a list published on October 28, 1955 and in extensions of that list are negotiated in the free market.

Proceeds from Invisibles

Exchange receipts from invisibles may be sold in the free market. There are no restrictions on the import of gold in coins or bars or on the import of Argentine or foreign banknotes.

Capital

Exchange derived from incoming capital may be sold in the free market. Capital transfers abroad, including investments by residents and nonresident-owned funds released from control, may be made through the free market without a license. New incoming capital and income thereon may be repatriated freely through the free market.

Foreign capital invested in Argentina before October 28, 1955 and income thereon accrued through June 29, 1955 remain subject to control by the Central Bank. Income on such capital earned after June 29, 1955 may be disposed of freely and may be transferred abroad through the free market.

Foreign capital entering Argentina after October 28, 1955 and income on such capital may be used freely for making investments or for any other type of operation or may be transferred abroad through the free market. Certain machinery for industry may be imported as foreign investment on special terms (see section on Imports and Import Payments, above).

Table of Exchange Rates (as at December 30, 1957)(pesos per U.S. dollar)
BuyingSelling
13.50(Official Rate less 25% Surcharge)
Exports of mineral oils, timber, etc.
15.30(Official Rate less 15% Surcharge)
Exports of breeding animals, etc.
16.20(Official Rate less 10% Surcharge)
Exports of certain fibers, seeds, linseed, yerba maté, etc.
17.10(Official Rate less 5% Surcharge)
Exports of unwashed wool and unprocessed sheepskins.2
18.00(Official Rate)18.00(Official Rate)
Exports of tanned hides, tobacco, yarns, meat, washed and combed wool, wheat and wheat flour, etc.Listed essential imports. Most government payments.
36.85(Free Market Rate)

All other exports. Invisibles. Capital.
36.90(Free Market Rate)

Other specified imports. Income from foreign investments accruing after June 29, 1955. Other invisibles. Capital.
56.90(Free Market Rate plus M$N 20 Surcharge)
Imports of motor bicycles and spares for industrial and other machinery.
76.90(Free Market Rate plus M$N 40 Surcharge)
Imports of parts and replacements for motorcars, certain tractor spares, and specified sports goods.

Changes during 1957

During the year, many changes were made affecting the exchange rates for individual import and export items. These changes may be summarized as follows: (1) Many articles and products, some of them previously imported under the quota system, were made subject to the automatic licensing system. (2) Many articles and products were authorized for import without quantitative limitation through the free market (for most of these, exchange licenses had previously- been granted through the official market in restrictive form, since they were subject to the quota system). (3) Certain machinery for industry and several other products were authorized for import through the free market without surcharge or with a surcharge of M$N 20 or M$N 40 per US$1. (4) The proceeds of many export items previously negotiable in the official market were authorized for sale in the free market. (5) The withholding percentages (surcharges) applied to the exchange proceeds of some exports were eliminated for a number of commodities. (6) Aforo values for various exports were established or renewed.

January 10. A par value of M$N 18 per US$1 was agreed with the International Monetary Fund.

February 19. The Central Bank announced that, continuing its policy of liberalization of the assets still subject to control, it would authorize the gradual transfer to free accounts of profits from foreign investments in Argentina earned prior to June 30, 1955.

April 12. Commodities paid through the free market and shipped after April 18, 1957 could be cleared through customs only if the importers made the following advance deposits in pesos: 100 per cent of the import value for chassis for trucks weighing 6 tons or more, 50 per cent for spare parts for automobiles, and 20 per cent for all other goods, except electric generating sets and other industrial machinery. The deposits had to be maintained with banks for at least 90 days and could be released only after customs clearance of the goods. Banks were not permitted to finance these deposits.

April 17. Exchange licenses granted automatically for certain products (e.g., unworked tinplate, nickel sheets, and various chemical products) at the official rate of exchange would be valid only for imports from Austria, Belgium-Luxembourg, Bolivia, Brazil, Chile, Czechoslovakia, Denmark, Finland, the French Franc Area, Hungary, Israel, Italy, Japan, the Netherlands, Norway, Paraguay, Poland, Rumania, the Sterling Area, Sweden, Switzerland, the U.S.S.R., Uruguay, and Yugoslavia.

May 6. A guarantee deposit of not less than 50 per cent of the peso equivalent of the contract was required to conclude forward sales contracts in the free market.

May 20. Exemption from the requirement of a deposit of not less than 50 per cent (see May 6, above) was granted for (1) sales connected with import payments, provided that a documentary credit was opened, (2) sales of agreement dollars under the agreements with Bolivia, Brazil, Paraguay, and Uruguay, (3) sales originating in swaps, and (4) sales to banks abroad.

May 24. Certain industrial machinery, machine tools, and welding equipment were authorized for import through the free market, some without surcharge and others with a surcharge of M$N 20 or M$N 40 per US$1. Concerning the method of payment, machine tools and welding equipment could be paid for in cash, provided that its f.o.b. value did not exceed US$15,000 per unit and that it originated in (1) Austria, the Belgian-Luxembourg Economic Union, Bolivia, Brazil, the French Franc Area, Italy, the Netherlands, Norway, Paraguay, the Sterling Area, Sweden, Switzerland, Uruguay; (2) Chile, Czechoslovakia, Denmark, Finland, Hungary, Israel, Poland, Rumania, the U.S.S.R., Yugoslavia; (3) Japan. Other industrial machinery or machinery referred to above with a value of more than US$15,000 could be imported only if financed on a deferred payments basis, with certification by an appropriate official agency that there was minimum financing of four years for machinery originating in the countries listed above and of eight years for machinery originating in other countries. A first payment of not more than 20 per cent of the f.o.b. value was allowed, the remainder to be paid in equal annual installments, the first of which would not fall due until at least one year after the downpayment. The surcharges established for certain machinery would be paid in -cash when the payment abroad was in cash, and on a time basis when the machinery was imported with foreign financing. The authorized machinery could also be imported, whatever its origin, when it entered as a foreign investment or when the user had funds abroad. Machinery subject to surcharge and machine tools with an f.o.b. unit value of up to US$15,000 and not financed on a time basis were made subject to a prior price check.

June 14. Exemption from the requirement of a guarantee deposit of not less than 50 per cent (see May 6 and May 20, above) was granted for forward sales of exchange to import firms and between local authorized institutions.

June 25. Banks were no longer allowed to grant credit for financing guarantee deposits for the conclusion in the free market of forward sales contracts. The exemptions for payments for imports with the opening of documentary credits and for import firms were canceled (see May 6, May 20, and June 14, above). These exemptions were replaced by exemption for import firms for import payments under documentary credits.

June 26. Chile was included in the group of neighboring countries benefiting from certain privileges in free market operations.

July 22. The rules established on May 24 (see above) concerning the method of payment for imports of industrial machinery were extended to cover imports of other machinery considered as capital goods (imports of which had been authorized by a previous regulation).

August 21. Imports of chassis for trucks and small buses were suspended for 90 days.

August 28. A resolution of the Ministry of Finance limited the free import of goods into Argentina south of the 42° parallel. The exemption of these goods from import duties and from exchange regulations applicable to certain articles, principally consumer goods, was suspended.

October 2. Exchange regulations governing border trade between Salta (northern Argentina) and Antofagasta, Chile, were announced.

October 4. Special consideration was to be given applications for exemption from surcharge for imports of spare parts for electric generating sets not produced in Argentina and with a c. & f. value of US$5,000 or more.

October 14. The Central Bank announced regulations governing forward exchange contracts for exports in multilateral currencies. The Bank would establish daily rates for contracts covering 30, 60, 90, and 120 days, with interest at 1½ per cent per annum.

October 18. It was announced that there would be no objection to the financing by deferred payments for any period of imports of machinery for which cash payment had been authorized in earlier circulars, provided the country of origin was in one of three listed groups of countries and areas (see May 24, above).

October 25. The Federal Republic of Germany was included among the countries imports from which are paid for under the multilateral arrangements, so that imports of machinery from Germany would now be given the treatment established on May 24 (see above) for those countries. The surcharge of 1 per cent on exports payable in Argentine-German agreement dollars was abolished.

November 4. Regulations covering payments between Argentina and Czechoslovakia under an agreement of October 18, 1957 were published: Payments were to be made in agreement dollars. A surcharge of 5 per cent payable on Argentine exports against Czechoslovak agreement dollars would be eliminated as from November 5.

November 4. The regulations on payments with Hungary and Poland under recent agreements with those countries were published.

November 6. Imports of newsprint were made subject to the automatic licensing system through the official market for 75 per cent of their value, and for the remaining 25 per cent authorizations were to be granted for clearance through the free market.

November 14. Imports from Israel were to be treated like imports from those European countries with which Argentina has bilateral agreements, so that imports of machinery from Israel were made subject to the system established on May 24 (see above).

November 14. The suspension of imports of chassis for trucks and small buses (see August 21, above) was extended until further notice.

November 25. The agreements constituting the “Paris Club” arrangements were signed with Austria, Belgium-Luxembourg, Denmark, France, the Federal Republic of Germany,3 Italy, the Netherlands, Norway, Sweden, Switzerland, and the United Kingdom. This multilateral payments system had been in force, provisionally, since July 1956.

November 29. The Central Bank announced that forward arbitrage transactions would be allowed in currencies of the “Paris Club” members (see November 25, above) for maximum periods of 180 days (90 days for French francs).

December 6. Regulations governing imports of aircraft were issued. Aircraft with an f.o.b. value of over US$20,000 could be imported from any country of origin as a foreign investment, or on deferred payment terms, or by using funds that a member of the user firm had available abroad before May 25, 1957.

December 17. It was announced that, effective January 2, 1958, importers, in order to clear goods, would be required to make advance deposits with a bank in Argentina of 20 per cent of the f.o.b. value for goods imported through the official market and 100 per cent for goods imported through the free market. Exemption was granted for imports of fuels and newsprint, and of industrial machinery and equipment imported under the regulations of May 24 and July 22 (see above). These deposits would not be returned in less than 120 days from the date they were made.

Australia

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 sterling: £A 125 buying, £A 125/10/- selling, per UK£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 the Department of Customs and Excise, which are in consultation 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 Customs and Excise 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 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 (1) in sterling to dollar countries through an American or Canadian Account, and to all other countries, except Egypt, through a Transferable Account; (2) in Australian currency through the account of a bank in the country of origin of the goods with a bank in Australia; (3) in dollars to a dollar country; or (4) in certain cases, in the local currency of the exporting country. For exports to countries outside the Sterling Area, sterling or Australian currency through appropriate accounts (as for imports) must be obtained; alternatively, dollars may be accepted from dollar countries and any specified currency that is freely offered and freely transferable to Australia may be accepted from non-dollar countries.

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 allowed freely, on application, between the accounts of residents of the same 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, and this would, in terms of the United Kingdom’s payments arrangements, ensure the payee’s ability to acquire his own currency if desired. When, however, amounts have been left indefinitely in Australia on nonresident account, they might be regarded as capital if transfer should be sought.

Imports and Import Payments

Apart from certain exemptions, the most important being petroleum products, imports of all goods require import licenses, which are issued by the Department of Customs and Excise in collaboration with the Department of Trade. Imports of certain basic materials are licensed on a nondiscriminatory basis. For other imports from the dollar area, licenses are issued on an administrative basis and are confined mainly to items regarded as essential, especially raw materials, industrial supplies, and capital equipment. Licenses for imports from all other countries are granted either freely or on a replacement basis for a number of commodities, but for other items licenses are issued mainly under percentage quotas based primarily on imports in the fiscal years 1950-51 and 1954-55 or the calendar year 1954. For some goods, e.g., machinery and capital equipment, for which quota control is inappropriate, the issuance of licenses for imports from non-dollar countries is subject to administrative decision. Licenses for non-dollar goods may be used for imports from any non-dollar source. All licenses are valid for 12 months.

For 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 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. However, limits are placed on the amount of earnings that may be withdrawn by visiting entertainers from the dollar area, while dollar expenditure for such items as advertising, insurance of local risks, and newspaper representation abroad is subject to administrative decision. 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 foreign exchange for travel (see section on Changes during 1957, July 29, below), and movements of emigrants’ funds; the treatment of applications for such transfers 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) require licenses issued by the Department of Customs and Excise. 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

Proceeds from invisibles received in U.S. dollars, as well as U.S. or Canadian dollars in banknote or check form, must be offered for sale within specified periods. Other holdings and proceeds from invisibles in other 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. Transfers of resident capital to countries outside the Sterling Area are not allowed other than in exceptional cases. Approval is normally granted for the repatriation of funds owned by residents of the Sterling Area; however, no advance commitments are given in such cases. Applications for repatriation of other nonresident-owned capital are examined on an individual basis and sympathetic consideration is given to cases where there is a demonstrable need for the repatriation or where the original purpose of the investment has been achieved or is no longer capable of achievement.

There are no restrictions on the receipt of capital funds from abroad, except that residents must obtain prior exchange control approval before incurring a liability to a nonresident.

Foreign securities owned by Australian residents (other than rights to receive payment in the United States or in U.S. dollars) need not be surrendered, but they must be reported. This obligation does not cover securities whose principal and interest are payable in a currency of the Sterling Area or securities expressed in Canadian dollars and registered in Australia, provided the securities are held within the Sterling Area. The export of securities and transactions in foreign securities are subject to specific exchange control approval.

Changes during 1957

During the year, a large number of upward adjustments were made to the quotas (based on 1950-51 imports) of those “traditional” importers who had lost ground relative to other quota holders as a result of variations made in quotas in the intervening years.

January 1. Import restrictions were relaxed. The most significant changes related to textiles: import quotas were increased by 60 per cent for textiles for manufacturing purposes and by 20 per cent for other textiles. Changes in a number of Category A (essential imports) quotas were also made. In addition, substantial increases, some on a nonrecurring basis, were made administratively in the licensing of nonquota goods, such as capital equipment, machinery, and agricultural implements.

February 13. Additional import licenses for up to 100 per cent of the quarterly quotas for Category A (essential imports) and 33⅓ per cent of the quarterly quotas for Category B (less essential imports) were granted for about 100 items.

April 1. All Category B (less essential imports) quotas were increased by 66⅔ per cent. The system of subcategories within Category B, introduced in July 1956, was abolished and importers were permitted to use their Category B quotas to import any commodity within the category. Category A (essential imports) quotas for consumer goods were increased in practically all cases by 20 per cent. The licensing period was lengthened from three months to four months, providing greater flexibility for importers, who could now take out licenses covering four months’ requirements at any one time.

July 6. A new trade agreement with Japan was concluded, which provided, inter alia, for licenses for imports from Japan to be issued on the same basis as those for imports from other non-dollar countries.

July 29. The allowance of foreign currency for Australian tourists was raised from UK£1,000 to UK£1,300 in any period of 12 months, available in any Sterling Area country. Of this allowance, UK£250 could be spent on private travel in the dollar area, in place of the former “in transit” allowance of approximately UK£70. Further, within the annual allowance of UK£1,300, the amount available for travel on the European continent and in other countries outside the Sterling Area and the dollar area was raised from UK£300 to UK£600. The daily rate of UK£15 for business travel to countries outside the dollar area remained unchanged, but the limits of UK£1,350 for the Sterling Area and UK£900 for other non-dollar countries were raised to UK£1,500.

The limit on remittances for family maintenance to countries outside the dollar area was modified to permit a maximum of UK£80 per month per remittor up to three months in advance. (Previously, remittances of UK£200 per quarter had been permitted within the Sterling Area by any one applicant, and monthly remittances of UK£25 per recipient had been permitted to countries outside the dollar area and the Sterling Area, up to a maximum for any one family of UK£75 per month.)

August 1. Restrictions on imports from both dollar and non-dollar sources were further relaxed. Most bulk petroleum products were exempted from licensing. The licensing of a number of commodities, including some from the dollar area, was placed on a sales replacement basis, under which importers obtain licenses equivalent to sales in the previous period after taking account of stocks. Sixteen commodities were added to the list of goods which could be imported from any country, including the dollar area countries.

September 10. Sales replacement licensing (see August 1, above) was changed to import replacement licensing, under which licenses are issued freely to importers provided the value outstanding on their existing licenses does not exceed twice the value of their imports of the particular commodity in the preceding licensing period. Arrangements were also made for new importers to obtain licenses for replacement goods.

December 1. Several items were added to the list of goods which could be imported from any country.

Austria

Exchange Rate System

The par value is Austrian Schillings 26.00 = US$1. The official rates are S 25.95 buying, S 26.05 selling, per US$1. Basically, exchange transactions are effected at uniform rates based on the par value.

Austria participates with Belgium-Luxembourg, Denmark, France, the Federal Republic of Germany, Italy, 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 six months’ delivery (three months’ delivery for transactions in French francs), with other authorized banks in any of these territories in any of their currencies. 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. Austria participates with Belgium-Luxembourg, Denmark, France, the Federal Republic of Germany, Italy, the Netherlands, Norway, Sweden, Switzerland, and the United Kingdom in multilateral arrangements with Argentina; Austrian schillings in the accounts of banks in Argentina are exchangeable into the currency of any country participating in these arrangements, except Argentine pesos and deutsche mark. Austria also participates with Belgium-Luxembourg, France, the Federal Republic of Germany, Italy, the Netherlands, and the United Kingdom in multilateral arrangements with Brazil; settlements with Brazil may be made in the currency of any country participating in these arrangements, except cruzeiros and schillings.

Official rates are fixed daily by the Austrian National Bank for exchange transactions in U.S. dollars, Canadian dollars, free Swiss francs, and, for travel purposes only, Czechoslovak korunas, as well as for all banknotes quoted by the Austrian National Bank. Special arrangements for exchange transactions in Egyptian pounds and Spanish account dollars give rise to other rates.

Administration of Control

In accordance with the Foreign Trade Law, export or import licenses for goods listed therein, if required, must be procured from the competent ministry, viz., the Federal Ministry of Trade and Reconstruction (Licensing Office), the Federal Ministry of Agriculture and Forestry, or the Federal Ministry of the Interior. The Austrian National Bank, which administers the import control, issues the exchange licenses, which are required for all imports against payment except those liberalized vis-à-vis OEEC countries.

Prescription of Currency

Settlements with countries in the dollar area are made in U.S. dollars, Canadian dollars, or through free schilling accounts of nonresidents. Settlements with countries participating in the Western European multilateral arbitrage arrangement are made in the currency of any country in the group. These currencies may also be used for settlements with Argentina, Uruguay, Paraguay, and Finland, insofar as such payments are permitted under the regulations of these countries. Settlements with Uruguay are made mainly in sterling, and those with Paraguay in freely convertible currencies or through schilling agreement accounts; for the time being, payments to Finland cannot be made in French francs. Settlements with countries with which Austria has bilateral payments arrangements are made as follows: with Bulgaria, Czechoslovakia, East Germany, Greece, Hungary, Poland, Portugal, Rumania, Spain, Turkey, the U.S.S.R., and Yugoslavia, through clearing accounts expressed in U.S. dollars; with Egypt, in Egyptian pounds; with Iceland, through a clearing account expressed in sterling.

Nonresident Accounts

The four main categories of nonresident accounts in Austrian schillings are described in the following paragraphs.

1. Free schilling accounts originate from the sale of gold, gold coins, and freely convertible exchange by a nonresident to the Austrian National Bank or to an Austrian authorized bank. With a few exceptions, disposal of these accounts is permitted freely, including transfers from one free schilling account to another and the conversion of balances on such accounts into foreign currency.

2. Authorized banks in Belgium-Luxembourg, Denmark, France, the Federal Republic of Germany, Italy, the Netherlands, Norway, Sweden, Switzerland, the United Kingdom, Finland, Paraguay, and Argentina maintain schilling accounts with Austrian authorized banks. All payments permissible within the multilateral payments arrangements with these countries may be settled through such accounts. In addition, these accounts are freely transferable among the countries mentioned above that participate in the Western European multilateral foreign exchange arbitrage arrangement and—insofar as such payments are permitted under their regulations—between those countries and Argentina.

3. Blocked accounts accrue from various categories of payments that have been made in favor of nonresidents and are not allowed to be transferred abroad. Balances on these accounts may not be used in Austria except as permitted under general or individual license. However, if these accounts are held with authorized banks, they may be debited freely for payments in Austria on behalf of the account holder for the following purposes: (a) donations (e.g., to relatives for personal aid, or to social, religious, or similar institutions) or maintenance payments to residents eligible for such payments, up to S 1,500 per beneficiary per month, total withdrawals not to exceed S 6,000 per month; (b) 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); (c) payments of taxes and other public fees and charges and legal counsel and notary fees owed by the account holder in Austria; (d) settlement of the travel expenses in Austria of the account holder and his family and accompanying servants, up to S 5,000 per person per week; (e) payments for the maintenance of graves; and (f) payments for real estate and related rights, and for securities (for shares, only under certain conditions). Blocked accounts may also be debited freely for specified investments in Austria; the permission of the Austrian National Bank is required for any other investment. The transfer of balances held by OEEC residents as at June 30, 1954 on blocked accounts with authorized banks is, upon application, authorized freely to any OEEC country.

4. Administration accounts accrue from proceeds derived from nonresident-owned real property and deposited with an Austrian credit institution. Balances on these accounts may be used freely for certain payments to residents, e.g., for the personal expenses of nonresidents in Austria and public charges not related to merchandise transactions.

Imports and Import Payments

Most imports from OEEC countries, including their associated territories, and a wide range of imports from Canada and the United States may be imported freely. Liberalized goods that have their origin in and are consigned from OEEC countries may be imported without an import or an exchange license. In order to make payments related to such imports, importers may utilize freely their retained export and other proceeds in EPU currencies held with Austrian foreign exchange dealers or they may purchase EPU currencies freely from the authorized banks. For all other imports, including liberalized goods from the United States and Canada, exchange licenses and also—for goods listed in the Foreign Trade Law—import licenses are required.

Compensation (barter) transactions are, in general, 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 Federal Ministry of Trade and Reconstruction.

Payments for Invisibles

Payments to EPU countries for nearly all transactions in invisibles and most payments to Canada and the United States are liberalized. With the exception of those liberalized in respect of EPU countries, payments for invisibles require licenses from the Austrian National Bank, but these are granted automatically for payments for invisibles liberalized in respect of Canada and the United States. For other payments, licenses are generally granted after taking into account the terms of existing bilateral agreements and such other considerations as the principle of reciprocity, hardship cases, and the availability of foreign exchange. For payments connected with the international transport of goods, export commissions, installations, and services, licenses are granted freely.

Residents traveling as tourists to OEEC countries may receive yearly allocations of exchange up to the equivalent of S 7,150. Persons going abroad may take with them S 10,000 in Austrian currency and any amount in foreign currency.

Exports and Export Proceeds

Licenses for exports that are regulated under the Foreign Trade Law have to be procured from the competent ministry, viz., the Federal Ministry of Trade and Reconstruction (Licensing Office); the Federal Ministry of Agriculture and Forestry, or the Ministry of the Interior; goods exported by way of compensation (barter) are subject to licensing by the Federal Ministry of Trade and Reconstruction. In the issuance of export licenses, due consideration is given to the provisions of any relevant bilateral trade agreements and the fulfillment of quotas established in accordance with such agreements, and to the needs of the Austrian economy.

In principle, exports effected and export claims must be declared and the export proceeds surrendered. If the exporter has obtained permission to maintain a foreign exchange account with an Austrian authorized bank, he may keep the export proceeds for six months; the use of these amounts is, however, subject to the same conditions as those applying to other outgoing payments. The following items are exempt from the general obligation to declare export claims and surrender export proceeds: (1) Claims and proceeds settled through EPU (if kept in accounts with Austrian authorized banks); such exchange may be used freely for conversion into other EPU currencies or for payment of the holder’s debts to creditors in the EPU area (with the exception of capital payments and payments in the transit and processing trades). (2) Claims and proceeds arising from exports to Egypt and collected through a “collector account” established in accordance with the Austrian-Egyptian payments agreement of July 6, 1953, as well as those resulting from exports to Spain and collected in Spanish account dollars; such exchange may be sold at free rates through authorized banks to Austrian residents holding valid exchange licenses for payments to Egypt or Spain, respectively.

Proceeds from Invisibles

In general, exchange receipts from invisibles have to be surrendered within eight days from the date of collection, with the exception of EPU currencies held with Austrian banks and other credit institutions and proceeds credited to an account under the agreement with Egypt or Spain (see section on Exports and Export Proceeds, above). A number of institutions, such as insurance companies and patent offices, are granted open licenses to use their exchange proceeds for payments on their own account.

Persons entering Austrian territory as tourists are free to bring in Austrian or foreign currency without limit.

Capital

The utilization of foreign capital by residents and new investments in Austria by nonresidents require licenses from the National Bank; these licenses are granted after careful scrutiny of each case, the interests of the national economy as a whole being taken into consideration. Foreign exchange brought in for investment purposes must, in principle, be surrendered. Requests for the transfer of capital and capital proceeds arising from new investments are granted under the terms originally laid down when the investment was authorized. Proceeds from sales by nonresidents of securities, enterprises, and real estate and related rights, as well as other payments not permitted to be transferred abroad, are usually credited to blocked accounts (see section on Nonresident Accounts, above). The transfer of capital abroad by residents is subject to approval, which is granted only in exceptional cases. Transfers to OEEC countries of exchange representing dowries and remigrants’ funds are limited to the equivalent of US$10,000. The transfer of inheritances is permitted to OEEC countries and Canada up to a countervalue of $10,000 a year and to the United States without limitation.

An open license has been granted for such transactions as (1) the export of securities for the purpose of realizing rights and claims thereunder abroad, (2) the export of nonresident-owned securities, and (3) the export of resident-owned foreign securities for sale abroad (the proceeds must be declared). Nonresidents may acquire fixed-interest-bearing securities only against payment in freely convertible currencies or to the debit of blocked schilling accounts. The proceeds of sales of securities by nonresidents must, in general, be deposited in a blocked account; they are, however, transferable to EPU countries within the framework of the liberalization of payments in the OEEC area, as well as to Canada and the United States if the securities matured after January 1, 1957.

Changes during 1957

January 2. Banks in Austria and Austrian schillings were included in the multilateral foreign exchange arbitrage arrangement in operation among most Western European countries. Also, settlements between Austria and Argentina could be made not only in sterling but also through schilling agreement accounts and in the currencies of the other countries participating in the Western European multilateral foreign exchange arbitrage arrangement—insofar as such payments are permitted under the regulations of these countries.

February 13. Ten per cent of Yugoslavia’s receipts from exports to Austria could be used multilaterally.

February 19. Payments between Finland and Austria were permitted to be effected through schilling accounts and in the currencies of other EPU countries participating in the Western European multilateral arbitrage arrangement, as far as such payments are permitted under the regulations of these countries.

April 1. The amount of exchange allocated per year to residents traveling as tourists to OEEC countries was increased from S 5,200 to S 7,150 per adult.

September 2. Payments to Canada and the United States for many categories of invisibles were liberalized for obligations due as from January 1, 1957. Licenses for such payments would be granted automatically by the Austrian National Bank.

November 27. The amount of Yugoslavia’s receipts from exports to Austria that could be used multilaterally was increased from 10 per cent to 20 per cent.

December 18. Payments between Austria and Paraguay could be effected in freely convertible currencies, through schilling agreement accounts, and in the currencies of other countries participating in the Western European multilateral exchange arbitrage arrangement, insofar as such payments are permitted under the regulations of these countries.

Belgium-Luxembourg

Exchange Rate System

The par values are Belgian Francs and Luxembourg Francs 50 = US$1. There are two exchange markets—official and free. Current transactions are settled through the official market and financial (i.e., capital and certain current) transactions are settled through the free market, although for a few current transactions there is a choice between the two exchange markets.

In the official exchange market, only authorized banks may carry out exchange transactions permitted in that market, at rates maintained within official limits corresponding to BF 49.50 and BF 50.50 per US$1. The currencies in the official market are Austrian schillings, Canadian dollars, Czechoslovak korunas, Danish kroner, deutsche mark, French francs, Italian lire, Netherlands guilders, Norwegian kroner, Portuguese escudos, pounds sterling, Swedish kronor, Swiss francs, and U.S. dollars. Belgium and Luxembourg participate with Austria, Denmark, France, the Federal Republic of Germany, Italy, 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 six months’ delivery (three months’ delivery for transactions in French francs or with French banks), with other authorized banks in any of these territories in any of their currencies. The spot exchange rates fluctuate between the official limits agreed by the exchange authorities of the countries concerned, while the forward rates are left to the interplay of market forces. Authorized banks in Belgium-Luxembourg may also deal in EPU currencies against Belgian and Luxembourg francs with residents of any country in the transferable area (see section on Prescription of Currency, below).

Belgium and Luxembourg participate with Austria, Denmark, France, the Federal Republic of Germany, Italy, the Netherlands, Norway, Sweden, Switzerland, and the United Kingdom in multilateral arrangements with Argentina; and with Austria, France, the Federal Republic of Germany, Italy, the Netherlands, and the United Kingdom in multilateral arrangements with Brazil. Under both these schemes, the accounts of banks in Argentina and Brazil are exchangeable into the currencies of the other countries participating in the same scheme.

In the free exchange market, all currencies may be negotiated at freely fluctuating rates by authorized banks and other residents and, for a few current and all capital transactions, by nonresidents. In practice, however, only the major currencies are negotiated in the free market. Exchange derived from certain transactions of a noncommercial nature may be sold in the free market, but non-dollar currencies purchased in the free market may be used only for a few current and all capital transactions. Exchange transactions in connection with the free gold market are also carried out in the free exchange market. Rates in the free market correspond to rates in free exchange markets in other countries.

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 Belgian-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 Belgian-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, but in special cases authorized banks must submit requests for authorization to the central authority.

Prescription of Currency

Prescription of the currency to be used for incoming and outgoing current payments is an integral part of the restrictive system of Belgium-Luxembourg. It seeks to limit payments in hard currencies to imports and services originating in countries with convertible currencies and to prevent any undue accumulation of inconvertible currencies; and it ensures that commercial payments are channeled through the official market or, if in Belgian or Luxembourg francs, through the correct type of nonresident account (see section on Nonresident Accounts, below).

All inward and outward transactions are classified in four groups, which may be summarized as follows: List A covers merchandise, transport expenses, other commercial expenses including insurance, and industrial expenses (e.g., costs of processing); List B covers administrative expenses, salaries, pensions, fees, subscriptions, collateral for current trade transactions, and public administration payments; List C covers traveling expenses, income on securities, loans, etc., rents, and exploitation rights; List D covers gifts, life insurance payments, family maintenance, capital investments, the liquidation of investments, dealings in gold, emigrants’ funds, inheritances, the forward covering of merchandise, collateral for noncommercial or capital transactions, and all transactions not in any of the other three lists.

Summary of Permissible Methods of Settlement for Foreign Payments1
Transaction ListCountry GroupForeign CurrencyExchange MarketNonresident Account in Francs
Outward Payments
A and BConvertibleAnyOfficial or freeAny
TransferableEPUOfficialTransferable
Bilateral22Bilateral of country concerned
CTransferableEPUOfficialTransferable
C and DConvertible, transferable, and bilateralAnyFreeFinancial or (for bilateral group) Bilateral
Inward Payments
A and BConvertibleDollarsOfficialConvertible
TransferableDollars or EPUOfficialConvertible or Transferable
BilateralDollars2Official2Convertible, or Bilateral of country concerned
CConvertibleDollars or EPUOfficial or freeConvertible or Financial
OtherFree
TransferableDollars or EPUOfficial or freeConvertible, Transferable, or Financial
OtherFree
BilateralDollars or EPUOfficial or freeConvertible, Bilateral of country concerned, or Financial
OtherFree
DConvertible, transferable, or bilateralDollarsOfficial or freeConvertible or Financial3
EPU or otherFree

Foreign countries are divided into three groups: (1) the convertible area—listed as Bolivia, Canada, Colombia, Costa Rica, Cuba, the Dominican Republic, Ecuador, El Salvador, Guatemala, Haiti, Honduras, Japan, Mexico, Nicaragua, Paraguay, Peru, the Philippine Republic, the United States and possessions, and Venezuela; (2) the bilateral countries—Bulgaria,4 Czechoslovakia, Egypt, Hungary, Poland, Rumania, Spain, Turkey, the U.S.S.R., Uruguay, and Yugoslavia; (3) the transferable area—all other countries, including EPU countries (except Turkey) and their associated monetary areas.

The permissible methods of settlement for foreign payments are summarized in the accompanying table. There is a choice between the official and the free market for dollars received from transactions in List C or D or paid for transactions in List A or B, and for EPU currencies received or paid for transactions in List C; such payments in Belgian or Luxembourg francs may also be made or received through a Financial Account as well as through one of the other types of nonresident account.

Nonresident Accounts

Belgian or Luxembourg franc accounts of nonresidents are classified in four types. The use of these accounts, in addition to their use for the settlement of transactions with residents as indicated in the last column of the table above, is outlined below.

1. Transferable Accounts. These accounts are not denominated by country and may be opened for all persons, including banks, resident in countries not classified as dollar or bilateral countries (see section on Prescription of Currency, above). They may be credited with proceeds from the sale by a nonresident of dollars or EPU currencies in the official market. Balances on Transferable Accounts may be converted into EPU currencies in the official market, and may be transferred freely to other Transferable Accounts.

2. Convertible Accounts. These accounts are not denominated by the country of residence of the account holder, and may be opened in the name of any nonresident. They may be credited with proceeds from the sale in the official market by a nonresident of U.S. and Canadian dollars to authorized banks in Belgium-Luxembourg. Balances on Convertible Accounts may be transferred freely to any nonresident account or be converted into any currency in the official or the free market.

3. Bilateral Accounts. These are the accounts of authorized banks in bilateral countries (see section on Prescription of Currency, above). They may be credited with proceeds from the sale by a nonresident of dollars in the official market. Balances on Bilateral Accounts may be transferred to other Bilateral Accounts of the same nationality. Belgian or Luxembourg francs in Bilateral Accounts related to Czechoslovakia may be exchanged against Czechoslovak korunas in the official market.

4. Financial Accounts. These accounts are not denominated by the country of residence of the account holder, and may be opened for any nonresident. They are primarily for capital transfers and traveling expenses, although other specified settlements, such as those related to dealings in gold, may be made through them. Balances on Financial Accounts may be transferred only to other Financial Accounts. Financial Accounts may be credited with proceeds from the sale by a nonresident of gold or any currency in the free market and of dollars in the official market. They are exchangeable into gold or any currency at free market rates.

Imports and Import Payments

Imports of certain goods from any country outside the Belgian Monetary Area require import licenses; lists of these goods are published and made effective by Belgian and Luxembourg ministerial orders. Imports of all goods from Albania, Bulgaria, Mainland China, Czechoslovakia, Egypt, East Germany, Hungary, North Korea, Poland, Rumania, Spain, Turkey, the U.S.S.R., North Viet-Nam, and Yugoslavia are subject to license. For goods not requiring a license, only a simple form completed by the importer giving notification of the import is required. No further documentation is required for imports not exceeding BF 10,000 in value. The authorized bank is required to make certain that payment is made by one of the methods laid down in the regulations (see section on Prescription of Currency, above). Where the requirements are not fulfilled, the authorized bank submits a request to the central exchange control authority for special permission.

Payments for Invisibles

For payments for transactions in invisibles, if they are to be made through the official exchange market or by crediting Belgian or Luxembourg francs to a nonresident account other than a Financial Account, supporting documents must be presented to an authorized bank and, in some cases, the approval of the central exchange control authority is required. Payments for certain invisibles may be made only through the free market or by crediting Belgian or Luxembourg francs to a Financial Account. For certain transactions there is a choice of exchange market and of type of nonresident account through which the payment may be made (see section on Prescription of Currency, above).

Exports and Export Proceeds

Some exports require an export license issued by the trade control authorities; lists of these goods are published and made effective by Belgian and Luxembourg ministerial orders. All exports to Albania, Bulgaria, Mainland China, Czechoslovakia, Egypt, East Germany, Hungary, North Korea, Poland, Rumania, Spain, Turkey, the U.S.S.R., North Viet-Nam, and Yugoslavia are subject to license. For goods not requiring a license, only a simple form completed by the exporter giving notification of the export is required. No documentation is required for exports not exceeding BF 10,000 in value. The authorized bank is required to make sure that export proceeds are received in accordance with the regulations (see section on Prescription of Currency, above). Export proceeds in Canadian dollars, U.S. dollars, or EPU currencies must, within eight days of receipt, be surrendered to an authorized bank, or deposited in a “commercial” account with an authorized bank if they are to be used later for current payments authorized to be made in these currencies.

Proceeds from Invisibles

Exchange proceeds from invisibles connected with certain commercial transactions (Lists A and B—see section on Prescription of Currency, above) received in Canadian dollars, U.S. dollars, or EPU currencies must be surrendered, i.e., sold in the official exchange market. Alternatively, they may be held in a “commercial” account with an authorized bank if they are to be used later for current payments authorized to be made in these currencies. Dollar receipts from other transactions (Lists C and D) may be retained or sold in the official or the free market. Receipts in EPU currencies derived from transactions in List C may also be retained or sold in either market, but receipts in EPU currencies derived from transactions in List D may be retained or sold only in the free market. All other exchange proceeds may be retained or sold in the free market.

Capital

All capital transactions may be carried out freely through the free market or by settlement in Belgian or Luxembourg francs through the Financial Account of a nonresident. In addition, incoming capital may be received in U.S. or Canadian dollars through the official market or in Belgian or Luxembourg francs to the debit of a Convertible Account. There are arrangements by which the exchange control authorities may guarantee the repatriation of approved foreign investments that are made in Belgium-Luxembourg in accordance with the general regulations governing incoming payments (see section on Prescription of Currency, above). All transactions in securities by residents or nonresidents are free, but financial settlements must conform to the general regulations.

Banknotes

Transactions in banknotes may be carried out freely by all residents and nonresidents at freely fluctuating rates. Banknotes may be imported and exported without restriction, but they may not be used to settle foreign transactions other than tourism, banknote arbitrage, and the purchase and sale of gold. Domestic banknotes and proceeds from the sale in the free market of foreign banknotes sent to authorized banks by foreign travelers in Belgium-Luxembourg or by persons residing abroad may be credited freely to the Financial Accounts of nonresidents.

Changes during 1957

January 2. Banks in Austria and Austrian schillings were included in the multilateral arbitrage arrangement in operation among most Western European countries.

April 1. The number of groups into which foreign countries are divided in the exchange control regulations was reduced from four to three and the number of types of nonresident account was reduced from five to four by combining the previous categories of EPU and No Agreement into a single category—Transferable—to which the arrangements previously applicable to settlements with EPU countries would apply. Transferable Accounts could be opened in the name of anyone resident in the transferable area and not only in the name of a bank, as previously. At the same time, Chile and Finland were transferred from the bilateral group to the transferable area and Bolivia and Paraguay from the No Agreement group to the convertible area.

May 20. By an arrangement with the Yugoslav authorities, 10 per cent of receipts by Yugoslavia of Belgian and Luxembourg francs derived from current transactions became available for payments in the transferable area or could be converted into EPU currencies.

July 6. The limit on the cashing of travelers checks drawn in EPU currencies or in Belgian or Luxembourg francs on a Transferable Account was raised from BF 10,000 to BF 20,000 per traveler per day.

August 1. Authority was delegated to the authorized banks in respect of several types of transactions that had previously required the individual approval of the Institut Belgo-Luxembourgeois du Change.

August 1. Payments in Belgian or Luxembourg francs for financial and some current transactions, previously only possible by debiting a Convertible or a Financial Account, could now be made also by debiting a Transferable Account if the amount did not exceed BF 20,000.

August 1. Proceeds from exports to Bulgaria, Hungary, Poland, Rumania, Spain, and Yugoslavia, previously acceptable only from a Bilateral Account of the country concerned, could now also be received in EPU currencies or in Belgian or Luxembourg francs to the debit of a Transferable Account.

October 1. Controls over payments for imports and exports were further simplified: Import and export declarations were abolished except for trade with other parts of the Belgian Monetary Area. For goods not subject to import or export licensing, only a simple form giving notification of the import or export was required. The prior stamping of import and export documents by an authorized bank was no longer required and settlements not exceeding BF 10,000 for imports or exports could be made without presenting any documentation. The number of commodities subject to import or export licensing was reduced, but licenses were required for all imports from and exports to Albania, Bulgaria, Mainland China, Czechoslovakia, Egypt, East Germany, Hungary, North Korea, Poland, Rumania, Spain, Turkey, the U.S.S.R., North Viet-Nam, and Yugoslavia. Licenses were no longer required for imports from and exports to Argentina and Uruguay.

October 18. Export proceeds in EPU currencies and receipts in EPU currencies from other commercial transactions had now to be sold in the official market or transferred to a “commercial” account within eight days of receipt. Outgoing capital payments in EPU currencies could no longer be made through the official market. All transfers between the official market and the free market were prohibited, except that dollars obtained in the free market could still be sold in the official market. Transfers of Belgian or Luxembourg francs between different types of nonresident account were also prohibited, except that Convertible Accounts could still be transferred to all other accounts. Transactions involving banknotes could only be dealt with in the free market or passed through Financial Accounts. Payments by residents in EPU currencies through the official market or in Belgian or Luxembourg francs to the credit of Transferable Accounts were made subject to the following exchange control requirements: if not over BF 20,000, a statement of the nature of the transaction; if over BF 20,000 but not over BF 500,000, a formal request for authorization for the information of the Institut Belgo-Luxembourgeois du Change; but for payments over BF 500,000, the Institut had to be supplied with supporting documents and its approval obtained.

November 18. The necessity of providing supporting evidence to sell EPU currencies in the official market or to debit Transferable Accounts was terminated.

November 18. Lists B and C (classifications of transactions for purposes of exchange control) were regrouped into new Lists B, C, and D. Unspecified transactions were transferred from List B to List D; and gifts, family maintenance, capital investments including liquidations, life insurance payments, dealings in gold, forward covering of merchandise, payments under guarantees related to loans, etc., were transferred from List C to List D.

November 18. The procedure set forth on October 18, for payments by residents in EPU currencies through the official market or in Belgian or Luxembourg francs to the credit of Transferable Accounts, was modified and the following exchange control requirements were established: for all payments, a statement of the nature of the transaction; for payments exceeding BF 10,000, adequate supporting documents handed to the intervening bank; in the absence of such documents and for certain special transactions, specific approval by the Institut Belgo-Luxembourgeois du Change. This procedure was extended to cover also payments made in convertible currencies through the official market and in Belgian or Luxembourg francs to the credit of Convertible Accounts.

December 30. It was announced that, effective January 1, 1958, Bulgaria would cease to be treated as a bilateral country and would be included in the transferable area.

Bolivia

Exchange Rate System

The par value of Bolivianos 190 = US$1, established on May 14, 1953, is not applied to any transactions under the present exchange system. All exchange transactions take place at a single rate, which is permitted to fluctuate, the Central Bank setting daily the rate at which foreign exchange may be bought or sold. On December 31, 1957, the rate was Bs 8,500 per US$1; it averaged about Bs 8,160 per US$1 during 1957.

Administration of Control

The control system is administered by the Central Bank of Bolivia. As agent of the Ministry of Finance, the Bank executes and controls an annual exchange budget for imports to be made by the Government and its agencies. The exchange budget is established in a decree issued by the Government.

Prescription of Currency

Payments for transactions with other countries are usually made in U.S. dollars or other convertible currencies. Payments for exports and imports under trade and payments agreements continue to be subject to the provisions of these agreements, while they remain in force.1

Imports and Import Payments

Imports by the Government and its agencies are governed by an exchange budget and are paid for with exchange purchased from the Central Bank at the rate of the day. Private imports are free of import and exchange licensing, and exchange to pay for such imports may be obtained freely at the rate of the day.

Payments for Invisibles

Payments for invisibles may be made freely at the rate of the day.

Exports and Export Proceeds

Exports are not subject to license. The Bolivian Mining Corporation is responsible for exports of the minerals produced in its own mines. Exports of minerals produced by private mines are effected, for the most part, through the Mining Bank. The Bolivian Government Petroleum Corporation is responsible for exports of petroleum.

All exchange receipts from exports by the Government and its official agencies are surrendered to the Central Bank at the rate of the day, except that the Mining Corporation retains 40 per cent of its exchange receipts for its own use. Proceeds from other exports may be sold to commercial banks or to authorized exchange houses at the rate of the day, or they may be retained by the exporter. Taxes (regalias) on exports are payable in convertible currency.

Proceeds from Invisibles

Exchange derived from invisibles may be sold at the rate of the day.

Capital

Inward and outward capital transfers by residents or nonresidents are free. The corresponding exchange transactions may be settled freely at the rate of the day.

Changes during 1957

No significant changes took place during 1957.

Brazil

Exchange Rate System

The par value is Brazilian Cruzeiros 18.50 = US$1. The official rates are Cr$18.36 buying, Cr$18.82 selling, per US$1. However, the effective rates for most private import transactions are obtained by adding to the Cr$18.82 rate the prices of the related exchange certificates obtained at auction. These prices and, consequently, the effective rates fluctuate. The effective rates for the proceeds of exports are obtained by adding fixed and other bonuses to the Cr$18.36 rate. There are four categories of export commodities, and for each category two different bonuses are established: (1) one bonus for proceeds in sterling, deutsche mark, Netherlands guilders, Belgian francs, Italian lire, and French francs, (these currencies are referred to in this survey as the “multilateral currencies”), convertible currencies, and Argentine clearing dollars; (2) the other bonus for proceeds in all other currencies. Moreover, for exports of coffee there is a special, additional bonus that varies with the price of coffee, and for exports of textiles there is a special, additional bonus of Cr$36 per US$1. All transactions in invisibles not directly related to the movement of goods and most capital transactions take place 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 the Superintendency of Money and Credit (SUMOC). 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 departments and public entities are requested to present to the Exchange Department semiannual estimates of their needs for imports and service payments; with these estimates as a basis, the Council of the SUMOC fixes the maximum quota to be utilized by them. The Foreign Trade Department of the Bank of Brazil issues export and import licenses, determines the percentage of total exchange auctioned to be distributed to each category of import commodity, and exercises control over prices, weights, measures, classifications, and types in export and import operations subject to license. The Customs Policy Council presides over changes in the categories of import commodities, subject to the approval of the Ministry of Finance. All sales and purchases of exchange pass through banks authorized for this purpose. Export proceeds must be sold by the banks to the Bank of Brazil, which provides the exchange needed for imports.

Prescription of Currency

Prescription of currency is enforced in relation to the currency of the country of origin of imports and to the currency of the country of final destination of exports, unless otherwise specifically prescribed or authorized. Settlements with Austria, Belgium-Luxembourg, France, the Federal Republic of Germany, Italy, the Netherlands, and the United Kingdom may be made in the currency of any of these countries, except the Austrian schilling,1 in accordance with the multilateral arrangements with these countries. Settlements with payments agreement countries are made through the relevant agreement accounts, usually maintained in clearing dollars.2 Settlements with countries with which Brazil has no payments agreements or arrangements are usually made in U.S. dollars or other freely convertible currencies.

Imports and Import Payments

Only imports of goods in the Special Category (see 5, below) and a few other specified imports require import licenses. Licenses for Special Category imports are granted freely to holders of exchange certificates purchased at auction, provided the application complies with the regulations in force; they are prerequisites for obtaining exchange at the official rate. Privileged imports, most of which require import licenses, are authorized within global quotas established in an exchange budget. Imports and import payments may be divided into the groups described in the following paragraphs.

1. Specified commodities for which payment, if necessary, is not effected through the auction system: In this group are specified government imports, imports of wheat, imports of maps, books, newspapers and magazines, and imports of equipment, components, and spare parts for oil research and production of crude oil, for the printing industry, and for investment considered essential to economic development or national security. These imports are subject to a surcharge of Cr$32.50 per US$1 or the equivalent in other currencies, with the exception of government imports not considered essential to economic development or national security, which are subject to a surcharge not lower than the weighted average of actual bids in the related category. Imports of newsprint, which are effected at the official rate plus surcharges which are increased every 6 months, are also included in this group.3 Exchange for all these imports is allocated in the exchange budget approved by the Council of the SUMOC.

2. Imports of petroleum products: In addition to being subject to import license, these imports must be authorized by the National Petroleum Council. Exchange is allocated directly by the Council of the SUMOC on a half-yearly basis. The surcharge for these imports is Cr$35 per US$1 or the equivalents in other currencies.

3. Imports of parts of motor vehicles to be assembled in Brazil according to plans approved by the Government until December 31, 1957: These imports are subject to fixed surcharges equal to the weighted average of actual bids received in exchange auctions during the 6 months before August 14, 1957, according to the different categories.in which they were classified under the arrangements prevailing before that date. The surcharges are calculated separately for different currencies and are added to the official rate.

4. Imports of production goods financed abroad: These may be authorized if the SUMOC is satisfied that they are in the national interest and that they are paid for with genuine foreign financing with amortization of not less than 5 years. If the importer is a Brazilian resident, these imports may be authorized if the annual payment installments do not exceed 20 per cent of the total value financed. Exchange for imports of these goods may be granted by the Exchange Department of the Bank of Brazil at the official rate, provided the importer pays the surcharge, which is equal to the average bid in the General Category (see 5, below). However, the commitment on the part of the Exchange Department to provide exchange depends on exchange availability, and the amounts corresponding to the obligations assumed must be earmarked.

5. All other imports: These are subject to the purchase of exchange certificates at auction. For the purpose of allocating exchange in accordance with essentiality, these imports are classified in two categories, according to the following criteria:

General Category: raw materials, equipment, and other production goods, as well as goods for general consumption whose supply in the domestic market is not satisfactory

Special Category: other goods

The price of the exchange certificates purchased at auction must be paid within 5 working days beginning with the second working day following that of purchase. Application for an import license (for goods in the Special Category) and for a certificate of exchange cover (for goods in the General Category) must be filed with the proper Department within 30 days following the purchase of exchange certificates, and the goods must be shipped within the period of validity of the import license or the certificate of exchange cover. As a rule, importers may not purchase more than US$50,000 worth of exchange certificates at any single auction. The “multilateral currencies” (see section on Exchange Rate System, above) are acquired by bidding for certificates denominated in ACL dollars (dollars of the area of limited convertibility). Successful bidders for ACL dollars may obtain any of the “multilateral currencies.” Minimum premiums for inconvertible currencies, other than “multilateral currencies,” are established each week on the basis of actual bids for U.S. dollars and ACL dollars during the previous week. The lowest and highest premiums for the U.S. dollar (120 days’ delivery) and for the ACL dollar, actually obtained at the auctions held in Rio de Janeiro on December 30 and 31, 1957, were as follows (in cruzeiros per U.S. dollar):

U.S. DollarsACL Dollars
(December 31, 1957)(December 30, 1957)
General CategoryCr$ 75.00-76.60Cr$ 70.40-73.20
Special Category228.00-228.00191.00-191.00

Special auctions are held weekly for separately listed goods used in agriculture (fertilizers, insecticides, etc.) and for imports of fruits from Argentina and Uruguay.

Payments for Invisibles

Payments for expenses incidental to trade are made at the same effective rates and subject to the same conditions as the corresponding imports or exports; but exchange is not provided for the insurance of goods in Brazil or where import licenses have been issued on a c. & f. basis. All other transactions in invisibles are effected through the free market. Travelers may take out freely domestic and foreign currency notes.

Exports and Export Proceeds

All exports are subject to export license, with the exception of coffee exports, which are subject to authorization by the Brazilian Coffee Institute. Export licenses are granted without limitation except when (1) the export is contrary to national security or to obligations arising from international agreements, (2) payment is to be made in an inconvertible currency the acceptance of which is considered by the Exchange Department of the Bank of Brazil to be inconvenient, or (3) an accumulation of stocks to guarantee domestic supplies is advisable. All exports are subject to shipping permits issued by the Exchange Department.

Export proceeds must be surrendered to an authorized bank, which in turn must sell the proceeds to the Bank of Brazil. Exports are classified in four categories, each of which receives one of two bonuses, according to the currency in which the proceeds are received, as follows (the bonuses are expressed in cruzeiros per U.S. dollar):

  • Category I (coffee): Cr$18.70 for proceeds in convertible currencies, Argentine clearing dollars, and “multilateral currencies” and Cr$17.19 for proceeds in other currencies

  • Category II (raw cotton, cocoa beans, cocoa cake, cocoa paste, all types of crude leather): Cr$24.70 for proceeds in convertible currencies, Argentine clearing dollars, and “multilateral currencies” and Cr$22.95 for proceeds in other currencies

  • Category III (cotton linters and spinning scraps; bananas and other table fruits, Brazil nuts, peanuts, carnauba wax, and other unprocessed and processed agricultural products; raw wool and raw skins of any type; cedar and other unfinished wood and sawn pine wood; iron ore, manganese ore, piezoelectric quartz, and raw quartz): Cr$36.64 for proceeds in convertible currencies, Argentine clearing dollars, and “multilateral currencies” and Cr$34.41 for proceeds in other currencies

  • Category IV (all other exports): Cr$48.64 for proceeds in convertible currencies, Argentine clearing dollars, and “multilateral currencies” and Cr$45.92 for proceeds in other currencies

An additional, variable bonus is paid on coffee exports when the export value of a 60-kilogram bag of coffee is higher than US$42. The bonus is equal to a percentage of the cruzeiro proceeds of the foreign exchange surrendered to the Bank of Brazil, the percentage being equal to the difference between the sale price in U.S. dollars of the 60-kilogram bag and the base price of US$42. (The bonus is effective until June 30, 1958.) Another additional bonus of Cr$36.00 per US$1 or the equivalent in other currencies is paid to exporters of textiles.

Proceeds from Invisibles

Exchange proceeds from most invisibles are sold through the free market. Travelers may bring in freely domestic and foreign currency notes.

Capital

Investments. The inflow and outflow of foreign investments are effected at the free market rate. Imports by foreign investors of groups of equipment, or, exceptionally, of equipment intended to complete or improve the capacity of existing groups, may be authorized provided there is sufficient proof that no payment will be transferred abroad.

Financing. In the case of loans, credits, and other financing of unquestionable interest to the national economy and, of those loans, credits and financing related to investments in the petroleum industry and the printing industry and to investments considered necessary to the economic development and security of the country, obtained abroad and registered by the Council of the SUMOC, repayments of principal and transfers of interest not exceeding 8 per cent per annum may be made at the official rate plus a surcharge which is presently Cr$32.50 per US$1 or the equivalent in other currencies. This privilege is granted provided the original capital has been applied abroad in the acquisition of equipment licensed expressly for that purpose, or applied abroad for the payment of contractual services approved by the Council of the SUMOC. The Foreign Trade Department may issue licenses to Brazilian companies to import groups of equipment financed abroad under certain conditions (see section on Imports and Import Payments, above).

Table of Exchange Rates (as at December 31, 1957)(cruzeiros per U.S. dollar)
BuyingSelling
18.36(Official Rate)18.82(Official Rate)

Imports of newsprint.4
18.50(Parity Rate)

Government and other official receipts.
35.55(Cr$18.36 plus Cr$17.19 Bonus)5

Category I exports against inconvertible currencies, other than “multilateral currencies” and Argentine clearing dollars.
37.06(Cr$18.36 plus Cr$18.70 Bonus)5

Category I exports against convertible currencies, “multilateral currencies,” and Argentine clearing dollars.
41.31(Cr$18.36 plus Cr$22.95 Bonus)

Category II exports against inconvertible currencies, other than “multilateral currencies” and Argentine clearing dollars.
43.06(Cr$18.36 plus Cr$24.70 Bonus)

Category II exports against convertible currencies, “multilateral currencies,” and Argentine clearing dollars.
51.32(Cr$18.82 plus Cr$32.50 Surcharge)

Government payments. Preferential imports, including specified government imports, wheat imports, imports for the petroleum industry and the printing industry, etc. Amortization and interest on registered loans, credits, and financing.
51.32(Cr$18.82 plus Cr$32.50 Auction Premium)

Imports of fertilizers.
52.32(Cr$18.82 plus Cr$33.50 Auction Premium)
52.77(Cr$18.36 plus Cr$34.41 Bonus)

Category III exports against inconvertible currencies, other than “multilateral currencies” and Argentine clearing dollars.
Imports of insecticides.
53.82(Cr$18.82 plus Cr$35.00 Surcharge)
Imports of most petroleum products.
55.00(Cr$18.36 plus Cr$36.64 Bonus)

Category III exports against convertible currencies, “multilateral currencies,” and Argentine clearing dollars.
64.28(Cr$18.36 plus Cr$45.92 Bonus)

Category IV exports against inconvertible currencies, other than “multilateral currencies” and Argentine clearing dollars.
67.00(Cr$18.36 plus Cr$48.64 Bonus)

Category IV exports against convertible currencies, “multilateral currencies,” and Argentine clearing dollars.
89.50(Fluctuating Free Market Rate)

All incoming capital. Most invisibles, including travel exchange. Other items not dealt with in the official market.
91.50(Fluctuating Free Market Rate)

All capital transactions, and income thereon, not effected at preferential rates. All nontrade invisibles.
93.82-95.42(Cr$18.82 plus Cr$75.00-76.60 Auction Premium)
100.28(Cr$18.36 plus Cr$45.92 Bonus and Cr$36.00 Special Bonus)General Category imports.
Exports of textiles against inconvertible currencies, other than “multilateral currencies” and Argentine clearing dollars.
103.00(Cr$18.36 plus Cr$48.64 Bonus and Cr$36.00 Special Bonus)
Exports of textiles against convertible currencies, “multilateral currencies,” and Argentine clearing dollars.246.82(Cr$18.82 plus Cr$228.00 Auction Premium)

Special Category imports.
Note: The auction premiums on which the selling rates are based are the lowest and highest bids for the U.S. dollar (120 days’ delivery) in Rio de Janeiro on December 31, 1957, with the exception of the premiums for imports of fertilizers and insecticides, which are based on the auctions held on December 20, 1957.

Changes during 1957

January 1. The premium on exchange to pay for imports of petroleum was fixed at Cr$35 per US$1.

January 11. Import categories for motor vehicles were established, to be in force until June 30, 1957. Exchange certificates for imports of completely knocked down vehicles were to be acquired at normal auctions, in the following categories: third category—jeeps for rural purposes (excluding many parts that are manufactured in Brazil), vehicles for special purposes that cannot be assembled on or adapted to a conventional chassis, and chassis with motors, for lorries and buses; fourth category—unconventional chassis with motors only for cargo, weighing up to 1,000 kilograms, and chassis with motors, for delivery vans, pick-up trucks, station wagons, ambulances, and trucks not included in the third category.

February 4. The fixed minimum bids of Cr$25, Cr$30, Cr$35, Cr$40, and Cr$100 per US$1 for exchange certificates purchased at auction for the five import categories were replaced by flexible minimum bids based on actual bids for the U.S. dollar and the ACL dollar. Minimum bids were to be determined weekly and at an adequate percentage of the weighted average of the actual bids for the U.S. dollar and the ACL dollar during the previous week. Minimum bids of Cr$29, Cr$47, Cr$73, Cr$107, and Cr$231 per US$1 for the five import categories were announced for the first week.

February 22. Transit or transshipment clauses in letters of credit would not be permitted for exports payable in inconvertible currencies, except in cases of shipments to countries which do not have direct access to the sea.

March 28. Import merchandise was reclassified in the categories established for the purpose of the foreign exchange auctions.

April 2. Congressmen and certain other members of the Government were allowed to import cars up to a value of $3,000 without license through the free market. (This facility expired with the introduction of the new import arrangements on August 14, 1957.)

June 24. A bonus not to exceed Cr$36 per US$1 would be paid to exporters of textile products out of a fund derived from receipts from a surcharge of Cr$36 per US$1 applied to imports of textile equipment and materials. A special allocation from the foreign exchange budget would be made available for these imports, which would be paid for at the rate applicable to government imports plus the Cr$36 per US$1 surcharge. (The import side of this arrangement was annulled by the changes of August 14, outlined below.)

July 1. The Brazilian Coffee Institute began to pay a premium on exports of coffee from the 1957-58 crop (ending June 30, 1958). The premium started at 1 per cent of the sales price of US$43 per bag, and would be raised progressively at the rate of 1 per cent for each additional dollar of the sales price. It was calculated on the basis of the cruzeiro proceeds obtained by converting the foreign exchange into cruzeiros at the effective exchange rate corresponding to the foreign currency surrendered.

August 14. The new customs tariff law, containing provisions affecting the exchange system, was signed by the President. The five categories of imports under the exchange auction system were reduced to two, General and Special, and minimum bids (see February 4, above) would be maintained only for auctions of bilateral agreement currencies. Import licenses would not be required for goods in the General Category. The 10 per cent remittance tax was abolished. Certain specified imports and government payments would receive a preferential exchange rate, which would be determined from time to time and would not be less than the cost of exchange. Preferential rate treatment for capital transactions was limited to official loans and to loans, credits, and financing for investments in specified fields. Special regulations were introduced for imports of parts of motor vehicles and for imports of automobiles having certain specifications.

September 20. The fixed surcharge on payments for certain imports and outgoing financial remittances receiving preferential rates was increased from Cr$25.00 to Cr$32.50 per US$1.

Burma

Exchange Rate System

The par value is Burmese 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 Exchange Control Board. Import and export controls are managed by the Directorate of Imports and Exports under the administrative control of the Ministry of Trade Development, but export control powers are also exercised by the State Agricultural Marketing Board and the State Timber Board, according to the commodities concerned. The registration of exporters and importers is carried out by the Registration Board.

Prescription of Currency

Burma is a member of the Sterling Area and has prescription of currency requirements similar to those of the United Kingdom and other Sterling Area countries. Payments to other parts of the Sterling Area must be made in sterling or in the appropriate Sterling Area currency; payments to the dollar area, in sterling through a Canadian or American Account or in Canadian or U.S. dollars; payments to bilateral payments agreement countries,1 through bilateral accounts denominated in sterling; payments to other countries, in sterling through a Transferable Account or, for certain countries, in the currency of the country concerned.

Imports and Import Payments

Imports of all goods are subject to regulation. There are three open general licenses giving general permission to import certain goods from countries other than Canada and American Account countries2 and one open general license permitting the import of a few items from all countries. All other imports are subject to individual license. If evidence of importation has been or will be presented, the authorized banks automatically provide appropriate exchange (see section on Prescription of Currency, above) to pay for permitted imports. Unless specially exempted, importers must be registered with the official Registration Board.

Payments for Invisibles

All payments for invisibles are subject to license. 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 investment are permitted freely on application, subject to presentation of evidence that all taxes due in Burma have been paid. Travelers may take out not more than the equivalent of K 100 in the currency of the country of destination, excluding Mainland China.

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. In general, exporters are required to surrender their foreign exchange proceeds to an authorized dealer in foreign exchange. Unless specially exempted, exporters must be registered with the official Registration Board.

Proceeds from Invisibles

Exchange receipts arising from invisibles must be surrendered.

Capital

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. Foreign insurance companies operating in Burma are permitted to remit their surplus funds to their home offices. When payments in favor of nonresidents are not permitted to be transferred abroad, the authorities can allow such payments to be credited to blocked accounts. The utilization of balances on blocked accounts is subject to individual permit.

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

The import, export, and transfer of securities involving nonresident interests are subject to individual license.

Changes during 1957

March 9. Mainland China was removed from the list of clearing account countries. Payments for imports from Mainland China were to be made on a transferable sterling basis.

June 10. Poland was removed from the list of clearing account countries. Payments for imports from Poland were to be made on a transferable sterling basis.

July 12. Bulgaria was removed from the list of clearing account countries. Payments for imports from Bulgaria were to be made on a transferable sterling basis.

September 14. In accordance with a new understanding reached with Czechoslovakia, East Germany, Hungary, Israel, the U.S.S.R., and Yugoslavia, all exports other than rice and rice products from Burma to these countries were to be settled in transferable sterling instead of through the respective clearing accounts maintained at the Union Bank of Burma.

September 14. The payments agreement with Rumania was terminated. All exports to Rumania would be settled in transferable sterling. All payments for imports from Rumania would be settled through the clearing account pending its liquidation.

September 14. Receipts from all exports to Bulgaria, Mainland China, and Poland would be accepted in transferable sterling only.

December 3. All applications to open letters of credit in respect of goods on open general license had to be referred to the Exchange Control Department of the Union Bank of Burma for prior approval.

December 4. The prior approval of the Union Bank of Burma had to be obtained by the authorized banks before granting any loan or overdraft to any company (other than a bank) which is by any means controlled (whether directly or indirectly) by persons resident outside Burma, whether or not the advance is secured by assets or collateral, or a guarantee is given in or outside Burma.

December 31. The bilateral payments agreement with Israel was terminated; settlements would now be made in transferable sterling.

Ceylon

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 rate and the sterling-U.S. dollar rate in London, maintained between official limits. The market rate as at December 31, 1957 was Cey Rs 4.747 buying, Cey Rs 4.765 selling, per US$1.

Administration of Control

Exchange control is administered by the Exchange Control Department of the Central Bank of Ceylon. 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, under permits issued by the Controller of Exchange. Import and export licensing is handled by the Controller of Imports and Exports.

Prescription of Currency

The regulations prescribing the currencies to be received from abroad in payment for exports and transactions in invisibles and those to be used for outgoing payments are similar to the regulations of the United Kingdom and other Sterling Area countries. In general, the regulations governing outgoing 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 (1) in sterling or in rupees to the credit of a nonresident account related to Canada, the American Account Area, or the Transferable Account Area, according to the country of origin of the goods, or (2) in some cases, in the currency of the country of origin of the goods. Receipts from foreign transactions, in general, may be in local currency, or from appropriate nonresident sterling accounts in the United Kingdom, or in dollars from Canada or an American Account country, or in any specified currency from a Transferable Account country (see section on Nonresident Accounts and footnote 5 in the survey on the United Kingdom). Payments with countries with which there are bilateral payments agreements1 must be effected through the relevant bilateral accounts. Transactions involving deviation from the general regulations require the prior approval of the Controller of Exchange.

Nonresident Accounts

The regulations governing nonresident accounts differentiate between the accounts of banks and of persons and firms abroad. 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 corresponding Sterling Area Accounts, Transferable Area Accounts, and Dollar Area Accounts 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 permits the free import of all goods (except some 30 items) from all countries except those in the dollar area2 and certain other countries.3 Open General License No. 2 permits the free import of over 200 essential items from the dollar area. Open General License No. 4 covers certain goods which may be imported freely from the countries covered by Open General License No. 1, with the exception of specified EPU countries.4 Open General License No. 5 permits the import of Maldive fish from the Maldive Islands. Most of the goods covered by open general licenses may be imported freely from certain countries5 under general import licenses, which are issued only to registered Ceylonese traders. Other imports, with some exceptions, may be effected only under individual licenses, and policy concerning their issue is announced annually. In most cases, such licenses are issued freely to registered Ceylonese traders; they may also be issued to other importers on the basis of past performance. For a number of commodities, mostly those which are being produced locally, no licenses are issued. 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. The currency and method of payment must normally be in accordance with the regulations (see section on Prescription of Currency, above).

Payments for Invisibles

All payments for invisibles are subject to exchange license. 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 transport of goods are allowed. Payments for international travel fares are permitted, provided certain conditions are met. Payments for business travel are allowed on application, subject to certain restrictions on the frequency of such travel. The allocation of exchange for tourist travel is subject to basic rations, which are different in respect to various groups of non-dollar countries; however, no basic ration is allocated 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 on policies denominated in foreign currency. Emigrants (Ceylonese nationals) to a Sterling Area country are permitted to transfer their assets up to £7,500 per family unit, but repatriates are permitted to transfer their entire assets. Remittances of profits and dividends by nonresidents are permitted freely. Travelers may export foreign exchange declared at the time of entry. The export of currency notes is limited to Cey Rs 50 per person per six months.

Exports and Export Proceeds

For purposes of exchange control, licenses issued by the Controller of Exchange are required for all exports; in addition, export licenses issued by the Controller of Imports and Exports are required for all but a few commodities and for all exports to Albania, Austria, Hungary, and the U.S.S.R. Exports of certain manufactured goods and re-exports of foreign manufactured articles are allowed only under special permit. Re-exports of nonmonetary gold, silver, and diamonds are allowed only in special circumstances. Licenses for exports to Bulgaria, China (Taiwan), Czechoslovakia, Poland, and Rumania are issued only to registered Ceylonese traders.

An exchange control export license is 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, usually within six months from the date of shipment but in certain cases within shorter periods, depending on the destination of the goods. The currencies in which payments for exports to different countries or monetary areas must be received are stipulated in the exchange control regulations (see section on Prescription of Currency, above).

Proceeds from Invisibles

The surrender at the official rate of foreign exchange from invisibles is required. Such proceeds have to be received in specified currencies, following the prescription of currency requirements applicable to export proceeds.

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 coins. The import of sterling notes in excess of £10 is allowed only with the permission of the Controller of Exchange, 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 under existing exchange control regulations, namely, the voluntary repatriation of investments of persons resident in the rest of the Sterling Area, subject to certain limitations, 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 to 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 other parts 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 countries outside the Sterling Area. Generally, inward transfers for investment in approved projects are permitted freely. Remittances of a capital nature—e.g., to purchase securities, properties, or annuities 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 of Exchange, 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 resident of a country outside the Sterling Area may be repatriated at his request up to the amount of the original investment, provided the investment had received prior approval.

Changes during 1957

January 2. The Austrian schilling became a permissible medium of payment to and from Austria and acceptable in payment for exports to any country in the Transferable Account Area.

January 16. Although the basic exchange allocation for travel to South India remained unchanged at Rs 250 per adult and Rs 125 per child under 18 years of age, per two-year period, a larger allocation would be allowed on application.

February 15. The exchange allocation that could be released by authorized dealers for travel to Hong Kong, Indo-China, and Thailand was limited to a maximum of £150 per adult and £75 per child under 18 years, to cover a period of four years, but the basic ration remained at £400, which was allowable on application. These three territories previously belonged to the group of countries for which the exchange allowance for travel was £400 over a period of four years, commencing September 1, 1955.

April 2. All exports to Albania, Austria, Hungary, and the U.S.S.R. were made subject to export license.

August 15. A traveler entitled to the travel exchange allowance of £400 once during the operative period (four years commencing September 1, 1955) could choose either (1) to take this allowance, or (2) to take the equivalent in foreign currency of up to six months’ leave salary, less proportionate income tax, or (3) to take 50 per cent of his gross income for six months, less proportionate income tax. Travelers to Egypt, Iraq, and other Middle Eastern countries, Hong Kong, Indo-China, Thailand, and Turkey were entitled to a travel exchange allocation of £300 (reduced from £400) once during the operative period.

Exchange for films would be granted for outright purchase rather than on a prepayment basis, and exchange would also be granted for films imported on a royalty or rental basis.

August 15. The release of foreign exchange for investment in shares of sterling companies registered in the United Kingdom but with assets in Ceylon was suspended for one year. The commercial banks were directed not to grant credit facilities for the purchase of the estates of sterling companies. The period of anticipatory transfers of capital assets by non-Ceylonese was reduced from two years to one. A ceiling of £7,500 per family unit was fixed for the transfer by Ceylonese emigrants of their capital assets to any country in the Sterling Area (previously their entire assets could be transferred). No exchange would be granted for Ceylonese nationals to buy residences abroad.

September 26. Foreign life insurance companies were permitted to remit funds arising out of receipts of premiums on Ceylon rupee policies, provided actuarial reports indicated that funds in Ceylon were sufficient to meet liabilities on such policies.

Chile

The par value of Chilean Pesos 110 = US$1, established on October 5, 1953, is not applied to any transactions under the present exchange system. No new par value has been proposed.

There are two exchange markets: the banking free market, where authorized banks may purchase any exchange and may sell exchange to cover imports and invisible payments expressly included in a permitted list; and the brokers’ free market, in which dealers other than the authorized banks may buy and sell exchange freely for certain invisibles, such as tourism and other personal remittances not permitted through the banking free market. There is a tax of 1 per cent on the sale of exchange by banks or by persons or entities authorized to cover import transactions or to issue drafts.1

The Central Bank of Chile deals in exchange only with the Government and its agencies (including autonomous agencies) and with authorized banks. It will freely buy and sell the following currencies: U.S. dollars, pounds sterling, Argentine agreement dollars, Swiss francs, and such other exchange or payments agreement account currencies2 as it may decide from time to time. The Central Bank buys and sells agreement account currencies only occasionally; but it is the sole buyer and seller of Argentine agreement dollars. The Central Bank determines the rate of exchange for these transactions in accordance with supply and demand in the banking free market.

The authorized banks may deal spot in any currency (including agreement currencies) with their clients or with other authorized banks and, up to specified limits, forward up to 90 days in any currency to cover import or export transactions.

Administration of Control

The Foreign Exchange Commission (Comisión de Cambios Internacionales) is in charge of the operation of the exchange system. Some functions of the Commission have been delegated to local commissions in important cities. Under Article 8 of Law 12084, the Foreign Exchange Commission must propose to the Ministry of Finance a list of permitted import goods and payments, which is made effective by a Supreme Decree of the Ministry. Any modification of the list is also made by Supreme Decree of the Ministry, on the proposal of the Foreign Exchange Commission. The commercial banks are authorized to operate in the banking free market, and various exchange dealers, tourist agencies, and hotels are authorized as dealers to operate in the brokers’ free market.

Prescription of Currency

Payments for transactions with Argentina, Bolivia, Brazil, Ecuador, France, Italy, Spain, and Yugoslavia must be made according to the method and in the currency established in the regulations that give effect to the terms of the payments or compensation agreements with those countries. Exports of copper by the large companies must be paid for in U.S. dollars or other currencies as specially authorized by the Copper Department of the Central Bank. Iron ore exports must be paid for in U.S. dollars. All other transactions may be settled in any currency, irrespective of the country of origin or destination of the payment. Authorized banks may freely convert any currency into U.S. dollars, sterling, or Swiss francs, but may not convert these currencies into a currency other than these without specific approval for each conversion.

Imports and Import Payments

Only goods specified by the Ministry of Finance in a list of permitted imports may be imported. All other imports are prohibited (for imports of chemical products, a definite list of prohibited items has been established). Imports are not subject to license; however, an importer must make an advance deposit, for which a certificate is issued by the Central Bank. This certificate is required by a bank before it may handle an import transaction and is also used to obtain consular authorization for shipment of the goods from the country of origin. Both the advance deposit certificate and the consular authorization are required for customs clearance at the port of entry into Chile. Some authorized imports also require a certificate of necessity from the Ministry of Economy. Government departments and agencies require permission from the Ministry of Economy for imports other than for national defense. A tax of 1 per cent on sales of exchange by banks or by persons or entities authorized to cover import transactions or to issue drafts is collected for the Foreign Exchange Commission by the authorized bank receiving the advance deposit (but see footnote 1).

The amount of the advance deposit is fixed from time to time by the Foreign Exchange Commission as a percentage—currently up to 1,500 per cent—of the value of the import in Chilean pesos converted at the rate of exchange that the Commission establishes weekly for this purpose on the basis of the banking free market rate in the preceding week. For goods imported on a consignment basis, a 5 per cent advance deposit is required. For goods imported on a deferred payments basis, the advance deposit required is the amount of the downpayment. For goods imported on a cash basis, nine categories have been established for the purpose of determining the percentage of advance deposit payable; these categories, and the advance deposit required for each, are as follows:

  • Category A (coffee, petroleum, rubber, sugar, wheat, etc.): 5 per cent

  • Category B (raw cotton, cowhide, aluminum and zinc in ingots, etc.): 50 per cent

  • Category C (chilled beef,, edible fats, chemical products, etc.): 100 per cent

  • Category D (seeds, essential oils, tires and tubes, etc.): 150 per cent

  • Category E (cocoa beans, raw tobacco, yarns, tools, etc.): 200 per cent

  • Category F (razor blades, sewing machines, hydraulic jacks, etc.): 400 per cent

  • Category G (automatic scales, photographic equipment, etc.): 600 per cent

  • Category H (pineapples, poplin, elastic fabrics, aircraft, buses, etc.): 1,000 per cent

  • Category I (spices, locks, trucks, automobiles, etc.): 1,500 per cent

The advance deposit certificate, duly signed by the importer, serves as a guarantee for the authorized bank to cover the sale of exchange. Exchange for imports may be sold freely on a spot basis or for 90 days forward by the authorized banks to anyone complying with these requirements. However, banks are allowed to sell only the amounts of foreign exchange specified in the advance deposit certificates. Payments are subject to the prescription of currency requirements. If the import transaction is not completed, the amount of the deposit less the tax is refunded against surrender of the advance deposit certificate. Imports by the large companies concerned with mining iron, copper, nitrates, or iodine, imports by government departments and agencies, imports under loans or credits from the Export-Import Bank of Washington or the International Bank for Reconstruction and Development, imports under the Surplus Agricultural Commodities Agreement with the United States, and imports of capital are exempt from the advance deposit requirements.

Payments for Invisibles

The commercial banks may sell exchange to cover payments for specified invisibles, including the following main items: freight, marine insurance and reinsurance, commissions on trade transactions, communication services, government payments, students’ expenses, correspondence courses, hiring of teachers and technical commissions, and interest, amortization, and profits. There is a tax of 1 per cent on all sales of exchange (but see footnote 1). Payments for other invisibles may be made freely through the brokers’ free market.

Exports and Export Proceeds

Exports of copper, nitrates, and iodine (the major portion of Chilean exports) are not subject to export license, but copper companies must obtain approval from the Copper Department of the Central Bank for their shipments. Exports of iron ore are authorized globally by the Foreign Exchange Commission. Exports of some specified commodities are prohibited or authorized partly under quotas. Other exports require licenses.

The proceeds from certain exports must be received in a prescribed currency (see section on Prescription of Currency, above). For all exports except those by the large copper and iron mines and the Nitrate and Iodine Sales Corporation (COVENSA), it is stipulated by law that, within a period of 90 days from the date of shipment or within such period as may, in special cases, be established, exporters must repatriate in instruments of international exchange the total value of their exports and must liquidate this value within 10 days from its repatriation, through an authorized bank or entity. The large copper companies are, however, required to sell to the Central Bank the necessary foreign exchange to meet their domestic costs of production. Payments for exports on a cash, collection, or consignment basis must be arranged through an authorized bank, which must specifically contract with the exporter to buy the exchange proceeds. The bank issues a certificate that payment has been made or arranged in an approved manner, to enable clearance of the export through customs.

Proceeds from Invisibles

Receipts of exchange from invisibles arising from trade transactions must be sold in the banking free market along with the export proceeds. Exchange from other invisibles, including tourism, may be sold in the brokers’ free market.

Capital

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

Under the terms of a decree of November 10, 1953 (amended February 2, 1954), foreign capital brought into Chile in the form of foreign exchange, raw materials, or equipment, when invested in approved enterprises, is given the following guarantees and exemptions: (1) the repatriation of capital after 5 years in annual quotas not exceeding 20 per cent per annum of the value of the investment; (2) transfers abroad of earnings on the investment, for a period of at least 10 years, and possibly up to 20 years; (3) exemption from customs duties on new machinery for industries not already existing in Chile which use domestic raw materials in a proportion of at least 80 per cent; (4) guarantees for at least 10 years against changes in taxes, for investments intended for the establishment of basic industries not already existing in Chile; (5) the right to reassess capital for tax purposes in accordance with fluctuations in the rate of exchange from year to year. Earnings on such capital, if reinvested in Chile, enjoy the rights and exemptions indicated under (2) and (5), above.

Capital is granted favorable treatment when invested (1) in export industries which can compete in the international market without government assistance; (2) in production for the domestic market of goods which at present must be imported, also without government assistance; or (3) in industries using a proportion (at least 80 per cent) of domestic raw materials to provide goods for the domestic market at reduced cost for the consumer. The Foreign Investment Commission supervises capital imports.

Exchange operations related to foreign capital investments covered by the decree of November 10, 1953 have to be effected through authorized banks and the amount of foreign exchange needed for remittances from these investments may be obtained in the banking free market. For other investments, transfers may be made at the brokers’ free rate.

Transfers of capital by residents into and out of Chile, if required to be made through the banking free market, are subject to individual license. Residents and nonresidents may export capital freely through the brokers’ free market.

Table of Exchange Rates (as at December 31, 1957)3(pesos per U.S. dollar)
BuyingSelling
690 (approx.) (Banking Free Market)

All exports and related invisibles. Capital subject to decree of November 10, 1953 as amended.
693 (approx.) (Banking Free Market)

All imports and related invisibles. Government invisibles; payments to students abroad; cost of correspondence courses; payments to foreign teachers and technical commissions. Capital, including profits, dividends, interest, and amortization, subject to decree of November 10, 1953 as amended.
773 (approx.) (Brokers’ Free Market)

Other invisibles, including tourist receipts. Other capital.
778 (approx.) (Brokers’ Free Market)

Other invisibles, including tourist payments. Other capital.

Changes during 1957

During the year, the percentages for advance deposits required for individual import commodities were changed on several occasions, by reclassifying the commodities into different categories. Other changes during 1957 follow.

January 19. The 1 per cent tax on import payments and other payments was increased to 5 per cent.

February 6. Several items were added to the list of permitted imports.

February 26. The percentages for advance deposits required for imports were increased for all categories except Category A. Category G was created, with an advance deposit of 600 per cent.

March 29. A decree prohibited the exportation of a number of agricultural products and established export quotas for others.

April. Additions were made to the lists of permitted and prohibited imports.

April. The trade and payments agreement with Italy was extended to April 28, 1958.

May 28. A new trade and payments agreement with Argentina was signed, to be effective from July 1, 1957 to December 31, 1958.

June 6. A new trade and payments agreement with Yugoslavia was signed, to be effective until March 28, 1958.

June 24. Some items were added to the list of permitted imports.

July. The tax of 5 per cent on sales of exchange was reduced to 1 per cent and the tax of Chil$15 per US$1 on sales of exchange was abolished. The exchange subsidy on imports of certain essentials, as a result of which these goods had been granted an effective rate of Chil$300 per US$1, was abolished. Various changes were introduced in the lists of permitted and prohibited imports.

July 18. Some items were added to the list of permitted imports.

July 22. Some items were added to the list of permitted imports.

September. Imports of automobiles, station wagons, and similar vehicles were permitted and made subject to special import taxes.

November 8. Categories H and I were created, with advance deposits on imports of 1,000 per cent and 1,500 per cent, respectively. After this change, the percentages for the various categories were as follows: A, 5 per cent; B, 50 per cent; C, 100 per cent; D, 150 per cent; E, 200 per cent; F, 400 per cent; G, 600 per cent; H, 1,000 per cent; I, 1,500 per cent.

China (Taiwan)

Exchange Rate System1

No par value for the New Taiwan Dollar has been established with the Fund. A multiple exchange rate system arises from the use of negotiable exchange certificates and of an exchange certificate rate for all receipts and payments of foreign exchange. Various effective rates result from the different “mixing” arrangements for export proceeds and from the coexistence of a fixed price and a fluctuating price for exchange certificates. A defense tax of 20 per cent is levied on all import payments and on payments for invisibles. (See Table of Exchange Rates, below.)

Administration of Control

The authority for exchange control policy is vested in the Foreign Exchange and Trade Control Commission. The decisions of the Commission are implemented 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, or, in a few cases, Malayan dollars or other foreign currencies approved by the exchange control authorities. There are no legal obligations prescribing the channel of payment to persons abroad (except for Japan, trade with which is conducted through special settlement accounts under the terms of an agreement). Payments must be made in U.S. dollars or 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, which are issued to registered importers under a two-month import allocation system. 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. Registered importers are classified as traders, industrial end-users, and direct end-users. Import allocations for traders are based on a general commodity budget, for industrial end-users on their production needs, and for direct end-users on their needs of specified goods.

When the import license is granted, the holder is automatically entitled to obtain the necessary foreign exchange from the Bank of Taiwan. Payments for imports by government agencies, specified public enterprises, end-users, or importers of industrial raw materials are made at a fixed rate of NT$24.78 per US$1; payments for all other imports are made at the market rate of exchange (see Table of Exchange Rates, below).

Payments for Invisibles

Payments to nonresidents for family maintenance are restricted by a monthly quota fixed by the authorities. For such trade items as freight and insurance, permission to effect payment is determined by the approval to import the related commodities. Application for exchange for invisibles must be made to the Remittance Department of the Foreign Exchange and Trade Control Commission, which passes its recommendations to the Commission for final decision. In general, reasonable amounts of foreign exchange are granted for transfers of reinsurance premiums and for travel other than for pleasure. All payments for invisibles are made at the fixed rate of NT$24.78 per US$1. Travelers leaving Taiwan may take with them no more than US$200 in foreign currency and no more than NT$500 in Taiwan currency.

Exports and Export Proceeds

All exports require licenses, which are granted to exporters 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, sterling, or, in a few cases, Malayan dollars or other foreign currencies approved by the exchange control authorities. Export proceeds must be surrendered at the Bank of Taiwan rate of NT$15.55 per US$1. In addition, exchange certificates equivalent to 80 per cent of the f.o.b. value of the proceeds are issued. These foreign exchange certificates are valid for 120 days. They are negotiable, with the exception of those representing proceeds from exports of sugar, rice, and salt, which are exchanged at a fixed price of NT$6.00 per US$1. Free market rates for certificates have been maintained at NT$13.50 per US$1 since November 1955.

Proceeds from Invisibles

All proceeds from invisibles must be surrendered to the Bank of Taiwan. Receipts by government agencies and specified public enterprises are converted at a rate of NT$24.68 per US$1; receipts by private individuals may be converted also at the rate of NT$24.68, or at the Bank of Taiwan rate of NT$15.55 plus an equivalent amount of the proceeds in exchange certificates. Diplomatic and foreign military personnel are granted a preferential rate for receipts surrendered by them, and the same rate is applied to private receipts, up to certain limits, in the form of drafts or foreign banknotes sent through international postal services and to inward remittances for family maintenance by Chinese residing overseas. Travelers entering Taiwan may bring in any amount of foreign currency and either hold or surrender it, the preferential rate being applied to foreign currency that is brought in and registered by travelers. The import of domestic currency is limited to NT$500 per traveler.

Capital

Capital payments due to nonresidents normally are not permitted, and repatriation of foreign capital is allowed only in special circumstances. In accordance with the Foreign Investment Law of July 14, 1954, new foreign investments approved by the authorities are guaranteed (1) free transfer of profits in the original currency of the investment at a yearly rate not exceeding 15 per cent of the value of the investment, (2) repatriation of capital (including reinvested earnings) two years after the investment has been made at a yearly rate not exceeding 15 per cent of the total investment, and (3) immunity from expropriation during ten years where the foreign investment constitutes at least 51 per cent of the total investment. The preferential rate is applied to foreign exchange sold by foreign investors.

New capital investments abroad by residents are prohibited. Residents are permitted to hold foreign exchange representing capital receipts in an account in foreign currency and may dispose of this exchange by surrendering it to the Bank of Taiwan for local currency at NT$15.55 plus the exchange certificate, or for local currency at NT$24.68 per US$1, or for remittance abroad.

Table of Exchange Rates (as at December 31, 1957)(new Taiwan dollars per U.S. dollar)
BuyingSelling
20.35(NT$15.55 plus 80% of Fixed Value of Exchange Certificate)2
Exports of sugar, rice, and salt.
24.68(NT$15.55 plus Equivalent of NT$3.13 Defense Tax and Fixed Value of Exchange Certificate)2

Private receipts if recipient chooses to receive payment in local currency of equivalent value of exchange certificates. Receipts by government agencies and specified public enterprises.
24.78(NT$15.65 plus NT$3.13 Defense Tax and Fixed Value of Exchange Certificate)2

All imports and remittances by government agencies, specified public enterprises, and certain others. All invisibles.
26.35(NT$15.55 plus 80% of Market Value of Exchange Certificate)
All other exports.
29.05(NT$15.55 plus Market Value of Exchange Certificate)
Private receipts if recipient chooses to receive exchange certificates.32.28(NT$15.65 plus NT$3.13 Defense Tax and Market Value of Exchange Certificate)
34.00(Preferential Rate)3

Receipts sold by foreign diplomatic and military personnel. Receipts for investment purposes. Foreign currencies brought in and registered by tourists. Private receipts in the form of drafts or foreign banknotes sent through international postal services. Family maintenance remittances from Chinese residing overseas.
All other imports.
Note: Since November 1955, the Bank of Taiwan has intervened in the market by selling exchange certificates at a price of NT$13.50 per US$1; and since July 1957, the commercial banks also have bought and sold exchange certificates at this price, which was used in calculating the effective rates in the table.
Note: Since November 1955, the Bank of Taiwan has intervened in the market by selling exchange certificates at a price of NT$13.50 per US$1; and since July 1957, the commercial banks also have bought and sold exchange certificates at this price, which was used in calculating the effective rates in the table.

Changes during 1957

March 1. The preferential rate was adjusted from NT$34 to NT$35 per US$1.

June 1. The preferential rate was adjusted from NT$35 to NT$34 per US$1.

July 25. The preferential rate was made applicable to inward remittances for family maintenance by Chinese residing overseas. The amount of each remittance at this rate was limited to US$100 or the equivalent for one person in a family, plus US$50 or the equivalent for every additional person in the same family.

August 1. The preferential rate was made applicable to foreign currencies brought in and duly registered by tourists.

November 29. The preferential rate was made applicable to inward remittances in the form of drafts or foreign banknotes sent through international postal services. Remittances at this rate were limited to US$100 or the equivalent per person per month.

Note. On April 12, 1958, the Government announced the following changes in the exchange system: An official rate of NT$24.78 per US$1 was established and other rates and the defense tax of NT$3.13 were abolished. There are now two effective rates: the official rate, which is applied to exports of sugar, rice, and salt, to imports of essential machinery, fertilizers, crude oil, cotton, soybeans, and wheat, and to invisibles for account of the Government; and the official rate plus the value of an exchange certificate, which is applied to the settlement of all other exports, imports, and invisibles.

On April 14, 1958, the Bank of Taiwan announced rates of NT$36.08 (NT$24.58 plus NT$11.50 for an exchange certificate) buying, and NT$36.38 (NT$24.78 plus NT$11.60 for an exchange certificate) selling, per US$1.

Colombia

Exchange Rate System1

The par value of Colombian Pesos 1.94998 = US$1, established December 17, 1948, is not applied to any transactions under the present exchange system. There are two exchange markets: the certificate market, where export receipts and exchange to cover import payments, students’ remittances, official nontrade payments, and interest on and repatriation of capital registered before June 17, 1957, are transacted through authorized banks; and the free market, where all other exchange transactions take place. On December 31, 1957, the selling rate in the certificate market was Col$5.425 per US$1 and in the free market it was Col$6.22 per US$1. Additional rates result from mixing arrangements for freight charges and sales of domestically mined gold. (See Table of Exchange Rates, below.)

There is an exchange tax of 15 per cent on proceeds of exports of coffee, bananas, and precious metals, and an exchange tax of 2 per cent on all other exports; and there is a remittance tax of 10 per cent on all payments made through the certificate market, except for official nontrade payments, students’ remittances, payments for imports for the petroleum and metal-extracting industries, and payments for imports of specified goods provided they are re-exported.

Administration of Control

To import from, export to, or make payments to, foreign countries, prior application for registration of the transaction must be made at the Exchange Registration Office, which is dependent on the Bank of the Republic. Purchases and sales of exchange certificates may be made either through the Bank of the Republic or through the commercial banks, which act as authorized agents of the Bank of the Republic. An Exchange Regulation Fund, operated by the Exchange Commission, regulates operations in the certificate market. The Superintendency of Imports controls imports that are subject to prior licensing.

Prescription of Currency

Payments and receipts related to international transactions are normally effected in U.S. dollars. Payments to and receipts from Denmark, Ecuador, Finland, East Germany, or Spain must be effected through a clearing account in accordance with the provisions of the related bilateral payments agreement. Under the agreement with Denmark, goods originating in third countries and purchased in one of the agreement countries may be settled through the agreement account by mutual consent of the partners. There are also agreements concluded by the National Federation of Coffee Growers with Czechoslovakia, France, and Hungary.

Nonresident Accounts

Commercial banks are authorized to debit and credit the accounts of nonresidents.

Imports and Import Payments

Prior application for import registration is required for all imports. If the application meets all legal requirements, approval is stamped on the application form, i.e., registration is granted. There are a list of prohibited goods and a list of goods whose import is subject to prior licensing by the Superintendency of Imports. A cash deposit of 100 per cent of the peso value of the import has to be paid as a prerequisite to import registration (with the exception of newsprint, certain foodstuffs, drugs, essential farm equipment, automotive parts, fertilizers, and insecticides, for which a cash deposit of 20 per cent is required). This deposit is returned when the goods are cleared through customs. Capital goods and their spare parts imported by official, semiofficial, and “public service” bodies and by financial corporations, i.e., goods not destined for commerce, are exempt from payment of the advance deposit.

Prior exchange registration is required for payments for imports; this is granted in f.o.b. terms upon submission of the import registration and evidence that the goods have entered Colombia. A remittance tax of 10 per cent is applied to all import payments except those for imports for the petroleum and metal-extracting industries and imports of specified goods provided they are re-exported. Importers may purchase exchange certificates covering the value of their imports from the commercial banks authorized for this type of transaction. Permitted imports may also be paid for through the free market, in which case the payment is exempt from the 10 per cent remittance tax.

Potatoes, wheat, spelt, maslin, and flours made thereof, rice, barley, corn, wheat groats, and some legumes and vegetables may be imported only by the Corporation for the Protection of Agricultural Products.

Payments for Invisibles

Exchange certificates are used in payment of national government services; installments of principal and interest on the official external medium-term and long-term debt; repatriation of foreign capital registered before June 17, 1957 and dividends thereon; installments of principal and interest on external medium-term and long-term debt registered before June 17, 1957 and owed by semiofficial or private entities; and 80 per cent of freight charges (the remaining 20 per cent is payable in pesos at a rate fixed by the Shipping Conference). Exchange at the certificate rate is also granted to students abroad engaged in postgraduate studies, taking professional courses not available in Colombia, or studying art; to persons sent by official or semiofficial institutions to study their specialties; and to persons holding scholarships in foreign countries and needing an additional amount for living expenses. Students’ remittances are exempt from the 10 per cent tax on payments through the certificate market, as are official nontrade payments. Exchange certificates may also be used for payment of consular fees. Payments for all other invisibles must be made through the free market.

Exports and Export Proceeds

Prior application for registration is required for all exports. If the application meets all legal requirements, approval is stamped on the application form, i.e., registration is granted. Negotiable exchange certificates are issued for export proceeds sold to an authorized bank. There is an exchange tax of 15 per cent on the proceeds of exports of coffee, bananas, and precious metals, and an exchange tax of 2 per cent on all other export proceeds. Minimum surrender prices are established for exports of coffee (US$100 per 70-kilogram bag)2 and bananas (US$1.05 per bunch for exports to the United States and US$56 per ton for exports to Europe). These minimum surrender prices also serve as the basis for the collection of the exchange tax. Exports of coffee are subject to quotas, which are established on a monthly basis.

Proceeds from Invisibles

Exchange receipts from invisibles must be negotiated in the free market.

Capital

Incoming foreign capital for the petroleum and other extractive industries must be surrendered and may be registered at the certificate rate; it is entitled to repatriation and remittance of profits. Other incoming capital (which cannot be registered) and remittance of profits and repatriation of capital (unless it was registered before June 17, 1957) must be brought in through the free market.

Table of Exchange Rates (as at December 31, 1957)(pesos per U.S. dollar)
BuyingSelling
4.61(Certificate Rate less 15% Exchange Tax)
Exports of coffee, bananas, and precious metals.
5.31(Certificate Rate less 2% Exchange Tax)
All other exports. Registered capital.5.425(Certificate Rate)
5.736(60% at Certificate Rate and 40% at Free Market Rate)

Sales of domestically mined gold to the Bank of the Republic.
Imports for the petroleum and metal-extracting industries. Imports of specified goods provided they are re-exported. Government payments. Students’ remittances.
5.968(Certificate Rate plus 10% Remittance Tax)
All other imports.3 Interest on and repatriation of registered capital.
6.21(Free Market Rate)

Unregistered capital. Invisibles.
6.22(Free Market Rate)

Unregistered capital. Other invisibles.
Note: An additional effective selling rate arises from the payment of freight on imports, 80 per cent of which is paid in exchange certificates and 20 per cent in pesos at a rate fixed by the Shipping Conference.

Changes during 1957

January 14. A classification of import commodities in four groups, I Special, I, II, and III, came into effect. The registration of imports in Group I Special, suspended since October 11, 1956, was resumed.

January 14. A commercial arrangement, valid for one year, was concluded with Czechoslovakia, providing for the exchange of coffee against equipment goods for agriculture and various industries.

January 19. It was announced that exchange registration for imports in Group I Special and Group I would in the future not be granted until 120 days after the shipment of the goods, except for imports from bilateral clearing partners.

January 21. The registration of imports in Group II, suspended since October 11, 1956, was resumed.

January 25. Regulations provided that 80 per cent of ocean freight was to be paid in exchange certificates and 20 per cent in pesos at a rate fixed by the Shipping Conference. However, importers of items in Group I Special and Group I entitled to exchange at the official rate still had the right to request, with the registration of the exchange, up to 50 per cent of the value of the freight in foreign exchange at the official rate.

January 28. The registration of imports in Group III, suspended since October 11, 1956, was resumed.

February 4. The registration of imports in Group I, suspended since October 11, 1956, was resumed.

June 17. It was provided that merchandise shipped with bills of lading later than May 1, 1957 would be settled at the rate in effect on the date the remittance was authorized.

June 17. A new exchange system was introduced: A certificate market was created, through which the following transactions were to be effected: (1) all export proceeds; (2) payments for merchandise on the free import list and for merchandise requiring a prior license; (3) remittances of previously registered capital and profits, dividends, and interest thereon, applied for from this date; (4) 80 per cent of freight payments; (5) obligatory payments by the National Government in foreign currency for service of the foreign debt, diplomatic expenditures, international organizations, and contractual obligations; (6) students’ remittances; and (7) payments of principal and interest on external debts of official, semiofficial, and private institutions registered before this date. A 15 per cent tax was levied on the proceeds of exports (except petroleum) and a 10 per cent tax was levied on import payments through the certificate market (except government payments and payments for imports for the petroleum industry and metal-extracting industries). Previous exchange and stamp taxes were abolished. Certain imports were prohibited, others made subject to restrictive licensing, and the remainder freed from quantitative restriction. An Exchange Regulation Fund, to be operated by the Exchange Commission, was created to regulate the certificate market. An advance deposit in domestic currency of 20 per cent of the value of imports was required.

June 17. The Exchange Registration Office suspended approval and registration of imports, exchange, and exports.

June 18. Decree No. 112 established a list of prohibited imports (luxury articles and nonessential goods) and a list of goods requiring prior licenses.

June 18. The Board of Directors of the Bank of the Republic established minimum surrender prices for exchange certificates representing the export proceeds of the following products: coffee, US$100 per 70-kilogram bag net, f.o.b., instead of the previous US$105; bananas, US$80 for each ton exported to Europe and US$1.50 for each bunch exported to the United States.

June 18. Petroleum companies established in Colombia could import articles on the list of prohibited goods under semiannual licenses issued by authorization of the Exchange Registration Office.

June 19. The Superintendency of Imports was created; its chief functions were to be approving, renewing, or refusing licenses to import items on the list of goods requiring prior licenses; advising the Ministry of Finance of the changes that should be made in the list of prohibited imports and the list requiring prior licenses; authorizing the import of machinery necessary for the expansion or modernization of existing and new industries.

June 24. The Exchange Registration Office reopened.

July 10. Up to 5 per cent over the net value of merchandise could be included in applications for registration of imports to cover all costs as far as the port of shipment.

July 22. The trade and payments agreement with Italy expired.

August 3. Students’ remittances were exempted from the 10 per cent tax on payments through the certificate market.

August 9. The system governing exports of petroleum was extended to apply to all minerals except precious metals (gold, silver, and platinum); i.e., they were to be exempt from the 15 per cent tax.

September 4. A circular issued by the Bank of the Republic set out three alternative methods for the remittance of capital and dividends for which applications had been filed with the Exchange Registration Office prior to June 17, 1957.

September 18. The Bank of the Republic was authorized to buy-gold produced in Colombia and to pay up to 40 per cent of its value (calculated at US$35 per ounce) in foreign currency and the balance in pesos at the certificate market rate. The Bank was also authorized to set the quotas and periods for the surrender of proceeds from the various types of exports in accordance with market procedure and conditions of sale for each of them.

September 24. Exporters of coffee were given, as an alternative to surrendering US$100 per 70-kilogram bag exported, the possibility of surrendering US$86 and Col$14 per 70-kilogram bag. In either case, the exchange tax of 15 per cent calculated on US$100 per 70-kilogram bag was payable, so that under the first option the exporter would receive exchange certificates for US$85, and under the second, for US$71.

September 25. The tax of 15 per cent on all exports was confined to exports of coffee, bananas, and precious metals. All other exports were made subject to a new exchange tax of 2 per cent.

September 25. The National Government authorized the Board of Directors of the Bank of the Republic to determine the amount of the advance deposit payable on imports. Under this authorization, the Board of Directors raised the advance deposit for imports from 20 per cent to 100 per cent, except for foodstuffs, drugs, fungicides, insecticides, fertilizers, agricultural machinery, and spare parts for agricultural machinery and for automobiles.

October 4. Capital goods and their spare parts imported by official, semiofficial, and “public service” bodies, i.e., goods not destined for commerce, were exempted from payment of the advance deposit. The advance deposit of 100 per cent on imports of newsprint was changed to 20 per cent.

November 22. Imports of foodstuffs by the Corporation for the Protection of Agricultural Products for normal supplies were exempted from the advance deposit by authorization in each case of the Ministry of Finance and Public Credit.

November 29. The minimum surrender price for banana exports was established at US$56 per ton for exports to Europe and US$1.05 per bunch for exports to the United States.

December 5. Raw materials imported by the financial corporations for the manufacture of export products were exempted from the advance deposit.

December 18. The difference between the minimum surrender price established per 70-kilogram bag of coffee and the actual value of the sale could be paid in domestic currency when so authorized by the Bank of the Republic.

Note. On March 26, 1958, Decree No. 80 introduced a number of changes in the Colombian system. Negotiable exchange certificates would no longer be issued against the proceeds of exports, but exporters would receive the peso equivalent of their export exchange, less the appropriate export tax, at a fixed rate. This rate was fixed by the Bank of the Republic at Col$6.10 per US$1 on March 27, and cannot be increased for 120 days. The Bank of the Republic would sell at public auction nonnegotiable exchange certificates issued against its available exchange receipts for payments authorized through the certificate system. Exchange certificates could no longer be applied to payment of 80 per cent of freight on imports and exchange for this purpose would have to be purchased entirely in the free market. The 10 per cent tax on remittances abroad had to be paid with dollars from the free market, instead of with exchange certificates as previously. The average price paid by importers for certificates at the auction of April 25 was Col$6.59. On April 11, the list of freely permitted imports was substantially reduced and many items were transferred from the restricted list to the list of prohibited imports.

Also under Decree No. 80, exporters of coffee were required to deliver without compensation to the National Federation of Coffee Growers a quantity of pergamino coffee equivalent to 10 per cent of excelso coffee intended for export. About two weeks later this percentage was increased to 15. The minimum surrender price for exports of coffee was reduced from US$100 to US$85 per 70-kilogram bag.

Costa Rica

Exchange Rate System

The par value is Costa Rican Colones 5.615 = US$1. A multiple rate system arises 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 effective rates of Ȼ 6.27 and Ȼ 6.62 per US$1 (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 made through the Central Bank or through authorized banks. Free market transactions are made through the commercial banks or through private dealers, independently of the Central Bank, but the Central Bank has the right to operate in the free market for the purpose 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 control or restriction. Control over payments for imports is exercised only in respect of essential imports paid for at the official rate; these imports consist of some 512 items included in a “List of Primary Needs” and represent approximately 45 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 may purchase the necessary exchange without limitation. Under contracts signed with the Costa Rican Government, foreign-owned banana companies may effect certain essential imports in lieu of surrendering exchange from their exports.

Payments for Invisibles

Payments permitted at the official selling rate are government payments, earnings of up to 10 per cent annually of registered foreign capital invested after January 20, 1933 (other than of foreign investments governed by special contracts), and specified expenses of students who are taking specialized courses abroad and are registered with the Central Bank. All of these transactions require exchange licenses, which are obtainable upon submission to the Central 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 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 which are in short supply domestically may be restricted. There is a list of strategic materials whose export to communist-dominated countries is prohibited.

Exchange proceeds from exports, with certain exceptions, must be surrendered at the official rate. However, under the Law on Free Exchange for Exports, exporters of certain articles benefit as follows: Exporters of bananas produced by Costa Rican enterprises, livestock, meat, eggs, shrimp, leather articles, books and other printed matter, stockings, yeast, and other products of minor importance may retain 65 per cent of their export exchange for sale in the free market, resulting in an effective rate of Ȼ 6.27 per US$1; exporters of cacao, in the bean or manufactured, may retain 99 per cent of their export exchange for sale in the free market, giving an effective rate of Ȼ 6.62 per US$1. Under contracts with the Government, foreign-owned banana companies may retain from their export proceeds foreign exchange for depreciation of equipment, profits, imports of essential goods, and payment of the export tax; the remainder is surrendered at the official rate.

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

Exchange receipts from insurance indemnities that arise from insurance whose premiums were covered in the official market, receipts by the Government and public entities, and sales of exchange by foreign concessionnaires whose contracts require such sales in the official market, have to be surrendered at the official rate. Receipts from other invisibles may be sold in the free market.

Capital

Residents may freely receive and make transfers of capital without limitation at the free market rate. Residents may also sell exchange at the official rate, but outward transfers of capital through the official market require the approval of the Central Bank and are subject to the conditions and limitations governing that market. Exchange receipts from foreign capital registered with the Central Bank must be surrendered at the official rate. The granting of official market exchange for amortization of registered foreign capital is subject to exchange licensing by the Central Bank, which decides on the applications on a case-to-case basis and in the light of the availability of exchange for that purpose. Foreign enterprises that produce export goods and are considered advantageous to the economy may be granted the right by the Central Bank to remit at the official rate amortization, profits, and interest on investments they have brought into the country through the free market. However, such authorizations are limited to the amounts set for that purpose by the Central Bank in its foreign exchange budget and are restricted by the fact that the total remittances of an enterprise may not exceed the total amount of its sales of foreign exchange during a specified period. Certain foreign-owned investments are dealt with individually under special contracts. There are no limitations on the receipt or payment of unregistered foreign capital through the free market.

Table of Exchange Rates (as at December 31, 1957)(colones per U.S. dollar)
BuyingSelling
5.60(Official Rate)5.67(Official Rate)
All exports except those at Ȼ 6.27 and Ȼ 6.62 rates. Certain invisibles. Registered capital.Essential imports. Government payments. 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.
6.62(1% at Ȼ 5.60 and 99% at Free Market Rate)
Exports of cacao and cacao products.
6.63(Free Market Rate)

All other receipts.
6.65(Free Market Rate)

All other payments.

Changes during 1957

During the year, permission to exporters to sell 65 per cent of their export proceeds in the free market was withdrawn for the following commodities: pasteboard made in Costa Rica, electrical kitchens of national manufacture, manganese, punch, and gelatin.

April 27. Exporters of yeast, stockings, and socks produced in Costa Rica were permitted, for a period of one year, to sell 65 per cent of their export proceeds in the free market, the remainder being surrenderable at the official rate.

November 23. Exporters of canned goods and vegetable pastes, sauces, and vinegar produced in Costa Rica were permitted, for a period of one year, to sell 65 per cent of their export proceeds in the free market, the remainder being surrenderable at the official rate.

Denmark

Exchange Rate System

The par value is Danish Kroner 6.90714 = US$1. The official rates are DKr 6.901 buying, DKr 6.914 selling, per US$1.

Denmark participates with Austria, Belgium-Luxembourg, France, the Federal Republic of Germany, Italy, 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 six months’ delivery (three months’ delivery for transactions in French francs or with banks in France), with other authorized banks in these countries in any of their currencies. 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.

Denmark participates with Austria, Belgium-Luxembourg, France, the Federal Republic of Germany, Italy, the Netherlands, Norway, Sweden, Switzerland, and the United Kingdom in multilateral arrangements with Argentina. Payments relations with Finland, Paraguay, Uruguay, and Yugoslavia are also based on multilateral arrangements. Danish kroner in the accounts of banks in Argentina, Finland, Paraguay, Uruguay, and Yugoslavia are exchangeable into the currency of any country participating in the Western European multilateral arbitrage arrangement.

Denmark operates a dollar export incentive scheme which takes the form of negotiation at a premium of special transferable import rights given to exporters to the dollar area when they surrender their dollar export proceeds (see section on Exports and Export Proceeds, below).

Exchange Control Territory

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

Administration of Control

Exchange control is administered by the National Bank of Denmark, which is the central exchange control authority 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. Foreign direct investments in Denmark require permission from the Ministry of Commerce, Industry, and Shipping.

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 related to the monetary area or country of the recipient or in Danish kroner by crediting a nonresident account held by a resident of the monetary area or country concerned. However, payments to the dollar area1 may be made in any currency and payments to non-dollar countries with which there are no bilateral payments agreements2 may be made in EPU currencies.

Receipts from abroad must, as a general rule, be obtained in the related foreign currency of, or in Danish kroner by debiting a nonresident account of a resident of, the monetary area or country concerned. However, U.S. dollars, Canadian dollars, and free Swiss francs may be received from any country, and EPU currencies may be received from any country outside the dollar area.

Nonresident Accounts

The accounts held in Danish kroner by nonresidents are divided into four types and are designated by nationality according to the country of residence of the account holder. These four types of account are held for the following purposes:

  • 1. Krone Accounts I may be used for settling current transactions between Denmark and the country where the account holder resides. They are permitted to be held primarily by banks domiciled in foreign countries.

  • 2. Krone Accounts II may be used for making payments in Denmark for current transactions with the country of the account holder. They are held mainly by commercial firms. Funds may be credited to these 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 nonresidents’ capital. Funds held in these accounts may be used freely for a wide range of payments in Denmark.

Balances on Krone Accounts I, II, or III related to most countries may be transferred abroad at any time in the currency of the nationality of the account holder. Where transfers between these three types of account are allowed, they may usually be made only between accounts of the same designation of nationality. However, transfers between Krone Accounts I related to Argentina, Finland, Paraguay, Uruguay, Yugoslavia, and EPU countries participating in the multilateral exchange arbitrage arrangement (see section on Exchange Rate System, above), transfers between Krone Accounts I related to other EPU countries, transfers between Krone Accounts I and Krone Accounts III of different nationality, and transfers between Krone Accounts III of different nationality, are permitted. Transfers from Krone Accounts I related to the dollar area to any other Krone Account I are also freely permitted. Balances on Krone Accounts IV may be transferred abroad within the limits set for capital transfers; transfers between Krone Accounts IV of different nationality require permission, which is given according to fixed rules (see section on Capital, below).

Imports and Import Payments

Most imports from OEEC countries, including their associated territories, and from certain other countries,3 and a wide range of imports from the dollar area (see footnote 1), are either free of import license or licenses are issued freely for them. Licenses are required for most imports from other countries. The import of a few goods from non-dollar countries is possible by purchasing a “title to import license” (see section on Exports and Export Proceeds, below). There are four free lists for imports, as follows:

  • 1. The general free list applies to imports originating in the dollar area or in EPU countries. Settlements may be made freely in accordance with the prescription of currency requirements.

  • 2. The regional free list designates goods that may be purchased freely in the EPU area against settlement through EPU.

  • 3. The general free issue of license list is, like the list under 1, above, applicable to imports from dollar or EPU countries.

  • 4. The regional free issue of license list is, like the list under 2, above, applicable only to imports from the EPU area.

The general free list and the regional free list (1 and 2, above) also apply to imports from certain other countries (see footnote 3). Imports included in the free issue of license lists (3 and 4, above) are subject to formal licensing, in order to verify the nature of the goods imported. The authorities grant such licenses freely.

Import declarations, when certified by the customs authorities, serve as 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 present the import declaration later. Foreign exchange may be made available only by the National Bank or—insofar as payments agreements do not prevent them from effecting foreign exchange transactions—by authorized exchange dealers. The form of currency for such payments is prescribed.

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 National Bank required. Transfers of up to DKr 500 for any noncommercial purpose are permitted freely. Foreign exchange for travel outside the dollar area is allocated liberally. For travel to the dollar area, US$30 per day is allocated for business journeys and US$100 per year for tourists.

Travelers may take out freely DKr 500 in domestic banknotes and coins, any amount in foreign banknotes, and any amount in other Danish or foreign means of payment.

Exports and Export Proceeds

Exports of major agricultural products and of a few industrial products to OEEC and dollar area countries, 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 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 from exports must be transferred to Denmark unless the National Bank permits otherwise. If recipients show evidence to the Bank that they need foreign exchange to meet their own future commitments, or to maintain their business, or for necessary purposes abroad, the Bank may exempt them from the general obligation to surrender their exchange proceeds. Transferred foreign exchange must be offered for sale to the National Bank or to an authorized exchange dealer within eight days after receipt. The type of currency to be received for exports is prescribed.

Exporters of most goods delivered to countries listed as belonging to the dollar area (or to U.S. and Canadian military forces stationed outside the dollar area) and 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 7½ 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 OEEC countries and their associated territories, Argentina, Brazil, Bulgaria, Chile, Czechoslovakia, Finland, Hungary, Israel, Poland, Rumania, the Spanish Monetary Area, the U.S.S.R., and Yugoslavia. These import rights are transferable. The price of the titles is stabilized at 80 per cent of their face value, through the following mechanism: if the demand for titles exceeds the supply at the stabilized price, the Government sells titles (called “L-titles”) at a price of 80 per cent of the face value; and if the supply of titles exceeds the demand, the Government purchases them at that price.

Proceeds from Invisibles

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

Travelers may bring into Denmark DKr 500 in domestic banknotes and coins. Foreign banknotes and other Danish or foreign means of payment may be imported freely in any amount.

Capital

Residents have an obligation to transfer to Denmark receipts realized from assets abroad. Residents who have issued foreign currency bonds abroad are permitted to redeem the bonds by buying abroad any such bonds that will fall due within a year. Residents are permitted via a Krone Account IV to grant to close relatives abroad gifts and inheritance advances without limitation and loans up to DKr 25,000 a year. Danish emigrants are granted an exchange allowance of DKr 3,500 per person; they acquire the status of nonresidents after three years’ stay abroad. Permission from the National Bank is required for other transfers abroad of a capital nature by residents; direct investments abroad are, however, authorized liberally.

Nonresident Danish or former Danish nationals may credit capital transfers to nonresident Krone Accounts IV without limitation. Funds in such accounts may be invested freely in Danish portfolio securities that are payable exclusively in Danish kroner, or they may be used for family loans up to DKr 25,000 a year. Funds belonging to Danish nationals may also be invested in real estate. Nonresident foreign nationals may credit Krone Accounts IV with amounts needed to use subscription rights on Danish securities held in portfolio, and to grant loans to their families up to DKr 25,000 a year. Other transfers of capital from abroad by nonresidents require permission from the National Bank or, for direct investments, from the Ministry of Commerce, Industry, and Shipping, which authorizes such investments on a liberal basis.

All payments of a capital nature due to nonresidents have to be credited to a Krone Account IV. Transfers abroad from these accounts may be made freely up to DKr 25,000 a year, and foreign nationals who, after having been domiciled in Denmark, return to their country of origin are freely permitted to transfer up to DKr 75,000 a year per family. Amounts placed in Krone Accounts IV owned by residents of the Uniscan countries (Norway, Sweden, and the Sterling Area) and Finland may be transferred abroad without limitation. Other transfers of a capital nature that are permitted freely are inheritances due to residents of the United States, and repatriation of foreign direct investments in Denmark and commercial and industrial loans and credits made after January 1, 1950.

In general, transfers of nonresident capital assets in Denmark are permitted between residents of the same country, between residents of the Uniscan countries and Finland, and between residents of EPU countries other than Uniscan countries.

Imports and exports of securities require permission from the National Bank. Imports of Danish securities payable only in Danish kroner are permitted if they have been owned by a nonresident for some years; exports of Danish and foreign securities owned by nonresidents are normally permitted also. Nonresidents are permitted to reinvest the proceeds of sales or redemptions of Danish securities in Danish bonds payable exclusively in Danish kroner. Nonresident-owned Danish securities held in Denmark may be sold freely.

Changes during 1957

January 1. “Titles to import license” were issued to exporters for 7½ per cent of the value of the exported merchandise, instead of for 10 per cent as previously.

January 2. Banks in Austria and Austrian schillings were included in the multilateral exchange arbitrage arrangement in operation among most Western European countries.

January 29. (1) A new Executive Order on exchange regulations was issued, as a result of which, among other things, the Ministry of Commerce, Industry, and Shipping took over from the National Bank the licensing of foreign direct investments in Denmark, excluding loans and credits. (2) Nonresident investors were permitted to utilize freely subscription rights to holdings of Danish securities and to reinvest the sales and redemption proceeds of Danish securities in Danish bonds. (3) Inward and outward loans between close relatives, up to DKr 25,000 per borrower per year, were allowed automatically provided the transfers pass through Krone Accounts IV. (4) The foreign exchange allowance for emigrants was raised from DKr 3,000 to DKr 3,500 per person, the allowance for children being the same as for adults. (5) The limit for free import and export of Danish notes and coins by travelers was raised from DKr 300 to DKr 500. (6) Transfers of minor amounts were allowed freely up to DKr 500 for outgoing payments for current invisibles. (7) The allowance for tourist travel to the dollar area was made the same for children as for adults (US$100 per person per year).

April 30. Payments for the charter of foreign ships between foreign ports were authorized to be transferred freely, provided the exchange of currencies is not unfavorable to Denmark. Payments to all countries for repairs abroad of Danish ships were liberalized.

July 2. Payments to and from Paraguay and Uruguay were placed on a multilateral basis.

July 8. The system was abolished under which imports of motorcars and motorcycles had been licensed either against “essential use” permits (e.g., priority users) or against “titles to import license.” In place of this system and also of the turnover tax to which most motor vehicles had been subject on first sale, a new purchase tax on motorcars, motorcycles, trailers, sidecars, caravans, and similar trailer attachments was introduced. An equalization tax on imports of assembled passenger cars was also introduced. Following the introduction of these new taxes, cars, motorcycles, and certain subsidiary items were added to the regional free list, thus raising the OEEC liberalization percentage to 86.

July 31. Payments to and from Yugoslavia were placed on a multilateral basis.

November 26. Inheritances due to residents of the United States were authorized to be transferred freely.

November 26. Payments to Colombia for invisible transactions were permitted in U.S. dollars.

Ecuador

Exchange Rate System

The par value is Ecuadoran Sucres 15.00 = US$1. This rate applies to most major exports, including coffee and cocoa, and a few minor exports, essential and semiessential imports (List 1), nontrade payments by the Government, registered private and official capital, and certain other specified transactions. A multiple currency practice arises from the existence, along with the official market, of a free market for most minor exports, most transactions in invisibles, unregistered capital, and nonessential and luxury imports (List 2). Other rates result from the mixing arrangements applied to the exchange proceeds of exports of bananas, pharmaceuticals, shrimp, other shellfish, and fish. (See Table of Exchange Rates, below.)

Administration of Control

The Monetary Board classifies goods according to the exchange market they must be settled through. 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 this market may enter the free market—conducted by exchange houses—where such transactions are free of supervision by the exchange control authorities.

Prescription of Currency

In principle, exchange proceeds must be received in U.S. dollars, but bilateral agreements with Argentina, Chile, Colombia, France, Italy, and Spain require payment through special accounts, denominated in U.S. dollars, 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 official foreign loans, those of certain foreign companies, and samples and gifts up to a value of US$40, but import licenses are issued freely. Imports are divided in two categories—essential and semiessential (List 1) and nonessential and luxury (List 2). All goods not included in these two lists are prohibited. The Monetary Board is authorized to make shifts between the lists and to add new goods to them.

The granting of an import license by the Exchange Department of the Central Bank for goods on List 1 carries with it the right to purchase the required foreign exchange at the official market rate. Legally, the Central Bank must act on an application within three days, stating any advance deposit that must be paid before the license is issued. For imports of essential and semiessential goods (List 1), no advance deposits are required but payment to the Central Bank of an ad valorem tax of 5 per cent of the c.i.f. value is a prerequisite to the granting of the import license. For imports of nonessential and luxury goods (List 2), foreign exchange to cover the entire import value may be purchased freely in the free market and this exchange must be deposited with the Central Bank prior to the issuance of the import license, along with an ad valorem tax of 10 per cent of the c.i.f. value. The Central Bank issues the import license as soon as the importer has made any advance deposit required and has paid the percentage consular fee applicable to the import.

Payments for Invisibles

Payments for most invisibles are made through the free market and are not subject to exchange control. Certain invisibles may be paid for at the official rate but require an exchange license from the Central Bank, which grants such licenses for the following items: contractual interest payments, repayments on loans, and other obligations abroad which are registered with the Central Bank; payments of dividends, profits, interest, and amortization on registered private foreign investments, up to 12 per cent annually as a minimum; 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 a maximum of US$100 per month for living expenses.

Exports and Export Proceeds

All exports other than those of certain foreign mining companies require licenses—which are issued by the Central Bank—to ensure, among other things, surrender of export proceeds subject to sale at the official rate. The official rate applies to the proceeds of such major products as coffee and cocoa, and to a few minor exports including hides and skins. The proceeds of most minor exports may be sold in the free market.

Exporters of bananas are required to surrender at the official rate the following amounts of their exchange earnings: (1) $1.00 per stem exported to Europe, Latin America, and New Zealand and shipped from any port at any time of the year; (2) $1.20 per stem exported to other countries and shipped from the ports of Esmeraldas and Bahía de Caráquez at any time of the year and from other ports between August 1 and October 31; and (3) $1.50 per stem exported to countries outside Europe, Latin America, and New Zealand and shipped from ports other than Esmeraldas and Bahía de Caráquez between November 1 and July 31. Furthermore, up to 15 per cent of a shipment of bananas to Latin American countries may consist of substandard stems (seven or eight hands), and exporters may sell the entire proceeds from these substandard stems in the free market. Under these conditions, it is estimated that exporters of bananas surrender, on the average, about one half of their export proceeds at the official rate and retain the other half for sale in the free market.

Exporters of fish are required to surrender at the official rate $100 per metric ton. Exchange proceeds above this amount may be sold in the free market, as may the entire proceeds of exports of a variety of tuna called “barrilete.” Exports of shrimp are subject to a surrender requirement of $300 per metric ton. At current market prices, it is estimated that this requirement amounts to approximately 25 per cent of total export proceeds. Exports of shellfish other than shrimp are subject to a surrender requirement of $100 per metric ton. At current market prices, it is estimated that this requirement amounts, on the average, to 15 per cent of export proceeds. (See Table of Exchange Rates, below.)

Proceeds from Invisibles

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 are registered with the Central Bank. Registered capital and earnings of up to 12 per cent as a minimum may be transferred annually at the official rate (see section on Payments for Invisibles, above). The Central Bank may refuse to register capital. Foreign capital for official investments, and foreign capital in the form of foreign exchange sold by foreign companies for the purpose of obtaining local currency to pay local salaries, taxes, and other charges, has to be surrendered at the official rate if the capital is to be registered. Unregistered capital is free to enter through the free market in unlimited quantities. Foreign capital entering in the form of machinery, tools, etc., is treated like foreign monetary capital and requires a license, except when it represents foreign official loans or the capital of certain foreign companies under contractual agreements with the Government. Machinery, equipment, implements, materials, and other similar items brought into the country as foreign investments and intended for the development of national production are exempt from taxes if the Ministry of the Treasury has so authorized. Their re-export is free and exempt from duties.

Table of Exchange Rates (as at December 31, 1957)(sucres per U.S. dollar)
BuyingSelling
15.00(Official Rate)

Most major exports, including coffee and cocoa, and a few minor exports. Registered private capital. Official loans. Government receipts.
15.15(Official Rate)

List 1 imports (cii. value). Nontrade payments by the Government. Interest, profits, dividends, and amortization on registered capital. A few other invisibles.
15.751
Exports of fish.
16.04(60% at Official Rate and 40% at Free Market Rate)
Exports of pharmaceutical products.
16.311
Exports of bananas.
16.801
Exports of shrimp.
17.221
Exports of shellfish other than shrimp.
17.61(Free Market Rate)217.69(Free Market Rate)3
Most minor and marginal exports. Invisibles. Unregistered capital.List 2 imports. Most invisibles. Unregistered capital.

Changes during 1957

During the year, several shifts of commodities between List 1, List 2, and the list of prohibited imports took place. Other significant changes follow.

January 3. Special surtaxes of 20 and 40 per cent on imports from Belgium were abolished.

January 15. The proceeds from exports of sugar were allowed to be sold in the free market.

March 12. The two sections of the free market, i.e., the controlled free market and the uncontrolled (brokers’) free market, were unified. All List 2 imports previously effected at the controlled free market rate of S/ 17.40 per US$1 were shifted to the uncontrolled free market and exporters were allowed to sell in this market foreign exchange which they had previously been surrendering to the Central Bank at S/ 17.30 per US$1. The “mixing” arrangement applicable to exports of bananas was retained: exporters were required to surrender to the Central Bank at the official rate of S/ 15.00 per US$1 the following portions of their exchange earnings: $1.00 per stem for bananas exported to European and Latin American markets, regardless of the time of the year, and $1.20 per stem for bananas exported from the Esmeraldas region, regardless of the import market or time of year. The new regulations also permitted up to 15 per cent of each shipment to European or Latin American countries to consist of substandard stems (i.e., seven or eight hands); proceeds from these exports were not required to be surrendered to the Central Bank.

March 19. A Monetary Board resolution authorized the sale in the free market of the proceeds from rice exports.

April 10. The sale in the free market of proceeds from exports of 5,000 metric quintals of ginned cotton was authorized.

April 24. The sale in the free market of proceeds from exports of corn was authorized (corn exports continued to be subject to prior authorization by the Minister of Economy).

April 25. The sale in the free market of proceeds from exports of cottonseed cake was authorized (cottonseed cake exports required prior authorization in each case by the Minister of Economy).

May 10. The special surtaxes of 20 and 40 per cent on imports from the United Kingdom and the Netherlands were abolished.

June 3. Official entities importing List 2 commodities financed through suppliers’ credits were required to deposit free market exchange with the Central Bank at the time payment became due.

June 7. The sale in the free market of proceeds from exports of canned fish and of fish flour was authorized.

June 7. The commercial banks were authorized to deal in the free exchange market and the foreign exchange which the banks could hold was limited to 15 per cent of their capital and reserves.

June 7. The exchange surrender requirements at the official rate for exports of bananas were modified as follows: (1) $1.00 per stem exported to European and Latin American countries throughout the year and shipped from any Ecuadoran port; (2) $1.20 per stem exported to countries outside Europe and Latin America and shipped through the ports of Esmeraldas and Bahía de Caráquez throughout the year and through other ports between August 1 and October 31; and (3) $1.50 per stem exported to countries outside Europe and Latin America and shipped through ports other than Esmeraldas and Bahía de Caráquez between November 1 and July 31. Up to 15 per cent of a shipment to Latin American countries could consist of substandard stems (seven or eight hands); the entire proceeds from these substandard stems could be sold in the free market.

June 7. The prohibition on imports of automobiles priced higher than $2,200 f.o.b. was canceled and these cars were shifted from the list of prohibited imports to List 2 (i.e., to the free market). Automobiles imported by government entities, however, were still restricted to a maximum of $2,200 each f.o.b. the dealer, plus optional equipment.

July 18. The percentage of foreign exchange balances which banks were allowed to hold was increased from 15 to 20 per cent of paid-up capital and reserves. Banks were also allowed to receive and administer deposits in foreign currencies, with the provision that each bank has to establish with the Central Bank a minimum reserve of 10 per cent of the amount of such deposits.

July 19. The Central Bank was authorized to make payments for imports through letters of credit and also to make payments in advance.

October 22. A new surrender requirement of US$1.00 per stem was established for exports of bananas to New Zealand at any time of the year.

Egypt

Exchange Rate System1

The par value is Egyptian Pound 1 = US$2.87156. Commercial banks’ rates as at December 31, 1957 were $2.8660 buying, $2.8375 selling, per LE 1. A tax of 10 per cent is charged in most cases on exchange allocated for travel and on revenue remitted to Egyptian nationals residing permanently abroad. In addition, there are certain charges for obtaining and processing import licenses. Exchange receipts in specified currencies from exports of cotton were entitled to an exchange premium until December 31, 1957.

Administration of Control

Exchange control in Egypt is supervised by a Supreme Committee for Foreign Exchange, which is 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 exchange control is performed, under the supervision and the instructions of the Director of Exchange Operations, by the Central Exchange Control attached to the National Bank of Egypt. An Export Board controls exports.

Prescription of Currency

The prescription of the manner and currency for making 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. Payments for imports are made as follows: (1) against dollars available in Egyptian accounts blocked in the United States, if the license has been issued in U.S. dollars; (2) in Egyptian pounds or in an agreement currency through accounts maintained in accordance with payments agreements,2 if the license has been issued for imports from agreement countries; and (3) in the currency of the country with which the transaction is carried out, as specified in the individual license.

Payments for Egyptian exports must be received as follows: (1) in Egyptian pounds or in an agreement currency through accounts maintained in accordance with payments agreements, for exports to countries with which Egypt has such agreements; (2) in U.S. dollars, for exports to the dollar area; (3) in Canadian dollars, for exports to Canada; (4) in the currency of the importing country or in U.S. dollars, Canadian dollars, free Swiss francs, or a currency acceptable to the Central Exchange Control, for exports to Denmark, Norway, and Sweden; (5) in U.S. dollars, Canadian dollars, free Swiss francs, or any currency acceptable to the Central Exchange Control, for exports to all other countries. Payments for exports to any country may also be received, subject to the authorization of the Central Exchange Control, in Egyptian pounds from nonresident accounts of the importing country. As a general rule, transit trade and re-exports must be settled on the basis that the same currency is paid and received. The Central Exchange Control can permit exceptions to the above regulations.

Nonresident Accounts

The main categories of nonresident account are described below. All transfers abroad to the debit of nonresident accounts require the prior approval of the Central Exchange Control.

1. Ordinary (or so-called “Free”) Nonresident Accounts. These accounts are named according to the country or monetary area in which the account holder is normally resident, but in the case of the United States, Canada, Switzerland, and Belgium, this applies only to nationals of these countries residing in their own country.

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

3. 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 4, below). They may be debited (a) with amounts up to LE 1,000 per year for living expenses of the account holder in Egypt; (b) for investments in Egyptian Government loans and in inscribed or registered shares in nominative form of companies established in Egypt (not redeemable in less than ten years); and (c) for subscriptions to increases in capital of Egyptian companies in which the account holder is already a shareholder. Income derived from such investments may be credited to an appropriate Ordinary (“Free”) Nonresident Account.

4. Provisionally Blocked Accounts. These accounts are opened for residents of Canada and the United States when funds due to them in respect of capital or revenue are temporarily not transferable because of a shortage of the corresponding currencies. Balances on these accounts may be used for the same purposes as those indicated above under Blocked Accounts, 3(b) and 3(c), and also for living expenses of the 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 require individual licenses, the issuance of which is dependent on the currency and method of settlement and the category of the goods. Applications for all import licenses must be accompanied by a fee of 7 per cent of the value of the import. In addition, import licenses involving payments in certain currencies are subject to an inspection fee of 10 per cent for individual imports and 20 per cent for government imports. Global limits are set periodically for the import licenses which can be granted to private individuals who require official exchange to pay for imports made during specified six-month or three-month periods. As a rule, licenses are issued fairly freely for imports of essential goods and raw materials and on a more restrictive basis for semiessentials. Certain specified nonessential and luxury goods are prohibited. Import licenses may be obtained for individual commodities or for groups of commodities. Up to 65 per cent of the value of capital arriving in Egypt may be authorized in the form of imports of goods essential to the national economy, provided that the remaining 35 per cent is imported in the form of free currencies.

Payments for Invisibles

Banks are authorized to effect payments for certain invisibles without prior exchange control approval; payments for other invisibles require prior approval of the Central Exchange Control. Exchange is normally made available for expenses associated with approved trade transactions and other current payments. Expenses for permitted travel, family maintenance, film royalties, and subscriptions and fees of professional organizations usually are approved within specified quotas. There is a basic exchange allowance for travel of LE 75 per adult per year, with additional amounts for elderly persons. Exchange for travel and for remittances to Egyptian nationals abroad is subject to a 10 per cent tax; however, remittances of diplomats, students, certain officials, and others are exempt from this tax. Persons leaving Egypt may take with them no more than LE 20 in Egyptian banknotes. 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, may be taken out by the travelers concerned.

Exports and Export Proceeds

Exports are allowed without restriction unless 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 three months from the date of shipment of the goods. Proceeds from exports to payments agreement countries must be obtained in accordance with the provisions of the relevant agreements. Exports under barter are subject to barter licenses. Exchange receipts in specified currencies from exports of cotton were entitled to a premium until December 31, 1957.

Proceeds from Invisibles

All persons and legal entities in Egypt are obliged to offer to authorized banks at the official exchange rate all proceeds in foreign currencies, within one month from the date of their collection abroad. Suez Canal tolls must be received in Egyptian pounds from Shipping Accounts No. 1, balances on which may only be fed with sales of certain currencies according to the foreign country concerned (see section on Changes during 1957, March 21 and May 13, below). Persons arriving in Egypt from abroad may 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 except for transfers to some neighboring countries. The import and export of securities and similar items require licenses.

Nonresidents may freely purchase securities on Egyptian stock exchanges against payment in acceptable foreign currencies or in Egyptian pounds by debiting an appropriate nonresident account. Certain categories of securities may be bought to the debit of Blocked Accounts or Provisionally Blocked Accounts (see section on Nonresident Accounts, above). Proceeds from sales of securities held under “nonresident dossier” are credited to Blocked Accounts. Transfers of securities between nonresidents of the same monetary area are permitted. Transfers abroad are permitted in respect of (1) securities drawn or matured in accordance with the original terms of issue, (2) income from securities quoted on an Egyptian stock exchange and held for 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 a family’s assets in Egypt to residents of foreign nationality who acquire nonresident status. Any amount above this limit is credited to a Blocked Account, except that capital transfers to Switzerland may exceed LE 5,000. Any payment of a capital nature not remittable under the exchange control regulations must be credited to a Blocked Account.

The Foreign Investment Law of April 2, 1953 and Law No. 475 of 1954 define the 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. Decrees providing for the Egyptianization of certain types of foreign investment were put into effect early in 1957.

Changes during 1957

January. The Egyptian Cotton Commission announced that government cotton stocks would be sold for export at public auction only for U.S. dollars, deutsche mark, or Swiss francs.

February 14. A trade and payments agreement with Libya became effective.

February 20. All import permits issued before September 1, 1956 were canceled except for goods already shipped. Payments through nonresident accounts were limited and it was announced that future payments would be made in foreign currencies. At the same time, some increases in exchange quotas were announced, along with measures to limit profits on imported goods.

February 23. Repatriation of export proceeds had to be made within three months, instead of six months as previously.

March 21. Rules were established for the receipt of Suez Canal tolls. Tolls should be paid in Egypt in Egyptian pounds to the debit of Shipping Accounts No. 1. These accounts must be fed as follows: accounts of the American Monetary Area, with U.S. dollars; Canadian accounts, with U.S. dollars or Canadian dollars; Swiss accounts, with U.S. dollars, Canadian dollars, or free Swiss francs; accounts of other countries, except India, with any of the above currencies or with Danish kroner, Norwegian kroner, Swedish kronor, Belgian francs, Netherlands guilders, Italian lire, Portuguese escudos, or deutsche mark, provided they are fully transferable into any EPU currency; and Indian accounts, with any of the above currencies or with Indian rupees. Shipping Accounts No. 2 were reserved for receipts and disbursements arising from shipping business carried out in Egypt on behalf of foreign shipowners or charterers.

March 23. It was announced that certain exchange premiums would be granted for cotton exported between March 23 and May 19, 1957. The premium was 7 per cent (later raised to 10 per cent) for sales to India in Indian rupees, 10 per cent for sales to Italy in Italian lire, 15 per cent for sales to the Federal Republic of Germany in deutsche mark, and 20 per cent for sales to the United States and Canada in U.S. dollars; but for sales in U.S. dollars to countries other than the United States or Canada, the premium was 15 per cent.

April 8. Payments and financial agreements with the Sudan were concluded, providing for the withdrawal of Egyptian currency circulating in the Sudan and arranging future settlements between the two countries.

May 5. It was announced that a 10 per cent fee would be charged importers who settle U.S. dollar obligations for transactions concluded prior to July 31, 1956 from blocked funds released by the U.S. Treasury. A 10 per cent fee would also be collected in respect of all import licenses issued in dollars, deutsche mark, Italian lire, Indian rupees, Danish kroner, Norwegian kroner, and Swedish kronor.

May 13. Sterling in Special No. 1 Accounts could be used to feed Shipping Accounts No. 1 of Western European countries.

May 20. It was announced that a premium would be granted on the proceeds of exports of cotton shipped before August 31, 1957, as follows: for exports to the United States and Canada for local consumption, 25 per cent for proceeds repatriated in U.S. dollars or Canadian dollars; for exports to Western European countries, 20 per cent for proceeds repatriated in U.S. dollars, Swiss francs, or EPU currencies; and 15 per cent for proceeds repatriated in Indian rupees or through the Egyptian-Italian clearing account.

June 3. It was established that import licenses would be issued for payments in sterling from an Egyptian Account for imports of goods contracted for in sterling before July 28, 1956. The opening of credits and/or transfers applied for on the strength of such licenses could be effected by means of a debit to an Egyptian Account in the United Kingdom without prior reference to the Central Exchange Control. Pensions due to British subjects could also be paid in sterling to the debit of an Egyptian Account.

July 1. A new rule was established for import licensing: Applications for import licenses must be submitted to an authorized bank for processing by the Import Control Department. Upon receiving an application, the bank is required to collect a fee of 7 per cent of the import value for account of the Ministry of Commerce. This fee is refundable in the event that the application is rejected. The bank issues import licenses in the light of the Import Control Department’s decision on each application, with the exception of those requiring payment in deutsche mark, U.S. dollars, Canadian dollars, Indian rupees, Italian lire, Swedish kronor, Danish kroner, or Norwegian kroner; applications for import licenses involving payments in these currencies must be submitted by the banks to the Central Exchange Control to be screened. An “examination fee” of 10 per cent for individual imports and 20 per cent for government imports is levied on each application.

July 17. It was announced that a 10 per cent premium would be granted on the value of exports of cotton from the new Egyptian crop contracted for and shipped before October 31, 1957, provided payment was received in U.S. dollars, Canadian dollars, or EPU currencies. For cotton contracted for and shipped from November 1 to December 31, 1957, the premium would be 5 per cent. The normal price would be restored in January 1958.

July 21. A payments agreement with Italy, signed July 6, 1957, became effective. It provided for payments to be made in multilateral lire.

August 26. It was announced that, from September to December 31, 1957, 70 per cent of the value of exports of cotton to all countries except Israel could be received in Egyptian pounds through the clearing accounts of Austria, Belgium, the Netherlands, or Switzerland. The remaining 30 per cent had to be received in U.S. dollars, Swiss francs, deutsche mark, or multilateral Italian lire, or in transferable sterling credited to Egypt’s Special No. 1 Account.

September 17. An Export Board was established to promote and regulate exports.

October. There was a tendency further to restrict import payments in Egyptian currency and to release the foreign exchange needed to pay for imports, since the use of Egyptian currency constituted an additional discount on cotton prices. The Egyptian pound would, however, continue to be the medium of payment for imports from countries having payments agreements to that effect. It was also decided that barter deals and trilateral transactions, except for essential commodities, would be discontinued.

October 13. The trade and payments agreement with Hungary was renewed.

October 19. The payments agreement with Rumania was renewed.

October 24. It was announced that, for import licenses issued in Belgian francs, Netherlands guilders, or Portuguese escudos, a fee would be collected at the rate of 10 per cent for imports by individuals and 20 per cent for imports for account of the Government.

December 31. A payments agreement with Tunisia became effective.

Note. On February 10, 1958, a system of “export pounds” was introduced. Under this system, “export pound accounts” are established which may be used for financing most transactions with countries other than those with which Egypt has payments agreements stipulating payment in Egyptian pounds. Excluded from the “export pound” system are proceeds from exports of rice and transactions through Shipping Accounts, including receipts of Suez Canal tolls. “Export pound accounts” may be held only by nonresidents and by certain Egyptian authorized banks, after approval by the exchange control authorities.

Imports are financed by paying local currency to the credit of an “export pound account” at the appropriate rate. If the account is in the name of an authorized bank, it is the responsibility of the bank to arrange payment abroad in foreign exchange. Alternatively, the “export pound account” may be held by the nonresident to whom the payment is due. Export receipts in foreign exchange are either retained by authorized banks to make payments abroad or sold to the National Bank, the local currency equivalent being debited to an “export pound account” held by an Egyptian bank. If the export receipt is through an “export pound account” held by a nonresident, payment is made to the resident in local currency by debiting the equivalent to the nonresident’s “export pound account.”

The National Bank has intervened since March 1, 1958 to stabilize the rate of the “export pound”; on March 10, the rate involved a premium of 26.5 per cent on the par value rate. Tourists may (since March 5) receive the benefits of the “export pound” arrangement.

Ethiopia

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

Outgoing payments must be effected in foreign exchange appropriate to the country of the recipient or, for countries outside the dollar area, in sterling. Foreign exchange from exports must be received in an appropriate currency, usually that of the country of final destination of the goods. The proceeds of coffee exports are subject to special regulations (see section on Exports and Export Proceeds, below).

Imports and Import Payments

There are no import licenses, but payments abroad for imports require exchange licenses, which are granted freely for all goods in the currency appropriate to the country of origin or in sterling. Application for an exchange license must be made prior to the arrival of the goods. Although the exchange license states 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. Invisibles connected with trade transactions are treated on the same basis as the goods to which they relate. Exchange for education abroad is granted within reasonable limits on a case-to-case basis. Foreign employees under contract with the Ethiopian Government may remit currently a maximum of 35 per cent of their salaries. Remittances by other foreign employees or personnel for family maintenance are permitted on a graduated scale, rising to 25 per cent of income. Foreign companies may remit dividends of up to 25 per cent of their invested and reinvested capital in the currency of the original investment. Emigrants’ allowances and transfers of legacies are permitted up to Eth$70,000 or the equivalent in foreign currency. For larger sums, reference has to be made to the Foreign Exchange Advisory Committee; the policy of the Committee in such cases is to spread the total transfer over a period of years so that the amount transferred in any one year does not exceed Eth$70,000.

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.

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 prices are established for all exports. The granting of the license by the Exchange Controller enables the goods to pass through customs. The licensing system is used to ensure that foreign exchange receipts are surrendered to the State Bank of Ethiopia and that export proceeds are received in an appropriate currency (see section on Prescription of Currency, above).

In due time, exporters must surrender at the official rate the promised minimum amount of foreign exchange. There are special regulations for the proceeds of coffee exports: exporters are required to surrender U.S. dollars for exports to the dollar area, or transferable sterling for exports to other countries, subject to the submission of documentary proof as to final destination; where this proof is not available, at least 50 per cent of the proceeds must be surrendered in U.S. dollars and the remainder in transferable sterling.

Proceeds from Invisibles

Foreign 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. Special concessions are made to approved new enterprises financed by foreign capital, including exemption from taxes for a period of five years, admission of all imports of machinery free of duty, and permission to foreign investors to remit abroad annually a portion of profits earned (see section on Payments for Invisibles, above). All payments to foreign countries on account of capital are subject to individual exchange license. Foreign exchange is granted for repayment abroad of matured capital and for the obligations of temporary residents. Other types of capital transfer are handled on a case-to-case basis.

Changes during 1957

No significant changes took place during 1957.

Finland

Exchange Rate System

The par value is Finnish Markkas 320 = US$1. The official rates are Fmk 319 buying, Fmk 321 selling, per US$1. Finland operates a single rate structure with the maintenance of parity values and orderly cross rates.1 Official fixed buying and selling rates are applied to some currencies, but those in the Western European multilateral arbitrage scheme (other than the French franc) are dealt in at fluctuating rates maintained within margins approximately ¾ of 1 per cent on either side of the par value. Authorized banks are permitted to effect arbitrage operations with one another and with their authorized correspondents abroad in a number of currencies.

Administration of Control

The Bank of Finland operates the exchange control system. Foreign exchange may be purchased only from the Bank of Finland or authorized exchange dealers (commercial banks). The administration of import licensing is handled by an office subordinate to the Ministry of Commerce, the Licensing Office, which is presided over by a Licensing Board composed of government officials.

Prescription of Currency

In general, the prescription of currency requirements are designed to ensure that the methods of payment conform to the provisions of existing payments agreements.2 Sterling is a key currency in Finnish trade with western countries, and Finland uses the facilities of the Transferable Account arrangements (see section on Nonresident Accounts in the survey on the United Kingdom). Finland has access to a multilateral arbitrage arrangement under an agreement with certain Western European countries,3 and payments to and from these countries may be made in any of their currencies.

Nonresident Accounts

Two types of nonresident account are operated under the control of the Bank of Finland.

1. Exchange Markka Accounts. All permitted transfers of a current nature due to nonresidents and proceeds of sales of exchange by nonresidents may be credited to these accounts. These accounts are equivalent to foreign exchange and may, as a rule, be freely transferred abroad to the country and in the currency of the account holder.

2. Blocked Accounts. All markka assets of nonresidents not authorized for credit to Exchange Markka Accounts are credited to these accounts. They are not transferable abroad, nor may they, without the consent of the Bank of Finland, be transferred between nonresidents. Certain expenditures in Finland may, however, be defrayed from Blocked Accounts, in particular (1) living and traveling expenses in Finland up to Fmk 100,000 monthly per account holder or member of his family or, if the account is held by a firm, per person employed by the firm; (2) purchase of the account holder’s ticket for his return home; (3) expenses related to the administration of property and assets of the account holder; (4) investments in securities quoted on the Finnish Stock Exchange (but only out of balances accrued from earnings, from amortization of loans or bonds, or from the sale of property with a view to reinvestment).

Imports and Import Payments

Most goods are on a free list, permitting them to be imported without an import license from the countries in footnote 3 and their overseas territories;4 other imports from these countries are subject to automatic licensing or to a system of global quotas and individual import licensing. Imports from other countries require import licenses, which are of two types—automatic licenses and ordinary restricted licenses. Under the automatic licensing procedure, all goods on the free list may also be imported from the independent Sterling Area countries, and most goods on this list may be imported from a number of countries with which Finland has bilateral payments agreements.5 A considerable number of these goods may also be imported from the dollar area under the automatic licensing procedure or under certain global quotas.

Exchange appropriate to the exporting country is granted without delay for all permitted imports on presentation of an application form, the import license if required, and the original commercial invoice, provided the goods are already in the country or there is sufficient evidence to guarantee their importation.

Payments for Invisibles

Payments not connected with imports are for the most part subject to the approval of the Bank of Finland, and all contracts involving payments to nonresidents must be submitted to the Bank for approval. If the Bank of Finland has approved a contract providing for transfers abroad, exchange is granted automatically for such payments.

Transfers on account of income on capital owned by nonresidents are generally permitted for (1) interest due from bonds denominated in Finnish markkas and (2) dividends on shares in Finnish companies on the condition that the shares have been uninterruptedly in the possession of a citizen of the same foreign country since January 1, 1952 or the shares were acquired later against payment to Finland in foreign currency or through a clearing account and have since then been in such continuous possession.

A Finnish resident going abroad may, for each journey, purchase from commercial banks up to Fmk 20,000 in foreign exchange for each visit to the Scandinavian countries and up to Fmk 40,000 for each visit to other countries. In addition, he may take with him Fmk 10,000 in Finnish notes.

Exports and Export Proceeds

All exports are subject to license, 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 payment, the authorities are able to ensure that exports conform to Finnish trade agreements and that exchange surrender requirements are fulfilled.

The authorized exchange dealers, insurance companies, and shipping firms are allowed to maintain their own working balances in foreign exchange, under the supervision of the Bank of Finland. Export firms are also permitted to keep a part of their export proceeds in foreign exchange accounts with Finnish banks, and in exceptional cases with foreign banks. The accounts may be used by the exporter for the payment of incidental expenses related to exports and for payments for authorized imports of raw materials, equipment, and machinery. The Bank of Finland may at any time claim the accounts against payment at the official rate.

Proceeds from Invisibles

All foreign exchange proceeds from invisibles 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 transfer on account of nonresident capital is subject to approval by the Bank of Finland. As a rule, such transfers are not permitted, but inheritances of Canadian and U.S. citizens may usually be transferred abroad, subject to certain conditions.

All nonresident-owned investments and property in Finland and proceeds from their sale are, as a rule, considered as blocked assets. Such proceeds and other blocked assets may be credited to Blocked Accounts (see section on Nonresident Accounts, above).

Persons residing in Finland are required to declare and surrender their foreign securities, investments, and proceeds accruing from property owned abroad. The obligation to surrender is, however, not applicable to (1) assets owned by foreigners prior to June 22, 1941, (2) assets owned by foreigners at the time of taking up residence in Finland after that date, or (3) inheritances and wills or the yield on all such assets received by foreigners after June 22, 1941. Outward transfers of capital by residents are subject to individual approval, which is seldom granted.

The import and export of securities and any transactions in securities involving nonresident interests require approval.

Changes during 1957

January 21. The amount of foreign exchange which Finnish residents traveling abroad were permitted to buy was reduced from Fmk 25,000 to Fmk 20,000 for each journey to Scandinavian countries and from Fmk 50,000 to Fmk 40,000 for each journey to other countries.

February 4. The Austrian schilling was included in the currencies dealt in at fluctuating rates maintained within margins approximately ¾ of 1 per cent on either side of the par value.

April 1. Imports by Finland from the countries listed in footnote 3 and France were admitted in accordance with three groups of quota lists. The first group consisted of 64 global quotas, within each of which the importer was free to select both the commodity to be imported and the country from which it could be obtained. (Some of these quotas also covered imports from Canada and the United States.) The second group consisted of 13 quotas, within which the Finnish authorities determined the importer and the commodity but the choice of country of supply was free. The licensing of imports in the third group was subject to full control. Payments between Finland and these Western European countries were based on multilateral principles, enabling Finland to transfer foreign exchange earnings from one country to another. The new trade and payments arrangements were implemented by a protocol, under which these countries agreed to grant as liberal a treatment as possible to imports from Finland and Finland undertook to be liberal in the granting of export licenses. The agreement was initially concluded for the period from April 1 to September 30, 1957.

May 1. The requirement of an advance deposit of 10 per cent for all imports was abolished.

June 6. The right of the Bank of Finland to transfer all of its French franc assets (see April 1, above) was reduced to 10 per cent of Finland’s export earnings. This reduction was retroactive to April 1.

September 15. The par value of the Finnish markka was changed from Fmk 230 to Fmk 320 per US$1. The special tourist exchange rates and other multiple currency practices were abolished. Inland Markka Accounts and Travel Markka Accounts were discontinued and balances were merged with Exchange Markka Accounts.

October 1. Automatic licensing was reintroduced for over 200 commodities and groups of commodities imported from the countries listed in footnote 3 (except Italy). These countries guaranteed that they would continue to apply OEEC liberalization to imports from Finland and that the previously extended transferable payments arrangements (see April 1, above) would be maintained. Restricted imports from these countries remained subject to global quotas, some of which also covered imports from the dollar area. France was excluded from the list of countries benefiting from the automatic licensing arrangements.

October 30. Over 20 commodities and groups of commodities were added to the list published on October 1, 1957.

December 9. Most goods on the automatic licensing list were transferred to a free list and exempted from import licensing; the remainder continued under automatic licensing. The free list applied to imports from the countries in footnote 3.

December 17. A new payments agreement with Italy came into effect providing for settlements between Finland and Italy to be made in multilateral lire. (Effective January 2, 1958, the Bank of Finland began to quote limited fluctuating rates for the Italian lira.)

December 17. The authorities published a list of goods which would be licensed automatically (as from December 19) when the exporting country and the country of origin belong to the dollar area, and a list of goods which would be licensed automatically (as from December 19) when the exporting country and the country of origin are bilateral agreement countries (see footnote 5).

December 23. The partial transferability of the French franc was withdrawn by France.

France

Exchange Rate System

Since January 1948, France has not maintained an agreed par value in terms of the Fund’s Articles of Agreement. Exchange rates in France are stable and of an essentially unitary character, with orderly cross rates. The officially quoted rate for the U.S. dollar is around F 350 per US$1. However, all sales of foreign exchange are subject to a 20 per cent surcharge and all purchases of foreign exchange are subject to a 20 per cent premium. Hence, all foreign exchange transactions are conducted at effective rates corresponding to F 420 per US$1.

Exchange rates for 4 currencies—the Canadian dollar, the Djibouti franc, the Mexican peso, 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. Mexican pesos, U.S. dollars, and Canadian dollars may, when needed for authorized payments, be acquired by the authorized banks through arbitrage transactions between the three currencies. Exchange rates for 14 other currencies fluctuate according to authorized demand and supply, between limits approximately ¾ of 1 per cent on either side of the established parities. In respect of 101 of these 14 currencies, 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. Authorized banks may also conclude spot transactions in these 10 currencies against French francs in the Nonresident Accounts of the following countries: Argentina,2 Brazil, Mainland China, China (Taiwan), Hungary (Special Accounts only), Japan, and Paraguay.3 The arbitrage arrangements are not in operation for the other 4 currencies.4

Rates for other currencies are notified to the authorized banks by the Bank of France either on the basis of the quotations in London and New York and the quotations 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 as a general rule settlements between France and countries whose currencies are not mentioned above are effected in French francs through appropriate Nonresident. Accounts.

Rates representing a deviation from the officially published rates derive from the sale of Capital Account francs by nonresident owners to other nonresidents of the same monetary area for investment (see section on Nonresident Accounts, below). The rate for the Capital Account franc as at December 31, 1957 was about F 455 per US$1.

Exchange Control Territory

The French Franc Area comprises Continental France (including Corsica), the Principality of Monaco, the Territory of the Saar, the French Overseas Departments (Algeria, Guadeloupe, Martinique, Guiana, and Réunion), Morocco, Tunisia, the French Overseas Territories (French West Africa, French Equatorial Africa, the Trust Territories of Cameroon and Togo, Madagascar and its dependencies, Comoro Islands, St. Pierre and Miquelon, New Caledonia and dependencies, the French Establishments in Oceania, and the Condominium of New Hebrides), and Cambodia, Laos, and the Republic of Viet-Nam. 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) carries out French exchange control policy and issues import licenses in accordance with directions formulated by various governmental bodies. The Exchange Office 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, and 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 made—usually in French francs to or from an appropriate nonresident account 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,5 the provisions of the agreements determine the prescriptions of currency. 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 currency.

Nonresident Accounts

The main types of nonresident account in French francs are described in the following paragraphs.

1. Free Franc Accounts. These accounts may be credited with the franc proceeds from sales of currencies considered as convertible (Canadian dollars, Djibouti francs, Mexican pesos, and U.S. dollars), with transfers from other Free Franc Accounts, and with payments authorized for credit to such accounts. Balances on Free Franc Accounts may be utilized freely to purchase any foreign currency negotiated in the Paris exchange market, including convertible currencies. They may be debited for all payments in the French Franc Area or for transfers to any other nonresident franc account. Free Franc Accounts are held mainly by residents of the dollar area6 and the French Somali Coast.

2. Nonresident Accounts (designated geographically according to the country or monetary area in which the account holder resides). These accounts are related to non-dollar countries. They are convertible into the currency of the country of residence of the account holder if that currency is dealt in on the Paris exchange market.7 They may be credited freely with the franc proceeds from sales of convertible currencies in the Paris exchange market, with transfers from Free Franc Accounts, and with proceeds from the sale of a currency related to the same country as that of the account holder. Transfers between accounts related to the same country or monetary area are permitted freely. Balances on Nonresident Accounts related to EPU countries and to Argentina, Brazil, Mainland China, China (Taiwan), Hungary (except for transfers related to goods under bilateral quotas), Japan, and Paraguay8 are freely transferable with one another and may be interchanged freely with EPU currencies in the Paris exchange market. Yugoslavia benefits from the same transferability for 10 per cent of her current receipts in France. Nonresident Accounts are available for payments in the French Franc Area from a resident of the country of the account holder, including payments for exports to that country.

3. Capital Accounts. These accounts are also designated geographically according to the country of residence of the account holder. They are credited with the proceeds of capital transactions not available for direct remittance to the account holder. Transfers between Capital Accounts of the same nationality, between those related to dollar area countries, and between those related to EPU countries and their monetary areas, are permitted freely. Balances on these accounts may be utilized freely for such purposes as buying investments quoted on stock exchanges in France and French short-term securities. The use of these balances is authorized liberally for all other forms of investment or for the maintenance of property in the French Franc Area.

In addition to the above-mentioned accounts, there are Tourist Accounts, designed mainly for the deposit of French banknotes held by nonresidents, and Internal Accounts of Nonresidents, mainly for persons staying temporarily in the French Franc Area or whose residence is not determined.

Imports and Import Payments

All imports are subject to individual license. Special licensing treatment is given to the following: (1) imports previously included in liberalized import lists but not subject to quotas; (2) imports from countries within the quotas in the trade arrangements concluded with those countries; (3) coal and steel products from the other member countries of the European Community for Coal and Steel (Belgium, the Federal Republic of Germany, Italy, Luxembourg, and the Netherlands); (4) specified raw materials or other goods needed for the production of goods to be exported (IMEX and EXIM procedure); and (5) goods which are imported under the EFAC arrangements (see section on Exports and Export Proceeds, below).

The import license, which is issued by the Exchange Office, constitutes the authority for the authorized bank handling the transaction to effect payment. The purchase of exchange by importers is subject to a 50 per cent deposit, which is returned at the time payment is made to the foreign supplier.

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 related 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. Exchange up to F 25,000 monthly per beneficiary is granted for family maintenance abroad. Appropriate foreign exchange is granted for 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 special accounts, called comptes cinéma and governed by special regulations. Transfers on account of membership fees, subscriptions, donations, and movements of emigrants’ funds are permitted up to specified limits. Foreign exchange is not granted to exporters and importers for insurance abroad of risks concerning persons, property, or liability in France, which may only be insured in France with French insurance companies or foreign companies authorized to conduct insurance business in France.

Quantitative restrictions are applied to the allocation of exchange for travel. There are special facilities 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 freely up to certain limits on an individual basis for travel abroad for education and health. The delivery of foreign exchange for travel abroad is subject to a tax of F 500 on amounts not exceeding F 15,000, F 1,000 on amounts not exceeding F 35,000, and F 1,000 per F 35,000 or fraction thereof on amounts exceeding F 35,000. (See also section on Changes during 1957, February 2, below.)

Travelers, as well as residents and nonresidents living near French frontiers, may 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 F 20,000.

Exports and Export Proceeds

Some exports are subject to individual license. Export proceeds must be collected within 90 days from the arrival of the goods at their destination and in the manner set forth in the regulations (see section on Prescription of Currency, above). The procedure is simplified for exports not exceeding F 200,000, with a few exceptions. Foreign exchange proceeds must be surrendered within a month from the date of their receipt.

The following percentages of export proceeds are, however, exempt from the surrender requirements: (a) 15 per cent of the proceeds of exports to any country, payable in U.S. dollars, Canadian dollars, Djibouti francs, Mexican pesos, or francs from a Free Franc Account; (b) 10 per cent of the proceeds of exports paid for in any other manner; and (c) 6 per cent of the proceeds of exports on consignment. These retained percentages of export proceeds are kept in special EFAC (Exportations-Frais Accessoires) 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. However, EFAC accounts related to EPU and some other countries are interchangeable among themselves and with EFAC accounts related to dollar countries. The retained proceeds must be used by the original exporter or supplier of the goods either for meeting incidental expenses or for certain imports, which are limited to raw materials, capital goods, and merchandise used directly by the importing firm. The Exchange Office may, on an individual basis, permit exporters to retain a percentage of export proceeds higher than those indicated above; such permits are granted particularly for exports that require considerable publicity expenses abroad. Authorized banks with which EFAC accounts are held have, at the end of quarterly periods, to surrender 10 per cent of unutilized balances, except for certain minimum balances.

Proceeds from Invisibles

Residents are obliged to collect, and to 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 F 10,000. Hotels and similar establishments dealing with foreign tourists are permitted to retain a percentage of their exchange proceeds under conditions similar to those applicable to exporters, i.e., they may maintain EFAC accounts (see section oh Exports and Export Proceeds, above).

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

Capital

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

New investments in France or in the French Franc Area by nonresidents 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 from 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 regulations of the Exchange Office, i.e., 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 F 10 million, and with the authorization of the Exchange Office for any other investment, especially in unquoted stocks or in a business or by making loans for amounts exceeding F 10 million.

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 Capital Accounts (see section on Nonresident Accounts, above). Immovable property and French securities in France belonging to nonresidents may be transferred between residents of the same country; foreign securities held in France may be transferred between nonresidents of various countries.

Banknotes

Banknotes in Belgian francs, Canadian dollars, Djibouti francs, Portuguese escudos, Swiss francs, or U.S. dollars may be purchased by the authorized banks, without any limitation on the amount, at the rates of the market prior to the day of transaction. Banknotes in Italian lire may be purchased by authorized banks on the basis of the market rate. In both these cases, an authorized bank holding an amount of banknotes higher than that needed for its transactions may sell the notes to other authorized banks or to the Bank of France. Other foreign banknotes may be purchased by authorized banks from their customers at any 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 from the Exchange Office, up to the maximum amounts that other foreign exchange control authorities permit nonresident travelers to import. These sales take place at rates determined as indicated above.

Changes during 1957

January 1. Authorized banks in France were permitted to carry out spot exchange arbitrage operations with Japan in EPU currencies. Balances on Nonresident Accounts related to Japan became freely transferable with balances on Nonresident Accounts related to EPU countries, Argentina, Brazil, Mainland China, China (Taiwan), Finland, Hungary (except for transfers related to goods under bilateral quotas), and Paraguay, and could be interchanged freely with EPU currencies in the Paris exchange market.

January 1. The special import procedure applicable to listed equipment goods, raw materials, and semifinished products for specified export-producing industries was suspended.

January 2. Austrian banks and Austrian schillings were included in the multilateral arbitrage arrangement in which France participates with Belgium-Luxembourg, Denmark, the Federal Republic of Germany, Italy, the Netherlands, Norway, Sweden, Switzerland, and the United Kingdom.

February 2. The exchange allocation for French tourists traveling abroad, previously allowed for two journeys per year (F 70,000), was limited to one journey per year (F 35,000) and reduced from $600 to $300 for travel in the dollar area. The special exchange allocation for residents living near the Swiss frontier was abolished.

February 2. The special, temporary, compensatory tax on products the importation of which from OEEC countries was liberalized (levied irrespective of the origin of the imports) was raised from a range of 7 to 15 per cent of the import value to a uniform 15 per cent. A number of imports not hitherto subject to this tax were made subject to it.

February 13. A tax was introduced on the delivery of foreign exchange against French francs for travel abroad. The tax was fixed at F 500 on amounts not exceeding F 15,000, F 1,000 on amounts not exceeding F 35,000, and F 1,000 per F 35,000 or fraction thereof on amounts exceeding F 35,000.

March 15. Importers, with some exceptions, were required to place an advance deposit with commercial banks of 25 per cent of the value of their imports. For liberalized imports, the deposit was to be made immediately before the license was applied for and the advance deposit was to be maintained until the last payment had been made to the foreign supplier. For nonliberalized imports, the deposit had to be made within ten days after the license was given. The import certificate procedure was suspended, thus making imports covered by this procedure again subject to request licensing, although licenses would be granted automatically. The period of validity of all import licenses to be granted after March 15 was reduced from six months to three months.

March 28. Hotels and similar establishments dealing with foreign tourists were entitled to tax rebates and social security refunds, except in the months of July and August.

April 6. The import certificate procedure was re-established for import transactions not exceeding F 200,000. The purchase of exchange by importers was made subject to the payment of a 25 per cent deposit, except for imports already subject to the advance deposit requirements introduced on March 15. The deposit is returnable when payment is made to the foreign supplier.

May 30. The regulation was abolished under which balances on Nonresident Accounts related to Finland had been freely transferable with Nonresident Accounts related to EPU and certain other countries and freely interchangeable with EPU currencies in the Paris exchange market. The following operations were made subject to permission of the Exchange Office: (1) transfers between Nonresident Accounts related to Finland and Nonresident Accounts related to any other country, unless such transfers could be made by debiting Free Franc Accounts; (2) the crediting of Nonresident Finnish Accounts with proceeds from the sale in the exchange market of foreign currencies other than Canadian dollars, U.S. dollars, and Mexican pesos; and (3) the utilization of these accounts to purchase foreign currencies in the exchange market. However, the balances of the Bank of Finland on the books of the Bank of France continued to be transferable until December 23, 1957.

June 5. The advance deposit required on imports (see March 15 and April 6, above) was raised from 25 per cent to 50 per cent.

June 18. All liberalization of imports was suspended.

August 11. A 20 per cent surcharge was introduced on payments for a substantial proportion of imports and on all other payments to foreign countries, and a 20 per cent premium was introduced on the proceeds from most exports and on all other receipts from foreign countries. Imports of coal, petroleum products, steel, sulphur, textile raw materials, and a few other products were exempted from the surcharge. Exports not entitled to the premium included the products exempted from the surcharge on imports, as well as finished textiles. Moreover, imports of cereals by the French Overseas Departments and Territories were exempted from the surcharge. The special compensatory tax on formerly liberalized OEEC imports, irrespective of origin, and the system of tax rebates and social security refunds were abolished, except that the latter was maintained for exports of textiles and certain chemicals not entitled to the export premium.

The advance deposit required for delivery of licenses for certain imports (see March 15, above) was abolished, and the advance deposit required on the purchase of exchange by importers (see April 6 and June 5, above) was extended to cover all imports.

The period of validity of import licenses (which had been reduced to three months on March 15) was again extended to six months.

August 13. Authorized banks were no longer permitted to cover forward short-term investments made in France by banks in the United States or Switzerland.

August 28. Balances on Capital Accounts could no longer be freely utilized 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. Any use of balances on Capital Accounts for such purposes became subject to license.

September 21. The system of tax rebates and social security refunds was changed for exports of textiles by giving exporters the choice between such rebates and refunds calculated in the accustomed manner or a flat percentage of value added.

October 28. All imports were made subject to the 20 per cent surcharge and all exports to the 20 per cent premium. At the same time the remaining tax rebates and social security refunds for exporters were abolished.

November 9. The maximum interest rate on loans granted to residents by nonresidents out of balances on nonresident accounts, including Capital Accounts, was set at 6 per cent.

November 29. Authorized banks were permitted to conclude forward exchange transactions with Argentine banks in currencies in the Western European multilateral arbitrage arrangement (deutsche mark were not included until March 3, 1958).

Federal Republic of Germany1

Exchange Rate System

The par value is Deutsche Mark 4.20 = US$1. Official market rates are maintained within the limits of 1 per cent on either side of the par value. Exchange transactions take place at uniform rates based on the par value.

Banks in Germany may carry out spot and forward exchange transactions with each other, with German residents, and with nonresidents in all currencies, provided that, in dealings with nonresidents, freely convertible currencies may be sold only against freely convertible currencies and partly convertible currencies may be purchased only against partly convertible currencies.

Germany participates with Austria, Belgium-Luxembourg, Denmark, France, Italy, the Netherlands, Norway, Sweden, Switzerland, and the United Kingdom in multilateral arrangements with Argentina, and with Austria, Belgium-Luxembourg, France, Italy, the Netherlands, and the United Kingdom in multilateral arrangements with Brazil. Deutsche mark held by banks in Argentina or Brazil may be exchanged into the currency of any country participating in the arrangements with Argentina or Brazil, as the case may be.

Administration of Control

The administration of controls in Germany in respect of imports and exports of goods and services is operated by the Federal Ministry of Economics, the Federal Office for Trade and Industry (Bundesamt für die gewerbliche Wirtschaft), the Foreign Trade Agency for Food and Agriculture (Aussenhandelsstelle für Ernährung und Landwirtschaft), and the Land Ministries of Economics. For capital transactions, the Deutsche Bundesbank is primarily the authority in charge of exchange control. All banks in Germany are permitted to effect foreign exchange transactions.

Prescription of Currency

In the German prescription of currency regulations, the following countries are in an “area of freely convertible currencies”: Bolivia, Canada, Chile, Colombia, Costa Rica, Cuba, the Dominican Republic, Ecuador, El Salvador, Guatemala, Haiti, Honduras, Liberia, Mexico, Nicaragua, Panama, Peru, the Philippine Republic, the United States and possessions, and Venezuela.2 Incoming payments from these countries may be received in Canadian dollars, U.S. dollars, and free Swiss francs, in deutsche mark debited to Freely Convertible DM Accounts (see section on Nonresident Accounts, below), or, for claims not exceeding DM 100, in German banknotes or coins. Payments due to these countries may be made in any foreign currency, or they may be made in deutsche mark, except by crediting Liberalized Capital Accounts.

To all countries outside the area of freely convertible currencies—the so-called “area of partly convertible currencies”—the following general prescription of currency regulations apply: Incoming payments may be received in any foreign currency or in deutsche mark. Payments due to these countries may be made in any foreign currency except U.S. dollars, Canadian dollars, or free Swiss francs, or they may be made in deutsche mark, except by crediting Freely Convertible DM Accounts or Liberalized Capital Accounts. However, special payments arrangements apply to settlements with some of the countries in the area of partly convertible currencies, namely, (1) EPU countries, settlements with most of which may be made on a multilateral basis, and (2) Argentina, Brazil, Bulgaria, Czechoslovakia, Egypt, Finland, Hungary, Japan, Paraguay, Poland, Rumania, Spain, Uruguay, and Yugoslavia, settlements with which are usually made through Partly Convertible DM Accounts, according to the payments arrangements in effect.

Debts due from one country may be offset by claims against any other country, provided that payments due from persons in the area of freely convertible currencies are not offset against payments due to persons in countries outside that area.

Nonresident Accounts

There are four main categories of nonresident DM accounts, as described below.

1. Freely Convertible DM Accounts. Balances on these accounts are equivalent to freely convertible currencies. They may be credited (a) with amounts which otherwise may be transferred abroad in freely convertible currencies; (b) with sums arising from specified exchange operations, such as transfers from abroad in freely convertible currencies and purchases from nonresidents of banknotes and other means of payment in freely convertible currencies; and (c) with redeposits by nonresidents of deutsche mark previously withdrawn from such accounts and not spent. 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, or exchanged for any other currency.

2. Partly Convertible DM Accounts. Balances on these accounts are equivalent to currencies with partial convertibility. They may be credited (a) with amounts which otherwise may be transferred abroad (except payments for imports from, or for investments in, Turkey); (b) with sums arising from specified exchange operations, such as transfers from abroad (except if coverage is provided through a clearing account under the payments agreement with Turkey), and purchases from nonresidents of foreign banknotes and other means of payment; (c) with German banknotes and coins paid in by nonresidents; and (d) with transfers from accounts in categories 1 and 3. Transfers between Partly Convertible DM Accounts are entirely free. Balances on Partly Convertible DM Accounts may be used for payments in Germany (unless such payments have to be received in a freely convertible currency), including purchases from banks in Germany of banknotes and other means of payment in inconvertible currencies, as well as for transfers to any country outside the area of freely convertible currencies, including transfers to Accounts Related to Payments Agreements (Bilateral Agreement Accounts).

Accounts Related to Payments Agreements are a special group within the category of Partly Convertible DM Accounts. They are in the names of authorized banks and are used for carrying out the terms of payments agreements with EPU countries (except Turkey). Transfers between these accounts, and also between these accounts and other accounts in category 2, may be made freely. So far as their use and transferability are concerned, there is no difference between these accounts and Partly Convertible DM Accounts.

3. Liberalized Capital Accounts. These accounts are maintained for the capital transactions of nonresidents. Some of the chief sources of these accounts are proceeds from sales of real property in Germany by foreign owners, sales of German securities held by nonresidents, and restitution or compensation due to nonresidents for confiscation or war damage. Certain foreign debts may be repaid in deutsche mark by crediting these accounts. Transfers of Liberalized Capital Accounts from one nonresident to another are permitted freely, regardless of the account holders’ countries of residence. Balances on these accounts may be transferred abroad in accordance with the provisions of payments regulations, credited to Partly Convertible DM Accounts, or used to pay for certain transactions in invisibles and for specified investments in Germany. Monthly transfers up to DM 500 to a person in a country in the area of freely convertible currencies may be made freely out of Liberalized Capital Accounts. Amounts credited to Liberalized Capital Accounts which may be transferred to a country in the area of freely convertible currencies may subsequently be credited to a Freely Convertible DM Account.

Imports and Import Payments3

Practically all imports of industrial goods and raw materials and most imports of foodstuffs from OEEC countries and their dependent territories are liberalized, as are most imports from the dollar area, countries in the monetary areas of OEEC members,4 and certain other specified countries.5 Goods free from quantitative restriction are not subject to license either for import or for payment and no prior control is exercised over such goods, but an ex post control is carried out by the federal authorities; however, an import declaration stamped by the Deutsche Bundesbank is required, which serves as documentation for customs control and payment. For imports still subject to quantitative limitation, an individual license is required, which covers the import transaction as well as the payment. Commodity futures may be dealt in freely. With a few exceptions that are subject to individual license, transit trade transactions may also be carried out freely, the only requirement being that of an ex post declaration, for purposes of control.

Payments for Invisibles

Payments for invisibles, particularly those connected with or related to foreign trade, are almost entirely free of individual license, but are subject to certain controls. Residents are permitted to make payments of up to DM 200 per quarter to any country for any purpose.

Earnings from nonresident investments in Germany may, without special permission, be transferred abroad or be credited to a Liberalized Capital Account or—according to the owner’s country of residence—to a Freely or Partly Convertible DM Account. Transfers of indemnities paid on the basis of the Federal Law on the Compensation for Victims of the National Socialistic Persecution, of June 29, 1956, may be made freely.

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 (see Fifth Annual Report on Exchange Restrictions, pages 153-54).

Travelers are permitted to take out at each crossing of the frontier any amount in German or foreign notes or coins for travel. However, German banks are permitted to sell or transfer abroad to German travelers means of payment in freely convertible currencies for travel only when an entry visa (or equivalent proof) is furnished showing that the country of travel is in the area of freely convertible currencies.

Exports and Export Proceeds

Exporters may freely conclude export contracts with foreign importers, carry through the export of commodities, and accept payments in an appropriate currency. For goods up to a value of DM 1,000, only an export (small consignment) notification, serving statistical purposes, is required. All other exports require export declarations, and certain commodities—mostly strategic goods—are subject to individual license. Declarations are not required for exports free of payment, if the value of the export does not exceed DM 1,000, or for many such exports valued at more than DM 1,000; however, for exports free of payment that are not covered by a general license, a “certificate of nonobjection” is required. The customs authorities exercise control over export declarations and also check to see whether a license is required.

Foreign exchange proceeds from exports do not have to be declared or surrendered. However, amounts over DM 5,000 that have been overdue for more than three months must be reported to the authorities. The exporter is responsible for obtaining the export proceeds, which must be received in accordance with the regulations (see section on Prescription of Currency, above). Exporters are permitted to use their export proceeds to pay the customary commissions to their agents abroad and to settle claims arising from defects or to cover such usual discounts or other reductions in price as may have been agreed upon subsequently. Residents are permitted to finance their exports for periods of up to 180 days and to maintain foreign currency accounts with German and foreign banks, but these accounts may be used only for authorized payments.

Proceeds from Invisibles

Services performed for nonresidents do not require licenses. A special license is required for transactions relating to the sale of, or the granting of licenses for, inventions, patents, registered designs, trademarks, etc., as well as for technical assistance through the delivery of constructional drawings, materials, and instructions for manufacture.

Residents may either sell exchange obtained from invisibles to a bank in Germany, or they may hold the exchange indefinitely in a foreign currency account maintained with a bank in Germany or in a foreign country and use it for authorized payments.

German and foreign notes and coins may be brought or sent into Germany in unlimited amounts.

Capital

Foreign investments in specified fields in Germany may be effected freely through Liberalized Capital Accounts (see section on Nonresident Accounts, above) and through subscriptions in kind. Investments in other ways are permitted under individual license. Applications for permission to make capital investments through the import of foreign exchange have to be made to the Deutsche Bundesbank, which submits them to an interministerial Federal Investment Commission.

Outgoing transfers of nonresident capital are generally permitted under the London Debt Agreement, or under open or individual license. Financial institutions in Germany are permitted to receive from abroad any kind of security and to send abroad, as well as to transfer to other German banks, securities owned by nonresidents.

Residents may buy and sell foreign securities and buy German bonds expressed in foreign currency. In principle, foreign securities may be sold to nonresidents only against U.S. dollars, Canadian dollars, or free Swiss francs, or deutsche mark debited to Freely Convertible DM Accounts. German securities expressed in German currency and held in German banks may be purchased from nonresidents with any foreign currency except U.S. dollars, Canadian dollars, and free Swiss francs, or with deutsche mark credited to a Partly Convertible DM Account or a Liberalized Capital Account. German securities expressed in German currency and held abroad may be purchased with any foreign currency, or with deutsche mark credited to any nonresident account except a Liberalized Capital Account.

German residents who are prevented by the exchange control regulations in other countries from repatriating their assets held abroad are given permission to sell them to residents authorized to make investments abroad, the parties concerned being permitted to agree among themselves as to the amount of compensation.

Residents are permitted, without a special permit, to acquire real property abroad, to establish branches or enterprises abroad, or to acquire participation in other foreign enterprises abroad.

Changes during 1957

January 1. Settlements with Poland could be made through Partly Convertible DM Accounts.

January 2. Banks in Austria and Austrian schillings were included in the multilateral exchange arbitrage arrangement already in operation among Belgium-Luxembourg, Denmark, France, Germany, Italy, the Netherlands, Norway, Sweden, Switzerland, and the United Kingdom.

February 13. The list of free imports from Brazil, Finland, Japan, and Uruguay was modified and extended.

March 12. Quantitative restrictions on imports of clothing, shoes, and synthetics were abolished.

March 19. The list of goods which could be imported freely from OEEC member countries and their overseas territories was modified and extended.

March 30. The list of goods which could be imported freely from OEEC member countries and their overseas territories was further modified and slightly extended.

April 1. The import of gold from OEEC countries was liberalized; also, the acquisition, sale, and processing of gold was generally authorized.

April 1. Settlements with Czechoslovakia could be made in partly convertible deutsche mark instead of through a clearing account.

May 1. With certain exceptions, imports through the post from any country up to a value of DM 100 were permitted freely. The exceptions are books, maps, prints, postage stamps, microfilms, and all foodstuffs other than coffee, coffee extracts, and tobacco and its products.

May 4. Quantitative import restrictions were abolished (1) for all commodities included in the OEEC import liberalization list, provided they are produced in OEEC member countries or their dependent territories and are purchased there or in countries belonging to the monetary areas of OEEC members (see footnote 4); (2) for most goods included in the OEEC import liberalization list, provided they are produced in countries belonging to the monetary areas of OEEC members and are imported from those countries or from OEEC members or their dependent territories; and (3) for most goods included in the OEEC import liberalization list, provided they are produced in, and imported from, one of certain specified countries (see footnote 5). Commodities produced in Brazil may also be imported freely from Austria, Belgium-Luxembourg, France, Italy, the Netherlands, and the United Kingdom.

May 23. Monthly transfers up to DM 500 to a person in a country in the area of freely convertible currencies could be made freely out of Liberalized Capital Accounts.

May 23. Funds credited to a Liberalized Capital Account which under the German exchange control regulations may be transferred to the area of freely convertible currencies could subsequently be credited to a Freely Convertible DM Account.

May 25. An additional liberalization list for imports from the dollar area was issued, which contained approximately 500 commodities, mostly finished products, and brought the liberalization percentage to 93.4 on the basis of private imports in 1953.

June 16. The prescription of currency regulations were modified and liberalized: (1) Payments to residents of the area of freely convertible currencies could be made freely in any means of payment except by crediting Liberalized Capital Accounts, and payments to residents of all other countries could be made freely in any foreign currency except U.S. dollars, Canadian dollars, and free Swiss francs, or in deutsche mark except by crediting Freely Convertible DM Accounts or Liberalized Capital Accounts. Previously, such payments could not be made in foreign or German notes or coins, although payments in German notes and coins to nonresidents visiting Germany had been permitted. (2) In the regulation concerning payments from residents of the area of freely convertible currencies, the expression “freely convertible foreign currencies including banknotes” was replaced by “U.S. dollars, Canadian dollars, and free Swiss francs.” (3) The regulation concerning payments from residents of countries outside the area of freely convertible currencies was worded in a more general way, i.e., such payments could be received in any foreign currency or in deutsche mark.

June 26. Persons who have their usual residence, their main establishment, or their domicile in the territory of the Federal Republic and are entered in the register of companies or in the register of cooperatives (banks excepted) were authorized to establish and to maintain foreign currency accounts in banks (and postal checking agencies) abroad.6

August 3. The Deutsche Bundesbank lifted the annual ceiling of DM 500,000 for the acquisition by nonresidents of German securities and industrial holdings and dropped the requirement that only securities listed on German stock exchanges could be acquired.

August 29. Residents were permitted to receive foreign currencies for deliveries and services rendered to nonresident travelers.

September 1. Residents were permitted to establish firms and branches abroad, to acquire participation in foreign undertakings, and to grant loans to enterprises more than 50 per cent of which the domestic lender owns (subsidiary enterprises). The restrictive regulation under which investments abroad in excess of DM 3 million required special approval was thereby annulled.

October 3. The general license to nonresidents to sell in Germany German securities denominated in deutsche mark was extended to securities not quoted on a stock exchange.

October 20. Residents were permitted to buy and sell foreign securities abroad at any rate, keep such securities anywhere, and import or export them freely. Hitherto, trade in foreign securities had been permitted only at quoted market rates and transactions had to be carried out through the intermediary of a domestic commercial bank, which also had to serve as depository.

October 31. German banks were authorized to grant to nonresidents credits in German or foreign currency for unlimited periods; formerly, the maximum period for which such credits could be granted was 180 days. A regulation forbidding the deposit of money at interest with banks abroad for periods exceeding 180 days was also removed.

November 14. Banking institutions in Germany were permitted freely to send and receive German notes and coins to and from foreign countries.

November 27. A general license was issued permitting the acquisition and disposal by residents of real property abroad. This license also covered leases on real property, as well as hunting and fishing rights abroad and rental agreements on buildings and rooms abroad.

December 2. Most goods produced in Argentina and included in the OEEC import liberalization list could be imported freely from Argentina, as well as from Austria, Belgium-Luxembourg, Denmark, France, Italy, the Netherlands, Norway, Sweden, Switzerland, and the United Kingdom. Payments between Germany and Argentina could be effected in partly convertible deutsche mark or any other currency in accordance with the payments regulations of both countries.

December 5. German bonds expressed in foreign currency could be purchased by residents directly in foreign countries, i.e., without the intermediate services of a German bank.

December 6. Limitations on the amount of certain payments (e.g., gifts, indemnities, winnings from games of chance, penalties) by residents to nonresidents were abolished.

December 21. Residents could purchase abroad German securities expressed in German currency with any foreign currency.

Note. On January 1, 1958, three new lists of liberalized imports were published. The most extensive list includes goods which, if produced in OEEC member countries or their dependent territories, may be imported freely from OEEC members, their monetary areas (see footnote 4), and from certain other countries (see footnote 5).

A second free import list includes goods which, if produced in countries belonging to the monetary areas of OEEC members or in certain other countries (see footnote 5), may be imported freely from any of those countries or from OEEC members. (This list contains more items than the free import list referred to in (2) and (3) under May 4, above.)

A third free import list includes goods which, if produced in any country in the area of freely convertible currencies, may be imported freely not only from that area, but also from OEEC members and their monetary areas and from certain other countries (see footnote 5). (This list includes more items than the list previously applicable to the area of freely convertible currencies.)

All commodities in the third list (5,480 items) are included in the second list (5,642 items), and all commodities in the second list are included in the first list, which contains 5,936 items out of a total of 6,346 importable items.

It was also stipulated on January 1, 1958 that imports paid for with freely convertible currencies may be re-exported only against payment in freely convertible currencies, unless the goods to be re-exported have been changed considerably by processing in Germany.

Ghana

Exchange Rate System1

The West African Pound is officially at par with the pound sterling. Exchange rates for other currencies are based on the comparable London quotations. The rate for the U.S. dollar as at December 31, 1957 was US$2.82 buying, US$2.78 selling, per £WA 1.

Administration of Control

Exchange control is operated by the Ministry of Finance, but its administration will be taken over by the Bank of Ghana in 1959 (the exchange control regulations are in the process of being revised). Much of the authority for approving normal payments is delegated to commercial banks authorized for this purpose. Import and export licenses, where necessary, are issued by the Controller of Imports and Exports.

Prescription of Currency

Ghana is one of the territories of the Sterling Area and payments to other parts of the Sterling Area may be made without formality. Payments for goods or services originating outside the Sterling Area may be made by paying (1) West African pounds or sterling to a resident of the United Kingdom; (2) dollars, West African pounds, or sterling through a bank to the account of a resident of the American Account Area or Canada, for goods or services originating in those countries; or (3) non-dollar specified currencies,2 West African pounds, or sterling through a bank to the account of a person resident outside the American Account Area and Canada, for goods or services originating outside those countries. The proceeds of exports to the American Account Area or Canada must be received in West African pounds or sterling from the account of a resident of one of those countries or in Canadian or U.S. dollars. The proceeds of exports to other countries outside the Sterling Area must be received in West African pounds or sterling from the account of a resident outside the Sterling Area or in any specified currency.3

Imports and Import Payments

Most goods do not require individual import licenses if imported from non-dollar countries. Imports from dollar countries are subject to individual license. Importers who receive dollar quota allocations may use them to purchase any goods in the United States or Canada, except petroleum products, explosives, ordnance, motor vehicles, motion-picture films, and gold. Other importers must apply for specific licenses. Where an import license has been obtained or is not required, the appropriate exchange or permission to credit an appropriate nonresident account is granted automatically (see section on Prescription of Currency, above).

Payments for Invisibles

Payments to other territories of the Sterling Area are not subject to exchange control unless they are for transactions outside the Sterling Area. Payments to persons resident outside the Sterling Area require approval, but for most types of transaction, permission is granted by the authorized banks. There is a basic allowance of exchange for tourist travel of £100 per adult for 12 months. Not more than £10 in Sterling Area notes may be taken out of Ghana. Other currency notes may be taken out only with specific permission.

Exports and Export Proceeds

A system of export licensing is applied to a limited range of goods. Exporters of goods to outside the Sterling Area are required to obtain payment of the value of the goods in the manner prescribed in the regulations within six months of shipment. When payment is received in a specified currency,3 the exchange must be sold to an authorized bank.

Proceeds from Invisibles

There are no specific requirements governing exchange receipts from invisibles, but if specified currencies3 are received they must be sold to an authorized bank. Not more than £10 in sterling notes may be imported either by travelers or through the post. Other currency notes may be imported without limit but must be declared and, if a specified currency, surrendered.

Capital

All transfers of capital to territories outside the Sterling Area require exchange control approval; applications are considered on their merits. Incoming capital received in a specified currency (see footnote 3) must be sold to an authorized bank. Transactions in securities are controlled to ensure that capital is not transferred outside the Sterling Area.

Changes during 1957

June 22. It was announced that importers with dollar allocations could use them to purchase any goods in Canada or the United States, except petroleum products, explosives, ordnance, motor vehicles, motion-picture films, and gold.

September 20. Ghana became a member of the International Monetary Fund.

Greece

Exchange Rate System

There is no established par value for the Greek Drachma. The official rates are Dr 29.90 buying, Dr 30.10 selling, per US$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 currency to the U.S. dollar.

Administration of Control

Controls are administered on the policy level by the Ministry of Coordination, the Ministry of Trade, and a Currency Committee. Controls are implemented and applied by the Bank of Greece and authorized commercial banks.

Prescription of Currency

Settlements on account of merchandise transactions and invisibles are made in the currency and manner provided for by trade and payments agreements, or on the basis of the origin or destination of the goods and services involved. Under the terms of most of the agreements,1 settlements are made 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

One of two general import procedures is applicable to private imports, depending on the method of payment: (1) No license is necessary, but the approval of an authorized bank is required, to import goods (except as mentioned under (2), below) from bilateral agreement countries1 when payment is effected through the relevant clearing accounts; or from countries participating in the EPU when payment is made in an EPU currency; or from Canada or the United States when payment is made in free dollars provided by the Greek exchange authorities. (2) An import approval issued by the main office of the Bank of Greece is required for imports from countries specified in Procurement Authorizations covering imports sponsored by the U.S. International Cooperation Administration (ICA); and for imports from any other country when the method of settlement differs from those mentioned under (1), above. Payment under either import procedure may be made by opening a documentary credit, by cash against shipping documents, or, for some specified goods, by the acceptance of time drafts.

Imports of specified luxury items and a few other goods from any country are subject to special license and payment may be effected only by the opening of a documentary credit for a period not exceeding six months. Imports from Japan of four specified commodities are subject to the same procedure.

For goods imported on the basis of cash against shipping documents, a Greek importer must deposit with his bank an amount in cash equal to 15, 50, or 100 per cent of the invoiced value, according to the commodity to be imported; for certain commodities (mainly foodstuffs), no guarantee or advance deposit is required. Deposits and guarantees are partly or entirely forfeited if imports or payments for them are not effected as prescribed. For shipments against time drafts, a personal guarantee equivalent to 25 per cent of the c.i.f. value of the goods to be imported is required. No cash deposit or bank guarantee is required on shipments payable by letter of credit. For commodities ultimately paid for with ICA funds, importers must, within ten days from the date of obtaining the import license, deposit cash or a bank guarantee covering 10 per cent of the value of the goods, in addition to any other down-payment required. After making arrangements for payment and upon delivery of the shipping documents, the importer’s bank issues a permit for the clearance of the goods.

If the importer fails to fulfill the conditions prescribed for the import or payment of the goods, a fine of up to 25 per cent of the c.i.f. value of the goods is payable. Greek importers who do not place orders with the exchange control prior to the shipment of goods may be subject to a fine of up to 25 per cent of the c.i.f. value of the goods.

Special regulations govern imports by state agencies, legal entities, and public companies.

Payments for Invisibles

Payments for invisibles require individual licenses, but these are granted freely for expenses incidental to authorized trade transactions and for certain other 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 450 in Greek banknotes.

Exports and Export Proceeds

All exports are subject to individual license, but most exports are free of quantitative limitation. Export proceeds have to be surrendered.

Proceeds from Invisibles

Exchange receipts representing payments for services must be surrendered. Foreign exchange proceeds from shipping are exempt from the surrender requirement, but shipowners have to pay any taxes, fees, etc., and must 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 450 in Greek banknotes.

Capital

All drachma assets of nonresidents have to be declared and are held in blocked accounts. Subject to the approval of the exchange control authorities, however, balances on such accounts may be utilized for such purposes as the purchase by a nonresident of real estate in Greece; the resale of such real estate is permitted if 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, approved foreign investments in Greece which are expected to promote national production or otherwise contribute to the economic advancement of the country can be granted preferential treatment, but such investments are not repayable earlier than one year from the date of importation or from the time the enterprise began to operate productively. When any enterprise organized with foreign capital is granted terms more favorable than those which had been accorded to a similar enterprise previously established with foreign capital, similarly favorable terms will be extended to the previously established enterprise, at the request of the beneficiary. Special guarantees are provided in case of requisition.

Approved foreign capital may be repatriated at an annual rate not exceeding 10 per cent. Dividends on equity capital not exceeding 12 per cent per year, and payments of interest on loan capital not exceeding 10 per cent per year, may be transferred; however, annual earnings below these limits may be supplemented by earnings in excess of such limits from other years.

Deviations from the general regulations may be approved for foreign capital imported to develop exports of agricultural and mining products or invested in enterprises of special importance to the economy. Specified foreign short-term investments may also be granted preferential treatment in respect of the repayment of capital and the transfer of interest.

Transfers of capital abroad by residents require approval.

Changes during 1957

No significant changes took place during 1957.

Hong Kong

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, the 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 rate (agreed informally by the three note-issuing banks with the Hong Kong 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 rates apply to most 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 32 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 by the method and in the currency prescribed in the United Kingdom’s exchange control regulations (see section on Prescription of Currency in the survey on the United Kingdom). In addition, payments and receipts may be 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 invoiced in Hong Kong dollars to the countries of the account holders, may be made to residents of Hong Kong. Credits to the accounts of persons and firms resident on the North American continent and in the Philippine Republic require licenses, but credits to the accounts of persons and firms in other countries do not require licenses. Payments between Hong Kong and other Sterling Area territories require licenses; however, 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. In addition, authorized exchange banks may pay Hong Kong residents for family remittances from residents of British North Borneo, Brunei, Cambodia, Indonesia, Laos, Malaya, Sarawak, Singapore, Thailand, and Viet-Nam, without the requirement of an individual license, but subject to a weekly report being made by the banks.

Imports and Import Payments

Except for certain strategic materials and for some other items from specified countries, imports are free of import license. Exchange licenses are required, even if the importer provides his own exchange, for imports from any country except other parts of the Sterling Area, North America, Cambodia, Mainland China, Indonesia, the Republic of Korea, Laos, the Philippine Republic, Taiwan, Thailand, and Viet-Nam. The exchange licenses are granted freely, 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, to pay for authorized imports may be obtained at the rate corresponding to the official rate. U.S. dollar exchange at this rate normally is authorized only for a few imports regarded as strictly essential; for other authorized imports payable in U.S. dollars, foreign exchange may be obtained in the free market.

Payments for Invisibles

To obtain exchange at the official rate, exchange licenses are required. These are granted to local residents for most transactions in invisibles 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. The basic allowance of exchange at the official rate for residents (for exchange control purposes) of Hong Kong traveling abroad is £100 per person per 12 months for the period commencing November 1, 1957. These facilities, which are cumulative for a period of 3 years, except for travel to Canada and the American Account Area, are also available for residents of the United Kingdom and the Colonies who have been staying in Hong Kong for not less than 3 years. If exchange at the official rate is not authorized, exchange licenses may be issued upon evidence of the prior sale to an authorized exchange bank of the equivalent in U.S. dollars (which may be purchased in the free market). In any event, payments may be made freely through the free market by holders of Hong Kong dollars. Transfers to other parts of the Sterling Area require licenses, except that authorized exchange banks may make remittances for dividends and interest 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.

The U.S. dollar f.o.b. proceeds of most exports originating in Mainland China, Hong Kong, the Republic of Korea, Macao, or Taiwan are freely disposable. However, portions of the U.S. dollar f.o.b. proceeds of certain exports originating in these countries must be surrendered, viz., 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. The U.S. dollar proceeds of exports originating in other countries must be entirely surrendered. Exchange proceeds in other currencies from exports to countries other than Mainland China, the Republic of Korea, Macao, Taiwan, 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, unless in respect of dividends or interest, requires permission. When freight and insurance on exports that have originated in Mainland China, Hong Kong, the Republic of Korea, Macao, or Taiwan, and that have been financed in U.S. dollars, are paid in Hong Kong by the exporter in sterling or in Hong Kong dollars, the exporter must surrender the U.S. dollar proceeds of that freight and insurance at the official rate. 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 may 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 between Hong Kong and other parts of the Sterling Area.

Table of Exchange Rates (as at December 31, 1957)(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 non-dollar 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, Macao, or Taiwan, payable in U.S. dollars.A few essential imports payable in U.S. dollars. Authorized invisibles and capital. All non-dollar imports.
HK$5.786(50% at HK$5.694 and 50% at Free Market Rate)

Cotton yarn exports.2
HK$5.832(25% at HK$5.694 and 75% at Free Market Rate)

Lead, silver, and tin exports.2
HK$5.841(20% at HK$5.694 and 80% at Free Market Rate)

Copper and feather exports.2
HK$5.850(15% at HK$5.694 and 85% at Free Market Rate)

Wood oil exports.2
HK$5.8675(Fluctuating Free Market Rate)HK$5.8775(Fluctuating Free Market Rate)
All other exports. Invisibles and capital.All other imports payable in U.S. dollars. Other invisibles and capital.

Changes during 1957

January 2. The Austrian schilling was added to the list of specified currencies, making it a permissible medium of payment for exports from Hong Kong to any country in the Transferable Account Area.

September 1. The basic travel allowance of £100 per person per 12 months was made available for travel to Canada and all countries in the American Account Area. Unlike the allowance for travel to other non-sterling countries, which may be accumulated for 3 years, this allowance may not be accumulated.

Iceland

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. There is a tax of 16 per cent on the sale of foreign exchange for imports and invisibles, with some exceptions, making an effective selling rate of IKr 18.93 per US$1. There is also a license fee of 40 per cent on exchange for travel for business and tourism, which (including the exchange tax) creates an additional effective selling rate of IKr 25.46 per US$1.

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 Office, which is also responsible for the over-all administration of exchange control. The two largest Icelandic banks have the exclusive right to buy and sell foreign exchange, and they 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. Iceland has bilateral payments agreements with Brazil, Czechoslovakia, Finland, East Germany, Hungary, Israel, Poland, Rumania, Spain, and the U.S.S.R. These countries are referred to as the clearing countries.

Imports and Import Payments

Regardless of other requirements, prior certification is required from an Icelandic bank that exchange is available to pay for an import before, the import can be effected. There are two free lists of commodities that do not require import licenses—one for imports from all countries and the other for imports from the clearing countries. All other 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.

Special import fees are payable on many imports (some 64 per cent on the basis of 1955 imports). For this purpose, imports are classified in seven categories, on six of which an import fee is payable, as follows:

  • Category 1 (preserved fruits, carpets, refrigerators, washing machines, radios, watches, etc.): 80 per cent

  • Category 2 (fresh and dried fruits, etc.): 70 per cent

  • Category 3 (honey, glucose, pencils, toothpaste, soap, perfume, leather articles, paper, various textiles, sanitary and photographic appliances, etc.): 55 per cent

  • Category 4 (implements and household utensils, etc.): 35 per cent

  • Category 5 (cement, timber, some other building materials, etc.): 8 per cent

  • Category 6 (all items not classified under Categories 1-5 and not exempted from import fee): 11 per cent

  • Category 7 (most important raw materials and equipment for the fishing industry and for agriculture, and most essential foodstuffs): no import fee

When goods in Categories 1 or 3 are imported from a clearing country, the import fees are reduced to 55 per cent or 35 per cent, respectively.

There is a tax of 16 per cent on sales of foreign exchange to pay for imports, except imports of equipment and raw materials for fisheries and agriculture. Also, when import licenses for passenger automobiles are issued, a fee amounting to 35 per cent of the amount licensed must be paid, and a further, temporary, license fee—amounting to 125 per cent of the f.o.b. value of passenger cars and delivery vans (under three tons)—must also be paid. The proceeds of the exchange tax, the import fees, and the import license fees are paid to an Export Fund that provides assistance to producers of commodities for export.

Payments for Invisibles

All outgoing payments require licenses, which are granted only on the basis of essentiality and the availability of the required foreign exchange. A tax of 16 per cent is payable on foreign exchange payments, except for transfers for students, medical care, foreign labor, and insurance. A tax of 8 per cent is payable on freight payments, except for freight on imports of fuel oil, gasoline, coal, and salt, and freight on exports. At the time an exchange license is issued for travel (other than for study or medical treatment), a fee of 40 per cent of the amount is also payable to the Export Fund.

Residents traveling abroad may take with them foreign banknotes and coins up to the equivalent of IKr 150. Exports of Icelandic banknotes and coins are prohibited. Nonresidents may re-export unspent amounts of foreign banknotes and coins that were declared on entry.

Exports and Export Proceeds

All exports require licenses. Exchange receipts must be surrendered at the official rate. Some time after the exchange has been surrendered, payments are made from the Export Fund to producers of certain commodities, on the basis of a determined percentage of the f.o.b. value of exports of those commodities.

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. Imports of Icelandic banknotes and coins are prohibited.

Capital

All foreign investments are subject to individual approval. Incoming foreign capital in the form of exchange must be surrendered. Outgoing transfers of capital require approval, which is granted only in exceptional cases. Securities held in Iceland by nonresidents are subject to registration, and all transactions or operations concerning them are subject to license. The import and export of securities is also subject to the approval of the exchange control authorities.

Table of Exchange Rates (as at December 31, 1957)1(krónur per U.S. dollar)
BuyingSelling
16.26(Official Rate)16.32(Official Rate)
All exchange proceeds.Imports and invisibles exempt from tax.
18.93(Official Rate plus 16% Tax)
Most imports and invisibles.
25.46(Official Rate plus 16% Tax and 40% License Fee)
Business and tourist travel.

Changes during 1957

No significant changes took place during 1957.

India

Exchange Rate System

The par value is Indian Rupees 4.76190 = US$1. Exchange transactions take place at uniform rates. All transactions in foreign exchange must be conducted through authorized dealers, whose dealings with the general public must be effected as follows: in Pakistan rupees and pounds sterling, at rates fixed by the Exchange Banks Association; in other currencies, including U.S. dollars and Canadian dollars, at rates at or between the official buying and selling rates of the Bank of England for spot transactions and at freely determined market rates for forward transactions. Further, authorized dealers are permitted to cover their requirements of specified currencies1 in the London market and to cover their permitted transactions in the specified currencies against sterling, rupees, or any one of the specified currencies, either spot or forward, with their agents in the respective country of the specified currency concerned.

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 of India, 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 requirements, i.e., payments to or from foreign countries must be effected in the currency prescribed by the exchange control authority, for the most part in conformity with the exchange control regulations of the United Kingdom. In general, settlements may be made by the transfer of sterling or rupees to or from accounts related to the country concerned; with some countries, however, settlements may be made also in specified currencies.1 Exceptionally, for exports to Egypt payment may be received only in Indian rupees from the accounts of Egyptian banks, and payments between India and Pakistan may be effected only in Indian or Pakistan rupees according to special arrangements between the two countries.

Nonresident Accounts

Nonresident accounts consist of rupee accounts belonging to banks, or to private individuals or firms, resident outside India. Payments to the accounts of nonresident banks for imports, interest, dividends, and allowances may be made by authorized dealers without prior approval; other payments by residents to such accounts must be approved by the Reserve Bank. The nonresident accounts of foreign banks may be drawn on to pay for Indian exports and for other payments, if the amount of an individual transaction does not exceed Rs 20,000. For all other credits and debits to the accounts of banks, prior approval of the Reserve Bank must be obtained. Rupee balances of banks in other Sterling Area territories may be transferred freely from one account to another. Those of banks outside the Sterling Area may be transferred freely to nonresident rupee accounts of 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.

Nonresident accounts of private individuals or firms may be credited, without prior approval, for payments of dividends and interest on securities and proceeds of small checks up to certain limits. They may be debited for such 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 the accounts of individuals or firms to nonresident accounts of banks belonging to the same country or monetary area, unless the items originally credited to such accounts were “currently remittable” in nature.

There are also blocked accounts, to which are credited capital proceeds that are due to nonresidents and may not be remitted abroad. Balances on 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

Goods may be imported into India under individual licenses. Individual licensing may be by quotas allocated to established importers in accordance with their imports in a base period and to actual users on the basis of their current requirements or it may be ad hoc. Currency-wise, there are two kinds of license, those for imports from soft currency countries and those for imports from all countries. Fifty per cent (and for some commodities, more than 50 per cent) of any license for imports from soft currency countries is automatically available for imports from hard currency countries. No distinction is made between one country and another within either currency area, except that imports from the Union of South Africa are prohibited and certain imports from Pakistan are admitted more liberally than are imports from other countries. At the beginning of each half-yearly licensing period, an announcement on import control policy is made in the form of a Red Book, which gives in detail the policy for established importers and actual users. There are also special procedures applicable to capital goods, heavy electrical plant, and goods imported to fulfill government contracts and irrigation projects.

Where a valid import license is held, the required exchange is released by an authorized bank on presentation of the exchange control copy of the license. The license holder may effect payments by opening letters of credit or by making remittances against sight drafts. Advance remittances in payment of imports before shipping documents are received are not normally permitted; but in special cases, e.g., imports of machinery and capital goods, where deposits have to be made with overseas manufacturers, the Reserve Bank grants special authorization for advance payment for a part of the value of the import.

Payments for Invisibles

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

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

There are no restrictions on the remittance of profits, dividends, and interest to beneficiaries permanently resident in any country outside India, provided all current tax and other liabilities in India have been cleared.

Foreign employees are permitted to make reasonable remittances to their own countries to pay insurance premiums or other expenses and for the support of their families. For Sterling Area nationals, other than nationals of Pakistan, authorized dealers may allow 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 nationals of countries outside the Sterling Area is considered on its own merits and facilities are provided for the remittance of savings that the applicant may reasonably be expected to make.

To obtain foreign exchange for travel or education abroad, individual application must be made.

Persons leaving India, except those going to Pakistan, Afghanistan, and the Portuguese territories in India, may take out Indian and foreign currency notes and 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 PRs 100 in Pakistan notes and coins. Persons leaving for Afghanistan may take out Afghan currency without limit and Rs 50 per day in Indian notes and coins. Persons leaving for the Portuguese territories in India may take out Indian notes and coins not exceeding Rs 100 per visit.

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 may be effected only under an open general license or a special license. Goods on open general license are not subject to quantitative restriction 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 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 in U.S. dollars and Philippine pesos received on account of invisibles 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 from Pakistan, Afghanistan, and Burma, where special limitations apply. With the exception of Bank of England notes, which are limited to £10 per person, 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 Government. Exchange receipts from approved foreign capital investment and from capital in Philippine pesos or U.S. dollars must 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 receive. 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, or Sweden, is authorized freely. 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 (see section on Nonresident Accounts, above).

Indian nationals (including persons domiciled in India) who emigrate to a Sterling Area country may transfer up to Rs 200,000 per family at the time of their departure. Any remaining assets are held in India, but remittance of income on such assets is allowed in full. Indian nationals (including persons domiciled in India) who emigrate to a country outside the Sterling Area may transfer up to Rs 75,000 for emigration to the dollar area and up to Rs 125,000 for emigration to any other country; any remaining assets are blocked. Sterling Area nationals temporarily resident but not domiciled in India are permitted to repatriate their assets, including capital investments, to any Sterling Area country at the time of their repatriation. Sterling Area nationals who emigrate from India to countries outside the Sterling Area are permitted remittance facilities on the same scale as in the United Kingdom. Other nationals who are resident but not domiciled in India are permitted at the time of their retirement to transfer to their own country the sale proceeds of their investments, subject to an over-all limit of Rs 125,000 per holder, provided any shares and securities concerned are quoted on recognized stock exchanges in India; in addition, they may transfer all their current remittable assets in India. Any amount exceeding that authorized for free transfer is blocked.

There are no restrictions on the import into India of domestic or foreign securities. Domestic dealings in rupee securities are not subject to restriction. The export of securities and their transfer to nonresidents require approval. Persons resident in India who become owners of foreign securities are permittted to hold them, provided they have been acquired in a manner not involving a breach of the Indian exchange control regulations. The sale, transfer, or other disposal of foreign securities requires approval.

Changes during 1957

January 1. The basic foreign exchange allowance for travel abroad for pleasure or personal convenience was abolished.

January 1. Import quotas were reduced for over 500 items described as relatively less essential to India’s economic needs, and import quotas for some essential items were raised. Licenses with a face value of Rs 5,000 or less were permitted to be utilized in full for imports from the dollar area. Most licenses would now be issued to established importers, mainly on the basis of quotas calculated as a fixed percentage of past imports in a base year. For some items, licenses would be issued to another category of importer, “actual users,” subject to certain conditions. The “newcomers” category was abolished. Import licenses for capital goods would be issued only in cases where the Government was satisfied that there would be no appreciable increase in foreign exchange payments for a considerable time to come.

January 2. The Austrian schilling was included in the list of specified currencies and became a permissible medium of payment between the Sterling Area and Austria. Payments for exports to Austria could be received in Austrian schillings, sterling from a Transferable Account, or rupees from the account of a bank in any country in the Transferable Account Area.

June 3. Business trips were permitted only when absolutely necessary. It was decided not to allow exchange for correspondence courses. Exchange would not be released to children going to school abroad or to persons wishing to take such courses as academic, legal, or language studies, accounting, social sciences, music, tailoring, drawing, painting, and fashion designing.

June 10. The general permission given to residents in India to acquire sterling shares in the London market provided they were shares of companies that operate exclusively in India and maintain dual registers—one in London and the other in India—was withdrawn.

June 27. Facilities for remitting sterling and rupees to foreign countries by money order were withdrawn. Previously, money orders up to £2 per person per day to countries exchanging orders in sterling (and up to Rs 30 to countries exchanging orders in rupees) had been authorized.

July 1. Indian nationals and persons domiciled in India emigrating to a Sterling Area country were allowed to transfer a sum not exceeding Rs 200,000 per family at the time of their departure. Any remaining assets would be held in India, but remittance of income on such assets would be allowed in full. Previously, emigrants to Sterling Area countries were permitted to transfer their entire assets on departure.

July 1. Open general licenses covering imports from all countries (except the Union of South Africa) and imports from soft currency countries expired on June 30, 1957 and were not renewed. The open general license pertaining to certain imports from Pakistan was renewed for a period of three months. However, the number of items importable from Pakistan without individual license was reduced to a few items. Individual licenses issued prior to June 30, 1957 were rendered eligible for renewal and/or conversion to merchandise considered essential. No new licenses were to be issued during the period July 1 to September 30, 1957, except for certain items, such as raw materials and capital goods, and equipment imported under the deferred payment plan.

July 4. The Reserve Bank of India authorized forward purchases and sales of foreign exchange for one year, instead of for six months as hitherto.

August 5. Travelers to Portuguese territories in India were permitted to take with them Indian notes and coins not exceeding Rs 100 per visit.

October 1. The import of a wide range of consumer goods was banned and the import of many others was drastically reduced.

Indonesia

Exchange Rate System

No par value for the Indonesian Rupiah has been established with the Fund. The basic rate is Rp 11.40 per US$1, the official rates being Rp 11.355 buying, Rp 11.475 selling, per US$1. However, these rates have only a nominal and very restricted application. Almost the whole exchange rate structure revolves around a fluctuating rate for export certificates. In return for foreign exchange surrendered, except receipts from tourism and certain other invisibles (see below), the authorized banks issue an export certificate, called a BE, which is expressed in rupiah and is equivalent to 100 per cent of the foreign exchange surrendered. BE certificates are valid for 42 days; during the first 28 days they may be sold freely, through the commercial banks, in the exchange market. All permitted exchange payments for imports, as well as for most invisibles and for transfers of capital, and all payments by the Government have to be financed by BE certificates bought in the market, through the intermediary of a bank, at freely fluctuating rates. Multiple exchange rates also arise from the application of an exchange tax of 20 per cent on export proceeds and receipts from invisibles and surcharges on imports. Imports are divided into six groups, with surcharges of nil, 20, 50, 100, 140, and 175 per cent. (See Table of Exchange Rates, below.) Certificates are not issued for receipts from tourism and a few other invisibles. Instead, the exchange is bought by banks, on behalf of the Foreign Exchange Fund, at a fixed rate which is set from time to time according to the prevailing export certificate rate less the 20 per cent exchange tax.

Administration of Control

Exchange control is administered by the Foreign Exchange Institute (which is under the direction of the Bank Indonesia), on whose behalf combined import and exchange licenses are issued by the Bureau for Import-Exchange Licenses. Export licenses are issued by the Bureau for Exports. Control is actually carried out by the Foreign Exchange Institute, 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 in 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 from South American countries are also settled largely through that account. Only imports originating in the dollar area may be paid in U.S. dollars. By arrangement with the governments concerned, Indonesia obtains partial reimbursement in U.S. dollars from the Netherlands, and also from Singapore and Malaya, for Indonesian goods re-exported by those countries to the dollar area. Payments to Mainland China and Egypt, with which Indonesia has payments agreements, are settled through special clearing accounts.

Nonresident Accounts

There are two classes of nonresident account, as described in the following paragraphs.

1. Accounts of foreign banks: Balances that have been created by transferring foreign currency to Indonesia are freely convertible into the same currency and may be transferred freely to accounts of nonresident banks of the same monetary area.

2. All other nonresident accounts: The opening of these accounts and all entries require permission from the Foreign Exchange Institute. These accounts are designated as Capital Accounts or Income Accounts, and transfers from the former to the latter are not allowed. 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 30,000 in the currency of the nonresident out of his current income. The granting of licenses for remittances to the debit of Capital Accounts, i.e., capital remittances and remittances of inheritances, has been suspended since January 1, 1954. However, in cases of destitution, transfers to the debit of Capital Accounts may be permitted up to limited amounts at the discretion of the Foreign Exchange Institute.

Imports and Import Payments

Business establishments wishing to import must obtain the official recognition of the Ministry of Economic Affairs. Most importers are required to lodge a deposit with the Foreign Exchange Fund: for Indonesian nationals, the deposit is Rp 500,000, and for nonnationals (other than those classified as industrial or horticultural and importing goods solely for their own use), the deposit is Rp 5,000,000. After the importer has been registered, the deposit may be used to pay the required advance deposit of 20 per cent1 of the rupiah equivalent of the proposed import at the official rate, as well as the additional import levy and the cost of BE certificates.

All imports have to be paid for with BE certificates. Most imports are, in addition, subject to exchange surcharges (called TPI); for this purpose, imports are divided into six groups, as follows:

GroupTPI Levy
I.Highly essential
II.Essential20%
III.Less essential50%
IV.Semiessential100%
V.Semiessential140%
VI.Luxury175%

All imports are subject to license. Application for an import license to the Bureau for Import-Exchange Licenses or its branches has to be made through an authorized foreign exchange bank and be accompanied by a receipt showing that 20 per cent (see footnote 1) of the c. & f. value of the import at the basic official rate has been deposited with the bank. If the application is approved, a preliminary license is issued to the importer through the bank which has submitted the application. Upon receipt of the preliminary license, the importer must buy within 30 days, through his bank, BE certificates equivalent to the nominal value of the license and must pay at the same time the applicable TPI levy, which is calculated on the effective rupiah purchase price of the BE certificates. Half of the 20 per cent deposit2 is forfeited if the preliminary import license is not used, i.e., the BE certificate is not bought and the TPI not paid, within the 30-day period. Upon proof that the necessary BE certificates have been surrendered and the required TPI levy paid, the Bureau for Import-Exchange Licenses issues to the importer the final import-exchange license.

Import licenses are issued only for the c. & f. value of the import; insurance has to be covered in Indonesia. Payment for imports by a correspondent bank abroad may be made only after the bank has received the documents evidencing the shipment to Indonesia of the merchandise as described in the related letter of credit or the import license.

Payments for Invisibles

Payments for invisibles are subject to either general or special license from the Foreign Exchange Institute. General licenses are issued to the authorized banks to effect payments for specified invisibles on certain conditions without further authorization from the Foreign Exchange Institute. Under a general license, foreign nationals employed by the Government of Indonesia are allowed to remit 20 per cent of their gross taxable income for such purposes as family allowances, education expenses for children, and as remittances of savings. For other foreign nationals employed in Indonesia, there are annual over-all ceilings of Rp 36,000 per remittor for those in independent professions and Rp 48,000 for employed persons. Another general license permits nonresidents to remit from their Income Accounts up to Rp 30,000 annually (see section on Nonresident Accounts, above). Payments in excess of the limits established in the general licenses and payments not covered by those licenses, such as those for advertising fees, film rentals, royalties, registration fees for patents and trademarks, subscriptions to newspapers and periodicals, memberships in associations, charitable remittances, legacies, and contractual amortization expenses, require special licenses from the Foreign Exchange Institute. Foreign exchange is not made available to pay insurance premiums on imports. Payments for invisibles are transacted at the BE certificate rate. Profits and dividends realized by “old, active companies” (see section on Capital, below) during the year 1957 may be transferred abroad at the certificate rate plus a surcharge, the percentage of which has not yet been decided.

The export of Indonesian and foreign banknotes and coins is prohibited, but residents going abroad are provided with small amounts of foreign banknotes to meet their traveling expenses.

Exports and Export Proceeds

All exports require licenses. Exporters (with the exception of those oil companies to which special arrangements apply) are required to surrender to an authorized bank in Indonesia all foreign exchange to which they become entitled. Exports, except to the Netherlands or the United Kingdom, must be financed by irrevocable bank credits, and the drafts drawn on such credits must be sight drafts.3 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 will refuse to issue an export license if, for example, the shipment should not conform to existing trade agreements. Exports of high-grade rubber, estate coffee, and tea to Singapore and other Malayan ports are prohibited.

An exporter, in return for the foreign exchange surrendered, is notified by the authorized bank that an export certificate (BE), expressed in rupiah and equivalent to 100 per cent of the foreign exchange surrendered at the official basic rate, has been issued in his name and is held by the bank for him. These BE certificates are valid for 42 days, during which time they may be sold freely—through the banks—in the exchange market, provided they have a remaining validity of at least 14 days at the time of sale. BE certificates not sold during the period of validity must be surrendered to the Bank Indonesia at the basic rate. An exchange tax of 20 per cent is deducted by the banks from the proceeds of BE certificates.

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, in the currency of the country of their nationality, any income that does not arise from foreign trade. Receipts from invisibles are treated in a manner similar to that for receipts from exports, i.e., they receive BE certificates and are subject to a 20 per cent tax on the sales proceeds. However, BE certificates are not issued for receipts from tourism; instead, tourist exchange is bought by the banks at a special rate which is set from time to time by the Foreign Exchange Institute in conformity with the prevailing market price for BE certificates less the exchange tax of 20 per cent.

The import of Indonesian banknotes and coins is prohibited. Foreign banknotes and coins may be imported on the condition that they are surrendered to the Bank Indonesia at the official buying rate. Visitors planning to stay in Indonesia no longer than 90 days may, after a record has been made, retain their foreign currency and take it with them on departure or sell it to an authorized bank; but they may exchange only the following currencies, and only with an authorized bank: (1) U.S. banknotes (in denominations not exceeding $50) and U.S. travelers checks; (2) sterling banknotes (in denominations not exceeding £1)4 and sterling travelers checks (payable outside the Sterling Area); and (3) Malayan banknotes (in denominations not exceeding $M 10). After 90 days, the visitor intending to re-export his foreign currency must apply for an extension of his permit.

Capital

There are no limitations on the remittance to Indonesia by nonresidents of capital which, if it were in the form of foreign exchange, would have to be surrendered in accordance with the regulations.

For the purpose of determining the treatment given them, companies operating in Indonesia with foreign capital may be classified in three groups, as described in the following paragraphs.

Group I, also known as “old, active companies,” includes investments in Indonesia before January 1, 1954 in companies registered abroad, as well as investments in companies which, though registered in Indonesia, were owned by one or a few foreigners residing abroad. Profits on these investments may be transferred abroad in the following way: After having paid the corporation tax (ranging from 40 per cent to 52½ per cent of the gross profits), the company has to deposit 40 per cent of the remaining 60 to 47½ per cent of its profits in an account (reserved profits) in its name with the Bank Indonesia; the balance may then be transferred abroad at the certificate rate. A surcharge will be imposed on the 1957 profits of investments in this group (see section on Payments for Invisibles, above). The reserved profits may be used for certain purposes, such as reinvestment in the companies concerned or in certain Indonesian enterprises, subject to approval by the Bank Indonesia. Amortization allowances and proceeds resulting from liquidation of investments in this group are placed in blocked Capital Accounts, transfers from which have been suspended since January 1, 1954.

Group II, also known as “new companies,” comprises investments in Indonesia since January 1, 1954. These investments are subject to conditions agreed between the Indonesian authorities and the interested parties, pending the promulgation of the foreign investment law. In general, companies in this group benefit from more favorable treatment than that accorded companies in Group I. Most companies in Group II are exempt from the reserved profits requirements applied to Group I, and, as a minimum, they are entitled to the same treatment as that accorded to companies in Group I. Transfers of profits and authorized repatriation of capital by “new companies” are made at the certificate rate without any surcharge.

Group III, also known as “passive companies,” includes foreign investments in Indonesia that do not fall into the two groups described above. In principle, no direct transfers of profits or dividends are allowed for this group. However, in special cases, e.g., when the shares of the company—registered in Indonesia—were originally quoted on the Djakarta Stock Exchange or abroad, a direct transfer for dividend coupons received from abroad may be allowed, but not above 30 per cent of the company’s paid-up capital. If no direct transfer of dividends is granted, the proceeds of dividend coupons from Group III investments may be credited to individual nonresident rupiah accounts of the foreign owners, balances on which are transferable up to an annual maximum amount (see section on Nonresident Accounts, above).

Residents are required to surrender exchange from capital, and approval is not normally granted to them for capital payments abroad.

Residents may trade in the Djakarta market in, registered foreign securities, including registered bonds and shares, obligations, bank mortgages, profit-sharing certificates, and similar securities, coupons, and dividend warrants. Residents may also trade in unregistered securities, provided a nonresident does not benefit thereby, directly or indirectly. Nonresidents are permitted to trade in specified domestic securities, provided the proceeds of any sale are credited to a nonresident Capital Account (see section on Nonresident Accounts, above); they may use funds from nonresident accounts to purchase specified domestic securities (i.e., Bank Industri Negara loans), and may export securities so purchased to the Netherlands or to the nonresident’s country of residence within 90 days of purchase, provided that if the security is reimported or not exported within the time limit it shall be dealt with only with approval of the Foreign Exchange Institute. The import of foreign securities into Indonesia is subject to license, the issue of which is subject to a special import levy (TPI-E) of 33⅓ per cent of the current domestic market value of the security. The proceeds of this levy are payable to the Foreign Exchange Fund. Imported securities representing the reinvestment of securities exported from Indonesia are exempt from this levy.

Table of Exchange Rates (as at December 31, 1957)(rupiah per U.S. dollar)
BuyingSelling
11.355(Official Rate)11.475(Official Rate)
Foreign notes and coins. Transactions of oil companies.Transactions licensed prior to June 20, 1957.
11.40(Basic Rate)
Expired BE certificates.
23.256(BE Certificate Rate5 less 20% Exchange Tax)
All exports. Most invisibles.
29.075(BE Certificate Rate)

Capital.
29.075(BE Certificate Rate)

Category I imports (all highly essential goods, including rice and raw cotton). Invisibles.
34.884(BE Certificate Rate plus 20% Surcharge)
Category II (essential) imports.
43.605(BE Certificate Rate plus 50% Surcharge)
Category III (less essential) imports.
58.14(BE Certificate Rate plus 100% Surcharge)
Category IV (semiessential) imports.
69.768(BE Certificate Rate plus 140% Surcharge)
Category V (semiessential) imports.
79.942(BE Certificate Rate plus 175% Surcharge)
Category VI (luxury) imports.

Changes during 1957

January 1. The importation of 35 items, the domestic production of which was considered sufficient to satisfy home demand, was prohibited.

January 19. Foreign firms were allowed to invest their balances on reserved profit accounts in certain Indonesian firms, subject to prior approval of the Bank Indonesia. Formerly, these profits could be released only for reinvestment in foreign-owned companies.

February 20. The issue of licenses was suspended for 7 import items.

April 29. The issue of licenses was suspended for all imports except those for government orders, U.S. surplus agreement goods, wheat flour from Australia, commodities imported with export incentive certificates (BPE’s), and imports under the Informational Media Guaranty program.

May 1. The trade and payments agreement with Poland was allowed to expire.

June 1. The issue of import licenses was resumed for essential raw materials, semimanufactured goods, and capital goods. The ban on imports of consumer goods was continued.

June 20. The old exchange rate structure was replaced by a new, simplified, and flexible rate system. A fluctuating export certificate market was introduced through which all exports, permitted imports, invisibles, capital transfers, and government receipts and payments were channeled. Under this system, exporters and others who offered foreign exchange to authorized banks received export certificates (called BE) expressed in rupiah and equivalent to 100 per cent of the foreign exchange surrendered at the basic official rate of Rp 11.40 per US$1. These certificates, which had a validity of two months, could be sold freely within this period in the exchange certificate market. All permitted exchange payments had to be financed with BE certificates, which represented foreign exchange. Dealings in certificates could take place only through the intermediary of a foreign exchange bank. The certificate rate was allowed to fluctuate freely through the interplay of supply and demand for foreign exchange. All exports and receipts from invisibles received the certificate rate less a uniform exchange tax of 20 per cent calculated on the selling price of the certificates. Incoming capital was exempted from this tax. Imports were reclassified into 6 groups for the purpose of setting the surcharges (TPI levies): the most essential imports, including rice and raw cotton, could be paid for at the certificate rate free of surcharge; the other 5 groups were made subject, in addition to the certificate rate, to surcharges of 20, 50, 100, 140, and 175 per cent, respectively, calculated on the certificate rate. All permitted payments for invisibles were effected at the certificate rate; however, profits and dividends to be realized by “old, active companies” over the book year 1957 would be transferred abroad at the certificate rate plus a surcharge, the percentage of which would be determined later.

The system of licenses for imports and for exchange payments was maintained. The advance deposit required for the issue of an import license was in principle abolished. Instead, importers were required to pay, at the time of applying for an import license, a guarantee of 20 per cent of the c. & f. value of the import, converted at the basic rate of Rp 11.40 per US$1. Upon receipt of the preliminary license, importers were required to buy within 21 days the necessary BE certificates and pay the TPI surcharge applicable. If the preliminary import license was not used within the stated period of 21 days, the guarantee of 20 per cent was forfeited.

June 25. Import licensing was resumed for all goods.

July. The permitted limit on annual transfers from Income Accounts of nonresident private persons was increased from Rp 25,000 to Rp 30,000.

July 1. The payments agreement with Japan was terminated and settlements with this country were put on a transferable sterling basis.

August 5. The BE certificate system was modified in respect of receipts from tourism. Banks were required to buy such exchange, without issuing an export certificate, at a fixed rate set by the Foreign Exchange Institute according to the prevailing market rate of BE certificates less the 20 per cent exchange tax. It was stated that the tourist rate would be changed from time to time.

August 5. Commercial banks were required to add a commission of ⅛ of 1 per cent for the Foreign Exchange Fund on all purchases and sales of BE certificates handled by them. This regulation was made retroactive to include all transactions effected since July 25, 1957.

September 5. The validity of preliminary import licenses, i.e., the period allowed to the importer to buy BE certificates and pay the TPI levy, was increased from 21 days to 30 days.

September 28. Foreign securities in Indonesia would be permitted to be sent abroad for sale after the necessary permit has been obtained, provided that the proceeds are reinvested in securities expressed in the same currency through official stock exchanges and that the newly acquired securities are then sent to Indonesia. The import of these securities was exempted from payment of the TPI-E charge of 33⅓ per cent, introduced in 1955.

October 4. The validity of BE certificates was reduced from 2 months to 42 days.

October 16. The regulation regarding the forfeiture of the 20 per cent guarantee deposit on imports was modified: in case the importer did not buy within 30 days from receipt of the preliminary import license the necessary BE certificates and pay the applicable TPI levy, half of the guarantee money, instead of the total, would be forfeited.

December 2. Branch offices of the Bureau for Import-Exchange Licenses were authorized to receive applications and issue licenses for imports. Imports could no longer be made on the strength of a preliminary license.

December 6. All transfers abroad on behalf of or in favor of Netherlands nationals for income, capital, and services not arising from trade were suspended.

Iran

Exchange Rate System

The par value is Iranian Rials 75.75 = US$1. All transactions take place at the rates fixed by the Bank Melli Iran: Rls 75.00 buying, Rls 76.50 selling, per US$1. There are charges on the invoiced amount of all imported goods of ½ of 1 per cent for sanitary services and of 1/10 of 1 per cent under the law on encouragement of exports.

Administration of Control

Exchange control is vested in the Exchange Control Committee, composed of representatives from the Ministry of Commerce, the Ministry of Finance, and the Bank Melli Iran. Import licenses are issued by the customs authorities. Exchange licenses are issued by the Exchange Control Committee. All foreign exchange transactions must be effected through authorized banks. The Ministry of Commerce determines the classification of imported and exported commodities.

Prescription of Currency

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

Transactions with countries with which Iran has payments or clearing agreements must be conducted in the currencies specified in the agreements: U.S. dollar accounts are used for transactions under the agreements with Hungary, Italy, and Turkey; the Swiss franc is specified in the agreement with Czechoslovakia, the pound sterling in the agreement with Poland, the French franc in the agreement with France, and the rial in the agreement with the U.S.S.R.1

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 for payments in Iran. Foreign currency accounts may be used for transfers abroad or for sales to authorized banks.

Imports and Import Payments

Exchange for imports is allocated freely, with the exception of exchange for goods included in a list of prohibited imports. A global quota of Rls 7.0 billion for nonprohibited imports has been established for the Iranian year 1336 (March 21, 1957—March 20, 1958), but if the quota should prove to be inadequate, it may be raised by the Ministry of Commerce, taking into account the availability of foreign exchange. Specified commodities, such as sugar, silkworm eggs, tobacco, cigarette paper, and railway equipment, are imported under state monopoly. Special permits may be issued to private traders or institutions to import these commodities.

Import licenses, which are required to clear goods through customs, are issued automatically by the customs authorities on receipt of documents showing that payment has been or will be effected through an authorized bank. The customs authorities check whether the import is permitted (i.e., not prohibited). Imports of precious metals, e.g., silver, gold, and platinum, are permitted if no exchange is transferred therefor; in such cases an import license is not required.

Under a general license, authorized banks may make payments against shipping documents for nonprohibited imports. Charges are levied on the invoiced amount of all imported goods of ½ of 1 per cent for sanitary services and of 1/10 of 1 per cent under the law on encouragement of exports. Persons holding “own exchange” are permitted to utilize the exchange for imports, provided they pay Rls 1.50 per US$1 of the import value to the authorized bank; importers of newspapers, periodicals, and precious metals are exempt from this charge.

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 Commerce upon submission of a detailed list of the goods to be exported and imported. Imports under private barter arrangements from countries whose currencies are not purchased by the Bank Melli Iran are authorized, provided the importer pays Rls 1.50 per US$1 of the import value, plus 1/10 of 1 per cent, and ½ of 1 per cent (for sanitary services), of the import value to an authorized bank; except in the case of exports to payments agreement countries, such counter-imports need not be obtained from the country to which the export was directed.

Payments for Invisibles

All payments for noncommercial purposes require licenses issued by the Exchange Control Committee. Licenses are issued mainly for medical treatment and living expenses abroad and for expenses of Iranian students studying abroad.

Exchange is granted to merchants for insurance of Iranian imports, but for imports covered by documentary credits, the insurance must be taken out in Iran and the exchange granted used for this purpose. For imports made against sight drafts, however, the c.i.f. value of the goods may be transferred to the exporter abroad. Exchange is not granted to merchants for insurance of Iranian exports sold f.o.b.

Purchases of exchange by residents going abroad as tourists are subject to license. Licenses are granted freely for up to US$1,000 to travelers holding U.S. visas and up to £400 to travelers to other countries. Travelers may take with them Rls 2,000 in Iranian banknotes when going abroad; Iranian pilgrims to Iraq, however, may take with them Rls 3,500 in Iranian banknotes. Nonresident travelers may not export foreign currency in excess of the amounts they imported less the amounts they have sold to authorized banks.

Exports and Export Proceeds

Exports of some commodities, mainly wheat, barley, and rice, are prohibited except under license.

Export receipts, up to the amount of the export value as appraised by the customs authorities, must be offered for sale to an authorized bank within six months after the export takes place. Under private clearing arrangements approved by the Ministry of Commerce, however, export proceeds need not be surrendered, but the exporters should import authorized goods equivalent to the value of the goods exported.

Within the regulations (see section on Prescription of Currency, above), authorized banks accept export proceeds in Belgian francs, French francs, deutsche mark, 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 are prohibited, except that goods to which 50 per cent or more of value has been added by manufacture may be re-exported, provided that foreign exchange equivalent to 150 per cent of the original landed value is obtained on reshipment. When goods imported do not correspond with the order placed by the importer, permission to re-export is given by the Exchange Control Committee, provided no exchange has been transferred or, if transferred, the importer undertakes to sell an equivalent amount of exchange to an authorized bank.

Proceeds from Invisibles

Exchange receipts derived from invisibles must be surrendered. Persons receiving foreign exchange abroad, other than export proceeds, may use this exchange to import nonprohibited goods.

Travelers to Iran are permitted to bring with them an unlimited amount in foreign currencies and Iranian banknotes. 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 buying rate.

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 within three days of receipt.

In accordance with a decree of December 16, 1953, modified slightly in 1955 by the Foreign Investment Protection Act, foreign capital invested in approved development or productive activities in industry, mining, or agriculture may be repatriated, together with net profits (up to a limit to be determined by implementing regulations), in the form of foreign exchange and/or goods; transfers of exchange must be effected in the original currency and at the commercial selling rate prevailing at the date of transfer. Capital imported in the form of foreign exchange must be in a currency acceptable to the Bank Melli Iran; the conversion into rials is made at the commercial buying rate prevailing at the date of application for entry, and repatriation of the capital and transfers of profits will take place at the commercial selling rate on the day the transfer takes place. The Bank Melli Iran has the option to buy the exchange or to accept it as a deposit while making available the rial equivalent at a rate mutually agreed upon in a separate agreement; in this case, the rate applicable to repatriation is that at which the exchange was originally purchased. The decree guarantees legal protection for foreign capital and provides for a committee to make recommendations on proposed investments to the Council of Ministers.

Changes during 1957

April. The import program for the Iranian year 1336 (March 21, 1957-March 20, 1958) was published. The main features of this program were that individual import quotas were eliminated and replaced by a global quota of Rls 7 billion and the list of prohibited imports was considerably reduced. Prohibited goods could still be imported from countries with which Iran has bilateral trade agreements—if the goods are included in the commodity lists of the agreements—up to the quantity and value shown therein. As in previous years, the Ministry of Commerce was given the power to enlarge the global quota should this prove to be below the country’s needs.

May 22. A new par value of Rls 75.75 per US$1 was established.

Iraq

Exchange Rate System

The par value is Iraqi Dinar 1 = US$2.80. Most transactions in the official market are effected in sterling (Iraq is one of the countries of the Sterling Area). For certain currencies, licensed dealers are authorized to deal on the basis of London rates; for the U.S. dollar, the Central 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 Central Bank of Iraq with all powers and responsibilities in connection with exchange control. In practice, however, the Board has delegated most of its administrative authority to the Directorate of Foreign Exchange of the Central Bank. All foreign exchange transactions must be effected through licensed dealers unless especially authorized by the Central Bank. Import and export licenses, where required, for items other than banknotes, coins, gold, and securities, are issued by the Directorate-General of Commerce in the Ministry of Economics.

Prescription of Currency

The method and currency of payment for transactions with most countries outside the Sterling Area are, in general, comparable to those applied in other countries of the Sterling Area. Insofar as Iraqi exports are concerned, receipts must be obtained in acceptable foreign currency appropriate to the country concerned, in sterling through an appropriate account (i.e., either American, Canadian, or Transferable), or in dinars through an appropriate dinar account of a nonresident.

Nonresident Accounts

Nonresident accounts are designated according to the residence of the account holder.

Imports and Import Payments

The import control policy aims at allowing adequate imports of all goods essential for domestic consumption and development. Imports of certain nonessentials are restricted. A few imports are prohibited for protective reasons; these include a variety of agricultural products, and goods produced by certain newly established Iraqi industries.

All imports from hard currency countries require licenses, which are granted in accordance with an annual program based on the anticipated needs of the economy. For imports from soft currency areas, the control policy is more liberal; the licensing procedure does not apply to most imports from such areas (except listed goods for which a license from the Directorate-General of Commerce should be obtained).

For goods subject to license, a licensed exchange dealer may make exchange available upon presentation of the exchange control copy of the import license; for goods not subject to license, exchange is provided on application. Licensed dealers do not, of course, provide exchange for imports licensed on the understanding that the importer will provide his own exchange. Payments to Cyprus require special authorization.

Payments for Invisibles

All payments for invisibles require permission. Exchange granted for invisibles normally is restricted to travel, educational and medical expenses abroad, freight on exports carried on a c.&f. or a c.i.f. basis, insurance premiums, and royalties on certain cinema films. Exchange is not, however, granted to merchants for the insurance abroad of their imports or exports. Exchange is provided for the transfer of interest and profits if the amounts applied for are considered reasonable.

Licensed dealers are permitted to transfer up to ID 50 per month for family maintenance on behalf of foreign nationals resident in Iraq, provided the remittances do not exceed half of the resident’s monthly income. For amounts exceeding this limit, it is necessary to refer to the exchange control authority. 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 ID 15 in Iraqi currency notes or the equivalent of ID 25 in foreign currency. Pilgrims to Saudi Arabia are permitted to take out the equivalent of ID 150 in foreign exchange, including up to ID 40 in the form of notes and coins. Exchange to meet the costs of business travel is subject to administrative approval.

Exports and Export Proceeds

Exports of essential goods in short supply require licenses. Specified exports (such as certain kinds of livestock, certain foodstuffs in short supply, cereals and fruits, and raw materials in short supply, including cement and scrap metals) are prohibited; but some prohibited commodities, such as wheat and certain fruits, may be exported if specially authorized by the High Supply Committee. Generally, goods imported into Iraq may be re-exported, subject to license; however, goods imported from the hard currency area and such specified goods as cars and agricultural machinery may not be re-exported.

Exporters must declare their exports to ensure that foreign exchange proceeds are received and surrendered. However, foreign exchange proceeds from exports of dates to India, Pakistan, Syria, Lebanon, Jordan, Saudi Arabia, Kuwait, and the Persian Gulf Protectorates are exempt from the surrender requirement.

Proceeds from Invisibles

Foreign exchange receipts from invisibles must be surrendered. Travelers may bring in foreign currency, including notes, in unlimited amounts, provided declarations are made to the Iraqi customs, and any unused amount may be re-exported. Travelers other than pilgrims returning from Saudi Arabia may bring in only ID 15 in Iraqi notes.

Capital

In general, all transfers of capital abroad require exchange control approval. The transfer of capital abroad by residents is not allowed. Nonresidents may import capital freely, but they must deposit it with a licensed dealer. Such deposits may be converted into local currency at the official rate, and repatriation to the country of origin is permitted. Foreign investment in Iraq is permitted freely, and exchange is provided for the repatriation of reasonable profits upon submission of an audited earnings statement and proof that local taxes have been paid. Interest payments may be made freely, subject to administrative checking.

Payments of a capital nature not permitted to be transferred abroad may be credited to blocked accounts; balances on blocked accounts may be disposed of, subject to approval of the exchange control authority.

Changes during 1957

April. The Directorate-General of Commerce made exchange allocations for 1957 imports. They amounted to ID 19 million for imports from the hard currency areas and to ID 3.8 million for those imports from the soft currency areas (including the Sterling Area) which require licenses. It was also announced that the policy of increasing allocations during the year, if demands should exceed availabilities, and of canceling unused allocations at the end of the year would be continued.

June 2. Residents of Iraq were permitted to buy and sell Saudi Arabian riyals in the local market.

August 21. Restrictive licensing was imposed on imports from the soft currency areas of 30 commodities or groups of commodities of the luxury type.

Ireland1

Exchange Rate System

The Irish Pound is officially at par with the U.K. pound. Exchange rates for other currencies are based on the comparable London quotations. The rate for the U.S. dollar as at December 31, 1957 was US$2.81 buying, US$2.8088 selling, per £1.

Administration of Control

Exchange control is operated by the Department of Finance, whose permission is required before orders may be placed for goods originating outside the Sterling Area, unless the goods are covered by general exemptions. Much of the authority for approving normal payments is delegated to commercial banks authorized for this purpose. Import licenses, where necessary, are issued by the Department of Industry and Commerce if the goods are of an industrial nature, or by the Department of Agriculture if the goods are agricultural in character. Import licensing is not used for exchange control purposes. Import and export controls are administered by the Revenue Commissioners.

Prescription of Currency

The Irish Republic is one of the territories of the Sterling Area and payments to and from other parts of the Sterling Area may be made without formality. Payments for goods or services originating outside the Sterling Area may be made by paying (1) Irish pounds or sterling to a resident of the United Kingdom; (2) dollars, Irish pounds, or sterling through a bank to the account of a resident of the American Account Area or Canada, for goods or services originating in those countries; or (3) non-dollar specified currencies,2 Irish pounds, or sterling through a bank to the account of a person resident outside the American Account Area and Canada, for goods or services originating outside those countries. The proceeds of exports to the American Account Area or Canada must be received in Irish pounds or sterling from the account of a resident of those countries, or in Canadian or U.S. dollars. The proceeds of exports to other countries outside the Sterling Area must be received in Irish pounds or sterling from the account of a resident outside the Sterling Area, or in any specified currency.3

Nonresident Accounts

Accounts of persons resident in other countries of the Sterling Area are treated as resident accounts. Accounts of persons resident in countries outside the Sterling Area are treated as nonresident accounts and are classified as American, Canadian, or Transferable Accounts-depending on whether the account holder is resident in the American Account Area, Canada, or the Transferable Account Area.

American and Canadian Accounts may be credited with the proceeds of U.S. dollars and Canadian dollars sold to a bank in Ireland, with transfers in Irish pounds or sterling from other American and Canadian Accounts or from Registered Sterling Accounts, and with funds eligible for transfer to the American Account Area and Canada. These accounts may be debited for transfer to any other nonresident account or may be converted into U.S. or Canadian dollars.

Transferable Accounts may be credited with the proceeds of any specified currency3 sold to a bank in Ireland, with transfers in Irish pounds or sterling from other Transferable Accounts, from American or Canadian Accounts, or from Registered Sterling Accounts, and with funds eligible for transfer to the Transferable Account Area. These accounts may be debited for payments to residents of the Sterling Area or for transfers to other Transferable Accounts or may be converted into non-dollar currencies.

Blocked Accounts are credited with capital funds due to persons resident outside the Sterling Area and not eligible for transfer. These funds arise from such sources as the sale of Irish securities, proceeds from sales of real estate exceeding £1,000, and the Irish estates of persons who at the time of death were resident outside the Sterling Area. Funds in these accounts may be invested through the stock exchange in Irish or sterling securities which cannot be redeemed within five years from the date of investment. They may also be used for the expenses of the account holder and his family during visits to Ireland and for the upkeep of the account holder’s property in Ireland. Funds on a Blocked Account may be transferred freely to other Blocked Accounts regardless of the account holders’ countries of residence, with the exception that transfers may not be made to the account of a resident of Denmark, the Faroe Islands, Greenland, Norway, or Sweden from the account of a person resident outside those countries.

Imports and Import Payments

The import of goods into Ireland is subject to two types of administrative control: (1) regulations applied by the Department of Industry and Commerce under the Control of Import Acts 1934 and 1937, and by the Department of Agriculture under the Agricultural Produce (Regulation of Imports) Act 1938 and the Acts relating to dairy produce and cereals, and (2) regulations applied by the Department of Finance under the Exchange Control Act 1954. Only the former are used to limit the quantity of goods imported; they cover only a limited range of commodities for protective purposes. The regulations of the second type also have limited application; they cover only those goods whose origin is outside the Sterling Area, even though an import license has been obtained already. These measures are not, in present practice, used restrictively.

Under the first type of control, imports of certain commodities are subject to quota restrictions which, with minor exceptions, are on a global basis; individual import licenses are required for these goods. All other imports are free from this import licensing. However, those goods which require a license, as well as those which do not, are subject to the second type of control, under which the permission of the Department of Finance must be obtained before orders may be placed for goods originating outside the Sterling Area and not covered by the General Exemptions.4 However, the Irish authorities have stated that this permission is at present granted automatically.

For permitted imports, appropriate exchange or permission to credit Irish pounds or sterling to a nonresident account is granted automatically. The submission of an exchange control form is required for amounts exceeding £250.

Payments for Invisibles

Payments to other territories of the Sterling Area are not subject to exchange control unless they are for transactions outside the Sterling Area. Payments to persons resident outside the Sterling Area require approval, but there is a general authority covering the costs of transport, handling, and insurance of Irish imports and exports. Other payments for invisibles are authorized freely, except that there are limitations on payments for tourism and for film rentals. There is a basic allowance of exchange for tourist travel of £100 per adult for 12 months. Not more than £10 in Sterling Area notes or £100 in other currency notes may be taken out of the country to a destination outside the United Kingdom.

Exports and Export Proceeds

A system of export licensing is applied to a limited range of goods. Exporters of goods to countries outside the Sterling Area are required to obtain payment for the goods in the manner prescribed in the regulations within six months of shipment, if the value of the goods exceeds £100. When payment is received in a specified currency (see footnote 3), the exchange must be sold to an authorized bank. Exchange control forms are required for exports exceeding £500 to countries outside the Sterling Area.

Proceeds from Invisibles

There are no specific requirements governing exchange receipts from invisibles, but if specified currencies (see footnote 3) are received they must be sold to an authorized bank. The import of U.K. banknotes through the post from outside the United Kingdom is prohibited. Travelers from the United Kingdom may bring in any amount of U.K. banknotes, but travelers from other countries may not bring in more than £10 in such notes. There are no limitations on the import of Irish banknotes, but if a large amount of such notes is carried, the traveler is liable to questioning by the customs, in view of the ban on the export of more than £10 in Sterling Area notes.5

Capital

All transfers of capital to territories outside the Sterling Area require exchange control approval. Applications by emigrants are approved within certain fixed allowances; those from other persons are considered on their merits. Incoming capital received in a specified currency (see footnote 3) must be sold to an authorized bank, except that in certain classes of transactions the recipient may reinvest the foreign currency in securities payable in that currency, provided the reinvestment is carried out through a bank, a stockbroker, or a solicitor. Transactions in securities are controlled to ensure that capital is not transferred outside the Sterling Area.

Changes during 1957

April 16. The amount of any foreign exchange allowance that would be made available in banknotes of the country or countries which the traveler is to visit was increased from £25 to £75.

April 16. The special import levies imposed for balance of payments reasons on March 13 and July 26, 1956 on an extensive range of goods were revoked for 21 items.

June 7. The basic allowance of exchange for tourist travel of £75 per adult for 12 months, previously available for travel only in non-dollar countries, was made available also for travel in dollar countries.

July 22. Provided the bank concerned is satisfied that the transaction is genuine, payments for goods or services originating outside the Sterling Area and not exceeding £250 no longer required completion of an exchange control form, but only submission to the bank of evidence of the value of the goods or services.

July 30. The special import levies imposed for balance of payments reasons on March 13 and July 26, 1956 on an extensive range of goods were revoked for an additional 26 items (see April 16, above).

August 8. Ireland became a member of the International Monetary Fund.

October 25. The basic allowance of exchange for tourist travel was raised from £75 to £100 per adult for 12 months (see June 7, above). The amount of any foreign exchange allowance that would be made available in banknotes of the country or countries which the traveler is to visit was increased from £75 to £100.

Note. On February 10, 1958, the following changes became effective: (1) Austrian schillings were made a specified currency. (2) The General Exemptions covering the purchase of goods were extended to cover precious metals, precious stones, etc., to any value when originating in the Transferable Account Area and to a limit of £250 in any period of three months when originating in the dollar area. (3) Exports to countries outside the Sterling Area not exceeding £500 no longer required the completion of exchange control forms.

Israel1

Exchange Rate System

The par value is Israel Pounds 1.800 = US$1. This rate applies to most transactions, but for other transactions special premiums and discounts give rise to other rates. Premiums ranging from I£0.600 to LE1.200 per US$1 are applied to that part of the exchange proceeds of exports of industrial products (except cement) which is regarded as value added by domestic industry, when the proceeds are received in certain currencies or the goods are exported to West Africa. Discounts are applied to the exchange proceeds of exports to Turkey (30 per cent) and Yugoslavia (13 per cent) and premiums are paid on a case-to-case basis on exchange granted to pay for imports from these countries. A subsidy of I£0.400 per US$1 is given on exchange payments for imports of informational media. (See Table of Exchange Rates, below.)

Dealings through Blocked Accounts take place at freely negotiated rates; such accounts are available for certain purposes (see section on Nonresident Accounts, below).

Administration of Control

Exchange control is exercised by the Department of Foreign Exchange of the Treasury (Ministry of Finance) under the responsibility of the Controller of Foreign Exchange in cooperation with other government agencies, and is carried out through the authorized banks. The official exchange rates are published by the Bank of Israel.

Prescription of Currency

Payments and receipts must be effected in the currency and manner prescribed by the exchange control authorities. Settlements with countries with which payments agreements are in force2 are usually made in U.S. dollars as an accounting unit, sterling, or the currency of the partner country.

Nonresident Accounts

Nonresidents’ funds are held either as foreign currency accounts or as local currency accounts. A nonresident abroad may use his foreign currency account freely or, if in Israel, may convert it into local currency. Local currency accounts of nonresidents are of two types: (1) Registered Accounts for foreign aviation, shipping, insurance, and film companies, and others, and (2) Blocked Accounts, further differentiated into “A” and “B” according to the nature of the original transaction giving rise to the account. Blocked Accounts may be used for investment in Israel securities, to purchase real estate, to pay property taxes payable by the account holder, for tourist expenses in Israel up to I£50 per day for the account holder and a like amount for each member of his family if the account has been held for at least six months, and for remittances up to I£500 to relatives who are Israel residents, provided the account has been held for at least one year. Transfers of Blocked Accounts from one nonresident to another are permitted, provided the amount in question is not less than I£6,000 or represents the balance of the account. Blocked Accounts are at present opened only for the holding of funds derived from former investments; other nontransferable funds are credited to Registered Accounts, which may be used only with special approval.

Imports and Import Payments

All imports require licenses. Exchange is automatically granted at the official rate for licensed imports. A subsidy of I£0.400 per US$1 on imports of books, phonograph records, and newspapers under the Informational Media Guaranty program is paid at the time the exchange to pay for the import is purchased by the importer. For imports effected under suppliers’ credits, a 35 per cent advance deposit in local currency is required. Apart from this requirement, importers must deposit 10 per cent of the c.i.f. value of the import license (20 per cent if the terms of payment are “cash against documents”) upon approval of the import license; this deposit is refunded upon opening of the letter of credit or upon payment against documents, as the case may be.

Payments for Invisibles

Payments abroad for invisibles require licenses. All authorized payments are made at the official rate. The annual transfer of profits, interest, and repayments on loans, to a maximum of 10 per cent of invested capital approved under Clause 21 of the Law for the Encouragement of Capital Investments (1950), is allowed. The export of Israel banknotes is prohibited. Tourists leaving Israel are permitted to repurchase through authorized dealers part of the same foreign currency they previously exchanged into Israel pounds, but not more than the equivalent of I£72.

Exports and Export Proceeds

All exports require licenses. Export proceeds in foreign currencies must be collected and may be surrendered at the official rate of I£1.800 per US$13 or deposited with authorized commercial banks in PAZAK accounts (foreign exchange accounts—see section on Proceeds from Invisibles, below). Alternatively, certain industries are permitted to keep all or part of their export proceeds in PAMAZ accounts (another type of foreign exchange account) and to use them for the purchase abroad of raw materials required for their export production.

Exports of industrial products, except cement, receive premiums varying according to the currency obtained. These premiums are calculated on the net value added, i.e., the value of the export after deducting the direct and indirect foreign exchange costs. They are as follows (the premiums are expressed in Israel pounds per U.S. dollar of value added): (1) for proceeds in U.S. and Canadian dollars, sterling, Swiss francs, Belgian francs, deutsche mark, Latin American currencies (except Argentine and Brazilian clearing currencies), Italian clearing dollars, Netherlands guilders, Swedish kronor, and French clearing francs, I£0.850; (2) for proceeds in Finnish, Greek, Danish, Norwegian, Polish, Brazilian, Argentine, and Rumanian clearing currencies, (a) no premium if the value added is less than 20 per cent of the export value, (b) I£0.600 if the value added amounts to 20 to 40 per cent of the export value, and (c) I£0.800 if the value added amounts to 40 per cent or more of the export value. An additional export premium of I£0.350 per US$1, also calculated on the net value added, is given for exports of the same commodities (i.e., industrial goods except cement) to West Africa.4 Export premiums are not paid if an exporter chooses to retain exchange in a PAZAK account or in a PAMAZ account instead of surrendering it.

Proceeds from Invisibles

Exchange proceeds from invisibles, in general, must be surrendered or kept as time deposits (PAZAK accounts). All foreign exchange received from abroad—except that received under bilateral payments agreements or obtained by semipublic institutions—if not surrendered at the official rate may be deposited in these accounts. PAZAK accounts may be opened in most currencies except those of the bilateral clearing accounts. The use of PAZAK accounts requires the approval of the exchange control authorities. Residents of Israel who receive U.S. or Canadian dollars, sterling, Swiss francs, deutsche mark, Belgian francs, Netherlands guilders, or Swedish kronor from inheritances and legacies, social security payments, pensions, rentals, and personal compensations, or from the liquidation of property abroad for the purchase of which no foreign exchange had been allocated, and who sell the exchange or any part thereof to the Ministry of Finance at the official rate, have the right to receive a bonus in the form of interest-bearing debentures with a face value of 20 per cent of the Israel pounds received by them. Alternatively, 20 per cent of the foreign exchange so received may be retained in a PAMAZ Transfer account (a third type of foreign exchange account) and up to 80 per cent may be deposited in a PAZAK account. Holders of PAMAZ Transfer accounts may use them for certain purposes for themselves or their immediate families without prior approval.

For a period of two years after their entry into Israel, immigrants and temporary residents are exempt from surrendering their foreign currencies to the Treasury or depositing them in PAZAK accounts, and may keep such currencies with authorized banks in Israel or with foreign banks abroad. All debits to such accounts, however, require prior authorization from the exchange control authorities. Some categories of new immigrants who transfer foreign exchange to Israel may be granted a bonus of I£0.700 per US$1, over and above the conversion rate of I£1.800 per US$1, on up to $10,000 per family. Half of this bonus is in the form of a grant by the Jewish Agency and the other half is in the form of a loan to the immigrant repayable to the Jewish Agency within four or five years.

Tourists visiting Israel are expected to bring with them the amounts of foreign currency that they will need during their stay. The import of Israel banknotes is prohibited. Tourists and others visiting Israel who are holders of Blocked Accounts (see section on Nonresident Accounts, above) are permitted to draw upon such accounts to the extent of I£50 per day for themselves and a like amount for each member of their families, provided they have held the account for six months or more.

Capital

Foreign exchange representing incoming capital has to be surrendered at the official rate. Capital brought into Israel for the purpose of investment can, subject to approval, be granted preferential treatment in accordance with the Law for the Encouragement of Capital Investments of March 29, 1950, which permits the repatriation of capital and transfers of earnings up to 10 per cent annually of the invested capital. Repayment and amortization of capital may also be transferred, provided the total value of profits, interest, and repayment does not exceed 10 per cent of the total investment in any one year. However, the rate of repatriation is limited to 7 per cent annually if the investment is in a building project. In June 1955, an amendment to this law made the privileges more automatic and reduced taxation on new enterprises. Foreign investments effected in Israel without taking advantage of the 1950 law do not benefit from these transfer privileges.

Payments that are due to nonresidents and are not permitted to be transferred abroad may be credited to Registered or Blocked Accounts (see section on Nonresident Accounts, above).

Proceeds accruing from the repatriation or liquidation of foreign assets held by residents have to be surrendered or may be kept in foreign exchange in time deposits (PAZAK accounts) or, in certain cases, 20 per cent may be retained in PAMAZ Transfer accounts (see section on Proceeds from Invisibles, above). Alternatively, residents may purchase treasury promissory notes in foreign currency against dollars, sterling, or Swiss francs accruing to them from legacies, gifts, life insurance policies, liquidation of assets abroad, or restitution payments. The notes bear interest at 5 per cent, payable semiannually, and are redeemable in 15 years, though holders may demand repayment by giving 90 days’ notice. Importers holding import licenses with allocation of foreign currency may, without giving the 90 days’ prior notice, use the notes registered in their names for payments of the value of the foreign currency allocated to them. Payments will be effected at the rate of exchange prevailing on the date of redemption or repayment.

Transfers abroad of a capital nature by residents are not permitted.

Exports of, and transactions in, securities involving nonresident interests are subject to approval. Investment in securities quoted on the Tel Aviv Stock Exchange of foreign capital in Blocked Accounts is, however, entirely free.

Table of Exchange Rates (as at April 1, 1958)(Israel pounds per U.S. dollar)
BuyingSelling
1.260(Official Rate less 30% Discount)

Exports to Turkey.
1.400(Official Rate with I£0.400 Exchange Subsidy)
1.566(Official Rate less 13% Discount)

Exports to Yugoslavia.
Imports of informational media under the Informational Media Guaranty program.
1.800(Official Rate)1.800(Official Rate)
Most exports.5 Invisibles, including appeals and charitable donations. Capital.Other authorized imports. Authorized invisibles. Capital.
Note: Exchange premiums are also paid on a case-by-case basis on payments for imports from Turkey and Yugoslavia.

Changes during 1957

February 10. The subsidies on imports of frozen meat and milk powder were abolished.

February 15. The premiums paid on the net value added to industrial exports to certain countries were increased. Swiss francs were added to the list of currencies receiving the highest premium; Russian rubles were removed from the list of currencies receiving premiums; and premiums were established for three clearing currencies (Finnish, Greek, and Rumanian) on which none had previously been paid.

March 19. A special, additional export premium of I£0.350 per US$1 of the net value added would be paid on industrial goods, except cement, exported to West Africa after this date.

April 30. Exporters of citrus products were authorized to retain 50 to 70 per cent (according to the country of destination) of their exchange proceeds in PAMAZ accounts.

June 1. The bilateral payments agreement with the Netherlands was terminated; settlements would now be made in transferable guilders.

July 1. The discount on Brazilian clearing dollars was reduced from 15 per cent to 8 per cent.

July 1. Certain categories of new immigrants who transfer foreign exchange to Israel would be granted by the Jewish Agency a premium of I£0.700 per US$1 over the official rate of I£1.800 per US$1, on up to $10,000 per family. Half of this would be in the form of a grant by the Jewish Agency and the other half would be in the form of a loan to the immigrants repayable to the Jewish Agency in four to five years.

July 1. Residents of Israel who transfer to Israel foreign exchange derived from certain transactions in invisibles and who sell the exchange or any part thereof to the Ministry of Finance for Israel pounds at the official rate became entitled to receive a bonus in the form of an interest-bearing government debenture with a face value of 20 per cent of the Israel pounds they received in exchange.

July 15. Transfers of Blocked Accounts from one resident to another were authorized, provided the amount in question was not less than I£6,000 or represented the balance of the account.

August 14. Exporters of automobile tires were authorized to retain 50 per cent of their exchange proceeds in PAMAZ accounts.

August 19. Personal receipts of Belgian francs, Netherlands guilders, and Swedish kronor qualified for a 20 per cent premium or for credit to a PAZAK account.

August 28. The 20 per cent premium on personal transfers instituted on July 1, 1957 was limited to persons who were residents of Israel prior to June 1, 1957.

September 3. The privileges accorded to PAMAZ Transfer accounts were made inapplicable to emigrants.

September 23. Exchange subsidies on imports of certain commodities (beans, chemical fertilizers, etc.) were abolished.

October 16. The advance deposit on documentary import credits was increased from 25 per cent to 35 per cent.

November 7. Premiums ranging from I£0.600 to I£0.800 per US$1 of the net value added were established on the proceeds of exports to Brazil, Denmark, Finland, Greece, Norway, Poland, and Rumania.

November 7. The discount of 8 per cent on Brazilian clearing dollars (see July 1, above) was canceled.

December 31. The bilateral payments agreement with Burma was terminated; settlements would now be made in transferable sterling.

Note. The following changes took place early in 1958:

January 1. The premium given on the net value added to industrial exports for receipts in Italian clearing dollars, Netherlands guilders, Swedish kronor, and French clearing francs was increased to the same as that given for receipts of dollars, sterling, etc. A premium of I£0.850 per US$1 was granted on 40 per cent of the cost of air freight for Israel exports carried by EL-AL (Israel Airlines).

January 1. The subsidy on imports of drugs and medicines was abolished, the only remaining import subsidy being that on books, etc., under the Informational Media Guaranty program.

April 1. The special rate of I£1.500 per US$1 for exchange receipts from charitable organizations was abolished.

Italy1

Exchange Rate System

No par value for the Italian Lira has been established with the Fund. Exchange rates are quoted for Canadian dollars, free Swiss francs, U.S. dollars, and for the various foreign currencies in the multilateral foreign exchange arbitrage arrangement in which Italy participates with Austria, Belgium-Luxembourg, Denmark, France, the Federal Republic of Germany, the Netherlands, Norway, Sweden, Switzerland, and the United Kingdom. Under this multilateral arbitrage arrangement, Italian authorized banks may conclude spot transactions, and forward transactions for up to six months’ delivery (three months’ delivery for transactions in French francs or with banks in France), with authorized banks in any of the participating countries in any of their currencies (except “free” currencies); 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. Authorized banks may deal in Canadian dollars, U.S. dollars, and free Swiss francs with banks in Canada and the United States. The rate for the U.S. dollar has remained between Lit 624.75 and Lit 625.00 per US$1 since September 1949.

Italy participates with Austria, Belgium-Luxembourg, Denmark, France, the Federal Republic of Germany, the Netherlands, Norway, Sweden, Switzerland, and the United Kingdom in the multilateral arrangements with Argentina; and with Austria, Belgium-Luxembourg, France, the Federal Republic of Germany, the Netherlands, and the United Kingdom in the multilateral arrangements with Brazil. Under both these schemes, the currency of a participating country may be exchanged for the currencies of the other countries participating in the same scheme.

Exchange Control Territory

Exchange control is not exercised over payments from the Italian Republic to the Republic of San Marino. 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 Cambi) on the basis of instructions issued by the Ministry of Foreign Trade. All sales and purchases of exchange, including those negotiated in the free market, pass through banks authorized for this purpose.

Prescription of Currency

Outgoing payments for commercial transactions with the dollar area and a few other countries2 may be made in U.S. dollars, Canadian dollars, free Swiss francs, or EPU currencies, or in lire by crediting a Foreign Account in Free Lire (see section on Nonresident Accounts, below). Outgoing payments for commercial transactions with the countries participating in the Western European multilateral arbitrage arrangement, their associated territories, and Afghanistan, Egypt, Ethiopia, Saudi Arabia, the Sudan, Thailand, Yemen, and Yugoslavia, are made in EPU currencies or in lire by crediting a Foreign Account in Multilateral Lire. For similar transactions with Greece, the Portuguese Monetary Area, Turkey, and the bilateral agreement countries,3 payments are made in lire through the appropriate clearing account. The clearing accounts with Greece, Portugal, and Turkey are, however, settled monthly through the EPU mechanism. Payments for commercial transactions with Argentina and Brazil are made in lire credited to a Foreign Account in Multilateral Lire or in the currency of one of the countries participating in the multilateral arrangements with Argentina or Brazil, as the case may be. Settlements with Japan are made in U.S. dollars or in lire through Foreign Accounts in Free Lire.

Incoming payments for commercial transactions may be received from any country in U.S. dollars, Canadian dollars, or free Swiss francs, or in lire from a Foreign Account in Free Lire. Such receipts from non-dollar countries4 may also be accepted in EPU currencies or in lire from Foreign Accounts in Multilateral Lire, and from bilateral agreement countries they may also be received through the appropriate clearing account.

Payments for transactions relating to securities, investments, dividends, interest, remittances of banknotes, etc., must be settled in lire through Foreign Capital Accounts or through Foreign Ordinary Accounts appropriate to the country of residence of the nonresident concerned (see section on Nonresident Accounts, below).

Nonresident Accounts

The two main types of account in Italian lire which nonresidents are allowed to maintain with authorized banks in Italy are Foreign Accounts, primarily for current transactions, and Foreign Capital or Foreign Ordinary Accounts, for financial transactions (mainly investments and income thereon, banknote transactions, and the travel expenses of nonresidents in Italy). Foreign Accounts are divided into three categories, as follows:

1(a). Foreign Accounts in Free Lire may be held by residents of any foreign country but are used mainly for transactions with countries in the dollar area and certain others (see footnote 2). These accounts may be transferred to any other Foreign Account in Free Lire, a Foreign Account in Multilateral Lire, or a Foreign Capital or Foreign Ordinary Account, or they may be converted into U.S. dollars, Canadian dollars, free Swiss francs, or EPU currencies. They may be credited with the proceeds of sales of U.S. dollars, Canadian dollars, or free Swiss francs remitted from abroad.

1(b). Foreign Accounts in Multilateral Lire may be held by residents of all countries except Chile, Japan, and those listed in footnote 2, but are used mainly for transactions with Western European countries. These accounts may be transferred to other Foreign Accounts in Multilateral Lire, to Foreign Accounts in Bilateral Lire, and to Foreign Capital or Foreign Ordinary Accounts, or they may be converted into EPU currencies. They may be credited with the proceeds of sales of U.S. dollars, Canadian dollars, free Swiss francs, or EPU currencies remitted from abroad. They may not be credited with payments that should be made to Foreign Accounts in Bilateral Lire.

1(c). Foreign Accounts in Bilateral Lire may be held only by residents of bilateral agreement countries (see footnote 3). These accounts may be transferred to Foreign Accounts in Bilateral Lire of the same country, and those related to residents of Greece, Portugal, or Turkey may also be transferred to Foreign Capital or Foreign Ordinary Accounts. They may be credited with the proceeds of sales of U.S. dollars, Canadian dollars, free Swiss francs, or EPU currencies remitted from abroad.

Apart from the Foreign Accounts, there are Foreign Capital Accounts and Foreign Ordinary Accounts. These may be credited with proceeds from the sale of foreign-owned personal property and real estate in Italy and with payments arising from the regulation of foreign-owned capital in Italy under the Regency Decrees of March 2, 1948 and February 7, 1956. They may also be credited with Italian banknotes sent to Italy by banks abroad, the residence of the remittor determining the category of account to be credited. Both Foreign Capital and Foreign Ordinary Accounts may be debited for the purchase of investments, living and traveling expenses in Italy, emigrants’ remittances from abroad, payments of taxes, etc. They are not exchangeable in Italy into foreign currency, except in banknote form, and transfers from them to Foreign Accounts are not permitted. These two categories of account are distinguished according to the residence of the account holder, as follows:

2(a). Foreign Capital Accounts may be held by residents of any country except those with which Italy has bilateral payments agreements (see footnote 3). These accounts may be transferred to any other Foreign Capital Account. They may be credited with transfers from Foreign Accounts in Free Lire, Foreign Accounts in Multilateral Lire, Foreign Accounts in Bilateral Lire related to Greece, Portugal, or Turkey, and other Foreign Capital Accounts, and with the proceeds from sales by nonresidents of foreign banknotes in the Italian market.

2(b). Foreign Ordinary Accounts (Conti Esteri Ordinari [“altri paesi”]) may be held by residents of countries with which Italy has bilateral payments agreements (see footnote 3). They may be credited with the proceeds from sales of U.S. dollars, Canadian dollars, free Swiss francs, or EPU currencies remitted from abroad. These accounts may be transferred to any other Foreign Ordinary Account.

Imports and Import Payments

Import licenses for goods from OEEC countries and their associated territories, Afghanistan, Egypt, Ethiopia, Saudi Arabia, the Sudan, Thailand, and Yemen are required for only a few items listed in a Tabella “B Import.” Licenses are also required for commodities not listed in a Tabella “A Import” when imported from the dollar area and a few other countries (see footnote 2). Other lists (Tabella “C Import” and Liste Particolari) indicate certain goods that may be imported without import license from bilateral agreement countries, Argentina, Brazil, Japan, and Yugoslavia. All other imports are subject to license. For imports not subject to import license, an import document completed by an authorized bank is required. Trade with Chile is settled on a compensation basis. Imports from Paraguay and Spain may be linked to exports to those countries.

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).

Payments for Invisibles

In principle, payments abroad for invisibles require licenses, which are issued by the exchange control authorities; but in practice, the authorized banks may grant foreign exchange freely for expenses incidental to trade transactions. They are also permitted to approve payments abroad up to specified limits for other types of expenditure, such as travel for business and tourism, health and education, patents and trademarks, and remittances of income on foreign-owned capital. Exchange is granted freely for remittances of earnings on investments in Italy in productive enterprises (see section on Capital, below). Residents may send postal money orders for up to Lit 50,000 in any currency for any noncommercial purpose. As a rule, when the cost of insurance premiums is being met by Italian exporters or importers, payment to domestic or foreign insurance companies operating in Italy is in lire. Insurance may be paid in free currency, multilateral currency, or a clearing currency, as the case may be, only for goods arriving in Italy or being sent out of Italy where the insurance has been stipulated by contractual agreement with an insurance company chosen by the seller or buyer abroad.

Tourists traveling to dollar and EPU countries may obtain from the banks exchange up to the value of Lit 300,000 per person annually (Lit 500,000 will be provided for trips lasting more than 15 days). Persons traveling abroad may take with them a maximum of Lit 30,000 in Italian banknotes.

Exports and Export Proceeds

A few commodities listed in a special table (TabellaEsport) require export licenses. Those commodities not listed may be exported on presentation of an export document completed by an authorized bank. This export document is also required for exports subject to export license, but not for exports not exceeding Lit 250,000 in value. Payment must be received in accordance with the regulations (see section on Prescription of Currency, above). Special credit facilities are provided to promote exports of special items. In addition, certain tax refunds are granted on a wide range of exported commodities; the funds for this purpose are made available by imposing an “equalization tax,” ranging from 1 to 4 per cent, on certain import commodities. Licenses for exports to Paraguay and Spain may require that such exports be linked to an equivalent value of imports from the respective country.

Exchange receipts must be surrendered to an authorized bank within seven days of receipt. Current proceeds in convertible currencies and the currencies in the Western European multilateral arbitrage arrangement may be retained by the recipients in foreign exchange accounts for a certain period, during which such balances may be utilized for permitted transactions or may be sold to other residents or to authorized banks. The banks are allowed to sell such balances to residents for authorized transactions and to negotiate them freely with the Exchange Office or among themselves. After expiration of the retention period, unused balances must be sold to the Exchange Office at the lowest official exchange rate quoted during the retention period (these official rates are determined daily on the basis of the average closing rates in Milan and Rome).

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 free or multilateral currencies. Persons may bring in Italian banknotes in any amount.

Capital

In accordance with the provisions of Decree Law No. 43 of February 7, 1956, all restrictions on the repatriation of capital invested in the establishment or expansion of productive enterprises and on the transfer of income therefrom were abolished. For other investments, the original capital may be repatriated after a minimum period of two years and the transfer of income is limited to 8 per cent. Any amounts which arise from investments that are not freely transferable abroad may be credited to Foreign Capital or Foreign Ordinary Accounts (see section on Nonresident Accounts, above).

Investments abroad by residents are subject to approval, which is granted only when such investments are considered economically advantageous. Residents may be authorized to make investments abroad with foreign banknotes purchased in Italy.

The export of securities is not permitted, except those which are owned by nonresidents and have been purchased against freely convertible or multilateral currencies.

Banknotes

Residents are authorized to receive foreign banknotes from nonresidents as gifts, or in payment for goods sold and services rendered to tourists during their stay in Italy. Banknotes so acquired must be sold to an authorized bank within seven days. Banks abroad may remit Italian banknotes to authorized banks in Italy for the credit of a Foreign Capital or Foreign Ordinary Account appropriate to the remitting country. Authorized banks may deal among themselves or with the Italian Exchange Office in foreign banknotes, sell foreign banknotes to residents traveling abroad or investing overseas, or export foreign banknotes for credit or for exchange into free or multilateral currencies.

Changes during 1957

January 2. Austria was added to the multilateral lire group and, with Argentina, was deleted from the list of bilateral lire countries.

February 20. Chile, Japan, the Republic of Korea, Nicaragua, and the Philippine Republic were added to the free lire group. In addition, residents of any non-dollar country were allowed to open Foreign Accounts in Multilateral Lire. These accounts could not be credited with payments by Italian residents that should be made through Foreign Accounts in Bilateral Lire.

March 1. The authorized banks were given authority to settle a variety of financial transactions through Foreign Ordinary Accounts without reference to the central exchange control authority.

June 18. Quantitative restrictions on imports from the dollar area were further reduced, raising the liberalization from 39 per cent to 71 per cent, on the basis of imports in 1953.

June 28. The global compensation arrangements with Uruguay ceased to be effective. Uruguay was included in the list of dollar area countries.

July 21. A payments agreement with Egypt (signed on July 6, 1957) came into effect. Settlements between Italy and Egypt would now be made in Italian lire through Foreign Accounts in Multilateral Lire; Bilateral Lire Accounts for Egyptian firms were liquidated.

August 3. Italy agreed to the multilateralization of Yugoslav earnings.

August 14. The global compensation arrangements with Colombia ceased to be effective. Colombia was included in the list of dollar area countries.

August 17. Yugoslavia was moved from the bilateral to the multilateral group of countries, with which settlements may be made in EPU currencies.

September 30. Imports not exceeding Lit 50,000 in value could be made without presenting an exchange control form.

Note. Changes that took place early in 1958 are listed below.

January 1. Settlements with Finland and Hungary would be made in multilateral currencies, and Finland and Hungary were removed from the group of bilateral countries in the Italian exchange control regulations.

January 11. Settlements with the U.S.S.R. would be made in multilateral currencies, and the U.S.S.R. was removed from the group of bilateral countries in the Italian exchange control regulations.

February 1. Foreign Ordinary Accounts of free currency countries and those of EPU countries were combined in one group—Foreign Capital Accounts—applicable to residents of all countries except those with which Italy has bilateral payments agreements.

February 10. Settlements with Iran would be made in multilateral currencies, and Iran was removed from the group of bilateral countries in the Italian exchange control regulations.

March 1. Settlements with Rumania would be made in multilateral currencies, and Rumania was removed from the group of bilateral countries in the Italian exchange control regulations.

Japan

Exchange Rate System

The par value is Japanese Yen 360 = US$1. The official rates of authorized banks for telegraphic transfers 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 nonmerchandise transactions, and capital transactions and transfers. The Ministry of Finance also has the function of determining exchange rates. The Bank of Japan, as the Government’s agent, executes the above functions in part. Authorized banks carry out the controls on the technical administrative level.

Prescription of Currency

Settlements on account of merchandise transactions and invisibles are made in accordance with the following prescription of currency requirements: (1) With Sterling Area countries, settlements are made in sterling. (2) With countries in Specified Area A (Afghanistan, Argentina, Austria, Cambodia, Mainland China, Denmark, Ethiopia, Finland, Indonesia, Israel, Italy, Lebanon, Norway, the Portuguese Monetary Area, the Sudan, Syria, Thailand, Uruguay, the U.S.S.R., Yugoslavia, and other Eastern European countries), outward payments may be made only in transferable sterling, while incoming payments may be received either in U.S. dollars or in transferable sterling, except that payments from Mainland China may be received only in transferable sterling. (3) With countries in Specified Area B (the Federal Republic of Germany, the French Franc Area, the Netherlands Monetary Area, and Sweden), settlements may be made in the currency of the country concerned, in sterling, or in other currencies mutually agreed. (4) With countries in Specified Area C (Canada and Switzerland), both inward and outward payments may be made either in the currency of the country concerned or in U.S. dollars. (5) With countries with which Japan has bilateral payments agreements (Brazil, China (Taiwan), Egypt, Greece, the Republic of Korea, and Turkey), settlements must be made through bilateral accounts, Called “open accounts”; alternatively, incoming payments from these countries may be received in sterling. (6) With all other countries, settlements are made in U.S. dollars. Incoming payments from the countries listed under (1), (3), and (5), above, may also be received partially or wholly in U.S. dollars if the authorities of the paying country agree or such agreement is not required, Deviations from these prescription of currency 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. 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 authorized freely. 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 in U.S. dollars with banks. (Specified residents, such as shipping companies, airlines, tourist services, insurance companies, and certain Japanese trading firms, also are authorized to keep Foreign Currency Deposit Accounts in U.S. dollars, sterling, or other designated currencies.)

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 license and, where payment is to be made, to registration with an authorized bank (“bank certification”) for prescription of currency purposes. Most of the authorized imports are planned in the exchange budget and communicated through Import Announcements.

There are two different licensing procedures for imports requiring payment abroad: (1) Under the exchange allocation system (covering imports of foodstuffs, raw materials, and other essentials), the importer must first obtain from the trade control authorities an allocation of foreign exchange appropriate to the source of the import. If the allocation is granted, the importer receives an exchange allocation certificate which entitles him to receive an import license from a foreign exchange bank automatically upon application. Exchange allocation certificates for most commodities under this system are issued on a global basis, without regard to the country of origin or the currency of settlement. However, single quotas for specified commodities from designated sources may be established in accordance with commitments undertaken in trade agreements. (2) Under the automatic approval system, licenses for specified commodities are issued freely by the authorized banks on application, up to the total amount appropriated for the system in the exchange budget. However, additional amounts are provided after the original appropriation is exhausted. Nearly 60 per cent of the items subject to the automatic approval system may be imported from any country, but for the remainder different lists of commodities apply to different currency areas.

Licenses for imports under the exchange allocation system or the automatic approval system are issued by authorized banks, but when the proposed payments are not in accordance with the prescribed methods of settlement, such imports require prior approval of the Ministry of International Trade and Industry. Licenses for imports without exchange are issued by the Ministry of International Trade and Industry.

As a general rule, applicants for import licenses must make a deposit, which is calculated by multiplying the value of the intended import by a coefficient that differs (the highest being 35 per cent) for various categories of goods and for various currency areas or countries of origin. 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.

Payments for Invisibles

Contracts for specified services are subject to individual license, e.g., services between residents giving rise to foreign claimable assets, and services between residents and nonresidents when payment is to be effected by a nonstandard method or over a period longer than three months. Payments for invisibles are subject to individual license; however, payments considered as part of a contract for service that has been authorized may be made freely. Payments on account of costs incidental to authorized imports and exports and specified categories of transfers—e.g., those in connection with insurance and shipping—are permitted freely. Residents may take out of Japan ¥ 2,000 in Japanese currency to be spent only on Japanese ships or on Japanese aircraft. Applications to take up to ¥ 20,000 are accepted, subject to the approval of the customs director.

Exports and Export Proceeds

All exports are subject to registration with an authorized bank (“bank certification”) in order to enforce the requirements concerning prescription of currency and surrender of proceeds. The following exports are subject to individual license: goods in short supply in the domestic market, strategic materials, imported goods, goods on the list of prohibited exports, gold or gold alloy in bullion form, and goods exported by transshipment or under consignment, processing, or compensation contracts.

Export proceeds have to be surrendered within ten days from the date of acquisition. Under the Special Foreign Exchange Allocation System, exporters are entitled to receive, through simplified procedures, allocations of foreign exchange of up to 3 per cent of the export proceeds surrendered, for specified imports and other foreign payments.

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 license, e.g., services between residents giving rise to foreign claimable assets, and services performed for nonresidents when payment is to be received by a nonstandard method. Exchange receipts from invisibles must, as a rule, be surrendered. Residents may bring into Japan in Japanese currency any unspent balance of the amount which they took out legally. Otherwise, the import of Japanese currency by residents or nonresidents is prohibited.

Capital

In accordance with Law No. 163 of May 10, 1950, foreign investments in Japan are subject to approval if a guarantee for remittance of income or principal is desired. Consequently, all purchases of stocks, debentures, 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 from the sale of foreign exchange or its equivalent. Stocks in the form of stock dividends on earned surplus or revaluation of assets may be acquired freely, but application for remittance rights must be made within three months from the date of acquisition. Proceeds from sales of stocks, dividends, and receipts from technological assistance contracts may be reinvested, but not proceeds from sales of debentures before maturity. In the event of expropriation or compulsory sale of a foreign investment, the amount paid on account of expropriation may be repatriated freely.

Transfers abroad of earnings on foreign investments, and of up to 20 per cent of the value of such an investment in any one year, are permitted. The proceeds of liquidated investments may be transferred abroad two years after the investment is made; 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 debentures, the principal may be entirely remitted at maturity only. Principal on investment trust certificates may be remitted after 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, since 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, but in practice an exchange license is not required for foreign investments in Japan if remittance of income or principal is not desired.

Capital transfers abroad and foreign investments by residents are subject to approval, which may be given if such investments are recognized as necessary for balance of payments reasons.

Imports and exports of securities are subject to approval.

Changes during 1957

January 1. The open account agreement with France was abolished and replaced by a new agreement for cash payments in transferable sterling or transferable French francs.

January 1. The percentage of export proceeds which exporters were entitled to use for specified imports and other foreign payments under the Special Foreign Exchange Allocation System (retention quota) was reduced from 5 per cent to 3 per cent.

March 30. In the budget for the first half of the fiscal year 1957-58, the list of commodities subject to automatic approval was extended to cover 32 additional items.

April 1. The linking of imports of beef tallow to exports of oils and fats manufactured from beef tallow was abolished.

April 1. In accordance with a new agreement signed with Finland, the open account was closed. Settlements between the two countries would be made in sterling.

April 1. The export adjustment measures in trade with Indonesia were revised.

May 14. The term of import usance credit was reduced from 4 months to 3 months for usance credits granted in sterling, deutsche mark, Swedish kronor, and French francs (this was already the limit for usance credits granted in U.S. dollars). The number of eligible commodities was also reduced.

May 15. The procedure for the use and conversion of foreign currencies by visitors to Japan was simplified. The foreign exchange record book was abolished.

June 1. The open account arrangement with the Netherlands was terminated, and transactions were placed on a transferable sterling or transferable guilder basis. The Netherlands guilder was added to the list of currencies designated for the settlement of international transactions.

June 4. The marginal import deposit requirements were increased for certain commodities.

June 8. Restrictions on the use of retained quotas of export proceeds were tightened.

July 1. The open account arrangement with Indonesia was abolished; settlements were placed on a transferable sterling basis, but incoming payments could also be received in U.S. dollars.

August 1. The open account arrangement with the Philippine Republic was terminated, and transactions were placed on a cash dollar basis.

September 25. The forward exchange rate between yen and sterling was made freely quotable, and the Ministry of Finance discontinued operations in forward sterling.

December 9. The spot exchange rate between yen and sterling was made freely quotable at rates within 1 per cent on either side of parity.

Jordan

Exchange Rate System

The par value of the Jordan Dinar is JD 1 = US$2.80. The official rates for the U.S. dollar are based on the buying and selling rates in the London market. There are two exchange markets in Jordan, one primarily for transactions in non-Arab League currencies, where official rates are applied, and the other for transactions in Arab League currencies,1 where rates fluctuate in accordance with supply and demand. There is no legal free market for U.S. dollars in Jordan. A tax of ½ of 1 per cent is levied on sales of exchange for transactions in invisibles, except education, whether payment is made at the official or the free rate. Fees of 4 per cent for goods paid at the official rate and ½ of 1 per cent for goods paid at the free market rate are payable on import licenses.

Administration of Control

Exchange control is administered by the Exchange Control Department of the Ministry of Finance under the direction of the Controller of Currency. Import policy is formulated by an Import Committee, which is composed of the Controller of Imports, the Undersecretaries for National Economy and for Customs, the Economic Adviser to the Ministry of National Economy, the Controller of Currency, and the Director of Income Tax. The regulations of the Import Committee are carried out by the Controller of the Import Department of the Ministry of National Economy.

Prescription of Currency

Transactions for which exchange at official rates is provided must in general be paid for in a currency prescribed on the individual import license, according to the country of origin. Export proceeds must be surrendered, where required, in a currency appropriate to the country of destination. “Prescribed currency” includes the payment of sterling to and from an account in the United Kingdom appropriate to the country concerned. Most trade involving official exchange is financed through such accounts. Jordan is a member of the Sterling Area.

Nonresident Accounts

Authorized banks may open nonresident accounts designated in accordance with Sterling Area practice, subject to the prior approval of the Controller of Currency. These accounts must be fed by appropriate funds. The approval of the Controller of Currency is necessary for redesignation of residence, for transfers from resident to nonresident accounts, and for transfers to residents of hard currency countries from any other nonresident account. All other transfers between nonresident accounts and transfers from nonresident to resident accounts are permitted freely.

Imports and Import Payments

Import licenses are required for all goods except certain perishables from neighboring Arab states. Licenses are granted under three categories: (1) “Primary,” covering mainly essential goods; foreign exchange is provided at official rates and a fee of 4 per cent is payable on import licenses. (2) “Secondary,” covering nonessential and luxury goods, which are financed in Arab League currencies at free market rates; a fee of ½ of 1 per cent is payable on import licenses. (3) “Without Exchange,” for products of Syria and Lebanon financed with earnings of Arab League currencies not subject to surrender; a fee of ½ of 1 per cent is payable on import licenses.

Import licenses for goods included in the Primary category and payable in hard currencies are not granted for commodities that may be imported on the same terms from soft currency countries. Licenses for Arab League commodities are valid for 4 months and those for non-Arab League commodities for 6 months. For the latter, the importer must open a letter of credit within 45 days of the date of issuance of the license and must complete the process of importation within the period of validity of the license. If the importer chooses to pay against documents, the requirement that he open a letter of credit is dispensed with, provided the goods are shipped within 3 months of the date of issuance of the license. Imports of certain goods from any source are prohibited.

Payments for Invisibles

All payments for invisibles are subject to exchange control approval. Payments to countries outside the Arab League are approved at the official rate in the currency of the country to which payment is due or in sterling. Payments to Arab League countries are approved at the free rate in the currency of the country concerned, except that remittances for educational expenses in Arab League countries are granted in sterling. A tax of ½ of 1 per cent is levied on payments for all invisibles except education. Payments for the following types of invisibles are generally permitted: income of nonresidents, savings up to JD 5,000 of foreign nationals who intend to return to their own countries, remittances to refugee dependents, living expenses of Jordan nationals abroad, travel expenses of Jordan residents abroad, expenditures for education, expenses of medical treatment, business expenses abroad, and insurance payments in accordance with special regulations. The policy in authorizing these payments is, in general, not discriminatory. In respect of certain items, however, limits have been established. Thus, for travel to Europe the allowance is UK£150 per month for a period of one month in any one year; larger allowances are approved for travel to the United States. No allowance is given for travel to Syria and Lebanon, but residents of Jordan and nationals of Lebanon and Syria traveling to these two countries may take out up to JD 100 in Jordan banknotes. Otherwise, persons leaving Jordan may not take out more than JD 5 in Jordan banknotes. Persons leaving Jordan for any destination may take out the equivalent of JD 10 in foreign banknotes and any amount of such notes previously brought into the country by them. Up to JD 5 per person per month may be sent by postal or money order to other Arab League countries.

Exports and Export Proceeds

In general, export proceeds exceeding JD 20 must be surrendered to the authorized banks in the currency of the country to which the export is made; such proceeds have to be surrendered at the free market rate if in an Arab League currency and at the official rate if in any other currency. Proceeds from exports of vegetables, fruits, and other perishable commodities are exempt from this requirement on the understanding that the proceeds will be used to pay for imports from the Arab League states.

Proceeds from Invisibles

Receipts from invisibles must be surrendered to the banks in the appropriate currency (see section on Prescription of Currency, above). Residents of Jordan and nationals of Lebanon and Syria entering Jordan from Lebanon or Syria may bring in a maximum of JD 100 in Jordan banknotes; otherwise, the limit is JD 5. All persons may bring in any amount in foreign currencies.

Capital

Capital may be imported freely. Capital exports require approval. Current income arising from nonresident investments in Jordan may be transferred abroad. Under the Law for the Encouragement of Foreign Capital Investment, effective May 1, 1955, profits from approved foreign investments may be remitted regularly, without any limitation, in the currency of the original investment. After one year, the repatriation of capital is permitted in four annual installments in the same foreign exchange as the original investment. The Government may approve more liberal provisions upon application. Transfers abroad of a capital nature by residents are subject to approval.

Table of Exchange Rates (as at December 31, 1957)(U.S. dollars per dinar)
BuyingSelling
2.82(Official Rate)

Exports to non-Arab League countries of phosphates, etc. Some invisibles.
2.782(Official Rate)

Government payments. Imports authorized at the official rate in non-Arab League currencies.
2.765($2.78 with ½% Tax)

Invisibles authorized at the official rate in non-Arab League currencies.
2.537(Free Market Rate)3

All other exchange receipts.
2.5242(Free Market Rate)3

All imports authorized in Arab League currencies.
2.511(Free Market Rate3 with ½% Tax)

Invisibles authorized in Arab League currencies.

Changes during 1957

June 23. The suspension of the issue of import licenses for goods from France and French colonies and protectorates was lifted, and trade relations with France became normal.

August 14. Household utensils (excluding aluminum, silver, and decorative goods) and six other items were shifted from the Secondary category to the Primary category for import licensing.

September 13. It was announced that all imports from Austria, Czechoslovakia, Hungary, Italy, Switzerland, and Yugoslavia were to be routed exclusively through the port of Aqaba, and not to Beirut for overland transit through Lebanon and Syria. Import licenses for goods from these countries would stipulate shipment via Aqaba.

November 3. Toothpaste and ten other items were shifted from the Secondary category to the Primary category for import licensing.

November 19. Jeeps and five other items were shifted from the Secondary category to the Primary category for import licensing.

Republic of Korea

Exchange Rate System

There is no agreed par value for the Korean Hwan. The official rate is 500 hwan per US$1 and applies to all transactions. Foreign exchange for imports, including foreign exchange accruing from U.S. procurement in Korea in support of Republic of Korea Forces and dollars obtained from U.S. aid, is sold at the official rate to bidders in order of the largest amount of National Bonds that they agree to purchase for each dollar they wish to buy.

Administration of Control

Exchange control is administered by the Ministry of Finance and by the Bank of Korea (the central bank), which is the only authorized exchange bank in Korea and through which all exchange transactions must pass. Exchange control regulations are issued by the Monetary Board of the Bank and the Ministry of Finance. Certain imports and exports must be approved by appropriate ministries.

Prescription of Currency

The proceeds of exports must be obtained in U.S. dollars, Hong Kong dollars, sterling, or in a currency authorized by the Monetary Board of the Bank of Korea.

Imports and Import Payments

Commodities listed by the Ministry of Commerce and Industry may be imported without license; the only procedure necessary is the opening of a letter of credit. Certain commodities on the import lists are subject to the approval of the appropriate ministry; those not on the import lists require the authorization of the Ministry of Commerce and Industry. Imports from communist countries are prohibited.

Imports are classified in two categories—ordinary imports and special imports. Ordinary imports may be paid for with foreign exchange purchased from the Government, with export earnings, or with inward remittances to registered missionaries. Dollars obtained from U.S. aid are sold at the official rate to those offering to purchase the largest amount of National Bonds for each dollar they wish to buy. Special imports may be paid for only with foreign exchange earned from exports or with dollar receipts from United Nations Forces. Dollars secured from exports to the “open account area” (Japan) may be used only for imports from that area. Imports of rice, barley, and wheat flour are limited by quota.

Payments for Invisibles

All remittances abroad, except by diplomats, require the approval of the Government. Subject to the approval of the Bank of Korea, foreigners residing in Korea may make payments abroad for invisibles (including tax payments and gifts to relatives), up to US$500, by drawing checks on their accounts abroad. Persons holding General Accounts (see section on Proceeds from Invisibles, below) may apply to the Ministry of Finance for permission to use the exchange in these accounts for business travel, if they have received a recommendation from the Bank of Korea. General Accounts may be sold to the Bank of Korea, or be used to purchase hwan to pay wages or salaries to foreign employees—who may make remittances overseas from these accounts, subject to checking by the Ministry of Finance—or be used for other approved purposes. The remittance of profits is not permitted. Departing foreigners may exchange hwan for dollars up to US$100. The export of foreign means of payment is prohibited by military order.

Exports and Export Proceeds

Exports of certain specified goods—such as tobacco, raw cotton, raw hides, precious metals and their ores, certain minerals and chemicals, pulp and lumber, machinery—and exports to communist countries are prohibited. Certain other goods may be exported only under the authorization of the ministry concerned.

The foreign exchange proceeds of exports must be deposited in a foreign exchange Import Account in the Bank of Korea. Import Accounts are credited with foreign exchange accruing from (1) exports of goods and services, (2) sales of goods to the Republic of Korea Army, if payment is received from U.S. aid funds, (3) purchases, to pay for imports, of foreign currency holdings from the Government of Korea by private parties, (4) sales of gold and silver to the Bank of Korea, as authorized by the Monetary Board, (5) sales of goods and services to the United Nations Forces by persons or firms in Korea (when United Nations Forces make contracts with local suppliers for goods and services, the local supplier must obtain the approval of the Ministry of Finance; and the supplier may then be paid in dollars, which must be sold to the Bank of Korea or deposited in an Import Account), and (6) other foreign exchange transferred from approved accounts. Exchange in Import Accounts may be sold to the Bank of Korea, transferred to other Import Accounts, or used to pay for imports, for incidental costs of imports and exports (freight, insurance, etc.), and for other approved purposes.

Proceeds from Invisibles

The proceeds derived from such invisibles as services to foreign countries, or to United Nations Forces or U.S. Government agencies in Korea, must be either sold to the Bank of Korea or deposited with the Bank in an Import Account. Inward remittances to registered missionaries may be credited to Import Accounts. Foreign exchange derived from other invisibles must be either sold to the Bank of Korea or deposited in a General Account, but such deposits may be disposed of only in accordance with existing regulations (see section on Payments for Invisibles, above). Foreign exchange reported upon entering the country or sent from overseas is credited to a General Account.

Capital

All capital remittances require approval.

Changes during 1957

May 1. The Bank of Korea suspended sales of U.S. aid dollars, pending establishment of a competitive bidding system. U.S. aid dollars had been sold through the Bank of Korea by lot when applications exceeded amounts offered for sale.

May 18. The Bank of Korea resumed sales of U.S. aid dollars. Dollars were sold to bidders offering to buy the largest amount of National Bonds for each dollar they wished to purchase.

December 5. Inward remittances to registered missionaries could be credited to Import Accounts. Exchange held on Import Accounts could be transferred to other Import Accounts.

December 9. The method of selling all foreign exchange for imports was changed so that successful bidders were determined in order of the largest amount of National Bonds that they agreed to buy for each currency unit they wished to purchase.

December 13. The Trade Law was promulgated and put into force.

December 30. The method of selling foreign exchange accruing from U.S. procurement in Korea for support of Republic of Korea Forces was changed so that successful bidders were determined in order of the largest amount of National Bonds that the bidders agreed to buy for each dollar they wished to purchase.

Lebanon

Exchange Rate System

The par value is Lebanese Pounds 2.19148 = US$1. However, all transactions take place at free market rates, which for the U.S. dollar as at December 31, 1957 were LL 3.1625 buying, LL 3.1650 selling, per US$1. (As a rule, the free market dollar rate is prevented from appreciating beyond LL 3.20 per US$1.)

Prescription of Currency

In general, no requirements are attached to exchange payments abroad or receipts in Lebanon. In some cases, transactions with certain countries,1 with which Lebanon has concluded payments agreements specifying the method or channel of payment, may be made through specific accounts.

Imports and Import Payments

Imports of a few goods are prohibited. Imports of certain commodities that are for the most part produced locally are subject to license. All other commodities may be imported freely without license. Exchange to pay for imports may be obtained freely through the free market.

Payments for Invisibles

Exchange to pay for invisibles may be obtained freely through the free market or payment may be made freely in local currency to any account.

Exports and Export Proceeds

Exports of a few goods (scraps of iron, cast iron, copper, lead, and tin) are prohibited. Export licensing is applied to only a few items, such as livestock, wheat and wheat products, barley, jute goods, Egyptian cotton, newsprint, cement, petroleum and petroleum products, industrial and agricultural machines and equipment, and certain metals. All products intended for export to North Korea are subject to export license. There are no surrender requirements attached to exchange receipts from exports, which may be retained, used, or sold freely in the free market.

Proceeds from Invisibles

There are no surrender requirements attached to exchange receipts from invisibles, which may be retained, used, or sold freely in the free market.

Capital

There are no limitations on capital payments or receipts, and exchange in respect of capital movements may be obtained or sold freely through the free market.

Changes during 1957

January 11. A trade and payments agreement was concluded with Czechoslovakia.

January 25. Certain types of diesel-driven vehicles and their engines and spare parts were removed from the list of prohibited imports.

April 6. A trade agreement was concluded with China (Taiwan).

April 17. Exports of all kinds of cheese were made free.

May 21. Imports of fresh and dry silkworm cocoons were made subject to license.

August 12. Imports of the following agricultural products were prohibited: citrus fruits, apples, peaches, olives, olive oil, tobacco, pineseeds, and silkworm cocoons. Imports of potatoes, onions, and garlic were made subject to license.

September 27. The restriction on exports to Mainland China was lifted.

October 8. Imports of acetic acid were made subject to license.

December 5. Imports of the following agricultural products were made subject to license: citrus fruits, apples, olives, pineseeds, dried figs, wheat, and silkworm cocoons. The import of tobacco was made subject to the regulations of the Régie Co-Intéressée des Tabacs et Tombacs (a monopoly). Imports of other agricultural products were made subject to license during certain periods of the year, according to an “agricultural calendar.”

Federation of Malaya1

Exchange Rate System

The Malayan dollar has a fixed relationship to the pound sterling on the basis of $M 1 = 2s. 4d. Rates for the U.S. dollar are determined on the basis of exchange rates in London.

Administration of Control

Exchange control is administered, under the Exchange Control Ordinance of 1953 as amended, by the Exchange Control Branch of the Economic Division of the Treasury, headed by a Comptroller of Foreign Exchange.

Prescription of Currency

The Federation of Malaya is one of the territories of the Sterling Area and follows the prescription of currency arrangements and the sterling payments system of the United Kingdom (see section on Prescription of Currency in the survey on the United Kingdom).

Nonresident Accounts

The accounts of nonresidents are maintained along the same lines as in the United Kingdom, namely, they are classified as Resident (Sterling Area), Canadian, American, or Transferable (all other countries), according to the residence of the account holder. For the use and availability of these accounts, see the section on Nonresident Accounts in the survey on the United Kingdom.

Imports and Import Payments

Imports from countries outside the dollar area are licensed freely, with the exception of a few items which for security or health reasons require certain conditions to be satisfied before licenses are issued. All goods of dollar area origin are subject to specific import license. Direct imports from the dollar area are limited to those goods which are not reasonably available from other sources and which are necessary for the economic development and the maintenance of the standard of living of the country. Nonessential goods of dollar area origin are imported via Hong Kong and paid for in sterling or Malayan dollars. Foreign exchange appropriate to the country of origin of the merchandise is made freely available for all permitted imports.

Payments for Invisibles

Payments for invisibles to residents of the Sterling Area may be made freely. Payments related to commercial transactions and personal payments to other countries are in general authorized. Payments for travel in countries outside the Sterling Area are limited by exchange allocation to a maximum in any four-year period of £400, depending on the length of the applicant’s residence in Malaya. Travelers may take out not more than £10 in sterling banknotes or $M 100 in Malayan notes, and foreign banknotes that were declared on entry.

Exports and Export Proceeds

All exports to countries outside the Sterling Area require the approval of the exchange control authorities in order to ensure that the proceeds are obtained in accordance with the prescription of currency regulations and that the foreign exchange is sold to an authorized bank.

Proceeds from Invisibles

There are no specific requirements governing exchange receipts from invisibles, but if specified currencies (see footnote 5 in the survey on the United Kingdom) are received, they should be sold to an authorized bank.

Capital

The entry of capital for investment purposes is unrestricted. Each application for an outward remittance, including the repatriation of capital, is subject to approval by the exchange control authorities, which is given freely for approved projects. The import of sterling securities is prohibited. Transfers of securities from a register within the Sterling Area to a register outside is prohibited, whether the transfer be unilateral or an exchange.

Changes during 1957

June 4. The basic travel allowance for travel in the Transferable Account Area was extended to cover travel in the dollar area.

November 1. The basic travel allowance was increased to a maximum of £400 per person in a four-year period, the actual amount depending on the length of the applicant’s residence in Malaya.

Morocco1

The Kingdom of Morocco comprises three zones, in which different trade and exchange arrangements operate pending the country’s economic integration. The arrangements in each zone are described below.

North Zone

The North Zone of Morocco was formerly Spanish territory. The exchange rates (based on the peseta) and the import and exchange regulations are similar to those of Spain, but exchange control authority is exercised by the Servicio de Moneda, a section of the Department of the Treasury of Morocco. The North Zone is still part of the Spanish Monetary Area and, pending the replacement of the peseta by the Moroccan franc, the Spanish exchange system continues to operate (see the survey on Spain in this Report).

South Zone

The South Zone of Morocco was formerly French territory. The exchange regulations are similar to those in effect in France (see the survey on France in this Report). However, certain important features of the system in the South Zone of Morocco differ from the French system; these are outlined below.

The exchange rate of the Moroccan franc, like that of the French franc, is based on an official rate of 350 francs per US$1 with a 20 per cent surcharge on outgoing payments and a 20 per cent premium on exchange receipts, making an effective rate of 420 francs per US$1. However, a Moroccan decree published on August 16, 1957 exempts from the 20 per cent surcharge payments for imports (to the extent of their f.o.b. value only) of certain commodities, such as raw materials (pyrites, ores, and textile raw materials), semifinished products (metals), fuels (mineral oils, gas oil, and coal), and such consumer goods as tea, cereals, sugar, textiles, vegetable oils, and some farm equipment, including tractors.

No exchange allocations are necessary for imports from France, in view of the interchangeability of the French franc and the Moroccan franc. Import controls are imposed on French products only in connection with certain import quotas designed to protect local industries. For imports from countries having bilateral trade agreements with Morocco (South Zone), import licenses and exchange allocations are granted in accordance with agreed quotas, payments being made through the arrangements existing between the partner country and the French Franc Area. For most other imports, licenses are issued up to published quotas; the allocation of exchange to pay for imports from the dollar area is also limited. There is no restriction (except for goods under special quotas or controls) on the issue of import licenses when the import is made with the importer’s own foreign exchange, including funds available in EFAC accounts (see section on Exports and Export Proceeds in the survey on France). These EFAC holdings are freely negotiable in Morocco and such currencies as the U.S. dollar are usually sold at a premium.

Tangier Zone

There are no exchange controls or import or export licensing in the Tangier Zone, and all trade and payments may be made without restriction in accordance with Tangier’s special economic status in the Kingdom of Morocco as recognized by a Royal Charter of August 26, 1957, promulgated on August 30, 1957.

Note. As of February 17, 1958, the Spanish currency in circulation in the North Zone was exchanged for Moroccan francs and the economy of this Zone was integrated with that of the rest of the country; the exchange control regulations in operation in the South Zone are therefore now extended to the former North Zone. The Tangier Zone retains its special status.

In the South Zone, the decree dated August 16, 1957 exempting from the 20 per cent surcharge payments for imports of certain commodities was abolished by a decree of January 31, 1958. Under the new decree, a 10 per cent refund is to be paid to importers, out of a special compensation fund, on the prices of imports in certain categories. The new list of products benefiting from this measure covers substantially the same categories of goods that were formerly exempted from the 20 per cent surcharge. This refund is due regardless of the origin of the goods imported and the currency of payment; therefore it benefits imports from countries of the French Franc Area as well as those from other areas.

Netherlands

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 par value.

For Canadian and U.S. dollars, sterling, Austrian schillings, Belgian francs, Danish kroner, deutsche mark, French francs, Italian lire, Norwegian kroner, Swedish kronor, free Swiss francs, Swiss “agreement francs,” and Turkish “agreement dollars,” spot and forward exchange markets have been established. Authorized banks are allowed to conclude both spot and forward transactions in these currencies against guilders, in the Amsterdam exchange market and, except for the Turkish “agreement dollar,” with banks in the country of the currency concerned. Spot transactions take place at rates within a fixed spread of 1 per cent on either side of parity. Forward transactions with residents must be based on permitted merchandise or service transactions.

The Netherlands participates with Austria, Belgium-Luxembourg, Denmark, France, the Federal Republic of Germany, Italy, 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 six months1 delivery (three months’ delivery for transactions in French francs), with other authorized banks in any of these territories in any of their currencies. 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. These currencies may also be bought and sold both spot and forward by banks in the Transferable Guilder Area (see section on Prescription of Currency, below), against their guilder accounts held with Netherlands authorized banks.

Apart from the arbitrage arrangement mentioned above, another arbitrage circuit exists in which authorized banks in the Netherlands are permitted to conclude, multilaterally with banks abroad, spot transactions and forward transactions for up to six months’ delivery in convertible currencies (U.S. dollars, Canadian dollars, and free Swiss francs).

Special arrangements apply to Belgian and Luxembourg francs in Financial Accounts (see section on Capital, below), which are traded in a spot market at free rates that are, in practice, very close to the official rates.

Exchange Control Territory

All transactions with the Netherlands Antilles, New Guinea, and Surinam are subject to exchange control. However, vis-à-vis third countries with which payments agreements are in force, the Netherlands and the overseas territories constitute the Netherlands Monetary Area. The Republic of Indonesia participates in several Netherlands payments agreements, in particular with EPU countries, and in those cases it also constitutes a part of the Netherlands Monetary Area.

Administration of Control

Exchange control is administered by the Netherlands Bank on behalf of the Ministers of Foreign Affairs, Affairs Overseas, Finance, Economic Affairs, and Agriculture. 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-seven 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 make payment in another way), viz., (1) where a two-account payments agreement is in force, either in guilders to 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 currency in the United States or Canada, or by crediting a Free Guilder Account or an appropriate Guilder Agreement Account (American or Canadian Account) held by a U.S. or Canadian bank with an authorized bank; (4) for payments to a country in the Transferable Guilder Area,1 by the methods prescribed for any one of these countries; (5) for payment of Suez Canal dues to Egypt, by crediting special guilder accounts (Egyptian C Accounts), which are transferable throughout the Transferable Guilder Area; (6) in all other cases, in the way indicated in the individual authorization, usually in U.S. dollars or transferable sterling.

The prescription of currencies for exchange receipts is similar to that for exchange payments, but Canadian dollars, U.S. dollars, and free Swiss francs are acceptable for all permitted payments by nonresidents to Netherlands residents.

Nonresident Accounts

The main categories of nonresident account are given below. Apart from those described under 5, the accounts are designated by the country of residence of the account holder.

1. Guilder Agreement Accounts. These accounts are in the names of banks abroad, and are applicable to Canada (Canadian Accounts), to the United States (American Accounts), to countries with which there are payments agreements providing for accounts in guilders and in the partner’s currency or in guilders only,2 to Netherlands New Guinea, and to certain other countries that are included in the Transferable Guilder Area. They are used for payments and receipts mainly on account of current transactions. Guilder Agreement Accounts are transferable to other Guilder Agreement Accounts of the same country or monetary area, but those related to countries in the Transferable Guilder Area are transferable to Guilder Agreement Accounts of. any country in that Area. Balances on Guilder Agreement Accounts held under a two-account payments agreement are convertible into the currency of the country of the account holder, and balances on those related to countries in the Transferable Guilder Area are convertible into any currency in the Western European multilateral arbitrage arrangement.

2. T Accounts. These accounts may be held by all nonresidents, regardless of nationality, except those who reside in Indonesia or those who hold E Accounts (see 6, below). They also are used for current transactions, and general licenses have been granted for current payments from them to residents. Their use for capital transactions is prohibited unless the account holder resides or is domiciled in the Netherlands overseas territories or in certain dollar countries.3 T Accounts are transferable to other T Accounts of the same country or monetary area, and balances on them may be transferred to Guilder Agreement Accounts related to the same country or monetary area. Balances on T Accounts related to Argentina, Brazil, Japan, Paraguay, and Uruguay are transferable to T Accounts related to any of these countries and to Guilder Agreement Accounts of banks in the Transferable Guilder Area. They may, moreover, be exchanged into the currencies of countries participating in the Western European multilateral arbitrage arrrangement. Balances on T Accounts related to certain dollar countries3 are freely convertible into U.S. dollars through authorized banks.

3. N Accounts-Indonesia. These accounts apply only to nonresidents residing or domiciled in Indonesia, regardless of nationality. There are special regulations applicable to the crediting and debiting of these accounts.

4. K Accounts. These accounts may be held by all nonresidents, regardless of nationality, except those who reside in Indonesia. They are used primarily for investments, but may be debited for some current payments, including travel expenses in the Netherlands up to a daily maximum of f. 100 per person. K Accounts may be transferred to other K Accounts of the same country or monetary area; also, if held by residents of EPU countries, they may be transferred to T Accounts or transferred through a Guilder Agreement Account to the country of the account holder and, in general, to K Accounts of residents of other EPU countries. Balances on K Accounts held by nonresidents in certain dollar countries3 may be repatriated by purchasing “security dollars.” K Accounts are classified in two groups, as follows:

  • (a) K Accounts related to certain dollar countries3 and to EPU countries (except Belgium and Luxembourg—see (b) (i), below) ;

  • (b) K Accounts related to other countries; these are subclassified as

    • (i) exportable—the proceeds from the sale or liquidation of securities imported after May 5, 1945, of securities paid for in convertible currencies, or of securities acquired out of securities in either of the foregoing categories, as well as K Accounts related to Belgium and Luxembourg not acquired by conversion of francs in Financial Accounts—or

    • (ii) nonexportable—all other capital proceeds not eligible for credit to an exportable K Account.

Netherlands and Indonesian securities, as well as foreign securities denominated exclusively in guilders, which are purchased to the debit of K Accounts related to the countries mentioned under (a) and of K Accounts described under (b) (i) may be exported.

5. Free Guilder Accounts. These accounts are available to all nonresidents. They may be credited with the proceeds in guilders of gold sold by nonresidents to the Netherlands Bank and of Canadian dollars, U.S. dollars, and free Swiss francs sold to the Netherlands Bank or an authorized bank. They may, moreover, be credited as follows: with transfers from other Free Guilder Accounts, Canadian Accounts, or American Accounts; with amounts authorized to be credited to Canadian or American Accounts; and with amounts authorized to be debited to authorized banks’ accounts in Canadian dollars, U.S. dollars, or free Swiss francs. Free Guilder Accounts may be debited for transfers to other Free Guilder Accounts, Guilder Agreement Accounts, and other guilder accounts of nonresidents. They may also be used for all payments within the Netherlands authorized to be made to the debit of an American Account, for the purchase of any foreign exchange by a nonresident, and for making available Netherlands banknotes and treasury notes to the account holder or other nonresidents. Free Guilder Accounts held by persons domiciled in Indonesia may not be debited without a special license.

6. E Accounts. These are transitional accounts held by emigrants from the Netherlands after their departure. On establishing residence abroad, emigrants may, on application, have their balances on E Accounts transferred to K Accounts, and T Accounts may be opened in their name.

7. Z Accounts (residual group). These accounts are those to which sums of doubtful origin have been credited. The debiting or crediting of Z Accounts is permitted only if expressly allowed by a Foreign Exchange Notice or a general or special license.

Imports and Import Payments

For liberalized goods imported from OEEC countries (except Turkey) or their associated areas, or from the Netherlands Antilles, New Guinea, or Surinam, no import licenses or declarations are required to clear the goods through customs, and payments may be made by virtue of an open general license (which is also applicable to non-liberalized commodities). The OEEC liberalization list also applies to Brazil, Chile, Egypt, Finland, Indonesia, and Uruguay, and licenses are issued automatically for liberalized goods imported from these countries. For imports from Indonesia and Turkey, an import declaration must be completed by the importer if no import license is required. For practically all imports valued at not more than f. 200, import and payment may be effected without documents. All other imports require combined import and exchange licenses, but these are issued automatically for imports of liberalized commodities from the dollar area.4

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).

Payments for Invisibles

All payments for invisibles exceeding f. 200 are subject to exchange license. However, payments for most categories of invisibles to non-dollar countries are permitted by general license and supporting documents need not be submitted. Payments to dollar area countries for some categories of invisibles are permitted by general license up to any amount and for many other categories up to f. 1,000 (supporting documents must be submitted). Applications for higher amounts are approved for bona fide transactions in invisibles.

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 country. This facility is also available for nonresidents domiciled in Indonesia or any of the Netherlands overseas territories but staying in the Netherlands temporarily.

Residents traveling abroad who hold passports may take with them all foreign notes and negotiable instruments acquired in accordance with a general or special license and a maximum of f. 200 in domestic notes, which may be spent abroad. Nonresidents may, when leaving the Netherlands, export foreign banknotes and coins up to the equivalent of f. 4,000, or as much more as was declared at the time of entry, as well as f. 1,000 in Netherlands banknotes.

Exports and Export Proceeds

Export licenses or declarations are not required for a large number of goods exported to OEEC countries (except Turkey) and their associated areas. However, for exports to the dollar area (see footnote 4), Indonesia, or Turkey that do not require an export license, a declaration completed by the exporter is required. For goods valued at not more than f. 200, the export may be effected and payment received without documents, but the method of payment must be in conformity with the regulations (see section oh Prescription of Currency, above).

The 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 in appropriate “foreign currency accounts” with authorized banks. The use of such funds is subject to the usual licensing requirements.

Proceeds from Invisibles

Exchange receipts from invisibles need not be surrendered and may instead be credited to “foreign currency accounts.” For settlement in guilders of incoming exchange exceeding f. 200 derived from current invisibles, 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 transaction for which the Netherlands Bank permits payments to be received from the remitting country by the method chosen, but this verification is not required for receipts from Canada, Indonesia, the Netherlands Antilles, New Guinea, Surinam, or the United States.

Nonresidents may bring into the Netherlands f. 1,000 in Netherlands banknotes and unlimited amounts in foreign banknotes and negotiable instruments. These may be sold only to an authorized bank or an authorized exchange office or they may be used to pay tourist expenses in the Netherlands.

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, but general licenses have been granted for many types of capital transaction. Payments for interest, dividends, and contractual amortization due to nonresidents are permitted freely to the country of their residence by crediting the appropriate T Accounts or Guilder Agreement Accounts.

Residents may buy foreign securities from, or sell them to, other residents. They may sell foreign securities abroad, either for U.S. dollars (not permissible for Belgian-Luxembourg securities) or for the currency in which payment of the principal or interest may be demanded. The exchange so acquired must be deposited with an authorized bank or securities broker in the Netherlands and may be sold or credited to an account denominated in the same foreign currency. The accounts of this type in which dollar proceeds are held are called “security dollar” accounts; all the others are called “reinvestment” accounts. These accounts may be credited also with capital repayments and similar items and used to buy foreign securities in the currencies concerned. Residents may buy foreign securities abroad with balances held abroad which cannot be transferred to the Netherlands owing to the foreign exchange regulations of the countries in which the balances are outstanding; real estate may also be bought to the debit of such balances. In addition, residents may purchase foreign securities in EPU countries through authorized brokers. These securities must be quoted officially and the principal and interest or dividends must be payable in an EPU currency, Canadian dollars, or U.S. dollars. Payment for such purchases must be made in an EPU currency.

Under an arrangement between the Netherlands, Belgium, and Luxembourg, all capital transactions between them are conducted through a free market in which practically all capital payments may be made either under a general license or by individual licenses granted automatically. These payments are made in the Netherlands through K Accounts in guilders, and in Belgium-Luxembourg through Financial Accounts in Belgian or Luxembourg francs kept in the names of Netherlands authorized banks and securities brokers. Residents of Belgium-Luxembourg and residents of the Netherlands may trade K Account guilders against Financial Account francs. Securities expressed in Netherlands guilders or in one of the currencies of the Belgian Monetary Area, as well as Indonesian securities, may be purchased and sold without restriction. Moreover, residents of Belgium-Luxembourg may purchase foreign securities from Netherlands residents to the debit of a K Account or to the credit of a Financial Account, with the exception of securities denominated in U.S. dollars, Canadian dollars, or Swiss francs, and U.S., Canadian, or Swiss securities of no par value. Residents of other EPU countries may have the proceeds from the sale of capital invested in the Netherlands transferred to them through the normal payment channels.5

New capital investments in the Netherlands by nonresidents are in general permitted only if made in convertible currencies, but there are special facilities for such investments by residents of Belgium-Luxembourg. Capital proceeds held by nonresidents in K Accounts may be reinvested in the Netherlands.

The export of Netherlands securities and Indonesian securities, and of foreign securities denominated exclusively in guilders, is allowed insofar as (1) the owner resides in certain dollar countries (see footnote 3) or an EPU country (Belgium-Luxembourg excepted for securities that have been acquired by conversion of francs in a Financial Account) ; (2) the securities concerned have been imported into the Netherlands after May 5, 1945, or have been acquired by switching securities imported after that date; (3) the securities concerned have been paid for in convertible currency. In these three cases the securities are, on exportation, provided with “red documents.”

Emigrants are permitted to export on departure foreign exchange to the countervalue of f. 4,000 for an individual emigrant or for the head of a family, plus f. 2,000 for each member of the family, in addition to personal effects, and f. 25,000 for the establishment of a domicile and/or the independent exercise of a profession or trade. On departure from the Netherlands, their guilder funds are held in E Accounts. On establishing residence abroad, emigrants may apply to have their E Accounts converted into K Accounts and to have their income credited to T Accounts (see section on Nonresident Accounts, above). Thus, as balances on K Accounts may be transferred to EPU countries, emigrants to those countries may have all their capital transferred to their new country of residence; emigrants to dollar countries may have their capital transferred by purchasing “security dollars” to the debit of their K Accounts.

Changes during 1957

January 2. Banks in Austria and Austrian schillings were included in the multilateral arbitrage arrangement in operation among most Western European countries.

February 14. Authorized banks were permitted to enter into forward transactions with banks in the Transferable Guilder Area in the currencies of countries participating in the Western European multilateral arbitrage arrangement. The same applied to banks in Argentina, with the exception of transactions in deutsche mark. The maximum period for forward transactions in French francs and with French banks was three months and that for all other transactions was six months.

March 5. The permission accorded to authorized banks to buy and sell treasury paper or bank acceptances denominated in guilders and to accept guilder deposits, on behalf of banks holding American or Canadian Accounts, was extended to cover banks in the Netherlands Antilles and Surinam and nonresidents holding Free Guilder Accounts, E, K, and N Accounts, and T Accounts related to the dollar area and the Netherlands overseas territories.

March 23. The general license permitting authorized banks to conclude forward exchange transactions with other banks and with residents in Canadian dollars, U.S. dollars, free Swiss francs, and the currencies in the Western European multilateral arbitrage arrangement for commercial purposes for a period of more than 12 months and up to a maximum of 48 months was limited to trade and service transactions concluded with nonresidents.

April 11. Certain capital transfers to residents amounting to not more than f. 1,000 were authorized from the Transferable Guilder Area.

April 15. Paraguay was included in the Transferable Guilder Area.

April 15. Bolivia was included with the source countries from which goods may circulate freely within Benelux.

May 14. Authorized banks were licensed to open guilder accounts in favor of Egyptian banks (Egyptian C Accounts) ; these accounts were made transferable to or from banks in the Transferable Guilder Area.

May 15. Authorized banks were licensed to deal spot in Western European multilateral arbitrage currencies against guilders in Egyptian C Accounts.

May 17. Authorized banks were licensed to transfer sums received from residents of Surinam to residents of guilder-agreement countries, except the United States and Canada.

May 31. Israel and Japan were included in the Transferable Guilder Area. T Accounts of residents of Japan were made transferable throughout the Transferable Guilder Area and exchangeable into Western European multilateral arbitrage currencies. (Transactions authorized before June 1 could be paid until December 2 with Japanese agreement dollars.)

June 3. Credits to Egyptian C Accounts for current payments were limited to payments of Suez Canal dues.

July 25. A general license was issued permitting residents to sell to nonresidents, under certain conditions, patents, trademarks, and rights to the use of technical knowledge (other than those which had been purchased with convertible currencies).

August 14. The general license permitting residents to acquire Western European multilateral arbitrage currencies from other residents, including authorized banks, was withdrawn. Permission to convert other currencies into liberalized capital deutsche mark was suspended.

August 21. Forward sales of claims denominated in deutsche mark were prohibited (but see October 16, below).

August 21. Letters of credit in favor of residents in payment of merchandise could be opened only on a cash basis (but see November 20, below).

October 16. Forward sales of claims denominated in deutsche mark, which were prohibited on August 21, were again permitted.

November 20. Letters of credit in favor of residents in payment of merchandise could again be opened on a three months’ basis.

November 26. Argentina was included in the Transferable Guilder Area.

December 9. Debits to N Accounts-Indonesia were prohibited without special license.

December 10. Debits to Free Guilder Accounts held by nonresidents domiciled in Indonesia were prohibited without special license.

Nicaragua

Exchange Rate System

The par value is Nicaraguan Córdobas 7.00 = US$1. The official rates are C$7.00 buying, C$7.0525 selling, per US$1. The official rates apply to exchange receipts from exports of cotton and certain minor exports, most invisibles, and registered capital, and to all authorized payments. A buying rate of C$6.60 per US$1 applies to the exchange proceeds of exports of coffee and a few other commodities. A fluctuating free market for foreign notes and coins is used for travel and certain other transactions. (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 commodities to the import categories. All sales of exchange pass through the Issue Department and the Banking Department of the National Bank or through private banks acting as agents of the National Bank.

Prescription of Currency

There is no prescription of currency; incoming and outgoing payments normally are made in U.S. dollars.

Imports and Import Payments

There are no quantitative restrictions or prohibitions on imports. All imports are subject to license, but licenses are issued automatically and without delay. Four import categories have been established on the basis of essentiality, for the purpose of advance deposit requirements: List I, List II, List A, and List III. Before making an application to import, the importer must deposit in domestic currency 50 per cent of the c.i.f. value of imports in List II, 75 per cent of the c.i.f. value of imports in List A, and 100 per cent of the c.i.f. value of imports in List III. Importers of goods in List III must make the advance deposit 30 days before receipt of the import license, except for imports of wheat flour and raw materials for national industry imported directly by manufacturers.

Payments for Invisibles

Payments for invisibles at the official selling rate are subject to prior authorization, which is granted only for the following classes of payment: government payments, students’ expenditures for tuition and living expenses, insurance and reinsurance premiums, remittances on account of registered foreign investments and of registered foreign loans, and salaries and fees for specialized services. Other invisibles are usually paid for through the free market. Domestic currency notes may be exported freely.

Exports and Export Proceeds

Exports are subject to a licensing procedure similar to that for imports, which serves to confirm that the prices at which the goods are exported are not lower than the minimum prices in foreign currency in world markets on the date of export and to ensure that all exchange receipts are surrendered at the appropriate rate.

Proceeds from Invisibles

Proceeds from invisibles must be surrendered at the C$7.00 rate. Domestic currency notes may be imported freely.

Capital

Under the Law on Foreign Investments of February 26,1955 (effective March 11, 1955), foreign investments approved by the National Bank and registered are granted favorable treatment. Foreign investments may be made in any form, and if in foreign exchange, the exchange must be surrendered. The law provides that exchange operations in respect of foreign investments are to be carried out at the exchange rate applicable to the essential import category on the day of the transaction. Visible imports for investment purposes are exempt from the requirements of advance deposits. Foreign investments are granted the following privileges: free repatriation of the registered capital; free transfer of earnings, profits, or interest on the capital; and free re-exportation of goods imported for investment. Profits not transferred abroad during the year following the year in which they were earned, and not registered as foreign capital, are treated as domestic capital.

Remittances on account of foreign investments that were effected prior to March 11, 1955, and that were registered under the Law for the Regulation of International Exchange of November 9, 1950, are subject to individual approval by the Board of Directors of the Issue Department of the National Bank, with the limitation that remittances of profits or amortization may not exceed 10 per cent of the capital per year. Remittances on account of investments subject to special contracts signed with the Government are bound by the terms of the contract.

Banknotes

Foreign currency notes may be negotiated in the free market.

Table of Exchange Rates (as at December 31, 1957)(córdobas per U.S. dollar)
BuyingSelling
6.60(Export Rate)

Coffee exports, cattle, and a few minor exports.
7.00(Official Rate)

Cotton exports and certain other minor exports. Most invisibles. Registered capital.
7.0525(Official Rate)

All imports. Government payments. Students’ expenses. Insurance premiums. Registered capital.
7.25(Fluctuating Free Market Rate)

Foreign banknotes and coins.
7.35(Fluctuating Free Market Rate)

Other invisibles and capital.

Changes during 1957

January 17. List A was created and a number of import items, primarily petroleum products, were moved from List III to List A. Importers of products on List A were required to make a local currency deposit of 75 per cent of the c.i.f. value before obtaining an import license.

April 10. Paper for books and other printing, when imported by Nicaraguan publishing houses, was moved to List I.

May 23. Parts and replacements for fixed machinery of insecticide and fertilizer factories, and packing for these products, were moved to List I.

June 3. Parts and replacements for pasteurizing plants were moved to List I.

June 24. Parts and replacements for textile machinery were moved to List I.

July 16. Jute fabric (twine) for making bags and for baling were moved to List I.

August 21. Buckles and hoops for baling cotton were moved to List I.

August 24. Tires and tubes for tractors of all kinds and for cargo trucks, as well as parts, replacements, and accessories for such trucks, were moved to List I.

August 29. Feeds for animals, when mixed with chemical and biological products, such as bone meal, dried blood, etc., were moved to List I.

October 16. Machinery for shelling castor beans was moved to List I.

October 31. Importers of propane or butane gas, or mixtures thereof, were exempted from the necessity to make an advance deposit 30 days before registration. For some construction materials, the deposit could be made 15 days instead of 30 days before registration.

November 1. The exchange rate of C$7.00 per U.S. dollar was applied to exports of cotton and certain minor exports, including balsam, bananas, cacao, coconut, gum, rubber, ipecac roots, rice, sesame, corn, beans, vegetable oils, and manufactured products.

November 1. Importers of items on List III were required to make the advance deposit 30 days before receipt of the import license.

November 6. Parts and replacements for industrial machinery were moved to List I.

November 27. Transmitters, transmitter tubes, amplifiers, microphones, and other parts for radio broadcasting and television, when imported directly by manufacturers, were moved to List I.

Norway

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. Parity rates for other currencies are based on the par values agreed with the Fund.

Norway participates with Austria, Belgium-Luxembourg, Denmark, France, the Federal Republic of Germany, Italy, 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, and forward transactions for up to six months’ delivery (three months’ delivery for transactions in French francs or with French banks), with other authorized banks in any of these territories in any of their currencies. 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. Authorized banks may also deal in spot transactions in these currencies with authorized banks in Finland, and in spot and forward transactions in these currencies (deutsche mark were not included until March 3, 1958) against the krone accounts of banks in Argentina.

Administration of Control

Import and export licenses are issued by the Ministry of Commerce. All payments to and from nonresidents must be made through one of the Norwegian authorized banks or through the Bank of Norway. Generally, all payments require approval from either the Ministry of Commerce (in respect of goods) or the Bank of Norway (in respect of invisibles). However, the authorized banks may effect payments to nonresidents for goods on the import free list and for most invisibles.

Prescription of Currency

The prescription of the methods in which payments to and receipts from nonresidents are to be effected is set out in the payments agreements concluded with other countries.1 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 in a single currency (single-account payments agreements). Payments for free list goods bought in dollar area countries2 may be made in any currency. Payments for free list goods bought in OEEC countries, other than Greece, and Turkey, may be made in any EPU currency except Greek drachmas and Turkish liras. Payments 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 account 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. 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 for such expenses in Norway as personal taxes, insurance premiums, and traveling expenses, as well as for direct investment, upon application, and for investment in bonds that are issued in Norwegian kroner only. Bonds acquired in this way may either be deposited with a Norwegian authorized bank or be sent to the owner abroad. In certain circumstances, capital in blocked accounts may be transferred abroad (see section on Capital, below).

Imports and Import Payments

All goods on the import free list may be imported freely from OEEC countries and their associated areas and from Czechoslovakia, Finland, Hungary, Israel, Poland, Rumania, the Spanish Monetary Area, and Yugoslavia. Specified items on the import free list may be imported freely from dollar area countries.3 Goods on the free list and certain categories of fruits and vegetables may be imported against a declaration; all other imports, except government imports, require import licenses. However, goods included in a list of global quotas may be imported up to the limits of the quotas from OEEC countries, from dollar area countries (with the exception of passenger cars, other than taxis, and delivery vans), and from a few other countries, including Yugoslavia.4

If no license is required, or when an import license is obtained, payment may be effected without delay, subject to presentation of a copy of the import declaration or a copy of the import license 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 invisibles, including income from capital and contractual amortization, is granted freely. Norwegian tourists to all European countries, the United States, and Canada are granted the equivalent of NKr 1,500 per year for each adult and NKr 350 per year for each child under 16 years of age.5 Each person leaving Norway may export NKr 99 in Norwegian banknotes.6 Nonresidents leaving Norway may export any foreign banknotes that they can prove they brought into the country.

Exports and Export Proceeds

All goods on the export free list may be exported freely to OEEC countries, the United States, Canada, and a number of other countries, against a declaration or a free list license, which is granted automatically. All other 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 must be surrendered.

Proceeds from Invisibles

Incoming receipts from invisibles must be surrendered. Each person entering Norway may import NKr 300 in Norwegian banknotes in denominations not exceeding NKr 506 and any amount in foreign banknotes.

Capital

Inward transfers of capital and investments in Norway by nonresidents are subject to approval by the Bank of Norway. Outward transfers of capital are subject to individual license, the granting of which depends on such circumstances as the merits of the case, the transfer possibilities under a relevant payments agreement, the possibility of compensation with Norwegian assets abroad, etc. Outward transfers in respect of investments made in Norway after the war can be provided for in accordance with the terms of approval of the investment. Payments for contractual amortization are permitted freely.

In accordance with an agreement concluded by Norway with Denmark, Sweden, and the United Kingdom in 1950, capital transfers to these countries normally are permitted. Transfers to the United States and Canada may take place within certain limits; above these limits, transfer depends upon the merits of the case, but inherited capital assets owned by residents of the United States or Canada may be transferred freely. Repatriation of moderate amounts of other nonresident-owned capital is permitted in cases of hardship. The export and import of, and all transactions in, securities involving nonresident interests are subject to approval.

In general, resident-owned capital assets abroad, other than securities and real estate, have to be surrendered. Applications for capital transfers to make direct investments abroad are considered on their individual merits. In handling such applications, the exchange control authorities follow a liberal practice.

Changes during 1957

January 2. Banks in Austria and Austrian schillings were included in the multilateral arbitrage arrangement in operation among most Western European countries.

February 15. Exchange banks were authorized to accept Norwegian currency notes in denominations of NKr 5, NKr 10, and NKr 50 sent by Danish banks, and to credit the equivalent value to Danish banks’ Norwegian krone accounts; and the Danish authorities authorized Norwegian exchange banks to send Danish currency notes in denominations of DKr 5, DKr 10, DKr 50, and DKr 500, bought from Danish and Norwegian travelers coming from Denmark, to Danish banks for credit to Norwegian banks’ Danish krone accounts.

March 11. The basic exchange allowance for tourist travel to all European countries, the United States, and Canada was raised from NKr 700 to NKr 1,500 per calendar year for each adult.

March 15. Exchange banks were authorized to accept Norwegian currency notes in denominations of NKr 5, NKr 10, and NKr 50 sent by Swedish banks, and to credit the equivalent value to Swedish banks’ Norwegian krone accounts; and the Swedish authorities authorized Norwegian exchange banks to send Swedish currency notes in denominations of SKr 5, SKr 10, SKr 50, and SKr 100, bought from Swedish and Norwegian travelers coming from Sweden, to Swedish banks for credit to Norwegian banks’ Swedish krona accounts.

March 16. Travelers were permitted to bring in NKr 300 in Norwegian banknotes in denominations not exceeding NKr 50.

April 1. A supplement to the import free list was issued, containing 300 items that could be imported freely from the OEEC countries and others, thus raising Norway’s OEEC import liberalization percentage from 78 to 80.8.

September 23. Exchange banks were authorized to carry out forward arbitrage transactions with Argentine exchange banks, provided the transactions are between banks in countries participating in the multilateral trade and payments arrangements with Argentina and are in the currencies of the participating countries, except Argentine pesos (deutsche mark were not included until March 3, 1958).

December 19. It was announced that, effective January 1, 1958, the exchange quota for tourist travel to all European countries, the United States, and Canada would be increased from NKr 1,500 to NKr 2,000 per adult and from NKr 350 to NKr 500 per child under 16 years of age.

Pakistan

Exchange Rate System

The par value is Pakistan Rupees 4.76190 = 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. Authorized dealers in Pakistan are permitted to cover in the London market their requirements of certain, specified, foreign exchange. They may 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 countries concerned.

Administration of Control

All transactions in foreign exchange must be effected through authorized dealers. The State Bank of Pakistan has delegated to 19 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 of payment are similar to those of the United Kingdom and most other Sterling Area territories. Exchange receipts have to be obtained through a bank. Receipts from countries outside the Sterling Area must be obtained either in sterling through a nonresident account in the United Kingdom related to any Transferable Account country, Canada, or an American Account country, according to the country concerned, or, in some cases, in other specified currencies. 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. Exchange transactions with Afghanistan, and those covered by the trade agreement with the U.S.S.R., are settled in Pakistan rupees. Transactions with India are settled in Indian or Pakistan rupees on the basis of the par value of each currency.

Payments abroad by residents of Pakistan to countries within the Sterling Area (other than India) are made by the transfer of sterling or any other Sterling Area currency, including Pakistan rupees, to the appropriate account of a nonresident; payments to countries outside the Sterling Area are made by the transfer of sterling or Pakistan rupees to an account related to any Transferable Account country, Canada, or an American Account country, according to the residence of the recipient, or, in some cases, in the recipient’s currency.

Nonresident Accounts

Different rules apply to nonresident rupee accounts of individuals, firms, or companies, on the one hand, and to nonresident rupee accounts of banks, on the other. Authorized dealers may open rupee accounts for foreign banks without reference to the State Bank, but approval is required for opening other nonresident accounts. Transfers from nonresident banks’ rupee accounts in Pakistan to the corresponding sterling accounts in the United Kingdom are allowed, but other nonresident account holders must obtain permission from the exchange control for transfers from their credit balances. Accounts of residents of India held prior to the imposition of exchange control on transactions with India are governed by separate regulations.

Imports and Import Payments

All imports are subject to license, except goods imported by the Central Government for defense purposes, goods for which orders are placed directly by the departments of the Central Government, goods in transit, personal baggage, and certain other items permitted under a Ministry of Commerce Notification (No. 335/260/24, June 12, 1951). Individual import licenses may be used in any country of the world, except for items for which single country licenses are issued under the terms of trade agreements with particular countries. Import licenses are issued only on a c. & f. basis.

Foreign exchange is made available under the regulations (see section on Prescription of Currency, above) upon receipt of an import license from the applicant. The application must be made through an authorized bank in the exchange control area in which the applicant resides.

Payments for Invisibles

Payments for invisibles are controlled by the State Bank and require licenses. However, under authority delegated to them, 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 permitted on their individual merits. Separate regulations govern payments to India for such purposes as travel and family maintenance. Remittances by Pakistan nationals to their families abroad require special authority. Foreign exchange is granted for expenses incidental to trade transactions, but not to importers for transport insurance, which may only be effected with insurance companies in Pakistan. Exchange is granted for transfers abroad of dividends and other earnings due to nonresidents. Payments for international travel fares are permitted if certain conditions are met. There is no basic allocation of exchange for tourist travel, except for travel to Burma, Ceylon, India, Iran, and Iraq; the amount differs for each country. There is also an annual allowance for pilgrimages to Saudi Arabia. Exchange for business, medical, and student travel to other countries and for sponsored cultural trips may be granted on an individual basis.

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 travel to 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 most commodities is allowed, free of export control, under open general license. A few commodities require export licenses, which in a few cases are issued subject to quota. The export of certain items is prohibited. The State Bank exercises control over exchange receipts and requires a declaration by the exporter to ensure surrender of the foreign exchange earned.

An authorized dealer is required to certify an export shipment after making sure 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. Under the Export Promotion Scheme, exporters of certain primary products are entitled to import licenses for specified consumer goods corresponding to 15 per cent of their exchange receipts, and exporters of certain manufactured goods are entitled to import licenses for raw materials and packaging materials used in their industries corresponding to 25 or 40 per cent of their export receipts.

Under the Export Industries Special Licensing Scheme, certain exporters may receive licenses to import raw materials and packing materials required in their industries against their guarantee of specific export performance within a six-month period.

Proceeds from Invisibles

Incoming foreign exchange from invisibles, with the exception of certain currencies1 which may be retained, 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 500 per person, 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 declaration to the customs.

Capital

Investments in Pakistan by nonresidents are subject to approval. In accordance with the foreign investment policy, foreign investors can, after approval, invest capital up to 60 per cent of the total of local and foreign investment, in 27 approved industries; in special cases, foreign participation may be higher. The extent of foreign investment in public utility concerns (other than the 27 approved industries) is considered on the merits of each case. The transfer of capital abroad and the repatriation of investments are not normally permitted, except where this has been arranged by prior agreement with the Government or is in accordance with the foreign investment policy. Applications for the repatriation of old foreign investments are considered on their merits. Capital invested after September 1, 1954 in industrial projects approved by the Government of Pakistan and approved separately for coverage by the repatriation guarantee may be repatriated at any time thereafter—subject to the exchange control regulations in force—to the country in which the investment originated and to the extent of the original investment; any profits derived from investment which are reinvested in approved industrial projects with the approval of the Government of Pakistan may be treated as investment for the purpose of repatriation; appreciation of any such capital investment may also be treated as investment for repatriation purposes. For an investment by means of goods or services, the amount of capital is the rupee value of such goods or services as recorded in the books of the company or firm concerned at the time of investment. These repatriation facilities do not apply to purchases of shares on the stock exchange (unless the shares are an integral part of an approved investment project) or to capital invested in Pakistan before September 1, 1954. Under the foreign investment policy, if any undertaking is nationalized, just and equitable compensation will be paid to the dispossessed owners and will be freely remittable to the country of residence of the foreign owners.

Transfers of capital abroad by residents are not permitted, except for limited facilities granted to emigrants. 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. Foreign nationals resident in Pakistan are permitted to transfer capital assets up to UK£5,000. Residents are permitted to sell foreign securities upon approval by the State Bank, provided the foreign exchange proceeds resulting from such sales are surrendered, but there is no provision for purchases of foreign securities by residents. In this connection, foreigners residing in Pakistan are considered nonresidents.

Exports of, and transactions in, securities involving nonresident interests are subject to approval. Proceeds accruing from the liquidation of nonresident capital assets may be credited to blocked accounts. Balances on blocked accounts may be invested in approved securities payable in Pakistan rupees.

Changes during 1957

February 14. The basic allocation of exchange for travel by residents was withdrawn, except for travel to Burma, Ceylon, India, Iran, and Iraq. The allocation for travel to Burma and Ceylon was reduced.

February 27. In addition to the existing Licensing Boards at Karachi and Chittagong, a Licensing Board was set up at Lahore to issue import and export licenses.

March 4. It was announced that all exporters, both of products subject to license and of those which are not, must be registered with the Chief Controller of Imports and Exports.

March 18. A Controller of Imports and Exports was appointed at Lahore.

March 28. A Controller of Imports and Exports was appointed at Chittagong.

April 4. A quota of 4.5 million pounds (weight) was imposed on the export of tea for consignment to London during the 1957-58 season.

May 20. Five items were added to the list of commodities included in the Export Promotion Scheme.

May 30. Applications for import licenses from newcomers were invited.

May 31. The Export Industries Special Licensing Scheme was announced (see section on Exports and Export Proceeds, above).

June 29. Banks were requested to limit credit granted against imports of manufactured goods, bullion, foodgrains, and oilseeds to 60 per cent of the value. Authorized dealers were instructed to require an advance deposit of 15 per cent against letters of credit covering imports of all kinds.

July 31. Imports of large and medium-sized motorcars were prohibited.

October 1. The Export Promotion Scheme was extended unchanged through September 30, 1958.

November 26. Fees for the registration and the renewal of registration of exporters and importers were levied under Ministry of Commerce Notification No. 339/155(6-57).

December 30. Small fees were levied on import licenses and clearance permits.

Paraguay

Exchange Rate System

The par value of Paraguayan Guaraníes 60 = US$1 is not applied to any transactions under the present exchange system. The value of the guaraní is determined in a free market, where the rate for the U.S. dollar on December 31, 1957 was ₲ 111.30 per US$1. Orderly cross rates are not maintained for other currencies.

Administration of Control

The Central Bank of Paraguay is in charge of the operation of the exchange system.

Prescription of Currency

Paraguay has bilateral payments agreements with Argentina, Italy, Spain, and Uruguay, according to which exchange payments and receipts must be effected through clearing accounts in terms of U.S. dollars.

Imports and Import Payments

No restrictions are maintained on imports. However, imports are subject to advance deposits, which vary according to the category, essentiality of the merchandise, and country of origin, as follows: Category I, 5 per cent; Category II, 50 per cent; Category III, 100 per cent; Category IV, 300 per cent; and Category V, 400 per cent.1 Advance deposits are not required for imports of wheat, wheat flour, fuels derived from petroleum, newsprint and printer’s ink for periodicals, government imports, imports in special circumstances, e.g., by diplomats, or for imports from Argentina, Bolivia, Brazil, and Uruguay. Payments for imports from countries with which Paraguay has bilateral payments agreements must be made through the relevant clearing account (see section on Prescription of Currency, above).

Exports and Export Proceeds

The surrender of the proceeds of exports is not required, and exchange receipts are freely disposable. For the time being, all exports are subject to a tax in guaraníes of 15 per cent of the value of the goods exported.2

Payments for and Proceeds from Invisibles

There are no requirements attached to exchange payments for, or exchange receipts from, invisibles.

Capital

There are no exchange control obligations attached to capital receipts or payments by either residents or nonresidents.

Changes during 1957

January 7. It was announced that payments for air and river passages via Argentine ships and aircraft would in future be made in Paraguayan-Argentine agreement dollars.

January 21. A Central Bank regulation provided that the amount of ocean freight, insurance, and associated charges declared in applications for import permits and included in the value of the goods, c.i.f. Buenos Aires, would be considered as part of the cost of the goods. The rate of exchange applied to such freight, insurance, and charges would therefore be the same as that applied to the goods concerned.

March. Rules were established for imports of automobiles: prospective importers would obtain the required exchange at auctions which the Central Bank would hold periodically, and each importer could acquire only the foreign exchange necessary to cover the value of one vehicle every two years.

March. It was announced that the Central Bank would grant a subsidy of 15 per US$1 on each case of grapefruit valued at up to US$2.60, f.o.b. Paraguayan ports, to be exported to neighboring countries and Uruguay; any amount received over this price would be negotiated at the official rate of 60 per US$1.

April. The Director of the Import and Export Department was authorized, under certain conditions, to allow an extension of up to 60 days, and a tolerance either way of 10 per cent, on import permits. Aircraft and aircraft engines were added to Group II imports.

April. Further regulations were issued dealing with the distribution of the 50 per cent of the value of certain exports for which exporters could obtain imports. Of the 50 per cent, one half could be used to import goods in Group I, one quarter to import goods in Group II without restriction, and one quarter to import Group II goods excluding silk, nylon, cigarettes and tobacco, perfumes, toilet articles, fine crystal, jewelry, porcelain, silver cutlery, carpets, and alcoholic beverages.

April An aforo3 of US$2.10 per box, f.o.b. Paraguayan ports, was established for exports of grapefruit to overseas markets.

April 15. The bilateral payments arrangements with the Netherlands were terminated, and settlements could be made on a multilateral basis.

July 2. The bilateral payments arrangements with Denmark were terminated and settlements could be made on a multilateral basis.

August 12. An exchange reform was introduced establishing a single exchange market in which the guaraní would fluctuate freely. Exports would be permitted freely but would be temporarily subject to a tax of 15 per cent. Quantitative import restrictions were removed and the list of prohibited imports abolished. Imports would still be subject to advance deposits, and five categories of merchandise were established for the purpose of determining the amount of advance deposit, which would vary with each category, as follows: 5 per cent for Category I, 50 per cent for Category II, 100 per cent for Category III, 300 per cent for Category IV, and 400 per cent for Category V. Advance deposits would not be required for imports of wheat, wheat flour, fuels derived from petroleum, newsprint and printer’s ink for periodicals, government imports, or imports under special circumstances, e.g., by diplomats. Private capital and transactions in invisibles would also be negotiated in the free market.

October 22. Notice was given to terminate the bilateral agreements with Czechoslovakia, Hungary, Poland, and Yugoslavia.

December 18. The bilateral payments arrangements with Austria were terminated and settlements could be made on a multilateral basis.

Peru

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.

There are two free fluctuating exchange rates: an exchange certificate market rate applying to most trade transactions and a draft market rate for other trade and most nontrade transactions. Foreign exchange from exports must be converted into exchange certificates, which are valid for ten days and are issued for 100 per cent of export proceeds in U.S. dollars and sterling. These exchange certificates are negotiable in the certificate market and may be used to pay 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

Export permits and exchange licenses permitting the use of certificates for nontrade transactions are issued by the Ministry of Finance and Commerce. The exchange certificates (see section on Exchange Rate System, above) 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 are conducted through commercial banks; 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 in U.S. dollars and sterling—results in prescription of currencies for all transactions effected through the certificate market. Transactions through the draft market may be made in any currency.

Imports and Import Payments

Imports are permitted freely, with the exception of automobiles, which are permitted on a quota basis, and imports from Eastern Europe and Mainland China. Control over other imports exists only insofar as commercial banks must ensure that certificate exchange is used to pay for actual imports and not for unauthorized purposes.

There are no licenses or other controls applied to payments for imports. However, in the certificate market, through which most imports are paid, certificates are denominated only in U.S. dollars and sterling; payments in other currencies may be made through the draft market or by converting the certificate into the currency required. Importers opening documentary letters of credit through commercial banks must make advance deposits (except for imports of wheat, meat, milk, and fats) in foreign currency of 25 per cent of the import value for imports for production and 50 per cent for all other imports. Banks may finance up to 50 per cent of the local currency equivalent of such advance deposits for raw materials, but credit may not be extended for 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, repayments of commercial debts, and insurance and reinsurance payments. Remuneration of foreign technicians and payments for pensions are also usually allowed through the certificate market. Exchange for all other types of invisibles, and for all invisibles in currencies other than the two (U.S. dollars and sterling) 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 may be denied for goods in short supply domestically. The export of strategic materials to Mainland China and North Korea is prohibited.

In general, exports are authorized only against payment in the two currencies in which certificates are issued (U.S. dollars and sterling). However, certificates in other currencies can be issued if it is considered necessary. Export proceeds in either of the two currencies in which certificates are issued must be surrendered within 5 days of the date of shipment for exports covered by irrevocable letters of credit and within 30 days for other exports. 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 control and may be sold in the draft market.

Capital

All inward and outward capital transfers by residents and nonresidents may be effected without control in the draft market. Capital remittances representing contractual amortization and depreciation of foreign capital and depletion of mineral investment may be effected, within certain limits, through the certificate market, subject to exchange license.

Table of Exchange Rates (as at December 31, 1957)(soles per U.S. dollar)
BuyingSelling
19.00(Fluctuating Exchange Certificate Market Rate)19.001(Fluctuating Exchange Certificate Market Rate)
Export proceeds in sterling and U.S. dollars. Certain capital.Most imports. Certain invisibles and capital.
19.19(Fluctuating Draft Market Rate)19.19(Fluctuating Draft Market Rate)
All other export proceeds. Invisibles and most capital.Occasional imports. Most invisibles and capital.

Changes during 1957

March 28. Quotas for imports of automobiles and trucks during 1957 were raised from 6,400 units to 8,320 units.

August 19. Quotas for imports of automobiles and trucks were established at 9,000 units.

Philippine Republic

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 of commercial banks for demand drafts and telegraphic transfers of US$500 and over.

Administration of Control

Exchange controls are operated by the Central Bank of the Philippines, whose Monetary Board determines, on a semiannual basis, the amount of exchange to be allocated for various purposes, including payments for 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, for transactions connected with travel, various other concerns, including the American Express Company). Post offices are also authorized to sell U.S. dollar money orders payable in the United States and its territories and possessions for certain, specified 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

There are no prescription of currency requirements for outgoing payments, but all exchange proceeds from exports must be obtained in U.S. dollars.

Nonresident Accounts

Nonresident accounts are composed primarily of nonresident peso funds that were in the Philippines prior to the imposition of 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; however, they may be used for local investments or expenses. Certain of these blocked peso balances have been made eligible for deblocking, provided the funds are used to purchase in the free market domestically mined gold bullion, which must be sold to the Central Bank at US$35 per ounce. The proceeds from the sale of this gold are freely transferable.

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 such letters of credit 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, new importer under the delegated authority of the Bankers’ Committee, or new importer by authority of the Monetary Board and who, up to and including the semester immediately preceding the current period for which foreign exchange is being allocated, has opened letters of credit and/or made remittances by demand draft, mail, or telegraphic transfer to pay for imports.

The Monetary Board certifies to each authorized agent bank the total amount of foreign exchange available to it for a certain period, generally six months. This certification includes a classification by importers, based on the specific categories of imports covered by their respective lines of business. In addition, the Monetary Board sets aside a contingency reserve of foreign exchange for sales to customers not considered in the regular budget; this reserve is used primarily for the requirements of old producers to expand production and of new producers to import machinery and raw materials, and for adjustments of quotas. With the exception of certain goods which may, upon approval of the Department of Commerce and Industry, be imported without an exchange allocation from the Central Bank, imports of goods without an exchange allocation (referred to as “no-dollar” imports) are, as a general rule, prohibited. There are no prescription of currency requirements and U.S. dollars are provided for import payments to all countries.

Payments for Invisibles

All payments and remittances abroad for invisibles require exchange licenses. Such licenses are usually granted to pay for most invisibles; they are granted on a limited basis for travel, education expenses, maintenance, profits and dividends, income, royalties, salaries, etc. Travelers may take out with them a maximum of P 100 in Philippine currency, of which coins may not exceed P 5.

Exports and Export Proceeds

In general, exports are not restricted, but they are controlled to ensure that the foreign exchange proceeds are surrendered to an authorized agent of the Central Bank. Exports of certain strategic materials are prohibited. Barter exports are allowed under certain conditions and subject to the approval of the Department of Commerce and Industry.

With the exception of barter exports, the proceeds of all exports must be obtained in U.S. dollars and surrendered to an authorized agent and no commodity may be exported from the Philippines unless covered by a draft drawn in U.S. dollars and unless collection of the proceeds will be undertaken by an authorized agent.

Proceeds from Invisibles

All exchange receipts from invisibles must be surrendered. Travelers may bring in a maximum of P 100 in Philippine currency, of which coins may not exceed P 50 for first-class passengers, P 20 for second-class passengers, and P 10 for third-class passengers.

Capital

All exchange receipts from capital must be surrendered. The transfer abroad of nonresident-owned capital invested prior to December 9, 1949 is not ordinarily allowed. Transfers to nonresident investors of profits and dividends out of current net earnings are allowed in amounts ranging from 25 per cent to 100 per cent of the foreign participation in the net profits or ranging from 20 per cent to 60 per cent of the foreign capital invested, whichever is the lower, the amount permitted to be transferred being related to the contribution made by the firm to the national income, to improving the balance of payments, and to the basic needs of the economy. Capital invested by nonresidents after December 9, 1949 with the prior approval of the Central Bank is eligible for transfer abroad, but all transfers of capital require approval of the Central Bank.

The import and export of, and transactions in, securities involving nonresident interests are subject to license. For certain transactions, licenses may be issued by authorized security dealers on behalf of the Central Bank.

Foreign assets held by residents and acquired prior to December 9, 1949 are subject to declaration and their use or disposal is subject to approval. Earnings and other acquisitions of foreign exchange abroad by residents since that date must be remitted to the Philippines and surrendered. Transfers of capital abroad by residents are in principle not permitted.

Changes during 1957

During 1957, numerous reclassifications of commodities took place among the groups of imports into which the import budget is divided, i.e., essential, semiessential, or nonessential consumer or producer goods, decontrolled items, and unclassified items. Other changes during 1957 follow.

February 28. The rules on remittances of profits and dividends issued May 22, 1956 were amended. Remittances were now to be related either to the percentage of foreign capital invested or to the nonresident’s share in current net profits, whichever is the lower. Allowable remittances would vary from 25 per cent to 100 per cent of the nonresident’s share in the net profits or from 20 per cent to 60 per cent of the foreign capital invested, depending on the “social-productivity” rating of the firm. Service or noncommodity companies which do not operate under a government franchise and whose output is of the character of a public service were to be treated according to these general rules, while companies operating under franchise and banks and insurance companies continued to be allowed to remit 40 per cent of the share of nonresidents in their net profits.

March 4. In accordance with Resolution No. 224 (February 19, 1957) of the Monetary Board, the Central Bank deblocked certain peso balances, which could be used to purchase in the free market domestically mined gold bullion for compulsory sale to the Central Bank at US$35 per ounce. The proceeds of such sales, payable in U.S. dollars, would be freely transferable.

July 1. The import commodity classification of “highly essential goods” was abolished.

July 11. Only 30 per cent of total quota allocations for imports of knitting yarns for the second half of 1957 could be utilized.

July 17. An amendment to the regulations on film rentals was issued, limiting total annual remittances to US$1.8 million beginning July 1, 1957.

July 31. The Philippine-Japanese Trade and Financial Agreements, under which the greater portion of trade with Japan was conducted on a barter basis, were terminated.

August 6. New rules and regulations on trade with Japan were issued as a result of the expiration of the trade and payments agreement on July 31, 1957. All transactions were now to be conducted on a cash basis in U.S. dollars.

August 14. The regulations governing trade under the “no-dollar” law were amended, clarifying the eligibility of “minor” and “major” commodities for barter export, limiting the period of validity of barter export and import licenses, and stating that barter import letters of credit must have as their beneficiary the party who opens the export letter of credit. In addition, import letters of credit were to be valid only for imports from the country of destination of the exports concerned.

August 22. Additional blocked peso balances were released for purchases of gold in the free market (see March 4, above).

September 2. The Central Bank announced that a cash deposit of 100 per cent would be required for all letters of credit and/or authority to purchase exchange for imports of nonessential consumer goods. Such letters of credit, etc., would be opened only on a sight basis and the deposit could not be utilized for any purpose other than the payment of drafts drawn against letters of credit, unless the letter of credit was liquidated otherwise.

November 18. The regulations governing “no-dollar” imports were amended for the period November 14 to December 31, 1957. During this period certain triangular barter transactions were allowed. Also, exports to countries without exchange restrictions as well as to free ports would be taken into consideration in computing the amount of barter licenses to be issued for “major” exports.

November (last week). In accordance with a resolution of the Special Exchange Control Committee of the Central Bank, the licensing of applications for foreign exchange on behalf of new students was suspended.

December 9. Circular No. 79 of the Central Bank suspended the issuance of letters of credit for all nonessential consumer goods. Moreover, the circular stated that a cash deposit of 100 per cent of the value of the letter of credit must be made for imports of decontrolled items, essential consumer goods, and essential and semi-essential producer goods, and a deposit of not less than 50 per cent must be made for imports of essential producer raw materials for establishments approved by the Central Bank or the National Economic Council or for essential industries established before December 9, 1949. For imports of semiessential consumer goods and nonessential producer goods, the advance deposits would be 200 per cent. A deposit equal to the downpayment plus 25 per cent had to be made for all letters of credit or authority to purchase exchange for authorized imports of capital goods under deferred payments arrangements of not less than three years. These regulations would apply to all imports, including those by the Government and its institutions, imports under U.S. Public Law 480, and all imports under arrangements with the U.S. International Cooperation Administration.

December 11. A Presidential Decree suspended the issuance of barter licenses under the “no-dollar” import law.1

Saudi Arabia

Exchange Rate System

The official government selling rate through the Saudi Arabian Monetary Agency is Saudi Riyals 3, qurush 16%, per US$1. The Saudi Arabian Monetary Agency fixes the value of the riyal in relation to foreign currencies and aids the Ministry of Finance and National Economy in centralizing the receipts and expenditures of the Government. The commercial banks’ selling rate is SR 3/17 per US$1. The granting of exchange at the official rate depends on its availability and the type of import. Exchange control regulations are applied only to the official allocations for trade and private remittances. Foreign exchange acquired from other than official sources, e.g., the proceeds of exports, may be used freely in any way and may be sold in the free market; the free market quotation at the end of 1957 was between SR 5.25 and SR 5.50 per US$1.

Administration of Control

Import licenses for all goods, and exchange licenses for all payments made at the official rate, are issued by three committees in Jedda, Riyadh, and Dammam. In granting licenses for exchange at the official rate, these committees are limited to quarterly allocations made by the Ministry of Finance and National Economy. An Exchange Control Committee of the Ministry of Finance and National Economy, composed of a representative appointed by the Council of Ministers, the Exchange Controller, and representatives from the Ministry of Commerce, the Directorate General of Economic Affairs, the Directorate General of Customs, and the Saudi Arabian Monetary Agency, deals with all matters of policy relating to exchange control. Exchange at the official rate is provided to the banks by the Saudi Arabian Monetary Agency in accordance with directives of the Exchange Control Department, which is headed by the Exchange Controller.

Prescription of Currency

There are no obligations imposed on importers, exporters, or other residents prescribing the method or currency for payments to or from persons resident abroad, except that imports from Lebanon must be settled in Lebanese pounds.

Imports and Import Payments

All imports require import licenses from one of the three import committees. Import licenses with allocation of exchange at the official rate are granted only for imports of certain, listed, essential items within a global quota. Licensing for imports under the Regulations for the Investment of Foreign Capital is automatic. The remittance of official exchange to pay for imports or the opening of import letters of credit is permitted only after an import license has been obtained. Import licenses for other items are issued only on the understanding that the importer will obtain his exchange in the free market. Imports of gold or of foreign notes and coins are subject to prior license by the Exchange Control Department.

Payments for Invisibles

The transfer of foreign exchange abroad at the official rate for any purpose requires a license. Saudi Arabian nationals going abroad on business or as tourists are given an allowance of SR 3,000 per year. A Saudi Arabian national whose family resides abroad may remit abroad monthly 50 per cent of his salary or SR 2,000, whichever is less. Saudi Arabian students are given annual exchange allowances of SR 6,000 for study in an Arab or Far Eastern country and SR 12,000 for study in the United States or Europe. Exchange allowances for medical treatment abroad are also granted. Foreign employees under contract with the Saudi Arabian Government may remit abroad 50 per cent of their net incomes if their families are in Saudi Arabia or 70 per cent if their families are living abroad. Foreign independent workers may remit up to 50 per cent of their net incomes. Travelers leaving Saudi Arabia are permitted to carry a maximum amount of SR 500 in notes.

Exports and Export Proceeds

A license is required for all exports, but the surrender of the proceeds is not required and exchange receipts are freely disposable. The re-export of imported goods is prohibited. Exports of gold or of foreign notes and coins are subject to prior license by the Exchange Control Department. Exports of Saudi Arabian silver or gold coins are prohibited.

Proceeds from Invisibles

There are no limitations on receipts from invisibles. Travelers may not bring in more than SR 500 in notes. Other imports of Saudi Arabian currency are prohibited, except for small amounts of silver coins in border traffic. Imports of Egyptian pounds are also prohibited, except that travelers may bring in up to LE 20 in LE 1 notes.

Capital

No exchange control obligations are imposed on capital receipts, but outgoing payments require permits. Under the provisions of the law entitled “Regulations for the Investment of Foreign Capital,” of May 23, 1957, profits from foreign investment in Saudi Arabia may be remitted abroad at the rate of 20 per cent per annum of the capital invested. The capital itself may be withdrawn, after three years, at the maximum rate of 30 per cent of its value per annum, or in its entirety after eight years, together with accumulated profits. In the event of technical difficulties acknowledged by the ministries concerned, the capital may be withdrawn at any time. A committee (formed by the Minister of Commerce as chairman, a member of the Ministry of Commerce, a member of the Ministry of Finance and National Economy, and a member of the Exchange Control Department) receives, examines, and grants all applications for foreign investment and for transfer of profits under this law.

Changes during 1957

February 1. The regulations on transfers of foreign exchange by foreign persons and companies were modified to permit employees and self-employed persons to transfer 70 per cent of their net incomes abroad (the previous limit had been 50 per cent), and to permit corporations to transfer their annual net profits to a maximum of 15 per cent of the capital invested in Saudi Arabia. The special permit formerly required for such transfers was no longer necessary, and the only requirement was a statement from the tax administrator evidencing payment of all income taxes.

April 8. All imports were made subject to import license. Banks were prohibited from opening commercial credits or accepting collections until a license had been obtained.

May 20. A list of imports that did not require import licenses was issued. Included were agricultural and animal products, fresh butter, salted cooking butter, ghee, cheese, grape molasses, dried apricot bricks, sugar, semolina, olive oil, medicines, and black and white cement.

May 23. A law entitled “Regulations for the Investment of Foreign Capital” came into force. This law permitted the remittance of profits from foreign investment in Saudi Arabia at the rate of 20 per cent per annum, and of the capital itself, after a period of three years, in annual amounts of 30 per cent. It also permitted the transfer of all of the capital or any remaining part of it, together with accumulated profits, after eight years.

June 22. A Royal Decree created three regional licensing committees at Jedda, Riyadh, and Dammam, to examine applications for import licenses. These committees, composed of representatives of competent ministries and private businessmen, were to grant licenses in accordance with the amount of foreign exchange allocated to them quarterly by the Ministry of Finance and National Economy, and in three newly established categories: (1) foodstuffs, certain types of livestock, and medical products, (2) cotton products, construction equipment, spare parts, mineral oils, etc., and (3) all other goods.

July 19. A Royal Decree was issued codifying all exchange control, import, and export regulations. Under the decree, an Exchange Control Department under the Ministry of Finance and National Economy was established, charged with supervising the allocation of foreign exchange to the banks by the Monetary Agency, in conformity with regulations issued for import payments and other transfers of exchange. Since these regulations would apply only to foreign exchange furnished by the Monetary Agency, the free exchange market was not affected. Foreign employees whose families live with them in Saudi Arabia and self-employed foreigners could remit abroad at the official rate up to 50 per cent, instead of 70 per cent as previously, of their net incomes.

August 26. Saudi Arabia became a member of the International Monetary Fund.

Sudan

Exchange Rate System

There is no agreed par value for the Sudanese Pound. The parity is 2.55187 grams of fine gold, giving a relation to the U.S. dollar of LSd 1 = US$2.87156. Commercial banks’ rates for telegraphic transfers on New York as at December 31, 1957 were LSd 0.345805 buying, LSd 0.348816 selling, per US$1.

Administration of Control

Exchange control is administered by the Ministry of Finance and Economics, much of the detail being carried out by authorized banks. Licensing of imports and exports is the responsibility of the Ministry of Commerce, Industry, and Supply; all licenses must be validated by the exchange control authorities.

Prescription of Currency

All payments and receipts in foreign exchange are required to be made as follows: with countries in the Sterling Area, in sterling or Sudanese pounds through an account of a resident of the Sterling Area; with countries in the American Account Area, in U.S. dollars or in sterling through an American Account in the United Kingdom; with countries with which payments agreements have been concluded,1 through a bilateral clearing account in Sudanese pounds; and with other countries, in sterling through a Transferable Account in the United Kingdom.

Imports and Import Payments

With the exception of some (mainly luxury) items, which require individual import licenses, most commodities originating in non-dollar countries are imported freely on open general license. Imports of dollar goods require individual licenses, which are not issued for commodities that may be imported on the same terms from soft currency countries. Exchange appropriate to the exporting country is granted for all permitted imports.

Payments for Invisibles

All payments for invisibles require licenses. Remittances within reasonable limits are permitted for family maintenance, education and medical expenses, and assistance to close relatives. Foreign nationals are also permitted to remit reasonable amounts of current savings to their country of origin. Shipping charges, insurance premiums, profits, interest, and dividends earned by nonresidents may be remitted freely upon presentation of the required documents. Travel expenses for tourism and other purposes are authorized up to the equivalent of LSd 200 per adult, and LSd 100 per child, per year.

Exports and Export Proceeds

Exports from the Sudan are subject to license, to surrender of the proceeds, and to certain regulations regarding the credit terms that can be extended to foreign buyers. Export licensing is quite liberal. The surrender requirements provide for repatriation of the export proceeds within six months after export, through an authorized bank. Exports on credit are limited by the six-month surrender requirement, as well as by specific regulations governing consignment sales, which are approved automatically only for certain grades of long-staple cotton exported to the United Kingdom.

Proceeds from Invisibles

Receipts from abroad in respect of invisibles must be surrendered to authorized banks and are subject to the general prescription of currency requirements. Travelers entering the Sudan may bring in LSd 10 in Sudanese currency and any amount in notes and coins of other countries permitted by the regulations of those countries.

Capital

Under a law for the encouragement of foreign investment, incoming foreign capital may be registered and thus may acquire, among other advantages, a guarantee for repatriation of the original capital and profits thereon. Non-Sudanese emigrants may transfer up to £2,000 to the dollar area and up to £10,000 to Sterling Area or Transferable Account countries; Sudanese nationals may transfer £2,000 on emigration.

Changes during 1957

April 8. Upon the introduction of Sudanese currency, exchange control was applied to settlements with Egypt; at the same time, a payments agreement with Egypt came into force.

September 5. Sudan became a member of the International Monetary Fund.

December l4. Additional items were placed on the list of goods requiring import licenses.

Sweden1

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.

Sweden participates with Austria, Belgium-Luxembourg, Denmark, France, the Federal Republic of Germany, Italy, 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 six months’ delivery (three months’ delivery for transactions in French francs or with banks in France), with other authorized banks in any of the participating countries in any of their currencies. 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. Authorized banks in Sweden may also deal spot and forward with banks in Argentina in these currencies (except deutsche mark) against any of these currencies, as well as against Swedish kronor in the nonresident accounts of banks in Argentina. Sweden operates a “transit dollar” scheme, under which dollars are purchased abroad at a premium by Swedish commercial banks and resold to Swedish importers of goods on the “transit dollar” list (see section on Imports and Import Payments, below).

Administration of Control

Import and export licenses, when required, are issued by the National Board for Trade Licenses or, in the case of foodstuffs, the State Agricultural Marketing Board. All payments to and from nonresidents must in principle be made through one of the 14 Swedish authorized banks, which have been given wide powers by the Sveriges Riksbank to approve payments.

Prescription of Currency

Payments to residents of the dollar area2 may be made in any foreign currency or by crediting kronor to any Regular Account; payments to residents of Bilateral Account countries3 must be made in the currency of, or by crediting kronor to a Bilateral Account related to, the country concerned; and payments to residents of Transferable Account (i.e., all other) countries may be made in the currency of any country outside the dollar area, except free Swiss francs, or by crediting kronor to any Transferable or Bilateral Account (see section on Nonresident Accounts, below). Payments to a resident of Sweden from the dollar area may be received in any dollar area currency or free Swiss francs, or in kronor to the debit of a Convertible Account; receipts from a Transferable Account country may be accepted in the currency of any country other than a Bilateral Account country or in kronor to the debit of any Convertible or Transferable Account; and receipts from a Bilateral Account country may be accepted in the currency of the country concerned, in the currency of any country other than a Bilateral Account country, or in kronor to the debit of a Bilateral Account of the country concerned or of any Convertible or Transferable Account.

Nonresident Accounts

There are two main types of nonresident account held in Swedish kronor with authorized banks in Sweden: Regular (i.e., current) Accounts and Restricted Accounts.

Regular Accounts include Convertible Accounts, held by residents of the dollar area (see footnote 2); Bilateral Accounts, held by residents of countries with which Sweden has bilateral payments agreements or bilateral payments arrangements;3 and Transferable Accounts, held by residents of all other countries. (Transferable Accounts may also be held by residents of Bilateral Account countries, but these may not be credited with payments from Sweden to the country of the account holder.) Regular Accounts may be used for all payments to and from Sweden and the country of the account holder. Balances on Regular Accounts may be exchanged at any time for the currency of the country of the holder. Convertible Accounts may be debited with transfers to any other Regular Account or exchanged into any foreign currency. Transferable Accounts may be debited with transfers to any other Transferable Account or a Bilateral Account or exchanged into the currency of any country outside the dollar area, except free Swiss francs. Bilateral Accounts may be debited with transfers to other Bilateral Accounts of the same country or exchanged into the currency of that country. In addition to transfers from other Regular Accounts, all Regular Accounts may be replenished with the proceeds of sales of currencies that are prescribed for payments to Sweden from the country of the account holder; but replenishment in these ways may not result in the creation of abnormal balances on the accounts. This limitation does not, however, apply to Regular Accounts operated under the Western European multilateral arbitrage scheme.

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, for payment of the holder’s own taxes in Sweden, and for investment in Swedish bonds quoted on the Swedish stock exchange. Bonds purchased in this way and proceeds therefrom must be deposited in a “restricted securities” account with an authorized bank or stockbroker.

Imports and Import Payments

Most goods from OEEC countries and their associated areas, Finland, and Yugoslavia, as well as printed matter from all countries, may be imported freely. Most commodities originating and purchased in dollar area countries are also free of import restriction. Some imports from other countries require import licenses. Licenses for a few commodities with origin in dollar countries and listed on the “transit dollar” list are granted automatically provided that, in cases where the purchases are made in dollar countries, payments are made in “transit dollars” purchased from Swedish commercial banks.

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. In principle, payments for imports must be made in any manner prescribed for payments to the country of origin (see section on Prescription of Currency, above). But imports of goods originating in the dollar area and purchased from a country outside the dollar area must be paid for in the manner prescribed for the country of purchase; and payments for imports of goods originating in Greece, Portugal, or Turkey and purchased from any country outside the dollar area must be made in the manner prescribed for payments to the country of purchase.

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 to payments in U.S. dollars. Any reasonable amount of exchange is granted for all travel to Denmark, Finland, Iceland, Norway,4 and the Sterling Area countries, the equivalent of SKr 5,000 yearly per person for travel to other non-dollar countries, and the equivalent of SKr 2,500 yearly for travel to the dollar area countries. For business travel to countries other than Denmark, Finland, Iceland, Norway, and the Sterling Area countries, exchange may be granted up to SKr 150 per person per day, but normally no more than SKr 3,000 per trip and SKr 6,000 per year will be granted. For official travel to these countries, exchange may be granted up to SKr 150 per person per day.

Each person leaving Sweden may export Swedish banknotes and coins to a total of SKr 1,000, in denominations no higher than SKr 100. Nonresidents may, when leaving Sweden, freely export foreign banknotes and other foreign means of payment brought into the country by them, up to the equivalent of SKr 5,000; for amounts exceeding this limit, a certificate of “Means of Payment Imported and Intended for Re-Export,” issued on entry, is required.

Exports and Export Proceeds

Most exports to North, Central, and South American countries (except Argentina) and to all OEEC countries and Finland are exempt from licensing requirements. However, payment must be received within six months after the dispatch of the commodity and must be in conformity with the regulations (see section on Prescription of Currency, above).

In principle, payment must be received in the manner prescribed for the country of final destination. Export proceeds from Denmark, Finland, and Norway exceeding SKr 10,000, and export proceeds from all other countries exceeding SKr 5,000, must be reported to the Sveriges Riksbank. All proceeds from exports received in hard currencies (mainly U.S. and Canadian dollars and free Swiss francs) must be surrendered. Other currencies 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

Receipts from invisibles from Denmark, Finland, and Norway exceeding SKr 10,000, and receipts from all other countries exceeding SKr 5,000, have to be individually reported to the Sveriges Riksbank. All proceeds from invisibles received in hard currencies must be surrendered.

Each person entering Sweden may import SKr 1,000 in Swedish banknotes and coins in denominations no higher than SKr 100, and foreign banknotes without limitation.

Capital

Investments in Sweden by nonresidents and the repatriation of their capital are subject to approval. Payments for contractual amortization are permitted freely. Transfers on account of dividends and other earnings on investments are permitted against presentation of an affidavit. Inheritances due to nonresidents may be transferred, and the repatriation of moderate amounts of other nonresident-owned capital is also permitted. Emigrants may transfer funds up to the equivalent of SKr 50,000 per person on special application. In accordance with an agreement concluded by Sweden with Denmark, Norway, and the United Kingdom in 1950, capital transfers and transactions between Sweden and these countries are generally permitted.

Nonresident-owned capital assets that are not permitted to be transferred abroad may be used in Sweden for certain purposes or are held in Restricted Accounts (see section on Nonresident Accounts, above).

Requests by residents to transfer capital abroad for direct investment are considered on a case-to-case basis. Transfers of capital abroad for portfolio investment are permitted only exceptionally.

Securities may be imported into Sweden through the intermediary of an authorized bank; however, their disposal is subject to approval. The export of, and transactions in, securities involving nonresident interests are also subject to approval.

Changes during 1957

January 2. Austrian banks and Austrian schillings were included in the multilateral arbitrage arrangement in operation among most Western European countries.

March 1. Settlements with any of the participants in the Western European multilateral arbitrage arrangement could be made in any currency included in the scheme or in Swedish kronor through a Transferable Regular Account.

The Regular Accounts of banks in Austria, Belgium, Denmark, France, the Federal Republic of Germany, Italy, Luxembourg, the Netherlands, Norway, Switzerland, and the Sterling Area, as well as Argentina, Japan, and Uruguay, and of any resident (i.e., not only a bank) of the Netherlands, the Sterling Area, Japan, and Uruguay, were denominated Transferable Regular Accounts. Balances on these accounts could be exchanged for any currency not freely convertible or be transferred to other Regular Accounts (including Transferable Regular Accounts), except those held by residents of dollar area countries.

March 1. For travel to Denmark, Finland, Iceland, and Norway, the amount of exchange which a resident could acquire and take with him without documentation was raised from SKr 2,500 to SKr 5,000; the general exchange allowance for tourist travel to other countries outside the dollar area was raised from the equivalent of SKr 3,000 to SKr 5,000 per person per year. The limit on the export and import of Swedish banknotes and coins was raised from SKr 300 to SKr 1,000 and the limit on the free re-export by nonresidents of means of payment imported by them was raised from the equivalent of SKr 2,500 to SKr 5,000.

June 3. The yearly foreign exchange allowance for travelers to the dollar area was increased from the equivalent of SKr 1,500 to SKr 2,500 per person.

July 1. The Foreign Exchange Control Office was abolished and its duties transferred to the Sveriges Riksbank.

July 1. The regulations governing exports exempt from licensing requirements were amended to permit increased choice as to the currency of payment.

July 1. The list of agricultural products that could be imported from the dollar area without an import license was extended.

July 9. Transfers of emigrants’ capital up to SKr 50,000 per person were authorized, subject to special application.

December 2. Authorized banks were permitted to deal on a forward basis with banks in Argentina in the currencies (except deutsche mark) of the countries participating in the Western European multilateral arbitrage arrangement.

Note. The following changes became effective on January 1, 1958:

Nonresident accounts held by residents of all non-dollar countries, except 12 specified countries to which bilateral payments arrangements are applied (see footnote 3), were designated Transferable Accounts. All residents of Transferable Account countries became eligible to hold Transferable Accounts. The regulations on prescription of currency were consolidated so as to stipulate uniform methods of payment between Sweden and the dollar area, Sweden and the Transferable Account countries, and Sweden and the Bilateral Account countries. Regular Accounts held by residents of the dollar area were redesignated Convertible Accounts. Yugoslavia was included in the Transferable Account area.

Syria

Exchange Rate System

The par value is Syrian Pounds 2.19148 = US$1. No exchange transactions take place at the official rates of LS 2.19 buying, LS 2.21 selling, per US$1. Most exchange transactions take place at the controlled free market rate, but there is an uncontrolled free market, mainly for capital transactions and some invisibles. As at December 31, 1957, the rates in the controlled free market were LS 3.565 buying, LS 3.585 selling, per US$1.

Administration of Control

The Exchange Office, which is under the supervision of the Council on Money and Credit, is the final authority on all matters pertaining to exchange policy and control. According to an agreement between the Central Bank of Syria and the Administrative Board of the Exchange Office, all transactions of the Exchange Office are executed through the Central Bank, which provides the Exchange Office with the required staff and office supplies. Import licenses are issued by the Ministry of National Economy. Authorized commercial banks are responsible for recording the exchange proceeds of most exports.

Prescription of Currency

The Exchange Office is empowered to prescribe the currencies to be obtained for exports of certain goods. The usual requirement is that proceeds of major exports to all but a few neighboring countries be obtained in 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, except specified products from neighboring countries, require licenses. Such licenses are generally issued freely, but there is a short list of prohibited items. Exchange for licensed imports may be obtained at the controlled free market rate.

Payments for Invisibles

Exchange for some invisibles, mainly those associated with trade, may be obtained at the controlled free market rate. All other invisibles must be paid for through the uncontrolled free market.

Exports and Export Proceeds

Exports of a few goods are prohibited. Most other exports are free of license. The proceeds of certain exports, including major exports 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 or sold freely to any authorized bank. The authorized banks are permitted to use exchange derived from export proceeds only to finance import transactions.

Proceeds from Invisibles

There are no requirements attached to proceeds from invisibles and such exchange may be held, sold in the uncontrolled free market, or otherwise disposed of.

Capital

Imports and exports of capital are free of all restriction and may be dealt with in the uncontrolled free market without limitation.

Changes during 1957

No significant changes took place during 1957.

Thailand

Exchange Rate System

No par value for the Thai Baht has been established with the Fund. There are fluctuating free market rates at which all authorized transactions take place. All incoming exchange must be sold to an authorized agent at these rates. All outgoing payments are subject to approval (given automatically for bona fide commercial transactions) and take place also at the fluctuating free market rates. As at December 30, 1957, the free rate for the U.S. dollar was approximately B 20.81 per US$1.

Administration of Control

Exchange control is administered by the Bank of Thailand on behalf of the Ministry of Finance; the Bank delegates responsibility for most transactions to authorized agents, i.e., authorized banks and authorized companies. A few imports and exports are subject to licensing by the Ministry of Economic Affairs.

Prescription of Currency

There are no special requirements concerning the currency to be used for payments with foreign countries; however, such payments are made largely in sterling and related currencies or in U.S. dollars.

Nonresident Accounts

Transfers of baht to and from the accounts of nonresidents (including transfers between nonresident accounts) require approval, which is granted automatically for certain current payments.

Imports and Import Payments

Most commodities may be imported freely, but for 67 listed commodities import licenses are required and for most of these items licenses are not generally granted. Payments for imports must be made by means of letters of credit, unless approval otherwise is given, and are made at the free market rate. Importers must obtain, in addition to the usual documents, a “certificate of payment” from an authorized agent before imported goods exceeding B 3,000 in value can be cleared through the Bangkok customs or goods exceeding B 5,000 in value can be cleared through other customs stations.

Payments for Invisibles

Authorized payments for invisibles are made at the free market rate. In general, exchange is provided freely for transactions in invisibles when the applications are supported by the documentary evidence specified in the regulations. For foreign travel and family remittances, however, the amounts of exchange that the authorized agent may sell are limited.

No person may take out local currency exceeding B 500 or foreign currency exceeding the equivalent of UK£50 or US$140 without prior approval of the exchange control authorities. A family traveling under the same passport may not take out more than twice these amounts without a permit. Persons in transit may take out any foreign exchange not exceeding the amounts they imported on entry.

Exports and Export Proceeds

Practically all exports are subject to a licensing procedure. The exporter is required to obtain a “certificate of exportation” from an authorized agent in order to clear the shipment through customs, as follows: for shipments of rice, rice flour, tin, and rubber exceeding B 1,000 in value through any customs station; for shipments of charcoal and wood exceeding B 10,000 in value through certain provincial customs stations; and for goods exceeding B 3,000 in value through the Bangkok customs or B 5,000 in value through other customs stations. This certificate assures repatriation of the export proceeds. Export proceeds must be sold to authorized agents at the free market rate within seven days of receipt but not later than three months after the date of export.

Proceeds from Invisibles

All receipts from invisibles must be sold to an authorized agent at the free market rate. No person may bring into Thailand local currency exceeding B 500 without a permit, and a family traveling under the same passport may not bring in more than B 1,000 without a permit.

Capital

All outward transfers of capital by residents or nonresidents are subject to approval. Foreign exchange from inward capital movements must be sold to an authorized agent. Foreign investments in Thailand can be accorded preferential treatment under the Industrial Promotion Act of October 4, 1954; this treatment can include a guarantee of the transfer abroad of current net earnings. The repatriation of capital is considered on the merits of each case.

Changes during 1957

May20. The list of prohibited imports and the list of goods subject to licensing procedure were abolished and a new consolidated list of 67 commodities subject to import controls was issued.

August 17. Quota restrictions were imposed on the export of rice and rice products, with the maximum quota for the second half-year period fixed at 30 per cent of each dealer’s past shipments.

October 4. The quota for the export of rice for the second half-year period was raised from 30 per cent to 45 per cent of each dealer’s past shipments.

October 10. Quota restrictions on and the licensing procedure for the import of motor vehicles were abolished.

November30. The quota for the export of rice for the second half-year period was raised from 45 per cent to 48 per cent of each dealer’s past shipments. Imports of fiberboard and plywood were placed under control.

Tunisia1

Exchange Rate System

The official rate is Tunisian Franc 1 = French Franc 1. There is free transferability between the two currencies. Exchange rates are orderly, based on the exchange rates (including the 20 per cent surcharge on selling rates and the 20 per cent premium on buying rates) in the official and “free” exchange markets in Paris, to which the authorized banks have access.

Exchange Control Territory

Tunisia is part of the French Franc Area. No limitations are placed on the movement of funds between Tunisia and France; between Tunisia and other parts of the Area, transfers are allowed on the same conditions as apply to transactions between France and those territories.

Administration of Control

All French regulations on foreign trade and payments are applicable in Tunisia. Exchange control is administered by a Delegation in Tunis of the Exchange Control Office of the French Franc Area. Details of the exchange control are carried out by authorized banks. Import and export licenses are issued by the External Finance Service.

Prescription of Currency

The methods of payment and receipt for settlements with countries outside the French Franc Area are in conformity with the French exchange control regulations and the agreements concluded for the French Franc Area. Settlements with Yugoslavia, however, are made in U.S. accounting dollars under the terms of a payments agreement between Tunisia and Yugoslavia.

Imports and Import Payments

Certain commodities originating in and consigned from OEEC countries and their associated areas may be imported freely. All other imports require import licenses, which are valid for three months. Imports must be recorded with an authorized bank. Authorized imports may be made within the limits of the exchange placed at the disposal of the importer. Some commodities may be imported with the freely available proportion of export proceeds retained in EFAC accounts (see section on Exports and Export Proceeds, below).

Payments for Invisibles

All payments for invisibles require exchange control approval, except those to other parts of the French Franc Area, which may be made freely. Travelers may not take out Tunisian francs unless authorized by the Delegation of the Exchange Control Office. The export of foreign banknotes is subject to license. Nonresident travelers may obtain foreign currencies against payment in French francs, but foreign banknotes are provided only up to the amount permitted to be imported under the regulations of the country to be visited.

Exports and Export Proceeds

Some items require export licenses, but others may be exported if the exporter gives an undertaking to collect and surrender the exchange proceeds. Exports must be recorded with an authorized bank and the exchange proceeds surrendered within three months from the date of exportation. Certain percentages of export proceeds may, however, be retained in special EFAC (Exportations-Frais Accessoires) accounts and used by the original exporter or supplier of the goods either to pay certain commercial expenses or to pay for imports of certain commodities. The percentages that may be retained in EFAC accounts are 15 per cent for exports giving rise to the sale of a convertible currency; 10 per cent for exports giving rise to the sale of other currencies; and 6 per cent for exports consigned on a sell-at-best basis. Of the 15 per cent, 3 per cent may be used for any payment abroad, including payments for imports of goods of any type. U.S. dollars and other currencies of the dollar area in EFAC accounts may be exchanged for any other currency; the currencies of most EPU countries may be exchanged for the currency of any other EPU country.

Proceeds from Invisibles

With the exception of currencies of the French Franc Area, which may be retained, residents must surrender to an authorized bank any foreign exchange received by them. Domestic and foreign banknotes may be brought in freely.

Capital

Foreign investments in Tunisia require prior authorization, which may be given by the Delegation of the Exchange Control Office with the agreement of the Tunisian Government. There are no restrictions on the movement of capital to and from other parts of the French Franc Area. Securities may be imported freely through the authorized banks.

Under a decree concerning foreign investments, a special fund is established in the Tunisian Treasury to which foreign exchange acquired from private foreign investments in productive enterprises is credited. Future transfers abroad of current earnings from such investments and the repatriation of the original capital are guaranteed. For other investments, the transfer abroad of dividends, interest, and profits may not exceed 8 per cent annually of the capital invested or the amount of foreign exchange imported originally and may not take place in less than two years from the date of the investment.

Changes during 1957

May 14. The special, temporary, compensatory tax of 15 per cent ad valorem (decree of December 29, 1955) was applied to certain additional imports.

May 17. The validity of import and export licenses was reduced from six months to three months.

June 6. A decree was published establishing a Fund for the Guarantee of Foreign Investments in Tunisia.

July 1. A bilateral trade and payments agreement with Yugoslavia came into effect. Settlements were to be made through U.S. dollar clearing accounts at the National Bank of Yugoslavia and the Tunisian Foreign Trade Office.

August 14. In conformity with exchange measures introduced in France, a 20 per cent surcharge was levied on payments for most imports and for capital transactions and invisibles other than those payable in currencies of the French Franc Area, and a 20 per cent premium was granted on receipts from most exports and from capital transactions and invisibles in currencies other than those of the French Franc Area. The surcharge was payable at the moment of purchase of the foreign currency, and the premium at the moment of surrender of the export proceeds. The special, temporary, compensatory tax was abolished for nearly all products formerly subject to it; all of the goods freed from this tax were also exempted from payment of the 20 per cent surcharge on import payments.

August 23. The special, temporary, compensatory tax was discontinued for all imports.

Turkey

Exchange Rate System

The par value is Turkish Liras 2.80 = US$1. The official rates are LT 2.80 buying, LT 2.8252 selling, per US$1. There are exchange taxes of 20 per cent on imports of crude rubber and 5 to 15 kurus per kilogram on imports of liquid fuels and mineral oils. Payments for most imports are, however, subject to an exchange tax of 40 per cent, resulting in a principal import rate of LT 3.955 per US$1. Other effective rates result from import surcharges of 25, 50, or 75 per cent applied, in addition to the 40 per cent exchange tax, to certain luxury and nonessential imports. Payments for invisibles connected with imports are treated like the related imports. In principle, exchange for other invisibles is made available at the official rate; however, a special selling rate of LT 5.75 per US$1 applies to private travel abroad, to profits and capital transfers by foreign companies not benefiting from the special foreign investment laws, and to certain other payments.

The official rate applies to most exports, but certain exports receive export premiums, ranging from 25 to 100 per cent, which are financed from the surcharges collected on certain nonessential and luxury imports. For exports of raisins and figs, varying premiums, expressed in kurus per kilogram, are granted according to the quality of the product and the currency received. A special buying rate of LT 5.25 per US$1 applies to the exchange proceeds of certain secondary exports, receipts from tourism, and certain other receipts; the banks sell this exchange for certain purposes, such as private travel abroad and the transfer of blocked commercial funds, at the LT 5.75 rate. (See Table of Exchange Rates, below.)

Administration of Control

Exchange control is administered by the Ministry of Finance. Exchange licenses for imports are issued by the Ministry of Commerce for the private sector and by the Ministry of Finance for the public sector. An Interministerial Exchange Committee, composed of a Minister of State, the Minister of Finance, the Minister of Commerce (formerly the Minister of Economy and Commerce), the Minister of Industry (formerly the Minister of State Enterprises), and the Minister of Customs and Monopolies,1 is charged with drawing up estimates of all foreign exchange needs and receipts in the private and public sectors, for making the broad allocations of exchange to these sectors, and for deciding the transfers to be made each month by the Central Bank of the Republic of Turkey, taking into consideration the type and importance of the needs. The Central Bank and the authorized banks operate the details of the exchange control.

Prescription of Currency

Settlements on account of merchandise and invisibles must be made in U.S. dollars, free Swiss francs, sterling through an account of the Central Bank, other EPU currencies, any other currency or manner acceptable to the Central Bank, or in accordance with the terms of Turkey’s payments agreements. Turkey is a participant in the EPU and has concluded payments agreements with all OEEC countries except Iceland, Ireland, and Portugal. In addition, Turkey has bilateral trade and/or payments agreements with 15 countries.2

Imports and Import Payments

All imports are subject to approval. The issue of licenses is subject to the decision of the exchange and trade control authorities on each application. There may be some delay, however, between the granting of the license and the time that the exchange is actually made available. The Ministry of Commerce reserves the right to restrict imports from any particular bilateral agreement country within the limits of exchange proceeds accruing from that country. The Central Bank requires that applications by private importers for foreign exchange to pay for merchandise be accompanied by a deposit of 10 per cent of the value of the application. If the applicant withdraws his application before the allocation of exchange is made, he is entitled to withdraw his deposit.

Most imports are subject to an exchange tax of 40 per cent (20 per cent for crude rubber and 5 to 15 kurus per kilogram for liquid fuels and mineral oils). In addition to the 40 per cent tax, a surcharge of 25, 50, or 75 per cent of the amount of the import license expressed in foreign currency is applied to certain nonessential and luxury imports (automobiles, vacuum cleaners, refrigerators, radios, etc.). Under a regulation dated October 8, 1956, the import of industrial spare parts not exceeding LT 5,000 in value by industrialists subject to the labor law, provided the goods are for their own needs, may be permitted with exchange purchased at the LT 5.75 rate, but the implementation of this provision has not been significant.

Payments for Invisibles

In principle, payments to nonresidents on account of invisibles are restricted and subject to individual license. However, payments incidental to merchandise transactions are permitted automatically, and licenses are usually granted for payments on account of (1) interest, commissions, and similar payments connected with bank operations, (2) export commissions, registration fees, patent fees, etc., (3) advertisements and other expenses connected with trade, and (4) payments by insurance companies. Exchange for invisibles is in principle authorized at the official rate, but exchange for specified services, e.g., research projects, repairs, royalties, newspapers, artists, entertainment invited from abroad, and business and private travel, is made available at the LT 5.75 rate. Exchange for business travel is granted within limits varying according to the amount of income or corporate tax paid by the applicant firm. Travelers are permitted to export LT 99 in Turkish banknotes and coins. Nonresident travelers may take out the unspent portion of the foreign exchange recorded in their passports on entry.

Exports and Export Proceeds

Certain goods may be exported freely; but specified goods require an individual license, mainly in order to prevent triangular trade in such goods that would result in payment of 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 three months from the date of export and within ten days of the date on which the foreign exchange was placed at their disposal. The proceeds of certain exports in dollars and EPU currencies benefit from premiums of 40, 50, 60, 75, or 100 per cent of the value of the proceeds, and in bilateral account currencies from premiums of 25, 40, 50, or 75 per cent, depending on the commodity involved. The premiums on exports of raisins and dried figs are based on weight rather than on export value and vary both with the currency involved and with the commercial grade of the product. These premiums are paid from funds in an Equalization Account at the Agricultural Bank derived from taxes of 25, 50, or 75 per cent on specified nonessential and luxury imports. Exchange proceeds from exports of specified secondary commodities may be sold to authorized banks at the rate of LT 5.25 per US$1.

Exporters of certain products may retain from 1 to 15 per cent of their export proceeds and use them to import specified materials used in the preparation and packing of these goods. The retained exchange proceeds may not be transferred to other importers.

Proceeds from Invisibles

Foreign exchange accruing to residents for services rendered by them to nonresidents must be surrendered within three months from the date on which the service was rendered and within ten days from the date of acquisition of the exchange.

Travelers are permitted to import LT 100 in Turkish banknotes and metallic currency. Foreign tourists may sell their exchange to authorized agents at a rate of LT 5.25 per US$1.

Capital

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 (which is not compulsory) may be made in foreign exchange at a rate of LT 5.25 per US$1, subject to a license from the Ministry of Finance. Repatriation may also, in cases specifically approved by the Ministry of Finance, be effected through the import of specified commodities, provided it is verified that repatriation in foreign exchange is not possible.

Foreign investments in Turkey require approval. 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 those of a commercial nature may be transferred abroad through the allocation of exchange derived from the export of specified goods.

Transactions in securities, including their export and import, require approval where a nonresident interest is involved.

Foreign capital invested in Turkey under the terms of the Law to Encourage Foreign Investments is accorded preferential treatment, provided the enterprise in which the investment will be made will tend to promote the economic development of the country, will operate in a field of activity open to Turkish private enterprise, and will not entail monopoly or special privilege. 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, and patents; and (4) profits converted into capital through reinvestment. Under this law, as amended, annual profits, interest, and dividends on approved investments and all or part of the invested capital or foreign loan may be remitted abroad in the original currency of the capital. Registered shares or stock certificates issued under this law are freely transferable between persons of all nationalities both in Turkey and abroad.

The capital and interest on long-term loans and credits extended 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 Ministers.

Table of Exchange Rates (as at December 31, 1957)(liras per U.S. dollar)
BuyingSelling
2.80(Official Rate)2.8252(Official Rate)
Most exports.Some imports. Invisibles not subject to other rates.
3.39(Official Rate plus 20% Exchange Tax)

Imports of crude rubber.
3.50-4.90(Official Rate plus 25%-75% Premium)
Exports of certain goods paid in clearing currencies.
3.92-5.60(Official Rate plus40%-100% Premium)3.955(Official Rate plus40%Exchange Tax)
Exports of certain goods paid in dollars or EPU currencies.Most imports and related invisibles.
4.944-6.922(Official Rate plus 25%-75% Surcharge and 40% Exchange Tax)
Imports of nonessential and luxury items.
5.25(Special Rate)5.75(Special Rate)
Exports of secondary goods. Receipts from tourism. Certain other receipts.Travel and certain other invisibles.
Note : This table does not take account of the tax of 5 to 15 kurus per kilogram on imports of liquid fuels and mineral oils, or of the various premiums granted on exports of raisins and dried figs.
Note : This table does not take account of the tax of 5 to 15 kurus per kilogram on imports of liquid fuels and mineral oils, or of the various premiums granted on exports of raisins and dried figs.

Changes during 1957

January 28. By Circular 627 of the Ministry of Commerce, a few items, mainly hand tools and raw materials, were added to the list of imports on credit.

February 2. Regulations were established for selling motor vehicles imported without an exchange allocation.

March 1. A new tax, called “share of the Treasury in the foreign exchange allocated for a number of products,” came into effect; it applied to about 80 per cent of all imports, including capital goods, raw materials, and consumer goods. The rate is 40 per cent, uniformly applied on all imports subject to the tax except crude rubber, which is subject to a 20 per cent levy, and imports of liquid fuels and mineral oils, which are subject to a tax of 5 to 15 kurus per kilogram. The tax is collected by the bank handling the import, at the time the foreign exchange is made available or before the goods are released from customs. Exempted from the tax are imports for national defense under the U.S. aid program, imports under the petroleum law, merchandise imported under the NATO agreement, and certain goods specifically exempted under Customs Law No. 5388. The 40 per cent tax gives rise to an effective selling rate of LT 3.955 per US$1.

March 13. A premium of 100 per cent on the f.o.b. price of exports of olive oil for free U.S. dollars and EPU currencies was established. The premium would be paid from a fund accruing from surcharges collected by the Meat and Fish Office on imports of cottonseed oil and tallow used in the manufacture of soap.

April 12. The system of transferable import rights, under which exporters of low-grade manganese and chrome were allowed to retain their export proceeds and use them for certain imports or transfer them to other importers, was abolished.

July 27. The list of goods benefiting from the export premium system was considerably reduced by the exclusion of some 75 items, most of which were already included in the Deblockage List (i.e., goods the export proceeds of which may be used to release the blocked funds of nonresidents). The differential treatment accorded to exports to the dollar area was abolished and these were included in the same group with exports against transferable sterling and other EPU currencies. Percentage premiums for exports against U.S. dollars and EPU currencies, as a group, were modified. Under the new arrangements, exports against free dollars or EPU currencies receive premiums of 40, 50, 60, or 75 per cent of the export proceeds, depending on the commodity involved. There is a 100 per cent premium for exports of meerschaum pipes. In most cases, the percentages correspond to the percentages previously applied to exports against EPU currencies, while for four items (live goats and kids, acorns, licorice, and licorice gums and extracts), the percentages were increased by 10 per cent. By the same decree, the premiums on exports of raisins and dried figs were increased: exporters of raisins during the 1957-58 export season would receive a premium of 60 kurus (previously 30 kurus) per kilogram on the f.o.b. value of their exports for dollars and EPU currencies, and a premium of 40 kurus (previously 15 kurus) for exports against clearing currencies. Exporters of dried figs would receive a premium of 25 kurus (previously 15 kurus) per kilogram for exports to the dollar area (except the United States), the Sterling Area, and EPU countries, and a premium of 15 kurus (previously 10 kurus) for exports against clearing currencies.

August 22. By Circular 648 of the Ministry of Commerce, a new import rights system was established for exports of 21 items, including tobacco, cotton, mohair, eggs, figs, raisins, and hazelnuts. Under this system, exporters of these articles are allowed to retain a certain percentage of their export proceeds and use them to import materials used exclusively in the packing and preparation of these export goods. The retained percentages were fixed separately for each export item; they range from 15 per cent for handled figs and ground nuts to 1 per cent for mohair, cotton, and tobacco. These import rights, which are calculated on the f.o.b. value of the export, may not be transferred to others, and imported materials must be used exclusively by the exporters themselves for their own needs.

September 2. Imports valued at US$1,000 or less were exempted from price control requirements.

October 12. Certain machinery and equipment, imported on a temporary acceptance basis and needed for the economy of the country, could be sold to residents for Turkish liras under certain conditions.

December 12. The Minister of Customs and Monopolies was included in the Interministerial Exchange Committee.

Union of South Africa

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 (£SA-99/17/6 buying, £SA 100/7/6 selling, per £100) 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, 1957 were US$2.81125 buying, US$2.79375 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 South African 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 accordance with the method 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 United Kingdom’s exchange control system; for several countries, payments or receipts may alternatively be in the appropriate local currency, e.g., for Canada or American Account countries, in Canadian or 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 other Sterling Area territories or to the country of the account holder, 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

Most items may be imported freely or are admitted on a replacement basis; the importation of other items is determined on a quota basis. Among items that may be imported on a replacement basis are raw materials; industrial plant and equipment, agricultural machinery and apparatus, vehicles and equipment, and maintenance spares therefor; consumable goods; pharmaceuticals; and a wide range of general merchandise not available from local sources. The small number of import items limited by quota includes jute, bananas, rice, amusement machines, books and periodicals, and general merchandise not on replacement. All goods of the Federation of Rhodesia and Nyasaland may be imported freely.

Upon presentation of satisfactory evidence that transactions have been or will be properly effected, an importer is granted exchange to pay for all goods legally imported; payment must be 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 for current commercial transactions, but certain transfers of sterling for noncommercial purposes require the approval of the Reserve Bank (see section on Capital, below). All payments to residents of countries outside the Sterling Area require exchange licenses, which are granted freely for most invisibles. Exchange to pay for travel expenses, membership fees, maintenance, etc., is granted liberally. Persons leaving South Africa may take £SA 20 in South African Reserve Bank notes and the equivalent of £SA 10 in other notes.

Exports and Export Proceeds

Export licenses are required for exports of specified raw materials in short supply and manufactures therefrom (Schedule A) to any destination other than Basutoland, Swaziland, and the Bechuanaland Protectorate. They are also required, for strategic reasons, for certain other goods (Schedule B) exported to destinations other than the United Kingdom, any British Dominion, Colony, Possession, Protectorate, or Trust Territory, and the United States. Other goods (Schedule C) may be exported without a license.

Proceeds from exports must be received in accordance with the prescribed method (see section on Prescription of Currency, above), and all foreign exchange, including Sterling Area currencies, must be surrendered unless exemption is obtained. Export control procedures operate to assure this.

Proceeds from Invisibles

Proceeds from invisibles must be received in accordance with the prescribed method (see section on Prescription of Currency, above) and the foreign exchange must be surrendered, unless exemption is obtained.

Capital

Proceeds of capital must be received in accordance with the prescribed method and the foreign exchange must be surrendered. There are no restrictions on the transfer of capital by residents, up to £10,000 per person or family unit, to other parts of the Sterling Area, and on similar transfers of any amount if they are for the purpose of effecting purchases in London, through the South African Stock Exchange, of South African shares.1 All other transfers of sterling for noncommercial purposes require the approval of the Reserve Bank. Transfers of capital to countries outside the Sterling Area require approval. This is granted, within certain limits, to emigrants; otherwise, residents are not normally allowed to export capital. Capital transferred directly to the Union may be retransferred to the country of origin and in the currency in which the original transfer was received.

Changes during 1957

February 28. The controls introduced on February 21, 1956 over certain sterling transfers to other countries in the Sterling Area were withdrawn.

March 21. A relaxation of import control regulations was announced. An allocation of import permits for consumer goods was made, increasing the general basis for these permits to 53⅓ per cent of 1948 imports, the same as in 1955 and 1956, and increasing the value of imports for consumer goods by about £3 million over the 1955 figure by upward adjustment of the basis of allocation. A number of items were added to the list of goods for which special, additional import permits would be issued. Also, import permits for certain classes of motor vehicles would in future be issued on a replacement basis; for other classes, the issue of such permits was relaxed.

May 10. A further relaxation of import controls on consumer goods was announced, increasing such imports by £2 million.

July 7. It was announced that permission to transfer South African Government stocks from the London register to the South African register would in future be granted only in exceptional circumstances.

July 28. A third issue of consumer goods permits for 1957 was made, bringing the total issue for 1957 up to 60 per cent of the issue basis (the issue basis being 1948 imports adjusted upward for firms that have expanded). Also, in future, importers’ full requirements of all motor vehicles were to be covered on a replacement basis.

September 21. The exchange control over Sterling Area transactions by residents of the Union of South Africa, previously operating between February 1956 and February 1957, was reintroduced. Export and other proceeds received in sterling or in other Sterling Area currencies had to be surrendered to authorized exchange dealers. Sterling continued to be made freely available for authorized imports and other current commercial transactions, but applications by residents for amounts exceeding £10,000 per person or family unit for other purposes, including travel and the transfer of capital, required the approval of the Reserve Bank. However, transfers by members of a South African stock exchange to cover commitments in respect of purchases of South African shares in London could be made freely; for this purpose, the shares of companies registered in the Federation of Rhodesia and Nyasaland which are listed on the London Stock Exchange or on both the London and the Johannesburg Stock Exchange were regarded as “South African.” Transfers of capital to the United Kingdom on South African account in excess of the exemption limit of £10,000 for the purchase of other securities were prohibited, unless the prior approval of the Reserve Bank was specifically obtained for the transfer of the excess amount required to purchase such securities.

December 6. Regulations replacing previous commodity import control lists were issued, with three commodity groupings: (1) goods exempt from import license, (2) goods subject to license but for which licenses will be issued on a replacement basis, and (3) goods subject to licensing quotas.

United Kingdom

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 £1. Official rates are quoted for the following currencies: Austrian schillings, Belgian francs, Danish kroner, deutsche mark, metropolitan French francs, Italian lire, Netherlands guilders, Norwegian kroner, Portuguese escudos, Swedish kronor, Swiss francs, and U.S. dollars. The Exchange Equalization Account is authorized to operate in foreign markets where Transferable Account sterling is traded at a discount. 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. In the United Kingdom there is a uniform exchange rate system based on the par values agreed with the Fund or, for currencies without an agreed parity, on official rates.

The United Kingdom participates with Austria, Belgium-Luxembourg, Denmark, France, the Federal Republic of Germany, Italy, 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 six months’ delivery (three months’ delivery for transactions in French francs or with French banks), with other authorized banks in any of these territories in any of their currencies (except free Swiss francs, Financial Account Belgian francs, and balances on other accounts which are freely convertible into gold or dollars within the terms of the exchange control regulations of the country concerned). 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. Authorized banks may undertake spot or forward exchange transactions (1) with residents of countries in the Transferable Account Area, (a) in any currency of the Transferable Account Area, except those which are freely convertible, against sterling in their Transferable Accounts, and (b) in U.S. and Canadian dollars against sterling in their Registered Accounts; (2) with residents of the American Account Area or Canada, in U.S. or Canadian dollars against sterling in American or Canadian Accounts; and (3) with any nonresident, in U.S. dollars against Canadian dollars. Authorized banks may also deal on a spot basis with banks in Brazil in Belgian francs, metropolitan French francs, deutsche mark, Italian lire, and Netherlands guilders against any of these currencies, and with banks in Argentina spot or forward for up to six months (three months for transactions in French francs or with French banks) in Austrian schillings, Belgian francs, Danish kroner, metropolitan French francs, Italian lire, Netherlands guilders, Norwegian kroner, Swedish kronor, and Swiss francs against any of these currencies.1 These facilities do not, however, extend to balances that are freely convertible under the exchange control regulations of the countries concerned.

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, Ghana, Iceland, India, Iraq, the Irish Republic, the Hashemite Kingdom of Jordan, Libya, the Federation of Malaya,2 New Zealand, Pakistan, the Federation of Rhodesia and Nyasaland, and the 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

Exchange control in the United Kingdom is administered 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 and currencies 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 as well as the Italian Monetary Area, Austria, 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; receipts both from Monetary Agreement countries and from others may also be accepted in any specified currency,5 if freely offered and freely transferable to the United Kingdom. These arrangements are facilitated and controlled by dividing nonresident sterling accounts, according to the residence of the account holder, into two main groups—Canada and American Account countries, and all other countries. General regulations show the 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 of persons, etc., resident in other parts of the Sterling Area (see section on Exchange Control Territory, above) are treated as those of residents. Thus, for transfers within the Sterling Area no U.K. exchange control permission is required, but for payments to other countries the U.K. authorized banks are required to ensure that the payment has the approval of the exchange control authority of the territory concerned.

The sterling accounts (other than Blocked Accounts—see Group 4, below) of nonresidents, i.e., those resident outside the Sterling Area, are available for payments in the Sterling Area and for transfers to other nonresidents, as described below. Additional transferability is achieved by granting licenses to make 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. These accounts may be debited freely for payments to any sterling account (other than a Blocked Account). Balances on American Accounts and Canadian Accounts may be converted freely into Canadian or U.S. dollars or used to purchase gold through the London market.

2. Transferable Accounts (all countries outside the Sterling Area except Group 1). Payments from Transferable Accounts may be made freely to any account related to the Transferable Account Area (other than a Blocked Account). Transferable Account sterling is negotiable, mainly against U.S. dollars, in free markets abroad.

3. Registered Accounts (all countries outside the Sterling Area except Group 1). These accounts are intended primarily for entries related to the purchase and sale of gold in the London market. 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 dollars or U.S. dollars to an authorized bank in the United Kingdom or with transfers from Canadian or American Accounts, and are available for transfers to any sterling account, including payments to residents in settlement of U.K. exports to any destination.

4. Blocked Accounts (all countries outside the Sterling Area except Denmark, Norway, and Sweden—residents of these three countries may transfer all their sterling assets to their respective countries). The purpose of these accounts is to receive funds that are not placed at the free disposal of nonresidents, e.g., capital proceeds. Such funds may be used to purchase on a recognized stock exchange in the United Kingdom securities that are payable in a Sterling Area currency, cannot be redeemed under any contractual provision within five years from the date of acquisition, and are not optionally payable in dollars. The income from such securities, and the maturity proceeds of any that are redeemable, may be remitted to the country of the holder. Transfers between Blocked Accounts are permitted freely, and Blocked Account sterling is negotiable, mainly against U.S. dollars, in free markets abroad.

5. Egyptian Accounts. The Egyptian Monetary Area is included in the Transferable Account Area; but the only Transferable Accounts authorized at present are those of the National Bank of Egypt, and U.K. residents are permitted to make payments to the credit of such Transferable Accounts only for Suez Canal dues or ships’ disbursements in Egypt. Other payments by U.K. residents to beneficiaries in Egypt may be made only to Egyptian Accounts. Egyptian Accounts may be credited with transfers from all nonresident accounts except other Egyptian Accounts or Blocked Accounts. They may be debited for certain commitments contracted prior to July 28, 1956, and for cash drawings by the account holder or, on his instructions, for living expenses in the United Kingdom, up to £100 a week. The No. 2 Accounts of banks in Egypt, except for transfers to other No. 2 Accounts, are blocked under a special arrangement.

Imports and Import Payments

Imports on government account are not subject to import license, but imports on private account are subject to one of the following types of import license: World Open General License (which permits any importer to import the goods covered by the license in any quantity from any country), Open General License (which permits any importer to import the goods covered by the license in any quantity from specified countries), Open Individual License (which permits an individual person or firm to import the goods specified in any quantity from the countries specified), and Specific License (which permits a specific import transaction by the person, for the goods, and from the country specified in the license).

Subject to the submission of evidence of importation or, if this has not yet taken place, the relevant import license and evidence of value and of purchase, foreign exchange or permission to credit a nonresident sterling account appropriate to the country of origin of the goods is granted automatically for imports. For imports of goods from, and originating in, any country outside the Sterling Area—other than Canada, a country in the American Account Area, or the Egyptian Monetary Area—payment may be made in sterling to the credit of a Transferable Account or in the currency of the country of origin of the goods or the country of the seller, if the currency is a specified currency (see footnote 5). For imports of goods from, and originating in, Canada or a country in the American Account Area, payment may be made to the credit of an American or Canadian Account or in Canadian or U.S. dollars. For imports of goods from, or originating in, the Egyptian Monetary Area, payment must be made to an Egyptian Account. For imports from other parts of the Sterling Area, payment may be made freely in sterling or in any other Sterling Area currency, and no documentation is necessary for exchange control purposes.

Commodity Markets and Transit Trade6

There are special schemes to facilitate commodity market transactions. The arrangements are as follows:

1. Cotton, grain, and refined sugar may be sold for sterling unless purchased for dollars, in which case they may be sold only for dollars.

2. Cocoa, coffee, and raw sugar of any origin, including the dollar area, may be sold for sterling except that, where these commodities are of neither Sterling Area nor dollar area origin and are purchased for dollars, they may be resold only for dollars.

3. Copra, rubber, copper, lead, tin, and zinc, regardless of origin, may be sold anywhere for sterling.

All commodities covered by the commodity market schemes must be sold for dollars when shipped to the dollar area. The export of these commodities to destinations outside the Sterling Area is subject to normal export requirements, but reimbursement in dollars is required for exports of cotton and grain of dollar area origin. Sugar refined in the United Kingdom may be exported to the Transferable Account Area against payment in sterling, regardless of the origin of the raw sugar used in its manufacture.

Apart from the facilities for organized market transactions described above, trading in goods originating outside the Sterling Area and not imported into the Sterling Area (except for transshipment) may be arranged on the basis that where payment is made in dollars, receipts must be obtained in dollars. When the Sterling Area trader makes payment in other currencies, receipts must be obtained in dollars from purchasers in the dollar area, but from purchasers in other countries receipts are acceptable in dollars, in Transferable Account sterling, or in any specified currency.

Payments for Invisibles

An exchange license is required for all payments for invisibles to countries outside the Sterling Area, but the completion of an exchange control form is not required for the discharge of commercial debts or the payment of professional fees not exceeding £250. These licenses normally are granted, without discrimination as to recipient country, for 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 some are subject to monetary limitations. There is a basic allowance of exchange for travel, available for use in all countries, of £100 for each person of 12 years of age or over and of £70 for each child under 12 years of age for the period November 1, 1957-October 31, 1958. For travel to Denmark, Norway, and Sweden, bona fide travelers may obtain “any reasonable amount” of appropriate exchange. The basic travel allowance is exclusive of the payment of fares for public transport, provided payment is made in sterling in the United Kingdom. Not more than £10 in British banknotes may be taken out of the United Kingdom, except by persons traveling directly to the Irish Republic or the Channel Islands. A certain freedom in exchange operations is granted to the insurance market.

Exports and Export Proceeds

Exports to countries outside the Sterling Area are permitted without specific exchange control approval, provided the proceeds are received in a prescribed or other permissible manner. For exports to the American Account Area or Canada, payment must be received in U.S. or Canadian dollars or in sterling from an American, Canadian, or Registered Account. For exports to any other country outside the Sterling Area, payment must be received in sterling from an American, Canadian, Registered, or Transferable Account, or in any specified currency (see footnote 5) that is freely offered and is freely transferable to the United Kingdom. The exchange control procedure is waived for exports (other than private gifts in kind) not exceeding £500 f.o.b. Exchange receipts in specified currencies must be offered to an authorized bank. Apart from the exchange control requirements, certain exports, mostly of a strategic character, and all exports to Mainland China, require export licenses.

Proceeds from Invisibles

Exchange receipts from invisibles in specified currencies (see footnote 5) 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.7

Capital

Transfers of resident capital to countries outside the Sterling Area require approval, which normally is granted for commercial investment that promises to employ Sterling Area skills or techniques or to assist Sterling Area exports or the production of raw materials. Permission may be obtained to invest foreign currency capital receipts in marketable securities expressed in foreign currency, but any such receipts in a specified currency (see footnote 5) which have not been invested within six months must be sold to an authorized bank.

Foreign exchange or permission to credit sterling to a nonresident account related to his country or monetary area is granted freely for repayments abroad due to a nonresident in respect of matured capital obligations; otherwise, the proceeds of nonresident-owned capital may be credited only to Blocked Accounts (see section on Nonresident Accounts, above). However, residents of Denmark, Norway, and Sweden may transfer their capital freely to their respective countries. Persons resident outside the Sterling Area who make direct investments in the United Kingdom must provide appropriate foreign exchange, or sterling from a nonresident account other than a Blocked Account appropriate to their country of residence. Capital directly invested by a nonresident after January 1, 1950 in projects approved by the exchange control authorities may be repatriated at any time, together with capital profits.

Nonresidents may buy sterling securities on a recognized stock exchange in the United Kingdom against payment appropriate to their country of residence or, if the securities cannot be redeemed under any contractual provision within five years from the date of purchase, with sterling from a Blocked Account,8 except that prescribed securities9 may be purchased only with sterling from an American, Canadian, or Registered Account, or with U.S. or Canadian dollars sold to an authorized bank. Nonresidents may sell sterling securities in the United Kingdom, provided the proceeds are credited to a Blocked Account or reinvested in a Sterling Area security having at least five years to maturity (special rules apply to residents of Denmark, Norway, and Sweden). Interest, dividends, etc., from such securities and the maturity proceeds of any that are redeemable may be remitted to, or credited to a sterling account appropriate to, the country of residence of the owner.

Nonresidents may purchase officially quoted non-sterling securities (other than prescribed securities) against sterling from an appropriate nonresident account. Such securities may not be resold on a stock exchange in the United Kingdom but may be exported.

Residents may sell outside the Sterling Area a security expressed in foreign currency and reinvest the proceeds in other marketable securities expressed in foreign currency; however, if the security sold is a U.S. or Canadian dollar security, the securities purchased must be U.S. or Canadian dollar marketable securities. Any sale proceeds in a specified currency which have not been reinvested within six months must be sold to an authorized bank. Residents of the United Kingdom are required to obtain permission from the Treasury to acquire foreign currency securities from residents of other parts of the Sterling Area.

Banknotes

The authorized banks may buy and sell foreign notes and coins, within certain limitations, at market rates of exchange. Purchase of foreign notes and coins 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 or U.S. dollar notes from anyone, but they may purchase currencies of the Transferable Account Area only from residents of that Area. Authorized banks may, under certain conditions, sell foreign notes and coins for travel outside the Sterling Area, but without special permission travelers may not take out of the United Kingdom foreign currency notes in excess of the equivalent of £100 per traveler or, if the traveler is a visitor, the amount he brought into the United Kingdom in foreign currency notes.

Changes during 1957

January 2. The Austrian schilling became a specified currency (see section on Prescription of Currency, above). The Bank of England began to publish daily official spot buying and selling rates for this currency. Austrian schillings (except “free” schillings) and Austrian authorized banks were included for spot transactions, and forward transactions for up to six months’ delivery, in the arbitrage arrangement in operation among certain EPU countries; and Austrian schillings (except “free” schillings) were added to the currencies in which authorized banks could deal with banks in Argentina on a spot basis.

January 18. Authorized banks were given permission to deal with residents of the Transferable Account Area in sterling against any currency of the Transferable Account Area (other than those on convertible accounts, such as free Swiss francs and Financial Account Belgian francs), and to engage in arbitrage transactions with nonresidents in any of those currencies. These permissions are subject to the authorized bank being satisfied that transfer of the foreign currency would be permitted by the monetary authorities in the countries concerned and differ in this respect from the automatic facilities covered by the EPU arbitrage arrangement and the arrangements with Argentina and Brazil.

March 15. It was announced that specific permission would in future be required for all transactions in securities or blocked funds by or on behalf of residents of Egypt.

May 13. The Egyptian Monetary Area was readmitted to the Transferable Account Area; however, the only Transferable Accounts authorized were those of the National Bank of Egypt, and residents of the United Kingdom were given permission to make payments to the credit of such Transferable Accounts only for Suez Canal dues or ships’ disbursements in Egypt. Other payments by residents of the United Kingdom to beneficiaries in Egypt could be made only to Egyptian Accounts. The existing restrictions on the use of Egyptian Accounts and of No. 2 Accounts of banks in the Egyptian Monetary Area were maintained.

May 28. Authorized banks were given permission to purchase in any country of the Transferable Account Area, against payment in sterling to a Transferable Account, currency notes of any country participating in the Western European multilateral arbitrage arrangement, in order to meet authorized requirements for travel purposes.

June 5. The basic travel allowance of £100 a year for each person of 12 years of age or over and of £70 for each child under 12 years of age, which had previously been limited to travel in the Transferable Account Area, was made available for travel in the dollar area.

June 17. The maximum exchange allowance for certain categories of travel, which had previously been £14/10/- a day for people traveling on business of national importance, was raised to £18 a day.

July 2. An exchange allowance of £700 a year for the cost of education at schools in the dollar area was introduced.

July 5. It was announced that the sale or transfer to, or the negotiation or acquisition by, residents of the United Kingdom of foreign currency securities owned or held by residents of other parts of the Sterling Area required the specific permission of the Treasury.

August 19. The granting, without special permission, of overnight bank overdrafts to nonresidents was terminated.

September 20. The following restrictions were imposed on the use of commercial credits in London by nonresidents: no further refinance facilities were to be provided to nonresidents and sterling credits for the purchase of goods by a nonresident from another nonresident were no longer to provide for payment by usance drafts.

December 2. The arrangements permitting authorized banks to undertake spot transactions with banks in Argentina in certain currencies was extended to include forward transactions for up to six months’ delivery (three months’ delivery for transactions involving French francs or authorized banks in France).

Uruguay

Exchange Rate System

No par value for the Uruguayan Peso has been established with the Fund. There is a basic rate of Ur$1.519 per US$1, which applies to government payments and to a few exports and imports. Another selling rate of Ur$2.10 per US$1 applies to certain essential imports. To obtain exchange for all other imports, a certificate must be purchased at a fixed rate of Ur$4.10 per US$1; these certificates are issued to exporters for a certain percentage of their export proceeds—the percentage depending on the nature of the commodity exported—giving rise to a number of effective “mixing” rates for such exports. An exchange tax of 6 per cent is payable on most imports and related services. Surcharges of Ur$0.50, Ur$1.50, or Ur$2.00, per US$1, apply to imports of certain less essential items. A tax of 1 per cent is applied to export proceeds. There is also a fluctuating free market for exchange for invisibles and capital transactions. (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 Export and Import Control Board.

Prescription of Currency

Settlements with countries with which Uruguay has bilateral payments agreements or interbank compensation agreements are made through accounts kept in specified currencies, as follows: with Belgium, Sweden, and Switzerland, in the currency of the partner country; with Argentina, Brazil, Czechoslovakia, Denmark, Finland, France, East Germany, Greece, Hungary, Italy, Paraguay, Poland, Spain, and Yugoslavia, in accounting dollars; and with the U.S.S.R., in transferable sterling. Settlements with Austria, the Federal Republic of Germany, the Netherlands, and the United Kingdom are made in the currencies of these countries on a transferable basis. Settlements with other countries are made in the currency indicated in the license.

Imports and Import Payments

Imports are classified in three categories: Category I, most essential goods; Category II, less essential goods; and Category III, luxury goods. All imports are subject to licenses, which are issued on a restrictive basis. Under the existing “emergency” regime, which is effective until June 30, 1958, a global quota has been established for all imports to be authorized during the period. This quota is composed of two main parts: (1) exchange to be granted for imports from countries in Group A,1 principally countries with which Uruguay has bilateral trade and payments agreements, and (2) exchange to be granted for imports from all other countries. Each import license is issued for a specified country. Licenses for imports not originating in Group A countries are granted only when there is authentic proof that the goods cannot be obtained from a country in Group A. There is a system of priorities by commodities, as follows: (1) imports for export and construction industries and for industries that produce essential goods; (2) imports for industries that process articles classified as of prime necessity but not included in the first group; (3) imports for the remaining industries. Each application for an import license is examined on its own merits, taking into account available supplies, etc.

Payments for imports of specified goods in Category I are made at the Ur$2.10 rate. Payments for all other imports are made through the certificate market. Exchange for authorized imports from Group A countries is granted promptly; exchange for imports from all other countries is made available 180 days after shipment of the goods. Payments for most imports are subject to a 6 per cent exchange tax. Payments for imports in Categories II and III are subject to exchange surcharges, as follows (in pesos per U.S. dollar) : Category II, Ur$0.50 for truck chassis of less than two tons and Ur$1.50 for all other items; Category III, Ur$2.00. Imports are subject to advance deposits ranging up to 100 per cent, according to the commodity involved.

Payments for Invisibles

Payments for invisibles covered by a payments agreement and involving the sale of exchange by the Bank of the Republic require the Bank’s approval. Expenditures in foreign exchange incidental to imports are authorized together with the payments 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 tax. All other payments for invisibles may be made freely through the fluctuating free market. There are no limitations on the export 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, exports of essential goods in short supply may be prohibited. Nearly all export commodities are classified in ten groups (A through G, I, K, and a provisional group), to each of which different “mixing” arrangements apply (see Table of Exchange Rates, below).2 A tax of 1 per cent is levied on all export proceeds.

Proceeds from Invisibles

All proceeds from invisibles may be held, utilized, or sold in the fluctuating free market. There are no limitations on the import of foreign or domestic banknotes.

Capital

Inward and outward capital transfers by residents or nonresidents are free. The corresponding exchange transactions may take place freely in the fluctuating free market.

Table of Exchange Rates (as at December 31, 1957)3(pesos per U.S. dollar)
Buying2Selling
1.5191.519
Exports in Group K (salted horse hides).Government payments. Imports of newsprint, inks, cardboard matrix, and seed potatoes.
1.9065

Exports in Group I (sheepskins and other products).
2.1649

Exports in Group G (greasy wool and dried cow hides and horse hides).
2.10

Specified Category I imports (essential goods).
2.4232

Exports in Group F, including washed wool and tanned woolly sheepskins.
2.6816

Exports of a provisional group of wool tops, combed wool, and by-products.
2.8107

Exports in Group E, including hog bristles.
3.0691

Exports in Group D, including frozen beef (manufacturas type).
3.4566

Exports in Group C, including tanned skins, wheat, and yarns.
3.715

Exports in Group B, including frozen beef (chilled Continental B and/or F type) and salted cow hides.
4.1025(Certificate Market Rate)

Exports in Group A, including linseed oil of 1956-57 crop (subsidy of Ur$0.35 per kilogram) and preserved beef and by-products.
4.10(Certificate Market Rate)

Other Category I imports.
4.60(Certificate Market Rate plus Ur$0.50 Surcharge)

Imports of truck chassis of less than two tons (Category II).
4.67(Fluctuating Free Market Rate)

All invisibles. Capital.
4.67(Fluctuating Free Market Rate)

Certain invisibles. Capital.
5.60(Certificate Market Rate plus Ur$1.50 Surcharge)

Other Category II imports.
6.10(Certificate Market Rate plus Ur$2.00 Surcharge)

Category III imports.

Changes during 1957

January. Details were issued of the quotas for imports of Categories II and III (to a total value of US$14 million). Special quotas for Category II amounted to US$3.65 million (including US$1.85 million for chassis for trucks under two tons), quotas for other goods in Category II, to US$4.793 million (including US$4.138 million for automobiles), general import quotas for Category II, to US$3.413 million, and quotas for Category III, to US$2.144 million.

April 9. It was announced that exports of greasy wool were to continue to receive Group I treatment, i.e., an effective rate of Ur$1.907, at least until August 15, 1957.

April 11. The exchange rate for the proceeds of exports of linseed oil was fixed at the certificate rate, while by-products could be negotiated at an effective rate of Ur$1.907, i.e., 85 per cent at Ur$1.519 and 15 per cent at Ur$4.1025. The profit made by the Bank of the Republic on the later sale of such export proceeds at the certificate rate were to be credited to an account entitled “1956-57 Linseed Harvest Fund.” Out of this account, a subsidy of Ur$0.35 per kilogram of linseed oil exported would be paid.

April 11. Exports of chilled meat, canned beef, and by-products (excluding salted cow hides and unprocessed tail hair) were to receive the certificate rate, i.e., a depreciated rate compared with earlier announcements. Exports of frozen meat of chilled “Continental B” or “Continental F” qualities and salted cow hides were to receive an effective rate of Ur$3.715, i.e., 15 per cent at Ur$1.519 and 85 per cent at Ur$4.1025. Exports of frozen meat of canning quality, with or without bone, were to receive an effective rate of Ur$3.069, i.e., 40 per cent at Ur$1.519 and 60 per cent at Ur$4.1025. Exports of unprocessed cow bristles were to receive an effective rate of exchange of Ur$1.907, i.e., 85 per cent at Ur$1.519 and 15 per cent at Ur$4.1025.

April 29. The Bank of the Republic announced that it was prepared to consider applications for imports of industrial machinery and equipment financed abroad at long term, provided payment could be made partly or wholly from subsequent exports by the same industry. The Bank stated that it would authorize the transfer of the funds but would not assume responsibility for providing the necessary foreign exchange, which must be bought in the certificate market. Such imports would be exempt from the requirements regarding advance deposits and prepayment of exchange that apply to normal import operations conducted through the certificate market. The concession would be granted only to imports financed on terms of two or more years, counting from the date of shipment.

May 30. The advance deposit on building materials imported at the rate of Ur$2.10 was raised from 75 per cent to 100 per cent, and all goods imported at the certificate rate were made subject to an advance deposit of 50 per cent instead of 30 per cent.

June 4. Exports of knitted woolen textiles and woolen garments made from carded or combed yarn produced in Uruguay could be negotiated at the certificate rate until June 30, 1958.

June 18. The Export and Import Control Board issued an order modifying the system for granting import permits under the system of sworn declarations for specified Category I goods paid for at the rate of Ur$2.10. In the future, importers of raw materials, building materials, and fuels would be given annual global allocations, based on their imports during the past three years, of which they could import half every six months. Within these global quotas, traders would not normally be permitted to import more than a total of US$12,000 per year of specified items that they had not habitually imported in the past.

August 1. The Bank of the Republic announced that it would provide private banks with exchange to cover import payments only after the customs authorities had verified the goods and their dispatch order had been approved by the Export and Import Control Board as being in complete agreement with the original import permit or sworn declaration authorized by the Board. In another circular, the Bank laid down various requirements for operations under certain agreements that must be financed through the central banks of the partner countries. Banks were assigned limits for such operations, and they must deposit in U.S. dollars 10 per cent of the amount fixed in Uruguayan pesos. If the Export and Import Control Board found that the goods cleared by customs differed in any way from the import permit or sworn declaration, the Bank of the Republic was given the right to debit the guarantee in U.S. dollars, and should the guarantee not be sufficient, the commercial bank would have to provide the difference in U.S. dollars. The banks suspended the opening of new documentary credits and established the following procedure for imports covered by bills for collection: for essential imports paid at the rate of Ur$2.10, banks would deliver shipping documents to importers against payment in pesos of the equivalent of the foreign exchange payment; for all other imports, documents would be released only against the official receipt, endorsed to the bank, covering the advance deposit made by the importer of 100 per cent of the foreign exchange equivalent of the invoiced value of the imported goods.

September. The opening of new documentary credits was resumed, and further clauses covering final settlements were added to those described under August 1, above.

October 1. A decree provided for the establishment of new aforos for exports of sheepskins and dried cow and horse hides.4

October 10. Exporters of dried horse hides would be allowed to negotiate 25 per cent of their foreign exchange earnings in the fluctuating free market.

October 15. A decree classified a large number of manufactured goods for inclusion in 6 of the 11 groups into which unmanufactured export commodities had been classified by a decree of August 3, 1956. The effect of the decree was to reduce the number of effective export rates for these commodities from 35 to 6.

October 17. The certificate market was temporarily closed, except for export operations.

October 31. The trade and payments agreement of September 12, 1955 with Czechoslovakia was ratified. The agreement specified the use of U.S. dollars in a clearing account for current operations and established a swing credit of US$2 million.

November 11. By a series of decrees, a number of major changes were made in the exchange system: (1) More depreciated exchange rates were established for the export proceeds of wool and wool products; thus, the rate for greasy wool was changed from Ur$1.907 to Ur$2.165, for scoured wool from Ur$2.036 to Ur$2.423, for wool tops and by-products from Ur$2.320 to Ur$2.682, for yarns from Ur$3.068 to Ur$3.457, and for sheepskins from Ur$1.777 to Ur$1.907. In addition, exports of skirted (desbordada) wool were granted a premium of Ur$0.06 per US$1. These changes were the result of shifts in classification of the various commodities between basic export groups established by a decree of August 3, 1956. (2) New rules were announced for the establishment of aforos. An official committee was set up to determine aforos, which were generally to be valid for two weeks. In establishing aforos for wool and wool products, the committee would be guided primarily by the quotations on world markets. However, aforos could be established as much as 10 per cent lower than the real value of exports. (3) The number of commodities imported at the rate of Ur$2.10 was greatly reduced and many of these goods were transferred to the certificate market rate. The special import rate of Ur$3.00 was abolished. The decree provided for the establishment of aforos for imports and a system of import controls. (4) Priorities were established for import payments already due but not settled—as a result of the closing of the exchange market for imports—in order to clear the way for the reopening of the market. In the first stage, exchange would be given for imports based on documentary credits opened up to October 16, 1957 and carried through within the period of validity they had as of that date. In the second and third stages, import licenses for goods in Categories I, II, and III which were authorized at the time the exchange market was closed would be granted foreign exchange. In addition, maximum time periods were established for the shipment of wool and wool products after an export declaration has been made, as follows: greasy wool, 60 days; washed wool, 90 days; combed wool tops, 180 days; yarn, 270 days; fabric, 360 days. Also, steps were taken to provide the authorities with some control over the flow of exports.

November 28. A decree introduced an emergency import regime, to remain in effect until February 28, 1958.5 The principal characteristics of this regime were as follows: (1) A global exchange quota was established, composed of two main parts: exchange to be granted for imports from the countries in Group A (see footnote 1) ; and exchange to be granted for imports from all other countries. (2) A system of priorities was established for imports, on the basis of their estimated importance to the country’s economy. (3) Specific rules were established for the granting of licenses to individual importers. (4) Exchange for import payments to Group A countries was to be made available promptly; exchange for import payments to all other countries was to be made available 180 days after shipment of the goods.

Republic of Viet-Nam

Exchange Rate System

There is no agreed par value for the Viet-Namese Piastre. The official rate is VN$35.00 per US$1; most import transactions and certain transactions in invisibles take place at this rate. There is also an officially recognized free market, through which certain other invisibles may be settled. The rate in this market is controlled; as at December 30, 1957 it was VN$73.00 per US$1. An effective rate of around VN$48 per US$1 arises from the negotiation of 66 per cent of the proceeds from exports of rice at the official rate and 34 per cent at the controlled free market rate; for proceeds from exports of tea, 100 French francs per kilogram must be surrendered at the official rate. The effective rate for most exports, other than rice, tea, and goods exported in compensation transactions, is also around VN$48 per US$1, since 65 per cent of the proceeds is surrendered at the official rate and 35 per cent at the controlled free market rate; some of these exports receive, in addition, an export subsidy in piastres. An effective rate of VN$110 per US$1 applies to luxury imports not financed by U.S. aid and arises from the addition of a “stabilization” tax of VN$75 per US$1 to the official rate. Other effective import and export rates arise in compensation transactions.

Administration of Control

Exchange control is administered by the National Exchange Office (a department of the National Bank of Viet-Nam) in accordance with the general policies of the Ministry of Finance. All remittances must have the prior approval of the National Exchange Office. Import and exchange controls on goods financed by U.S. aid, including imports financed with “triangular” francs (i.e., goods bought with U.S. counterpart funds in French francs), are administered by the Directorate-General of Trade and the National Bank. Other imports must be approved by the Directorate-General of Trade as well as by the National Exchange Office. Export licenses are issued by the Directorate-General of Trade and require also the approval of the National Exchange Office.

Prescription of Currency

Payments and receipts through both the official market and the controlled free market must be effected through the authorized exchange banks and in the currency stipulated in the license. Payments to and receipts from Cambodia and Laos (with which Viet-Nam has bilateral payments agreements) are, in principle, effected through special accounts held by the central banks of these countries. In trade with these countries, tied import-export transactions (“simultaneous exchanges”) are authorized. Compensation transactions are authorized with Hong Kong and Singapore. Settlements with the dollar area are made in U.S. dollars. Settlements with Switzerland are made in U.S. dollars or free Swiss francs, with the French Franc Area in French francs, and with other European countries in transferable sterling or the currency of the other country.

Nonresident Accounts

Nonresidents may maintain accounts with banks, subject to the approval of the National Exchange Office. All transactions through these accounts require prior approval.

Imports and Import Payments

Imports are subject to prior license. Applications to import are sent through an authorized bank to the Directorate-General of Trade, which examines them in the light of available foreign exchange and conformity with an import plan prepared by an interministerial commission. In principle, the minimum amount for an import license application is US$10,000. Imports are classified in 13 categories; no importer may be concerned with more than 3 categories. An importer who has obtained foreign exchange in order to import a certain type of commodity may not transfer his foreign exchange or sell this type of commodity to another person or firm. Goods must be imported in accordance with the time limit, quantity, and quality specified in the import license. Importers must have storage facilities for the goods they import. Luxury imports not financed by U.S. aid are subject to a “stabilization” tax of VN$75 per US$1.

Payments for Invisibles

All outgoing payments require the prior approval of the National Exchange Office. For certain payments—such as government expenses, incidental charges on imports, certain insurance premiums and indemnities, students’ expenses, and savings of foreign technicians—exchange is granted at the official rate by the National Exchange Office. With the approval of the National Exchange Office, payments for such items as transfers of profits of foreign enterprises, personal savings of resident foreigners other than foreign technicians, medical expenses, and family allocations may be made through the controlled free market. Most exchange for travel must also be obtained in the free market.

Travelers are permitted to take with them VN$400 in Viet-Namese banknotes. Foreign banknotes and credit instruments not used by foreign travelers may be taken out of the country by making a declaration to the customs supported by evidence that any utilized foreign exchange has been sold to an authorized bank at the appropriate rate. Foreigners traveling in Viet-Nam must record all purchases and sales of foreign exchange on entry-exit forms.

Exports and Export Proceeds

All exports are subject to license and must be registered with an authorized bank, which is responsible for the repatriation of the foreign exchange. The exchange proceeds of most exports must be surrendered 65 per cent at the official rate and 35 per cent at the controlled free market rate. The proceeds from exports of rice are settled 66 per cent at the official rate and 34 per cent at the free market rate. For the proceeds from exports of tea, 100 French francs per kilogram must be surrendered at the official rate. Certain exports receive subsidies in piastres. Some goods may be exported on a compensation basis, either in exchange for equivalent imports or by surrender of 50 or 70 per cent of the export value. Exports of manufactured or semimanufactured products originally imported into Viet-Nam are prohibited.

Proceeds from Invisibles

Foreign exchange receipts from most transactions in invisibles may be sold at the controlled free market rate. Tourists, philanthropic organizations, and foreign governments may sell their foreign exchange in the controlled free market to cover their expenses in Viet-Nam.

There is no limit on the amount of foreign exchange that may be brought into the country, but it must be declared to the customs upon entry. A traveler may not bring in more than VN$400 in Viet-Namese banknotes. Foreigners traveling in Viet-Nam must record all purchases and sales of foreign exchange on entry-exit forms.

Capital

All capital remittances require approval. The import of foreign-owned capital and of resident-owned funds held abroad is permitted freely in the form of gold, provided no payment of foreign exchange is made. Capital held in piastres by nonresident foreigners may be sold to other nonresident foreigners for foreign exchange at a negotiated rate without prior approval, provided the purchaser places the newly acquired piastres in a capital account with an authorized bank. Piastres held in such accounts are blocked and may be used only for investment in certain branches of economic activity and only with the approval of the National Exchange Office. The transfer of profits derived from new foreign investments is guaranteed, and repatriation is allowed after five years in annual installments of 20 per cent of the initial investment.

Table of Exchange Rates (as at December 30, 1957)(piastres per U.S. dollar)
BuyingSelling
35.00(Official Rate)

Government receipts. Certain invisibles.
35.00 (Official Rate)

Imports financed by U.S. aid. Government expenses. Certain invisibles.
47.92(66% at Official Rate and 34% at Free Market Rate)
Exports of rice.1
48.30(65% at Official Rate and 85% at Free Market Rate)

All exports other than rice,1 tea,2 and goods sold in compensation transactions.
73.00(Controlled Free Market Rate)

Tourist exchange and sales of exchange by foreign embassies. Operating funds for foreign investments.
73.00 (Controlled Free Market Rate)

Profits, some savings, travel exchange, and some other invisibles.
110.00 (Official Rate plus VN$75 “Stabilization” Tax)

Imports not financed by U.S. aid.

Changes during 1957

January 1. Settlements between Viet-Nam and Japan would be made in free U.S. dollars. Previously, they had been made in agreement dollars under the terms of an open account agreement between France and Japan.

January 1. All allocations of student exchange on behalf of children of foreign residents were made at the controlled free market rate.

January 11. The ban on exports of rice was rescinded. A quota of 50,000 tons was set for the first quarter of 1957 and was reserved entirely for the French Franc Area. Proceeds of rice exports had to be surrendered in full, without EFAC privileges, and would be settled 34 per cent at the controlled free market rate and 66 per cent at the official rate.

February 15. The minimum amount of an import license was set at US$10,000, and import letters of credit had to be opened within 30 days following receipt of the import license. Licenses of which less than 90 per cent is used and licenses canceled without valid cause were made subject to a penalty of 20 per cent. Importers penalized more than three times in one year would be taken off the register of recognized importers.

March 5. A Presidential Declaration specified the benefits to which new foreign-owned capital is entitled. These include a guarantee against expropriation, transfer of profits and savings in accordance with existing regulations, and repatriation after five years at an annual rate of 20 per cent of the initial investment.

March 10. An import tax (“production” tax) was imposed amounting to 15 per cent of the c.i.f. value on “items of vital necessity,” 35 per cent on certain luxury goods, and 25 per cent on all other goods. This tax replaced the “general internal revenue” tax (4, 6, or 10 per cent) and the sales tax (4 per cent) which previously were levied upon entry of the goods. An “equalization” or “stabilization” tax ranging from 10 to 50 per cent of the c.i.f. value was imposed on certain imported consumer goods and raw materials.

March 20. New exchange allocations for Viet-Namese studying abroad became effective.

April 5. The rice export quota for the second quarter was set at 60,000 tons, valid for all noncommunist destinations.

April 8. The allocation of official exchange for transfers of premiums and indemnities under insurance and reinsurance contracts was discontinued, except for insurance and reinsurance of commodities transported between Viet-Nam and foreign countries and insurance and reinsurance of risks not covered by insurance companies established in Viet-Nam. All other transfers of premiums and indemnities had to be made through the controlled free market.

April 11. All EFAC funds, if not used within three months of their accrual, had to be surrendered at the official rate. Previously, there had been no time limit on the use of such funds.

April 16. Residents going abroad for tourist or business travel had to acquire the foreign exchange for their travel tickets and their expenses abroad in the controlled free market; but for tourist or business travel to Cambodia, Hong Kong, the Philippine Republic, Singapore, and Thailand, residents -could buy tickets with Viet-Namese currency from travel agencies with main offices in Viet-Nam.

April 18. “Transferable piastre” accounts were abolished.

April 29. It was announced that establishment of automobile assembly plants would be authorized, and that the allocation of exchange for assembled automobiles would be reduced in favor of allocation for parts. Foreign capital invested in automobile assembly plants would be granted most of the facilities referred to in the Presidential Declaration of March 5.

May 2. Restrictions on exports of beer to Cambodia and Laos were lifted.

May 20. Importers’ cash bond deposits were partially refunded.

May 24. A special release of importers’ cash bond deposits was granted to textile traders importing for joint account (groupements).

May 28. The travel exchange regulations of April 16 were declared applicable to “permanent residents” rather than “residents.”

June 12. A second partial release of importers’ cash bond deposits was announced.

June 12. Textile importers were freed from the regulations governing the internal distribution of textiles.

June 12. Entry-exit forms were introduced, on which foreigners traveling in Viet-Nam had to record all sales and purchases of foreign exchange.

June 15. Special measures were introduced to facilitate the payment of customs duties, including permission to pay these duties with four-month drafts and to offer real estate as collateral.

June 20. Importers of kerosene were freed from the regulations governing its internal distribution.

June 25. Coffee could no longer be imported with EFAC funds.

July 1. The allocation of official exchange for imports of passenger automobiles was resumed. Imports of sewing machine tables were prohibited. Imports of cement were freed from the regulations governing their internal distribution.

July 2. Importers of commodities subject to the “stabilization” tax could effect customs clearance upon payment of import duties only; the tax would be collected at some later date by the Department of National Economy.

July 17. A third partial refunding of importers’ cash bond deposits took place.

July 18. A new exchange rate guarantee contract (Contract C) for imports financed by U.S. aid was created, omitting the requirement that banks must deposit at the National Bank either 100 per cent (Contract A) or 25 per cent (Contract B) of the amount of the contract. Old Contracts B could be converted into Contracts C, upon which the National Bank returned the 25 per cent deposits. The interest rates on Contracts A and B remained at 2 and 5 per cent per year, respectively, while that on Contract C was set at 5 per cent.

July 23. Apart from the issue of bank checks or travelers checks to travelers, exchange allocations in the controlled free market could no longer be taken up in the form of checks.

August 1. New exchange allocations were set for installation allowances for students and civil servants studying abroad.

September 14. Applications for import licenses would be accepted at all times. Previously, applications had been accepted on a quarterly basis, and only within strictly limited periods of time.

September 30. The bilateral trade agreement with the Federal Republic of Germany expired.

October. Exports of fish were granted an export subsidy expressed in piastres per unit.

October 1. The export retention quota system (EFAC system) was discontinued. Exporters of commodities other than rice, tea, or goods exported in compensation transactions must surrender 65 per cent of their foreign exchange proceeds at the official rate and 35 per cent at the controlled free market rate. It was announced that the Directorate-General of Trade and the National Exchange Office would jointly issue lists of exports to be granted an additional subsidy in piastres. A new list of prohibited imports was issued, as well as a list of imports subject to special restrictions.

October 21. When purchasing exchange for imports not financed by U.S. aid, importers had to pay, in addition to the official rate, a “stabilization” tax; this tax was established at VN$0.095 per French franc, VN$87 per U.S. dollar, and VN$232 per pound sterling.

October 29. All remaining cash bond deposits were refunded to importers. The number of categories into which all import commodities are classified was reduced from 18 to 13 by regrouping. The trading activities of import firms remained restricted to a maximum of 3 categories.

October 31. The “stabilization” tax on exchange for imports not financed by U.S. aid was reduced to VN$0.08 per French franc, VN$75 per U.S. dollar, and VN$182 per pound sterling.

Yugoslavia1

Exchange Rate System

The par value is Yugoslav Dinars 300 = US$1. This rate is used for foreign debt service and for incoming and outgoing capital. Multiple currency practices apply to other transactions (see Table of Exchange Rates, below). Imports of some essential food items (wheat and fats) are paid for at the official rate without the application of a coefficient, but if the domestic price is higher than the foreign price, the importer is, in principle, required to pay an additional amount equivalent to the difference between the foreign and the domestic price.

“Settlement” rates, fixed for most currencies, form the basic rates for export proceeds and payments for imports, including the related invisibles. Various coefficients apply to these settlement rates, according to the commodity concerned. Imports for essential investment projects financed by the Yugoslav Investment Bank (i.e., the approved investment expenditures of economic organizations) are paid for at the settlement rates, without the application of coefficients but subject to a revaluation factor of 1.20. The National Bank sells exchange for imports of raw materials and spare parts needed by most industries and for imports of specified commodities and of consumer goods at “special meetings” held at the foreign exchange settlement places. The rates for this exchange involve broken cross rates for some of the currencies quoted. As at December 31, 1957, the rates for the U.S. dollar and sterling were Din 632 per US$1 and Din 1,752 per £1.

The National Bank also sells exchange for the needs of economic organizations in a free market (referred to as “regular meetings” of the foreign exchange settlement places) at fluctuating rates. Sales in this market are made only by the National Bank and represent only about 1 per cent of total sales of exchange. All economic organizations have a right to buy foreign exchange in this market but, since foreign exchange for investment needs and imports of raw materials and spare parts is allocated by the Yugoslav Investment Bank, the Yugoslav Foreign Trade Bank, or the National Bank at fixed rates more favorable than the free market rates, demand in the free market is usually limited to a few marginal payments. As at December 31, 1957, the rate for the U.S. dollar in this market was Din 6,908.50 per US$1.

Import and export coefficients (multipliers) are fixed for different import and export commodities and applied to the relevant settlement rates. In this way, differences between domestic and foreign prices for imports and exports are adjusted, using the coefficients effective on the day preceding the date of the conclusion of the transaction. As at December 31, 1957, there were 19 import coefficients, ranging from 0.6 to 3.0, and 16 export coefficients, ranging from 0.5 to 2.0. Where the coefficient is less than 1.0, the exporter pays to, and the importer receives from, the bank the difference between the amount receivable or payable at the settlement rate and the same amount multiplied by the coefficient. Where the coefficient is more than 1.0, the exporter receives from, and the importer pays to, the bank the difference between the amount receivable or payable at the settlement rate multiplied by the coefficient and the amount receivable or payable at the settlement rate. Where the coefficient is 1.0, no additional amounts are payable or receivable. Importers are bound within a period of 30 days after importing goods, and exporters within a period of 30 days after receipt of the exchange, to settle the price difference with the bank concerned.

The official rate plus 33⅓ per cent yields an effective rate of Din 400 per US$1 for receipts from tourism (and the retransfer of unspent amounts) and from diplomatic and other foreign missions, and the official rate plus 100 per cent yields an effective rate of Din 600 per US$1 for emigrants’ remittances, inheritances, exchange for private travel, and other noncommercial receipts and payments.

Administration of Control

The Federal Executive Council prescribes the general provisions governing foreign trade and exchange transactions. The Committee for Foreign Trade, by virtue of these general provisions, establishes rules and regulations and makes decisions governing exchange transactions of a commercial nature. The Federal Secretariat for Finance prescribes provisions governing exchange transactions of a noncommercial nature. The Committee for Foreign Trade determines the coefficients and the amounts of foreign exchange to be surrendered to the National Bank, regulates exports and imports of goods, and prescribes conditions governing exports and imports of specified categories of goods. The National Bank is the operative organ of the exchange control, and in addition prescribes the methods for payments to and receipts from foreign countries. In principle, all foreign exchange transactions have to be effected through the National Bank, the Yugoslav Foreign Trade Bank, or the Yugoslav Investment Bank. The National Bank sells exchange direct to government organs and institutions and private persons, as well as at the “special meetings” and “regular meetings” of the foreign exchange settlement places. Foreign exchange for imports of investment goods is sold by the Yugoslav Investment Bank, and foreign exchange for imports not covered by the investment program is sold by the National Bank or the Yugoslav Foreign Trade Bank.

Prescription of Currency

Payments are made according to the method or channel of payment provided for in the payments agreement with the country concerned. Yugoslavia has payments agreements requiring settlements through bilateral clearing accounts (1) in U.S. dollars with Albania, Argentina, Austria, Brazil, Bulgaria, Chile, Czechoslovakia, Finland, East Germany, Greece, Hungary, Israel, Norway, Paraguay, Poland, Rumania, Spain, Tunisia, Turkey, the U.S.S.R., and Uruguay; (2) in sterling with Burma and Mainland China; and (3) in their respective currencies with Belgium-Luxembourg, Egypt, France, the Netherlands, the Sudan, and Switzerland. A certain degree of multilateralization with other EPU currencies is provided in the agreements with Austria, Belgium-Luxembourg, France, Greece, the Netherlands, Norway, and Switzerland. Payments agreements on a multilateral basis with Denmark, the Federal Republic of Germany, Italy, and Sweden provide for payments in the transferable currencies of those countries. If no agreement exists, payment is usually made in U.S. or Canadian dollars, sterling, or Swiss francs.

Nonresident Accounts

The opening of nonresident accounts is subject to the approval of the National Bank. In granting such approval, the National Bank stipulates the conditions under which the accounts may be operated. In general, the dinar account of a nonresident individual may be used by the account holder only to cover expenses of his stay in Yugoslavia; the use of such balances for commercial operations is not permitted. Nonresident accounts may be opened also with foreign exchange imported into Yugoslavia, and these foreign exchange balances may be used within Yugoslavia for payments in dinars for commercial or private purposes; their transfer abroad is subject to individual license from the National Bank.

Imports and Import Payments

There is no actual import licensing, except for imports of motorcars, but importing is confined to economic organizations registered on the Foreign Trade Register as authorized to engage specifically in import business. The amount of their imports is determined by the amount of their annual exchange allocation as set forth in the economic planning. Institutions, social organizations, and economic organizations not on the Foreign Trade Register may effect individual imports if they are granted a license to that effect.

Payments for practically all imports are made with exchange acquired at the settlement rate from the National Bank, the Yugoslav Foreign Trade Bank, or, for imports for investment projects, the Yugoslav Investment Bank. Import coefficients are applied to most goods at the time of import; these coefficients are determined on the basis that their application to the relevant settlement rate of exchange equalizes the domestic price of the product with the foreign price (see section on Exchange Rate System, above).

Payments for Invisibles

Payments for invisibles related to merchandise transactions are treated in a manner similar to that accorded to payments for merchandise. Exchange for government debt service is allocated by the National Bank at the official rate and for other invisibles of government and social organs and institutions at the official rate plus 100 per cent. Exchange for travel, up to the equivalent of Din 6,000 per person, and for remittances for family maintenance is allocated by the National Bank at the official rate plus 100 per cent. Not more than Din 3,000 in Yugoslav banknotes, in notes of Din 100 or less, may be taken out by travelers.

Exports and Export Proceeds

Exports of a number of goods are prohibited; export quotas are established from some goods; all other goods may be exported freely. Ninety-nine per cent of export proceeds must be surrendered to the National Bank at the settlement rates. The remaining 1 per cent may be used by exporters for expenses abroad incidental to their own transactions, and for other payments of their own abroad if these payments would serve the advancement of their activities; if not used, this exchange may only be sold to the National Bank at the settlement rates. Export coefficients are applied to the exchange rates when calculating the local currency equivalents of most export proceeds (see section on Exchange Rate System, above).

Proceeds from Invisibles

Exchange proceeds from practically all invisibles must be surrendered to the National Bank at the effective rate of exchange applicable to the particular transaction. Receipts from tourism and from diplomatic and other foreign missions must be surrendered at the official rate but receive a premium of 33⅓ per cent; receipts from emigrants’ remittances, inheritances, maintenance, gifts, and other noncommercial items receive the official rate plus a 100 per cent premium. Proceeds from invisibles related to merchandise transactions are treated in a manner similar to that accorded to proceeds from merchandise transactions. Economic organizations may use foreign exchange earned from the execution of development work abroad for their own payments abroad. The Committee for Foreign Trade, in agreement with the Federal Secretariat for Finance, determines the portion of exchange proceeds earned by transport and other service enterprises that must be surrendered and the portion that may be retained for use by these organizations abroad; with few exceptions, the portion that may be retained amounts to 1 per cent. Not more than Din 3,000 in Yugoslav banknotes, in notes of Din 100 or less, may be brought in by travelers.

Capital

All transfers of a capital nature by residents or nonresidents are subject to individual license. Authorization is seldom granted for foreign participation in foreign enterprises in Yugoslavia. However, foreign loans to Yugoslav enterprises are allowed on a more liberal basis. Unless specifically permitted to retain foreign exchange, residents are obliged to repatriate and surrender foreign exchange held abroad. Capital transfers abroad by residents are usually not approved.

Table of Exchange Rates (as at December 31, 1957)(dinars per U.S. dollar)
BuyingSelling
300(Official Rate)

Receipts from invisibles not specified below. Incoming capital.
300(Official Rate)

Foreign debt service. Imports of wheat and fats.2 Outgoing capital.
400(Official Rate plus 33⅓% Premium)

Receipts from tourism and diplomatic and other foreign missions.
400(Official Rate plus 33⅓%)

Retransfer of unspent dinar amounts representing exchange cashed for nonresidents.
600(Official Rate plus 100% Premium)

Receipts from emigrants’ remittances, inheritances, maintenance, gifts, and other noncommercial items.
600(Official Rate plus 100%)

Exchange for travel; other private noncommercial payments; invisibles of government and social organs and institutions.
6323(Settlement Rate)

Exports and related invisibles.4
6323(Settlement Rate)

All commercial imports (other than wheat and fats) and related invisibles, and imports by government and social organs and institutions.5
758.40(Settlement Rate times Revaluation Factor of 1£0)
Imports for investment projects financed by the Investment Bank.
6,908.50(Free Market Rate)

Sales by National Bank for a few imports and invisibles.6

Changes during 1957

March 4. Austria agreed that 10 per cent of Yugoslav earnings in trade with Austria would be transferable among Western European countries.

March 21. The Netherlands agreed that 10 per cent of Yugoslav earnings in trade with the Netherlands would be transferable among Western European countries.

April 9. Greece agreed that 10 per cent of Yugoslav earnings in trade with Greece would be transferable among Western European countries.

April 17. France agreed that 10 per cent of Yugoslav earnings in trade with the French Franc Area would be transferable among Western European countries.

May 9. Belgium-Luxembourg agreed that 10 per cent of Yugoslav earnings in trade with the Belgian Monetary Area would be transferable among Western European countries.

May 20. Some of the settlement rates were revised, reducing the number of broken cross rates from 13 to 6. The disparities in the settlement rates for the Belgian franc and the Netherlands guilder were reduced to less than 1 per cent.

May 22. The number of export coefficients was reduced from 35 to 16; those higher than 2.0 were abolished. Inoperative import coefficients above 3.0 were formally eliminated and the minimum was increased from 0.5 to 0.6. The grouping of service enterprises that could benefit from the retention of their exchange earnings, and the percentages that they could retain, were revised.

May 23. Arrangements were made for the clearing account with Denmark to be terminated and Denmark established the transferability of Yugoslav earnings among Western European countries. The disparity in the settlement rate for the Danish krone was reduced to less than 1 per cent.

June 11. A bilateral trade agreement was concluded with Morocco, to be effective from July 1, 1957. Payments were to be made in accordance with the arrangements governing settlements with the French Franc Area.

June 13. The revaluation factor applicable to the settlement rates for imports for essential investment projects financed by the Yugoslav Investment Bank was changed from 1.00 to 1.20.

June 19. A bilateral trade and payments agreement was concluded with Tunisia, to be effective from July 1, 1957. Payments were to be made through a clearing account with the U.S. dollar as the accounting unit.

July 5. Arrangements were made for the clearing account with Sweden to be terminated and Sweden established the transferability of Yugoslav earnings among Western European countries. The disparity in the settlement rate for the Swedish krona was reduced to less than 1 per cent. (In Sweden, the payment measures became effective January 1, 1958.)

August 3. Arrangements were made for the clearing account with Italy to be terminated and Italy established (as from August 19) the transferability of Yugoslav earnings among Western European countries. The disparity in the settlement rate for the Italian lira was reduced to less than 1 per cent.

August 20. Norway agreed that 10 per cent of Yugoslav earnings in trade with Norway would be transferable among Western European countries.

August 30. Switzerland agreed that 10 per cent of Yugoslav earnings in trade with Switzerland would be transferable among Western European countries.

November 27. Austria increased from 10 per cent to 20 per cent the portion of Yugoslav earnings in trade with Austria which is transferable among Western European countries.

Note. The following changes took place early in 1958:

January 1. The National Bank began to sell foreign exchange direct to government organizations and institutions and to social organizations, at the official rate plus 100 per cent for their noncommercial payments abroad and at the settlement rates for their commercial payments.

January 10. The settlement rates were further revised (see May 20, above) : except for Eastern European countries, Egypt, Israel, and Turkey, the disparity between the various settlement rates was reduced to 1 per cent or less.

January 14. A bilateral trade and payments agreement with Spain came into effect. Settlements were to be made through a clearing account with the U.S. dollar as the accounting unit.

March 1. With few exceptions, the portion of foreign exchange which service enterprises could retain for their free disposal was reduced to 1 per cent.

These countries are Mainland China, Czechoslovakia, Federal Republic of Germany, Poland, and U.S.S.R.

In the period April 12, 1957–January 2, 1958, advance deposits were required only for imports through the free market, as follows: 100 per cent for truck chassis of six tons or more, 50 per cent for replacements of motor vehicles, and 20 per cent for other articles. Electric generators and other industrial machinery were exempt.

The surcharge on these two items was abolished on January 10 and February 12, 1958, respectively.

The Federal Republic of Germany actually entered the “Paris Club” on December 2, 1957.

This summary reflects a change that became effective February 3, 1958, when outward payments to the transferable area for transactions on List C could be made through the free market in any foreign currency, and not only in EPU currencies, as previously.

For settlements with Czechoslovakia, there is the possibility of payment in Czechoslovak korunas, and for settlements with Egypt, in EPU currencies or Egyptian pounds. In addition, the proceeds of exports to Bulgaria, Hungary, Poland, Rumania, Spain, and Yugoslavia may be received in EPU currencies or in Belgian or Luxembourg francs from a Transferable Account.

Payments from the transferable area may also be received through a Transferable Account, if the amount does not exceed BF 20,000.

Effective January 1, 1958, Bulgaria was moved to the transferable area.

Bilateral agreements requiring settlements through centralized accounts continue in effect with Argentina, Brazil, Chile, and Uruguay.

Effective February 27, 1958, this exception was removed.

Brazil has bilateral payments agreements with Denmark and Sweden requiring settlements to be made in the currency of the respective country; arrangements requiring settlements to be made in clearing dollars are in effect with Argentina, Bolivia, Chile, Czechoslovakia, Finland, Hungary, Israel, Japan, Norway, Poland, Portugal, Spain, Turkey, and Uruguay; and an agreement with Iceland requires settlements in clearing sterling.

Starting January 1, 1958, a surcharge of Cr$3.25 per US$1 or the equivalent in other currencies will be added each semester to the Cr$18.82 rate for payments for imports of newsprint by printers whose publications have a weight of no more than 80 grams, and a surcharge of Cr$8.125 per US$1 or the equivalent in other currencies will be added each semester to the Cr$18.82 rate for payments of imports of newsprint by other printers. There will be no additional surcharge after the effective rate has reached the level of the “cost of exchange,” i.e., the weighted average of the bonuses paid to exporters plus the official exchange rate.

See footnote 3.

An additional, variable bonus is also payable when the price of coffee exceeds US$42 per bag of 60 kilograms.

Burma has bilateral payments agreements with Czechoslovakia, East Germany, Hungary, U.S.S.R., and Yugoslavia.

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.

Ceylon has bilateral payments agreements with Bulgaria, Mainland China, Czechoslovakia, Egypt, Poland, and Rumania.

Bolivia, Canada, Colombia, Costa Rica, Cuba, Dominican Republic, Ecuador, El Salvador, Guatemala, Haiti, Honduras, Mexico, Nicaragua, Panama, Philippine Republic, United States and dependent territories, and Venezuela.

Albania, Austria, Bulgaria, Mainland China, Czechoslovakia, East Germany, Federal Republic of Germany, Hungary, Italy, Japan, Poland, Rumania, Spain, U.S.S.R., and Yugoslavia.

Belgium, Denmark, France, Greece, Iceland, Luxembourg, Netherlands, Norway, Portugal, Sweden, Switzerland, and Turkey.

Austria, Czechoslovakia, East Germany, Federal Republic of Germany, Italy, Japan, Poland, and Yugoslavia.

Effective February 12, 1958, this tax was raised to 2 per cent.

Chile has bilateral agreements with Argentina, Bolivia, Brazil, Ecuador, France, Italy, Spain, and Yugoslavia.

This table does not take account of the 1 per cent exchange tax (which was raised to 2 per cent on February 12, 1958).

Significant changes in the exchange system announced on April 12, 1958 are described in a note at the end of this survey.

The fixed value of an exchange certificate is NT$6.00 per US$1.

This rate was changed to NT$35 on March 1, 1958 and to NT$36 on April 1, 1958, and was abolished on April 12, 1958 (see note at the end of this survey).

A number of changes were made in the Colombian system on March 26, 1958; see note at the end of this survey.

In the period September 24, 1957 through March 25, 1958, the exporter had the alternative of surrendering US$86 and Col$14, the exchange tax payable remaining at US$15.

Import payments may also be made through the free market, in which case they are exempt from the 10 per cent remittance tax.

In the Danish regulations, the dollar area comprises Bolivia, Canada, Costa Rica, Cuba, Dominican Republic, Ecuador, El Salvador, Guatemala, Haiti, Honduras, Liberia, Mexico, Nicaragua, Panama, Philippine Republic, United States and possessions, and Venezuela.

Apart from payments agreements with Argentina, Finland, Paraguay, Uruguay, Yugoslavia, and EPU countries, Denmark has concluded bilateral payments agreements with Brazil, Bulgaria, Colombia, Czechoslovakia, East Germany, Hungary, Israel, Poland, Rumania, Spain, and U.S.S.R.

Argentina, Brazil, Finland, Israel, Rumania, Spain, U.S.S.R., and Yugoslavia.

These rates are approximate effective rates calculated on the basis of the surrender requirements. They vary with the price obtained for the commodity sold and the free market rate (see section on Exports and Export Proceeds, above).

Average rate for purchases in Guayaquil.

Average rate for sales in Quito and Guayaquil.

The exchange system of Egypt was changed significantly on February 10, 1958; see note at the end of this survey.

Countries with which Egypt has concluded payments agreements are Austria, Belgium-Luxembourg, Bulgaria, Ceylon, Mainland China, Czechoslovakia, France, East Germany, Federal Republic of Germany, Greece, Hungary, India, Indonesia, Italy, Japan, Lebanon, Libya, Netherlands, Poland, Portugal, Rumania, Saudi Arabia, Spain, Sudan, Switzerland, Syria, Tunisia, Turkey, U.S.S.R., and Yugoslavia.

From September 16, 1957, for one year, most exports are subject to a special levy designed to absorb part of the increased export revenue resulting from the September 1957 devaluation.

Finland has bilateral payments arrangements with Argentina, Brazil, Bulgaria, Mainland China, Colombia, Czechoslovakia, France, East Germany, Greece, Hungary, Iceland, India, Indonesia, Israel, Paraguay, Poland, Portugal, Rumania, Spain, Turkey, U.S.S.R., Uruguay, and Yugoslavia. However, the arrangements with Portugal were placed on a multilateral basis as from March 14, 1958.

These countries are Austria, Belgium-Luxembourg, Denmark, Federal Republic of Germany, Italy, Netherlands, Norway, Sweden, Switzerland, and United Kingdom.

And, as from March 14, 1958, Portugal.

These countries are Bulgaria, Czechoslovakia, France, East Germany, Greece, Hungary, Iceland, Poland, Rumania, Spain, Turkey, U.S.S.R., and Yugoslavia. (Morocco was added in March 1958.)

The currencies of Austria, Belgium, Denmark, Federal Republic of Germany, Italy, Netherlands, Norway, Sweden, Switzerland, and United Kingdom.

Francs in Nonresident Accounts related to Argentina may also be used for forward exchange transactions for periods not exceeding three months against the currencies of the countries listed in footnote 1 (however, the deutsche mark was not included until March 3, 1958).

Iran was included in this list as from January 7, 1958.

The currencies of Czechoslovakia, Egypt, Portugal, and Yugoslavia.

France has bilateral payments agreements with Bulgaria, Chile, Czechoslovakia, Ecuador, Egypt, Finland, East Germany, Hungary, Iran, Israel, Poland, Rumania, Saudi Arabia, Spain, U.S.S.R., Uruguay, and Yugoslavia.

The countries to which this applies are Bolivia, Canada, Colombia, Costa Rica, Cuba, Dominican Republic, El Salvador, Guatemala, Haiti, Honduras, Mexico, Nicaragua, Panama, Peru, Philippine Republic, United States and possessions, and Venezuela.

At present, this provision applies to balances on Nonresident Accounts related to the following countries or monetary areas: Austria, Belgian Monetary Area, Czechoslovakia, Denmark, Egypt, Federal Republic of Germany, Italy, Netherlands Monetary Area, Norway, Portuguese Monetary Area, Sterling Area, Sweden, Switzerland, and Yugoslavia.

Iran was added to this list as from January 7, 1958.

The 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 term “Germany” is used in this survey as an abbreviation for the Federal Republic of Germany.

Afghanistan was included in this area as from March 22, 1958.

On January 1, 1958, three new lists of liberalized imports were published; see note at the end of this survey.

Australia, Burma, Cambodia, Ceylon, Ghana, India, Indonesia, Iraq, Jordan, Laos, Libya, Morocco, New Zealand, Pakistan, Rhodesia and Nyasaland, Tunisia, Union of South Africa, and Viet-Nam.

Afghanistan, Andorra, Argentina, Bhutan, Brazil, China (Taiwan), Egypt, Ethiopia, Finland, French Somaliland, Iran, Israel, Japan, Republic of Korea, Lebanon, Muscat and Oman, Nepal, Paraguay, Saudi Arabia, Spain, Sudan, Syria, Thailand, Uruguay, Vatican City, Yemen, and Yugoslavia.

Effective January 16, 1958, all residents are permitted to maintain such accounts.

The currency circulating in Ghana is the West African pound, issued by the West African Currency Board. Ghana intends to start issuing its own currency, to be called the Ghana pound, on July 14, 1958. The Ghana pound will be at par with the pound sterling.

Non-dollar specified currencies are listed in the Ghana regulations as Austrian schillings, Belgian francs, Congolese francs, kroner of Denmark and the Faroe Islands, deutsche mark, francs of the French Monetary Area, French Somali Coast (Djibouti) francs, Indo-Chinese piastres, Italian lire, Luxembourg francs, Netherlands, Netherlands Antilles, and Surinam guilders, Norwegian kroner, Portuguese escudos, Swedish kronor, and Swiss francs.

Specified currencies are those listed in footnote 2, together with Canadian dollars, Panamanian dollars, Philippine pesos, and U.S. dollars.

Besides payments agreements with EPU countries, Greece maintains bilateral payments agreements with Bulgaria, Chile, Czechoslovakia, Egypt, Finland, East Germany, Hungary, Israel, Japan, Poland, Rumania, Spain, U.S.S.R., Uruguay, and Yugoslavia.

Export licensing in Hong Kong, as in some other areas, is not related to exchange control.

Originating in Mainland China, Hong Kong, Republic of Korea, Macao, or Taiwan, and received in U.S. dollars.

This table shows the effective exchange rates, allowing for the taxes payable directly on exchange licenses and foreign payments; it does not take account of the special fees payable on imports or the subsidies given later to producers of export commodities.

For a list of the specified currencies, see footnote 5 in the survey on the United Kingdom.

Since February 3, 1958, 100 per cent.

Since February 3, 1958, 10 per cent of the 100 per cent deposit.

Effective January 1, 1958, all exports, irrespective of the country of destination, must be financed by irrevocable bank credits, but exemptions may be given by the Foreign Exchange Institute.

Effective March 18, 1958, sterling banknotes of any denomination could be exchanged.

On the basis of a BE rate of Rp 2.55 per Rp 1 of nominal value and the basic rate of Rp 11.40 per US$1.

Payments arrangements with France and with Italy were placed on a transferable basis as from January 25, 1958 and February 10, 1958, respectively.

In view of certain changes that became effective on February 10, 1958 (see note at the end of this survey), this survey represents the situation as at that date.

Non-dollar specified currencies are listed in the Irish regulations as Austrian schillings, Belgian francs, Congolese francs, kroner of Denmark and the Faroe Islands, deutsche mark, francs of the French Monetary Area, French Somali Coast (Djibouti) francs, Indo-Chinese piastres, Italian lire, Luxembourg francs, Netherlands, Netherlands Antilles, and Surinam guilders, Norwegian kroner, Portuguese escudos, Swedish kronor, and Swiss francs.

Specified currencies are those listed in footnote 2, together with Canadian dollars, Panamanian dollars, Philippine pesos, and U.S. dollars.

The General Exemptions permit the purchase of all goods originating outside the dollar area and the following goods originating in the dollar area: (a) cereals, cereal products, animal feeding stuffs, animal oils, animal fats, vegetable oils, vegetable fats, oilseeds, oil nuts, seeds for sowing, raw cotton, yarns, leather, hides, skins, and timber; and (b) any other goods, subject to a limit of £250 in any period of three months.

On February 28, 1958, all restrictions on imports of banknotes were removed.

In view of certain changes that took place in the first few months of 1958 (see note at the end of this survey), this survey represents the position as at April 1, 1958.

Israel has bilateral payments agreements with Argentina, Brazil, Bulgaria, Denmark, Finland, France, Greece, Hungary, Iceland, Italy, Norway, Poland, Rumania, Turkey, and Yugoslavia.

However, discounts are applied to the exchange proceeds of exports to Turkey (30 per cent) and Yugoslavia (13 per cent).

Specifically, Belgian Congo, Ghana, Liberia, Nigeria, and Sierra Leone.

Exports of certain industrial products receive premiums ranging from I£0.600 to I£1.200 per US$1, according to the currency received and the destination of the goods. These premiums are, however, given only to the extent of the “net value added” (see section on Exports and Export Proceeds, above).

In view of certain changes made in the Italian exchange control system early in 1958 (see note at the end of this survey), this survey represents the situation as at March 1, 1958.

Bolivia, Canada, China (Taiwan), Colombia, Costa Rica, Cuba, Dominican Republic, El Salvador, French Somaliland, Guatemala, Haiti, Honduras, Republic of Korea, Lebanon, Liberia, Mexico, Nicaragua, Panama, Peru, Philippine Republic, Syria, United States and possessions, Uruguay, and Venezuela.

Italy has bilateral payments agreements with Albania, Bulgaria, Czechoslovakia, Ecuador, Israel, Paraguay, Poland, and Spain.

For the purpose of incoming payments, dollar countries are those listed in footnote 2, plus Chile and Japan but excluding Lebanon and Syria.

The members of the Arab League are Egypt, Iraq, Jordan, Lebanon, Libya, Saudi Arabia, Sudan, Syria, and Yemen. However, the currencies most used in the free market are those of Lebanon and Syria.

This selling rate does not include the fees payable on all import licenses (see section on Imports and Import Payments, above).

This rate represents the rate for the Lebanese pound in Amman converted on the basis of the free rate for the U.S. dollar in Beirut.

These countries are Czechoslovakia, Egypt, East Germany, Poland, Rumania, and U.S.S.R.

The Federation of Malaya became a member of the International Monetary Fund on March 7, 1958.

This survey describes the position as at December 31, 1957. However, important changes that took place early in 1958 are given in the note at the end of this survey. Morocco became a member of the International Monetary Fund on April 25, 1958.

The Transferable Guilder Area comprises EPU countries (except Turkey), Afghanistan, Argentina, Brazil, Chile, Ethiopia, Finland, Iran, Israel, Japan, Lebanon, Paraguay, Saudi Arabia, Sudan, Syria, Tangier, Thailand, Uruguay, and Yemen.

Payments agreements of these types are in force with EPU countries (except Turkey) and their associated territories, Argentina, Brazil, Bulgaria, Czechoslovakia, Egypt, Finland, East Germany, Hungary, Indonesia, Israel, Netherlands Antilles, Paraguay, Poland, Spain, Surinam, U.S.S.R., Uruguay, and Yugoslavia. A payments agreement with the U.S. dollar as the agreement currency is in force with Turkey.

Canada, Cuba, Dominican Republic, El Salvador, Guatemala, Haiti, Honduras, Mexico, Panama, United States, and Venezuela.

For this purpose, 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.

However, the regulations of Switzerland permit Swiss residents to receive capital from other EPU countries only through free exchange markets.

Besides payments agreements with EPU countries, Finland, and Argentina, Norway has bilateral payments agreements with Brazil, Bulgaria, Czechoslovakia, Hungary, Israel, Poland, Rumania, Spain, U.S.S.R., and Yugoslavia. There is a private compensation agreement with East Germany.

The dollar area countries are listed as Bolivia, Canada, Colombia, Costa Rica, Cuba, Dominican Republic, Ecuador, El Salvador, Guatemala, Haiti, Honduras, Liberia, Mexico, Nicaragua, Panama, Philippine Republic, United States and possessions, and Venezuela.

On January 1, 1958, the import free list was further extended by the addition of 72 items to the OEEC list and 130 items to the dollar list, raising the import liberalization percentages to 81.4 and 86.6, respectively.

Finland was also included as from January 1,1958.

These allocations were raised to NKr 2,000 and NKr 500, respectively, as from January 1, 1958.

Effective March 12, 1958, this limit was changed to NKr 350 in Norwegian coins and banknotes in denominations not exceeding NKr 100.

The currencies of Aden, Afghanistan, Belgian Congo, Burma, Ceylon, East Africa, French Africa, India, Portuguese territories in India, Madagascar, Malaya, Mauritius, Nepal, Persian Gulf Sheikdoms, South Africa, and Tibet.

Effective March 31, 1958, the advance deposits for Categories I, II, and III were increased to 10 per cent, 60 per cent, and 110 per cent, respectively.

A special, additional tax on exports of lumber, yerba maté, and coco oil was introduced as a temporary measure on March 31, 1958.

An aforo is an official value which serves as the basis for determining the amount of exchange that must be surrendered by an exporter.

The banks are required to quote a single rate for buying and selling certificates, but they may charge a commission on certificate sales.

Effective January 12, 1958, this ban was removed, except for exports of saw logs and other major export items.

The Sudan has concluded payments agreements with Czechoslovakia, Egypt, East Germany, Hungary, Poland, Saudi Arabia, and Yugoslavia.

In view of the changes that became effective on January 1, 1958 (see note at end of this survey), this survey represents the situation as at that date.

In Sweden, the dollar area countries are listed as Bolivia, Canada, Colombia, Costa Rica, Cuba, Dominican Republic, Ecuador, El Salvador, Guatemala, Haiti, Honduras, Liberia, Mexico, Nicaragua, Panama, Philippine Republic, United States and possessions, and Venezuela.

Brazil, Bulgaria, Czechoslovakia, East Germany, Greece, Hungary, Poland, Portugal, Rumania, Spain, Turkey, and U.S.S.R.

For travel to Denmark, Finland, Iceland, and Norway, only amounts exceeding SKr 5,000 need be documented.

Tunisia became a member of the International Monetary Fund on April 14, 1958.

Since January 11, 1958, the Minister of Public Works also serves on this Committee.

Brazil (a payments agreement between the central banks), Bulgaria, Czechoslovakia, Egypt, Finland, East Germany (an agreement between the Chambers of Commerce), Hungary, Iran, Israel, Japan, Poland, Rumania, Spain, U.S.S.R., and Yugoslavia.

For this purpose, shares of companies registered in the Federation of Rhodesia and Nyasaland, which are listed on the London Stock Exchange, are considered as “South African.”

As from March 3, 1958, these facilities were extended to include transactions in deutsche mark.

The Federation of Malaya became a sovereign state on August 31,1957.

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 Faroe Islands and Greenland), French Franc Area, Federal Republic of Germany (and British, French, and U.S. Sectors of Berlin), Netherlands Monetary Area, Norway, Portuguese Monetary Area, Sweden, and Switzerland (and Liechtenstein).

The specified currencies are listed as follows: Austrian schillings, Belgian francs, Belgian Congo francs, Canadian dollars, Danish and Faroese kroner, deutsche mark, francs of the French Franc Area, French Somali Coast (Djibouti) francs, Indo-Chinese piastres, Italian lire, Luxembourg francs, Netherlands, Netherlands Antilles, and Surinam guilders, Norwegian kroner, Panamanian dollars, Philippine pesos, Portuguese escudos, Swedish kronor, Swiss francs, and U.S. dollars.

In this section, “dollars” includes Canadian dollars, U.S. dollars, sterling from Canadian and American Accounts, and, in the case of receipts, sterling from Registered Accounts; “sold for sterling” includes settlement in sterling from a Transferable Account or in any specified currency (see footnote 5).

As from February 28, 1958, British banknotes may be imported freely into the United Kingdom.

Exceptionally, 2½ per cent Consols and 3½ per cent War Loan may also be acquired with sterling from a Blocked Account.

Prescribed securities are those which are payable, or carry the option of payment of principal or interest, in U.S. or Canadian dollars.

Brazil, Bulgaria, Czechoslovakia, East Germany, Greece, Hungary, Israel, Italy, Paraguay, Poland, Spain, Switzerland, U.S.S.R., and Yugoslavia.

Effective April 8, 1958, the number of export groups was reduced to six, by abolishing some intermediate groups.

This table does not take account of the exchange taxes of 1 per cent on export proceeds and 6 per cent on most payments abroad related to imports.

An aforo is an official value which serves as the basis for determining the amount of exchange that must be surrendered by an exporter or will be supplied to an importer.

A subsequent decree in February 1958 extended this regime to June 30, 1958.

Effective January 1, 1958, proceeds of rice exports are settled at the rate of VN$48.30 (65% at the official rate and 35% at the controlled free market rate).

For exports of tea, 100 French francs per kilogram must be sold at the official rate, the balance being sold at the controlled free market rate.

In view of certain changes made in the regulations in early 1958 (see note at the end of this survey), this survey presents the situation as at March 1, 1958.

No coefficient is applied to imports of wheat and fats, but if the domestic price is higher than the foreign price the importer is, in principle, required to pay an additional amount equivalent to the difference between the foreign and the domestic price.

This is the settlement rate for the U.S. dollar; settlement rates are also fixed for other currencies. The rates for a few clearing currencies represent broken cross rates.

Actual effective rates are created by the application of export coefficients.

Actual effective rates for these imports are created by the application of import coefficients.

Imports paid for with foreign exchange obtained in the free market are subject to payment of an amount calculated on the relevant coefficient applied to the settlement rates. The free market rate applies to approximately 1 per cent of total sales of foreign exchange.

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