Chapter

Country Surveys

Author(s):
International Monetary Fund. External Relations Dept.
Published Date:
September 1966
Share
  • ShareShare
Show Summary Details

Afghanistan

Exchange Rate System

The par value is Afghanis 45.00 = US$1. The Afghanistan Bank (Da Afghanistan Bank, the central bank) charges commissions ranging from 110 of 1 per cent to ½ of 1 per cent on exchange transactions. The official buying rate applies to the proceeds of exports of karakul, wool, and cotton, and to 30 per cent of foreign exchange receipts of the Government for the financing of the salaries in afghanis of foreign experts. Exchange taxes of 15.56 and 28.89 per cent are payable on the proceeds from exports of wool and cotton, respectively. Under certain conditions (see section on Exports and Export Proceeds, below), a rebate of Af 4 per US$1 is allowed on the exchange tax on the proceeds from exports of cotton. The official selling rate applies to foreign exchange payments by the Government. All other transactions take place at free market rates through either the banks or the bazaar. The Afghanistan Bank at present maintains its free market rate within Af 2 per US$1 either side of the free market rate quoted in the bazaar. On December 31, 1965, the free market rate of the Afghanistan Bank was Af 73.50 buying, Af 74.00 selling, per US$1, and the free market buying rate in the bazaar was Af 73.30 buying, Af 75.80 selling, per US$1.

Administration of Control

Foreign exchange is controlled by the Government through the Afghanistan Bank. The control is facilitated by the existence of relatively large companies specializing in the export of such commodities as karakul, cotton, wool, and carpets. However, these companies do not exercise a monopoly over such commodities.

Prescription of Currency

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

Imports and Import Payments

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

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

Payments for Invisibles

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

Exports and Export Proceeds

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

Exchange receipts from exports of karakul, wool, and cotton must be surrendered at the official rate; the export proceeds from wool and cotton are subject to taxes of 15.56 and 28.89 per cent, respectively. A rebate of Af 4 per U.S. dollar is allowed on the exchange tax on the proceeds from exports of cotton in excess of the requirement that at least 20 per cent of total exports of cotton should be made to countries from which payment will be received in convertible currencies. Surrender requirements are also maintained for the proceeds of some other exports to bilateral agreement countries. With this exception, the proceeds of all exports other than karakul, wool, and cotton, irrespective of the currency in which they accrue, may be sold at free market rates or be used by the exporter to pay for imports.

Proceeds from Invisibles

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

Capital

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

Changes during 1965

June 17. The exchange tax on proceeds from karakul exports was eliminated.

June 17. The Afghanistan Bank began a policy of keeping its free market rate within Af 2 per US$1 either side of the free market rate quoted in the bazaar.

June 17. The scope of the official market was reduced considerably; official exchange was no longer granted to the Monopoly or to other public or private enterprises, and only the Treasury remained entitled to such exchange.

June 22. The exchange tax on proceeds from wool exports was reduced from 24.44 per cent to 15.56 per cent.

July 2. Imports of certain nonessential consumer goods from Japan were only permitted if equivalent Afghan goods were exported to Japan.

Algeria

Exchange Rate System

No par value for the currency of Algeria has been established with the Fund. The official unit of currency is the Algerian Dinar, which is at par with the French franc, giving the relationship DA 4.93706 = US$1. The Central Bank of Algeria deals at par in French francs. Buying and selling rates for specified currencies of countries outside the French Franc Area1 are fixed by the Central Bank of Algeria on the basis of the rates quoted on the Paris exchange market for these currencies.

Administration of Control

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

Prescription of Currency

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

Nonresident Accounts

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

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

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

Final Departure Accounts may be opened, with prior authorization, in the name of any person residing in Algeria, but not of Algerian nationality, who intends to leave Algeria for another country in the French Franc Area. These accounts may be credited freely with an amount equivalent to the holdings at October 20, 1963 in the account of the person concerned; with proceeds from sales of real estate of the account holder, provided that the sales are made through the intermediary of a notary public; with proceeds accruing from the sale of stocks and other securities and from any income, amortization, and redemption in respect of securities, provided that the transactions are made through the intermediary of a bank; and with any other payments, up to DA 1,000. These accounts may be debited freely for all payments in Algeria on behalf of the account holder; balances of less than DA 5,000 may, subject to certain conditions, be transferred to other parts of the French Franc Area.

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

Imports and Import Payments

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

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

Liberalized imports not exceeding DA 10,000 in value require only the submission of an invoice to the customs. Most liberalized imports whose value exceeds this figure are admitted on the basis of a declaration completed by the importer, but some require an administrative visa, which is stamped on an import attestation. Imports exceeding DA 10,000 in value, and all imports for which payment has to be made before the goods reach Algeria, must be domiciled (registered) with an authorized bank, to which the necessary import documents must be presented and through which all payments related to the transaction must be made.

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

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

Payments for Invisibles

Residents may transfer freely, through postal channels, up to DA 100 a person a month for any purpose to any country. All other payments for invisibles to all countries require the approval of the Central Bank. However, when supporting documents are presented, approval may be granted by authorized banks, or sometimes by the post office, either freely or up to specified limits for certain payments such as (1) those relating to approved trade transactions and maritime contracts, (2) travel expenses, (3) transfers of salaries and wages, and (4) payments relating to government transactions with foreign companies. For other invisibles, the granting of exchange must be authorized by the Central Bank.

Residents of other French Franc Area countries working in Algeria under the program for technical cooperation may transfer abroad a certain percentage of their net salaries: 45 per cent for single persons or married persons having their families in Algeria; 65 per cent for persons having their families abroad; and 100 per cent for employees who spend their vacations abroad (the transfer being limited to the duration of their absence from Algeria). For other workers from French Franc Area countries who have contracts with employers and hold the necessary employment documents, the amounts that may be transferred are 25 per cent, 45 per cent, and 100 per cent, respectively, for the groups enumerated above. The payments must be transferred once a month on the basis of the remuneration for the previous month.

For residents traveling to other countries, including the French Franc Area, the foreign exchange allocation is equivalent to DA 1,000 a person a year (DA 500 for children under 15) and is issued on presentation of a valid passport and travel documents. Furthermore, residents traveling by air or sea to a country within the French Franc Area are entitled to an allocation, in the currency of the country of destination, equivalent to DA 500 a person a trip, on presentation of travel documents certified by the authorized intermediary; children under 15 are entitled to DA 250. If travel is by means other than air or sea, this allocation is only granted once every six months. Foreign exchange for business travel is subject to authorization by the Central Bank of Algeria. Funds in EFAC accounts (see section on Exports and Export Proceeds, below) may be used for business travel.

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

Exports and Export Proceeds

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

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

The proceeds of exports, including those to the French Franc Area, may be the object of a 90-day credit and must thereafter be collected within 30 days. Foreign exchange proceeds may be used to make authorized payments abroad within three months from the date of their receipt. Companies holding mineral rights must repatriate to Algeria 50 per cent of the proceeds from their exports of hydrocarbons. Certain percentages of the proceeds from most exports may be kept in special EFAC (Exportations-Frais Accessoires) accounts; these percentages are 2 or 5, and the maximum amount to be retained is DA 20,000 per export transaction. EFAC accounts are denominated in dinars and are held with the bank at which the export is registered. Certain payments may be made from these accounts without prior approval by the Central Bank. All other export proceeds must be surrendered.

Proceeds from Invisibles

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

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

Capital

Decree-Law 63-277 of July 26, 1963 establishes a code for foreign investments in Algeria made after July 1, 1962. Such investments can be undertaken to establish new, or to extend existing, enterprises, provided that such enterprises (1) are recognized by the authorities as having economic priority in accordance with programs prepared by the Government, (2) constitute a program of investment of at least DA 5 million, to be carried out in three years, and (3) give rise to the permanent employment of a specified minimum number of Algerian nationals. Such approved enterprises (entreprises agréées) benefit from certain advantages in respect of fiscal charges and other taxes. Moreover, subject to the fulfillment of certain other conditions (such as the effect that the investment would have on related economic activities and the volume of production intended for export), additional privileges relating to certain taxes are accorded to the approved enterprises. The transfer abroad of part of the profits from, as well as part of the proceeds from the liquidation of, such investments can be authorized by the Central Bank in accordance with the guarantees provided for in the decree. Additional benefits may be accorded to enterprises covered by a special agreement (entreprises conventionnées); these privileges include a guarantee of stability of fiscal charges for up to 15 years.

Changes during 1965

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

January 1. A professional association for textiles—groupement professionnel pour les textiles (GITEXTAL)—was established. It was given the monopoly over the importation of certain textiles and the responsibility of drawing up an annual import program for the textiles concerned and of allocating corresponding quotas to its members.

January 5. The import procedure to be followed by professional associations was established.

January 11. Balances up to DA 5,000 in Final Departure Accounts could be transferred to other parts of the French Franc Area.

January 14. Imports from all sources of animal and vegetable oils, oilseeds, and oleaginous fruits were reserved for the Office National de Commercialisation (ONACO).

January 29. Applications for licenses for specified imports had to be submitted to the competent ministries rather than, as previously, to the Ministry of Commerce or the Office Algerien d’Action Commerciale (OFALAC).

February 17. A bilateral payments agreement was concluded with Hungary; the agreement took effect on June 22.

February 17. The import of margarine from all sources was reserved for the professional association for milk products—groupement professionnel des produits laitiers (GAIRLAC).

March 15. A bilateral payments agreement was concluded with Rumania; the agreement came into effect on July 13.

May 4. A professional association for hides and skins—groupement professionnel des cuirs et peaux (GICP)—was established. It was given the monopoly over the importation of various types of hides, skins, and leather.

May 7. Transfers of up to DA 100 a person a month could no longer be made through authorized banks; such transfers had to be made by post.

May 14. With certain exceptions, means of payment expressed in foreign currencies could no longer be exported by mail.

June 1. The bilateral payments agreement with Mainland China, which was signed on September 24, 1964, came into effect.

June 22. The bilateral payments agreement with Albania, which was signed on April 4, 1964, came into effect.

June 25. The allocation for tourist travel was reduced to DA 1,000 a person a year (DA 500 for children under 15). The additional allocation of DA 500 a person for each journey to countries within the French Franc Area could only be taken up once every six months if travel was not by sea or air.

June 29. The export of certain petroleum products and of butane gas required an individual license.

July 24. Exports of additional commodities required an individual license and became subject to quantitative restriction by quotas. These included iron and steel scrap, various metals, construction materials of iron or steel, rolling stock, and locomotive parts.

August 3. The bilateral payments agreement with North Korea, which was signed on October 23, 1964, came into effect.

September 9. Certain categories of woven fabrics of synthetic fibers were deleted from the list of goods requiring an individual import license.

September 14. The regulations governing EFAC accounts were revised; these accounts had to be held in dinars with the exporter’s bank.

November 5. The conditions were announced on which agricultural products from the private sector could be exported.

November 12. Imports of certain textiles required the approval of GADIT.

Argentina

Exchange Rate System

On January 9, 1957, a par value for the Argentine Peso was established by Argentina with the Fund. However, exchange transactions no longer take place at rates based on that par value. All exchange transactions take place in an official exchange market (the “single exchange market”), in which the selling rate on December 30, 1965 was M$N 188.50 per US$1. The Central Bank of Argentina operates in the exchange market by buying and selling foreign exchange to maintain the U.S. dollar rate within certain limits. Forward exchange transactions may be concluded between individuals and authorized banks or among authorized banks at freely negotiated exchange rates. Forward exchange purchases by the public, however, are restricted to import payments made under a documentary credit, bank collection, or bank guarantee (aval), and require a 50 per cent deposit in local currency for a period of 180 days. Forward contracts concluded as part of a swap transaction and forward transactions among authorized banks are exempt from the 50 per cent deposit. The deposit may not be financed by local banks.

Administration of Control

Exchange transactions must be carried out through banks and institutions authorized expressly for this purpose. The authority to approve certain foreign payments has been delegated to the authorized institutions.

Prescription of Currency

Payments to Mexico must be made through accounts maintained with each other by the Central Bank of Argentina and the Bank of Mexico. Transactions with other countries must be settled in convertible currencies or externally convertible European currencies.

Nonresident Accounts

Authorized banks may open accounts in pesos in the name of nonresident correspondent banks. The accounts may be credited with the counterpart of convertible foreign exchange negotiated in the exchange market and with peso amounts that are transferable abroad. Balances in these accounts may be used to make payments in Argentina. They may also be reconverted into foreign exchange for payments abroad or for repatriation, up to the amount of foreign exchange previously sold by the account holder in the exchange market. Transfers between accounts may be effected freely.

Imports and Import Payments

Imports are generally free of import and exchange licensing; exchange to pay for them may be purchased in the official market. Some import payments, however, require the specific approval of the Central Bank. Goods imported by official agencies require approval by the Central Bank and the Ministry of Economy if payment is extended over a period of more than 180 days. Imports of a number of nonessential or luxury goods are temporarily prohibited; these include certain foodstuffs, beverages, and industrial consumer goods. All imports are subject to a tax of 4 per cent on the freight charges. Most imports are subject to a single import levy (recargo único), in lieu of the import duties and surcharges in force prior to December 1, 1965. Import taxes include the following: a consular fee of 1½ per cent payable in foreign currency on most import invoices; statistical taxes of 1½ per cent or 310 per cent applicable to all imports; taxes ranging from 4 per cent to 10 per cent on imports of paper products, certain types of timber and timber products, and forest products (the taxes on logs and sawmill products amount to M$N 2 and M$N 8, respectively, per square meter by one inch, for imports from LAFTA countries); and taxes ranging from M$N 200 to M$N 2,000 a ton on imports of iron and steel.

Imports covered by various industrial promotion measures do not pay the single import levy but continue to be subject to the import surcharges fixed in the relative decrees and amending legislation, and to a 5 per cent import tax calculated on the value on which the surcharges were levied. These are mainly imports for the automobile industry, for the engine industry, for the tractor industry, and for the textile machines industry. Prior to the introduction of the single import levy, imports were grouped in lists according to their essentiality and domestic production. Surcharges were established for these lists, independently of the customs duties payable in accordance with the Schedule of Valuations. Except for goods in List 1 (fuels, some metals, rubber, newsprint, etc.), surcharges on the c. & f. value of the invoice, on the index price established for the commodity concerned, or on its normal import value,1 were payable before initiation of customs clearance at rates ranging from 5 per cent to 235 per cent. Imports of automobiles were subject to special surcharges according to weight and value. Imports of parts used in the domestic manufacture of automobiles were subject to a fixed surcharge up to certain percentages of the c. & f. value of the automobile; these percentages were being decreased annually according to a previously approved production plan. Machinery and materials for vital industries (petroleum, coal, steel, power, railroads, etc.), machinery for the establishment of industries in developing areas, and capital goods related to foreign investment were exempt from payment of surcharges.

An advance import deposit of 50 per cent of the c. & f. value is required on many imports from all sources; goods imported from LAFTA countries are exempt if the goods are included in Argentina’s concession lists (including the special lists for Ecuador and Paraguay), and certain imports from Bolivia also are exempt. The deposit is payable in pesos and calculated at the current exchange rate in the official market. It must be lodged with the Central Bank before any of the following actions can be undertaken: opening a letter of credit; withdrawing shipping documents from the intermediary bank; purchasing forward exchange; making advance payments for imports; or clearing goods through customs. The deposit is refunded after 180 days, provided that the goods have been cleared through customs.

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

To prevent unauthorized capital movements, all import payments require documentary evidence of the bona fide nature of the transaction. Some import payments require the specific approval of the Central Bank; these include payments by automobile manufacturers for imports of raw materials and equipment, and payments for most imports of capital goods. Payments for specified capital goods valued at over US$5,000, with the exception mainly of those imported from LAFTA countries, must be made in installments over a period ranging from at least two years to at least nine years after the date of shipment, depending on the total value of the goods. Foreign exchange for import payments may be purchased in the “single” exchange market, subject in a few cases noted above to prior approval of the Central Bank.

Payments for Invisibles

The banks and institutions authorized to deal in foreign exchange are permitted to sell exchange for many categories of invisibles up to established limits, subject in appropriate cases to the submission of documentary evidence or sworn declarations of the bona fide nature of the transaction. Transfers in excess of the established limits require the authorization of the Central Bank. Exchange is granted up to US$25 a person a trip (US$400 during the summer season for adults or US$200 for persons under 18) for travel to Uruguay; up to US$100 a person a month for travel to Bolivia, Brazil, Chile, Paraguay, and Peru; and up to US$400 a person a trip (US$200 for a person under 18) for travel to other countries. Exchange for medical treatment abroad is granted up to US$1,000 a person, as often as considered necessary by the Ministry of Social Assistance and Public Health. Remittances for students abroad are allowed up to US$300 for each student a month; in addition, up to US$200 may be transferred as a one-time installation allowance and up to US$50 every month for a student’s wife and each of his children. Family remittances are allowed up to M$N 10,000 a quarter for each beneficiary subject to certain conditions. Payments for purchases of books and medicines and for subscriptions to newspapers and magazines by private individuals are permitted up to M$N 5,000 a person a quarter. Remittances for purchases of books and subscriptions to newspapers and magazines by Chambers of Commerce-and Industry and cultural organizations, other than public libraries, are limited to M$N 20,000 a purchaser a quarter; books and magazines of a scientific or technical nature are exempt from this limitation. Remittances of trade commissions are limited to 6 per cent of the c. & f. value of imports and 6 per cent of the f.o.b. value of exports. Transfers of profits, payments for current invisibles not listed above, and payments in excess of the limits listed above require the prior authorization of the Central Bank; examination of the applications has been delegated to the authorized banks.

Certain overdue remittances (mainly in respect of profits, dividends, interest, and royalties) are being effected in foreign exchange. Creditors who do not request cash remittances may instead acquire corresponding amounts of 5 per cent External Bonds denominated and payable in U.S. dollars. Interest and amortization on such bonds are transferable.

The export of gold coins or bullion and of domestic and foreign banknotes requires the prior approval of the Central Bank; travelers, however, may take out freely in the form of foreign banknotes 10 per cent of their travel allowance.

Exports and Export Proceeds

Exports are free of direct controls but, in general, exporters are required to repatriate and sell in the “single” exchange market the foreign exchange proceeds of their exports within 10 working days after shipment. Foreign exchange proceeds from exports of chilled meat to the United Kingdom in excess of their provisionally declared value, and proceeds from exports of newspapers, magazines, pamphlets, printed music, and books printed and published in Argentina must be surrendered within 10 days after collection. Proceeds from exports of petroleum products must be surrendered within 180 days after loading. Proceeds from nontraditional exports for which payment is received within 180 days after loading, and which are covered by an irrevocable documentary credit or by drafts of similar duration, must be surrendered within 10 working days after the due date. The proceeds of exports to Chile for which payment is made within 120 days from either the date of the bill of lading in the case of sea transport, or the date of arrival at a Chilean Government warehouse in other instances, must be surrendered within 10 working days after the due date. Exporters of malted barley and brewers’ malt must surrender the export proceeds within 45 days after shipment.

Some products are subject to retention taxes calculated on the basis of the f.o.b. sales value or on the index values fixed by the Advisory Commission on Export Values, on which the National Grain Board, the National Meat Board, the Departments of Agriculture, Commerce, and Finance, and the Central Bank are represented. The retention tax is 6 per cent on exports of beef, offal, and tongue (except canned tongue); 6.5 per cent for corn; 20 per cent for linseed and linseed oil, horses, unprocessed hides, certain meat by-products, and some forestry products; 12 per cent for live cattle not for breeding; and 10 per cent for exports of certain agricultural and livestock products, including raw goat hides and sheepskins, certain oilseeds, and vegetable oils. The tax must be paid before shipment of the merchandise or within the following 30 days when there is a bank guarantee of payment. All exports are subject to a 2 per cent tax on the freight charges.

Other taxes on exports are levied as follows: a 10 per cent sales tax on exports of linseed oil, oilseeds, logs, coal, certain wood extracts, sheepskins, and wool;2 a 1.5 per cent tax, the proceeds of which are destined for the National Agriculture and Livestock Fund, on exports of agricultural and livestock products; a 1 per cent tax, the proceeds of which are destined for the financing of road construction in connection with agricultural development, on exports subject to retention taxes; a 1.5 per cent tax, the proceeds of which are destined for the National Grain Board, on certain agricultural products; a 1.5 per cent tax, the proceeds of which are destined for the Secretariat of Public Works, on the export of certain other agricultural products; a 0.3 per cent statistical tax on exports subject to retention taxes; and a 5 per cent tax, the proceeds of which are destined for the Forestry Fund, on exports of tanning extracts (these are exempt, however, from all other charges and taxes).

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

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

Proceeds from Invisibles

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

Capital

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

Remittances to repay foreign loans or to transfer the liquidation proceeds of foreign investments in Argentina are authorized without restriction, provided that no transfer of domestic capital is involved.

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

Changes during 1965

January 8. Authorized institutions were allowed to make direct transfers abroad in payment of obligations resulting from credits granted by the IBRD, the IFC, the IDA, the IDB, the U.S. Export-Import Bank, and the U.S. Agency for International Development.

January 11. Advance import deposit requirements valid until April 30, 1965 were introduced. Advance deposits in local currency equivalent to 100 per cent of the c. & f. value of imports were required prior to the making of import payments or the opening of letters of credit; they would remain frozen for at least 180 days. Exempt were imports by official organizations, imports of commodities on Argentina’s LAFTA concession lists, goods that had been shipped by January 8, imports for which letters of credit had been opened by January 8, and imports of goods on a special list.

January 5. Domestic indirect taxes paid by exporters of nontraditional exports included in the annex to Decree 46/65 and its amendments were henceforth refunded. Refunds would amount to 6, 12, or 18 per cent of the f.o.b. value.

January 21. The exchange allowance for tourist travel to countries not adjacent to Argentina was reduced to US$400 a person a trip (US$200 for a person under 18), of which 10 per cent could be obtained in foreign banknotes. Commercial travelers and officials could obtain additional amounts.

January 21. The exchange allocation of the equivalent of M$N 10,000 for each beneficiary a quarter for family assistance was made subject to the fulfillment of certain conditions.

January 21. Imports of jute burlap were exempted from the advance import deposit requirement.

January 28. Until March 15, the exchange allocation for travel to Chile was raised to US$300 a person a trip (US$150 for a person under 18).

February 4. The Central Bank revised and consolidated the regulations pertaining to the operations of foreign exchange brokers.

February 4. The 10 per cent sales tax on the export proceeds from wool and sheepskins was suspended until May 1, 1965. The suspension was subsequently extended several times.

February 5. The Central Bank undertook an inquiry in respect of obligations as of December 31, 1964 incurred abroad by the private sector.

February 8. The regulations concerning advance import deposits were clarified. The deposits had to be made before any of the following actions could take place (1) opening a letter of credit; (2) withdrawing shipping documents from the intermediary bank; (3) purchasing forward exchange; (4) making advance payments for imports; or (5) clearing goods through customs. To the existing exemptions from the advance deposit requirements were added the following: imports by the Mixed Iron and Steel Company (SOMISA) and the Greater Buenos Aires Electrical Service Company (SEGBA) and imports from Bolivia made in accordance with special regulations.

February 10. The period in which applications for the adjustment of the f.o.b. value of exports could be received was extended to 360 days.

February 16. Decree 1188 announced special regulations for imports of parts for the automobile industry from LAFTA countries; these imports became subject to surcharges of 20 per cent or 40 per cent. Imports of parts were required to be followed by equivalent exports.

February 18. Banks were authorized to countersign shipping permits for fresh fruit exported to LAFTA countries, provided that the exporter undertook to surrender the exchange proceeds within 90 days of shipment.

March 5. A list was issued specifying the commodities that could only be imported in accordance with the deferred payments regulations for capital goods.

March 12. It was announced that, as from March 16, the bilateral payments agreement with Uruguay would cease to function; all transactions which as of March 16, 1965 were covered by documentary credits or payments orders expressed in Uruguayan agreement dollars would have to be liquidated in Uruguayan agreement dollars by March 17, 1966.

March 12. Further exemptions from the advance import deposit requirements were announced; newly exempted goods included pesticides, fertilizers and raw materials for their manufacture, and drugs and medicines.

March 16. The bilateral payments agreement with Uruguay expired.

March 19. The exchange allowance for travel to Uruguay was reduced to US$25 a person a trip.

April 7. Tin plate imports were exempted from the advance deposit requirements.

April 12. Procedures were announced for the validation of tax refund certificates for nontraditional exports.

April 19. The advance import deposit requirement was reduced from 100 per cent to 75 per cent and was extended for an indefinite period. Advance payments for imports were prohibited.

April 20. The spot exchange rate was depreciated to M$N 171 buying, and M$N 173 selling, per US$1.

April 20. Certain new retention taxes on exports were introduced, as follows: 20 per cent on linseed and linseed oil; 13 per cent on wheat shipped prior to June 15; 9.5 per cent on meat, offal, and tongue (except canned tongue); 6.5 per cent on corn; and 3.5 per cent on birdseed, oats, barley, and rye.

April 27. Certain types of agricultural machinery were included in the list of capital goods (see March 5, above).

April 29. The approval of the Tractor Industry Council was no longer required for the import of tractors.

May 10. The list of capital goods was further amended.

May 11. Commercial travelers and certain other persons previously accorded special travel allocations were only entitled to a tourist travel allowance.

May 28. A special exchange allowance of US$300 a person (US$150 for a person under 18) for tourist travel to Rio de Janeiro during the period June 1 to June 10 was announced.

May 31. Certain raw materials and finished products for the care of livestock were exempted from advance import deposits.

June 8. By virtue of a LAFTA “complementarity agreement,” imports of specified statistical machinery and electronic valves from LAFTA countries were exempted from advance import deposits.

June 9. Subject to certain conditions, imports of specified raw materials for industrial use were exempted from advance import deposits.

June 14. The Central Bank announced certain changes in the regulations pertaining to the operations of authorized institutions. The examination of applications for those payments for invisibles that required approval by the Central Bank was delegated to the commercial banks. The new regulations took effect on June 21.

July 13. The surcharge on imports of automobiles was substantially increased.

July 19. New regulations were issued for the transfer of funds for scholarship students.

July 20. Certain imports of machinery and equipment by registered enterprises in the iron and steel industry were exempted from advance import deposits.

July 23. All new contracts for imports of capital goods were required to be registered with the Central Bank.

July 28. Imports by the shipbuilding industry of goods not classified as capital goods were exempted from advance import deposits.

August 2. Imports by electrical cooperatives and by the Italo-Argentine Electrical Company were exempted from advance import deposits.

August 2. Certain imports for phytopathological purposes were exempted from advance import deposits.

August 3. New regulations were issued for transfers by travel agencies for tourism to countries not contiguous to Argentina.

August 5. Airplane engines and parts for private civil aviation were deleted from the list of capital goods (see March 5, above) and were exempted from advance import deposits.

August 6. Certain procedures relating to advance import deposits were revised.

August 6. Certain rules and procedures for the endorsement of shipping documents by authorized institutions were revised.

August 13. Imports of certain raw materials and parts by industrial firms that were engaged on manufacturing plans approved by the Government were exempted from advance import deposits.

August 16. Exchange was not granted for imports of books unless a customs certificate indicating their value was submitted.

August 16. Road construction machinery and parts therefor were exempted from advance import deposits.

August 23. The Central Bank issued a consolidation of the principal rules governing exchange transactions of authorized institutions. Specifically reconfirmed were the following rules: operations between authorized institutions should normally take place without the intervention of brokers; brokers could only intervene in operations between authorized institutions when transactions were solely for the purpose of meeting the customers’ requirements; transactions in forward exchange between authorized institutions could only be undertaken to cover the requirements of customers. A schedule of charges was established for transactions carried out through the intermediary of brokers.

September 13. The spot exchange rate was depreciated to M$N 178 buying, and M$N 180 selling, per US$1.

September 16. Certain overdue remittances (mainly in respect of profits, dividends, interest, and royalties) could be effected by purchasing 5 per cent External Bonds denominated and payable in U.S. dollars. Interest and amortization on such bonds would be paid in free U.S. dollars.

September 21. It was announced that, as from October 1, payments abroad could be made for capital goods shipped before November 15, 1963 or between May 5, 1964 and June 30, 1964. This would also apply to imports made under special regulations and shipped before October 5, 1964.

September 22. A multilateral clearing agreement was signed by the central banks of Argentina, Brazil, Chile, Colombia, Ecuador, Mexico, Paraguay, Peru, and Uruguay.

September 22. A reciprocal credit agreement was signed between the Bank of Mexico and the Central Bank of Argentina.

October 14. Decree No. 8998 extended the validity of the temporary 5 per cent import tax of November 1, 1962 and the validity of the temporary surcharge of 15 per cent on goods in Lists 3 through 8 until the entry into force of the new customs tariff.

October 20. Procedural details were announced for payments in respect of freight.

October 22. The surrender period for the exchange proceeds from exports of meat, sausages, and meat products was reduced from 90 days to 10 days after shipment.

October 28. Contracts with nonresidents for the performance of cultural, artistic, or sporting activities, and involving payments in foreign exchange, required prior authorization.

October 29. The exchange proceeds of certain nontraditional exports made between April 20 and September 10, 1965 could be sold at the exchange rate in effect at the time of sale. This did not apply, however, to any part of the export value financed by the Central Bank, or to exports which, on September 11, 1965, were covered by forward sales contracted before that date.

November 19. The surrender requirements for the exchange proceeds from exports of canned meat and meat specialties were amended.

November 30. The surrender period for the exchange proceeds from exports of petroleum products was fixed at 180 days from the date of shipment.

December 1. Decree No. 10682/65 of the Ministry of Economy revised the prohibited import list.

December 1. The suspension of the sales tax on the proceeds from exports of wool and sheepskins was extended until May 31, 1966.

December 1. A new customs tariff under the Brussels nomenclature came into effect. All import duties and import surcharges were consolidated into a single levy (recargo único) for each commodity. The levy would be applied either on the c.i.f. value or, where appropriate, on an index value (aforo), and it ranged from nil to 235 per cent ad valorem. Goods imported from LAFTA countries and covered by Argentina’s LAFTA commitments continued to be liable for the duties established in the relevant concession lists.

December 1. Decrees Nos. 10683/65 and 10684/65 of the Ministry of Economy provided for the tariff treatment for goods previously exempt from import duties and/or import surcharges, as follows: (1) Goods exempt from both import duty and import surcharge were exempt from the new import duty. (2) Goods exempt from import duty but subject to import surcharges would pay 90 per cent of the new import duty. (3) Goods exempt from import surcharge but subject to import duty would pay 10 per cent of the new import duty.

December 1. It was announced that imports covered by various industrial promotion measures would continue to be subject to the import surcharges fixed in the relative decrees and amending legislation, as well as a 5 per cent import tax calculated on the value on which the surcharges were levied.

The legislation referred to was the following: for the automobile industry, Decree No. 7711/64 and Decree No. 3642/65; for the engine industry, Decree No. 4808/65; for the production of parts for automobiles and engines, Decrees Nos. 10170/62, 9089/64, 1565/61, 8829/63, 2958/61, 3986/65, and 2357/64; for the tractor industry, Decree No. 8980/63; and for the textile machines industry, Article 3 of Decree No. 3870/61.

December 6. The spot exchange rate was depreciated to M$N 188 buying, and M$N 190 selling, per US$1.

December 6. The advance import deposit requirement was reduced from 75 per cent to 50 per cent.

December 6. Proceeds from exports shipped during the period September 11-December 4, 1965 had to be sold at the exchange rate in effect on December 3. Proceeds from exports of manufactured products could be sold at the rate of exchange in effect at the time of shipment, except for any part financed by the Central Bank. Proceeds from exports for which all formalities had been fulfilled before April 19, 1965 could be liquidated at the rate of M$N 151 per US$1, and those from exports for which all formalities had been fulfilled between April 20 and September 10, 1965 at M$N 171 per US$1.

December 7. The exchange proceeds from certain further nontraditional exports (see October 29, above) could be sold at the exchange rate in effect at the time of sale.

December 14. The export retention taxes on birdseed, oats, barley, rye, Guinea corn, millet, and sorghum were abolished. The retention tax on beef, offal, and tongue (other than canned) was reduced to 6 per cent.

December 15. Travelers to Uruguay could during the summer season obtain an exchange allocation equivalent to US$400 a person a trip.

December 29. Residents were required to declare to the Central Bank their foreign commitments on December 31, 1965.

December 29. Further procedural details were announced for the making of payments for imports.

Australia1

Exchange Rate System

The par value is Australian Dollar 1 = US$1.12. Official rates are fixed for spot transactions in sterling: $A 2.5000 buying, and $A 2.5100 selling, per £ stg. 1. The rates for spot transactions in other currencies quoted by the authorized banks are based on the closing buying and selling rates of the previous day in London and New York. The rate for the U.S. dollar on February 14, 1966 was US$1.1218 buying, and US$1.1151 selling, per $A 1.

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

Administration of Control

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

Prescription of Currency

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

Nonresident Accounts

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

Imports and Import Payments

Imports from all sources of certain drugs, and imports from Rhodesia of tobacco, ferroalloys, chrome ore, and asbestos, are prohibited. Import licenses are required for unwrought aluminum and aluminum alloy, waste and scrap of aluminum and aluminum alloy, used earth-moving, excavating, or materials-handling equipment and parts, and polyethylene twine, rope, cordage, and cable. All other goods may be imported freely without import licenses. No restrictions are imposed on payments for imports, provided that the prescription of currency requirements are observed.

Payments for Invisibles

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

Exports and Export Proceeds

Exports to all destinations of copper and copper alloy scrap, and copper and copper alloy ingots, are prohibited, and exports of primary copper, refinery shapes, and copper rod are controlled. Exports to Rhodesia of arms and other military equipment are prohibited. With minor exceptions, exports require licenses issued by the Department of Customs and Excise, to ensure that the full proceeds are received in a currency and within a period approved by the Reserve Bank. To assist supervision, there is a further condition that all shipping documents, bills of lading, etc., must be drawn to the order of and delivered to the Reserve Bank or a trading bank acting as its agent.

Proceeds from Invisibles

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

Capital

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

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

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

Changes during 1965

March 3. Licensing control was imposed on imports of certain types of copper and brass sheet, strip, and foil.

March 29. Imports of certain drugs were prohibited on the grounds of danger to public health.

August 31. A Free Trade Area Agreement with New Zealand, to become effective on January 1, 1966, was signed and related exchanges of letters with New Zealand took place.

September 1. Import controls on copper and brass sheet, strip, and foil (see March 3, above) were removed.

November 16. Imports of tobacco from Rhodesia were prohibited. Tariff preferences on imports of Rhodesian origin were suspended. Exports of arms and other military equipment to Rhodesia were prohibited. Action was taken to prevent Rhodesian residents from evading U.K. exchange control measures, including the exclusion of Rhodesia from the Sterling Area for purposes of the banking (foreign exchange) regulations.

December 8. Imports of ferroalloys, chrome ore, and asbestos from Rhodesia were prohibited.

December 8. The money order service between Australia and Rhodesia was suspended.

December 20. Exports of copper and copper alloy scrap, and copper and copper alloy ingots, were prohibited, and control was imposed on exports of primary copper, refinery shapes, and copper rod.

Note.—The following changes took place early in 1966:

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

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

Austria1

Exchange Rate System

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

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

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

Austria accepted the obligations of Article VIII, Sections 2, 3, and 4, of the Fund Agreement, as from August 1, 1962.

Administration of Control

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

The customs issue freely and without delay licenses required for imports of liberalized goods. Licenses, if required, for other imports and for exports have to be obtained from the competent ministry, viz., the Federal Ministry of Trade and Reconstruction (Licensing Office) or the Federal Ministry of Agriculture and Forestry.

Prescription of Currency

Settlements with the countries with which Austria maintains bilateral payments arrangements2 are made through clearing accounts expressed in U.S. dollars. Settlements with all other countries may be made either in convertible currencies or through Free Schilling Accounts.

Nonresident Accounts

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

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

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

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

Imports and Import Payments

All commodities not included in the Annex to the Foreign Trade Law are free of import licensing and may be imported from any country without quantitative restriction. All goods included in the Annex require licenses. Most of these goods are free of quantitative restriction. The liberalization depends on the group of countries from which they are imported; for such liberalized goods, licenses are issued by the customs at the time of clearance.3 Nearly all imports from European OECD countries, their associated territories, and many other countries4 are liberalized. Imports from Canada and the United States and its territories are liberalized to the same degree as those from the European OECD countries, except that slaughtered poultry is subject to quantitative restriction when imported from Canada or the United States. Imports from three other countries5 are treated in practically the same way as imports from European OECD countries.

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

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

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

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

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

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

Payments for Invisibles

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

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

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

Exports and Export Proceeds

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

Export claims must be declared. Export proceeds may either be surrendered or be deposited in accounts with authorized banks. Such deposits in convertible currencies may be used freely for authorized payments. Deposits in bilateral clearing currencies may be used in accordance with the terms of an individual payments license.

Proceeds from Invisibles

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

Capital

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

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

The Austrian National Bank permits the transfer abroad of (1) proceeds from the liquidation of various foreign investments in Austria (shares or participation in Austrian enterprises, Austrian securities, real estate in Austria) and (2) repayments by residents of foreign loans and credits.

The transfer of funds owned by emigrants, and payments due to nonresidents on account of dowries, inheritances, and settlements under certain agreements between heirs, are permitted.

Residents are allowed to acquire participation rights in foreign companies, associations, and other enterprises, and to establish, acquire, or extend foreign agencies or individually owned firms; earnings accruing from such investment may be reinvested. Residents also are permitted to acquire real estate abroad, to grant commercial or investment credits, and to grant credits secured by mortgages in Austria or abroad. Domestic insurance companies may conclude with nonresidents life insurance contracts in Austria.

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

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

Changes during 1965

May 1. A number of imports from Japan were liberalized, and restrictions on further imports from Japan were relaxed.

June 19. The general permission to transfer abroad the proceeds from the sale of Austrian securities by foreigners to residents was extended to cover the proceeds from the sale of claims on Austrian securities that are kept on general deposit.

July 1. Some imports from Yugoslavia were liberalized, and restrictions on some other imports from Yugoslavia were relaxed.

July 1. Existing global import quotas were increased further.

Note.—The following change took place in 1966:

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

Belgium-Luxembourg

Exchange Rate System

The par values are Belgian Francs 50.00 = US$1 and Luxembourg Francs 50.00 = US$1. There are two exchange markets—the official and the free.

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

In the free exchange market, all currencies (including banknotes) may be bought and sold at freely fluctuating rates. Convertible currencies acquired through the free market may be sold in the official market, but no other direct connection between the two markets exists. On December 31, 1965, the free market rates for the U.S. dollar were approximately BF 49.95 buying, BF 49.96½ selling, per US$1.

Depending on the category of payments and receipts, either one or both of the exchange markets may be used for settlements with so-called convertible area countries, which include all countries except those in the bilateral group.2 If receipts from bilateral group countries are obtained in convertible currencies, they are to be ceded on the official market.

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

Belgium and Luxembourg accepted the obligations of Article VIII, Sections 2, 3, and 4, of the Fund Agreement, as from February 15, 1961.

Exchange Control Territory

There is no exchange control between Belgium and Luxembourg (the Belgian-Luxembourg Economic Union); the two countries constitute a single exchange control territory in relation to other countries.

Administration of Control

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

Prescription of Currency

The prescription of currency requirements operate mainly to ensure that settlements with foreign countries are made, according to their nature, through the appropriate exchange market or, where payments in Belgian or Luxembourg francs are involved, through the appropriate category of nonresident account.

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

Foreign countries are divided into two groups: the bilateral countries (see footnote 2) and the convertible area (all other countries).

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

In addition to the general methods of settlement described above, individual licenses are granted in order to allow transfers through the official market for some of the transactions mentioned in List D. These cover essentially direct investment by enterprises and some capital transfers by individuals.

Summary of Permissible Methods of Settlement for Foreign Payments
Transaction ListCountry GroupForeign CurrencyExchange MarketNonresident Account in Francs
Outward Payments
A, B, and CConvertibleAnyOfficial or freeAny
DConvertibleAnyFreeFinancial
A, B, C, and DBilateralBilateral3
Inward Payments
A and BConvertibleConvertibleOfficialConvertible
C and DConvertibleConvertibleOfficial or freeConvertible or Financial
OtherFree
A, B, C, and DBilateralConvertibleOfficialConvertible or Bilateral3

Nonresident Accounts

Belgian or Luxembourg franc accounts of nonresidents are classified as follows:

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

2. Financial Accounts. These accounts may be opened only for residents in convertible area countries,4 and they are not related to any country or monetary area. They may be used for settlements which either must or may be made through the free market, and may be credited with proceeds from the sale by a nonresident of gold or any currency in the free market and of convertible currencies in the official market. Domestic banknotes and proceeds from the sale in the free market of foreign banknotes deposited with authorized banks by foreign travelers in Belgium-Luxembourg or by persons residing abroad may be credited freely to Financial Accounts. Transfers between Financial Accounts are free. Balances on these accounts may be used to purchase gold or any currency negotiated on the free market.

3. Bilateral Accounts. These accounts may be opened for residents of bilateral countries (see footnote 2), and they are related to the country of residence of the account holder. They are used for settlements with bilateral countries, and may be credited with proceeds from the sale by a nonresident of convertible currencies in the official market. Balances on Bilateral Accounts may be transferred to other Bilateral Accounts related to the same country. Transfers may be made freely between Bilateral Accounts related to Burundi, the Democratic Republic of Congo, and Rwanda. In practice, the authorities permit the conversion of balances on Bilateral Accounts of the central banks of these three countries into foreign currencies.

Imports and Import Payments

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

No exchange control documentation is required for imports not exceeding BF 10,000 in value. The authorized bank is required to make certain that payment is made by one of the methods laid down in the regulations (see section on Prescription of Currency, above). If the requirements are not fulfilled, the authorized bank submits a request to the central exchange control authority for special permission. Exchange control approval is also required to make payments for imports more than three months before or after the date of customs clearance.

Payments for Invisibles

Payments to convertible area countries for transactions included in Lists A, B, and C may be made through the official exchange market or by crediting Belgian or Luxembourg francs to a Convertible Account. Supporting documents must in that case be presented to an authorized bank, and in exceptional cases the approval of the central exchange control authority is required. Payments to convertible area countries for all invisibles (including those in List D) may be made through the free market, by crediting Belgian or Luxembourg francs to a Financial Account, or in domestic or foreign banknotes. Payments to bilateral countries (see footnote 2) must be made by crediting Belgian or Luxembourg francs to a Bilateral Account related to the country concerned.

Foreign and domestic banknotes may be exported freely.

Exports and Export Proceeds

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

No exchange control documentation is required for exports not exceeding BF 10,000 in value. The authorized bank is required to make sure that export proceeds are received in accordance with the regulation (see section on Prescription of Currency, above). Special authorization is required to collect export proceeds more than six months after the date of exportation. Export proceeds in convertible currencies must, within eight days of receipt, be surrendered to an authorized bank, or, alternatively, they may be deposited in a Controlled Resident Account in Foreign Currency with an authorized bank if they are to be used later for current payments authorized to be made in these currencies.

Proceeds from Invisibles

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

Capital

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

Changes during 1965

July 12. The Spanish peseta was admitted to the official exchange market.

July 14. The import from any source of many cotton, jute and synthetic textiles, and jute bags required an individual license; if import prices were not considered out of line, licenses as a rule would be issued automatically.

August 1. All payments to residents of the convertible area, including those for goods originating in and shipped from countries in the convertible area (i.e., excluding transit transactions), could be paid for in foreign or domestic banknotes; receipts from convertible area countries for transactions included in Lists C and D could be effected in foreign or domestic banknotes.

August 31. Imports from the Netherlands of the textile items made subject to import license on July 14 were exempted from license.

October 1. Notification of imports, for exchange control purposes, was no longer required; notification was required only when payment through an authorized bank took place.

November 12. Imports of sand, ground quartz, and gravel were exempted from individual import license.

December 29. All imports from and exports to Rhodesia required individual licenses; no licenses would be issued for exports of arms, ammunition, and petroleum products, or for imports of sugar and tobacco.

Bolivia

Exchange Rate System

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

For operational purposes, the free market is divided into two sectors: the public sector and the private sector. The Monetary Department of the Central Bank of Bolivia operates in the public sector, buying foreign exchange from the Government and the official enterprises, including the Bolivian Mining Corporation (COMIBOL), and selling foreign exchange to the Banking Department of the Central Bank, the banks, the Government, and its official agencies. The exchange rate of the Monetary Department of the Central Bank on December 31, 1965 was $b 11.875 buying, and $b 11.885 selling, per US$1. The Banking Department of the Central Bank, the banks, and the foreign exchange dealers operate in the private sector, where the exchange rate on December 31, 1965 was $b 11.865 buying, and $b 1L910 selling, per US$1. All sales of foreign exchange in the private sector are subject to a 2 per cent exchange tax and a 2 per mill stamp tax.

Prescription of Currency

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

Imports and Import Payments

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

Payments for Invisibles

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

Exports and Export Proceeds

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

Proceeds from Invisibles

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

Capital

Outward capital transfers by residents or nonresidents are free of control and may be made through the free market; inward capital transfers also may be made through that market but are controlled by the Ministry of Finance in order to avoid excessive medium-term and short-term indebtedness. Foreign investments in Bolivia, except those involving petroleum and mining, are governed by the provisions of the Investment Law of October 19, 1965, which guarantees the free convertibility and repatriation of profits and amortized capital. Companies established before the passage of this law may also benefit from its provisions. The law is administered by the Institute for the Promotion of Investment in Bolivia (INPIBOL). Investments in petroleum and mining are governed by the Petroleum Code and the Mining Code.

Changes during 1965

February 17. Most of the import restrictions imposed in 1963 were abolished; tires, various foodstuffs, automobiles, machinery, and mining equipment no longer required prior authorization by the Ministry of National Economy.

March 4. All imports by public sector agencies required prior authorization by the Ministry of National Economy. Government agencies could no longer purchase foreign exchange from Bolivian banks or maintain accounts in foreign currencies with foreign banks.

October 19. A new Investment Law entered into force, superseding the Investment Law of December 16, 1960. It would be administered by an Institute for the Promotion of Investment in Bolivia.

October 20. A new customs tariff took effect.

October 21. The royalties payable on tin exports were revised; the modifications in most cases involved a reduction in such royalties.

Brazil

Exchange System

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

Exchange transactions take place in a free market operated by the Bank of Brazil and the authorized banks. There is also a “manual market,” in which only banknotes and travelers checks are negotiated. The exchange rates are freely negotiated. The rates quoted by the various intermediaries remained within a narrow range of each other during 1965; the maximum spread was approximately 3 per cent on the buying side and even less on the selling side. The Bank of Brazil operates in the exchange markets on behalf of the Central Bank of the Republic of Brazil whenever this is called for by the monetary authorities’ policy of maintaining their exchange rates within a narrow range of the commercial banks’ rates. On December 31, 1965, the buying and selling rates quoted by the monetary authorities to the public were Cr$2,200 and Cr$2,220 per US$1, respectively; those quoted by the authorized banks were Cr$2,205 buying, and Cr$2,215 selling, per US$1, and the rates in the “manual market” were Cr$2,210 buying, and Cr$2,220 selling, per US$1. Exchange rates for other currencies (including “agreement currencies” used for settlements with bilateral agreement countries) are based on the U.S. dollar rates in Brazil and the dollar quotations for such currencies in international markets. (See Table of Exchange Rates, below.)

Spreads wider than those indicated above result from the fact that certain charges and a stamp tax are levied on most exchange transactions in the free market. The combined cost of these charges and the tax, which, by law, are not to be included in the exchange rate quotations, is about Cr$26 per US$1 on each purchase or sale of foreign exchange at the prevailing market rate. Applied to the buying and selling rates quoted by the monetary authorities on December 31, 1965, the resultant effective rates were Cr$2,174 and Cr$2,246 per US$1, respectively. Transactions in the “manual market” are exempt from these charges and the stamp tax.

Other effective rates result from the following arrangements.

1. On the buying side: (a) Special regulations apply to coffee exports, (b) Proceeds from exports of fresh and chilled beef from Central Brazil are subject to a contribution (“contribution quota” or quota de contribuição) of 30 per cent, (c) Proceeds from exports of fresh and chilled beef from Rio Grande do Sul are subject to a contribution of 20 per cent, (d) A 15 per cent contribution is levied on proceeds from exports of cocoa beans and cocoa paste, (e) A 5 per cent contribution is levied on proceeds from exports of cocoa derivatives.

2. On the selling side: (a) A “financial charge” of 15 per cent is levied on nontrade payments not specifically exempt. The rate is 10 per cent in respect of nontrade payments of firms maintaining price increases within limits specified in Portaria 71.1 (b) Additional effective rates may result from the following: (i) the guarantee deposit required for the closing of forward exchange contracts for most private imports; and (ii) the arrangement whereby Petrobras (national petroleum agency) concludes, at the beginning of each calendar quarter, an “open foreign exchange contract” with the Bank of Brazil for estimated requirements during the corresponding calendar quarter of imports of petroleum and specified petroleum by-products.

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

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

Administration of Control

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

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

The Foreign Trade Department of the Bank of Brazil (CACEX) issues export and import licenses, when required, and verifies price quotations, weights, measures, classifications, and types in export and import operations that are subject to license. The Customs Policy Council decides on changes in the assignment of import commodities to the General or the Special Category, subject to confirmation by the Ministry of Finance.

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

Prescription of Currency

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

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

Imports and Import Payments

Import procedures depend on whether the goods belong to the General Category or the Special Category. The commodities listed in the General Category are mainly raw materials, equipment goods, spare parts, and some essential goods not produced in Brazil in sufficient quantities. All other commodities are in the Special Category. With the exception of wheat and onions, all imports from other LAFTA countries are in the General Category.

Secondhand goods classified in the General Category when new may be imported, and then are granted General Category treatment, if they are (1) certified to be in good operating condition, (2) not obsolete, (3) to be used by the importer himself, and (4) considered to contribute directly to domestic productive processes. Imports of new automobiles and recreational boats of a value over US$3,500 are prohibited.

General Category imports are free of quantitative restriction. However, to obtain a visa from the Brazilian consular authorities abroad (which is required prior to shipment of the goods) and to clear the goods through customs, the importer must first obtain a “certificate of exchange cover,” which is issued by the Exchange Department of the Bank of Brazil, subject to the following conditions: (1) The importer must have closed an exchange contract with the Bank of Brazil or an authorized bank, for no more than 180 days, for the full value of the import. As a rule, at present, foreign exchange is sold for up to 120 days. (2) CACEX must be supplied with information on the foreign prices of the goods and any other information which the Department may consider necessary.

At the time the importer closes the exchange contract with the Bank of Brazil or a commercial bank, he is required in most cases to place as a guarantee deposit with the respective bank 100 per cent of the value of the foreign exchange if the contract is concluded in convertible currencies. If the contract is concluded in convertible exchange with the Bank of Brazil, the guarantee deposit is reduced to the following: 10 per cent for contracts covering imports of newsprint and paper stock for books; 20 per cent for fertilizers, insecticides, and seeds; and 50 per cent for petroleum and petroleum products. The required guarantee deposit is also 50 per cent for contracts with the Bank of Brazil or an authorized bank covering imports by firms adhering to the provisions of Portaria 71, provided that the commodities are in the General Category and do not have a similar nacional.2 For payments in agreement currencies, the required guarantee deposit is 20 per cent or, exceptionally, if the contract is concluded with the Bank of Brazil, 10 per cent. When the contracts are liquidated, deposits may be used for payment for foreign exchange. Guarantee deposits are not required for the following: (1) maps, books, and periodicals; (2) imports financed with foreign loans having a maturity of over 20 years; and (3) imports by industrial companies in amounts not exceeding 50 per cent of their proceeds from exports of manufactured goods or in amounts up to 100 per cent of such proceeds for industrial companies complying with Portaria 71.

Each importer may purchase no more than US$50,000 in convertible currencies, and no more than US$50,000 in bilateral agreement currencies, in any one week. However, to the extent that his purchases of convertible exchange fall short of US$50,000, an importer may acquire bilateral agreement currencies in addition to the US$50,000 limit; thus, the combined limit is US$100,000 weekly. These limits do not apply to imports in the Special Category, to imports included in the National List of Brazil from LAFTA countries, to imports complying with Portaria 71, to imports of petroleum and petroleum products, or to imports covered by foreign loans with more than a 20-year repayment period. The limits may be waived by the Bank of Brazil, and a waiver is normally granted to importers who in the past have customarily imported goods in average weekly amounts larger than these limits.

Special Category imports are subject to global quotas. They represent a minor proportion of total imports. Importers are required to obtain an import license from CACEX, and for this purpose they must purchase a promessa de licença on a stock exchange, where promessas are offered in global amounts for auction. Importers must also comply with the requirements established for obtaining a “certificate of exchange cover” for General Category imports, as described above.

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

Special procedures are applicable to certain imports (petroleum and petroleum products, wheat, newsprint, maps, books, magazines, and newspapers) and imports with foreign financing. For petroleum and specified petroleum by-products, Petrobras concludes quarterly “open foreign exchange contracts” with the Bank of Brazil. An “open contract” provides that during the calendar quarter actual exchange contracts may be closed up to a specified amount, at the exchange rate prevailing on the day when the “open contract” was concluded. The exchange contracts are entered into by Petrobras in accordance with the following arrangements prescribed by the Bank of Brazil: 50 per cent of the value of a shipment must be paid no later than 8 working days after the week in which the shipment has taken place, and the remaining 50 per cent within 110 days after the date of shipment; for imports of liquid gas the remaining 50 per cent is to be paid within 140 days of shipment, with an option for advance settlement. The Bank of Brazil charges an interest rate of 1 per cent a month on the balance outstanding during the 110 days or 140 days.

Payments for Invisibles

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

Authorized banks may sell foreign exchange freely up to the equivalent of US$200 for personal remittances abroad. Payments for other current invisibles, except those related to foreign capital, income therefrom, and royalties and technical assistance, are subject to the approval of FICAM. For many current invisibles, FICAM permits the sale of foreign exchange by authorized banks, either freely or up to certain limits. In principle, foreign exchange for other remittances (e.g., tourism) or for amounts in excess of the limits approved by FICAM may be acquired in the form of foreign banknotes in the “manual market” or, if the payment is of a personal nature (e.g., migrants’ remittances or family maintenance), the US$200 allowance, which is granted without limitation, may be used. The sale of tickets for international air travel is made against local currency upon presentation of valid passports.

Remittances abroad of foreign capital, income from foreign investments and reinvestments, and remittances in respect of royalties and technical assistance are governed by Decree No. 55762 of February 17, 1965, which contains the regulations implementing the Profit Remittance Law (Law No. 4131, as amended by Law No. 4390). Remittances are allowed only when the foreign capital concerned, including reinvestments, and the contracts for patents and trademarks, and for technical, scientific, and administrative assistance, are registered at FIRCE in accordance with the established rules (see section on Capital, below). Remittances are normally authorized in the currency of registration. Remittances of interest on loans and credits and of related amortization payments are permitted freely in accordance with the terms stipulated in the respective contract and recorded in the Certificate of Registration. A progressive supplementary income tax is levied on such remittances of earnings on foreign capital if their average over a three-year period exceeds 12 per cent of the registered capital and reinvestments. For foreign capital that produces goods or services for luxury consumption, remittances of profits are limited to 8 per cent per annum of registered capital. With the following exception, remittances are permitted freely in respect of royalties for the use of patents of inventions or of industrial and commercial trademarks, as well as in respect of technical, scientific, administrative, or similar assistance. Such remittances of royalties are not permitted by a branch or subsidiary established in Brazil to its head office abroad when at least 50 per cent of the local firm’s voting capital is directly or indirectly held by the foreign principal firm.

In order to eliminate the administrative barriers to remittances which had developed as a result of the large backlog of applications for registration of incoming capital, Decree No. 55762 provides for the issue of Certificates of Authorization for remittances under a guarantee bond (têrmo de responsabilidade) subscribed to by the interested party in advance of the completion of registration. This method of remitting in advance of registration is applicable to profits, dividends, interest, amortization, royalties, and payments for technical, scientific, and administrative assistance. In addition to signing the guarantee bond, the interested party must present to FIRCE the balance sheet showing the profits of the last fiscal year and, where applicable, a copy of the shareholders’ decision authorizing the distribution of profits. If the transfers made under the above provision exceed the value specified in the Certificate of Registration that is ultimately issued, FIRCE will either make adjustment for the excess in the Certificate of Registration or will require the restitution of the excess amount transferred.

Payments for current invisibles, with specified exceptions, are subject to a 15 per cent financial charge. The following are exempt: remittances connected with the repurchases of foreign exchange under SUMOC Instruction 289 (see section on Capital, below); personal remittances up to US$200; remittances listed in Announcement No. 22 of May 29, 1964 of the Exchange Department of the Bank of Brazil, as amended from time to time; remittances by industrial companies of registered financial obligations in amounts not exceeding 50 per cent of the companies’ proceeds from exports of their own manufactures, or in amounts corresponding to 100 per cent of such proceeds if the companies complied with certain provisions with regard to price stability, under Portaria 71. The surcharge is reduced to 10 per cent for remittances of registered financial obligations of companies which comply with the provisions of Portaria 71.

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

Travelers may take out domestic and foreign banknotes freely.

Exports and Export Proceeds

All exports require licenses, with the exception of exports of coffee, which require authorization by the Brazilian Coffee Institute. Export licenses are granted without limitation except when (1) the export is contrary to the national security or to obligations arising from international agreements, (2) payment is to be received in an inconvertible currency, the acceptance of which is considered to be undesirable, or (3) it is considered necessary to guarantee adequate domestic supplies of the goods concerned. Restrictions on account of the last-mentioned reason are limited to a few products.

The Brazilian Coffee Institute does not grant the authorization to export coffee unless the sale contract is based on a price per pound that is at least equal to the minimum registration price (in U.S. dollars per pound, f.o.b.) fixed from time to time by the Institute.3 Exporters of coffee are required to surrender without compensation a portion (“contribution quota”) of their foreign exchange receipts;4 the cruzeiro equivalent of this portion is transferred to a Coffee Defense Fund. For the export proceeds in excess of the contribution quota, exporters receive (1) payment of a fixed cruzeiro amount per bag5 determined from time to time by the Brazilian Coffee Institute and (2) payment of the full cruzeiro equivalent at the free market rate of any foreign exchange received in excess of the minimum registration price. To the extent that the foreign price obtained by the exporter is lower6 than the minimum registration price, the cruzeiro payment to the exporter is reduced; the reduction is calculated at the prevailing selling rate. Thus, the effective exchange rate for coffee exports generally depends on (i) the cruzeiro payment per bag, (ii) the minimum registration price, (iii) the actual price received (f.o.b. Brazil, in U.S. dollars per pound), and (iv) the free market rate. Based on payments per bag of coffee of Cr$48,000, Cr$46,000, Cr$39,200, and Cr$35,200 for different grades and ports of shipment, and corresponding minimum registration prices per pound of US$0.41, US$0.40, US$0.37, and US$0.35, respectively, prevailing on December 31, 1965, and on the assumption that the foreign price obtained by the exporter was equal to the minimum registration price, the effective rates for proceeds from coffee exports on that date were Cr$887, Cr$871, Cr$803, and Cr$762 per US$1.

In accordance with Resolution No. 346 of the Brazilian Coffee Institute, a foreign importer of Brazilian coffee is entitled to compensation from the Institute if, on specified dates within a specified period of time, the minimum registration price is reduced, or the indicative price7 falls, below the level at which those prices were on the date of sales registration at the Institute. The amount of the compensation payment equals the largest amount that can be calculated as the difference between the minimum registration price or the indicative price prevailing on the date of registration of the sales contract and the level of such prices on either the day of shipment or the forty-fifth day after shipment. On the basis of the bills of lading submitted to the Brazilian Coffee Institute by FICAM in connection with the liquidation of the exchange contracts in respect of coffee exports, the Institute issues to the foreign importer a Guarantee Notice entitling him to contract, with a Brazilian exporter of his choice and within a period of 90 days beginning from the date of issue of the Notice, the import of coffee up to the value in foreign currency stipulated in the Notice. The Guarantee Notice expires after the 90-day period. It may be transferred between importers in countries with which Brazil does not maintain bilateral payments agreements. A Guarantee Notice issued to an importer in a bilateral payments agreement country may not be transferred to another country, and the coffee must be used for domestic consumption in the agreement country concerned.

The proceeds from all other exports are also sold at freely negotiated exchange rates, but exporters of cocoa beans and cocoa paste are required to surrender without compensation 15 per cent of their exchange proceeds; and exporters of cocoa derivatives (butter, cake, and powder) are required to surrender without compensation 5 per cent of exchange proceeds. The cruzeiro equivalent of these deductions is used to finance a program of price support and plantation improvement for cocoa. Similarly, exports of fresh and chilled beef are subject to surrender without compensation of 30 per cent and 20 per cent of exchange proceeds, respectively, when the beef originates in the Central Zone of Brazil or in the State of Rio Grande do Sul.

Industrial firms exporting designated products of their own manufacture may use up to 50 per cent of the foreign exchange proceeds to cover their own import requirements or to pay their own financial obligations abroad that have been registered with the Central Bank (or previously with SUMOC), subject to certain conditions; industrial firms complying with Portaria 71 may use up to 100 per cent of their exchange proceeds for such purposes.

Exports of consumer durable goods and capital goods for which payment is to be made in convertible currencies on a medium-term or long-term basis may be licensed by CACEX, provided that (1) the financing in foreign currency does not exceed 80 per cent of the invoiced value and (2) information is furnished about the transaction and, in particular, about guarantees given by the importer covering the financed portion of the export. For transactions with terms of payment exceeding 360 days, CACEX may refinance the total amount payable in the first 360 days and 75 per cent of the balance, provided that the export proceeds are negotiated with the Bank of Brazil. Refinancing by the Exchange Department of the Bank of Brazil of the whole of the credit granted by the exporter is also provided for, but only for transactions with payment terms not exceeding 360 days. In connection with this refinancing, the Exchange Department of the Bank of Brazil is authorized to place in foreign financial markets securities in foreign currencies with a maturity not exceeding 7 years. The outstanding amount of these securities may not exceed US$50 million.

Proceeds from Invisibles

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

Capital

For the purpose of repatriation and the remittance of income, foreign capital and the reinvestment of profits on foreign capital must be registered with FIRCE. Foreign capital is defined as (1) goods, machinery, and equipment which have entered the country without a corresponding expenditure of foreign exchange and which are to be used to produce goods or to render services, and (2) financial and monetary resources brought into the country for investment in economic pursuits, provided that, in either case, the owner is a person or firm resident or domiciled abroad or with headquarters abroad.

Foreign capital is classified as direct investments or loans, whether imported in the form of money or goods, and it includes reinvested profits. Direct investment is defined as that foreign capital which constitutes part of corporate capital and participates directly in the risk inherent in an economic undertaking. Foreign capital that is not part of the corporate capital of any enterprise and which does not participate directly in capital risk is considered to be a loan. Any loan obtained to purchase capital goods abroad, whether conceded by the manufacturer himself or a third party, is considered to be financing (mostly suppliers’ credit). Loans are considered to be cash loans when monetary or financial resources are brought into Brazil.

To register foreign capital, it is necessary to prove that the capital has entered Brazil. To register loans and financing that are made in foreign currency, it is necessary to certify that the interest rate corresponds to that prevailing in the country of the lender, and that the prices of the imported goods correspond to the prices of comparable goods in the country of origin. If FIRCE approves the terms of financing, it issues a certificate of authorization to CACEX. The latter, in turn, examines the application in the light of the price and essentiality of the proposed import and of the availability of similares nacionais. If CACEX approves the application, it grants an import license, on the basis of which FIRCE issues a certificate of authorization to the importer.

The registration of direct investment is subject to the following rules: The capital that enters or has entered Brazil is registered in foreign currency. Reinvestments, defined as the unremitted portion of remittable earnings, are registered simultaneously in cruzeiros and in the currency of the country to which the profits could have been remitted, calculated at the average rate of exchange during the period between the moment when the profit appeared in the balance sheet and that of actual reinvestment. The reimportation into Brazil of remitted earnings of foreign capital is registered in foreign currency.

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

All capital transfers abroad are subject to the approval of FICAM. Exchange transactions concerning private capital are effected through an authorized bank or the Bank of Brazil at freely negotiated rates; outward transfers, unless made under the terms of a repurchase contract, are subject to payment of a financial charge of 10 per cent or 15 per cent.

Table of Exchange Rates

(as at December 31, 1965)8

(cruzeiros per U.S. dollar)
BuyingSelling
762-887 (Free Market Rate for Cruzeiro Payment a Bag and Minimum Registration Price)9
Coffee exports effected at a price equal to the minimum registration price.
1,540 (Free Market Rate less 30% Contribution Quota)
Exports of beef (fresh or chilled) from the Central Zone.
1,760 (Free Market Rate less 20% Contribution Quota)
Exports of beef (fresh or chilled) from Rio Grande do Sul.
1,870 (Free Market Rate less 15% Contribution Quota)
Exports of cocoa beans and cocoa paste.
2,090 (Free Market Rate less 5% Contribution Quota)
Exports of cocoa derivatives.
2,200 (Free Market Rate)

All other export proceeds. Other receipts.
2,220 (Free Market Rate)

Imports,10 and invisibles and capital exempt from financial charge.
2,210 (“Manual Market” Rate)

Foreign banknotes and travelers checks.
2,220 (“Manual Market” Rate)

Foreign banknotes and travelers checks.
2,442 (Free Market Rate plus 10% Financial Charge)
Invisibles and capital subject to reduced financial charge.
2,553 (Free Market Rate plus 15% Financial Charge)
Invisibles and capital subject to full financial charge.

Changes during 1965

During the year, the minimum registration price for exports of different grades of coffee and/or the cruzeiro payments to exporters per bag of coffee (132 pounds) were changed on several occasions. The effective exchange rates applicable to proceeds from coffee exports changed correspondingly.

January 14. SUMOC Instruction 287 provided for an increase from US$30,000 to US$50,000 in the limit on weekly purchases by any one firm of convertible foreign exchange for import payments. Implementing regulations increased the corresponding weekly limit for bilateral agreement currencies from US$20,000 to US$50,000. To the extent that the importer’s purchases of convertible exchange fell short of US$50,000, he could acquire an equivalent amount of bilateral agreement currencies in addition to the US$50,000 limit, up to a combined limit of US$100,000 weekly. Specified categories of imports excluded from these limits were imports financed with foreign loans for periods of more than 20 years, as well as commodities for which Brazil has made concessions to members of LAFTA.

January 14. The terms on which the Bank of Brazil offered swap loans were tightened. By SUMOC Instruction 289, the Foreign Exchange Department of the Bank of Brazil was authorized, upon purchasing foreign exchange, to guarantee to the seller the right to repurchase foreign exchange, spot or forward, up to the same amount. The right of repurchase could be exercised in whole or in part at any time after 90 days and up to 360 days. The repurchase could be made from any authorized bank or the Bank of Brazil at the free market rate prevailing at the time of the repurchase. Repurchases were exempt from advance deposit and guarantee deposit requirements and from the financial charge. Registration of the transaction for the purposes of the Profit Remittance Law would be automatic. Permitted use of the procedure included transactions related to repatriation under the terms of a temporary amnesty of undeclared resident-owned capital held abroad.

February 4. SUMOC Instruction 290 introduced a 30 per cent contribution quota on the exchange proceeds from exports of beef, resulting in an additional effective buying rate of Cr$l,277 per US$1. The cruzeiro equivalent of the contribution would be paid to SUMOC and used for promoting the production, processing, and marketing of beef. The measure was accompanied by a decision to authorize the export of 60,000 tons of meat, several times the average authorized in recent years.

February 17. Decree 55762 established the regulations for the implementation of the Profit Remittance Law.

February 23. Interministerial Order 71 (Portaria 71) provided that firms which undertook to maintain stable prices for their products could be granted exemptions from the financial charge and advance deposit, as well as a reduction of the guarantee deposit on the exchange cover required for imports of raw materials, spare parts, and components for their own use; such firms could also be granted a reduction of the advance deposit and financial charge on financial transfers, as well as an increase in the weekly limit for the acquisition of foreign exchange for imports.

March 5. SUMOC Instruction 292 reduced the contribution quota on exchange proceeds from beef exports originating in the State of Rio Grande do Sul from 30 per cent to 20 per cent, resulting in an additional effective buying rate of Cr$1,460 per US$1.

March 29. SUMOC Instruction 293 provided that industrial enterprises which adhered to the principles laid down in Portaria 71 could use their entire foreign exchange proceeds from exports of their own manufactures to cover their own import requirements of raw materials, spare parts, components, and machinery and equipment, as well as to pay their registered financial obligations abroad, without putting up the advance deposit or paying the financial charge. Prior to this provision, industrial enterprises had the right to use up to 50 per cent of the proceeds from exports of their own manufactures to make the above payments free of advance deposits and financial charges.

March 31. FIBAN Circular 40 limited to 25 per cent the guarantee deposit for exchange cover for specified imports financed with external loans with a maturity exceeding 20 years.

April 1. The Central Bank of the Republic of Brazil started operations. In accordance with Law 4595 of December 31, 1964 establishing the Central Bank, the Superintendency of Money and Credit (SUMOC) was abolished. The operation of exchange control was taken over from the Bank of Brazil’s FIBAN Department by the Exchange Control Sector of the Central Bank (FICAM), under the general direction of the Board of Directors of the Central Bank and the National Monetary Council. The Exchange Department of the Bank of Brazil would handle exchange operations for the account of the Central Bank.

May 10. FICAM Circular 6 specified the benefits available under Portaria 71 to industrial enterprises for payments in respect of imports and financial transfers. Industrial firms listed as qualifying for these benefits were exempt from advance deposit and from the financial charge on the exchange cover for imports of raw materials and spare parts intended for the enterprises’ own use. The guarantee deposit was reduced from 100 per cent to 50 per cent on exchange cover for imports intended for their own use. Qualifying enterprises were also granted a reduction from 50 per cent to 20 per cent for the advance deposit and from 30 per cent to 20 per cent for the financial charge on financial transfers abroad, and they were exempt from the weekly limit on the acquisition of foreign exchange for imports.

June 1. FICAM Circular 14 exempted proceeds from exports of cooked and frozen beef from contribution quota.

June 7. FICAM Circular 18 exempted specified imports financed with external loans with a maturity exceeding 20 years from advance deposit and financial charge on the exchange cover.

June 22. The prior authorization of FICAM was no longer required for the right to purchase foreign exchange from authorized banks to effect remittances abroad of foreign capital, of income therefrom, and of royalties and technical assistance fees registered at FIRCE in accordance with Law 4131, as amended. Authorized banks could engage in exchange operations in respect of such remittances on production of a Certificate of Authorization for Remittance issued by FIRCE. When specific authorization for remittances could be stipulated in the original Certificate of Registration issued by FIRCE because the transaction was in the form of a contract involving precise terms of payment, such a Certificate was sufficient to effect the exchange operations.

June 24. FICAM Circular 24 permitted authorized banks to sell foreign exchange up to the equivalent of US$50 for personal remittances. Such remittances were exempt from the 50 per cent advance deposit and 30 per cent financial charge.

September 1. Resolution 341 of the Brazilian Coffee Institute provided for a guaranteed minimum registration price for coffee.

September 6. The practice of quoting “agreement currencies” for settlements under certain bilateral payments agreements at buying and selling rates 5 per cent below the rates for convertible currencies was discontinued.

September 22. FICAM Circular 46 established provisions implementing the guaranteed minimum registration price for coffee announced by the Brazilian Coffee Institute in Resolution 341 of September 1. At the time of the settlement of exchange contracts in respect of coffee exports, exporters were to send to FICAM, either direct or through the authorized banks negotiating the foreign exchange proceeds, a copy of the bills of lading covering shipments made after September 1. Should the minimum registration price on the date of shipment or on the forty-fifth day after shipment be lower than that on the day of registration, FICAM would inform the Brazilian Coffee Institute of the amount for which the importer of that particular shipment was to be compensated. Such compensation was to be equal to the difference between the minimum registration price in effect on the date on which the sale was registered at the Brazilian Coffee Institute and either of the following prices, whichever would result in a bigger difference: (1) the price in effect on the day the coffee was shipped or (2) the price in effect 45 days after shipment. On the basis of the information supplied by the Exchange Control Sector, the Brazilian Coffee Institute was to issue to the importer a Guarantee Notice entitling him to contract, within a period of 90 days beginning from the date of issue of the Notice, with a Brazilian exporter of his choice, the import of coffee up to the value in foreign currency stipulated in the Notice. Upon receipt of the Guarantee Notice from the foreign importer, the Brazilian exporter must present it to the Brazilian Coffee Institute for the purpose of registering the sales contract “without exchange cover.” The exporter would receive a payment in cruzeiros from the Exchange Department of the Bank of Brazil corresponding to the amount specified in the sales contract and shipping document; this payment would be financed from the Coffee Defense Fund. The Guarantee Notice could be transferred between importers in countries with which Brazil did not maintain bilateral payments agreements. A Guarantee Notice issued to an importer in a bilateral payments agreement country could not be transferred to another country, and the imports of coffee thus realized were to be used for domestic consumption in the respective bilateral country only.

September 22. A multilateral clearing agreement was signed by the central banks of Argentina, Brazil, Chile, Colombia, Ecuador, Mexico, Paraguay, Peru, and Uruguay.

November 13. The buying and selling rates of the Bank of Brazil were changed from Cr$l,825 and Cr$l,850 per US$1, respectively, to Cr$2,200 and Cr$2,220 per US$1, respectively.

November 13. Resolution 9 of the Central Bank announced the following measures: (1) the elimination of advance deposits and financial charges on payments for imports, (2) the elimination of advance deposits and the reduction of the financial charge from 30 per cent to 15 per cent on nonimport payments; the charge was reduced from 20 per cent to 10 per cent for nonimport payments by firms complying with Portaria 71.

November 13. FICAM Circular 56 raised from US$50 to US$200 the amount of foreign exchange which authorized banks could sell freely for personal remittances.

November 27. Resolution 346 of the Brazilian Coffee Institute provided for the introduction, in addition to the guarantee of the minimum registration price of coffee exports as stipulated in its Resolution 341 (see September 1, above), of a similar guarantee with respect to the indicative price (i.e., the price calculated in accordance with Resolution 67 of the International Coffee Organization). When both the minimum registration price and the indicative price were reduced from the levels at which they were on the day on which the sales contract was registered, compensation would be given on the basis of the price showing the larger reduction from the initial level.

November 29. It was announced that, with effect from January 1, 1966, a customs surcharge of 10 per cent of existing import duties would be levied, except on imports from LAFTA countries.

November 30. FICAM Circular 65 provided that FICAM would forward copies of bills of lading in respect of coffee exports to the Brazilian Coffee Institute, which would henceforth make its own calculations of the compensation due to importers of Brazilian coffee as a result of a reduction in the minimum registration price or in the indicative price.

December 1. FICAM Circular 66 eliminated the 25 per cent guarantee deposit for specified imports financed with external loans with a maturity exceeding 20 years.

December 31. The minimum period after which the right to repurchase foreign exchange sold previously to the Bank of Brazil could be exercised under SUMOC Instruction 289 (see January 14, above) was reduced from 90 days to 60 days.

British Guiana

Exchange Rate System

The par value is Guyana Dollars 1.71429 = US$1. The Guyana dollar has a fixed relationship to sterling of G$4.80 = £1. The banks in British Guiana base the rates for other currencies on the current London market rates. The Guyana dollar circulates concurrently with the West Indian dollar previously issued by the British Caribbean Currency Board; the West Indian dollar is being redeemed at par.1

Administration of Control

Exchange control authority is vested in the Governor and the Minister of Finance. Authority for approving normal import payments and providing allocations of foreign exchange for other current payments is delegated to the banks authorized for this purpose. Import licensing is the responsibility of the Ministry of Trade and Industry.

Prescription of Currency

British Guiana is a member of the Sterling Area and maintains prescription of currency requirements similar to those of the United Kingdom. Authorized settlements with residents of other parts of the Sterling Area may be made in any Sterling Area currency. Authorized payments, including payments for imports, by residents of British Guiana to residents of countries outside the Sterling Area other than Rhodesia may be made in any foreign currency or by crediting West Indian dollars or sterling to an External Account. Receipts from countries outside the Sterling Area other than Rhodesia may be obtained in any foreign currency or in sterling or West Indian dollars from an External Account. Special regulations apply to payments to and receipts from Rhodesia.

Nonresident Accounts

There are three categories of accounts for persons who are not residents of British Guiana: External (Sterling Area) Accounts, External (Non-Sterling Area) Accounts, and Blocked Accounts.

External (Sterling Area) Accounts are held by residents of Sterling Area countries other than British Guiana. They may be credited with all authorized payments by residents of British Guiana to other Sterling Area countries and with transfers from other External (Sterling Area) Accounts; other credits require approval. They may be debited for payments for any purpose due from residents of other countries in the Sterling Area to residents of British Guiana, for transfers to other External (Sterling Area) Accounts in British Guiana, and for withdrawals by the account holder while he is in British Guiana; other debits require approval.

External (Non-Sterling Area) Accounts are held by residents of countries outside the Sterling Area other than Rhodesia. They may be credited with all authorized payments by residents of British Guiana to the residents of countries outside the Sterling Area and with transfers from other External (Non-Sterling Area) Accounts; other credits require approval. They may be debited for any payments due from residents of countries outside the Sterling Area to residents of British Guiana, for transfers to other External (Non-Sterling Area) Accounts in British Guiana, and for withdrawals by the account holder while he is in British Guiana; other debits require approval.

Blocked Accounts are credited with funds that are not placed at the free disposal of nonresidents (e.g., capital proceeds). These accounts may be debited for authorized payments, including the purchase of approved securities.

Imports and Import Payments

Imports subject to individual licensing cover a wide range; they include coffee, sugar, vegetables, cereals, meat, poultry, dairy products, fats, copra, vegetable and animal oils, petroleum products and other fuels, building materials, gold, diamonds and jewelry, and firearms. The granting of individual licenses and the conditions attached thereto depend on current policy; at the end of 1965, licenses were not being issued for some of the categories mentioned above. Other goods may be imported under an open general license.

Payments for authorized imports are permitted upon application and submission of the necessary documentary evidence. Exchange control forms have to be completed only for transactions exceeding G$240.

Payments for Invisibles

All payments for invisibles require approval, which is given freely. As a working rule, limits are usually applied to certain payments on an annual basis, e.g., for travel abroad (G$666), for education at schools abroad (G$3,360 for each child), for education at universities and comparable institutions (G$4,800 for each student), and for family maintenance (G$4,800).

Travelers going abroad may take with them Guyana and West Indian currency notes not exceeding G$100; these notes do not form part of any allotment of exchange for travel. In addition, notes to the value of G$50 may be taken out in the form of foreign currency notes as part of any travel exchange allowance.

Exports and Export Proceeds

Most exports are free of export license, but are supervised by the authorized banks and the Customs and Excise Department to ensure that the exchange proceeds are repatriated and, if obtained in specified currencies,2 surrendered. Exchange control forms have to be completed only for exports exceeding G$2,000 in value.

Proceeds from Invisibles

Receipts in the specified currencies on account of invisibles must be sold to an authorized bank. Travelers may bring in any currency notes freely.

Capital

New investments by nonresidents require the approval of the exchange control. Such approval is normally given for direct investments in new projects that would benefit British Guiana; it carries with it an assurance that profits may be remitted and that upon liquidation of the investment the proceeds, including any capital increments, may be repatriated in full.

The export of capital by residents is not normally permitted. Specified currencies obtained by residents through capital transactions must be surrendered to an authorized bank.

Changes during 1965

July 22. The 1962 regulations imposing restrictions on certain payments to the rest of the Sterling Area were revoked.

October 15. A central bank, the Bank of Guyana, was established.

November 15. The Government of British Guiana introduced a new monetary unit—the Guyana dollar—to replace the West Indian dollar at par.

November 30. Japanese yen and Spanish pesetas were designated as specified currencies.

November 30. The prescription of currency in respect of payments to and receipts from Rhodesia was modified.

December 15. An agreement to establish a Caribbean Free Trade Area (CARIFTA) with Antigua and Barbados was signed; the agreement was to come into force not later than September 1, 1966.

December 23. The International Monetary Fund concurred in the establishment of an initial par value for the Guyana dollar of G$1.71429 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 the London exchange market.

Administration of Control

Exchange control is administered by the Exchange Control Board. All imports and exports are handled by various government agencies under the Ministry of Trade.

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 are made in a Sterling Area currency. Payments to Mainland China, with which Burma has a bilateral payments agreement, are made through a clearing account denominated in sterling. Payments to other countries may be made in sterling through an External Account, in any non-Sterling Area currency, or by crediting kyats to the account of a resident of a country outside the Sterling Area. Prescription of currency requirements for receipts are the same as those for payments, except that if foreign currency is obtained it must be one of the specified currencies.

Imports and Import Payments

All imports are made by the Government and government agencies. Most consumer goods are imported by the Trade Council. Imports from South Africa are prohibited. Also prohibited are imports of a few commodities from any source—principally opium and similar narcotics, monkeys, playing cards, and gold and silver bullion.

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

Payments for Invisibles

All payments for invisibles are subject to licensing. In general, payments for items connected with foreign trade are allowed automatically, and payments for other purposes are considered on a case-to-case basis. Remittances of income resulting from investment other than that guaranteed under the Investment Act have been temporarily suspended. Most personal money order remittances to neighboring countries through post offices are not permitted.

Foreign exchange allocations for tourist travel by residents have been temporarily suspended. However, residents granted an official permit to go abroad for any purpose may take out freely the equivalent of K 50 in the currency of the country of destination (except India) or, if that currency is not available, in sterling notes. On leaving, nonresident travelers who have stayed in the country for less than six months may take out any foreign currency they still hold and may also reconvert one fourth of the amount of foreign currency which they had converted into kyats. The export of Burmese currency notes is prohibited.

Exports and Export Proceeds

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

Proceeds from Invisibles

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

Capital

Foreign investments in Burma are governed by the provisions of the Union of Burma Investment Act, 1959, and the Investment Rules of February 25, 1960 issued under authority of the Act. Investment proposals are considered by an Investment Committee, to ascertain whether the proposed enterprise will utilize domestic raw materials, increase domestic employment, conserve foreign exchange, and generally conform to the economic plans of the Government. However, since February 15, 1963, when the Government announced a new policy of nationalization, permission has not been granted for setting up new private industries.

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

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

When the transfer abroad of payments in favor of nonresidents is not permitted, the authorities can allow such payments to be credited to blocked accounts. The use of balances on blocked accounts is subject to individual permit.

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

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

Changes during 1965

December 19. A Trade Council replaced the People’s Stores Corporation.

Burundi

Exchange Rate System

The par value is Burundi Francs 87.50 = US$1. This rate is applicable to all transactions. The official rates on December 31, 1965 were FBu 86.50 buying, and FBu 87.20 selling, per US$1. Authorized banks must carry out permitted exchange transactions at rates between the buying and selling rates fixed by the Bank of the Kingdom of Burundi for currencies quoted by that bank1 and at rates fixed freely with their customers for certain other currencies.2

Administration of Control

Control over foreign exchange transactions and foreign trade is vested in the Bank of the Kingdom of Burundi; authority to carry out some of these transactions is delegated to three authorized banks.

Prescription of Currency

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

Nonresident Accounts

Certain nonresidents may maintain nonresident accounts in foreign currencies with an authorized bank. The opening of such accounts requires the approval of the central bank and is restricted to (1) physical persons of foreign nationality who are resident abroad and (2) juridical persons having branches or subsidiaries abroad. These accounts may be credited freely with any foreign exchange that is received from abroad. They may be debited freely for (1) conversion into Burundi francs required to pay any expenses in Burundi and (2) payments abroad for travel and representation or for the purchase price of foreign goods. These accounts cannot bear interest and must not be overdrawn; the related bank charges and commissions may be settled in Burundi francs.

Imports and Import Payments

All imports except trade samples and merchandise not intended for sale and valued up to FBu 20,000 require licenses; these are issued freely, except for certain used clothing. Applications for licenses in amounts of FBu 100,000 or more must be submitted to the Bank of the Kingdom of Burundi, through an authorized bank, on a form entitled Import License and Payment Authorization. The approval of such an application constitutes an authorization also to obtain foreign exchange. Applications for amounts under FBu 100,000 are approved by the authorized banks, unless the merchandise is imported by air, when an application must be submitted to the central bank. Import licenses must be presented to the customs officials when the goods are cleared through customs. The number and date of expiration must be entered on the customs clearance form, called the Consumption Declaration, a copy of which is then sent to the central bank by the customs office.

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

Payments for Invisibles

All payments for invisibles require approval. Transfers of up to two thirds of net salaries and emoluments of foreign nationals are freely permitted upon proof of payment of taxes. For unincorporated businesses and professional persons, transfers are freely permitted of two thirds of income after taxes earned after January 1, 1965. Companies may freely transfer their net income after taxes for the period beginning January 1, 1965. Transfers of accumulated earnings accrued prior to 1965 by persons leaving Burundi permanently are authorized on an ad hoc basis. Transfer of income from rental properties to nonresident owners is permitted after payment of taxes and deduction of normal maintenance expenses; resident owners may remit two thirds of such income. Residents may purchase reasonable amounts of exchange for foreign travel; they may take out this exchange and up to FBu 2,000 in Burundi banknotes. In addition, residents may freely purchase foreign travel tickets up to certain limits against payment in Burundi francs; these limits are, for air travel, FBu 60,375 for a round trip in economy class or FBu 98,175 in first class, and the equivalent of US$360 for surface travel.

Exports and Export Proceeds

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

Proceeds from Invisibles

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

Capital

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

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

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

Changes during 1965

January 26. An initial par value for the Burundi franc of FBu 87.5000 per US$1 was agreed with the International Monetary Fund.

February 11. All exchange transactions were henceforth to take place within prescribed margins of the par value in replacement of the system of multiple currency practices previously in force. The free market, in which the rate was about FBu 117.00 per US$1 in December 1964, was abolished, as were the 5 per cent and 20 per cent exchange taxes, which had resulted in effective selling rates of about FBu 52.50, FBu 60.00, and FBu 122.85 per US$1 in addition to the official rate of FBu 50.00 per US$1.

February 11. Restrictions on payments for certain current invisibles were relaxed.

February 11. Quantitative restrictions on imports were abolished; advance deposits of 20 per cent, 50 per cent, or 100 per cent of the c.i.f. value were henceforth required for all imports. Customs duties were increased on goods formerly imported with free market exchange.

February 11. Certain nonresidents could open nonresident accounts in foreign currencies in Burundi.

March 17. A repatriation guarantee could be granted on foreign exchange imported by resident enterprises for working capital purposes and surrendered to the central bank.

April 29. Advance import deposits were no longer required when, calculated at the appropriate rate of deposit, they would amount to less than FBu 10,000 for one import license.

May 7. Residents could freely purchase tickets for foreign travel up to specified amounts for each trip.

June 9. The period within which proceeds from exports to neighboring countries must be collected was reduced from 90 days to 45 days.

July 1. The 20 per cent advance deposit requirement was abolished.

November 19. Imports of used clothing were restricted.

Cambodia1

Exchange Rate System

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

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

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

Administration of Control

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

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

Prescription of Currency

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

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

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

Nonresident Accounts

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

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

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

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

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

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

Imports and Import Payments

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

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

All imports are effected by a state-trading agency, the National Import-Export Corporation (SONEXIM). Applications for goods to be imported may be submitted by industries and traders to SONEXIM, which transmits them to a Special Board in the Ministry of Commerce for consideration. The Special Board allocates appropriate foreign exchange to SONEXIM for those applications it approves.

Payments for Invisibles

All payments for invisibles require individual licenses.

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

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

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

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

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

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

The export of Cambodian currency is prohibited.

Exports and Export Proceeds

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

Proceeds from Invisibles

Proceeds from invisibles must be surrendered. Foreign tourists staying at all officially listed hotels are given coupons for 25 riels over and above the rate of 35 riels for each U.S. dollar sold. Only authorized banks may purchase foreign exchange from travelers. The import of Cambodian currency is prohibited. Foreign exchange must be declared by travelers when entering Cambodia; if imported by residents, it must be surrendered within seven days from the day of entry into Cambodia.

Capital

All capital transfers require individual licenses.

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

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

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

Changes during 1965

January 1. Foreign tourists staying at hotels of the Société Khmère des Auberges Royales at Siemréap were no longer given coupons for 25 riels over and above the rate of 35 riels for each U.S. dollar sold.

January 1. The allocation of foreign exchange for tourist travel and business travel was discontinued.

March 1. The premium previously granted to foreign tourists (see January 1, above) was reintroduced until the end of the year; it was now applied to all officially listed hotels in Cambodia.

August 1. The monthly exchange allocation for wives and children of Cambodians studying abroad was discontinued.

September 30. Permissible imports were classified in six commodity lists; commodities in four were subject to compensation charges (péréquation).

Cameroon1

Exchange Rate System

No par value for the currency of Cameroon has been established with the Fund. The official unit of currency is the CFA franc, which is equivalent to 0.02 French franc, giving the relationship CFAF 246.853 = US$1.2 The BCEAEC stands ready, in transactions with commercial banks, to buy and sell CFA francs against French francs at the fixed rate of CFAF 1 = 0.02 French franc. Exchange rates for other currencies are based on the fixed rate for the French franc and the Paris market rates for the other currency concerned.

Administration of Control

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

Prescription of Currency

Cameroon is a member of the French Franc Area, and settlements with other countries of the French Franc Area are made in any currency of that Area. Settlements with countries with which Cameroon maintains bilateral payments agreements3 are made through special accounts under the terms of the agreements. Settlements with all other countries are usually made through banks domiciled in France, in any of the currencies of those countries or through Foreign Accounts in Convertible Francs; payments may also be made through postal channels.

Nonresident Accounts

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

Imports and Import Payments

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

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

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

Import licenses which do not involve a request for foreign exchange, e.g., for gifts, items sent as guarantees, publicity articles, and supplies for foreign religious missions, may be approved, provided that the importer undertakes not to sell the goods and only to use them for his personal requirements. Under the EFAC arrangements (see section on Exports and Export Proceeds, below), licenses are granted for imports of goods to be used directly by exporters, provided that such imports are paid for with funds from EFAC accounts.

Payments for Invisibles

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

Exports and Export Proceeds

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

Proceeds of exports to countries in the French Franc Area may be retained by the exporter. Export proceeds in the currencies of all other countries must be surrendered within three months from the date of their receipt. Exporters may, however, retain 12 per cent of their U.S. dollar proceeds, and 8 per cent of their proceeds in other non-Franc Area currencies, in special EFAC (Exportations-Frais Accessoires) accounts. These percentages may be increased by 3 per cent with the approval of the Directorate of Exchange. Balances on these accounts may be used by the exporters to pay for imports of raw materials or equipment needed in their own business, for representation and advertising expenses, and for business travel abroad. The holder of the account must every three months surrender 10 per cent of the unused balance.

Proceeds from Invisibles

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

Capital

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

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

Changes during 1965

March 1. Settlements with Rumania ceased to be made on a bilateral basis, as the bilateral payments agreement between France and Rumania, which was also applicable to Cameroon, was terminated.

Note.—The following development took place early in 1966:

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

Canada1

Exchange Rate System

The par value is Canadian Dollars 1.08108 = US$1. Canada has no exchange restrictions on foreign payments. On March 25, 1952, Canada notified the Fund that it was prepared to accept the obligations of Article VIII, Sections 2, 3, and 4, of the Fund Agreement.

Prescription of Currency

No prescription of currency requirements are in force.

Imports and Import Payments

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

Exports and Export Proceeds

The surrender of the proceeds of exports is not required, and exchange receipts are freely disposable. For supply reasons, the export of a few commodities to all destinations is under export control. For security reasons, the export of certain specified commodities to all destinations except the United States is under export control. All exports to the Sino-Soviet bloc are subject to control; certain non-strategic goods, when of Canadian origin, may be exported to these destinations under general permit. Petroleum and petroleum products, arms, and military equipment may not be exported to Rhodesia.

Payments for and Proceeds from Invisibles

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

Capital

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

Changes during 1965

November 11-December 20. Importation was prohibited of sugar, tobacco, ferrochrome, chrome ores and concentrates, asbestos, and meats (sterile, canned, and cooked) of Rhodesian origin. Imports were made subject to the General Tariff rather than the British Preferential Tariff. An embargo was placed on exports to Rhodesia of petroleum and petroleum products, arms, and military equipment. All exports to Rhodesia were made subject to export control. The facilities of the Export Credits Insurance Act were withdrawn from exports to Rhodesia.

November 22. Export control to destinations other than the United States was placed on Canadian copper ores, concentrates, matte, anodes, all refinery shapes, rolled copper rod, copper and copper-base alloys in all mill forms, including wire-mill products, secondary ingot, and copper and copper-base scrap.

Note.—The following change took place early in 1966:

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

Central African Republic1

Exchange Rate System

No par value for the currency of the Central African Republic has been established with the Fund. The official unit of currency is the CFA franc, which is equivalent to 0.02 French franc, giving the relationship CFAF 246.853 = US$1.2 The BCEAEC stands ready, in transactions with commercial banks, to buy and sell CFA francs against French francs at the fixed rate of CFAF 1 = 0.02 French franc. Exchange rates for other currencies are based on the fixed rate for the French franc and the Paris market rates for the other currencies concerned, and include a commission.

Administration of Control

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

Prescription of Currency

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

Nonresident Accounts

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

Imports and Import Payments

The import of coffee, palm oil, and groundnut oil is prohibited from all sources. Imports of household utensils and matches from any source may be made only in given ratios to purchases of the local product. All other imports from countries in the French Franc Area may be made freely. Most imports from EEC countries are liberalized. Imports from all countries outside the French Franc Area are subject to licensing in accordance with an annual import program. This program and the amount of foreign exchange required to implement it are determined by a joint French-Central African Committee.

Separate global quotas are established for imports from EEC countries (other than France), for imports from all other countries outside the French Franc Area and outside the Sino-Soviet bloc, and for imports from countries of the Sino-Soviet bloc. The quotas for EEC countries may be used only to import goods originating in those countries; the quotas for other countries outside the Sino-Soviet bloc may be used to import goods originating in any country outside the French Franc Area except those in the Sino-Soviet bloc. There are subquotas for imports of textiles from Far Eastern countries outside the Sino-Soviet bloc.

Licenses for imports outside the program are granted for petroleum imports, for which a joint quota exists for the countries of the Equatorial Customs Union, for imports financed with funds from EFAC accounts (see section on Exports and Export Proceeds, below), and for certain imports by diamond and lumber companies.

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

Under the EFAC arrangements, licenses are granted for imports of goods to be used by the exporter himself, provided that such imports are paid for with funds from EFAC accounts.

Payments for Invisibles

Payments for invisibles may be made freely to residents of countries in the French Franc Area. All payments for invisibles to other countries are, in general, subject to approval by the Exchange Office. Insurance on imports and exports must be contracted with French insurance companies or companies operating in France. The transfer of profits from registered foreign investment is permitted freely. Residents of foreign nationality (other than that of a French Franc Area country) may transfer to countries outside the French Franc Area their full salary, but the transfer must be made monthly or no less frequently than quarterly. Other invisibles are authorized liberally, provided that corroborating evidence is submitted to the Exchange Office.

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

Exports and Export Proceeds

All exports of cotton, coffee, and diamonds require a license. All other exports to countries in the French Franc Area may be made freely; exports to all other countries require licenses, which are issued freely.

Proceeds of exports to countries in the French Franc Area may be retained by the exporter. Proceeds of exports to other countries must be surrendered within one month from the date of their receipt; collection must take place within 180 days from arrival of the goods in the country of destination. Exporters may, however, retain 12 per cent of their proceeds from exports to Canada and the United States, or 8 per cent of their proceeds from exports to other countries, in special, nontransferable EFAC (Exportations-Frais Accessoires) accounts, which may be used by the exporters themselves to pay for export promotion expenses and for modernization and expansion needs of their industries.

Proceeds from Invisibles

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

Capital

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

Under Law No. 62.355 of February 19, 1963, industrial, tourist, agricultural, and mining enterprises (both foreign and domestic) established in the Central African Republic are granted, under certain conditions, reduced duties and taxes on the import of specified equipment; in addition, certain enterprises receive exemption from direct taxes on specified income.

The Law also provides for three categories of preferential treatment, in accordance with which fiscal and other privileges may be accorded to firms investing in new enterprises or in the expansion of existing ones in most sectors of the economy, except the commercial sector. Preferential treatment A applies to enterprises whose activity and market are limited to the territory of the Central African Republic; it is granted for a period of up to 10 years. Preferential treatment B applies to enterprises whose activity and market include the territory of two or more states of the Equatorial Customs Union (the Central African Republic, Chad, Congo (Brazzaville), and Gabon). Preferential treatment C, which contains the most favorable provisions, is reserved for enterprises of prime importance to the country’s economic development; it provides for stabilization of their fiscal charges for up to 25 years.

Requests for approval for preferential treatment must be submitted to the Minister of National Economy, who is the Chairman of the Investment Commission which considers the application. If a positive decision has been given by the Commission, the proposed authorization is submitted to the Council of Ministers. Preferential treatments A and C are granted by decree issued by the Council of Ministers. Preferential treatment B is granted by an act of the Board of Directors of the Equatorial Customs Union upon the recommendation of the Council of Ministers.

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

Changes during 1965

March 1. Settlements with Rumania ceased to be made on a bilateral basis, as the bilateral payments agreement between France and Rumania, which was also applicable to the Central African Republic, was terminated.

September 1. Payments up to the equivalent of F 20,000 for imports from countries outside the French Franc Area could be made when the application for an import license was domiciled with an authorized bank.

September 1. The validity of import licenses was extended from six to nine months.

Note.—The following development took place early in 1966:

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

Ceylon

Exchange Rate System

The par value is Ceylon Rupees 4.76190 = US$1. Exchange rates are based on the fixed sterling-Ceylon rupee rate (Cey Rs 13.33 = £1) and the rates for other currencies against sterling in London.

Administration of Control

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

Prescription of Currency

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

Settlements with 12 countries with which Ceylon has bilateral payments agreements1 must be made through the relevant clearing accounts. Payments to all other countries except Rhodesia may be made by crediting sterling or Ceylon rupees to a sterling External Account or an External Rupee Account, or in the currency of the creditor country. Receipts from all other countries except Rhodesia may be accepted in sterling or Ceylon rupees from a sterling External Account or an External Rupee Account, in any specified currency2 other than a Sterling Area currency, or in any nonspecified, non-Sterling Area currency marketable in the United Kingdom, i.e., freely exchangeable for sterling. Transactions involving deviations from the general regulations require the prior approval of the Controller of Exchange. Special regulations apply to settlements with Rhodesia.

Nonresident Accounts

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

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

Imports and Import Payments

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

The right to import is restricted to government-sponsored corporations and registered importers. All imports from countries in the “Ceylonized” area4 and a few imports from any source are restricted to registered Ceylonese traders—a special group of registered importers. Imports of specified commodities5 are restricted to government or state corporations or the Cooperative Wholesale Establishment. In order to allocate quotas, applicants for import licenses are divided into three groups: (1) actual users of industrial raw materials, machinery, etc., (2) those who import other goods for their own use and not for resale, and (3) established importers who import goods for trading purposes.

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

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

Payments for Invisibles

All payments for invisibles require individual permits. The remittance of profits, dividends, and other investment income was, until July 31, 1964, freely permitted, but since then a moratorium, for one year in the first instance, has been applied to such remittances;6 a first release of accumulated arrears took place in the latter part of 1965.

The remittance of life insurance premiums on policies in foreign currencies that are purchased by nonnationals residing temporarily in Ceylon is permitted.

Foreign exchange for tourist travel abroad is not granted. Business travel is generally limited to travel for the promotion of industrial exports, and exchange up to a maximum of £ stg. 6 a day for a maximum period of 30 days is allowed in such cases.

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

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

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

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

Exports and Export Proceeds

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

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

Proceeds from Invisibles

Foreign exchange proceeds from invisibles must be surrendered.

A traveler entering Ceylon must declare his holdings, including currency notes and coins. The amount of foreign funds that may be carried into Ceylon in the form of travel credit instruments is not restricted. The import of Indian and Pakistan notes is not permitted. Ceylon notes may be imported up to Cey Rs 50, in denominations of Cey Rs 10 or less, provided that evidence of prior export of such notes by the same traveler is produced. Other currency notes and coins may be taken in without restriction.

Capital

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

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

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

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

Changes during 1965

January 1. Imports of lubricating oils and greases were brought under state trading. The Ceylon Petroleum Corporation became the sole importer of all petroleum products. Imports of newsprint and other paper products, cotton yarn, fodder, corn, and caustic soda also were reserved for government-sponsored corporations.

January 1. Imports of all drugs and medicines required an individual import license.

June 14. Certain minor imports no longer required an individual import license; these included gifts, books, and periodicals not exceeding Rs 50 a person a year and trade samples or advertising materials not exceeding Rs 250 a shipment. Applications to receive gifts up to Rs 250 a person a year would be considered on their merits.

August 8. An initial step was announced toward the termination of the moratorium imposed on July 31, 1964 on most remittances of investment income. Remittances equivalent to Rs 2 million, corresponding to about 10 per cent of profits and dividends accumulated up to June, would be authorized.

August 10. A customs surcharge of 10 per cent of the existing rate of import duty was imposed on most imports: exempt were certain food items, drugs and medicines, fertilizers, petroleum products, textiles, motor spare parts, cement, agricultural machinery, and certain items used by the export industries. Import duties on a wide range of foodstuffs and small agricultural implements were abolished, and those on cotton textiles and a few specified items of synthetic textiles were reduced.

August 10. A rebate was granted on income tax equal to 5 per cent of the f.o.b. value of specified exports of manufactured goods, provided that such exports yielded a minimum net earning in foreign exchange of 25 per cent of their f.o.b. value.

October 1. The exchange tax levied at rates of 10 per cent and 20 per cent on certain current remittances and capital transfers was terminated.

November 17-December 7. Special regulations were introduced for settlements with Rhodesia.

December 24. Imports from and exports to Rhodesia were prohibited.

Chad1

Exchange Rate System

No par value for the currency of Chad has been established with the Fund. The official unit of currency is the CFA franc, which is equivalent to 0.02 French franc, giving the relationship CFAF 246.853 =US$1.2 The BCEAEC stands ready, in transactions with commercial banks, to buy and sell CFA francs against French francs at the fixed rate of CFAF 1 = 0.02 French franc. Exchange rates for other currencies are based on the fixed rate for the French franc and the Paris market rates for the other currencies concerned, and include a commission.

Administration of Control

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

Prescription of Currency

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

Nonresident Accounts

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

Imports and Import Payments

With minor exceptions, imports from countries in the French Franc Area may be made freely. All imports from countries outside the French Franc Area are subject to licensing in accordance with an annual import program. This program and the amount of foreign exchange required to implement it are determined by a joint French-Chadian Committee.

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

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

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

Payments for Invisibles

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

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

Exports and Export Proceeds

Exports to countries in the French Franc Area may, with a few exceptions, be made freely; exports to all other countries require licenses.

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

Proceeds from Invisibles

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

Capital

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

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

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

Under the Investment Code of August 26, 1963, any enterprise established in Chad, whether domestic or foreign, is granted, under certain conditions, reduced duties and taxes on specified imports, as well as exemption from direct taxes on specified income.

The Code also provides for three categories of preferential treatment, in accordance with which certain fiscal and other privileges may be accorded to firms investing in specified new industries or in the expansion of existing ones. Preferential treatment A applies to enterprises whose activity and market are limited to the national territory of Chad. Preferential treatment B applies to enterprises whose activity and market include the territory of two or more states of the Central African Customs and Economic Union (Cameroon, the Central African Republic, Chad, Congo (Brazzaville), and Gabon). Preferential treatments A and B are granted for a period of up to 15 years. Preferential treatment C is reserved for enterprises of prime importance to the country’s economic development; it provides for stabilization of their fiscal charges for up to 25 years.

Requests for approval for preferential treatment must be submitted to the Minister of Economy, who, after examining the documents, transmits them to the Investment Commission. After an opinion has been given by that Commission, the project is submitted to the Council of Ministers. Preferential treatments A and C are granted by decree issued by the Council of Ministers. Preferential treatment B is granted by a decision of the Central African Customs and Economic Union upon the recommendation of the Council of Ministers.

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

Changes during 1965

January 1. The Exchange Office became part of the Ministry of Finance under the name of Exchange Department.

March 1. Settlements with Rumania ceased to be made on a bilateral basis, as the bilateral payments agreement between France and Rumania, which was also applicable to transactions with Chad, was terminated.

April 1. Additional imports from EEC countries other than France were liberalized.

Note.—The following development took place early in 1966:

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

Chile

Exchange Rate System

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

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

On December 31, 1965, the spot exchange rate in the banking market was E° 3.46 buying, E° 3.47 selling, per US$1. On the same date, the effective exchange rates in the banking market for “futures” were E° 3.55 buying, and E° 3.56 selling, per US$1. Transactions not permitted in the banking market may be settled in the brokers’ market, but in many cases the approval of the Central Bank must first be obtained; certain invisibles that are channeled through the brokers’ market are restricted. The exchange rate in the brokers’ market on December 31, 1965 was E° 4.20 buying, E° 4.219 selling, per US$1. Purchases of exchange in the brokers’ market for which the Central Bank has not approved a transfer application are subject to a 4 per cent exchange tax.

Administration of Control

The Foreign Trade Department of the Central Bank of Chile is in charge of the operation of the exchange control system. Some functions of the Department have been delegated to local commissions in important cities, and the supervision of copper exports and all imports of the copper industry has been delegated to the Copper Department.

Prescription of Currency

The proceeds of exports by the large copper companies must be received in U.S. dollars or other currencies specifically authorized by the Copper Department. Large copper and iron ore mining enterprises must pay their income taxes in U.S. dollars. All other transactions, including exports of iron ore by small and medium-sized companies, may be settled in any currency, irrespective of the country of origin or destination of the payment.

Imports and Import Payments

Imports are classified as generally permitted, conditionally permitted, or prohibited. Goods in the generally and conditionally permitted categories must be registered with the Central Bank but may normally be imported in any volume. The Central Bank, however, is empowered to reject import applications (registrations) for any commodity group if total applications for that commodity group in the current month exceed by more than 5 per cent the average monthly registrations for the same group during the past 12 months; when applications are so rejected, the Central Bank must reject registration for all commodities listed under the same customs tariff heading. During 1965 the Central Bank invoked these powers on several occasions. Imports of goods in the conditionally permitted category are only permitted in “free port” zones, such as Arica, Magallanes, and Aysén, and may not be shipped to other parts of the country unless they are first processed or assembled in the “free port” zone. Prohibited imports (including automobiles and most trucks) may only be imported into a “free port” zone for use in that zone.

For specified commodities, importers must, within 60 days after shipment, purchase exchange in the “futures market” corresponding to the full registered value against immediate cash payment in local currency; the exchange cannot be remitted until 120 days after the date of the bill of lading. All other imports are entitled to exchange in the banking market, but this cannot be obtained until 120 days after the date of the bill of lading covering the goods; exchange for these other imports may also be purchased in the “futures market” within 60 days after shipment.

Almost all imports are subject to customs surcharges calculated by the addition of two separate charges (the impuesto adicional and the impuesto adicional agregado) and payable when the goods are cleared through customs. The following items are exempt: imports by large companies concerned with mining iron, copper, nitrates, or iodine; crude petroleum and diesel oil destined for the nitrate, subnitrate, and iodine industries; imports by the University of Chile; imports under loans or credits from the Export-Import Bank of Washington or the International Bank for Reconstruction and Development; imports under the Surplus Agricultural Commodities Agreement with the United States; spare parts for agricultural machinery; planes and parts for Chilean airlines; jute sacks, magnetic enamels, etc.; certain capital goods; and goods in the conditionally permitted category imported into the “free port” zones of Arica and Magallanes. The surcharges range from nil to 400 per cent of the c.i.f. value and are paid in escudos at a rate of exchange that is periodically established by the Central Bank. On December 31, 1965 this rate was E° 3.55 per US$1.

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

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

Payments for Invisibles

Payments for invisibles may be made through the brokers’ market in accordance with the regulations applicable to those items in that market. Payment at the rate of exchange in the banking market is permitted for a few commercial invisibles; all other transactions take place in the brokers’ market. Payments through the brokers’ market may be effected up to established limits for the following purposes: for tourist travel, up to the equivalent of US$300 a person a year for travel to Latin American countries, or up to US$600 a person a year for travel to other countries; for family remittances, up to US$100 a month for each beneficiary; for books, up to US$30 a person a month; for subscriptions to periodicals, up to US$100 a person a year; for medicine and pharmaceutical products, up to US$100 a person a month; and for insurance premiums, up to US$100 a person a month. Transfers in excess of these limits, and those in respect of other transactions, require the prior authorization of the Central Bank. All purchases of exchange in the brokers’ market, except those for which the Central Bank has approved a transfer application, are subject to a tax of 4 per cent, which is applicable not only to purchases of notes and checks but also to payments in respect of bills of exchange and letters of credit. Residents of Chilean nationality traveling to Latin American countries are required to pay a travel tax of E° 30 a trip; for travel to other countries, the tax is E° 60 a trip. Travelers may take out any amount in Chilean banknotes; resident travelers may take out 10 per cent of their travel allowance in foreign banknotes.

Exports and Export Proceeds

Most goods may be exported freely, but exports of some items are prohibited or are subject to quota. In order to enforce these requirements and to ensure the repatriation of export proceeds, all exports, except those of the large copper mines and the Nitrate and Iodine Sales Corporation (COVENSA) must be registered with the Foreign Trade Department of the Central Bank. The Central Bank also certifies the f.o.b. value of the exports for the purpose of restitution of duties and taxes to exporters of certain agricultural and industrial products either imported earlier for processing or produced locally.

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

Proceeds from Invisibles

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

Capital

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

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

Foreign capital may enter Chile under one of three different arrangements, depending on the purpose and the type of the investment. (1) Article 14 of Decree 1272 (September 7, 1962) stipulates that capital brought into the country in the form of foreign exchange may be freely sold in the brokers’ market through authorized banks when the investor (individual or corporation, national or foreign) has registered with the Central Bank. To this end, the Central Bank issues a nontransferable certificate which also permits the free outward transfer of the capital through the brokers’ market. The remittance of profits or interest on this capital requires the authorization of the Central Bank. (2) According to Article 16 of the above Decree, the investor may enter into a loan agreement with a Chilean individual or corporation, or into an agreement with a national enterprise with a view to capital participation. In these cases, the investor has an option between the banking market and the brokers’ market; the Central Bank guarantees access to the exchange market chosen for the entry of the capital, both for the servicing of loans and the re-export of capital, and for the remittance of interest and profits. The guarantee is given subject to certain conditions, one of which is a minimum investment period of 3 years. As an application and extension of Article 16, the Executive Committee of the Central Bank on November 3, 1963 took a decision to create an additional regime to further foreign investment in Chilean export industries. Under this regime, capital brought in for the promotion of exports of agricultural, industrial, and mining products may be sold in the brokers’ market, while its repatriation may take place in the banking market, provided that the amount repatriated is financed from the increase in the volume of exports resulting from the investment. The regime is implemented through individual investment agreements in accordance with Article 16. Repatriation of the invested capital may start 2 years after entry and may amount to 12½ per cent annually of the invested capital. In addition, the remittance of interest or profits is permitted annually up to 7 per cent of the invested capital. The repayment of capital, and the transfer of interest or profits thereon, may be effected through the banking market, provided that the amount does not exceed 50 per cent of the amount of exchange resulting from the volume increase in exports. If this criterion prevents the transfer of the full amount of amortization, interest, and profits through the banking market, the transfers may be completed through the brokers’ market. The above privileges are only granted to firms that will not purchase foreign exchange in the banking market to acquire abroad any machinery, equipment, or capital goods on a cash payment basis. (3) The most important law governing foreign investment is Decree-Law 258 of 1960, which establishes a regime both for foreign exchange transfers and long-term capital investment. A Foreign Investment Committee approves by decree the particular investment; it establishes both guarantees regarding withdrawal of capital and remittances of interest and profits and may also give special guarantees regarding exemption from payment of certain import surcharges, customs duties, and taxes. Such privileges may be granted for a period of 10 years, with extension to 20 years in special cases. Remittances are effected in the same market (normally the banking market) through which the capital was brought in, and the investor has the right to use the exchange resulting from the export proceeds of his investment.

Changes during 1965

January 7. Law No. 16101 empowered the Central Bank to reject import applications for any commodity group for which total import applications during any month exceeded by more than 5 per cent the average monthly import registrations of the past 12 months. When applications for any commodity were rejected, applications for all other commodities contained in the same customs tariff category would have to be rejected.

January 28. Access to the “futures market” was granted for all imports subject to a 50 per cent advance deposit requirement, provided that the compulsory deferment period of 120 days had been completed. Access to the “futures market” was also granted for all imports that before April 30, 1964 had complied with the deferment period, and for imports subject to a 100 per cent advance deposit requirement that before May 31, 1964 had complied with the deferment period.

January 29. The Central Bank announced certain procedures for the implementation of Law 16101. The Central Bank would either accept or reject any import application within 90 days of its being received.

February 17. The surrender period for the exchange proceeds from certain minor exports was revised.

February 23. Access to the “futures market” was granted for imports subject to a 100 per cent advance deposit requirement that by June 30, 1964 had complied with the compulsory deferment period, and for imports subject to advance deposit requirements in excess of 100 per cent that by May 31, 1964 had complied with the deferment period.

March 16. Access to the “futures market” was granted for imports subject to a 100 per cent advance deposit requirement that by September 30, 1964 had complied with the compulsory deferment period, and for imports subject to advance deposit requirements in excess of 100 per cent that by August 31, 1964 had complied with the deferment period.

March 19. The conversion rate for the calculation of import surcharges and advance deposits was established at E° 3.20 per US$1.

March 20. Basic allocations were introduced for certain invisibles and for certain imports for personal use. The main items were as follows: for tourist travel, up to the equivalent of US$300 a person a year for travel to Latin American countries, or up to US$600 a person a year for travel to other countries; for family remittances, up to US$100 a month for each beneficiary; for books, up to US$30 a person a month; for subscriptions to periodicals, up to US$100 a person a year; for medicine and pharmaceutical products, up to US$100 a person a month; and for insurance premiums, up to US$100 a person a month.

April 26. Spare parts valued at up to US$500 could be ordered and shipped prior to registration; registration was required within 15 days of shipment.

April 30. Exchange for frozen or chilled meat and for cattle on the hoof could no longer be obtained in the “futures market.”

May 6. The conversion rate for the calculation of import surcharges and advance deposits was established at E° 3.26 per US$1.

May 14. Access to the “futures market” was granted for imports of meat and livestock into the northern part of the country.

May 18. Regulations were issued facilitating the purchase of copper by manufacturers who required it for export production. They could buy U.S. dollars in the “futures market” to purchase copper from the large mining companies.

May 25. Import registrations were limited to the f.o.b. value plus insurance and freight; any further charges could only be included in the registered import value if the Central Bank gave its prior approval.

May 28. Access to the “futures market” was granted for imports subject to a 100 per cent advance deposit requirement that by January 31, 1965 had complied with the compulsory deferment period, and for imports subject to advance deposit requirements in excess of 100 per cent that by September 30, 1964 had complied with the deferment period.

June 8. Regulations were issued concerning imports on a deferred payments basis covered by U.S. AID credit. With the exception of certain specified types of plant and machinery, all imports with such financing would require the prior approval of the Commission for Industries.

June 8. Representatives’ commissions could no longer be transferred abroad.

June 12. The conversion rate for the calculation of import surcharges and advance deposits was established at E° 3.30 per US$1.

June 23. A consolidated list was issued of all imports which had access to the “futures market.”

July 10. The requirement that imports must be cleared through customs within 150 days of registration was replaced by the prescription that importers seek a new registration when goods had not been shipped within 150 days of registration.

July 12. Access to the “futures market” was granted for all imports that by January 1, 1965 had complied with the compulsory deferment period.

July 20. The conversion rate for the calculation of import surcharges and advance deposits was established at E° 3.34 per US$1.

July 28. Access to the “futures market” was granted for all imports that by April 1, 1965 had complied with the compulsory deferment period.

July 31. Hotels were permitted to accept foreign exchange in payment of travelers’ normal hotel charges. Certain hotels in remote areas were permitted to accept foreign exchange for other purposes as well.

July 31. All outward remittances to shipping or airline companies for passages and tickets had to be made through banks.

July 31. Exchange for travel to Bolivia, Brazil, Peru, and Uruguay was only granted in the form of payment orders.

August 12. Exchange for travel to Colombia, Ecuador, and Paraguay was only granted in the form of payment orders.

August 20. A consolidation of existing regulations and procedures affecting export transactions was issued.

August 31. The conversion rate for the calculation of import surcharges and advance deposits was established at E° 3.39 per US$1.

September 8. With the exception of items subject to an advance deposit of 10,000 per cent, household goods belonging to returning Chileans or resident foreigners were exempted from advance deposit requirements.

September 14. A consolidation of existing regulations and procedures affecting exchange transactions was issued.

September 15. The conversion rate for the calculation of import surcharges and advance deposits was established at E° 3.43 per US$1.

September 16. Access to the “futures market” was granted for all imports that had complied with the compulsory payments deferment period of 120 days, provided that a customs clearance certificate could be submitted.

September 22. A multilateral clearing agreement was signed by the central banks of Argentina, Brazil, Chile, Colombia, Ecuador, Mexico, Paraguay, Peru, and Uruguay.

October 9. The conversion rate for the calculation of import surcharges and advance deposits was established at E° 3.50 per US$1.

October 19. Exporters of onions and melons on a consignment basis were required to guarantee the surrender of exchange corresponding to at least 75 per cent of the registered export value.

October 27. The exchange proceeds from exports of iron ore had to be surrendered within 180 days of shipment.

November 18. The conversion rate for the calculation of import surcharges and advance deposits was established at E° 3.54 per US$1.

December 10. Decree No. 2802 of the Ministry of Finance revised the import surcharges and advance deposit requirements for many commodities.

December 10. Central Bank Circular No. 590 established that for specified commodities registered after December 10, 1965 importers must, within 60 days after shipment, purchase exchange in the “futures market” corresponding to the full registration value against immediate cash payment in local currency; the compulsory payments deferment period of 120 days after shipment continued to be applicable. The submission of a customs clearance certificate to a commercial bank was no longer required for such purchases of exchange. Importers of all other commodities were permitted to purchase exchange in the “futures market” within 60 days after shipment.

December 16. The conversion rate for the calculation of import surcharges and advance deposits was established at E° 3.55 per US$1.

December 20. Circular No. 758 of the Superintendent of Banks changed the official value of the escudo from E° 3.10 to E° 3.46 per US$1.

Republic of China

Exchange Rate System

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

Administration of Control

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

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

Prescription of Currency

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

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

Nonresident Accounts

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

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

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

Imports and Import Payments

All imports require individual licenses. When applying for a license to import goods in excess of US$500, the importer must submit evidence that he has acquired “patriotic bonds”2 corresponding to at least NT$1 for every U.S. dollar of the f.o.b. value of the goods; exempt from this requirement are educational equipment, aircraft parts, and machinery and equipment financed with self-provided exchange. Full exchange settlement for imports must be made within 14 days of approval of the license. Imports from communist countries are prohibited. The Chinese authorities license and check imports from Hong Kong in order to induce importers to obtain certain imports direct from the country of production and to control effectively imports from Mainland China.

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

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

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

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

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

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

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

Payments for Invisibles

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

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

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

Exports and Export Proceeds

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

Quota limitations are maintained on the export of canned mushrooms. The export of a few foodstuffs is restricted. There are also ceilings on the export of cotton textiles to Canada, Italy, the United Kingdom, and the United States. Minimum prices are established for exports of certain commodities.

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

Exporters are required to surrender exchange earnings accruing from exports immediately after their collection. When surrendering export proceeds, “patriotic bonds” equivalent to NT$10 a basket must be purchased by exporters of bananas, and bonds equivalent to NT$50 a box by exporters of canned mushrooms. Subject to approval, bona fide gifts and commodity samples up to the value of US$100 may be sent abroad. When leaving the Republic of China, tourists are allowed to take out domestic products valued up to US$100 without providing evidence that they have surrendered foreign exchange.

Proceeds from Invisibles

Exchange surrender requirements, applicable to proceeds from invisibles are the same as those applicable to export proceeds. Interest, earnings, and profits on investments made by Chinese investors outside the country, and originally approved by the FETC, must be surrendered to the banks, but earnings from private investments abroad that have not been financed by outward remittance may be retained. Private inward remittances may be retained by the recipients for making authorized payments.

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

Capital

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

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

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

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

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

Changes during 1965

During the year, a number of commodities were shifted from the controlled to the permissible list of imports, or vice versa.

January 4. The Statute for Encouragement of Investment was amended.

January 16. The maximum export commission payable to foreign agents was increased from 3 per cent to 5 per cent of the f.o.b. value of exported goods.

July 3. Importers and exporters of specified commodities were required to purchase specified amounts of “NT$500 million patriotic bonds of 1966” denominated in Taiwan dollars; the bonds were negotiable, could be used as collateral for loans, and were repayable in 20 semiannual installments beginning on January 3, 1968.

July 30. A free trade zone for export processing purposes was established at Kaohsiung.

September 6. Official buying and selling rates were established for Australian pounds and Canadian dollars, and export proceeds could be received in these currencies.

October 6. With minor exceptions, exports to any permitted destination could be made on a consignment or delayed collection basis, provided that payment was not deferred for more than 180 days from shipment.

October 28. Tourist hotels were permitted to remit commissions of up to 10 per cent to foreign travel agencies; previously, no exchange was granted for such remittances.

November 1. The import of rayon and polyester staple used for the manufacture of textiles for the domestic market was suspended until March 31, 1966.

Colombia

Exchange Rate System

On December 17, 1948, a par value for the Colombian Peso was established by Colombia with the Fund. However, exchange transactions no longer take place at rates based on that par value. There are two exchange markets, an official market with several fixed rates and a free market with a fluctuating rate. Exchange certificates must be purchased from the Bank of the Republic to make payments through the official market. The official market comprises (1) a rate of Col$7.67 per US$1 for sales of foreign exchange by foreign petroleum companies; (2) a rate of Col$8.50 per US$1 for proceeds from coffee exports; (3) a preferential market rate of Col$9.00 per US$1; and (4) an intermediate market rate of Col$13.50 per US$1.

The preferential market rate applies on the buying side to the proceeds from exports of manufactured products with an import component paid at the preferential rate exceeding 50 per cent of the f.o.b. value of the exports; it applies on the selling side to certain imports, certain students’ expenses, and specified payments by the National Government. The intermediate market rate applies on the buying side to the proceeds from other exports, to capital registered as entering through the intermediate market, and to foreign loans the proceeds of which must be sold to the Bank of the Republic. This rate applies on the selling side to other imports, 80 per cent of certain freight payments, service on new foreign debt, service on old foreign debt covered by special provisions, and repatriation and profits on new capital registered as entering through the intermediate market. There is a remittance tax of 10 per cent (which has to be paid in U.S. dollars from the free market) on payments of interest on, and repayments of, capital registered before June 17, 1957, if such payments are made through the official market. All other transactions take place in a free market; at the end of 1965 the rate in the free market was Col$18.27 buying, and Col$18.29 selling, per US$1. (See Table of Exchange Rates, below.)

Administration of Control

To import from, export to, or make payments to foreign countries, prior application for registration of the transaction must be made at the Exchange Registration Division of the Superintendency of Foreign Trade. Exchange certificates for payments entitled to be made through the official market must be purchased at the Bank of the Republic and may be acquired through the commercial banks, which act as authorized agents of the Bank of the Republic. Applications for such certificates require the prior approval of the Exchange Registration Division. An Exchange Regulation Fund, operated by the Monetary Board, regulates operations in the official exchange market. Over-all import and export policy is determined by the Board of Foreign Trade. The Superintendency of Foreign Trade controls imports that are subject to prior licensing. Imports and exports of foreign capital and the transfer of profits thereon, including commissions and royalties for trademarks and patents, must be recorded at the Exchange Registration Division. The Division is also in charge of the registration of the foreign debt.

Prescription of Currency

Payments and receipts related to international transactions are normally effected in U.S. dollars. Settlements with Denmark, Finland, and Spain for commercial transactions must be made through a clearing account in accordance with the provisions of the relevant bilateral payments agreement. Under the agreement with Denmark, goods originating in third countries and purchased in one of the agreement countries may be settled through the agreement account by mutual consent of the partners. The National Federation of Coffee Growers has concluded trade and payments agreements with Bulgaria, Eastern Germany, Hungary, Poland, Rumania, the U.S.S.R., and Yugoslavia.

Nonresident Accounts

Nonresidents are permitted to hold accounts in Colombia. There are no special nonresident accounts.

Imports and Import Payments

For purposes of import licensing, imports are classified as follows: goods whose import is prohibited; goods whose import is subject to prior licensing by the Superintendency of Foreign Trade; and goods that may be imported freely. For purposes of indicating the exchange rate applicable, there are two import lists that are revised from time to time by the Board of Foreign Trade; one contains the goods payable at the preferential rate, and the other those payable at the intermediate rate. Once commodities are on the latter list they cannot be shifted to the former. Certain imports are liberalized when paid for at the intermediate market rate but require an import license when paid for at the preferential market rate.

Prior registration of the import transaction at the Exchange Registration Division is required for all imports; the charge for import registration forms is Col$5.00 for imports valued at less than US$20.00 and Col$100.00 for other imports. Advance import deposits are required for all commodities. Imports of capital goods by the National Government and by regional or municipal governments are subject to a nominal advance deposit of Col$1.00. Beginning on October 1, 1965, the rates of advance deposit listed below have been reduced once a month by 5 per cent for the commodities on the intermediate market list; they would thus be eliminated over a 20-month period. An advance deposit of 1 per cent is required for the following: capital goods and spare parts imported by official agencies and public service agencies for their own use; equipment for the printing industry; capital goods and spare parts not destined for resale; capital goods intended for the establishment of die-forging works; raw materials and basic foodstuffs brought into the country by the National Institute of Health for the preparation of pharmaceutical products; raw materials for tires; imports under clearing agreements concluded for the foreign marketing of coal and products of Acerías Paz del Rio S.A., subject to the exchange and trade regulations; foodstuffs imported by the National Institute of Supply, with the approval of the competent ministry, for Colombia’s normal needs; imports exempt from advance deposits under laws, decrees, or resolutions in effect before the coming into force of Law No. 1 of 1959, provided that they comply with the regulations and are authorized by the Ministry of Finance and Public Credit; sacramental wine imported by the dioceses in quantities considered reasonable by the Bank of the Republic; imports of books, newspapers, and magazines of a scientific or literary nature which will contribute to the culture or entertainment of the Colombian people; and a few other items. Other advance deposits required as a prerequisite to import registration are as follows: 5 per cent for certain machinery and equipment for basic industries and for capital goods valued at over US$250,000 f.o.b. for which payments are spread over several years; 10 per cent for paper, cryolite, zinc ore and concentrates, aluminum fluoride, certain lighting equipment, agricultural machinery and apparatus, chassis for jeeps, and seagoing ships; 30 per cent for certain types of sheep, goats, poultry, trees, shrubs, plants, wheat, oats, barley, oleaginous fruits, fish oil, fodder concentrates, certain ores, and raw materials for the production of pharmaceuticals; 60 per cent for church organs; 65 per cent for certain raw materials, some chemicals, and metal tools; 90 per cent for certain metals and metal products; 500 per cent for gold coins; and 120 per cent for all other goods. These advance deposits are not required (1) on imports from LAFTA countries of goods included in Colombia’s National List or in the special concession lists for Paraguay and Ecuador, or (2) on imports under the “Vallejo Plan.”1 The advance deposit must be placed with the Bank of the Republic before the application for registration of the import transaction is submitted to the Exchange Registration Division; it is returned 90 days after the merchandise is cleared through customs. Advance deposits are calculated on the f.o.b. value; the conversion rate is Col$9.00 per US$1.

Prior exchange registration is required for all payments for imports; registration is granted in f.o.b. terms upon approval by the Exchange Registration Division of the importer’s application for the corresponding exchange certificates. Applications are not approved unless evidence is submitted that the goods have been cleared through customs and that payment is due. At least 20 days prior to filing an application for exchange certificates, the importer must provide a peso advance deposit equivalent to at least 95 per cent of the exchange requested, calculated at the rate of Col$9.00 per US$1. Import payments before the maturity date of the exporter’s claim are not authorized, except for official imports. Official imports are exempt from the 95 per cent deposit requirement. Importers, or commercial banks acting for them, may buy exchange certificates covering the value of their imports from the Bank of the Republic.

Potatoes, wheat, spelt, maslin, and flours made thereof, rice, barley, corn, wheat groats, and some legumes and vegetables may be imported only by the National Institute of Supply.

Payments for Invisibles

The following payments for invisibles are channeled through the official market: (1) At the preferential rate, expenses of students engaged in studies abroad at the university level that are not available in Colombia; government payments for diplomatic expenses; government payments for contractual obligations entered into before September 2, 1965; and government, departmental, and municipal debt service payments, provided that the underlying receipts were not brought in at the intermediate or free market rates. (2) At the intermediate rate, 80 per cent of freights on imports financed with official exchange and carried by national or foreign ships belonging to a shipping conference; debt service payments on new foreign loans brought in after September 2, 1965; debt service payments on capital registered prior to June 17, 1957; profits on capital registered prior to June 17, 1957; profits on capital brought in after September 2, 1965 and registered as eligible for intermediate market treatment; service payments on debts contracted before October 25, 1964 and registered at the intermediate market rate; service payments on that part of official debt contracted before September 2, 1965 that corresponds to receipts brought in at the intermediate rate.

Exchange certificates are granted for the payments listed above. All other payments for invisibles must be made through the free market.

Exports and Export Proceeds

Prior application for registration is required for all exports except crude oil. If the application meets all legal requirements, approval is stamped on the application form, i.e., registration is granted. When registering an export transaction, the exporter must provide a guarantee in pesos corresponding to the full export value to ensure that the proceeds will be surrendered to the Bank of the Republic. Except for manufactured products with an imported raw material component in excess of 50 per cent, this guarantee may, at the exporter’s option, be a bank or personal guarantee accompanied by a cash deposit, or a personal guarantee without such deposit. For coffee, the proceeds must be surrendered within 10 days after registration if the shipping documents are made out in the interior of Colombia, or within 10 days after the date of the bill of lading in respect of shipment by sea; these regulations do not apply to exports made by the National Coffee Federation, which may keep stocks abroad for sale and make deposits in banks abroad in the interim before sale. Exporters of bananas must surrender 60 per cent of their proceeds within 10 days of the issuance of the export license and the remaining 40 per cent within 60 days. Receipts from other exports have to be surrendered within 90 days after registration.

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

The exchange proceeds from exports of coffee must be surrendered to the Bank of the Republic at the buying rate of Col$8.50 per US$1 fixed by the Monetary Board. Exports of coffee are subject to a minimum surrender price (reintegro) presently fixed at US$71.50 per 70-kilogram bag; the surrender price for bananas and other products varies according to the quantity exported and the price that the exporter may obtain in accordance with world market conditions. When the surrender price is higher than the f.o.b. export price, exporters have to purchase foreign exchange to fulfill the surrender requirement. This exchange may be purchased in the free market. Further, coffee exporters are required, prior to registration, to surrender in kind to the National Coffee Fund the equivalent of approximately 16 per cent of the volume of coffee exported (retentión).

Manufactured export products in which imported materials or elements are used are subject to the following system: when the value of the imported raw material component paid at the preferential rate is less than 50 per cent of the export value, the buying rate for the foreign exchange proceeds of the export is the intermediate market rate; when it exceeds 50 per cent, the foreign exchange proceeds of the export must be sold to the Bank of the Republic at the preferential rate, i.e., Col$9.00 per US$1.

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

Proceeds from Invisibles

Exchange receipts from invisibles may be retained or negotiated in the free market.

Capital

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

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

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

Table of Exchange Rates(as at December 31, 1965)(pesos per U.S. dollar)
BuyingSelling
7.672 (Fixed Rate)

Exchange sales by petroleum companies for exploration and exploitation.
8.50 (Fixed Rate)

Exports of coffee.
9.00 (Preferential Market Rate)

Exports of manufactured products with an import component exceeding 50 per cent paid for at the preferential rate.
9.002, 3 (Preferential Market Rate)

Certain imports. Certain payments by the National Government. Certain students’ expenses.
10.832 (Preferential Rate plus 10% Remittance Tax)4
Principal and interest on official external debt registered before June 17, 1957. Repatriation of and service on foreign capital registered before that date.
13.50 (Intermediate Market Rate)

All other exports except those of crude oil by foreign-owned petroleum companies.5 Capital inflow electing intermediate market registration. Exchange receipts of local authorities and public agencies, including those from foreign loans.
13.502, 3 (Intermediate Market Rate)

Other imports. Eighty per cent of import freight payments on merchandise transported by conference ships. Service on new foreign debt. Service on old foreign debt registered under special provisions. Repatriation and profits on new foreign capital electing intermediate market registration.
18.27 (Free Market Rate)

Invisibles. Other capital.
18.29 (Free Market Rate)

Other invisibles and capital.

Changes during 1965

January 1. The bilateral payments agreement with Czechoslovakia was terminated.

January 1. The Foreign Trade Council published new lists of prohibited imports and of imports subject to license.

January 20. The advance import deposit requirements were announced for those tariff items of the new customs tariff for which they had not been published on December 23, 1964.

February 2. Regulations were issued that would apply to imports from LAFTA countries of commodities on which Colombia had granted concessions.

February 15. The minimum surrender price for exports of coffee was reduced from US$73.00 to US$71.50 per 70-kilogram bag.

March 10. The official buying rate for proceeds from coffee exports and for the exchange sold by petroleum companies was depreciated from Col$7.30 to Col$7.67 per US$1.

March 12. The quantity of coffee that exporters were required to surrender in kind to the National Coffee Fund was increased from 5 per cent to 8 per cent of the volume of coffee exported.

March 20. The Colombian petroleum company ECOPETROL could purchase exchange for imports of crude oil at the “auction” rate of Col$9.00 per US$1.

March 24. Further items were added to the list of commodities subject to import license.

May 5. All imports, including those from LAFTA countries, required a license.

May 19. The minimum surrender price for exports of coffee was reduced from US$71.50 to US$70.00 per 70-kilogram bag.

May 31. The number of “auctions” for exchange certificates was reduced from one a week to two a month.

June 14. General regulations were issued for the treatment of import applications for machinery and equipment for agriculture and for the mining, construction, transport, communications, and manufacturing industries.

June 29. All existing regulations pertaining to the surrender of exchange proceeds from minor exports were revoked. Henceforth, such exchange proceeds had to be sold to the Bank of the Republic in amounts and at rates of exchange to be fixed from time to time by the Monetary Board.

June 30. The rate at which the Bank of the Republic converted the exchange proceeds from exports other than coffee was fixed at Col$13.50 per US$1. For exports of manufactured products, an amount equal to the value of the imported raw material incorporated in the goods could be deducted from the total amount of exchange to be surrendered to the Bank of the Republic, provided that the raw material was imported without exchange certificates and with the approval of the Superintendency of Foreign Trade under Law No. 1 of 1959 (“Vallejo Plan”).

July 7. The exchange proceeds from exports other than coffee and bananas had to be surrendered within 90 days after export registration. The peso deposit required in guarantee of the surrender of the exchange proceeds was raised to 100 per cent of the export value.

July 7. All imports and exports of foreign capital and all remittances of interest and profits on such capital had to be recorded with the Superintendency of Foreign Trade.

July 14. Exporters could retain up to 10 per cent of the exchange proceeds from exports other than coffee to repay registered debts incurred abroad in connection with their export activities. They could also deduct an amount to pay for equipment imported in conformity with Law No. 1 of 1959.

Exchange proceeds from exports of manufactured products with an import component exceeding 50 per cent had to be converted at the rate of Col$9.00 per US$1; proceeds from exports with a smaller import component were converted at Col$13.50 per US$1.

July 14. Imports of equipment for the printing industry became subject to an advance deposit of 1 per cent.

July 15. Debts contracted abroad had to be registered with the Exchange Registration Division of the Superintendency of Foreign Trade.

August 13. A bilateral payments agreement with Bulgaria was signed.

August 30. Further items were added to the list of commodities subject to import license.

September 2. The structure of the official exchange market was modified. The Bank of the Republic sold foreign exchange at a preferential market rate of Col$9.00 per US$1 and at an intermediate market rate of Col$13.50 per US$1. The distribution of imports, specified capital transactions, and some invisibles between the two rates would be announced. Exchange proceeds from exports other than coffee, from registered foreign investment, and from foreign loans would be bought at the intermediate rate. Foreign capital could be brought in either at the free market rate or at the intermediate market rate; in the latter case, repatriation and profit remittances could also be made at the intermediate market rate.

September 6. The official buying rate for the proceeds of coffee exports was depreciated from Col$7.67 to Col$8.50 per US$1. The quantity of coffee that had to be surrendered in kind to the National Coffee Fund was increased from 8 per cent to 16 per cent of the volume of coffee exported. The minimum surrender price for coffee exports was raised from US$70.00 to US$71.50 per 70-kilogram bag.

September 7. The Board of Foreign Trade issued a list of imports for which exchange would be granted at the preferential rate of exchange. The list included some foodstuffs, chemicals, pharmaceuticals, and public transportation vehicles.

September 8. The Board of Foreign Trade issued a list of imports that could be imported free of license, if paid for at the intermediate rate of exchange; some items on this list could also be imported at the preferential rate, if an import license was obtained.

September 8. The “auction” system for the sale of official exchange was abolished. The Bank of the Republic announced that it would sell exchange certificates at the intermediate and preferential market rates during its regular office hours.

September 22. A multilateral clearing agreement was signed by the central banks of Argentina, Brazil, Chile, Colombia, Ecuador, Mexico, Paraguay, Peru, and Uruguay.

October 1. Advance import deposits for commodities that could only be imported at the intermediate rate of exchange were reduced by 5 per cent of the rates in force; further reductions by 5 per cent from the rates on September 30 would take place every month until their complete elimination.

November 11. The Board of Foreign Trade issued a second list of imports that did not require a license if paid for at the intermediate rate of exchange.

December 1. Exporters could retain part of their foreign exchange proceeds from exports for payments for certain capital goods intended for the production of exports and covered by nonreimbursable import licenses.

December 7. A 60 per cent advance deposit requirement was introduced; it was applied to imports of church organs.

Congo (Brazzaville)1

Exchange Rate System

No par value for the currency of Congo (Brazzaville) has been established with the Fund. The official unit of currency is the CFA franc, which is equivalent to 0.02 French franc, giving the relationship CFAF 246.853 = US$1.2 The BCEAEC stands ready, in transactions with commercial banks, to buy and sell CFA francs against French francs at the fixed rate of CFAF 1 = 0.02 French franc. Exchange rates for other currencies are based on the fixed rate for the French franc and the Paris market rates for the other currencies concerned, and include a commission.

Administration of Control

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

Prescription of Currency

Congo (Brazzaville) is a member of the French Franc Area, and settlements with other countries in the French Franc Area are made in any currency of that Area. Settlements with other countries are usually made through banks in France, in any of the currencies of those countries—provided that the currencies are quoted on the Paris exchange market—or through Foreign Accounts in Convertible Francs; settlements with countries with which Congo (Brazzaville) maintains bilateral payments agreements,3 however, are made through special accounts in accordance with the terms of those agreements.

Nonresident Accounts

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

Imports and Import Payments

Imports from countries in the French Franc Area may be made freely. All imports of Portuguese origin are prohibited. Imports from all other countries outside the French Franc Area are subject to licensing in accordance with an annual import program. This program and the amount of foreign exchange required to implement it are determined by a joint French-Congolese Committee.

Separate global quotas are established for imports from EEC countries (other than France) and for imports from all other countries outside the French Franc Area. The quotas for EEC countries may be used only to import goods originating in those countries; the quotas for the other countries may be used to import goods originating in any country outside the French Franc Area, including those in the Sino-Soviet bloc. Licenses for liberalized commodities originating in EEC countries other than France are issued automatically; such liberalized imports are not included in the quotas for EEC countries.

For goods included in the annual import program, the Ministry of Economic Affairs publishes each year an announcement of the exchange allotted to each registered importer in accordance with, inter alia, his import business in the previous year. The importer submits to the Ministry an application for a license within the limits of the quota that has been assigned to him. When the license is issued, the Exchange Office makes the exchange available to the importer through his bank. Import licenses are valid for one year, and no extensions are granted except for specially manufactured goods when evidence is presented concerning the delay in manufacture.

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

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

Payments for Invisibles

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

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

Exports and Export Proceeds

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

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

Proceeds from Invisibles

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

Capital

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

Under the Investment Code of June 1961, as amended on December 29, 1962, any enterprise established in Congo (Brazzaville), whether domestic or foreign, is granted, under certain conditions, reduced duties and taxes on specified imports as well as exemption from direct taxes on specified income.

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

Requests for approval for preferential treatment must be submitted to the Minister of Finance and Planning, who, after examining the documents, transmits them to the Investment Commission. After an opinion has been given by that Commission, the project is submitted to the Council of Ministers. Preferential treatment A is granted by decree issued by the Council of Ministers. Preferential treatment B is granted by an act of the Executive Committee of the Equatorial Customs Union upon the recommendation of the Council of Ministers. Preferential treatment C requires legislation.

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

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

Changes during 1965

March 1. Settlements with Rumania ceased to be made on a bilateral basis, as the bilateral payments agreement between France and Rumania, which was also applicable to Congo (Brazzaville), was terminated.

March 15. Licenses were required for the export to countries of the French Franc Area of cotton and minerals, and the export to countries outside the French Franc Area of coffee, cacao, palm oil, groundnuts, bananas, and cotton.

June 1. Imports of certain goods from EEC countries other than France were freed from quantitative restriction.

August 16. All imports of Portuguese origin were prohibited.

Note.—The following development took place early in 1966:

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

Democratic Republic of Congo

Exchange Rate System

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

Administration of Control

Exchange control is administered principally by the National Bank of Congo, which is responsible for global allocations of foreign exchange for payments for imports and invisibles. The General Manager of the National Bank acts also as Foreign Exchange Controller and in this capacity is directly responsible to the Prime Minister for the broad formulation and control of exchange programs. The Bureau of Economic Coordination in the Prime Minister’s office, together with the Office of Supply (Office d’Approvisionnement) in the Ministry of Economic Affairs, is responsible for the determination of more detailed priorities for imports and the allocation of import quotas to recognized importers. On the basis of decisions reached by the above-mentioned agencies, combined import licenses and authorizations for payments for imports are issued by the Licensing Office, and authorizations for payments for invisibles are issued by the Exchange Office. Both these offices are an integral part of the National Bank. An Exchange Commission, composed of representatives of the economic ministries and of the National Bank, deals with contraventions of exchange control regulations.

Prescription of Currency

There are no prescription of currency regulations. The Democratic Republic of Congo is not a party to any bilateral payments agreements.

Nonresident Accounts

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

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

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

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

Imports and Import Payments

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

The National Bank determines the total amount of foreign exchange to be made available for payments for imports in accordance with an exchange budget established for each four-month period; the budget distinguishes between imports financed by the Democratic Republic’s own resources and imports financed by foreign aid. Within these limits, the Office of Supply assigns quotas by commodity categories for imports financed out of the Democratic Republic’s own resources, in accordance with priorities established by this Office and by the Bureau of Economic Coordination. The Office then allocates individual quotas to recognized importers, subject to the approval of the Bureau of Economic Coordination. Importers who have obtained an import quota must apply to the Licensing Office, through an authorized bank, for a combined import license and exchange authorization. Importers do not require individual import quotas for a few specified products, such as petroleum products, salt, yeast, dried fish, and many types of meat, most of which are liberalized. The commodity categories to be financed by foreign aid are determined in agreement with the donor countries.

In addition, for enterprises deemed essential to the economy, a system of “exchange allocation agreements” is in force, which gives limited but guaranteed access to the Democratic Republic’s currency resources. Under this system, certain proportions of export proceeds (specified for individual exporting companies on the basis of agreements reached between each company and the National Bank), surrendered at the rate of CF 150 per US$1, are credited at the rate of CF 180 per US$1 to so-called Resident Foreign Currency Accounts. These accounts may be debited exclusively for payments for authorized categories of imports and invisibles to be effected directly by the account holder in connection with his own business activity. The imports concerned are not subject to import quota requirements, and the banks in which the Resident Foreign Currency Accounts are held obtain an import license on behalf of the account holder and make payments against the presentation of import documents. The proper use of exchange credited to Resident Foreign Currency Accounts is verified by the National Bank.

Allocations of exchange (for direct imports or for invisibles) may be granted under similar conditions to nonexporting producers and to service enterprises. Imports under this arrangement are not subject to quota requirements, but a combined import license and exchange authorization is required in accordance with the provisions of the respective exchange allocation agreements.

An application for an import license must be accompanied by a specification of the merchandise to be imported, its unit price and country of origin, the transport and insurance charges connected with it, and the currency in which the payment is to be made. The combined import licenses and exchange authorizations that are granted are normally valid for four months. Within that period, importers must complete the importation and make the payment authorized.

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

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

The quota and licensing procedure, as well as the verification formalities, apply as a rule to all private imports, including those financed by foreign aid. However, for the latter, any provisions connected with the granting of the foreign aid must also be observed.

Payments for Invisibles

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

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

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

Exports and Export Proceeds

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

However, under the system of “exchange allocation agreements” (see section on Imports and Import Payments, above), certain proportions of the export proceeds surrendered may be repurchased by the exporters concerned in accordance with the procedures described above. Exporters of agricultural products may use up to 25 per cent of repatriated export proceeds to settle payments for authorized imports and invisibles. “Exchange allocation agreements” with mining companies provide for allocations ranging from 33 per cent to 38 per cent of their export proceeds surrendered.

Proceeds from Invisibles

All exchange receipts from invisibles must be surrendered. The import of Congolese banknotes is prohibited, except that travelers to the Democratic Republic may import such banknotes up to an amount not exceeding CF 15,000 a trip; additional local currency may be obtained by the sale of foreign currency at the official buying rate.

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

Capital

Capital transfers abroad, except some relating to the Government, are not authorized. ?

Changes during 1965

January 1. A list of prohibited imports was published.

March 15. Price controls on imports were tightened.

Costa Rica

Exchange Rate System

The par value is Costa Rican Colones 6.625 = US$1. The Central Bank buys exchange derived from exports and other exchange tendered to it at a fixed rate of Ȼ 6.62 per US$1. Exchange may be purchased freely by the public in a market in which the Central Bank maintains the rate at Ȼ 6.65 per US$1. Costa Rica has no exchange restrictions on current or capital payments. Costa Rica accepted the obligations of Article VIII, Sections 2, 3, and 4, of the Fund Agreement, as from February 1, 1965.

Administration of Control

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

Prescription of Currency

There are no prescription of currency requirements. In practice, nearly all exchange transactions in Costa Rica are expressed in U.S. dollars. Costa Rica does not maintain any payments or clearing agreements with other countries. Payments to El Salvador, Guatemala, Honduras, and Nicaragua in respect of trade and invisibles may be made in Costa Rican colones through the Cámara de Compensación Centroamericana, a clearinghouse established by the central banks of Central America to foster the process of economic integration of their countries. Payments to Mexico in respect of trade and invisibles may also be made in Costa Rican colones through the clearinghouse, in accordance with the Agreement on Clearing and Reciprocal Credits between the Bank of Mexico and the member banks of the clearinghouse.

Imports and Import Payments

There is no system of import licensing and all payments may be made freely.

As part of the exchange reform of 1961, certain less essential or luxury items were made subject to either a 15 per cent or a 30 per cent temporary import surcharge. However, as each successive Central American common external tariff agreement enters into force, any surcharges on the agreed items are thereby eliminated. For Costa Rica, such tariff equalization provisions now apply to 98 per cent of the items listed in the Central American uniform import tariff schedule.

Payments for Invisibles

Payments for invisibles are not controlled, and exchange may be purchased freely.

Exports and Export Proceeds

The Central Bank supervises exports to assure a supply of exchange to the market. Export licenses from the Central Bank are necessary for the physical exportation of merchandise, and the license is granted if the exporter agrees to surrender the exchange proceeds; the Bank may require the exporter to provide a guarantee in this respect. In addition to the export license issued by the Central Bank, other export licenses are required as follows: (1) strategic materials, such as armaments, munitions, scrap iron, and scraps of nonferrous base metals, require export licenses from the Ministry of Economy and Finance; (2) sugar requires an export license from the Ministry of Economy and Finance in order that shipments under the sugar quotas may be controlled; (3) lumber and root of ipecacuanha require export licenses from the Institute for Lands and Colonization; (4) beans, rice, potatoes, onions, cotton, meat, and purebred and other cattle require export licenses from the National Council of Production; (5) airplanes require export licenses from the Civil Aviation Board; (6) Indian art objects made of gold, stone, or clay require export licenses from the National Museum; (7) tobacco requires an export license from the Tobacco Defense Board; and (8) coffee requires a sales contract approved by the Coffee Office, in order to control exports under the coffee quotas, and an approval from a commercial bank stating that there are no liens on the coffee.

The exchange proceeds of all exports must be surrendered. Foreign-owned banana companies that have contracts with the Government must surrender their net export proceeds calculated by deducting from their gross export proceeds (1) profits obtained during the year from their transactions in Costa Rica; (2) a sum equivalent to the depreciation on their investments in Costa Rica that is acceptable to the U.S. Internal Revenue Service; (3) the export tax on bananas payable in foreign currency; and (4) the cost of imports made during the year that were necessary for their normal business in Costa Rica. There are export taxes on sugar and coffee.

Proceeds from Invisibles

Exchange receipts from invisibles may be retained or sold freely.

Capital

Transfers of capital may be made freely by residents and nonresidents. The Organic Law of the Central Bank provides that foreign investments may be registered with the Central Bank and repatriation of the capital and income thereon assured.

Changes during 1965

July 20. A Barter Trade Law was promulgated by Decree No. 3527. The law provided that barter transactions could be authorized, provided that they involved commodities produced in Costa Rica and that in each transaction the value of the import did not exceed that of the export by more than 5 per cent of the total amount of the transaction. Regulations to implement the law would be issued within six months.

Cyprus

Exchange Rate System

The par value is Cyprus Pound 1 = US$2.80. Exchange rates are based on the fixed rate for sterling, with which the Cyprus pound is at par, and London market rates for sterling against other currencies. The rate for the U.S. dollar on December 31, 1965 was US$2.80% buying, US$2.80 selling, per £C 1.

Administration of Control

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

Prescription of Currency

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

Nonresident Accounts

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

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

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

Imports and Import Payments

All imports from Rhodesia are prohibited. Most imports from other countries may be made freely under an open general license. Individual import licenses are, however, required for some 50 items (certain agricultural and textile products, a few metals, and most nonelectrical machinery) and for all goods originating in countries with which Cyprus maintains bilateral payments arrangements (see footnote 1). Individual import licenses are not required for bona fide gifts up to £C 10 in value and not to be sold, for returned goods, or for certain special transactions.

Payments for all authorized imports may be made freely.

Payments for Invisibles

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

Exports and Export Proceeds

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

Proceeds from Invisibles

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

Capital

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

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

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

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

Changes during 1965

November 20. Rhodesia was excluded from the definition of the Sterling Area and the Rhodesian pound became a foreign currency for exchange control purposes. The accounts of residents of Rhodesia became Rhodesian Accounts. Exports to Rhodesia had to be settled in a specified currency, in sterling from an External Account or a Rhodesian Account in the United Kingdom, or in local currency from an External Account or a Rhodesian Account in Cyprus. Payments due to persons resident in Rhodesia could be made in local currency to a Rhodesian Account in Cyprus or in sterling to a Rhodesian Account in the United Kingdom. All payments to or from Rhodesian Accounts required prior approval by the exchange control authorities; payments to External Accounts would not normally be allowed. Various transactions involving Rhodesian interests were restricted.

December 6. The bilateral payments agreement with the United Arab Republic was terminated.

December 14. The basic tourist travel allowance could no longer be used for travel to Rhodesia.

December 16. All imports from Rhodesia were prohibited.

December 20. All payments for approved services of a commercial character rendered by residents of Cyprus to Rhodesia, and all payments for exports to Rhodesia, must be received in a specified foreign currency.

December 22. Japanese yen and Spanish pesetas were designated as specified currencies.

Dahomey

Exchange Rate System

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

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

Administration of Control

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

Prescription of Currency

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

Nonresident Accounts

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

Imports and Import Payments

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

All imports from countries outside the French Franc Area must be registered (domiciled) with an authorized bank. The import license or import certificate entitles the importer to purchase the necessary exchange, provided that the shipping documents are submitted to the authorized banks; however, import payments up to the equivalent of CFAF 1 million may be made when the import transaction is registered. Under the EFAC arrangement (see section on Exports and Export Proceeds, below), licenses for the import of goods to be used directly by exporters are approved freely, provided that such imports are paid for with funds from EFAC accounts.

Payments for Invisibles

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

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

Exports and Export Proceeds

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

Export proceeds in currencies of countries outside the French Franc Area that are not used to make authorized payments abroad must be surrendered within three months from the date of their receipt. Exporters may, however, retain the following percentages of export proceeds in special, nontransferable EFAC (Exportations-Frais Accessoires) accounts: 12 per cent for proceeds from Canada and the United States, irrespective of the currency used for payments; 8 per cent for proceeds from other countries, irrespective of the currency used for payments; and 6 per cent for proceeds of exports on consignment. Except for proceeds of exports on consignment, these percentages may be increased by 3 per cent by enterprises engaged principally in export business. Balances on these accounts may be used to make any payment outside the French Franc Area, provided that general or special authorization has been obtained within the regulations for their use.

Proceeds from Invisibles

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

Capital

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

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

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

Changes during 1965

January 29. Imports of potatoes were prohibited.

March 1. Settlements with Rumania ceased to be made on a bilateral basis, as the bilateral payments agreement between France and Rumania, which was also applicable to Dahomey, was terminated.

April 11. A bilateral payments agreement with the United Arab Republic was signed.

September 15. Payments up to the equivalent of CFAF 1 million for imports from countries outside the French Franc Area could be made when the import transaction was registered with an authorized bank.

November 22. Exemption from the deposit requirements was granted to securities issued by public or private juridical persons domiciled outside the French Franc Area, provided that the securities were exclusively denominated in French francs and provided that they were serviced only in Dahomey.

Residents could sell forward all receipts in non-Franc Area currencies from countries outside the French Franc Area. Residents could also obtain spot or forward cover for all payments to countries outside the French Franc Area.

Authorized banks could freely grant credit to nonresidents, in the form of overdrafts on Foreign Accounts and for periods up to six months.

Denmark1

Exchange Rate System

The par value is Danish Kroner 6.90714 = US$1. The official limits for the U.S. dollar are DKr 6.8575 buying, and DKr 6.9575 selling, per US$1, at which rates the exchange authorities stand ready to intervene; the rate for the U.S. dollar fluctuates in the exchange market between these limits. Market rates for the Canadian dollar and specified European currencies2 are quoted daily. Authorized exchange dealers may engage in arbitrage with one another and with their foreign correspondents in convertible and externally convertible currencies, including Danish kroner, both spot and forward for up to 12 months. Forward premiums and discounts are left to the interplay of market forces. Forward transactions with residents must have a commercial basis.

Exchange Control Territory

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

Administration of Control

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

Prescription of Currency

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

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

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

Nonresident Accounts

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

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

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

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

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

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

Imports and Import Payments

All goods not on a restricted list containing mainly nonindustrial goods may be imported without license from the “Free List Area,” which comprises most countries outside the Soviet bloc.4 For imports from the “Free List Area” of commodities on the restricted list, licenses are issued on the basis of global (regional) quotas and may be used for any country in the “Free List Area.”5 Imports from countries outside the “Free List Area” require licenses; these are generally granted in accordance with bilateral trade agreements and traditional trade relations, and apply to the specific country concerned. Licenses are issued freely for a large number of commodities when these are imported from Bulgaria, Poland, and Rumania.

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

Payments for Invisibles

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

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

Exports and Export Proceeds

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

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

Proceeds from Invisibles

Foreign exchange derived from invisibles must be transferred to Denmark, unless the National Bank permits otherwise, and offered for sale to the Bank or to an authorized exchange dealer without undue delay, with exceptions similar to those that apply to export proceeds (see section on Exports and Export Proceeds, above).

Travelers may bring in any amount in Danish banknotes and coins, foreign banknotes, and other Danish or foreign means of payment.

Capital

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

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

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

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

Transfers of proceeds from the sale or liquidation of all types of investments and transfers of all other liquid funds in Denmark owned by nonresidents other than newly emigrated Danish nationals are permitted freely, irrespective of when and how the original investment was acquired. Interest and repayment of principal on authorized loans, credits, and deposits received from persons and firms who were nonresidents at the time of receipt may be paid freely.

Inheritances and gifts to relatives may normally be transferred to any country without limitation. Individual payments above DKr 2,000 as gifts to persons other than relatives require approval from the National Bank. Such approval is normally given for bona fide gifts.

Imports and exports of securities require permission from the National Bank. Bona fide imports of Danish securities payable only in Danish kroner are permitted. Exports of Danish and foreign securities owned by nonresidents are normally permitted also. Danish securities held in Denmark and belonging to nonresidents may be sold freely to residents. Foreign securities held in Denmark and belonging to nonresidents may be sold to residents only with the National Bank’s permission. Foreign securities held in Denmark may be negotiated freely between residents, provided that the exchange control regulations concerning emigrants are not circumvented.

Changes during 1965

January 1. Further imports from the “Free List Area” were liberalized, including adhesives, carbon paper, and packaging materials.

January 1. Yugoslavia was transferred to the “Free List Area.”

June 18. The payments agreement with Czechoslovakia was revised; all settlements were to be effected through an account in Danish kroner at the National Bank of Denmark.

July 1. Further imports from the “Free List Area” were liberalized, including household refrigerators and washing machines.

September 14. Further relaxations of exchange restrictions took place. These included a reduction from three years to one year of the period in which Danish nationals who have emigrated are subject to special exchange regulations, and the granting of a general permission to authorized exchange dealers to purchase abroad Danish securities payable or optionally payable in foreign currency, provided that these securities either had been sold to nonresidents previously or would be resold to nonresidents within 14 days.

Note.—The following changes took place early in 1966:

January 1. The bilateral payments agreement with Rumania was terminated.

January 1. Certain imports from Bulgaria, Poland, and Rumania were liberalized.

January 1. Further imports from the “Free List Area” were liberalized.

Dominican Republic

Exchange Rate System

The par value is Dominican Peso 1.00 = US$1. Exchange transactions in U.S. dollars between the Central Bank of the Dominican Republic and other banks take place at the par value. Exchange transactions by commercial banks with the public also take place at the par value. All payments abroad must be made through banks, and all exchange received must be sold to banks. The commercial banks are required to transfer to the Central Bank all exchange purchased.

On August 1, 1953, the Dominican Republic notified the Fund that it accepted the obligations of Article VIII, Sections 2, 3, and 4, of the Fund Agreement.

Administration of Control

Exchange and trade control policy is made by the Monetary Board. Foreign exchange control is administered by the Central Bank.

Prescription of Currency

No obligations are imposed on importers, exporters, or other residents in respect of the method to be followed or the currency to be used for payments to or from nonresidents.

Imports and Import Payments

Imports of kidney beans, potatoes, onions, and garlic require the approval of the Ministry of Agriculture; such imports are at present prohibited. Licenses for other imports are not required. All payments for imports are subject to scrutiny by the Central Bank to determine whether they correspond to bona fide transactions.

Advance deposits of 40 per cent or 80 per cent of the f.o.b. value are required on certain imports; the deposits must be lodged with the Central Bank when the goods are cleared through customs, and they are refundable after six months.

Payments for many imports are settled on a draft for collection basis; when the draft is presented for collection, the importer pays the full amount in pesos to the commercial bank; the bank then transfers this deposit to the Central Bank which releases exchange for the remittance. Other imports are paid for by letter of credit or a direct transfer of exchange: the commercial banks transmit daily to the Central Bank a list of importers’ applications for exchange accompanied by the equivalent in local currency. The Central Bank authorizes the commercial banks to open letters of credit and, when these have been negotiated, it transfers foreign exchange to the banks; all letters of credit except those covering industrial machinery and raw materials must be paid in full by the importer upon the opening of the credit. Exchange to meet direct transfers is provided promptly.

Most imports are subject to customs surcharges totaling 51.5 per cent ad valorem.

Payments for Invisibles

All payments for invisibles, except tourism, require the approval of the Central Bank, which in most cases is given freely. There is a limit of US$50 for each application in respect of personal and family remittances. For tourism, the banks may make exchange equivalent to US$100 available to an individual resident once every six months.

Exports and Export Proceeds

Export licenses are required for sugar, in connection with the operation of export quotas established under the International Sugar Agreement. Within 48 hours of receiving payment, exporters of Dominican products must surrender through the commercial banks to the Central Bank foreign exchange equal to 100 per cent of the f.o.b. value of their exports.

Proceeds from Invisibles

The foreign exchange proceeds from invisibles are subject to surrender requirements and must be surrendered to the Central Bank through the commercial banks. The import of Dominican banknotes and coins is prohibited.

Capital

There are no restrictions on the inward movement of capital by either residents or nonresidents. Inward capital remittances must be registered with the Central Bank and must be converted into pesos at that Bank. Applications for approval of outward capital remittances must be submitted through the commercial banks to the Central Bank.

Changes during 1965

August 7. The 40 per cent import deposit requirement imposed on most imports on November 5, 1964 was increased to 80 per cent for some less essential consumer goods. Certain other commodities were exempted from advance deposit requirements; these included industrial and agricultural machinery and equipment, nearly all raw materials, petroleum, and industrial containers.

November 30. Imports of passenger automobiles, jeeps, and certain consumer durable goods could only be made against a letter of credit.

Ecuador

Exchange Rate System

The par value is Ecuadoran Sucres 18.00 = US$1. The official rates are S/ 17.82 buying, and S/ 18.18 selling, per US$1. These rates apply to nearly all exports, to payments for all imports (except books) and related invisibles, to official transactions, to other essential invisibles, to registered capital, and to all contractual registered private foreign debt operations entered into after July 14, 1961. For all other transactions there is a free market, in which the rates as at December 31, 1965 were S/ 18.49 buying, and S/ 18.52 selling, per US$1.

Administration of Control

The Monetary Board classifies transactions according to the exchange market through which they must be settled. Most transactions pass through the official market, which is under the control and supervision of the Central Bank of Ecuador. The Central Bank also issues import and export licenses. Transactions that do not qualify for the official market may enter the free market—conducted mainly by exchange houses and several commercial banks—where such transactions are free of supervision by the exchange control authorities.

Prescription of Currency

Exchange proceeds must be received in convertible currencies, usually U.S. dollars.

Imports and Import Payments

Permitted imports are divided into two categories: List I, consisting of essential and semiessential goods, and List II, consisting of less essential and luxury goods. All goods not included in these two lists are prohibited, except books, which may be imported freely. Prior import licenses are required for all permitted imports exceeding a value of US$100, except those financed by official foreign loans. A few goods may only be imported from LAFTA countries, and some only from Paraguay; with these exceptions, import licenses are issued freely irrespective of the origin of the goods, provided that the appropriate advance deposits and the required prepayments of import duties have been made. The licenses automatically entitle the holders to obtain exchange at the official rate to cover the c.i.f. value of the imports upon presentation of the shipping documents; advance payments for imports are prohibited. The Monetary Board is authorized to shift items between Lists I and II and to prohibit the import of goods or lift import prohibitions when the economic situation of the country and the balance of payments situation so require.

The advance deposit requirement applies to almost all private imports. The exceptions are imports under the Agricultural Surplus Agreement with the United States, imports of special types of cotton from LAFTA countries, all imports from Paraguay, imports of capital goods financed by international organizations or by suppliers’ credit of at least three years, and imports made by the Government and official institutions. The advance deposit must be made in sucres by the importer when applying for an import license; the importer must at the same time lodge with the Central Bank a prepayment of part of the import duty. The rates for the advance deposit required are currently 15 per cent of the c.i.f. value for imports in List I, 30 per cent for about 100 articles in List II, and 80 per cent for most other imports in List II. The prescribed prepayment of import duty is 10 per cent of the duty on commodities in List I and 45 per cent of the duty on those in List II. Advance deposits are released at the time of customs clearance.

Payments for Invisibles

Payments for transactions in invisibles that may be made through the official market require an exchange license from the Central Bank; the license is granted freely for all authorized transactions. These transactions include invisibles connected with trade (e.g., freight and insurance); necessary expenses (i.e., travel, tuition, and living expenses up to US$100 a month) of Ecuadoran students abroad who are registered with the Central Bank; most payments of the Government and of official entities; payment of interest on registered private foreign investment up to 7 per cent annually, or payments of interest, profits, dividends, and amortization up to 15 per cent annually; and contractual private foreign debt operations entered into and registered after July 14, 1961. Other payments for invisibles may be made freely through the free market.

Exports and Export Proceeds

All exports except those of certain foreign oil companies require licenses to ensure, among other things, the full surrender, of the exchange proceeds; licenses are issued freely. Minimum surrender prices (aforos) are established for exports of bananas (according to port of shipment, destination, and season) and for shrimps; exchange corresponding to those prices must be surrendered at the official rate, while any excess receipts may be sold in the free market. Exports of bananas are subject to minimum export prices expressed in sucres. Exports of coffee, cacao, bananas, sugar, and gold and silver filigree work are subject to export taxes of 9.4 per cent (washed, or 9.6 per cent unwashed), 10 per cent, 21.4 per cent, 3.4 per cent, and 10 per cent, respectively.1 Exports of bananas are subject to an additional specific tax of S/ 1.2 a stem. Exports of rice by the National Development Bank receive a subsidy equal to the difference between its cost to the National Development Bank and the f.o.b. price; the average subsidy paid in 1965 was S/ 16.50 per quintal or S/ 3 per US$1.

Proceeds from Invisibles

Receipts from invisibles related to trade and all receipts of the Government and of official entities have to be sold at the official rate. Other receipts from invisibles (including those from tourism) may be sold in the free market.

Capital

Receipts of private foreign capital must be surrendered to the Central Bank at the official buying rate if registration with the Central Bank is desired. This also applies to foreign exchange sold by foreign companies for the purpose of obtaining local currency for salaries, taxes, and other local expenses. Foreign capital entering in the form of machinery and equipment may also be registered with the Central Bank. The Central Bank can refuse to register foreign capital if the investment is not considered to be in the interest of the Ecuadoran economy at that particular time. All unregistered private capital may enter without limitation through the free market. An Industrial Promotion Law provides for certain exemptions from import duties and import charges to three categories of industrial investment.

Foreign exchange at the official rate may be obtained for the withdrawal of registered foreign investment from Ecuador up to a total of 15 per cent per annum of the amount registered; this percentage includes interest, dividends, profits, and amortization. Contractual repayments of registered foreign loans may also be made at the official rate. All other capital remittances, either by residents or nonresidents, may be made through the free market.

Capital receipts of the Government and of official entities are converted at the official buying rate, and payments at the official selling rate. However, the proceeds from loans granted to the Government and official entities by foreign financing organizations are converted by the Central Bank at the official selling rate of S/ 18.18, instead of at the official buying rate of S/ 17.82, per US$1. In such instances, the Central Bank receives from the Treasury or the borrower a payment of S/ 0.072 per US$1 as reimbursement for the Central Bank’s share of the normal spread between the official buying and selling rates.

Commercial banks are permitted to hold up to 10 per cent of their capital in foreign exchange.

Changes during 1965

January 12. An Industrial Promotion Law, replacing the Development Law of 1962, provided additional tax and import duty benefits to certain categories of approved industrial investment.

January 29. Decree No. 161 authorized barter transactions to be carried out with Bulgaria, Mainland China, Czechoslovakia, Eastern Germany, Hungary, Poland, Rumania, the U.S.S.R., and Yugoslavia.

January 29. Decree No. 182 required advance payment to the Central Bank, upon application for an import license, of 50 per cent of the import duty and 9 per cent of the f.o.b. value; the latter payment constituted an advance on the consular fee of 10½ per cent on the f.o.b. value. These advance payments were additional to the existing advance deposit requirements; previously, the Central Bank had paid the same advance fees out of the advance import deposit lodged by the importer.

February 2. Minimum prices expressed in sucres were imposed on exports of bananas.

March 22. The minimum prices for exports of bananas were revised.

April 19. Decree No. 761 revoked Decree No. 182 (see above) and required importers to lodge advance payment for part of the import duties with the Central Bank before an import license was issued; the advance payments amounted to 10 per cent of the duty on commodities in List I and 45 per cent of the duty on goods in List II.

May 1. A new customs tariff came into force which consolidated import duties, all import taxes, and the 10% per cent consular fee.

September 22. A multilateral clearing agreement was signed by the central banks of Argentina, Brazil, Chile, Colombia, Ecuador, Mexico, Paraguay, Peru, and Uruguay.

November 16. Decree No. 2527 revoked all taxes on exports except those specified in the new customs tariff and published the same day; the decree was retroactive to November 10.

El Salvador

Exchange Rate System

The par value is Salvadoran Colones 2.50 = US$1. The rates of the Central Reserve Bank for transactions with the public are Ȼ 2.49 buying, and Ȼ 2.51 selling, per US$1. Exchange transactions by commercial banks with the public take place at or within these limits and are subject to a tax of ¼ of 1 per cent. On November 6, 1946, El Salvador notified the Fund that it was prepared to accept the obligations of Article VIII, Sections 2, 3, and 4, of the Fund Agreement.

Administration of Control

Exchange control authority is exercised by the Central Reserve Bank of El Salvador through its Exchange Control Department. Authority to approve certain payments is delegated to the commercial banks. Exchange licenses for imports are issued by the Exchange Control Department; in some instances the license also requires the approval of the Ministry of Economy. The Central Reserve Bank is also empowered to license exports, but this power has not been exercised.

Prescription of Currency

Payments to Costa Rica, Guatemala, Honduras, and Nicaragua in respect of trade and specified invisibles are settled in Salvadoran colones through the Cámara de Compensación Centroamericana, a clearinghouse established by the central banks of Central America to foster the process of economic integration of their countries. Payments to Mexico are also settled in Salvadoran colones through the clearinghouse. Otherwise, residents are free to make authorized payments in any currency they choose.

Nonresident Accounts

The accounts of nonresidents may be utilized freely, but the commercial banks must make periodic reports to the Central Reserve Bank of the movements on such accounts. Accredited diplomatic missions and other foreign institutions or persons established in El Salvador may be authorized to hold nonresident accounts in U.S. dollars with authorized banks, provided that such accounts are credited with foreign exchange received from abroad. The maximum balance which may be held on these accounts is fixed by the Exchange Control Department.

Imports and Import Payments

Import licenses are required only for airplanes, firearms, ammunition, military equipment, and dynamite. Payments and transfers abroad require exchange licenses, which are granted freely, provided that (unless the goods are imported from other countries of the Central American Common Market) the terms of payment do not exceed certain maxima: (1) Imports of raw materials or equipment for use in agriculture, stock raising, or industry (including construction), and essential products as determined by the Board of the Central Reserve Bank, are authorized by the Exchange Control Department when the terms of payment do not exceed 360 days from the date of entry of the merchandise into a customs warehouse. (2) Imports of the same commodities with longer payment terms are not authorized by the Exchange Control Department unless the prior approval of the Ministry of Economy has been obtained. (3) Imports of all other commodities are authorized by the Exchange Control Department, provided that the terms of payment do not exceed 120 days.

The commercial banks are authorized to provide exchange for import payments not exceeding US$6,000 for imports from Central American countries and US$2,000 for imports from all other countries: larger amounts have to be approved by the Central Reserve Bank. When suppliers abroad request payment in advance, a prior deposit calculated on the value of the advance payment is required from the importer as a guarantee. The deposit varies according to the nature of the goods: 10 per cent on raw materials not produced domestically; 20 per cent on other raw materials and machinery; 50 per cent on manufactured goods not classified as luxury items; and 80 per cent on luxury goods. Imports paid for against letters of credit are subject to a prior deposit of 25 per cent (10 per cent for imports of machinery, equipment, and raw materials). When the importer is a manufacturer rather than a merchant, the prior deposit is usually waived. The deposit is refunded upon completion of the import transaction.

Payments for Invisibles

Payments for current invisibles require exchange licenses, which are granted freely for most items, although for certain payments only up to specified limits. Net profits may generally be remitted up to a limit of 10 per cent a year of the registered capital; higher transfers require the authorization of the Ministry of Economy. The commercial banks provide exchange up to the equivalent of US$200 a person each six months for tourist travel. For larger amounts, authorization by the Exchange Control Department is required; as a general rule, under such authorization, each person is granted up to US$30 a day while traveling abroad, subject to a maximum of US$2,000. Persons who require exchange in excess of US$2,000, for medical treatment abroad or for other special reasons, must deposit 25 per cent of the amount exceeding US$2,000 with the Central Reserve Bank at the time the authorization is issued; the deposit is refunded when the Department receives the required proof. The Department also authorizes transfers of up to US$500 a mouth plus US$50 for each child to Salvadorans with permanent residence abroad. Students are allowed US$200 a month; those with families are allowed US$250 a month plus US$50 for each child. Foreign exchange in excess of the limits given above is seldom granted.

The exchange control regulations permit travelers to take out up to Ȼ 200 in local currency, but this amount may be increased to facilitate border trade with other Central American countries.

Exports and Export Proceeds

Export licenses are not required, but the proceeds of exports must be received through a bank in El Salvador and the foreign exchange must be surrendered to the Central Reserve Bank or an authorized commercial bank. Export transactions must be declared to the Exchange Control Department within 15 days of shipment. The collection terms must not exceed 90 days.

Proceeds from Invisibles

All exchange receipts from invisibles must be surrendered to the Central Reserve Bank or an authorized commercial bank. The exchange control regulations permit travelers to bring in up to Ȼ 200 in local currency, but this amount may be increased to facilitate border trade with other Central American countries.

Capital

All exchange receipts resulting from capital transactions must be surrendered. Payments abroad representing capital movements require exchange licenses; such licenses are not granted for resident-owned capital except for investments in Costa Rica, Guatemala, Honduras, and Nicaragua. The entry of capital in the form of foreign investment is subject to the advance approval of, and registration by, the Ministry of Economy. Registration ensures (1) the remittance of net profits up to a limit of 10 per cent a year of the registered capital (larger amounts may be authorized in special cases by the Ministry of Economy at the time of registration of the investment) and (2) amortization payments and repatriation of the proceeds from the sale of the assets of the enterprise after payment of taxes (including, where appropriate, capital gains tax). Foreign investments made in El Salvador prior to June 1, 1961 must also be registered by the Ministry of Economy or the Exchange Control Department in order to enjoy the same facilities. For long-term foreign loans, the Exchange Control Department authorizes, without restriction, the remittance abroad of foreign currency for the payment of interest and amortization. The same treatment is granted to short-term foreign loans that have been approved by and registered with the Exchange Control Department.

Changes during 1965

January 1. Import licenses were required for airplanes, firearms, ammunition, dynamite, and military equipment.

May 20. The Central Reserve Bank took steps to restrain the growth of foreign suppliers’ credit. (1) Imports of raw materials or equipment for use in agriculture, stock raising, or industry (including construction), and essential products as determined by the Board of the Central Reserve Bank, would be authorized by the Exchange Control Department when the terms of payment did not exceed 360 days from the date of entry of the merchandise into a customs warehouse. (2) Imports of the same commodities with payment terms exceeding 360 days would not be authorized by the Exchange Control Department unless the prior approval of the Ministry of Economy had been obtained. (3) Imports of all other commodities would be authorized by the Exchange Control Department, provided that the terms of payment did not exceed 120 days. (4) Imports from other countries of the Central American Common Market were exempt from these regulations.

August 18. New businesses or industries with assets of less than US$40,000 could only be operated by native-born Salvadorans or Central Americans.

October 26. The repatriation of registered foreign investments was no longer limited to the amount of the originally registered capital.

Ethiopia

Exchange Rate System

The par value is Ethiopian Dollars 2.5 = US$1. The official rates are Eth$2.48125 buying, and Eth$2.51875 selling, per US$1.

Administration of Control

All transactions in foreign exchange must be carried out through authorized banks under the control of the National Bank of Ethiopia. All payments abroad and exports are subject to the supervision of the Exchange Controller, whose office is a department of the National Bank.

Prescription of Currency

Outgoing payments are normally made in foreign exchange appropriate to the country of the recipient or in U.S. dollars or sterling. The net proceeds of exports must be received in a foreign currency which is freely convertible, or in any other foreign currency acceptable to the Exchange Controller.

Nonresident Accounts

Nonresidents may hold nonresident accounts in Ethiopian dollars at authorized banks. Balances in these accounts may be freely transferred abroad. Transfers between nonresident accounts require prior approval.

Imports and Import Payments

No import licenses are required. However, payments abroad for imports require exchange licenses; these licenses are granted freely in the currency appropriate to the country of origin, or in any convertible currency that may be requested. Goods ordered through a third country must be supported by evidence of original cost. Payment is normally authorized by letter of credit, mail transfer, telegraphic transfer, or cash against documents at sight or on an acceptance basis; for goods which were previously subject to advance deposit requirements, however, the usance must not exceed 90 days.

Payments for Invisibles

Payments for invisibles require exchange licenses. Invisibles connected with trade transactions are treated on the same basis as the goods to which they relate. Foreign nationals may remit a maximum of 35 per cent of their salaries or annual taxable income, provided that they have resided in Ethiopia for less than six years; this time limit does not apply to foreign nationals who are in contractual service with the Ethiopian Government or with an autonomous government organization and who have an employment contract specifically entitling them to remit a percentage of their earnings. Ineligible persons may apply for exchange to meet expenses for maintenance of bona fide dependents, education of children, medical care, and premiums on insurance policies taken out before April 2, 1962. Subject to proper provision having been made for local taxation, foreign companies may remit dividends on their invested and reinvested capital in any currency; for approved projects, they may also transfer amortization at the rate of 10 per cent per annum.

Persons traveling abroad are allowed foreign exchange equivalent to Eth$100 a day for a maximum period of six weeks if the journey is made for business purposes, and up to the equivalent of Eth$l,050 a year for persons 16 years of age or over and Eth$735 a year for those under 16, if the journey is made for pleasure and/or vacation. Travelers may take with them a maximum of Eth$100 in Ethiopian banknotes.

Exports and Export Proceeds

All commodities require export licenses. When applying for a license, an exporter must give details of the goods to be exported, the destination, and the value. The granting of the license by the Exchange Controller enables the goods to pass through customs. The licensing system is used to ensure that foreign exchange receipts are surrendered to the National Bank of Ethiopia within three months and that export proceeds are received in an appropriate currency (see section on Prescription of Currency, above).

Proceeds from Invisibles

Foreign exchange receipts from invisibles must be surrendered. Persons may bring in a maximum of Eth$100 in Ethiopian banknotes. Foreign exchange need not be declared by travelers on entry, and its re-export is freely permitted.

Capital

All receipts of capital in the form of foreign exchange must be surrendered. There is no discrimination regarding the currencies in which foreign investments are accepted. Special concessions are made to approved new enterprises financed by foreign capital; these concessions include exemption from taxes for a period of five years, admission of all imports of machinery free of duty, and permission to foreign investors to remit abroad earned profits after taxation (see section on Payments for Invisibles, above). Upon liquidation, transfer of the entire imported capital and reinvested profits is permitted in any currency. Emigrants’ allowances, transfers of legacies, and savings of foreign employees upon retirement are permitted up to the equivalent of Eth$70,000 in foreign currency. Transfers of sums in excess of this amount are authorized up to a total of Eth$70,000 in any subsequent 12-month period.

Changes during 1965

November 1. The bilateral payments agreement with the United Arab Republic was terminated; henceforth, all settlements with that country would take place in convertible currencies.

Finland1

Exchange Rate System

The par value is Finnish Markkas 3.20 = US$1. The official buying and selling rates for the U.S. dollar vary within ¾ of 1 per cent on either side of the par value. Market rates for certain other currencies2 vary between limits which result from combining the official limits for the U.S. dollar maintained by Finland and such limits in force in the country of the other currency concerned. Forward premiums and discounts are left to the interplay of market forces. Official, fixed, buying and selling rates are applied to U.S. dollars, when used as a unit of account on bilateral clearing accounts. Authorized banks may deal among themselves, with their Finnish customers, and with foreign authorized banks, in U.S. dollars and certain other convertible or externally convertible currencies.2 Forward transactions may be concluded freely for periods not exceeding 12 months; forward transactions with residents must have a commercial basis.

Administration of Control

The Bank of Finland operates the exchange control system, delegating authority to the authorized exchange dealers (mainly commercial banks). Import and export licensing is administered by an office subordinate to the Ministry of Commerce, the Licensing Office, which is presided over by a Licensing Board composed of government officials, including a representative of the Bank of Finland.

Prescription of Currency

For prescription of currency purposes, countries are divided into two groups: the bilateral countries3 and the convertible currency countries (all others). Settlements with the bilateral countries must be made in the currency of the agreement or in Finnish markkas through Restricted Accounts. Settlements with the convertible currency countries may be made in any convertible currency or through Convertible Accounts. Payments for imports from Brazil may be made only to Brazilian banks.

Nonresident Accounts

There are four categories of nonresident accounts: Foreign Exchange Accounts, Convertible Markka Accounts, Restricted Markka Accounts, and Capital Accounts.

1. Foreign Exchange Accounts are held by nonresidents in convertible or bilateral currencies.4 These accounts may be credited with amounts received in the currency in which the account is kept; with payments authorized to be made in the currency in which the account is kept; and with interest accrued on such accounts. They may be debited for transfers to Capital Accounts; for payments to residents of Finland; and for withdrawals in Finnish currency. If the account is held in a convertible currency, it may also be debited for transfers to other Foreign Exchange Accounts in any convertible currency and for transfers abroad or withdrawals in any convertible currency. If the account is held in a bilateral currency, it may be debited for transfers to other Foreign Exchange Accounts in the same currency and for transfers to the respective bilateral country.

2. Convertible Markka Accounts may be credited with the equivalent in Finnish markkas of convertible currencies sold to an authorized bank; with authorized remittances from residents of Finland to residents of convertible currency countries; with transfers from other Convertible Markka Accounts; with the value of Finnish banknotes received by an authorized bank from a bank in a convertible currency country; and with interest accrued on the account. They may be debited for authorized payments in Finland, including the purchase of foreign exchange; for remittances abroad; and for transfers to other Convertible Markka, Restricted Markka, or Capital Accounts.

3. Restricted Markka Accounts are held by residents of countries with which Finland has bilateral payments agreements (see footnote 3). They may be credited with proceeds from the sale of U.S. dollars, the currencies listed in footnote 2, or the currency of the country of the account holder; with transfers from another Restricted Markka Account of the same country; with authorized remittances payable to the country of the account holder; with the value of Finnish banknotes received by an authorized bank from a bank in the country of the account holder; and with interest accrued on the account. They may be debited for authorized payments in Finland in accordance with the relevant payments agreement; for transfers to other Restricted Markka Accounts related to the country of the account holder; for transfers to the country of the account holder; and for transfers to Capital Accounts.

4. Capital Accounts comprise all other nonresident accounts. They may be credited with funds available for credit to a Convertible or a Restricted Markka Account; with proceeds from the sale to a resident of any asset held by a nonresident; with interest on the account; with income from nonresident-held assets; and with sums obtained from the redemption of bonds. If the account holder is a bank, the account may also be credited with transfers from a Capital Account of a resident of the same country. Capital Accounts may be debited for the travel and living expenses in Finland of the account holder and nonresident members of his family or, if the holder is a firm, members of its staff traveling at the firm’s expense, up to Fmk 1,000 for each person for each period of ten days; for payments not exceeding Fmk 1,000 for support of a person in distress in Finland; for payments for expenses incurred by a bank in administering the assets of the account holder; for investment in bonds quoted on the stock exchange and issued after August 31, 1939 which are not tied to any foreign currency and are purchased by a bank on behalf of the holder; for acquisitions of shares on the basis of subscription rights to shares belonging to the same account holder and held in the custody of a bank; for the purchase through the Helsinki stock exchange of shares in place of other shares, held in the custody of a bank, that have been sold not more than a month before; for transfers to the Capital Account of a bank located in the same country as that of the account holder; and for monthly transfers abroad up to Fmk 1,000 to an account holder who has resided abroad during the last three years, provided that he is destitute in his country of residence. Other transfers between Capital Accounts and other transfers abroad of funds deposited in Capital Accounts require the specific permission of the Bank of Finland.

There are also special transfer accounts for nonresident funds awaiting repatriation.

Imports and Import Payments

Most goods may be imported free of license from the license-free area (i.e., nearly all countries with which Finland does not have bilateral payments agreements), provided that the goods are purchased from and originate in that area.5 Certain other goods may be imported from the license-free area under the global quota system, by which import licenses are issued up to the limits of certain value quotas for specified commodity groups. Import licenses are not required for certain commodities originating in bilateral countries. Other imports from the bilateral countries are admitted under licenses up to quotas provided for under the related trade agreement. All other imports require individual licenses.

Exchange is granted without delay for all permitted imports on presentation of an application form, the import license if required, and the original commercial invoice, provided that the goods are already in the country or there is sufficient evidence to guarantee their importation. Importers of specific consumer durable goods must make payment abroad or deposit cash for their imports before customs clearance can be obtained; otherwise, payment for imports must be made within six months after the arrival of goods in the country. For imports on credit of over six months, the credit must be authorized by the Bank of Finland.

Payments for Invisibles

The authorized banks have general permission to effect payments for most current invisibles, subject in some cases to maximum allowance or other conditions; for other transactions, with few exceptions, exchange licenses are granted liberally by the Bank of Finland. All contracts involving payments to nonresidents for which general permission has not been granted must be submitted to the Bank of Finland for approval.

A Finnish resident going abroad may purchase from commercial banks foreign exchange equivalent to Fmk 400 for each visit to the Scandinavian countries and Fmk 800 for each visit to other countries. Resident and nonresident travelers may take out Fmk 100 a trip in Finnish notes and coins and any reasonable amount in foreign notes and coins; travelers to neighboring countries making frequent trips to destinations not located beyond any municipality adjoining Finland’s land boundary may take out Fmk 100 a person a month in Finnish notes and coins. The automatic exchange allocation for business travel is the equivalent of Fmk 120 a day.

Exports and Export Proceeds

Export licenses are required only for exports of metal scrap. Exports of other goods require only an export control declaration, which is approved automatically by the Licensing Office except in a few specified cases. Foreign exchange acquired through commodity exports must be surrendered to the Bank of Finland or an authorized exchange dealer. All exporters, however, are permitted to keep a part of their export proceeds in foreign exchange accounts with Finnish banks or with banks abroad. The accounts may be used by the exporter to pay for incidental expenses related to exports and for authorized imports of raw materials, equipment, and machinery. The Bank of Finland may at any time claim the accounts against payment at the official rate.

The authorized exchange dealers and shipping firms are allowed to maintain their own working balances in foreign exchange, under the supervision of the Bank of Finland.

Proceeds from Invisibles

With the exception of freight earnings, foreign exchange receipts derived from current invisibles do not have to be surrendered. The import of Finnish and foreign means of payment by nonresident travelers and returning Finnish residents is unrestricted.

Capital

Most outward transfers of nonresident capital are subject to approval by the Bank of Finland, which is granted in certain circumstances. Inheritances are in most cases transferable without limitation and, subject to certain conditions, are generally transferred automatically, up to Fmk 50,000 for each beneficiary. Nonresidents who have resided outside Finland for three years are permitted to repatriate their blocked assets within five years (1) by annual installments of Fmk 5,000 for amounts not exceeding Fmk 25,000 (to the annual installments may be added interest accrued on the account calculated in conformity with the ordinary rate of bank interest paid on deposits), and (2) by five equal annual installments for amounts exceeding Fmk 25,000. During the entire period of transfer, the funds must be held on special transfer accounts. Moreover, persons who have resided abroad since September 1, 1939 and foreign corporate bodies that since that date have held an account with a Finnish monetary institution are permitted to repatriate their balances freely.

Nonresident bondholders may repatriate amounts falling due on account of redemption of bonds in markkas issued before September 1, 1939.

Nonresidents may purchase through an authorized bank, against convertible or externally convertible currencies or by debiting a Convertible Markka Account, bonds or shares quoted on the Helsinki stock exchange. When the securities so acquired by a nonresident are deposited in the custody of the authorized bank, the nonresident purchaser is permitted to sell the securities on the stock exchange through the authorized bank and to repatriate the proceeds of the sale in a convertible or an externally convertible currency. No permission is needed for the acquisition of bonds issued after August 31, 1939 with funds classified as Capital Accounts, but proceeds of the sale of such securities may not be repatriated without the permission of the Bank of Finland. Any other transactions in, and the export of, securities involving nonresident interests require approval. If the securities were acquired with convertible foreign exchange or with markkas from a Convertible Markka Account, approval for their export can be obtained freely. The import of securities by nonresidents and returning Finnish residents is unrestricted.

The regulations concerning foreign investments are as follows. All incoming capital transactions must be approved by the Bank of Finland, which considers the foreign exchange aspect. The Bank grants permission liberally, except where it would be contrary to the national interest. At the time the Bank approves an incoming transaction, it may state the conditions for repatriation of the invested capital. Foreign investments that involve a participation of more than 20 per cent in the capital of the enterprise require, in certain cases, the approval of the State Council. This approval, when required, is usually granted liberally. The primary reason for the 20 per cent limit is concern for the protection of natural resources, mainly forests.

On demand of the Bank of Finland, residents must declare their foreign assets and the yields on their property owned abroad. Proceeds from the sale of securities and real property abroad must be surrendered. Outward transfers of capital by residents require individual approval; investment by residents in foreign securities or real estate is rarely permitted. For direct investment abroad, approval is granted on the merits of each case.

Finnish emigrants are granted an exchange allowance of up to Fmk 5,000 a person.

Changes during 1965

January 1. Albania, Cuba, Malawi, Tanzania, the United Arab Republic, and Zambia were included in the license-free area.

January 1. The global quota program for 1965 became effective. The total value of the quotas was fixed at Fmk 492 million, which represented an increase of 23 per cent over the value of the quotas announced for 1964.

February 1. The bilateral payments agreement with Turkey was terminated.

April 15. The exchange control regulations were liberalized as follows: (1) The automatic exchange allocation for business travel was increased from Fmk 80 to Fmk 120 a day. (2) Exporters were exempted from the obligation to surrender all foreign exchange to the extent necessary to pay for imports of raw materials and costs incidental to exports. (3) The amount of foreign exchange which authorized banks could sell for transfers abroad of inheritances was increased from Fmk 32,000 to Fmk 50,000. (4) The exchange allowance for emigrants was increased from Fmk 2,500 to Fmk 5,000 (in addition to the basic travel allowance). (5) The period of time over which blocked capital funds belonging to certain foreign corporate bodies, or to nonresidents who during the last three years have resided abroad, could be transferred abroad with the permission of the Bank of Finland was shortened from ten to five years. In addition, capital funds not exceeding Fmk 25,000 could be transferred in annual amounts up to Fmk 5,000. Persons who had resided abroad since September 1, 1939 and foreign corporate bodies that since that date had held accounts with a Finnish monetary institution could immediately transfer their balances.

April 24. The Government introduced stricter hire-purchase terms in an effort to discourage imports of cars and consumer durables.

April 30. The Bank of Finland requested commercial banks to restrict credits on imported goods and revised its criteria for the authorization of long-term suppliers’ credits; henceforth, these must not exceed 65-75 per cent of the value of the goods.

June 4. The import tax on passenger automobiles was increased.

July 1. Israel was included in the license-free area. As a result, the total value of global quotas for 1965 was increased by Fmk 6 million.

August 1. License-free import treatment was extended to additional commodities listed under 134 tariff headings or their parts. The total amount of the global quota program was consequently reduced by Fmk 17 million.

September 24. A Cabinet Decree authorized the Licensing Office to determine that certain commodities no longer required an import license when imported from bilateral countries, provided that the country of purchase and that of origin were the same; this authority was limited to commodities that already were liberalized for import from the license-free area. In such cases the Licensing Office would have the authority to reintroduce the license requirement for balance of payments reasons or for domestic employment reasons.

November 1. The amount in Finnish notes and coins that travelers may take out was reduced from Fmk 200 to Fmk 100 a person a trip; for travelers to neighboring countries making frequent trips to destinations not located beyond any municipality adjoining Finland’s land boundary, the amount was set at Fmk 100 a person a month. The duty-free allowance of returning tourists was reduced from Fmk 150 to Fmk 70 (Fmk 35 for children under 15) or, for trips of less than 24 hours, Fmk 10.

December 3. Rhodesia was excluded from the license-free area.

Note.—The following changes took place early in 1966:

January 1. Certain goods no longer required a license when imported from bilateral countries, provided that the country of purchase and the country of origin were identical (see September 24, above).

January 1. Further imports from the license-free area were liberalized.

France1

Exchange Rate System

The par value is Francs 4.93706 = US$1. Market rates for spot exchange transactions in U.S. dollars are maintained between official limits of F 4.90 buying, and F 4.9740 selling, per US$1. Market rates for Western European currencies and a few other currencies fluctuate between limits which result from combining the official limits for the U.S. dollar maintained by France and such limits in force in the country of the other currency concerned. Forward exchange transactions take place at freely negotiated rates. Authorized banks in continental France (including Corsica) and in the Principality of Monaco, as well as banks established abroad, are permitted to deal spot or forward in the exchange market in France. Authorized banks may also deal with their correspondents in foreign markets in all currencies. Residents may freely conclude forward exchange contracts for periods not exceeding six months in respect of receipts and payments related to any permitted current or capital transactions; however, forward exchange contracts for longer periods may be entered into for the purpose of making payments for trade transactions.

France accepted the obligations of Article VIII, Sections 2, 3, and 4, of the Fund Agreement, as from February 15, 1961.

Exchange Control Territory

The French Franc Area comprises (1) the territory of the French Republic, i.e., continental France, Corsica, the Overseas Departments (Guadeloupe, Martinique, Guiana, and Réunion), the Overseas Territories, except French Somaliland (Comoro Islands, St. Pierre and Miquelon, New Caledonia, Wallis and Futuna Islands, and French Polynesia); (2) the Condominium of the New Hebrides; and (3) Algeria, Cameroon, Central African Republic, Chad, Congo (Brazzaville), Dahomey, Gabon, Guinea, Ivory Coast, Malagasy Republic, Mali, Mauritania, Monaco, Morocco, Niger, Senegal, Togo, Tunisia, and Upper Volta. Payments from France to other parts of the French Franc Area are free of restriction.

Administration of Control

The Minister of Economy and Finance is granted extensive authority in trade and exchange control. Various departments of the Ministry are concerned with the issue and supervision of import and export documents, the issue of licenses for payments related to imports and exports, control of import payments and export proceeds, the preparation of decisions concerning and control over French investments abroad and foreign investments in France, and the preparation of regulations concerning foreign trade and exchange. The Bank of France is concerned with the issue of licenses for transactions of a financial nature, controls relating to assets held abroad, the repatriation of income, transactions in foreign securities, etc. Much of the detail of exchange control is carried out by authorized banks designated by the Minister of Economy and Finance.

Prescription of Currency

Settlements with other parts of the French Franc Area may be made in the currency of any part of that Area. Settlements with countries in the area of convertibility, which comprises all countries outside the French Franc Area, may be made in any of the currencies of those countries, or through Nonresident Foreign Accounts in Convertible Francs (see section on Nonresident Accounts, below). Settlements with Laos and Viet-Nam are subject to special regulations.

Nonresident Accounts

A nonresident account in francs may be opened by an authorized bank for a nonresident foreigner or for a French national who either has been residing abroad for at least two years or, before this two-year period has elapsed, has been accorded the status of a nonresident. Authorized banks may freely grant credit for up to six months in the form of debit balances on nonresident accounts; otherwise, nonresident accounts in francs may not show a debit balance unless specifically permitted. French franc balances maintained by nonresidents are not permitted to bear interest, except balances maintained by foreign central banks and international organizations.

Foreign Accounts in Convertible Francs may be used for settlements with residents of the French Franc Area (including settlements for imports and exports). They may be credited freely with francs obtained from sales of currencies of countries in the area of convertibility in the exchange market in France or through a French authorized bank in an exchange market abroad; with transfers from other Foreign Accounts in Convertible Francs; with French francs obtained from the sale of foreign banknotes; and with French banknotes and coins received by authorized banks from their correspondents in countries in the area of convertibility. They may be debited freely for purchases in the exchange market in France of any foreign currency negotiated in that market; for purchases of the currency of any country in the area of convertibility through a French authorized bank in an exchange market abroad; for transfers to the credit of another Foreign Account in Convertible Francs; for the purchase of foreign banknotes; and for French banknotes and coins dispatched by authorized banks to their correspondents in countries in the area of convertibility.

Other transactions through Foreign Accounts may be made by individual or general authorization. Three other categories of nonresident accounts (Tourist Accounts, Suspense Accounts, and Nonresident Internal Accounts) are of minor significance, in practice.

Imports and Import Payments

Goods originating in and brought from other parts of the French Franc Area are generally admitted free of quantitative restriction and individual license. Imports of goods which originate in countries outside the French Franc Area and are not covered by French import liberalization require individual licenses. Some liberalized imports from EEC countries and some imports from all countries outside the French Franc Area other than EEC countries are subject to minimum prices; these require an administrative visa in addition to any import license that may exceptionally be required.

For import control purposes, countries outside the French Franc Area are divided into three groups according to the extent of import liberalization: (1) OECD countries in Europe, their dependent territories and associated countries, Andorra, Canada, Finland, the United States, and Yugoslavia; (2) 49 specified countries;2 and (3) all other countries. Imports from all countries of certain agricultural items and certain raw materials are free of quantitative restrictions. Commodities that may be imported free of quantitative restrictions from one group of countries include all the commodities that may be freely imported from the next group of countries plus some other specified commodities. Goods covered by the import liberalization arrangements applicable to one country may be imported freely from another country, provided that the country of origin and the country of shipment both benefit from the liberalization.

Imports of practically all industrial products from countries in group (1) are free of quantitative restrictions, but such restrictions are applied to a number of agricultural products; there is relatively little difference between the lists of goods which may be imported freely from different countries in this group. Imports of 68 industrial products from countries in group (2) are restricted, and restrictions are applied to these 68 and to certain additional industrial products from group (3) countries. Several agricultural products and many industrial products may be imported without quantitative restrictions from most group (3) countries,3 on the basis of an import attestation visaed by the Director of External Economic Relations.

For liberalized imports not exceeding F 10,000 in value, only an invoice has to be submitted to the customs; most liberalized imports exceeding this figure are admitted on the basis of a customs declaration completed by the importer. (These two procedures account for more than 75 per cent of imports.) Some liberalized imports (spare parts, etc.) require an administrative visa, which is stamped on an import attestation; imports of the products of the European Coal and Steel Community require individual licenses, which are issued automatically.

Other imports generally require individual import licenses. These are granted up to quotas determined on an individual commodity basis or for a group of commodities and applicable to specified countries or areas in accordance with trade agreements or an import plan drawn up for a definite period. Moreover, licenses may be issued under the IMEX and EXIM procedures,4 which provide for the importation of raw materials and other goods needed to produce goods for export, or under the compensation transaction procedure, which applies mainly to agricultural items from countries in the Soviet bloc. In view of the high degree of import liberalization, imports under these schemes are of minor importance.

Imports exceeding F 10,000 in value, and all imports for which payment is required before the goods reach France, must be domiciled (registered) with an authorized bank, to which the necessary import documents must be presented and through which all payments related to the import must be made. For goods imported under the import declaration or attestation procedure or with an import license, importers may, as soon as the import has been domiciled with an authorized bank, arrange with the bank to purchase spot or forward exchange. As a general rule, payment to the foreign exporter may be made only after documents have been presented to prove that the goods have been shipped. However, payment up to F 20,000 may be made at the time of domiciliation of the import, and special authorization may be given to importers to purchase exchange forward for a period of more than six months and to make total or partial prepayment at a date preceding that of importation by more than six months.

Payments for Invisibles

Payments for current invisibles are controlled, but applications for remittances are approved, provided that no unauthorized capital transfer is involved.

If justifying documents are presented and certain exchange control requirements are met, authorized banks are permitted to approve applications for payments without any limitation for many categories of current invisibles, and up to established limits for many other categories of current invisibles. Applications for other payments for invisibles are referred to the Bank of France to prevent unauthorized capital transfers.

Payments which may be authorized without limitation include those related to approved trade transactions; to maritime contracts of any kind; to income accruing to nonresidents in the form of profits, dividends, and royalties; to banking commissions, patent fees, and specified categories of taxes; to specified insurance payments; to fees to medical doctors, lawyers, etc.; to rents and similar payments due to nonresident owners and administrators of firms in France; to participation in foreign congresses, conferences, etc.; to alimony in accordance with court decisions; to fees for education and cost of maintenance of students abroad; to business travel abroad; and to net salaries of nonresidents employed in France within three months from the date of payment.

Payments up to established limits which may be approved include those by residents traveling abroad for pleasure (up to F 5,000 for each trip), by residents for family maintenance (up to F 1,000 a month for each beneficiary), and by residents on account of rebates, refunds, discounts, etc. (up to F 10,000). Also, authorized banks may approve payments up to F 500 for any purpose; subject to certain conditions, they may approve transfers up to F 2,500 to residents finding themselves abroad without means of payment.

In addition to the exchange allocation for tourist purposes (up to the equivalent of F 5,000 for each trip), authorized banks may grant resident tourists going abroad exchange for renting rooms and villas abroad; these tourists may freely make travel arrangements through licensed travel agencies operating in France or purchase credit cards in France for their traveling expenses abroad, without limitation, and buy tickets in France against French francs for any transportation abroad. Also, they are permitted to take with them up to the equivalent of F 1,000 in foreign exchange (notes, coins, travelers checks, etc.) which they did not spend during previous travel abroad.

Nonresident travelers leaving France may exchange into foreign currency French banknotes and coins up to F 1,000 without any formality, and larger amounts upon presentation of proof that such banknotes and coins were obtained from the sale of foreign currency or from debiting a nonresident account within the two months preceding their departure from France.

Both resident and nonresident travelers crossing the border may take out of France banknotes or coins (except gold coins) up to F 1,000 in metropolitan francs, or up to F 75,000 in CFA francs or CFP francs, or up to the equivalent of F 750 in banknotes issued by any other bank of issue in the French Franc Area. These banknotes and coins may be spent abroad or exchanged for other currencies.

Exports and Export Proceeds

Certain goods on a prohibited export list may only be exported if a special license is issued. Some other exports also require individual licenses; but if the total value does not exceed F 500, these exports may be permitted without any formality, subject to certain exceptions. Regardless of their value, exports under the IMEX or EXIM procedures, or through compensation transactions with certain countries,5 require licenses if the commodities are those for which export licenses are required; otherwise, they are subject to exchange commitments. Other exports are free of trade or exchange controls; when such exports exceed F 5,000 in value, certain financial information must be supplied together with the customs declaration in order to enable the verification of the collection of the export proceeds.

Goods that are purchased in France by nonresidents against checks or travelers checks expressed in any currency, or against checks issued by foreign correspondents of French banks to the debit of nonresident accounts, are considered as exports and are exempt from turnover taxes.

Exporters may grant credit for 180 days or, subject to administrative authorization, for a longer period; but thereafter the proceeds must be collected within 30 days. Exporters are permitted to sell forward their anticipated export proceeds. If payment is received in foreign currencies, these currencies must be ceded on the exchange market within three months, unless they were used for payments for authorized transactions. Holders of exporters’ cards, which are issued to enterprises that export a certain percentage of their production, are entitled to obtain every year import licenses for any commodity related to their export activity, up to a value corresponding to 10 per cent of their export proceeds in foreign currencies received in the previous year.

Proceeds from Invisibles

Residents are obliged to collect within a month from the date that payment is due proceeds accruing from services rendered by them abroad and, in general, all proceeds accruing from any other source abroad. If the settlement is in foreign currencies, these currencies must be ceded on the exchange market within three months, unless they were used for payments for authorized transactions.

Residents are, however, exempted from this requirement in respect of proceeds of up to F 1,000 accruing from the collection of coupons of foreign securities held abroad and from immovable property located abroad. When the limit of F 1,000 is reached, such proceeds must be repatriated prior to March 31 of the year following the year in which the limit was exceeded.

Travelers may bring in any amount of banknotes and coins (except gold coins) in metropolitan francs, CFA francs, CFP francs, or any foreign currency; however, the exchange of banknotes issued by some banks of issue in the French Franc Area is prohibited or limited to certain amounts for each traveler.

Residents returning from abroad may retain foreign exchange (notes, coins, travelers checks, etc.) up to the equivalent of F 1,000 for use during their next trip abroad.

Capital

All capital transactions involving nonresident interests must be carried out through the intermediary of authorized banks.

Most outward transfers by residents for the purpose of making investments abroad require approval; these include direct investments in foreign enterprises as well as the establishment of branches by French firms. Requests for the authorization of direct investments abroad are approved liberally. Issues of securities in France by nonresidents require the approval of the Ministry of Finance. Authorized banks may freely grant overdrafts on nonresident accounts for periods not exceeding six months. Residents are permitted to deal in securities abroad, within the limitations described below.

Capital assets abroad of residents are not subject to repatriation. Residents of French nationality may use such assets in accordance with a general or individual license. Residents of foreign nationality may dispose freely of their assets abroad. Residents of French nationality must repatriate within three months the proceeds from the sale of securities abroad, unless these proceeds were used to purchase other securities. This obligation also applies to residents of foreign nationality, to the extent that the securities sold have previously been purchased with funds they held in France.

Transfers abroad are permitted freely in respect of legacies and dowries due to nonresidents and in respect of assets of persons of foreign nationality who, after staying in France as residents, leave to establish residence abroad. Emigrants are allocated F 5,000 in addition to the tourist allowance; they may apply to the Bank of France for permission to transfer larger amounts.

Within the limits described below, nonresidents may freely make investments in France and deal in securities in France. They are permitted to repatriate the proceeds accruing from the liquidation of approved investments and from the sale of their securities in France.

The following investments may be made freely in France by, nonresidents: (1) subscriptions to an increase in the capital of a French company, provided that its shares are officially quoted on a stock exchange in France; (2) subscriptions, at the time of issuance, to short-term6 or long-term securities and bonds issued by a French public service organization or by a private enterprise having its head office in France, provided that the securities issued by the private enterprise are officially quoted on a stock exchange in France; (3) acquisition on a spot basis through the intermediary of a notary public of immovable property or rights to such property located in France, for which up to 50 per cent of the sales price may be financed with credit; (4) loans to residents of up to F 1 million (or its equivalent in foreign currency), provided that the rate of interest does not exceed 4 per cent and that the maturity is less than two years;7 and (5) purchases of securities in France as described below. Other investments, particularly direct investments, by nonresidents in France require individual licenses. Repatriation of the proceeds from the liquidation of approved investments is permitted.

Dealings in securities are subject to special regulations; in principle, all dealings must take place on stock exchanges. Nonresidents are permitted to deal on a stock exchange in France in any security officially quoted on that stock exchange; and residents are permitted to deal in France or abroad in any security officially quoted on a stock exchange. Special conditions are, however, attached to transactions in certain foreign securities listed by the Ministry of Economy and Finance. Furthermore, purchases of French securities by nonresidents require prior license when they are to be made in any manner other than by purchase on a French stock exchange.

Securities may be imported and exported freely through authorized banks as follows: imported on behalf of residents or nonresidents; exported on behalf of nonresidents (except French securities belonging to residents of Rumania), or exported on behalf of residents for the purpose of selling the securities in accordance with the regulations mentioned in the preceding paragraph. Dealings in securities on a spot or forward basis may be made in France by all nonresidents. Residents may carry out spot or forward transactions in securities on foreign stock exchanges.

Nonresidents must make payments for securities purchased in France in accordance with the regulations applicable to foreign countries; they are permitted to transfer abroad the proceeds accruing from the sale of securities in France.

Exchange proceeds from the sale of securities abroad by residents may be disposed of in one of the following ways: (1) repatriated and surrendered, (2) used to acquire securities abroad, or (3) if exchange control regulations in the country where the sale took place do not permit the transfer of proceeds from the sale of securities, ceded to a resident for the subsequent purchase of securities in that country.

The purchase of securities by a resident on a stock exchange abroad can be financed by (1) the purchase of foreign exchange on the exchange market in France, (2) the use within three months of the proceeds from the sale abroad of securities by the seller, (3) the use of funds in foreign currency held by the buyer and not subject to surrender requirements, and (4) the use of funds in foreign currency acquired from any person in the French Franc Area if such funds may not be repatriated because of exchange control regulations abroad.

Changes during 1965

March 1. The bilateral payments agreement with Rumania was terminated and Rumania was included in the area of convertibility; all Rumanian Foreign Accounts in Bilateral Francs became Foreign Accounts in Convertible Francs.

May 8. The lists of imports subject to minimum prices were revised.

May 16. The import of coffee from all sources outside the French Franc Area was freed from quantitative restriction and from the requirement of an administrative visa.

May 18. A revised list was published of goods whose export was prohibited unless a special license was granted.

July 13. Nonresidents could freely buy and sell shares of French open-end mutual funds.

July 13. Residents could freely undertake futures operations in foreign commodity markets, provided that the operations were registered with, and carried out through, an authorized bank.

July 13. Importers were permitted to make payments up to F 20,000 to foreign suppliers at the time of domiciliation of the import.

October 15. Residents could freely conclude forward exchange contracts for periods up to six months in respect of exchange receipts and payments related to any permitted current and capital transactions.

October 15. Authorized banks could freely grant credits to nonresidents in the form of overdrafts on nonresident accounts for a period not exceeding six months.

November 10. The regulations concerning insurance and reinsurance operations were revised.

December 23. Authorized banks were freely permitted (1) to make in the United Arab Republic, with blocked Egyptian pounds, those payments allowed by the United Arab Republic and authorized under special or general permission by the French exchange control legislation; (2) to facilitate in that connection the negotiation of blocked Egyptian pounds between French residents; and (3) to sell blocked Egyptian pounds to nonresidents of the French Franc Area.

December 24. Exports to Rhodesia of most oil products were prohibited.

Note.—The following changes took place early in 1966:

January 1. Export controls were revised. Exports to countries outside the French Franc Area no longer had to be domiciled at an authorized bank.

January 8. The EFAC (Exportations-Frais Accessoires) accounts, in which exporters could retain certain percentages of their export proceeds received in currencies of countries outside the French Franc Area, were abolished. Henceforth, holders of an exporter’s card could obtain annually import licenses for any commodity related to their export activity, up to a value corresponding to 10 per cent of their proceeds in non-Franc Area currencies received in the previous year.

January 30. Many imports of manufactured goods from Albania, Bulgaria, Mainland China, Czechoslovakia, Hungary, Poland, Rumania, and the U.S.S.R. were liberalized.

Gabon1

Exchange Rate System

No par value for the currency of Gabon has been established with the Fund. The official unit of currency is the CFA franc, which is equivalent to 0.02 French franc, giving the relationship CFAF 246.853 = US$1.2 The BCEAEC stands ready, in transactions with commercial banks, to buy and sell CFA francs against French francs at the fixed rate of CFAF 1 = 0.02 French franc. Exchange rates for other currencies are based on the fixed rate for the French franc and the Paris market rates for the other currencies concerned.

Administration of Control

Exchange control is administered by the Exchange Office, which is under the authority of the Ministry of National Economy. Exchange transactions are handled by commercial banks under the direction of the Exchange Office. The Foreign Trade Office of the Ministry of National Economy allots to each importer exchange for goods included in the annual import program. It also issues import and export licenses, which must be approved by the Exchange Office.

Prescription of Currency

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

Nonresident Accounts

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

Imports and Import Payments

Imports from countries in the French Franc Area may be made freely, provided that they originate in that Area. Many imports from EEC countries other than France are also free of quantitative restrictions. All other imports from countries outside the French Franc Area except petroleum are subject to import licensing in accordance with an annual import program. This program and the amount of foreign exchange required to implement it are determined by a joint French-Gabonese Committee. For petroleum imports a joint quota is established for the four countries of the Equatorial Customs Union. Licenses for certain imports outside the import program are granted to large firms.

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

Imports of certain goods from countries outside the French Franc Area are subject to ceilings within the import program; there are separate ceilings for EEC countries other than France and for all countries outside the French Franc Area. Total imports from certain Far Eastern countries (taken as a group) are limited to 40 per cent of the total quotas established for all countries outside the French Franc Area.

For goods included in the annual import program, the Ministry of National Economy publishes each year an announcement of the exchange allotted to each registered importer in accordance with, inter alia, his import business in the previous year. The importer submits to the Foreign Trade Department of the Ministry of National Economy an application for a license within the limits of the quota that has been assigned to him. When the license is issued, the Exchange Office makes the exchange available to the importer through his bank. Import licenses are valid for six months; the license may be renewed three times for six months at a time for imports of capital goods, and twice, for three months at a time, for imports of supplies, provided that the importer presents valid reasons for requesting the renewal. Imports of liberalized goods from EEC countries other than France require an import certificate. Under the EFAC arrangements (see section on Exports and Export Proceeds, below) licenses are granted for imports of raw materials and equipment to be used directly by exporters, provided that such imports are paid for with funds from EFAC accounts.

Payments for Invisibles

Payments for invisibles may be made freely to residents of countries in the French Franc Area. All payments for invisibles to other countries are, in general, subject to approval by the Exchange Office. Foreigners who are not nationals of a French Franc Area country and who have been hired by contract and hold an employment card may transfer to their country of origin their net basic pay. There is a basic tourist allocation up to the equivalent of CFAF 250,000 a person for each trip to countries outside the French Franc Area. Travelers to those countries on business may obtain an amount in excess of the above limit for bona fide living expenses, the amount depending on the destination and the duration of the trip. Transfers of earnings from capital invested in Gabon by foreign companies or foreign physical persons require prior approval by the Exchange Office; for investments registered under the Investment Code, such transfers are always permitted upon production of documentary evidence.

Persons having the status of residents and traveling to other countries in the French Franc Area may take out any amount of CFA banknotes or French banknotes. When traveling to other countries, they may take out banknotes up to a maximum of F 1,000 in French francs or CFAF 75,000 or CFPF 75,000 in legal tender CFA or CFP notes and coins. Nonresident travelers may take out foreign notes and coins up to the amounts declared when they entered the country, minus the amounts of French Franc Area banknotes that are taken out.

Exports and Export Proceeds

Exports to countries in the French Franc Area may be made freely. For exports to all other countries licenses, which are issued freely, are required; exceptions are cocoa, timber, and manganese, for which only an exchange commitment (engagement de change) must be approved by the Exchange Office. Gold and uranium may be exported only to France. The exporter undertakes to repatriate the export proceeds within a period of 180 days from the date of arrival of the goods at their destination. When settlement is made in a currency other than a French Franc Area currency, the exporter must surrender it on the Paris exchange market within three months following settlement.

Exporters may retain, however, a part of their export proceeds (depending on the country of destination) in special, nontransferable EFAC accounts (Exportations-Frais Accessoires), which may be used by the exporters themselves to make payments abroad for export promotion expenses and for modernization and expansion needs of their industries. The portion that may be retained is 15 per cent for earnings accruing in U.S. or Canadian dollars, and 8 per cent for receipts in other currencies of countries outside the French Franc Area.

Proceeds from Invisibles

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

Capital

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

Under the Investment Code promulgated on December 4, 1961, any enterprise established in Gabon, whether domestic or foreign, is granted, under certain conditions, reduced duties and taxes on specified imports, as well as exemption from direct taxes on specific income.

The Code also provides for three categories of preferential treatment, in accordance with which fiscal and other privileges may be accorded to firms investing in specified new industries or in the expansion of existing ones. Preferential treatment A applies to enterprises whose activity and market are limited to the national territory of Gabon; it is granted for a period of up to 10 years. Preferential treatment B applies to enterprises whose activity and market include the territory of two or more states of the Equatorial Customs Union (the Central African Republic, Chad, Congo (Brazzaville), and Gabon). Preferential treatment C is reserved for enterprises of prime importance to the country’s economic development; it provides for stabilization of their fiscal charges for up to 25 years. The granting of any one of the three kinds of preferential treatment automatically includes the application of specified exemptions from direct taxes which are granted under the provisions of other existing legislation.

Requests for approval of preferential treatment must be submitted to the Minister of National Economy, who, after examining the documents, transmits them to the Investment Commission. After an opinion has been given by that Commission, the project is submitted to the Council of Ministers. Preferential treatments A and C are granted by decree issued by the Council of Ministers. Preferential treatment B is granted by a decision of the Executive Committee of the Equatorial Customs Union upon the recommendation of the Council of Ministers.

Foreigners who are not nationals of a country of the French Franc Area are permitted to repatriate their capital, provided that they have settled their taxes and provided that the foreign investment regime is applicable to them.

Foreigners leaving Gabon permanently may take out up to CFAF 250,000 in foreign exchange, provided that they sign a statement to the effect that they are not returning to the French Franc Area; three months after their return to their country of origin they may obtain the transfer of their total bank balances in Gabon.

Changes during 1965

February 23. All payments to countries outside the French Franc Area became subject to a charge of 0.4 per cent.

March 1. Settlements with Rumania ceased to be made on a bilateral basis, as the bilateral payments agreement between France and Rumania, which was also applicable to Gabon, was terminated.

March 19. The charge of 0.4 per cent on payments to countries outside the French Franc Area was abolished.

August 1. Further imports from EEC countries other than France were freed from quantitative restrictions.

Note.—The following developments took place early in 1966:

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

January 1. The import allocation for certain Far Eastern countries (taken as a group) was increased from 30 per cent to 40 per cent of total quotas established for all countries outside the French Franc Area.

Federal Republic of Germany1

Exchange System

The par value is Deutsche Mark 4.00 = US$1. The official limits established by the Deutsche Bundesbank for its dealings with banks are DM 3.97 buying, and DM 4.03 selling, per US$1. For the banks’ transactions with their customers, these rates are considered as middle rates which can be exceeded by buying or selling margins. The rate for the U.S. dollar fluctuates in the exchange market between these margins. Market rates for certain other currencies vary between limits which result from combining the official limits for the U.S. dollar maintained by Germany2 and such limits in force in the country of the other currency concerned. All other currencies are also admitted to market quotations in Germany. Premiums and discounts on forward exchange transactions are left to the interplay of market forces. There are no restrictions on foreign exchange dealings by residents or nonresidents.

There are no restrictions on payments and no prescription of currency requirements. Residents are not required to repatriate or surrender their foreign exchange earnings or holdings, which may be held in Germany or abroad at the choice of the holder. Accounts in deutsche mark or in any foreign currency may be held in Germany by any nonresident. Balances on these accounts may be transferred freely to any account and used for any payment in Germany or abroad, including the purchase of any foreign currency; these accounts may be credited freely with any payment. However, credit balances on nonresident accounts, except savings accounts of individual persons, may carry interest only if a special license has been granted. Such licenses are given to all credit institutions for the payment of interest on customers’ balances held as cover for letters of credit; otherwise, licenses are given in exceptional cases only.

The Federal Republic of Germany accepted the obligations of Article VIII, Sections 2, 3, and 4, of the Fund Agreement, as from February 15, 1961.

Administration of Control

The administration of control in Germany in respect of imports and exports of goods and services is operated by the Federal Ministry of Economics, the Federal Office for Trade and Industry (Bundesamt fürgewerbliche Wirtschaft), the Federal Office for Food and Forestry (Bundesamt für Ernährung und Forstwirtschaft), Import and Storage Agencies (Einfuhr- und Vorratsstellen), and the Land Ministries of Economics. The Deutsche Bundesbank is primarily the authority in charge of exchange control for certain capital transactions. All banks in Germany are permitted to carry out foreign exchange transactions.

Imports and Import Payments

Quantitative restrictions are not applied to imports of most commodities purchased from and originating in countries outside the Sino-Soviet bloc; out of a total of some 6,900 items, 6,600 may be imported freely from those countries. In addition, some 150 items are liberalized for imports originating in European OECD countries and their dependent territories. Certain solid fuels are liberalized only when purchased and imported from other member countries of the European Coal and Steel Community. Imports from all sources of about 160 tariff items (sugar, cereals, cattle, certain meat and meat products, milk, and edible fats) are controlled by virtue of the German Marketing Laws, unless they are covered by EEC market regulations and therefore are free from quantitative restriction (at present, wheat and pork).

Imports free of quantitative restriction are not subject to licensing, and no prior control is exercised over such imports; however, an import declaration stamped by the Deutsche Bundesbank, which serves as documentation for customs control and for statistical purposes, is required. For imports still subject to quantitative restriction (with certain exceptions, such as books, maps, etc., and small parcels through the post), an individual import license is required. Import licenses may be allocated to importers either on a first-come, first-served basis, or account may be taken of conditions of price, delivery, quality, etc., or of the total value of applications in relation to the quotas established for specified commodities.

For manufactured goods, the period of validity of the license is usually six months, but it may be extended in certain cases (e.g., heavy machinery) to a period necessary for the production of the goods. For agricultural products the usual period is also six months; however, for seasonal imports, it may be shorter. No fees are charged for licenses to import manufactured goods.

Payments for imports are free, even if the underlying import transaction is still restricted. Commodity futures may be dealt in freely. Transit trade transactions may, in principle, be carried out freely; but when they involve certain countries, they are subject to certain conditions.

Payments for Invisibles

All payments for invisibles may be made freely without individual license. German and foreign notes and coins and other means of payment may be exported freely.

The following transactions—but not the related payments—between residents and nonresidents are subject to restriction: the chartering of foreign ships from residents of specified countries; the use of foreign boats in certain inland waterways traffic; transactions with specified countries (which do not grant reciprocal treatment) for hull and marine liability insurance and aviation insurance, except passenger accident insurance; the production of motion pictures in association with nonresidents; and certain contracts with nonresidents pertaining to motion-picture films.3

Exports and Export Proceeds

With few exceptions, export transactions may be carried out freely. For all goods, only an export notification, for statistical purposes, is required. Certain exports—mostly strategic goods—are subject to individual licensing. The customs authorities exercise control over export declarations and also check to see whether a license is required.

Foreign exchange proceeds from exports do not have to be declared or surrendered, and they may be used for all payments. Claims exceeding DM 10,000 that have been overdue for more than three months must be reported, for statistical purposes.

Proceeds from Invisibles

With few exceptions, services performed for nonresidents do not require licenses. However, licenses are required for transactions related to specific sea services, and for technical assistance through the delivery to residents of Eastern bloc countries of constructional drawings, materials, and instructions for manufacture, insofar as such assistance is for the production of goods whose export requires a license.

There are no restrictions on the receipt of payments for services rendered to nonresidents. However, receipts exceeding DM 500 on account of such services have to be reported.

German and foreign notes and coins and other means of payment may be imported freely.

Capital

Residents and nonresidents may import or export capital freely without a license. However, domestic money market paper (Treasury bills, etc.) and domestic fixed-interest-bearing securities—if in the latter case the contracts contain an obligation to reacquire the securities later at a definitely fixed price—may not be sold to nonresidents without an individual license. Securities of all types may be imported or exported freely. There are no limitations on the disposal of legacies located in Germany and inherited by nonresidents, or on legacies located abroad and inherited by residents.

Changes during 1965

January 1. Imports from Japan corresponding to 8 additional tariff items were liberalized, and quotas on 20 other tariff items were increased.

December 15. Imports of tobacco and sugar from Rhodesia were prohibited.

Note.—The following change took place early in 1966:

January 1. The amount beyond which export claims overdue for more than three months must be reported was raised from DM 3,000 to DM 10,000.

Ghana1

Exchange Rate System

The par value is Cedi 1 = US$1.16667. Exchange rates are based on the fixed rate for sterling, which is Ȼ 1 = £ stg. 0. 8s. 4d. The cedi circulates concurrently with the Ghana pound, which is being withdrawn from circulation at a rate of Ȼ 2.40 = £G 1. The Bank of Ghana does not quote rates other than for the pound sterling; it deals in sterling at rates within ½ of 1 per cent on either side of parity, the statutory limits being ¾ of 1 per cent on either side of parity. For other currencies, the commercial banks in Accra base their rates on the current London market rates plus the exchange charge of ½ of 1 per cent levied on sterling transactions and a brokerage fee of 18 of 1 per cent. The authorized banks may exchange Ghanaian currency for any foreign currency and engage in arbitrage in all currencies, spot or forward.

Administration of Control

A Foreign Exchange Committee, under the chairmanship of the Governor of the Bank of Ghana, is responsible for drawing up an annual foreign exchange budget. The Ministry of Trade prepares an import and export plan, which is subject to approval by the Cabinet. The over-all import plan must correspond to the import ceiling set by the Foreign Exchange Committee. The Controller of Imports and Exports at the Ministry of Trade is empowered, on behalf of the Ministry of Trade, to prohibit or regulate the import and export of all goods. Open general licenses, other import licenses, and other export licenses are granted by the Controller of Imports and Exports.

Applications for individual import licenses must be channeled through the appropriate ministry or government agency for endorsement as follows: all government departments through the Office of the Planning Commission; state or semistate industrial enterprises through the State Enterprises Secretariat; State Farms Corporations, the agricultural branch of the Workers Brigade, and the United Ghana Farmers Council Cooperatives through the Ministry of Agriculture; and industrialists in the private sector through the Ministry of Industries. Applications that have been endorsed by the competent ministry or agency are then forwarded to the Controller of Imports and Exports at the Ministry of Trade. An exception is made for applications by the private sector for the import of consumer goods as well as for applications by the National Trading Corporation and similar state trading agencies; such applications are submitted directly to the Ministry of Trade.

The Exchange Control Department of the Bank of Ghana administers the allocation of exchange for payments for invisibles and capital. Permitted foreign exchange transactions must be made through authorized banks.

Prescription of Currency

Ghana is a member of the Sterling Area and has prescription of currency requirements similar to those of the United Kingdom. Settlements between residents of Ghana and residents of other Sterling Area countries may be made in cedis through Sterling Area accounts, in sterling, or in other Sterling Area currencies. Authorized payments, including payments for imports, by residents of Ghana to residents of countries outside the Sterling Area other than Rhodesia may be made in cedis to the credit of a Foreign Account, in sterling to the credit of an External Account, or in any foreign currency. Receipts from residents of countries outside the Sterling Area other than Rhodesia may be obtained in cedis from a Foreign Account, in sterling from an External Account, or in any non-Sterling Area currency which is freely exchangeable for sterling or cedis. However, settlements related to transactions covered by bilateral trade and payments agreements are made through clearing accounts maintained by the Bank of Ghana and/or the central or state banks of the countries concerned.2

Nonresident Accounts

Accounts in cedis held by residents of countries within the Sterling Area are designated Sterling Area Accounts. These accounts may be credited with authorized payments by residents of Ghana, with transfers from Foreign Accounts and from other Sterling Area Accounts, and with the proceeds from sales of foreign currencies. They may be debited for payments to residents of the Sterling Area countries, for transfers to other Sterling Area Accounts, and for purchases of Sterling Area currencies.

Accounts in cedis held by residents of countries outside the Sterling Area other than Rhodesia with authorized banks in Ghana are designated Foreign Accounts. The opening of these accounts is subject to approval by the Bank of Ghana. The accounts may be credited with authorized payments by residents of the Sterling Area countries, with transfers from other Foreign Accounts, and with the proceeds from sales of non-Sterling Area currencies other than Rhodesian pounds. They may be debited for payments to residents of the Sterling Area, for transfers to other Foreign Accounts, and for purchases of foreign currency other than Rhodesian pounds.

Nonresident accounts maintained under the provisions of bilateral payments agreements are called “Territorial Accounts.” These accounts may be credited with authorized payments by residents of Sterling Area countries, with transfers from Foreign Accounts, with payments received through the Bank of Ghana for settlements with bilateral payments agreement countries, and with proceeds from sales of non-Sterling Area currencies other than Rhodesian pounds. They may be debited for authorized payments to residents of Ghana, for transfers to other Territorial Accounts related to the same country, and for transfers to the related clearing account at the Bank of Ghana.

Blocked Accounts are nonresident accounts of another category, the purpose of which is to receive funds that are not placed at the free disposal of nonresidents, e.g., certain types of capital proceeds. These may be debited for authorized payments, including the purchase of approved securities.

Imports and Import Payments

A large part of the import trade is carried out through the state-owned Ghanaian National Trading Corporation or similar state trading agencies. Other goods are imported by private importers who must be registered. Certain imports are prohibited. There are four open general licenses which permit the free import from any country of a few commodities (such as trade samples, personal or household effects, gifts, and books). All other imports require individual licenses, which are issued within the limits of the import plan. Individual licenses are of two kinds: specific and special unnumbered licenses. All goods not covered by an open general license must be covered by a specific license, but where satisfactory evidence can be produced to the effect that payment for such goods has been made and therefore no transfer of foreign exchange is involved, they can be imported under “special unnumbered licenses.” A special foreign exchange allocation is provided for imports from bilateral payments agreement countries with centrally planned economies; a specified proportion of annual imports must be obtained from these currencies. A license fee of 1 per cent is payable on the value of the goods specified in each license.

Additional import licenses, which are nontransferable, may be granted under an export incentive scheme to manufacturers exporting locally made goods, including goods incorporating imported raw materials or components; licenses issued are replacement, assistance, or bonus licenses (see Exports and Export Proceeds, below). Licenses for imports from bilateral payments agreement countries specify the bilateral partner country from which the commodity has to be imported; licenses to import from countries outside the bilateral account group are valid for any of these countries. Licenses are normally issued on a c.i.f. basis but are endorsed to the effect that insurance must be covered in Ghana.

Imports from Rhodesia, South Africa, South West Africa, and the Portuguese Monetary Area are not permitted.

Exchange for payment of approved imports is granted freely by authorized banks. Imports by the private sector under individual licenses have to be financed on the basis of sight or acceptance documentary credits established by the importer with a commercial bank in Ghana. The opening of all import letters of credit requires the approval of the Bank of Ghana. Importers are required to deposit with the Bank of Ghana a minimum of 15 per cent of the value of letters of credit covering imports of consumer goods, including consumer durable goods; the corresponding requirement for industrial raw materials is 5 per cent and that for capital goods 1 per cent. In practice, however, commercial banks require importers to make down-payments on the opening of letters of credit for all categories of imports. Importers are required to deposit with the Bank of Ghana 15 per cent of the value of their orders for imports of consumer goods to be financed on a collection basis, within 14 days from the date of confirmation of the orders. Exchange control approval must be obtained by banks for a credit ceiling for the individual importer before acceptance documentary credits are established. Documents against acceptance terms for imports valued at more than Ȼ 360 require exchange control approval before orders are placed.

Many imports are subject to a levy of 11.5 per cent on the combined amount of c.i.f. value, import duty, and other import charges.

Payments for Invisibles

All payments for invisibles require specific approval of the Exchange Control Department of the Bank of Ghana, and documentary evidence must support all applications.

The following categories of payments are normally authorized in connection with the importation of goods: (1) the buying commission—this must be duly endorsed on the import license and the amount of the authorized commission is deducted from the value of the import license; (2) the transfer of normal bank charges payable to overseas bankers for import payments, provided that the amount of the bank charges and the buying commission combined do not exceed 4 per cent of the c.i.f. value of the goods; and (3) the transfer of funds to cover interest on bills up to 6½ per cent per annum, provided that the license under which the goods are imported has been authorized by the Ministry of Trade and that this Ministry is satisfied with the acceptance terms. Freight charges must be paid to the local shipping agents; the transfer of funds to cover such charges is normally permitted, provided that the applications are properly documented. Insurance on all imports shipped to Ghana on f.o.b. or c. & f. terms must be arranged in Ghanaian currency with local insurance companies.

Remittances of income by non-Ghanaian employees are limited to 50 per cent of their annual earnings, up to a maximum of Ȼ 6,000 a year; this quota is intended to cover all personal and family requirements and commitments outside Ghana, including leave expenses, travel for health purposes, education, gifts, insurance premiums, subscriptions, and donations. Applications for remittances of income by non-Ghanaian self-employed persons are considered on their individual merits by the Exchange Control Department of the Bank of Ghana.

Nonresident companies are permitted to transfer abroad freely their net profits, i.e., profits after payment of the prevailing 45 per cent tax on companies and of a 20 per cent withholding tax.

The basic annual travel allowance for Ghanaians is Ȼ 50 for each person 18 years of age or over and Ȼ 25 for each person under that age. Foreigners resident in Ghana but domiciled elsewhere in the Sterling Area are allowed up to Ȼ 600 a calendar year out of their personal remittance quota. Exchange for business travel is granted up to Ȼ 25 a day, for a maximum of 7 days. All residents may buy round-trip tickets in Ghana to the country of destination. Residents of any nationality (except children under 2 years of age, diplomats, and UN personnel) who, for any purpose, are leaving Ghana temporarily by air or sea must pay a travel tax of 10 per cent of the price of the round-trip ticket.

Persons leaving Ghana may take with them Ghanaian currency notes and foreign currency notes (including CFA franc notes) together equivalent to Ȼ 120, provided that not more than Ȼ 24 is taken in any one currency. Ghanaian banknotes may be taken out by any traveler up to Ȼ 24, but may be spent only on Ghanaian aircraft and ships. Nonresident travelers may take out any foreign currency imported upon entry.

Exports and Export Proceeds

There are two open general licenses for exports, covering such articles as trade samples, advertising materials, postage stamps, gifts up to Ȼ 24 in value, luggage, and gold coins commemorating the founding of the Republic.3 All other exports require specific licenses from the Controller of Imports and Exports prior to shipment. Most items are exported through the Ghana Agricultural Produce Marketing Board. Exports to Rhodesia, South Africa, South West Africa, and the Portuguese Monetary Area are prohibited.

Manufacturers who have exported, or intend to export, goods made in Ghana may obtain nontransferable import licenses for certain goods required in the production process. Replacement licenses are issued for raw materials and components imported against an import license granted for production for the domestic market; assistance licenses are available to importers who intend to manufacture for export; bonus licenses are granted to those who have exported manufactured goods incorporating raw materials and/or components imported under replacement or assistance licenses or under regular licenses that contained an allocation to cover export trade.

Exporters are required to collect proceeds from their exports within 60 days of shipment; export proceeds in foreign exchange must be surrendered.

Proceeds from Invisibles

All receipts from invisibles must be sold to an authorized bank. Foreign currency notes may be imported freely; CFA franc notes may be sold only to the Bank of Ghana or to an authorized bank. Travelers may bring in Ghanaian currency notes and CFA franc notes in any amount, but cedi notes in excess of Ȼ 24 must be declared.

Capital

Foreign investment in Ghana requires prior approval if repatriation is to be guaranteed. The Capital Investments Act, which was promulgated in April 1963, provides for the granting of special benefits to specified existing investments as well as to new investments. Under the Act approval may be granted to investments that contribute to the development and utilization of productive capacity, the reduction of import requirements, the attainment of a high level of employment, or the acquisition of technical skills by citizens of Ghana. Investments granted “approved status” under this Act obtain a guarantee of the right to transfer profits and liquidation proceeds; tax holidays, initial capital allowances, etc., are also available for such investments. The Act also stipulates that the assets of foreign investors may not be expropriated and that, when approved enterprises are nationalized in the public interest, fair compensation is to be determined either by voluntary agreement of the parties or through arbitration by the International Bank for Reconstruction and Development. A Capital Investments Board, whose principal function is to decide which foreign investments qualify for benefits under the Act, has been established.

All outgoing capital movements must be approved; applications for such transfers must be supported by documentary evidence and are considered on their merits. Transfers to beneficiaries under wills and intestacies are approved, provided that all local indebtedness has been paid. Requests for the transfer of funds representing personal assets of foreign residents in Ghana who retire and return to their home country are considered individually on their merits. Applications must be supported by appropriate documentation showing that the savings are genuine and that no illegal transfer of capital is involved. If the amounts involved are very large, their transfer may be authorized over a period of a few months. Proceeds from the liquidation of real assets of foreign nationals leaving Ghana may be directed to reinvestment in registered government stocks, Treasury loans, or Treasury bills; the interest accruing on such investments is transferable. Applications for the transfer abroad of funds by emigrants must be accompanied by appropriate documentation and are also considered on their individual merits.

Loan and overdraft facilities to resident companies controlled by nonresidents require the individual approval of the exchange control authorities.

Transactions in securities are controlled to ensure that capital is not transferred abroad without express permission. In respect of portfolio investments, residents have to obtain approval for any switch in their holdings of securities issued by nonresidents.

Changes during 1965

January 21. A 10 per cent sales tax was levied on many imports.

January 21. Import duties on a wide range of manufactured goods were increased. The purchase tax on imported manufactured goods was abolished except for motor vehicles, the tax on which was increased.

January 21. A foreign travel tax was introduced. Residents (irrespective of nationality) leaving Ghana temporarily by aircraft or ship were required to pay a tax of 10 per cent on the price of the round-trip ticket. Children under 2 years of age, diplomats, and UN personnel were exempt.

February 25. The minimum period of exemption from the payment of income tax for investments approved under the Capital Investments Act was reduced from five years to one year.

March 1. Importers of goods to be financed on a collection basis were required to deposit with the Bank of Ghana 15 per cent of the invoice value, within 14 days from the date of confirmation of the order.

March 1. Import licenses payable in convertible currencies were, for most goods, restricted to a deferred payment basis.

March 1. The Meat Products Corporation was established to import meat; in September it was granted a monopoly also over the commercial import of live animals.

March 31. The 10 per cent sales tax, insofar as it was applicable to imports, was replaced by a levy of 11.5 per cent, calculated on the c.i.f. value plus customs duty and other import charges.

May 19. The State Machinery Trading Corporation was set up to import all commercial vehicles and cars, machinery of all kinds and components, and all spare parts or accessories for any type of vehicle or machinery. The Corporation would carry on the functions of the Ghana Supply Commission.

May 19. The State Textiles Corporation was established to import all types of textiles.

July 16. The State Machinery Trading Corporation and the State Textiles Corporation ceased operating. It was announced that a Ghana People’s Trading Corporation would be established which could import and distribute any type of consumer goods in competition with existing firms.

July 19. A new monetary unit, the cedi, was issued to replace the Ghana pound at a rate of Ȼ 2.40 = £G 1. The two currencies would circulate concurrently until July 19, 1966. The par value for the cedi was established at Ȼ 1 = US$1.16667.

August 23. It was officially stated that, except in accordance with existing commitments under trade agreements or payments agreements, cocoa could no longer be exported on a barter basis or against payment in inconvertible currencies.

September 17. New regulations were issued concerning the import and export of domestic and foreign banknotes.

September 24. Applications for import licenses for 1966 were invited.

October 27. The import licensing procedures for 1966 were announced. The special list of commodities that could be imported only from bilateral payments agreement countries was abolished. Four open general licenses for imports from all sources were established, replacing the existing ones. An export-incentive scheme for manufactured goods was introduced, which provided for the issue of additional import licenses to manufacturers exporting goods made in Ghana, including goods incorporating imported raw materials or components. A list was issued of goods for which, save in exceptional circumstances, no import licenses would be issued; these included various kinds of textiles and footwear.

November 1. The functions of the Exchange Control Committee were taken over by the Exchange Control Department of the Bank of Ghana.

November 16. Payments to and receipts from Rhodesia were prohibited.

Note.—The following changes took place early in 1966:

January 1. The import licensing procedures announced on October 27, 1965 came into operation.

January 7. Imports from and exports to Rhodesia were prohibited.

January 17. Exchange allocations for tourist and business travel were reduced. The basic travel allowance was cut back from Ȼ 120 to Ȼ 50 a year. Exchange for business travel would be granted up to Ȼ 25 a day for a maximum of seven days.

January 17. Imports valued at more than Ȼ 360 and payable on documents against acceptance terms required prior exchange control approval. All applications for the opening of import letters of credit required the prior approval of the Bank of Ghana. The deposit requirements for such credits were extended to imports of industrial raw materials and to capital goods, for which deposits of 5 per cent and 1 per cent, respectively, had to be made.

Greece

Exchange Rate System

The par value is Greek Drachmas 30.00 = US$1. The official rates are Dr 29.90 buying, and Dr 30.10 selling, per US$1. Market rates for other currencies vary between limits which result from combining the official limits for the U.S. dollar maintained by Greece and such limits in force in the country of the other currency concerned.

Administration of Control

Controls are administered on the policy level by the Ministry of Coordination, the Ministry of Trade, the Currency Committee, and the Foreign Trade Board. Exchange control is implemented and applied, and import approvals are granted, by the Bank of Greece and authorized commercial banks. Import and export licenses are issued by the Bank of Greece, authorized banks, and the Ministry of Commerce and, in some cases, require the prior approval of the competent ministry.

Prescription of Currency

Settlements on account of merchandise transactions and invisibles are made on the basis of the origin or destination of the goods and services involved or in the currency and manner provided for by trade and payments agreements. Settlements with countries with which Greece has bilateral payments agreements are made through controlled accounts, with the U.S. dollar as the currency of account.1 Settlements with all other countries are made in any convertible currency or through Foreign Sight Deposit Accounts in drachmas.

Nonresidents Accounts

Nonresidents are permitted to open with Greek banks convertible Foreign Sight Deposit Accounts in drachmas or convertible currencies. These accounts may be credited with convertible foreign exchange or the proceeds from sales of convertible currencies, with authorized payments by residents of Greece for imports or services payable in convertible currencies, and with transfers from other Foreign Sight Deposit Accounts. They may be debited for payments to residents for current transactions, for transfers to other Foreign Sight Deposit Accounts, and for the purchase and transfer abroad of any convertible currency. Any withdrawal from drachma accounts for use in Greece and any conversion of foreign exchange withdrawals into drachmas entail the loss of the conversion right of the sums withdrawn. The maximum rate of interest on such accounts is 1½ per cent per annum.

Nonresident investors enjoying the privileges of Legislative Decree No. 2687/53 (see section on Capital, below) may also establish time deposits, for a minimum period of six months and with a minimum deposit in convertible currencies equivalent to US$10,000; balances on these accounts earn interest of between 5 per cent and 6 per cent, and principal and interest are freely transferable at maturity in the currency of the deposit.

All drachma assets of nonresidents other than those in Foreign Sight Deposit Accounts must be declared and are held in blocked accounts. Domestic banknotes in excess of Dr 200 brought in by nonresident travelers must also be credited to a blocked account. Subject to the approval of the exchange control authorities, balances on blocked accounts may be used for such purposes as personal expenses in Greece up to Dr 30,000, purchases of securities officially listed on the stock exchange in Greece, and purchases of real estate in Greece. Amounts of up to Dr 60,000 may be released for remittance by each account holder, provided that his account had been opened before December 31, 1963 and the money deposited was derived from general revenue sources; amounts of up to Dr 30,000 may be released semiannually for remittance by each account holder, from accounts opened after January 1, 1964, provided that the money deposited was derived exclusively from rents. Other amounts of balances on blocked accounts may also be transferred abroad with the prior approval of the Bank of Greece. Blocked balances may be deposited with a commercial bank, where they earn interest at current rates for sight deposits.

Imports and Import Payments

Imports of a few commodities from all sources are prohibited or suspended. All imports, other than those with an invoice value c.i.f. of the equivalent of US$100 or less for which payment will be made through an authorized bank, require approval. For most imports, prior approval is required; however, for certain commodities, mainly machinery and raw materials, imports may be effected without prior approval. The granting of an import license implies the allocation of appropriate foreign exchange. Apart from imports for which special licenses are required, two general import procedures (E and D) are applicable to private imports, mainly for statistical purposes. Under procedure E, the approval of an authorized bank is required (1) for imports from countries participating in the European Monetary Agreement (EMA) when payment is to be made in a convertible or externally convertible European currency; (2) for imports from Canada or the United States when payment is to be made in free dollars, i.e., not on the basis of procurement authorizations under U.S. aid; (3) for imports from countries with which Greece has concluded bilateral payments agreements when payment is to be made through the relevant clearing account; and (4) for imports from Cyprus when payment is made in free Cyprus pounds or through one of the EMA countries. No license is necessary under procedure E, but import applications which have been approved by an authorized bank are registered with the Bank of Greece. Under procedure D, an import approval issued by the Bank of Greece is required for imports financed by U.S. aid, for imports other than those covered by procedure E, and for imports for which the importer requests changes in the general provisions concerning the terms of shipment, method of settlement, terms of payment, etc. For all goods that do not require a special import license, prices must be approved and pro forma invoices visaed in Greece by a local Chamber of Commerce.

Special licenses are required for imports of commodities in List A (certain luxury items, textiles, automobiles and parts, and certain foodstuffs, including rice) and List B (certain types of machinery and spare parts). Special regulations govern imports of petroleum products similar to those produced by Greek refineries and imports of certain other items, such as goods under monopoly control, medicines, narcotics, wheat and flour, sulphur, and motion pictures, as well as barter transactions based on clearing agreements.

For purposes of applying regulations concerning payments for imports and advance deposit requirements, all private imports are classified in nine lists (P-3, P-6, F, F-50/1-3, and F-100/1-3). Payments for imports may be made by letter of credit, by cash against shipping documents, or by acceptance of time drafts (which is permitted only for goods in Lists P-3 and P-6, the time limit being three months for List P-3 and one year for List P-6, except for machinery and spare parts, for which the time limit is three years). The Ministry of Commerce may authorize longer payment periods and may also approve deferred payments for imports not included in any one of the nine lists. When time drafts are accepted, a personal written undertaking amounting to 4 per cent (List P-6) or 8 per cent (List P-3) of the amount of the draft is required as a guarantee that the payment will be made within the prescribed time limits.

When a letter of credit is opened, the importer is required to deposit in drachmas the whole amount of the credit with the intervening bank. In addition, for those imports included in Lists F-100/1-3, further cash deposits of 26-40 per cent of the c.i.f. value are required as security for import duties and other taxes. For imports under procedure E, this deposit must be made when the import approval is obtained; for imports under procedure D, the deposit must be made within 20 days of the import approval.

Advance deposits are not required for imports for which payment is to be made by acceptance of time drafts. When payments for imports are to be made against sight drafts, advance deposits in cash are required for private imports included in Lists F-50/1-3 and F-100/1-3.2 Advance deposits are the same for all countries. They are calculated on the c.i.f. invoice value and consist of two components: a prepayment required when applying for an import approval and an advance (security) against import duties and other taxes. Security deposits, however, are not required for capital goods and spare parts that are exempt from import duty by virtue of the laws governing investment of foreign or domestic capital. The rates of deposit for each list of imports are set out below.

PrepaymentSecurityTotal
In per cent of invoice value
List F-50/1502070
List F-50/2451863
List F-50/3351449
List F-100/110040140
List F-100/290336126
List F-100/3702898

For goods imported and cleared through customs in the Dodecanese Islands, the advance against import duties and other taxes is reduced to one half of the above-mentioned percentages. When imports are financed with U.S. aid funds, a further deposit of 10 per cent must be made in cash or by bank guarantee and in favor of the Greek State, in addition to any deposit as specified above. All deposits must be made with the intervening bank (1) at the time the import approval is obtained, for imports under procedure E, and (2) within 10 days (for Athens and the Piraeus area) or 20 days (for the provinces) of obtaining the import approval, for imports under procedure D. Upon delivery of the shipping documents, the importer’s bank issues a permit for the customs clearance of the goods and advance deposits are refunded.

Advance payments may be made to foreign suppliers for all imports against delivery of shipping documents or against a letter of undertaking issued by a foreign bank. Special regulations govern imports by state agencies, public entities, and public utility companies. Except for goods on List P-6, which may be shipped prior to approval, goods must be shipped within six months and arrive in Greece within nine months after the date of import approval.

Payments for Invisibles

Payments for invisibles require approval, but this is granted freely for expenses incidental to authorized trade transactions and for certain other transactions. Transfers abroad on account of specified categories of insurance (shipping, aviation, merchandise transport, and fire) or reinsurance (accident and life) are authorized by the Bank of Greece up to specified percentages of the amounts owed.

Greek residents going abroad for family reasons, tourist travel, or business are entitled to US$200 for each trip and for any number of trips a year. Exporters and manufacturers are allowed US$20 a day for a maximum of 45 days when they travel to the United States, Canada, or the Far East; for all other countries the allowance is US$15 a day for a maximum of 30 days. Requests for larger amounts or from other businessmen, commercial representatives, etc., are submitted to the Foreign Exchange Subcommittee.

Persons traveling abroad may take with them a maximum of Dr 200 in Greek banknotes. Nonresident travelers holding Greek passports are required to declare their foreign exchange when leaving Greece if the amount of such exchange exceeds US$500 or its equivalent; no declaration is required from holders of foreign passports.

Exports and Export Proceeds

Exports of arms to Rhodesia are prohibited. All exports require individual licenses, but most exports are free of quantitative limitation. Export proceeds must be surrendered within 150 days from the date of export of the goods; in special cases, however, the authorities are empowered to extend this period up to two years for manufactures and up to one year for other commodities. The Ministry of Commerce may license barter transactions involving the export of tobacco, certain types of fruit, or wine; such transactions are only permitted with Mainland China, Czechoslovakia, Eastern Germany, Hungary, Iran, Israel, and Poland.

Proceeds from Invisibles

Exchange receipts representing payments for services must be surrendered. Exchange proceeds from shipping are exempt from the surrender requirement, but shipowners have to pay for supplies, repairs, etc., and any taxes and fees, and must cover their disbursements and expenses in Greece in local currency obtained through the sale of foreign exchange to the Bank of Greece.

Travelers may bring in a maximum of Dr 200 in Greek banknotes in denominations of Dr 50 and Dr 100 only. Any surplus is deposited in a blocked account with the Bank of Greece; subject to prior approval by the Bank, the surplus may be taken out on departure or spent in Greece on personal financial requirements. Greek residents returning to Greece must declare the foreign exchange in their possession. Nonresident travelers of foreign nationality need not declare their holdings of foreign exchange at the time of entering the country, and nonresidents holding Greek passports are required to declare their foreign exchange only if they intend, when leaving Greece, to take out again foreign exchange in excess of US$500 or its equivalent.

Capital

Commercial banks and investment banks may freely borrow convertible currencies abroad, provided that they lend corresponding amounts as foreign currency loans for periods of at least five years to productive enterprises established in Greece. All other investments in Greece by nonresidents are subject to approval. Such approval is automatic for purchases of real estate for personal use. Under Legislative Decree No. 2687/53, approved foreign investments which aim at the promotion of national production or otherwise contribute to the economic advancement of Greece may be granted preferential treatment. Under Law No. 4171/61, as amended by Legislative Decree No. 4256/62, further privileges are provided for foreign capital participating in investment projects in Greece exceeding Dr 60 million in value. Moreover, Legislative Decree No. 4256/62 provides additional repatriation facilities for foreign investments which promote exports.

Repatriation facilities are as follows: (1) Approved investments according to the provisions of the legislation mentioned above may not be repatriated before one year from the date the enterprise begins to operate productively and in no case before one year from the date the capital was imported. (2) The repatriation of foreign capital may not exceed 10 per cent a year of the amount of capital imported. The repatriation of dividends on equity capital and of interest on loan capital may not exceed 12 per cent a year and 10 per cent a year, respectively. (3) Under the provisions of Law No. 4171/61, profits on approved foreign investments may be transferred abroad in amounts not exceeding 6 per cent a year of the repatriated portion of the capital, provided, however, that the amount of profits transferred shall not exceed 8 per cent of the foreign exchange earnings of the enterprise from the sale of its products abroad. (4) For investments made under Legislative Decree No. 2687/53 that are not covered by Law No. 4171/61, the transfer of profits is related to the residual capital remaining in Greece and the transfer privilege expires as soon as all capital has been repatriated. (5) Under the provisions of Legislative Decree No. 4256/62, the repatriation of capital and profits of foreign investments approved under the provisions of Legislative Decree No. 2687/53 can exceed the rates specified in (2) above, up to 70 per cent of the foreign exchange earnings of the enterprise from the sale of its products abroad. Also, foreign loans approved under Legislative Decree No. 2687/53 can be repatriated at an annual rate of up to 20 per cent, provided that the amount of the loan does not exceed double the value of the share capital and that the amounts repatriated do not exceed 70 per cent of the foreign exchange earnings of the corporation.

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

Transfers of capital abroad by residents require approval.

Changes during 1965

March 1. Interest rates on nonresidents’ time deposits established under Legislative Decree No. 2687/53 were increased from 4.5 per cent to 5 per cent for deposits of 6-12 months, from 5 per cent to 5.5 per cent for deposits of 1-2 years, and from 5.5 per cent to 6 per cent for deposits for longer periods.

March 13. The amount of domestic banknotes which travelers could bring in or take out was reduced from Dr 2,000 to Dr 200 a person. Any amount brought into Greece in excess of Dr 200 by nonresident travelers was required to be deposited in a blocked account with the Bank of Greece; subject to the prior approval of the Bank of Greece, however, the notes could be re-exported on departure or blocked balances could be spent in Greece on personal financial requirements.

March 21. The requirements were announced that newly established banks would have to meet. Foreign capital participation was restricted to 40 per cent of the share capital and dividend transfers to foreign shareholders to 3 per cent a year.

April 16. The granting of installment credit facilities for passenger automobiles, motorcycles, and certain other consumer durable goods was prohibited.

May 1. The cash deposits payable at the time of import approval for certain goods in List F-100/2 were reduced to 76 per cent; these goods were ham (salted, dried, smoked, and prepared or preserved) and European-type cheese.

June 15. The approval of the Bank of Greece or the intermediary authorized bank was no longer required for imports with an invoice value c.i.f. of the equivalent of US$100 or less, provided that payment would be made through an authorized bank.

June 15. Security deposits were no longer required for capital goods and spare parts that are exempt from customs duty by virtue of the laws governing investment of foreign or domestic capital.

October 24. Imports of beef and live cattle were suspended.

November 1. The initial adjustments in the import tariff toward alignment with the common external tariff of the EEC were made. The third successive 10 per cent tariff cut on imports from EEC countries of industrial products subject to tariff dismantlement over a 12-year period was made. The initial 10 per cent enlargement of the value quotas on imports from the EEC of some types of machinery was made. The prepayment and security deposit requirements on imports from all sources of goods in Lists F-50/3 and F-100/3 were reduced. The 12 per cent security deposit requirement for certain imports financed by letter of credit was abolished.

November 2. Imports of pork and live pigs were suspended.

November 29. Exports of arms to Rhodesia were prohibited.

December 1. Authorized banks could accept a new type of time deposit in foreign exchange for periods of at least 3 months. These deposits were not restricted as to amount or type of depositor. The interest rate was 4 per cent for deposits for 3-6 months; 4.5 per cent for those for 6-12 months; 5 per cent for those for 12-24 months; and 5.5 per cent for those for longer periods.

December 15. Commercial banks and investment banks were permitted to grant loans in foreign currency for periods of at least five years to productive enterprises in Greece, provided that the lending bank took up at least the same amount abroad; foreign currency loans granted by commercial banks could not be for amounts less than the equivalent of US$400,000 and required the prior approval of the Currency Committee.

December 21. Agreement was reached on the settlement of the Greek share of the debts of the former Ottoman empire.

December 22. The free market for gold coins was abolished. Henceforth, residents could buy gold coins only in the official market created in January 1964, which operates through licensed stockbrokers. Resident purchasers must identify themselves and sign a statement to the effect that such coins would only be resold to licensed stockbrokers. The price of the gold sovereign was initially set at Dr 328 (US$10.93) for sales and Dr 327.50 for repurchases. Holders of gold coins could sell them anonymously and without formality to the Bank of Greece or authorized commercial banks at the official rate, provided that they were acquired in the previously existing free market.

Guatemala

Exchange Rate System

The par value is Guatemalan Quetzal 1.00 = US$1. The official rates are Q 1.00 buying, and Q 1.01 selling, per US$1. The Bank of Guatemala quotes exchange rates for certain other currencies1 on the basis of their rates in the New York market. On January 27, 1947, Guatemala notified the Fund that it was prepared to accept the obligations of Article VIII, Sections 2, 3, and 4, of the Fund Agreement.

Administration of Control

Exchange control is administered by the Bank of Guatemala (Exchange Department) under the direction of the Monetary Board. Foreign exchange transactions of the public sector are carried out exclusively through the Bank of Guatemala; those of the private sector are carried out through the medium of authorized banks for the account of the Monetary Stabilization Fund maintained by the Bank of Guatemala.

Prescription of Currency

All exchange transactions must be carried out through banks. Payments to Costa Rica, El Salvador, Honduras, and Nicaragua in respect of trade and invisibles are normally settled in Guatemalan quetzales through the Cámara de Compensación Centroamericana, a clearinghouse established by the central banks of Central America to foster the process of economic integration of their countries. The Exchange Department of the Bank of Guatemala, however, is empowered to authorize the sale of currencies of other Central American countries to make payments to the Central American area. There are no obligations prescribing the currency for payments to and from other countries.

Imports and Import Payments

Import licenses are not required except for imports of maps of Guatemala, explosives, poultry, and wheat flour. Within eight days after confirmation, importers must register with the Exchange Department any firm order to import merchandise. (Imports originating from Central American countries and included in the General Treaty for Central American Economic Integration are exempt from this requirement.) Importers must effect their registered imports during the 90-day validity of the registration.

All remittances abroad to pay for imports require exchange licenses, which are granted freely by the Exchange Department; the exchange is granted by the authorized banks upon submission of the registration form and the shipping documents. Checks denominated in quetzales are authorized freely for payment for specified imports from Central American countries. Payments for imports which have to be fully or partially prepaid must be made by letter of credit. When it is impossible to establish a letter of credit and the prepayment exceeds Q 1,000, a deposit equal to 25 per cent of the amount of foreign exchange requested must be made with the Bank of Guatemala or an authorized bank in cash or in government bonds by importers who are not established importers in the country or who are unable to provide sufficient proof of the nature of the transaction; the deposit is refunded when the goods arrive in Guatemala. Importers of merchandise for which payment must be made in cash or in installments, and importers of merchandise on consignment, must present the original shipping documents usually required by the Guatemalan customs for the clearance of goods.

Authorizations to withdraw imports from customs must be obtained from the Exchange Department or an authorized bank, except for imports whose value does not exceed Q 50, household goods, samples, printed advertising material, and those imports originating in Central American countries and included in the General Treaty for Central American Economic Integration. The Exchange Department and the authorized banks issue such authorizations without delay. The customs officials may refuse clearance of goods if discrepancies are found between the information contained in the authorization issued by the Exchange Department and in the import documents. For the specified imports from Central American countries, the importer must complete, at either the Exchange Department or the customs office, a special form required by the Exchange Department, giving a description of the merchandise to be imported and the date on which he made the advance payment or the date on which he undertook to pay in the future. If these forms are completed at the customs office, they must be forwarded daily to the Exchange Department.

A surcharge of 100 per cent of the customs duty may be applied to products originating in or imported from countries with which Guatemala has an unfavorable trade balance. On December 31, 1965, this surcharge applied to certain imports from 28 countries.2 This surcharge is waived if the goods are transported in Guatemalan ships. Moreover, all imports from other areas which are included in the agreed uniform tariff list of the countries participating in the General Treaty for Central American Economic Integration are exempt from the surcharge.

Payments for Invisibles

All transfers abroad on account of current invisibles require authorization by the Exchange Department, mainly for the purpose of checking capital transactions. Payments of up to Q 1,000 to El Salvador or up to Q 200 to Costa Rica, Honduras, and Nicaragua do not require authorization by the Exchange Department.

Requests for foreign exchange for payments for current invisibles must be supported by such documents as may be required by the Exchange Department to verify that the operation is genuine. The sale of foreign exchange for most categories of current invisibles, including remittances of income from and repayments of registered foreign loans and investments, is authorized freely. For certain payments for current invisibles, exchange is sold up to established limits; in some cases, requests in excess of these limits are approved. There is an exchange allowance equivalent to a maximum of Q 2,500 a person in any one year for tourist travel abroad, as follows: to Central America, Q 300; to Mexico, Panama, and the Caribbean area, Q 750; and to the rest of the world, Q 2,500. Minors not traveling alone are entitled to half these allowances. The exchange allocation for travelers on business is Q 750 a person for journeys to British Honduras and the Mexican border towns, and Q 2,500 for journeys to other parts of the world. The exchange allocation for remittances abroad for family maintenance is Q 250 a month for each relative (Q 200 for those under 18 years of age), up to a maximum of Q 700 a month for each beneficiary family. Foreign technical personnel employed in Guatemala may remit abroad up to two thirds of their salaries if their families reside abroad, or up to one third if their families reside in Guatemala. Foreign technicians leaving the country permanently may, subject to individual approval, transfer their savings up to the full amount of their earnings in Guatemala. Limits are also imposed on remittances for students’ expenses abroad.

The export of Guatemalan banknotes and coins is not prohibited; however, Guatemalan banknotes and coins received from abroad are not converted by the Bank of Guatemala unless they come from Costa Rica, El Salvador, Honduras, or Nicaragua. For these countries, the Bank of Guatemala guarantees monthly conversions into U.S. dollars up to the following limits: Costa Rica, Q 125,000; El Salvador, Q 400,000; Honduras, Q 300,000; and Nicaragua, Q 125,000. There are no regulations prohibiting the export of foreign banknotes.

Exports and Export Proceeds

All exports require an export license from the Exchange Department of the Bank of Guatemala. Exports to Central American countries of goods included in the General Treaty for Central American Economic Integration are exempt from this requirement; for these goods, the exporter must complete a special form required by the Exchange Department presenting evidence that the export proceeds have been sold to an authorized bank. The application for an export license must be accompanied by a full description of the nature of the transaction, including the terms and method of payment. The Exchange Department issues licenses only if certain conditions have been met: (1) for exports paid for in advance or in cash, it requires evidence that the export proceeds have been sold to an authorized bank; (2) for exports on credit, it requires an undertaking to sell the relevant exchange to an authorized bank within 90 days of the date the license is issued; and (3) for exports on consignment, it requires the exporter’s certified declaration showing the estimated value of the export and his undertaking to sell the relevant exchange to an authorized bank within a period not exceeding 180 days after the issuance of the license.

Proceeds from Invisibles

Foreign exchange proceeds from invisibles must be declared and surrendered. The purchase of Salvadoran banknotes by authorized banks is limited to Ȼ 500 a person.

Capital

All foreign capital investments in Guatemala must be declared and registered with the Exchange Department of the Bank of Guatemala. All investment by foreign, domestic, or foreign-controlled companies in the construction of private housing in Guatemala requires the prior approval of the Ministry of Economy; such investment may be limited to a specified over-all amount a year, it must meet certain minimum quality and financing standards, and the sales value of a housing unit must not exceed Q 6,000. All outgoing capital payments require exchange licenses, which, like those for the transfer of profits and dividends, are granted freely for remittances of registered foreign investments. Transfers abroad of resident-owned capital are not permitted.

Changes during 1965

No significant changes took place during 1965.

Guinea

Exchange Rate System

No par value for the currency of the Republic of Guinea has been established with the Fund. The unit of currency (introduced on March 1, 1960) is the Guinean franc, defined as a monetary unit containing 0.0036 gram of fine gold. It corresponds to GF 50 = 1 French franc and GF 246.853 = US$1. The official buying and selling rates are GF 247 and GF 253 per US$1, respectively. These rates apply to all transactions and include a bank commission. Clearing account transactions under bilateral payments agreements are carried out on the basis of GF 246.853 per US$1.

Administration of Control

The Central Bank of the Republic of Guinea is the only authority in exchange control matters; this authority is carried out through the Exchange Control Office of the Bank. The Bank has not delegated any of its exchange control powers to any other bank or institution. All settlements with foreign countries, including payments for imports, require individual licenses from the Exchange Control Office.

Import and export licenses are issued, within the framework of an annual program, by the Ministry of Foreign Commerce and Banks (the Office of the Director of Foreign Trade) after applications have been screened by the National Economic Commission.

Prescription of Currency

Settlements on account of transactions covered by bilateral payments agreements are made in currencies prescribed by, and through accounts established under, the provisions of the agreements.1 Settlements with other countries are made in convertible currencies.

Nonresident Accounts

There are three types of nonresident accounts: Nonresident Transferable Accounts in Foreign Currencies; Nonresident Transferable Accounts in Guinean Francs; and Blocked Accounts.

Balances in Blocked Accounts, which are maintained in Guinean francs, represent funds held with commercial banks by nonresidents when their businesses were nationalized. When the commercial banks were liquidated, these balances were transferred to the Crédit National, the principal government-owned deposit bank. No regulations have yet been issued to permit debits to Blocked Accounts.

Imports and Import Payments

All imports, other than those for the Seven-Year Plan, require individual licenses, which are issued by the Ministry of Foreign Commerce and Banks, after applications have been screened and approved by the National Economic Commission. Once an import license has been issued, authorization for the corresponding payment is granted by the Exchange Control Office. Imports by foreign concession holders require import licenses for statistical purposes only and are not restricted.

Imports into Guinea are made within the framework of an annual import program. This program is prepared jointly by the Ministry of Foreign Commerce and Banks and the Ministry of Domestic Trade on the basis of the country’s import needs, the domestic production possibilities of import substitutes, and experience with the previous year’s import program. The program requires the approval of the National Economic Commission, which takes into consideration the amount of imports foreseen under the program, the sources of imports, and the availability of convertible currencies and of balances under payments agreements.

Certain items are imported outside the import program. These are goods for which foreign exchange is derived from sources other than the exchange reserves of Guinea—e.g., imports made by certain foreign concession holders (the Fria Company and the Compagnie Miniére de Conakry) and by foreign embassies—and goods for the Seven-Year Plan. All commercial imports other than those by the Fria Company and the Compagnie Miniére de Conakry are made by state enterprises that specialize in various types of commerce.

There is no list of prohibited imports, but certain imports are not being licensed.

Payments for Invisibles

All payments for invisibles require the authorization of the Exchange Control Office.

Payments for freight and insurance in connection with imports are authorized as part of the import license. No exchange is granted for other types of insurance with companies abroad. There is no basic allocation for tourist travel; each application is considered individually. There is a basic allocation for business travel expenses (other than transportation) of GF 15,000 a trip. Government officials on official missions are permitted an allowance of GF 2,000 a day if they travel in Africa and GF 2,500 a day if they travel outside Africa. Pilgrims are granted exchange up to the equivalent of GF 60,000 for each pilgrimage. In cases of serious illness, provided that a doctor’s certificate is submitted, Guinean nationals are granted foreign exchange for medical care abroad or are permitted to transfer exchange for the care of relatives receiving medical treatment abroad. Individual authorization is required for the payment in Guinea of all fares for foreign travel.

Payments for family support may be made up to GF 10,000 a month for each beneficiary, whether child or adult. For officially recognized study abroad, the student’s relatives may transfer the equivalent of the amount of a government scholarship, i.e., GF 22,500 a month. Students starting their studies abroad are granted an additional foreign exchange allowance of up to GF 30,000. The Foreign Investment Law guarantees that at least 20 per cent of the net annual profits of approved foreign investments may be transferred abroad; the percentage actually permitted to be transferred depends on the agreement concluded between the enterprise concerned and the Government. In addition to transfers under other regulations, foreign planters are permitted to transfer abroad GF 4 per kilogram of pineapples exported, GF 3 per kilogram of bananas exported, and GF 2 per kilogram of citrus fruit exported. Expatriate workers employed by the public sector in Guinea may transfer abroad 30 per cent of their net monthly salaries if they are married and 20 per cent if they are single; expatriate workers employed by the private sector may transfer abroad 25 per cent of their net monthly salaries if married and 15 per cent if single.

The export of Guinean currency is prohibited.

Exports and Export Proceeds

The Ministry of Foreign Commerce and Banks in cooperation with the Ministry of Domestic Trade establishes an annual export program, which requires the approval of the National Economic Commission and the Government.

All exports require individual licenses in order (1) to assure the implementation of the export program (particularly in respect of commitments under bilateral trade agreements); (2) to permit the Treasury to levy certain duties (e.g., mining companies must pay export taxes of 6 per cent on the value of ores exported); (3) to prevent shortages of goods needed for domestic consumption; and (4) to prevent the export of capital. Special authorization from designated agencies is required in addition to the export license for the following commodities: wild animals (dead or alive), edible animals, articles of historical or ethnographical interest, jewelry, articles made of precious metals, and plants and seeds.

Exports other than those effected by the Fria Company and the Compagnie Miniére de Conakry are made by a state institution, Guinexport.

Foreign planters are granted special transfer privileges related to the quantity of pineapples, bananas, or citrus fruit exported (see section on Payments for Invisibles, above).

All export proceeds must be surrendered; however, the Fria Company and the Compagnie Miniére de Conakry are allowed to retain a certain percentage (for the Fria Company, 66% per cent) of their export earnings to pay for imports and invisibles and for the transfer of capital. An export license is granted only when the exporter assumes the obligation to surrender the proceeds immediately after they are collected.

Proceeds from Invisibles

Exchange proceeds accruing to residents in respect of invisibles must be surrendered. The import of foreign banknotes is permitted freely, subject to declaration on entry. Nonresidents may retain the foreign banknotes they brought in and may sell them locally to finance their expenses, whereas Guinean nationals are required to surrender all foreign banknotes they bring in. The import of Guinean currency is prohibited.

Capital

All capital transfers require authorization. Outward capital transfers by Guinean nationals are prohibited.

The Foreign Investment Law (Law No. 50/AN/62) of April 5, 1962, which replaced the more restrictive one of May 1960, provides guarantees against nationalization for foreign investments in the industrial and mining sectors; it also provides for preferential tax and customs treatment applicable to foreign investments and for the transfer of profits, interest, amortization, and proceeds accruing from the liquidation of such investments. Small and medium-size enterprises in which at least GF 150 million is invested over a 3-year period may receive exemptions for a period of 7 to 10 years; exemptions for up to 25 years may be granted on long-term investments of particular importance to the Guinean economy. The actual conditions under which foreign investments may be made are subject to negotiations within the terms of this code.

Changes during 1965

April 15. The issuance of import and export licenses was limited to state enterprises and foreign concession holders.

April 28. The amounts which expatriate workers are permitted to transfer abroad were lowered to 30 per cent of net monthly salaries for married workers in the public sector and 20 per cent for single workers, and to 25 per cent for married workers in the private sector and 15 per cent for single workers.

Haiti

Exchange Rate System

The par value is Haitian Gourdes 5.00 = US$1. This rate is applicable to all transactions. Exchange transactions by commercial banks with the public are subject to small banking commissions. There are no controls or restrictions on foreign transactions. On December 22, 1953, Haiti notified the Fund that it was prepared to accept the obligations of Article VIII, Sections 2, 3, and 4, of the Fund Agreement.

Prescription of Currency

No obligations prescribing the method or currency for payments to or from nonresidents are imposed.

Imports and Import Payments

Although the law provides for the imposition of quantitative restrictions on imports, none has so far been imposed. Imports of certain types of footwear and of a few other items are controlled for other than balance of payments reasons. Payments abroad may be made freely.

Exports and Export Proceeds

A few exports require licenses. Gold coins, bullion, etc., may be exported only by the National Bank of the Republic of Haiti. The proceeds of exports are not subject to exchange control.

Payments for and Proceeds from Invisibles

Payments for invisibles are not restricted. No exchange control requirements are applied to proceeds from invisibles. A regulation, which is seldom applied, prohibits the export and import of U.S. banknotes in denominations of over $20.

Capital

Incoming and outgoing capital payments by residents or nonresidents are not subject to exchange control. Under a decree of June 27, 1957, revising a law of August 14, 1952, private banks operating in Haiti are required to keep in the form of domestic assets up to 80 per cent of deposits collected from residents of Haiti.

Changes during 1965

No significant changes took place during 1965.

Honduras

Exchange Rate System

The par value is Honduran Lempiras 2.00 = US$1. The official rates are L 1.98 buying, and L 2.02 selling, per US$1. Banknotes and coins in Costa Rican colones, Guatemalan quetzales, Nicaraguan córdobas, and Salvadoran colones are purchased at parity rates minus an official exchange commission of 1 per cent and sold at parity rates plus an official exchange commission of % of 1 per cent. Honduras has no exchange restrictions on foreign payments. Exchange may be purchased from local banks without restrictions; however, for statistical purposes, buyers are required to file an application stating how the exchange will be used. Earners of foreign exchange wishing to negotiate the exchange in Honduras may do so only with the Central Bank of Honduras or through the banking system for account of the Central Bank. On August 19, 1950, Honduras notified the Fund that it had assumed the obligations of Article VIII, Sections 2, 3, and 4, of the Fund Agreement, beginning July 1, 1950.

Prescription of Currency

No obligations prescribing the method of currency for payments to or from nonresidents are imposed. Payments to Costa Rica, El Salvador, Guatemala, and Nicaragua in respect of trade and invisibles may be settled in Honduran lempiras through the Cámara de Compensación Centroamericana, a clearinghouse established by the central banks of Central America to foster the process of economic integration of their countries. Payments to Mexico may also be settled in Honduran lempiras through the clearinghouse.

Imports and Import Payments

Import licenses are required for a few items. Payments and transfers abroad may be made freely; however, for statistical purposes, buyers of exchange are required to file an application stating how the exchange will be used.

Exports and Export Proceeds

Exports do not require licenses. The proceeds of exports are not subject to exchange control, and the foreign exchange may be retained or used for international transactions. Those wishing to negotiate their exchange in Honduras may do so only with the Central Bank or through the banking system for account of the Central Bank.

Payments for and Proceeds from Invisibles

These are not restricted.

Capital

Capital payments are not subject to exchange control.

Changes during 1965

No significant changes took place in 1965.

Hong Kong

Exchange Rate System

The par value is Hong Kong Dollars 5.71429 = US$1. The exchange rate system comprises official rates and free market rates; as far as rates for the U.S. dollar are concerned, these are, in practice, within 1 per cent of the par value. On December 31, 1965, rates in the official market were 1s. 3132d. buying, and 1s. 21516 d. selling, per HK$1, or HK$5.6638 buying, and HK$5.74½ selling, per US$1; rates in the free market on that date were HK$5.7058 buying, and HK$5.7078 selling, per US$1. The official market rates are those of authorized banks, based on the sterling-Hong Kong dollar rate (agreed informally by the three note-issuing banks with the Hong Kong Exchange Fund) and the sterling-foreign currency rates in the London foreign exchange market.

The official rates apply to all transactions in Hong Kong dollars against sterling, to the proceeds in U.S. dollars of exports not of local or neighboring origin, and to most authorized non-dollar transactions. The free market rates apply to other transactions.

Administration of Control

Exchange control authority is vested in the Financial Secretary of the Colony. Fifty-one banks are authorized to conduct exchange transactions within the framework of the local regulations and subject to specific or general approval of the local control. These authorized banks are permitted to conclude exchange transactions only at the official market rates. The free market is operated by other banks and financial institutions. Import and export licensing is carried out by the Director of Commerce and Industry.

Prescription of Currency

The Colony of Hong Kong is part of the Sterling Area, and all settlements except those through the free market must be made by the method and in the currency prescribed in the exchange regulations, as described in the following paragraphs.

Settlements for exports to and imports from other parts of the Sterling Area may be made in any Sterling Area currency. Licenses are required, however, for all payments made from Hong Kong to, or received in Hong Kong from, residents of other parts of the Sterling Area, except that authorized banks may freely make or receive such payments in respect of the following: (1) bona fide trade between Hong Kong and other Sterling Area territories; (2) payments between authorized banks or their branches in the Sterling Area for the purpose of transferring banking funds to an authorized bank or for the settlement of the exchange transactions of an authorized bank; (3) bulk payments in favor of banks or recognized dealers in Hong Kong when the payments are for bona fide family remittances and no individual payment exceeds HK$8,000; and (4) other payments not exceeding £500 or the equivalent in other Sterling Area currencies.

Payment in Hong Kong dollars for exports to Mainland China, the Republic of China, and Macao is permitted; imports from these territories may be paid for in Hong Kong dollars (but not to the credit of an External Account; see section on Nonresident Accounts, below) without exchange control approval. The proceeds of exports to all other countries outside the Sterling Area must be received in Hong Kong dollars from an External Account, in sterling from an External Account held with an authorized bank in the Sterling Area, in a foreign currency emanating from outside Hong Kong and freely exchangeable for sterling or Hong Kong dollars (the foreign currency must be surrendered to an authorized bank), or by international money order issued outside the Sterling Area; however, U.S. dollar proceeds of exports to the dollar area or to the Republic of Korea of goods originating in Mainland China, the Republic of China, Hong Kong, the Republic of Korea, or Macao may be sold in the free market to the extent of the f.o.b. value of the goods; proceeds from freight and insurance payments have to be surrendered to an authorized bank. Payment for imports from countries outside the Sterling Area may be made by crediting sterling or Hong Kong dollars to an External Account or in any foreign currency.

For merchanting transactions by Hong Kong firms in goods bought from and sold to countries outside the Sterling Area, outgoing payments may be made in a Sterling Area currency to the credit of an External Account or in any foreign currency, provided that the incoming payment is received in a Sterling Area currency from an External Account or in a foreign currency from outside Hong Kong that is freely exchangeable for sterling or Hong Kong dollars.

Nonresident Accounts

The treatment of nonresident accounts distinguishes between those of residents of other parts of the Sterling Area (their accounts being treated the same as accounts of residents of Hong Kong), those of recognized banks situated outside the Sterling Area (External Accounts), and those of other nonresidents outside the Sterling Area.

The accounts of companies and individuals resident outside the Sterling Area are treated in the same way as the accounts of residents, except that, without exchange control permission, they may not be overdrawn or be debited for any payment outside Hong Kong.1

The accounts of recognized banks situated outside the Sterling Area are termed External Accounts. These may be credited with permitted payments from residents of the Sterling Area, with transfers from other External Accounts, and with the proceeds from sales of foreign currencies to authorized banks. They may be debited freely, but they may not normally be overdrawn, and an order for the purchase of foreign currency may be executed only by an authorized bank.

Imports and Import Payments

Except for certain dutiable and dangerous commodities, imports are free of license. If the prescription of currency requirements are fulfilled, and if related shipping documents are presented when the value of the consignment exceeds £250, the authorized banks may freely make payments to residents of countries in the Sterling Area for imports from the Sterling Area, and to residents of other countries for individual shipments not exceeding £10,000 in value from those countries.2 To make payment or establish letters of credit through an authorized bank for imports from the dollar area for local consumption or for re-export to Mainland China, the Republic of China, or Macao, the importer must surrender to an authorized bank U.S. dollars or Canadian dollars in amounts equivalent to the value of the imports; these currencies may be purchased in the free market. Imports from Mainland China, the Republic of China, or Macao are normally paid for in Hong Kong dollars (but not to the credit of an External Account), and exchange control approval is not required.

An exchange control form must be submitted for prior approval for payments for imports not covered by the regulations described above. These include (1) imports for which documents are not presented, payment is required in advance of shipment,3 and payment is not in accordance with the usual prescription of currency requirements; (2) goods imported specifically for re-export; and (3) all imports of diamonds, ships, and boats.

Payments for Invisibles

Payments made through authorized banks and not exceeding £500, or the equivalent in other Sterling Area currencies, to other parts of the Sterling Area do not require approval; for larger amounts, exchange control permission is necessary. The authorized banks have power to approve payments to nonresidents for most invisibles up to certain limits (no exchange control form is required when the payment does not exceed £100 or the equivalent). Payments for invisibles above these limits need the approval of the exchange control, which is normally granted. The basic allowance of exchange at the official rate for residents (for exchange control purposes) of Hong Kong traveling to countries outside the Sterling Area or beyond Macao is £250 or the equivalent for each individual journey. Applications for exchange in excess of this allowance to cover genuine travel expenses may be made to the exchange control. In any event, payments may be made freely through the free market by holders of Hong Kong dollars.

Exports and Export Proceeds

Exports to any destination of certain strategic goods and of such commodities as textiles and garments are subject to restrictive licensing. For exports to countries outside the Sterling Area, Mainland China, the Republic of China, and Macao, the exporter must submit to the Department of Commerce and Industry, for approval, a declaration showing how the export proceeds will be collected. If payment is not being received within six months and in accordance with prescription of currency requirements, the circumstances must be reported to the exchange control. The U.S. dollar proceeds of exports to the dollar area or to the Republic of Korea of goods originating in Mainland China, the Republic of China, Hong Kong, the Republic of Korea, or Macao are freely disposable to the extent of the f.o.b. value of the goods; proceeds from freight and insurance payments have to be surrendered to an authorized bank. The proceeds of exports must be obtained in accordance with the regulations (see section on Prescription of Currency, above).

Proceeds from Invisibles

Receipts exceeding £500, or the equivalent in other Sterling Area currencies, from other parts of the Sterling Area require permission. When freight and insurance on exports that have originated in Mainland China, the Republic of China, Hong Kong, the Republic of Korea, or Macao, and that have been financed in U.S. dollars, are paid in Hong Kong by the exporter in sterling or in Hong Kong dollars, the exporter must surrender the U.S. dollar proceeds of that freight and insurance at the official market rate. Other exchange receipts from invisibles need not be surrendered.

Capital

Licenses are required for transfers abroad of capital in currencies other than the U.S. dollar; these are granted at the official market rate only for approved purposes or, if the equivalent in U.S. dollars has been sold to an authorized exchange bank, at the discretion of the local control. Exchange for the repatriation of foreign capital is normally provided at the official market rate if the exchange control had given prior approval of the investment. Transfers of capital may be made freely in Hong Kong dollars through the free market. However, licenses are required for all receipts from, as well as transfers to, other parts of the Sterling Area which exceed £500 or the equivalent in other Sterling Area currencies; these licenses are granted for all bona fide transactions between Hong Kong and other parts of the Sterling Area.

Changes during 1965

No significant changes took place during 1965.

Iceland1

Exchange Rate System

The par value is Icelandic Krónur 43.00 = US$1. The official rates are IKr 42.95 buying, and IKr 43.06 selling, per US$1. Rates for other currencies are based on these rates and the dollar rates for such currencies in other countries. Rates for settlements through clearing accounts are fixed. The authorized banks are permitted to carry out exchange transactions among themselves and to engage in arbitrage in foreign markets. A fee of ½ of 1 per cent is charged on the krónur amount of foreign exchange sold by banks.

Exchange Control Territory

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

Administration of Control

The Ministry of Commerce has the ultimate decision on matters concerning import and export licensing and on payments for invisibles. The Central Bank of Iceland is responsible for the regulation of foreign exchange transactions and of exchange control, and for ensuring that all foreign exchange due to residents is surrendered to the authorized banks and that such exchange is disposed of as authorized. The two largest Icelandic banks, the National Bank of Iceland and the Fisheries Bank, are the only banks, other than the Central Bank, that are authorized to deal in foreign exchange. In addition, they issue import and exchange licenses in consultation with the Ministry of Commerce. Export licenses are issued by the Ministry of Commerce.

Prescription of Currency

All settlements with the seven countries with which Iceland maintains bilateral payments agreements must be made exclusively through clearing accounts, denominated as follows: with Rumania and the U.S.S.R., in Icelandic kronur; with Brazil, Hungary, and Poland, in sterling; and with Czechoslovakia and Eastern Germany, in U.S. dollars. As a general rule, exchange receipts from other countries must be obtained in convertible currencies. In practice, settlements with countries in the dollar area are made in U.S. dollars; with countries in the Sterling Area and some other countries, in sterling; and with all other countries, in their respective currencies.

Nonresident Accounts

There are two categories of nonresident krónur accounts: Foreign Accounts and Special Accounts.

Foreign Accounts may be credited with the proceeds from the sale of foreign currency to authorized banks and with authorized payments due to nonresidents from residents. Balances on Foreign Accounts may be used for authorized payments to residents and may be converted into the currency of the country of residence of the account holder. These accounts are in practice seldom used, payments for international transactions generally being made in U.S. dollars, sterling, or other convertible currencies.

Special Accounts may be opened by agreement with an authorized bank. The most important of these accounts are those of foreign banks and foreign insurance companies. They may be credited freely, up to certain limits, with payments from residents.

Imports and Import Payments

All goods not included on the restricted list or subject to state trading (see below) may be imported freely without an import license from any country; about 87 per cent of total imports (1964 basis) is liberalized. Some 60 commodities or groups of commodities are included in the restricted list and are subject to quantitative restriction. Most of these goods are admitted, subject to individual license, under global quotas that apply to all countries with which Iceland does not maintain bilateral payments agreements. The remaining goods on the restricted list are admitted from the same countries on the basis of individual licenses issued on a discretionary basis. All goods on the restricted list require individual licenses when imported from bilateral payments agreement countries; licenses in this case are generally issued in accordance with bilaterally agreed quotas. Certain imports are only admitted under state trading.

Except for imports of automobiles, a fee of ½ of 1 per cent (minimum IKr 10.00) is charged as a license fee on the krónur amount of the import license when the license is issued. This fee is not charged on licenses for imports from countries with which Iceland maintains bilateral payments agreements. A fee of 125 per cent is charged as a license fee on the f.o.b. krónur amount of the import license for automobiles from all sources (30 per cent for jeep-type vehicles).

Importers of goods not requiring licenses do not have to obtain a foreign exchange permit prior to shipment from abroad, provided that the purchase is payable at sight. On the other hand, the goods will not be cleared by the customs unless payment has already been made or the importer has arranged with an authorized bank for the payment. An importer may either open a letter of credit or obtain a payment certificate which enables him at any time to buy foreign exchange to pay for the goods. For imports that require individual licenses, foreign exchange is granted in accordance with the terms stipulated in the license.

Payments for Invisibles

No exchange license is required for government payments (such as interest and amortization on external loans, expenses of the foreign service, payments to international organizations, payments for postal, telegraphic, and telephone services), for banking commissions, or for bank charges on foreign exchange transactions.

Most other outgoing payments are licensed freely on the basis of bona fide documents. An exchange allocation for tourist travel is granted up to US$280 a year, or its equivalent in other currencies, for each person. Applications for exchange for repair of ships, repair of means of transport other than ships and aircraft, transactions and transfers in connection with direct insurance, and insurance business operations abroad are considered on their merits.

Residents traveling abroad may take with them foreign banknotes and coins which they possess legally, and Icelandic banknotes and coins not exceeding IKr 2,500. Nonresidents may re-export the foreign banknotes and coins, and up to IKr 2,500 of the Icelandic banknotes and coins, which they brought into Iceland.

Exports and Export Proceeds

All commercial exports require licenses. Exchange receipts accruing from exports must be surrendered without undue delay.

Proceeds from Invisibles

Exchange receipts from invisibles must be surrendered without undue delay. The owners of Icelandic ships and aircraft are, with the approval of the authorized banks, permitted to retain their foreign exchange receipts from freight, passenger tickets, or other charges, and to use them for operating purposes and for purchases of necessities for the homeward journey of the ship or aircraft. Icelandic insurance companies which reinsure abroad are permitted to retain foreign exchange earned from premiums and indemnities and to use it to pay reinsurance premiums, claims, and other regular expenditures of the insurance business in the country where the foreign exchange was earned.

Residents may bring in, upon re-entering the country, up to IKr 2,500 in Icelandic banknotes and coins; the limit for nonresident travelers is IKr 5,000. There are no limitations on the import of foreign banknotes and coins.

Capital

All foreign investments in Iceland are subject to individual approval. The participation of nonresidents in Iceland’s joint stock companies may not exceed 49 per cent. Nonresident-owned foreign capital entering in the form of foreign exchange must be surrendered. Nonresidents may be authorized to open nonresident accounts for these funds, in which case their retransfer abroad may be permitted.

Residents are obliged to surrender foreign exchange accruing to them on account of capital transactions and payments. Without the approval of the Government, residents may not obtain loans abroad, including loans for financing imports, for periods exceeding one year. Applications for the contracting of financial credits and loans abroad for a period of less than one year are considered on their merits and approved only in exceptional circumstances. The contracting of commercial credits abroad for a period of between 3 and 12 months is also approved only in exceptional circumstances, e.g., in connection with the import of industrial raw materials for which the production process is lengthy, construction materials, etc. Commercial banks may freely permit import credits of up to 90 days, except for the financing of a number of specified imports, including motor vehicles for personal use, various household appliances, specified foods, various types of clothing, precious and semiprecious stones, watches and clocks, toys, and portland cement. Transfers of capital abroad by residents require approval, which is granted only in exceptional cases.

Nonresidents may acquire Icelandic securities and other assets with imported funds; the transfer abroad of the proceeds from the sale of these assets and securities requires authorization. Securities held in Iceland by nonresidents must be registered, and all transactions and operations concerning them are subject to licensing. The import and export of securities by residents are subject to the approval of the Central Bank.

Changes during 1965

January 1. The import license fee on imports of automobiles from all sources was increased from 100 per cent to 125 per cent of the f.o.b. value.

January 29. The importation of over 60 commodity groups previously included in the restricted list was liberalized. A revised list of global quotas for 1965 was published to take account of this liberalization. It was announced that the importation of some 15 additional commodity groups was to be freed with effect from July 1, 1965.

July 1. Imports of additional commodities were liberalized (see January 29, above).

October 1. A new bilateral payments agreement with Czechoslovakia took effect; the agreement account was denominated in U.S. dollars.

Note.—The following changes were made early in 1966:

January 1. A fee of ½ of 1 per cent was charged on the krónur amount of foreign exchange sold by banks.

January 21. Imports of iron, lumber, and several groups of other commodities were liberalized.

India

Exchange Rate System

The par value is Indian Rupees 4.76190 = US$1. Transactions in foreign exchange are conducted through authorized dealers, as follows: in sterling, at rates fixed by the Foreign Exchange Dealers Association; in other currencies, at rates fixed on the basis of the London market rates for sterling against the other currency concerned. Authorized dealers are permitted to cover their requirements of foreign currencies in the London market and to cover their permitted transactions in certain currencies1 against sterling, rupees, or any one of these currencies, either spot or forward for periods not exceeding six months, with authorized banks in any country outside the Bilateral Account group.2 On December 31, 1965, market rates for telegraphic transfers on London were Is. 6132d. buying, and 1s. 53132d. selling, per Re 1, and for telegraphic transfers on New York they were Rs 4.7425 buying, and Rs 4.7750 selling, per US$1.

Other effective rates arise from the negotiation of certificates issued under the National Defense Remittance Scheme and from the issuance of tax credit certificates; additional effective rates may arise under several of the export promotion schemes (see section on Exports and Export Proceeds, below).

Administration of Control

Exchange control is administered by the Reserve Bank of India in accordance with the general policy laid down by the Government of India in consultation with the Reserve Bank. Much of the routine work of exchange control is delegated to certain commercial banks, which act as authorized dealers permitted to buy and sell foreign exchange for specified purposes under regulations laid down by the Reserve Bank.

Prescription of Currency

India is a member of the Sterling Area and has an exchange control system similar to that of the United Kingdom but adapted to suit local requirements. For prescription of currency purposes, countries are divided into three groups: Sterling Area countries, Bilateral Account countries,2 and the Convertible Account group (all other countries).

Payments to and from Sterling Area countries may be made in sterling or any Sterling Area currency, except Indian rupees, through the account of a resident of any Sterling Area country except India, or in Indian rupees through the account of a bank in any Sterling Area country except India.3 Payments to and from Bilateral Account countries must be settled in Indian rupees through the appropriate clearing account. Payments to countries in the Convertible Account group may be made in rupees or sterling to the credit of the account of a resident of any country in this group4 or in any listed currency.5 Receipts from the Convertible Account group may be obtained in any listed currency,5 in rupees from the account of a bank in any country in this group, or in sterling from an External Account in the United Kingdom.

Nonresident Accounts

The accounts of residents of Bhutan and Nepal are treated as resident accounts.6 Accounts related to all other foreign countries are treated as nonresident accounts. The treatment of these accounts distinguishes between those of banks and of others.

The accounts of banks are classified in three groups corresponding to the division of countries for prescription of currency purposes, i.e., Sterling Area Accounts, Bilateral Accounts, and Convertible Accounts. These accounts may be credited with payments for imports, interest and dividends, and other authorized payments, with authorized transfers from the nonresident accounts of private firms or persons, with proceeds from sales of the currency of the country or monetary area of the account holder, and with proceeds from sales of sterling from the appropriate nonresident sterling account in the United Kingdom. They may be debited for payments for exports, and for other payments to residents of India. These accounts may also be debited for remittances by Indian nationals resident in the Sterling Area for credit to their accounts in India or for payment to Indian nationals resident in India. Transfers may be made from Convertible Accounts to other Convertible Accounts or to Sterling Area Accounts and between Sterling Area Accounts. All other entries on Sterling Area Accounts, Bilateral Accounts, and Convertible Accounts require the prior approval of the Reserve Bank.

Nonresident accounts of private individuals or firms may be credited, without prior approval, for payment of dividends and interest on securities, shares, and deposits; refunds of amounts previously debited or overcharged; proceeds of remittances in appropriate foreign currency or transfers from appropriate nonresident banks’ rupee accounts (see Prescription of Currency, above); proceeds from checks issued by the Life Insurance Corporation in respect of maturity or death claims and surrendered value of policies held by nonresidents, provided that the Corporation certifies that premiums had been received in India in an approved manner and that actuarial reserves are held in India; proceeds of checks, provided that the aggregate of such credits during a month does not exceed Rs 2,000 and no individual credit is in excess of Rs 750; and proceeds from the sale of Indian Government securities and of units issued by the Unit Trust of India which were originally purchased from funds in the same nonresident account. These accounts may be debited without prior approval for such items as payments for premiums on life insurance policies of the account holder or his dependents; all taxes due from the account holder in India; contributions to the National Defence Fund, the Prime Minister’s National Relief Fund, or any government-sponsored charity; allowances not exceeding Rs 1,000 a month to relatives and dependents; investment in Indian Government securities and in units issued by the Unit Trust of India; and for checks up to Rs 1,000 a week drawn in favor of beneficiaries resident in India or in favor of the account holder while temporarily resident in India. All other credits and debits require the prior approval of the Reserve Bank. Transfers are not normally permitted from nonresident accounts of individuals or firms to nonresident accounts of banks, unless the amounts originally credited to such accounts could have been transferred abroad.

Special regulations cover funds lodged in National Defence Remittance Scheme (Special) Accounts representing rupee proceeds of inward remittances for the account of nonresidents and rupee proceeds from sales of certificates issued under the Scheme. Balances in such accounts cannot be remitted abroad; they may, however, subject in some cases to prior approval by the Reserve Bank, be invested domestically or be used for other expenditures in India.

There are also blocked accounts, to which are credited capital proceeds that are due to nonresidents and may not be remitted abroad. Balances on blocked accounts may be placed on fixed deposit or invested in approved Indian rupee securities; the income derived from such investments may normally be remitted to the owner’s country, with the approval of the Reserve Bank.

Imports and Import Payments

Practically all imports require individual licenses. Individual licenses may be issued ad hoc, or on the basis of quotas allocated to established importers in accordance with their imports in a base period and to actual users on the basis of their entitlements or requirements. In addition, licenses for specified commodities may be granted on the basis of certificates issued under the National Defence Remittance Scheme (see section on Proceeds from Invisibles, below) and on the basis of entitlements to import license that are issued under export promotion schemes. Generally, licenses may be used to import from any country except South Africa, South West Africa, and Rhodesia;7 imports from these countries are prohibited. Licensing policy generally accords priority to foodstuffs, capital goods, raw materials, and other industrial requirements, while the import of other items is severely limited or prohibited. At the beginning of each financial year, an announcement on import control policy is made in the form of a Red Book, which gives in detail the policy for established importers and actual users. Licensing is in most cases on an annual basis, subject to the condition that only the first half of the annual license may be used in the first six months of the validity period of the annual license, and the second half of the license may be utilized, subject to such change as may be decided upon, in the second six months and within the extended period of validity allowed for this purpose. In other cases, licenses are issued for the first six months, and a supplementary license is issued later for the second six months. There are special procedures applicable to imports of capital goods, of heavy electrical plant, and of goods imported to fulfill government contracts and for irrigation projects. In licensing imports of a capital nature, their essentiality, their potential for earning or saving foreign exchange, and the availability of medium-term or long-term credits for financing such imports are taken into account.

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

With few exceptions, imports are subject to a customs surcharge (“regulatory duty”) of 10 per cent ad valorem.

Payments for Invisibles

In general, payments abroad for invisibles require approval. Foreign exchange is granted freely for a few such payments, mainly for expenses incidental to trade transactions and transfers of recurring contractual obligations.

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

There are no restrictions on the remittance of profits, dividends, and interest to nonresident beneficiaries (except any income accruing to beneficiaries of the National Defence Remittance Scheme), provided that all current tax and other liabilities in India have been cleared. However, remittances to Indian nationals who emigrated on or after January 1, 1963 of dividends and interest on shares, securities, and deposits held in India require the prior approval of the Reserve Bank or are subject to any special directions given to the person concerned when he was granted emigration facilities; such remittances are subject to an over-all limit of Rs 20,000 a year.

Foreign employees are permitted to make reasonable remittances to their own countries to pay insurance premiums, for the support of their families, and for other expenses. Authorized dealers may allow such remittances by foreign nationals other than nationals of Pakistan up to Rs 1,500 a month, provided that this amount does not exceed 50 per cent of the remittor’s net income.

Applications for foreign exchange for travel or education abroad are considered on an individual basis; no exchange is granted for tourist travel. Travel agents and companies are not permitted to book passages abroad for persons resident in India unless the traveler has been granted travel exchange by the Reserve Bank or has been specifically granted permission by the Reserve Bank to book his passage.

The export of Indian currency notes and coins except to Nepal is, in general, prohibited. However, deck passengers to Burma, Malaysia, Singapore, Persian Gulf ports, and East Africa, and travelers to Ceylon and Pakistan, may take with them Rs 20 a person at any one time. Residents may take out foreign notes and coins up to Rs 40 a person: authorized money-changers at airports and seaports are permitted to sell foreign currency notes up to a value of Rs 40 a person to all passengers, whether Indian or foreign, who have made payments for the fare in rupees in India; nonresidents may take out the foreign notes and coins which they declared on entry, less the amounts sold to authorized dealers in India.

Exports and Export Proceeds

Export licenses are required for only a few items, and most commodities may be exported without a license. Most of the controlled commodities are licensed freely to all shippers; a few may be exported through established shippers; and a few commodities are subject to export quotas. Exports to South Africa, South West Africa, Tibet, Rhodesia, and Pakistan are prohibited.

Exports to all permitted destinations other than Nepal, Bhutan, and Sikkim of a large number of nontraditional export commodities and certain traditional commodities may be made by registered exporters under export promotion schemes. Under these schemes, in addition to the rupee equivalent of the foreign exchange proceeds, exporters receive import entitlements for specified commodities used in the production of the export commodity covered by a particular promotion scheme.8 These entitlements are, for a number of schemes, eligible for transfer to other exporters and manufacturers covered by the scheme. Under a Tax Credit Certificate (Exports) Scheme applicable to a specified list of exports, tax credit certificates are issued amounting to 2, 5, 10, and 15 per cent of the rupee equivalent of the export proceeds. The certificates may be used for settlement of tax liabilities; any certificates in excess of liabilities may be cashed in rupees.

Exchange control is exercised over the proceeds of exports to countries other than Bhutan and Nepal. An exporter must declare that the full export proceeds will be received and dealt with in accordance with the prescription of currency regulations.

Foreign exchange holdings, including the proceeds of exports, in most currencies9 must be offered for sale against rupees to an authorized dealer, unless the holder has been authorized by the Reserve Bank to retain them, or the holdings are the balance on July 8, 1947 in a sterling account held by him, or he is not domiciled in India and the funds do not represent the proceeds of an export.

Proceeds from Invisibles

Proceeds from invisibles in certain currencies (see footnote 9) must be surrendered.

Under the National Defence Remittance Scheme, individuals of Indian nationality resident in India who obtain, through banking channels and in any currency other than Indian rupees or a bilateral account currency, family remittances, gifts, or capital (without repatriation facilities), receive, in addition to the rupee equivalent of the remittance, a transferable certificate with which they can, upon application, acquire an import license corresponding to 60 per cent of that rupee amount. Permitted imports under the Scheme are comprised of a wide range of essential goods. The rupee proceeds of the remittance and of the certificate may be used freely in India for any purpose. Similar privileges are available to nonresidents, irrespective of nationality, provided that the proceeds of remittances are credited to special accounts in their own names; the certificates issued against their remittances must be endorsed in favor of an Indian resident, and the payment, if any, for the certificate must be credited to the special account held by the remittor. Funds in special accounts may be used freely for tax payments and charitable payments in India and for placement in fixed deposits or in units of the Unit Trust of India or in government securities; all other disbursements from such accounts require the prior approval of the Reserve Bank. Balances are not retransferable abroad.

The import of Indian currency notes and coins is, in general, prohibited. However, deck passengers from Malaysia, Singapore, Persian Gulf ports, and East Africa, and travelers from Ceylon and Pakistan, may import into India Rs 20 a person against presentation of evidence that they previously had exported this amount from India. Persons coming to India from Burma are allowed to bring in Indian currency notes up to a value of Rs 50 for an adult and Rs 25 for a child between the ages of 12 and 18. Travelers from Nepal may bring in up to Rs 75 a person. Foreign currency notes may be brought into India without limit, provided that a declaration of the total amount brought in is made to the customs authorities upon arrival. Persons holding duly certified declaration forms may sell the relevant currency notes to any authorized money-changer or authorized dealer in foreign exchange.

Capital

The inward movement of capital is practically free, except when it is to form part of an investment requiring the prior approval of the Indian Government. Banks in India may borrow freely from their branches and correspondents abroad, provided that borrowings in excess of Rs 2 million are utilized for the purchase of rupees from the Reserve Bank and that they are repaid only when the debtor bank has no outstanding borrowings in India from the Reserve Bank or any other bank. Foreign investments once admitted are eligible for the same treatment that Indian enterprises receive. Repatriation of capital owned by persons residing in Sterling Area countries other than Pakistan, and by residents of Denmark, Norway, or Sweden, is authorized freely. Capital invested in approved projects after January 1, 1950 by residents of other countries, including capital appreciation on the original investment, may be repatriated at any time. The proceeds from liquidated foreign investments not eligible for repatriation are blocked (see section on Nonresident Accounts, above). Local borrowing by foreign-controlled corporate bodies is restricted.

Under the National Defence Remittance Scheme (see section on Proceeds from Invisibles, above) certain facilities are available to nonresidents irrespective of nationality and to individuals of Indian nationality resident in India on imports of capital without repatriation facilities, provided that these are made through banking channels and in a currency other than a bilateral account currency. For the purposes of the Scheme, such capital is deemed to include provident fund balances; payments due under life insurance policies; the sales proceeds and proceeds on maturity of foreign securities held by Indian nationals with the permission of the Reserve Bank; and all balances in foreign currencies held by Indian nationals with the permission of the Reserve Bank.

Indian nationals (including persons domiciled in India) are not normally granted any foreign exchange facilities for emigration purposes. In exceptional cases, foreign exchange may be released up to a limit of Rs 20,000 at the time of emigration and in three subsequent annual installments of Rs 10,000 each. The remainder of an emigrant’s assets are blocked; only income on such blocked assets is thereafter allowed to be remitted up to a limit of Rs 20,000 per annum. Foreign nationals who are resident but not domiciled in India are permitted at the time of their retirement to transfer to their own country the proceeds from the sale of their investments, subject to a limit of Rs 75,000 at the time of retirement and the remainder in annual installments not exceeding Rs 20,000 per annum, provided that the shares and securities concerned are quoted on recognized stock exchanges in India; in addition, they may transfer all their current remittable assets in India.

There are no restrictions on the import into India of Indian or foreign securities. The export of securities and their transfer to nonresidents require approval, as does also the sale, transfer, or other disposal of foreign securities. Persons resident in India are permitted to hold foreign securities that have been acquired in a manner not involving a breach of the Indian exchange regulations.

Changes during 1965

January 1. Imports of phosphates from Jordan could no longer be settled in Indian rupees.

February 17. A customs surcharge (“regulatory duty”) of 10 per cent ad valorem was introduced on all imports, except crude petroleum, foodgrains, fertilizers, pesticides, books, and accessories for family planning. Petroleum products other than kerosene were subjected to additional excise taxes and countervailing import duties. Raw jute and sulphur were subsequently exempted from the 10 per cent surcharge.

April 1. The Foreign Exchange Regulation (Amendment) Act, 1964 came into effect. The Amendment strengthened certain provisions of the original Foreign Exchange Regulation Act, particularly those relating to the enforcement of the controls. Foreign-controlled companies in India were required to obtain permission from the Reserve Bank before accepting appointment as agents or advisors.

June 29-July 15. The import program for the 12-month period from April 1, 1965 was announced. As a result of a political emergency, the program was not put into effect. Most permitted imports were licensed on an ad hoc basis.

July 1. Importers were required to put up prior import deposits of 25 per cent of the c.i.f. value of all private imports; the deposits had to be made prior to dispatch of the goods to India.

July 12. Capital goods on approved deferred payment terms, certain goods imported under foreign loans, and most imports under U.S. Public Law 480 were exempted from the prior import deposit requirement.

August 5. Corn imported under U.S. Public Law 480, imports of cotton under certain barter deals, raw cashew nuts imported for re-export, and books and periodicals were exempted from the prior import deposit requirement.

August 17. Panamanian dollars, Philippine pesos, and Portuguese escudos were deleted from the list of currencies in which authorized dealers are freely permitted to deal spot or forward in any country outside the Bilateral Account group.

August 20. The 10 per cent customs surcharge imposed in October 1963 was abolished; the regulatory duty introduced on February 17 (see above) was continued.

August 20. The prior import deposit requirement was abolished.

August 20. A major revision of the customs duty schedule took effect; import duties on most goods were increased.

September 6. All remittances to Pakistan were suspended.

September 7. The prior approval of the Reserve Bank of India was required for foreign exchange transactions with branches of Pakistani banks in India.

September 8. Transactions with, or on behalf of, residents of Pakistan became subject to certain restrictions and prior approval procedures.

September 8. No remittances abroad could be made by, or on behalf of, Pakistani nationals or firms and companies either incorporated in Pakistan or under the control of persons resident in Pakistan. The prior approval of the Reserve Bank of India was required for all operations on the accounts of persons or firms resident in Pakistan, or of firms and companies either incorporated in Pakistan or under the control of persons resident in Pakistan.

September 18. Remittances in excess of Rs 1,000 for imports by parcel post or air freight required prior approval by the Reserve Bank.

September 29. The Rs 2 million limit on the import of banking funds by individual banks was abolished, but preconditions were imposed on the repayment of imported banking funds in excess of Rs 2 million. Repayment could take place only if the debtor bank had no outstanding borrowings in India from the Reserve Bank or any other bank and when the interbank call rate in India was below the Treasury bill rate.

October 1. A Tax Credit Certificate (Exports) Scheme was introduced. Credit certificates would be issued to exporters for 2, 5, 10, or 15 per cent of the rupee equivalent of the foreign exchange value of specified exports to any country other than Nepal, Bhutan, or Sikkim; for some of these commodities the certificates would be granted on exports made after February 28, 1965, and for others on exports made after October 1, 1965.

October 16. Indian currency notes circulating in Bahrain were withdrawn and exchanged for Bahrain dinars. The Reserve Bank of India ceased to accept from individuals, banks, and other institutions in Bahrain special rupee notes and Indian coins for payment in sterling or for credit to rupee accounts.

October 20. An issue of 15-year National Defence Gold Bonds was launched. Subscription and redemption were to take place in gold.

October 20. A National Defence Remittance Scheme was introduced. Individuals of Indian nationality resident in India who were beneficiaries of family remittances, gifts, or transfers of capital (without repatriation facilities) obtained through banking channels in foreign exchange other than a bilateral account currency received, in addition to the rupee equivalent of the remittance, a transferable certificate with which they could, upon application, obtain an import license corresponding to 60 per cent of that rupee amount. For the purposes of the Scheme, capital without repatriation facilities was deemed to include provident fund balances; payments due under life insurance policies; the sales proceeds and proceeds on maturity of foreign securities held by Indian nationals with the permission of the Reserve Bank; and all balances in foreign currencies held by Indian nationals with the permission of the Reserve Bank. The Scheme would be applicable only to remittances received during the period between October 25, 1965 and February 1, 1966. The items permitted for import covered a wide range of capital goods, spare parts, metals, raw materials, and chemicals but did not include any restricted or prohibited items. Import applications could be submitted up to April 30, 1966.

November 1. A bilateral payments arrangement with the Sudan became effective.

November 3. Authorized banks could not accept for payment, or make payment on, letters of credit opened or other arrangements made for imports of goods from or into Pakistan or in pursuance or discharge of obligations directly or indirectly entered into with persons, firms, or banks resident in Pakistan or of Pakistani nationality.

November 13. In view of its exclusion from the Sterling Area, Rhodesia was reclassified as belonging to the Convertible Account group.

November 17. Exports to Rhodesia and imports of goods of Rhodesian origin were prohibited.

November 26. One of the preconditions imposed on the repayment of imported banking funds in excess of Rs 2 million, viz., that it could be made only when the interbank call rate in India was below the Treasury bill rate, was abolished.

December 6. Restrictions on rupee loans and overdrafts to foreign-controlled companies in India were tightened.

December 11. The benefits of the National Defence Remittance Scheme were extended to all nonresidents, irrespective of nationality, provided that the proceeds of remittances were credited to special accounts in their own names. These benefits would be available only on remittances received in India between December 10, 1965 and February 1, 1966.

December 15. All applications for remittances to Rhodesia required the prior approval of the Reserve Bank of India.

December 24. The prior approval procedure for remittances in excess of Rs 1,000 for imports by parcel post or air freight was modified; prior approval was no longer required to open a letter of credit or to make remittances against shipping documents for imports by air freight.

Iran

Exchange Rate System

The par value is Iranian Rials 75.75 = US$1. The official rates are Rls 75.00 buying, and Rls 76.50 selling, per US$1. Exchange rates for other currencies quoted by the central bank1 are based on these buying and selling rates for the U.S. dollar, taking into consideration the exchange rates of the quoted currencies in the international exchange markets. Exchange rates for currencies not quoted by the central bank are determined by the authorized banks with due regard to the rates against the U.S. dollar currently quoted in the international exchange markets.

The following charges are levied by the authorized banks on the amount of exchange sold for imports: ½ of 1 per cent for sanitary services, and 110 of 1 per cent of the invoice amount for the Export Promotion Fund.

Administration of Control

Exchange control authority is vested in the Bank Markazi Iran (the central bank). All foreign exchange transactions must take place through authorized banks. The Ministry of Economy determines the classification of imported and exported commodities.

Prescription of Currency

Payments and receipts are normally settled in sterling, U.S. dollars, or the currency of the country concerned, provided that the currency is one which is quoted by the central bank.

Transactions with the five countries with which Iran has bilateral payments agreements2 must be conducted through agreement accounts denominated in U.S. dollars.

Nonresident Accounts

Foreign nationals are permitted to maintain Foreign Nationals’ Accounts freely, in rials as well as in foreign currencies, with the authorized banks. Rial accounts may be used only for payments in Iran. Foreign currency accounts may be used for transfers abroad or for sales to authorized banks, provided that such funds originate abroad.

Imports and Import Payments

All imports into Iran are subject to control by the Government. The import policy is re-examined annually, and a new Import List, effective for the next Iranian year, is published by the Ministry of Economy. The Import List distinguishes between “authorized,” “unauthorized,” and “prohibited” goods. “Authorized” imports, consisting of nonluxury goods which either are not produced in Iran or are produced in Iran but not in quantities sufficient to meet domestic requirements, are divided into two main categories: (1) imports for which orders may be placed without prior approval by government agencies,3 and (2) imports that are subject to prior approval by government agencies before the import order is placed. “Unauthorized” imports include goods which have been shifted from the “authorized” list to the “unauthorized” list, as well as goods that may be permitted occasionally by the Ministry of Economy when the supply of the protected local product is considered insufficient. For “prohibited” goods, no authorizations are given.

Specified commodities, such as tobacco and cigarette paper, are imported under state monopoly. Gold may be imported only by the central bank.

Payments for imports may be made either against bills for collection or documentary letters of credit. Payments against bills for collection may be made without authorization for goods (mainly capital goods and raw materials) listed in the Schedule attached to Circular No. 116 of August 3, 1965 (Iranian date 12.5.1344). Payments for imports of other goods required by domestic industries may also be made against bills for collection with special permission from the central bank. All other import payments must be made against documentary letters of credit. All orders for imports must be registered with the Bank Markazi Iran through an authorized bank; registration is effected against a pro forma invoice.

Foreign exchange obtained from the sale of exports to countries whose currencies are not quoted by the central bank may be utilized by the exporters concerned or by others to import authorized goods from these or other countries. Also foreign exchange obtained by residents from persons abroad, other than from the sale of exports, may be used to import goods authorized for payment against bills for collection. However, transactions of this nature do not exempt importers from paying 110 of 1 per cent tax on imports and the difference between the buying and selling rates of foreign exchange. The import of gifts is restricted to Rls 10,000 for each person a year.

At the time of registration of imports, importers are required to deposit with the Bank Markazi, through an authorized bank, Rls 1.50 per U.S. dollar of the amount of the import order. This deposit is liable to forfeiture in the event that any misrepresentation by the importer is subsequently discovered but is otherwise refundable upon presentation of the customs clearance certificate after the respective goods have been cleared through customs, or if and when the order is canceled. Additionally, advance deposits apply to all imports for which payments are made against documentary letters of credit. The deposit must be made by the importer in rials at the Bank Markazi Iran, through an authorized bank, when he registers his order with the Bank and submits his application for the opening of a letter of credit;4 it is refundable upon clearance of the documents. The rates of deposit are currently Rls 10.00, Rls 30.00, and Rls 75.00 per U.S. dollar (depending on the essentiality of the goods).

Authorized banks make payments for permitted imports against the presentation of shipping documents. Approval of the shipping documents by the authorized banks represents approval of the foreign exchange transfer.

Almost all imports are subject to commercial profit taxes, in addition to tariffs, which are either specific or ad valorem. The ad valorem commercial profit tax ranges from 1 per cent to 225 per cent. Monopoly taxes are included in the commercial profit taxes. The authorities specify in the Import List the commercial profit taxes for each year. All taxes are paid to the customs before customs clearance. The clearance through customs is authorized upon the presentation of shipping documents approved by the authorized banks, specifying that payment has been made or will be made, and, when required, that the special import authorization has been received from government agencies prior to lading of goods in the country of origin.

Payments for Invisibles

Payments for invisibles related to imports are made on the same basis as payments for those imports. Exchange is granted to merchants for insurance of imports against bills for collection; for imports covered by documentary letters of credit, insurance must be taken out in Iran. Exchange is not granted to merchants for insurance of Iranian exports sold f.o.b. Payments for noncommercial invisibles require licenses from the central bank. Foreign nationals working in Iran as technical assistants and whose employment has been recognized as necessary by the Government may take out in foreign exchange about 50 per cent of their net salaries. The annual travel allowance for Iranian nationals—which is limited to US$500 or its equivalent in other currencies for travel to Europe, the United States, or the Far East, and to US$100 for other countries—may be sold by authorized banks upon presentation of the traveler’s visaed passport. For children under 12 years of age the allowances are 30 per cent of the above amounts.

Iranian nationals leaving the country are required to pay a travel tax of Rls 10,000 for each single-voyage exit permit, except for pilgrimage travel for which the tax is Rls 3,000. Lower rates apply to family members traveling on the same passport (wife and children from 7-18 years of age), viz., Rls 750 a person for pilgrimages and Rls 2,500 a person for other travel. Iranians resident abroad and students studying abroad but visiting home temporarily are exempt from payment of the tax.

Travelers leaving Iran may take with them Rls 3,000 in Iranian banknotes. Travelers of foreign nationality may not export foreign currency in excess of the amount they imported less the amounts they have sold to authorized banks, as recorded in their passports; they may, however, convert rials up to the equivalent of US$50 into other currencies upon presentation of their visaed passports.

Exports and Export Proceeds

Exports of oil to Rhodesia are prohibited. Exports of some commodities require licenses. A commercial profit tax is imposed on a few exports, mainly consumer goods or raw materials. The commercial profit tax charged at the time of import on materials contained in goods for export may be returned to the exporter after the export has taken place. Under a system of export subsidies, the Ministry of Economy pays the exporter 20 per cent of the f.o.b. value of exports of manganese ore; 12½ per cent of the f.o.b. value of first-grade and second-grade pickled skins (salambore); and 10 per cent of the f.o.b. value of exports of chromite and packed raisins. However, the actual rates paid to the exporter by the Ministry of Economy are 90 per cent of the percentages mentioned for ores and 75 per cent of those indicated for packed raisins and pickled skins; the remainder is put at the disposal of the Ministry of Economy to promote exports.

The exporter must surrender the foreign exchange value of his exports, as appraised by the customs, within eight months after the goods have been exported. Authorized banks accept export proceeds only in specified currencies (see footnote 1). Export proceeds in other currencies may be used to purchase imports from the same or other countries.

Proceeds from Invisibles

Exchange receipts from invisibles must be surrendered unless used to import authorized goods.

The import of Iranian currency by travelers to Iran is permitted in unlimited amounts. The repatriation of Iranian banknotes through the mail is not permitted. Upon arrival in Iran, travelers of Iranian nationality must either sell their foreign exchange to an authorized bank or deposit it in a temporary foreign exchange account, from which transfers abroad or to Foreign Nationals’ Accounts require licenses from the central bank. Other travelers, during their stay in Iran, may sell their exchange only to an authorized bank at the bank’s buying rate.

Capital

Transfers of capital abroad require the approval of the central bank. Except as noted below, such approval is given only in exceptional circumstances.

In accordance with the law concerning the encouragement and protection of foreign capital investment in Iran (1955) and regulations implementing the law, foreign capital invested in approved development or productive activities in industry, mining, agriculture, or transport may be repatriated, together with net profits (in accordance with the provisions contained in the implementing regulations), in the form of foreign exchange and/or goods. Transfers of exchange must be made at the selling rate prevailing at the date of transfer. However, the central bank has the option of buying the exchange or accepting it as a deposit to be converted into rials at a rate mutually agreed upon in a separate agreement, and this rate is applicable to the funds when they are repatriated. Capital imported in the form of foreign exchange must be in currencies acceptable to the central bank; the exchange is converted into rials at the buying rate prevailing at the date of application for conversion. The law does not set up any limit of participation with respect to the ratio of foreign to domestic investment, but the Supervisory Board encourages participation by Iranians in the proposed investments.

Changes during 1965

March 21. The Import/Export Regulations for the Iranian year 1344 (March 21, 1965-March 20, 1966) were published by the Ministry of Economy. The import/export policy of Iran remained substantially the same as in the previous year. All imports of industrial equipment were made subject to prior licensing by the Ministry of Economy. Some imports were designated as “unauthorized,” but a few items were shifted from the “unauthorized” to the “authorized” list. Wheat and sugar also were placed on the “authorized” list. The rates of the commercial profit tax were amended for 45 items.

March 27. The import of goods for payment by bills for collection required prior registration with the central bank.

April 21. Advance deposit requirements on imports of live sheep and meat were reduced from Rls 30.60 to Rls 11.50 per US$1.

April 24. Imports of specified categories of machinery no longer required a license from the Ministry of Economy.

July 21. Foreign exchange (other than export proceeds) obtained by residents from persons abroad, if used for imports, could be used only for goods authorized for payment against bills for collection.

August 7. Registrations of intended imports were made subject to a deposit requirement of Rls 1.50 per US$1, refundable after the goods had cleared customs. The existing advance deposit requirements were reduced from Rls 11.50, Rls 30.60, and Rls 76.50 per U.S. dollar to Rls 10.00, Rls 30.00, and Rls 75.00 per U.S. dollar; these advance deposits remained refundable upon clearance of documents.

September 23. Export subsidies on washed and unwashed sultanas, third-grade pickled skins, and iron ore were abolished. Other subsidies, with the exception of that on manganese ore, were reduced: on packed sultanas from 20 per cent to 10 per cent; on first-grade and second-grade pickled skins from 15 per cent to 12½ per cent; and on chromite from 12½ per cent to 10 per cent.

November 22. Exports of oil to Rhodesia were prohibited.

Iraq

Exchange Rate System

The par value is Iraqi Dinar 1 = US$2.80. Transactions in the official market are carried out in any of the listed currencies1 or in Iraqi dinars through nonresident accounts in Iraq. The Central Bank of Iraq quotes official rates for the listed currencies for its transactions with authorized dealers. The official rates for the U.S. dollar on December 31, 1965 were US$2.8030 buying, and US$2.7944 selling, per ID 1. An exchange tax is levied on the Iraqi dinar equivalent of foreign exchange granted to a person who leaves Iraq or resides abroad, except on amounts transferred for the account of persons studying abroad, persons on official missions, and foreigners (other than those married to Iraqis). The rate of duty is 8 per cent for the first ID 500 (with the exception of certain exempted amounts; see section on Payments for Invisibles, below) and 12 per cent on amounts above ID 500 (with the same exemptions) granted during any calendar year. There is a small free market (mainly in banknotes) in Iranian rials and Saudi Arabian riyals.

Administration of Control

The Board of Administration of the Central Bank of Iraq is entrusted with all powers and responsibilities in connection with exchange control; it has delegated this authority to the Foreign Exchange Committee, headed by the Governor of the Central Bank, to the Directorate of Foreign Exchange of the Central Bank, and to the licensed dealers. Foreign exchange transactions must take place through a licensed dealer unless otherwise authorized by the Board of Administration. The Directorate-General of Imports and Exports in the Ministry of Economy is the licensing authority for imports and exports.

Prescription of Currency

Settlements must be made in any of the listed currencies,1 or, under bilateral payments agreements,2 in dinars or pounds sterling through the appropriate clearing account.

Nonresident Accounts

The opening of a nonresident account requires the approval of the exchange control authorities. Transactions permitted in convertible currencies may alternatively be settled in Iraqi dinars through nonresident accounts.

Imports and Import Payments

All imports from Israel and all imports from Hong Kong other than certain capital goods are prohibited. Imports of jute, sugar, tea, and certain medical supplies are a government monopoly. All private imports are licensed in accordance with an annual quota system. Quotas are distributed by the Directorate-General of Imports and Exports in accordance with its own criteria; each category of importers is limited to specified types of commodities. Imports of consumer goods generally are more heavily restricted than those of raw materials and construction materials for industrial use. Some commodities may only be imported by government agencies or state trading companies; other commodities may also be imported by registered private importers or by contractors who have entered into contracts with the Iraqi Government. New importers who meet the requirements may also be granted import privileges. Licenses for private imports are valid for 6 months from the date of issue and are automatically renewable for a similar period if a letter of credit has been opened. Licenses for imports by the Government or by official agencies are valid for 12 months from the date of issue.

Licensed dealers make exchange available upon presentation of the exchange control copy of the import license, except in certain cases where reference has to be made to the Central Bank.

Payments for Invisibles

All payments for invisibles require permission. Exchange is usually granted for travel, educational and medical expenses abroad, freight on exports carried on a c. & f. basis, insurance premiums, royalties, etc. Exchange is not granted to merchants for the insurance abroad of their imports or exports. Licensed dealers are permitted to transfer up to ID 50 a month for family maintenance on behalf of foreign nationals resident in Iraq, provided that remittances do not exceed half of the resident’s monthly income; it is necessary to refer to the exchange control authorities for amounts exceeding this limit.

There is a basic travel allowance of ID 300 a calendar year for each person 18 years of age or over, of ID 150 for persons aged between 5 and 18, and of ID 50 for children 5 years of age or younger, subject to a limit of ID 600 for each passport covering more than one person. Iraqi nationals traveling to Iran, to the countries of the Persian Gulf, or on a pilgrimage to Saudi Arabia are allowed half of these amounts. Tourist travel exchange additional to the basic allowances is subject to ad hoc approval of the Central Bank. Travelers may take out ID 5 in Iraqi currency notes and the equivalent of ID 15 in foreign currency. Residents on a pilgrimage to Saudi Arabia are permitted to take out the equivalent of ID 50 in listed currencies or in Saudi Arabian riyals.

An exchange tax is levied on the Iraqi dinar equivalent of foreign exchange granted to a person who leaves Iraq or resides abroad, except on amounts transferred for the account of persons studying abroad, persons on official missions, and foreigners (other than those married to Iraqis). The tax is 8 per cent on the first ID 500 granted during any calendar year and 12 per cent on amounts above ID 500, with the following exemptions: ID 150 for persons 18 years of age or over, ID 75 for persons aged between 5 and 18, and ID 25 for children 5 years of age or younger.

Travelers leaving Iraq must deposit with an authorized bank 10 per cent of the Iraqi dinar equivalent of the foreign exchange granted. The deposit is refunded upon the traveler’s return to Iraq, subject to the fulfillment of certain formalities. The following are exempt from the deposit requirement: officials of government, semigovernment, and public utility departments, certain persons traveling for study purposes, foreigners except non-Iraqi wives of Iraqi nationals, and persons leaving on a pilgrimage.

Exports and Export Proceeds

Exports to Kuwait are free of restriction; certain agricultural exports to Kuwait, however, require an export license. All exports to Hong Kong and Israel and exports of certain goods to all other countries are prohibited. Specified exports (e.g., certain kinds of livestock, certain foodstuffs in short supply, cereals and fruits, and raw materials in short supply) may be prohibited, and some of these (e.g., wheat and certain fruits) may be exported only if specially authorized by the High Supply Committee. All other exports are licensed freely. The re-export of such goods as cars and agricultural machinery is prohibited.

Exporters must undertake to repatriate their foreign exchange proceeds through a licensed dealer and to surrender them. Proceeds from exports of dates taken by sailing boats to countries of the Persian Gulf area (excluding Iran) are exempt from these requirements.

Proceeds from Invisibles

Foreign exchange receipts from invisibles must be surrendered to a licensed dealer. Travelers may bring in foreign exchange, including currency notes, in unlimited amounts, provided that they are declared to the Iraqi customs; foreigners may re-export any unused amount. Travelers may bring in ID 5 in Iraqi notes.

Capital

Nonresidents may import capital freely, but they must deposit it with a licensed dealer; such deposits may be converted into local currency at the official rate, and repatriation to the country of origin is permitted. With minor exceptions, foreign companies starting operations in Iraq must use Iraqi capital to the extent of at least 51 per cent of their total capital. One half of the profits of foreign service companies (companies rendering services only) is transferable. The transfer of profits from foreign investments in other economic activities is limited to 10 per cent per annum of the paid-up capital for commercial, banking, and insurance companies, and to 20 per cent of the paid-up capital for industrial companies. These percentages are applicable for each year separately. They also apply to profits on capital resulting from reinvestment of profits in excess of the transferable percentages. Interest payments may be made freely, subject to administrative checking. Imports of capital from Israel are prohibited. All transfers of capital abroad by residents, whether Iraqis or foreigners, require exchange control approval.

Under the Industrial Development Law (No. 31 of 1961) and the Industrial Promotion Law (No. 164 of 1964), specified enterprises in Iraq are granted partial or total exemption during the first five years of operation from income tax, stamp duties, and customs duties on their profits up to 10 per cent of paid-up capital, provided that (1) the principal work of the enterprise is done by machine; (2) all workers and employees other than essential technicians or experts are Iraqi citizens or Arabs; (3) the value of machinery and tools required, excluding power-generating plant, exceeds ID 3,000; and (4) foreign non-Arab participation in the enterprise does not exceed 40 per cent. Similar exemptions for profits up to 5 per cent of paid-up capital are granted during the second five-year period of operation. The specified enterprises are those whose main purpose is to process raw materials into semimanufactured or finished products or to process semimanufactured products into finished products, including assembly. Under the Iraqization Law of June 1961, all branches of foreign firms and all foreign-owned firms (except banks)3 must have a majority of equity capital held by Iraqi nationals; this law does not cover export agencies and operations requiring special skills.

Changes during 1965

January 1. The Arab Common Market Agreement, signed by Iraq, Jordan, Kuwait, the Syrian Arab Republic, and the United Arab Republic, entered into force.

January 1. The import program for 1965 took effect. Imports (other than defense items) would be kept to the level of 1964, i.e., to some US$390 million. The importation of luxury goods would remain severely restricted.

August 3. A trade agreement was signed with Turkey; the prohibition of exports to or imports from Turkey was terminated.

September-November. The import program for 1965 was revised; imports of essential foodstuffs would be increased substantially. The government monopoly over the importation of drugs and pharmaceuticals, insecticides, baby food and similar products, powdered milk, motor vehicles (other than passenger cars), and spare parts for motor vehicles was removed.

November 26. The government monopoly over imports of tires and tubes, automobile batteries, X-ray apparatus and film, and microscopes was lifted; imports of these commodities were liberalized.

November 26. Imports of feedstuffs, seeds, agricultural machinery and tools, fertilizers, and insecticides were liberalized.

November 26. It was announced that the entire import trade would be returned to private traders, with the exception of tea, sugar, jute, and certain medical supplies.

Ireland1

Exchange Rate System

The par value is Irish Pound 1 = US$2.80. Transactions in sterling take place at parity. Exchange rates for other currencies are based on London market rates. Certain capital transactions involving investment currency or property currency (see section on Capital, below) take place at different effective rates. On February 15, 1961, Ireland accepted the obligations of Article VIII, Sections 2, 3, and 4, of the Fund Agreement.

Administration of Control

Exchange control is operated by the Central Bank. Much of the authority for approving normal payments is delegated to commercial banks authorized for this purpose. Import licenses, where necessary, are issued by the Department of Industry and Commerce if the goods are of an industrial nature, or by the Department of Agriculture if the goods are agricultural in character. Import licensing is not used for exchange control purposes. Import and export controls are administered by the Revenue Commissioners.

Prescription of Currency

Ireland is a member of the Sterling Area, and payments to and from other parts of the Sterling Area may be made freely in any Sterling Area currency; certain insurance payments within the Sterling Area, however, may be made in non-Sterling Area currencies. Authorized payments to countries outside the Sterling Area other than Rhodesia may be made in Irish pounds or sterling through an External Account or in any non-sterling currency other than Rhodesian pounds. The proceeds of exports to countries outside the Sterling Area other than Rhodesia must be received in Irish pounds or sterling through an External Account or in any specified currency.2 The proceeds of permitted exports to Rhodesia must be received in specified currency; payments to Rhodesia are subject to special regulations.

Nonresident Accounts

Accounts of persons resident in other countries of the Sterling Area are treated as resident accounts. Accounts of persons resident in countries outside the Sterling Area are treated as nonresident accounts and, with the exception of Blocked Accounts and Rhodesian Accounts, are designated External Accounts. These may be credited with payments authorized for transfer to countries outside the Sterling Area other than Rhodesia, with transfers from other External Accounts in Irish pounds or in sterling, and with the proceeds in Irish pounds of any non-sterling currency other than Rhodesian pounds sold by a resident of a country outside the Sterling Area to an authorized bank in Ireland. Balances on these accounts may be transferred freely to other External Accounts in Irish pounds or in sterling, used for payments to residents of the Sterling Area, or converted through an authorized bank in Ireland into any non-sterling currency other than Rhodesian pounds.

Blocked Accounts are credited with funds not eligible for transfer that are due to persons resident outside the Sterling Area.3 These funds arise from such sources as the sale of Irish securities, proceeds from sales of real estate exceeding £1,000, and the Irish estates of persons who at the time of death were resident outside the Sterling Area. Funds in these accounts may be invested through the stock exchange in Irish or sterling securities which cannot be redeemed within five years from the date of investment. They may also be used for expenses of the account holder and his family during visits to Ireland and for the upkeep of the account holder’s property in Ireland. Balances on Blocked Accounts may be transferred freely to other Blocked Accounts in Ireland or in the United Kingdom. Holders of Blocked Accounts may avail themselves of facilities for the sale of funds in such accounts at the prevailing price for blocked sterling (normally at a slight discount).

Accounts held by or on behalf of residents of Rhodesia are designated Rhodesian Accounts. The opening of such accounts, and all debits and credits thereto, require the prior approval of the Central Bank.

Imports and Import Payments

The import of goods into Ireland is subject to two types of administrative control. Under one type, which covers only a limited range of commodities for protective and other nonbalance of payments purposes, imports of certain commodities are subject to quantitative restrictions which, in most cases, are on a world-wide basis. Individual import licenses are required for these goods and are used to limit the quantity of goods imported. In addition, special quota restrictions apply to certain textiles originating in any of 16 specified countries or territories.4 All other imports are free of import licensing.5 Under the other type of control, prior permission of the Central Bank is required before orders may be placed for goods originating outside the Sterling Area, if they are not to be used in Ireland or are to be delivered more than nine months after the date of the order.

For permitted imports, appropriate exchange or permission to credit Irish pounds or sterling to an External Account is granted automatically. Exchange control forms are required for import payments exceeding £2,000 to countries outside the Sterling Area.

A temporary import levy is applied to imports of certain finished consumer goods; the basic rate is 15 per cent ad valorem, while a preferential rate of 10 per cent applies to most of these items when of U.K. origin, to all of these items when of Canadian origin, and to wines of South African origin. Imports are exempt when shipped from, and originating in, Northern Ireland.

Payments for Invisibles

Payments to other territories of the Sterling Area are not subject to exchange control unless they are for transactions outside the Sterling Area. Payments to residents of countries outside the Sterling Area require approval. Approval to make payments for most invisibles is given by the authorized banks; for other invisibles, it is given by the Central Bank.

For tourist travel outside the Sterling Area (other than to Rhodesia) there is a basic allowance of £250 a person for each trip. For business travel, up to £1,500 is allowed for each journey. Limits are also established for allowances for education and other purposes. Applications for larger amounts are approved, provided that no unauthorized export of capital is involved. Persons traveling to destinations outside the United Kingdom (other than to Rhodesia) may take with them up to £25 in Sterling Area currency notes and £250 in other currency notes; travelers who are resident outside the Sterling Area may take with them in addition any foreign currency that they brought into Ireland. There is no restriction on the amount of Irish or other banknotes that may be taken to the United Kingdom.

Exports and Export Proceeds

A system of export licensing is applied to a limited range of goods. Exporters of goods to countries outside the Sterling Area must obtain payment for the goods within six months of shipment, if the value of the goods exceeds £100. When payment is received in specified currencies, the exchange must be sold to an authorized bank. Exchange control forms are required for exports exceeding £2,000 to countries outside the Sterling Area. Exports of manufactured goods to the United Kingdom receive “market development grants” of up to 50 per cent of the U.K. temporary import charge levied on such goods.

Proceeds from Invisibles

There are no specific requirements governing exchange receipts from invisibles, but if specified currencies are received they must be sold to an authorized bank or permission for their retention must be obtained. Any foreign exchange held by a person after his return from a trip abroad may be retained for three months from the date he received the exchange, for use on a subsequent trip abroad. There are no limitations on the import of Irish or foreign banknotes.

Capital

Exchange control approval is required for all transfers of capital to countries outside the Sterling Area. Applications by emigrants are approved up to a limit of £5,000 a family; those from other persons are considered on their merits. Incoming capital received in specified currencies must be sold to an authorized bank. Investment currency, i.e., the proceeds from the sale of non-Sterling Area securities6 sold outside the Sterling Area, may be fully reinvested in non-Sterling Area securities, provided that the securities sold were held prior to April 7, 1965, or acquired by “switches” from securities so held, and that the investment is carried out within six months from the date of sale through a bank, a stockbroker, or a solicitor. Where the securities sold were purchased with investment currency on or after April 7, 1965, 25 per cent of the sale proceeds must be surrendered at the official rate. In certain cases, the proceeds from the sale of direct investments outside the Sterling Area are eligible for investment in non-Sterling Area securities, provided that 25 per cent of such proceeds is surrendered at the official rate. The proceeds from the sale of real estate situated outside the Sterling Area (property currency) may be used, subject to individual permission, to purchase for personal use real estate outside the Sterling Area. Transactions in securities are controlled to ensure that capital is not transferred outside the Sterling Area. Dealings in Irish registered securities are permitted freely between residents of the Sterling Area.

Changes during 1965

January 6. Special quota restrictions were introduced, on a global basis, on imports of certain textiles from 16 countries or territories. As a consequence of this measure, imports of these goods from other countries now required a certificate of origin.

April 6. The following categories of foreign currency receipts ceased to be eligible for disposal through the investment currency market: gifts of securities, including gifts to charities; receipts under wills and trusts; assets acquired by nationals of countries outside the Sterling Area subsequent to their designation as Irish residents; and pensions payable to Irish residents by foreign governments.

April 12. Japanese yen and Spanish pesetas were declared specified currencies.

April 12. The amount of Sterling Area currency notes that travelers to destinations outside the United Kingdom could take out freely was reduced from £50 to £25.

The normal maximum allowance for business travel was reduced from £2,500 to £1,500 for each trip. Passport marking was reintroduced in all instances where foreign exchange facilities for travel outside the Sterling Area were provided.

April 12. Investment currency was no longer made available for purchases of property for personal use outside the Sterling Area. Such purchases could, subject to individual approval, be made with property currency. Payments for all attendant expenses also had to be made with property currency, but exchange at the official rate would be made available for maintenance.

April 21. Twenty-five per cent of the foreign currency proceeds from the sale or the redemption of securities acquired with investment currency on or after April 7, 1965 and payable, or optionally payable, in a specified currency had to be surrendered at the official rate. From the same date, no other category of specified currency receipts could be treated as investment currency, with the exception of certain funds brought in by persons from outside the Sterling Area taking up permanent residence in Ireland (to be determined in each case by the Department of Finance), and the foreign currency proceeds of mortgages, real estate, mineral rights (excluding royalties), and life and endowment policies (but not annuities payable under such policies).

May 3. The Minister of Finance delegated to the Central Bank the day-to-day administration of exchange control.

July 29. The following categories of foreign currency receipts by Irish residents ceased to be eligible for disposal through the investment currency market: (1) capital proceeds of life and endowment policies and mineral rights; (2) cash balances brought in by persons from outside the Sterling Area taking up permanent residence in Ireland; and (3) savings from earnings of persons who had been employed outside the Sterling Area. The proceeds of foreign currency securities had to be exchanged at the official rate, if such securities were owned by persons from outside the Sterling Area taking up permanent residence in Ireland and were held by them for less than two years from the date on which they took up permanent residence, or if the securities were acquired by any resident of Ireland from any such person.

August 6. The foreign currency proceeds of mortgages and real estate no longer were eligible for reinvestment or disposal through the investment currency market. All applications for permission to treat as investment currency the sale or liquidation proceeds of direct investments outside the Sterling Area had to be submitted to the Central Bank. Immigrants who had not completed two years’ residence in Ireland had to exchange at the official rate the total proceeds of any foreign currency securities sold by them.

September 10. The 25 per cent requirement was extended to all foreign currency securities instead of those payable, or optionally payable, in a specified currency. It was confirmed that the foreign currency proceeds from the sale or liquidation of direct investments outside the Sterling Area could, in certain cases (to be determined in each case by the Central Bank) be dealt with in the same manner as the foreign currency proceeds from the sale or redemption of foreign currency securities, and it was announced that no other category of foreign currency receipts could be treated as investment currency.

November 2. A temporary import levy was imposed for balance of payments reasons on certain finished consumer goods; the basic rate was 15 per cent ad valorem and the preferential rate 10 per cent. The order imposing the levy would expire on March 31, 1966.

November 18. Rhodesia was excluded from the list of Sterling Area countries as defined in the Irish exchange control regulations.

November 26. Imports from Northern Ireland were exempt from the special import levy.

November 30. The authorized banks were informed that accounts of residents of Rhodesia should be designated as Rhodesian Accounts; approval of the Central Bank was required for all debits and credits to these accounts and for the opening of an account by, or on behalf of, a resident of Rhodesia. Approval of the Central Bank also was required for all transactions in Rhodesian pounds, any transactions in securities to which a person resident in Rhodesia was a party, any transaction affecting securities held by or on behalf of a resident of Rhodesia, and all dealings in securities payable in Rhodesian pounds. The latter were now considered foreign currency securities but were not covered by the existing permissions and instructions concerning foreign currency securities.

December 14. An Anglo-Irish Free Trade Area Agreement and related agreements were signed, the former to become effective on July 1, 1966.

Note.—The following changes occurred early in 1966:

January 21. Exchange control regulations removed, with respect to Rhodesia, the general exchange control exemptions applicable to territories outside the Sterling Area. The new regulations had the effect that payments for imports of goods and services from Rhodesia required the approval of the Central Bank, that currency notes could not be exported by travelers to Rhodesia except as permitted by the Central Bank, and that exports to Rhodesia must be paid for in a specified currency.

January 21. By an Order made under the Restriction of Imports Act, 1962, the importation of goods from Rhodesia was prohibited except under license.

March 31. The temporary import levy imposed on November 2, 1965 was continued in operation until June 30, 1966, when the position would be reviewed.

Israel

Exchange Rate System

The par value is Israel Pounds 3.00 = US$1. All exchange transactions take place at rates based on the par value.

Administration of Control

Exchange control is administered by the Department of Foreign Exchange Control of the Ministry of Finance under the responsibility of the Controller of Foreign Exchange in cooperation with other government agencies, and is carried out through authorized banks.

Prescription of Currency

Payments and receipts must be effected in the currency and manner prescribed by the exchange control authorities. Settlements with countries with which payments agreements are in force1 are usually made in U.S. dollars or sterling as accounting units.

Nonresident Accounts

Nonresidents’ funds are held either on foreign currency accounts or on local currency accounts. A nonresident abroad may use his foreign currency account freely; when in Israel, he may convert funds held on the account into local currency at the official rate. Local currency accounts of nonresidents are of two types: (1) Registered Accounts—for foreign aviation, shipping, insurance, and film companies and for former residents—may be established only with special approval. Aviation, shipping, and insurance companies may freely convert at the official rate of exchange any amounts held on these accounts which are surplus to requirements; film companies may do so under individual arrangements made with each company. Registered Account funds held by former residents may be used for investment in listed Israel securities, for purchase of real estate, for tourist expenses in Israel up to an amount of I£100 a day for the account holder and for each member of his family, for remittances of up to I£2,500 in support of relatives who are residents of Israel, for the payment of taxes payable in Israel by the owner of the account, and for donations to public and charitable institutions. Ownership of Registered Accounts may not be transferred. (2) Blocked Accounts may be used to hold funds derived from former investments which are not eligible for transfer at the official rate and funds left behind in Israel by tourists. Balances may not be transferred from one nonresident to another, but the accounts may be liquidated by purchasing foreign securities against Israel pounds and selling them abroad against foreign exchange. Otherwise, Blocked Accounts may be used within Israel for the same purposes as Registered Accounts but no limit is placed on the amounts that may be withdrawn.

Imports and Import Payments

A few imports are prohibited from all sources. Importers of goods listed in the Free Import Orders (nearly one half of total imports in 1965) must be approved as importers by the Ministry of Commerce and Industry. These goods are free of all licensing and restriction. All other imports are subject to licensing. For commodities on the Automatic Approval List (more than one third of total imports), licenses are issued automatically upon application. All individual import licenses must be countersigned by the Department of Foreign Exchange Control of the Ministry of Finance. The currency and method of payment are prescribed in each license; if a convertible currency is prescribed, payment may be made in any convertible currency. Seven basic food products are imported exclusively by or for account of the Government of Israel.

Exchange to pay for items listed in the Free Import Orders or to pay for licensed imports is granted automatically. An import license may prescribe whether, if payment is to be made by documentary credit, the full amount of foreign currency required must be purchased at the time of opening the credit; in such cases, funds not transferred abroad immediately must be deposited in a special account with the Bank of Israel until transfer is made. With the exception of government agencies and persons importing for export, importers utilizing credit facilities must, at the time of opening the credit, deposit 50 per cent of the cost of the goods. Licenses are issued for imports of goods on consignment, provided that the recipient of the license imports goods valued at US$250,000 within three months and undertakes to deposit 10 per cent of the value of the goods with the Accountant General through an authorized bank. An importer cannot receive more than two such licenses a year. The approval of the Department of Foreign Exchange Control is required for all imports effected under foreign credits.

Payments for Invisibles

Most payments abroad for invisibles require individual licenses. Each resident is allowed exchange equivalent to US$30, which is obtainable on demand, for the purchase of books, membership dues, etc., and US$50 for certain other purposes (e.g., registration in a university). For tourist travel abroad, there is an exchange allowance equivalent to US$500 a traveler for each journey. Not more than I£100 in Israel banknotes may be taken out by travelers. Foreign tourists leaving Israel are permitted to repurchase through authorized dealers part of the same foreign currency they previously exchanged into Israel pounds, but not more than the equivalent of I£900. Residents traveling abroad must pay a travel tax; the tax is I£255 plus 7.5 per cent of the price of the ticket for travel by sea, and I£290 plus 7.5 per cent of the price of the ticket for travel by air. Exporters doing more than US$100,000 of export business a year are exempt from travel tax on business trips.

Exports and Export Proceeds

Most exports do not require licenses. For some commodities, however, export licensing is retained for the purpose of quality control. The Ministry of Commerce and Industry maintains a check on export transactions with a low value-added content which are made with bilateral partners: this is done to discourage switch transactions. Export proceeds in foreign currencies must be surrendered or held on a PAZAK account (see section on Proceeds from Invisibles, below).

Proceeds from Invisibles

Exchange proceeds from invisibles must, in general, be surrendered. Alternatively, they may be kept in foreign exchange on PAZAK accounts, balances on which may be exchanged into Israel currency at any time or used to make authorized payments.

One third of the foreign exchange received by residents of Israel as restitution payments, and as pensions by disabled soldiers who served in World War II, may be retained in TAMAM accounts (see section on Capital, below).

For ten years after entering Israel, new immigrants are exempt from surrendering their foreign exchange to the Treasury, and they may keep these currencies with authorized banks in Israel or with banks abroad.

Tourists visiting Israel are expected to bring with them the amounts of foreign currency that they will need during their stay. Not more than I£100 in Israel banknotes may be brought in by travelers. Tourists and others visiting Israel who are holders of Registered Accounts (see section on Nonresident Accounts, above) may draw upon such accounts to the extent of I£100 a day for themselves and the same amount for each member of their families; if they are holders of Blocked Accounts, they may draw on these without limit.

Capital

Foreign exchange representing incoming capital has to be surrendered at the official rate or held in a PAZAK account (see section on Proceeds from Invisibles, above). Capital brought into Israel for the purpose of investment may, subject to approval, be granted preferential treatment in accordance with the Law for the Encouragement of Capital Investments of August 16, 1959, which permits a nonresident who has made an “approved” investment in foreign currency to transfer all his profits abroad in the same currency at the official rate. Repayment and amortization of capital may also be transferred on the following terms: if the investment has been kept for less than five years, the capital may be withdrawn in five equal annual installments; if the investment has been kept for more than five years, it may be withdrawn immediately. Current policy is to grant “approved” status only to enterprises in selected fields of production that undertake to export half their output, that provide for a significant degree of import substitution, or that create desirable employment in the development areas of Galilee and the Negev. Foreign investments made in Israel without taking advantage of the 1959 law do not benefit from these transfer privileges, but most old investments have in fact been recognized as “approved” investments. Interest and dividends on bonds or shares registered on the stock exchange which have been purchased by nonresidents with exchange converted at the official rate may be transferred abroad in foreign currency at the official rate; this applies also to amounts received through sales of such shares.

Payments due to nonresidents and not permitted to be transferred abroad may be credited to Registered Accounts or Blocked Accounts, subject to prior approval by the Ministry of Finance.

Proceeds accruing from the repatriation or liquidation of foreign assets held by residents are treated in the same way as proceeds from invisibles. New immigrants may, for ten years from the date on which they first entered, retain their foreign assets and use them freely. Transfers abroad of a capital nature by residents are generally not permitted.

Holders of TAMAM accounts may use them to purchase abroad, for themselves or their families, foreign securities quoted on an official stock exchange and, subject to submission of evidence to the authorized bank maintaining the account, for legal costs in respect of restitution payments and for travel expenses abroad exceeding the basic travel exchange allocation of US$500. Foreign securities purchased by debiting a TAMAM account may be sold abroad for foreign currency and the proceeds again credited to a TAMAM account, or the securities may be sold to other residents against payment in Israel pounds.

Changes during 1965

During the year on various dates import restrictions were further relaxed by the addition of commodities to the Free Import Orders or the Automatic Approval List and by deletion of commodities from the list of prohibited imports.

Italy1

Exchange Rate System

The par value is Italian Lire 625.00 = US$1. Market rates for spot exchange transactions in U.S. dollars are maintained between official limits of Lit 620.50 buying, and Lit 629.50 selling, per US$1. Market rates for certain other currencies2 vary between limits which result from combining the official limits for the U.S. dollar maintained by Italy and such limits in force in the country of the other currency concerned. Forward premiums and discounts are left to the interplay of market forces. Authorized banks are allowed to engage in spot exchange transactions in any currencies, and in forward exchange transactions in U.S. dollars, Canadian dollars, and externally convertible European currencies. Transactions in foreign banknotes take place at freely negotiated rates.

Italy accepted the obligations of Article VIII, Sections 2, 3, and 4, of the Fund Agreement, as from February 15, 1961.

Administration of Control

The exchange control system is operated by the Italian Exchange Office (Ufficio Italiano dei Cambi) on the basis of instructions issued by the Ministry of Foreign Trade. All sales and purchases of exchange pass through banks authorized for this purpose. Import and export licenses, when required, are issued by the Ministry of Finance at the request of the Ministry of Foreign Trade. Issues of securities by nonresidents require the prior approval of the Ministry of Foreign Trade and of the Interministerial Credit Committee. Payments to and from the Republic of San Marino or Vatican City are not subject to exchange control.

Prescription of Currency

Settlements with foreign countries may be made in U.S. dollars, Canadian dollars, or externally convertible European currencies, or in lire on Foreign Accounts.

Nonresident Accounts

The main types of accounts in Italian lire which nonresidents are allowed to maintain with authorized banks in Italy are Foreign Accounts, for current transactions and Italian investments abroad, and Capital Accounts, for foreign investments in Italy. The use of these accounts, and of Special Accounts for certain investments, is described below.

1. Foreign Accounts may be credited with transfers from other Foreign Accounts, from Capital Accounts, and from Special Accounts under Law No. 43, with authorized current and capital payments, with payments for approved investments abroad by residents of Italy, and with the proceeds from sales of U.S. dollars, Canadian dollars, and externally convertible European currencies. They may be debited for purchases of any of these currencies, for transfers to any other Foreign Account, Capital Account, or Special Account under Law No. 43, for payments to residents of Italy for current and capital transactions, and for payments due to residents of Italy on account of their disinvestments abroad.

2. Capital Accounts may be credited with transfers from Foreign Accounts, from Special Accounts Under Law No. 43, and from other Capital Accounts, with Italian banknotes sent to Italy by banks abroad, and with the proceeds from the liquidation of foreign investments in Italy not made under the provisions of Law No. 43 of February 7, 1956 (see below). They may be debited for transfers to any other Capital Account or to Foreign Accounts, for drawings in cash by the holder of the account or his delegates, and for the purchase of investments.

3. Special Accounts Under Law No. 43 of February 7, 1956 are accounts in the names of nonresidents who have invested in Italy convertible currencies or externally convertible European currencies in accordance with the above-mentioned law. These accounts may be credited with transfers from Foreign Accounts or from other Special Accounts and with the proceeds from sales of investments that have been made in accordance with Law No. 43. They may be debited for purchases of the same currency that was originally sold and for investments in Italy, and balances on them may be transferred to Foreign Accounts, Capital Accounts, or to any other Special Account under Law No. 43.

Imports and Import Payments

Imports of tobacco and sugar from Rhodesia are prohibited. Practically all imports from other countries except Japan and the Sino-Soviet area are free of quantitative restriction. Commodities that still require individual licenses when imported from these other countries are included in a negative list (Tabella A Import), which includes goods listed under 55 tariff headings or their parts—of these 20 relate to agricultural products and foodstuffs. However, the general permission to import goods not included in the Tabella A Import applies to Somalia, the United Arab Republic, and Yugoslavia only if the goods originate in and are shipped direct from one of these countries; in addition, in respect of imports from the United Arab Republic, the payee must reside in that country or in one of the European OECD countries.

A more extensive list (Tabella B Import) contains those commodities which require an individual license when imported from the Sino-Soviet area. The list includes 110 tariff items or subitems related to agricultural products and foodstuffs, and about 840 tariff items or subitems related to other goods. Special lists contain those commodities on the Tabella B Import which may be imported freely from some of the countries3 to which the Tabella B Import applies, provided that the goods originate in and are shipped from one of these countries.

A separate negative list applies to Japan indicating the goods (listed under 96 tariff items or their parts) that are subject to individual import licensing when imported from that country. A special list contains those commodities (at present comprising 100 tariff items or subitems) for which import licenses are issued freely. All other goods from Japan may be imported freely, provided that they originate in that country, irrespective of provenance.

For imports not exceeding Lit 250,000 in value, no exchange control form is required; for imports from Lit 250,000 to Lit 500,000 in value, a form completed by the importer is required; for imports over Lit 500,000 in value, an import document completed by an authorized bank is required.

For all authorized imports, the authorized banks provide exchange or permit payment in Italian lire to a nonresident account, provided that appropriate payment terms are observed (see section on Capital, below). International postal money orders may be used to pay for imports not exceeding Lit 250,000 in value, or any lower amount within the limits established for each country to which this service is provided; amounts in excess of Lit 250,000 must be approved by the representative of the Italian Exchange Office at the branch of the Bank of Italy having jurisdiction for the area concerned.

Payments for Invisibles

In principle, payments abroad for invisibles require licenses issued by the exchange control authorities. Under general authorization, however, the authorized banks may sell foreign exchange freely, provided that the necessary documents are submitted, although for certain transactions4 there are limits beyond which the banks may make payments only after examination of the supporting documents by the Italian Exchange Office. Exchange is granted freely for remittances of earnings on investments. Residents may use international postal money orders for financial payments in the currency and within the limits established for each country; for payments exceeding Lit 250,000, however, prior authorization is required by the representative of the Italian Exchange Office at the branch of the Bank of Italy having jurisdiction for the area concerned.

Certain transactions (but not the related payments) in respect of services are subject to approval by the Ministry of Foreign Trade or the Ministry of Industry. These transactions can be divided into two groups: (1) contracts which require a permit if they involve residents of specified countries5 and (2) contracts which require a permit regardless of the nationality of the nonresidents involved. The first group includes transactions giving rise to expenditures for chartering of ships (excluding charters for a single trip); repairs to ships which are not urgent and not necessary for safety of operation; news agencies and newspaper correspondents (for amounts exceeding Lit 5 million a month for the same payee); purchase of publication rights, information agencies, etc. (for amounts exceeding Lit 5 million per contract); copyrights (for amounts exceeding Lit 5 million a year per contract); services of professional workers and company managers (for amounts exceeding Lit 5 million); and services of entertainers and athletes (for amounts exceeding Lit 5 million). The second group includes transactions giving rise to expenditures for production abroad of films and advertising shorts; utilization of films, scripts, synchronization, etc.; collaboration in cinematography; civil liability insurance; insurance of ships and aircraft against risks of operation; brokerage for merchandise transactions, whenever the settlement is made after the end of the year following that in which the export or import took place;6 and other transactions not permitted by general authorization.

Residents traveling to foreign countries may obtain from the banks exchange equivalent to Lit 500,000 for each trip for tourism, business, and education; banks are authorized to supply foreign exchange above these allowances, provided that they are satisfied that no unauthorized capital transfer is involved. Any person traveling abroad may take with him Lit 50,000 in Italian banknotes, and to the extent that he refrains from obtaining an allocation of foreign exchange, he may take in addition a proportionate amount in Italian banknotes, up to Lit 500,000.

Exports and Export Proceeds

A few commodities in a special list (Tabella Esport) require export licenses. For exports not exceeding Lit 250,000 in value, no exchange control form is required; for exports from Lit 250,000 to Lit 500,000 in value, a form completed by the exporter is required; for exports exceeding Lit 500,000 in value, an export document completed by an authorized bank is required.

Unless special approval is obtained for different terms of payment (see section on Capital, below), exchange receipts must be collected within one year of the arrival of the goods in the country of destination, and they must be offered for sale to an authorized bank within seven days of receipt. Proceeds in U.S. dollars, Canadian dollars, and externally convertible European currencies may be retained by authorized banks on behalf of the recipients in foreign exchange accounts for six months, during which period such balances may be used for permitted transactions or be sold to authorized banks; the banks are allowed to sell these currencies to residents for authorized transactions or to negotiate them freely with the Italian Exchange Office or among themselves. After expiration of the retention period, unused balances must be sold to the Italian Exchange Office at the lowest official exchange rate quoted during the retention period (these official rates are determined daily on the basis of the average closing rates in Milan and Rome). Export proceeds may also be received by international postal money order, up to amounts within the limits established for individual countries.

Proceeds from Invisibles

Receipts from invisibles are subject to the same requirements as receipts from exports. Shipping and insurance companies and travel and forwarding agencies may keep operating accounts in U.S. dollars, Canadian dollars, and externally convertible European currencies. Residents may retain up to the equivalent of Lit 100,000 in foreign banknotes and coins left over from trips abroad and may use this exchange for other trips abroad or sell it at any time to an authorized bank. Persons may bring in any amount in Italian or foreign banknotes.

Capital

Inward and outward movements of nonresident capital are free. However, loans of any kind from nonresidents to residents and from residents to nonresidents require specific authorization from the Ministry of the Treasury or the Ministry of Foreign Trade, respectively, except, with regard to OECD countries, long-term loans for the purpose of establishing or maintaining lasting economic relations; loans to relatives up to the third degree of relationship, provided that the amount does not exceed the limit of Lit 10 million; and, with regard to EEC countries, short-term and medium-term (up to 5 years) financial loans (i.e., loans not connected with commercial operations or the performance of services) that do not exceed Lit 50 million; for none of these is any kind of authorization required. Repayment of such loans may be made freely, provided that it is in accordance with the repayment schedule authorized by the above-named ministries when the loan was approved.

Direct investment in OECD countries, by individual or juridical persons, is permitted in any form and without any limit. Direct investment in other countries may only be made by juridical persons in firms that are in the same line of business as that of the Italian firm making the investment; other types of direct investment in such countries require special authorization from the Ministry of Foreign Trade. The general license to make these investments also covers the reinvestment of earnings and the use for this purpose of the liquidation of previous investments (after crediting the proceeds of the disinvestment to bank accounts similar to those established for export proceeds; see section on Exports and Export Proceeds, above).

Residents of Italy are free to buy and sell, through the Bank of Italy or the authorized banks, any foreign securities issued or payable abroad and quoted on foreign stock exchanges, and to deal in such securities among themselves against payment in lire. Such foreign securities have to be deposited with an Italian bank or with a bank abroad for account of an Italian bank.

All issues of securities by nonresidents on the Italian capital market require the prior approval of the Ministry of Foreign Trade, and subsequently that of the Interministerial Credit Committee; such issues are subject to the rules governing the issue in Italy of Italian securities.

Transfers in connection with donations, inheritances, and dowries may be made freely. The transfer of property of permanent emigrants is allowed in two steps: up to the equivalent of Lit 4 million a person upon presentation of specified documents at the time of leaving Italy (plus Lit 50,000 in Italian banknotes), and the remainder when residence has been established abroad.

Special regulations apply to commercial credits and credits related to the performance of services. Advance payments for imports may be made freely if importation is to take place within 90 days; such payments require the prior approval of the Italian Exchange Office if importation is to take place between 90 days and 360 days from the date of payment and must be in accordance with normal commercial practice; in all other cases, the prior approval of the Ministry of Foreign Trade is required. Deferred payments for imports are permitted freely if settlement is to take place, to the extent of at least 90 per cent, within 360 days after importation, and the balance within 24 months after importation; such payments require the prior approval of the Italian Exchange Office if the settlement is to take place between 12 months and 24 months after importation. In all other cases, the prior approval of the Ministry of Foreign Trade is required.

Advance payments for exports may be received freely if exportation is to take place within 360 days; in all other cases, such receipts require the prior approval of the Italian Exchange Office. Deferred payments for exports are permitted freely if settlement is to take place, to the extent of at least 90 per cent, within 360 days after exportation, and the balance within 24 months after exportation; in all other cases, such receipts require the prior approval of the Ministry of Foreign Trade.

Virtually identical regulations are in force for the permitted credit terms for imports and exports of services.

In relations with EEC countries, the reciprocal granting of credits for commercial transactions or the performance of services, with a maturity longer than the time limits that banks are authorized to approve and up to 5 years, may be effected after examination of the documents by the Italian Exchange Office.

Loans and credits not connected with commercial transactions or with the performance of services require the approval of the Ministry of Foreign Trade. However, financial loans may be granted to or by residents of EEC countries, provided that the duration of such loans or credits does not exceed 5 years, that the total amount outstanding for a resident is not more than Lit 50 million, and that the rate of interest on a credit taken up by a resident from a nonresident does not exceed 6 per cent per annum; the authorized banks have been granted a general license to approve such transactions.

The export is not permitted of securities, except those which are owned by nonresidents and have been purchased against U.S. dollars, Canadian dollars, or externally convertible European currencies, or against funds on a Foreign Account or Capital Account.

Changes during 1965

January 1. The State banana monopoly was abolished. Imports of bananas required a license, a temporary quota system for banana imports was introduced, and a consumption tax of Lit 70 per kilogram was imposed on bananas from all sources. The initial annual quota was set at 1.8 million quintals, of which one half was reserved for imports from Somalia; two other quotas were opened, one for EEC countries and associated countries and territories, the other for all other countries.

January 16. Payments for all imports of goods and services could be made within 90 days preceding or following arrival of the goods or the performance of the service; previously, payments for specified consumer durable goods had to be made within 30 days preceding or following arrival of the goods. Furthermore, requests for the authorization of credits preceding the date of importation by between 90 days and 180 days could now be submitted to the Italian Exchange Office for authorization, while requests for authorization of credits preceding the date of importation by more than 180 days could be submitted to the Ministry of Foreign Trade. Prior examination of the documents by the Italian Exchange Office was required if credits were to be taken up for a period of between 90 days and 360 days following the importation of the goods. Requests for the authorization of credits for a period exceeding 360 days following the importation of goods could be submitted to the Ministry of Trade for approval, except for credits taken up for imports from EEC countries for a period of between 90 days and 5 years following the importation of goods, for which the approval of the Italian Exchange Office was required. The prior approval of the Exchange Office was not required when 90 per cent of the import payment would be made within 90 days of arrival and the remaining 10 per cent within 24 months.

Payments for exports of goods and services were required to be collected within 360 days; longer credit terms required prior approval, either from the Ministry of Foreign Trade or, for credits up to 5 years granted to residents of other EEC countries, from the Italian Exchange Office.

March 11. Authorized banks, notaries, and public officials were henceforth required to report to the Italian Exchange Office all investment operations of foreign capital in Italy in which they intervened, specifying the amount and nature of the operation and the currency received. Notification was required within 60 days of each investment operation. Furthermore, companies operating in Italy were required to inform the Italian Exchange Office, also within 60 days, of all sales of shares or participation quotas to foreigners or to Italian citizens residing abroad. Previously, these notifications were required to be made within 30 days.

March 16. The power of the authorized banks to approve financial loans granted to or by residents of EEC countries was reduced from Lit 50 million for each transaction to a total of Lit 50 million for each resident, and banks were required to notify such operations to the Italian Exchange Office.

March 16. Advance payments for imports could be made freely if importation were to take place within 90 days; such payments required the prior approval of the Italian Exchange Office if importation were to take place between 90 days and 360 days from the date of payment, provided that the advance payment was in accordance with normal commercial practice and required the prior approval of the Minister of Foreign Trade in all other cases. Deferred payments for imports could be made freely if settlement were to take place, to the extent of at least 90 per cent, within 360 days after importation, and the balance within 24 months; such payments required the prior approval of the Italian Exchange Office if the settlement were to take place between 12 months and 24 months after importation. In all other cases, the prior approval of the Ministry of Foreign Trade was required.

Advance payments for exports could be received freely if exportation were to take place within 360 days; in all other cases, such receipts required the prior approval of the Italian Exchange Office. Deferred payments for exports could be received freely if settlement were to take place, to the extent of at least 90 per cent, within 360 days after exportation, and the balance within 24 months; in all other cases, such receipts required the prior approval of the Ministry of Foreign Trade.

Corresponding amendments, with virtually identical approval and payment terms, were made to the regulations concerning imports and exports of services. In relations with EEC countries, the reciprocal granting of credits for commercial operations or the performance of services, with maturities beyond the time limits that banks are authorized to approve and up to 5 years, might be effected after examination of the documents concerned by the Italian Exchange Office.

June 24. Subject to the prior authorization of the Italian Exchange Office, residents could engage in forward transactions in silver on the London bullion market.

August 1. In accordance with a new trade agreement with Japan, the import of 26 additional items from Japan was liberalized, reducing the nonliberalized list for Japan to 96 items.

September 18. The Spanish peseta was officially quoted and included among the conto valutario currencies.

October 1. In accordance with the trade agreement with Japan (see August 1, above), new or increased quotas for the period to April 1, 1966 came into operation for restricted imports from Japan.

December 9. The import of tobacco and sugar from Rhodesia was suspended.

Note.—The following change took place early in 1966:

January 22. Direct investment in the OECD area was permitted in the following forms: (1) participations by juridical persons (other than financial institutions) in firms with a line of business different from that of the person acquiring the participation, and (2) participations by physical persons. In some cases, such direct investment required examination of the documents by the Italian Exchange Office. Long-term loans in the OECD area which have the character of participations by physical or juridical persons were liberalized, with the exception of the disbursement of the loans of financial institutions.

The following also were freely permitted for OECD countries: (1) outward transfers in respect of legacies, gifts, endowments (except those in the form of Italian Treasury bills), lottery winnings, etc., and (2) inward and outward transfers in settlement of debts of immigrants and emigrants, provided that the-debts were contracted before immigration or emigration.

Inward and outward transfers in respect of loans to relatives up to the third degree of relationship resident in OECD countries were freely permitted, up to Lit 10 million for each beneficiary.

Ivory Coast

Exchange Rate System

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

Administration of Control

Exchange control is administered by the Department of External Finance and Credit of the Ministry of Economic and Financial Affairs. Foreign exchange transactions are handled by authorized banks under the direction of the Department of External Finance and Credit. Global annual programs for imports from countries outside the French Franc Area are coordinated by the Ministry of Economic and Financial Affairs. Import licenses (for imports subject to quotas) are issued by the Foreign Trade Department, after checking and approval of the terms of payment by the Department of External Finance and Credit (Bureau of Exchange Operations). Import certificates (for imports not subject to quota restrictions) are approved by the Department of External Finance and Credit (Bureau of Exchange Operations).

Prescription of Currency

Ivory Coast is a member of the French Franc Area, and settlements with other countries in the French Franc Area are made in any currency of that Area. Settlements with other countries are usually made through banks in France, in any of the currencies of those countries that are quoted on the Paris exchange market; they may also be made through Foreign Accounts.

Nonresident Accounts

There are two types of nonresident accounts: Foreign Accounts and INR Accounts. Foreign Accounts apply to nationals of countries outside the French Franc Area who reside outside the Area or to nationals of French Franc Area countries who have resided outside the Area for more than two years. INR Accounts (intérieurs de nonrésidents) apply to nationals of French Franc Area countries who have resided outside the Area for less than two years and to nationals of countries outside the Area who have resided within the Area for less than two years. Balances in Foreign Accounts are fully convertible. Balances in INR Accounts are only transferable between INR Accounts; any remaining balance may be transferred abroad when the holder gives up his ties with the French Franc Area permanently.

Imports and Import Payments

A few imports from all sources are prohibited or restricted. All other imports from countries in the French Franc Area may be made freely. Imports from countries outside the Area may be made in accordance with an import program, which is determined annually by the Department of Foreign Trade. Under this program, semiannual global quotas are established for imports from EEC countries other than France and for imports from all other countries outside the French Franc Area. The quotas establish limits up to which import licenses may be issued, for specified commodities, to licensed importers and, in exceptional cases, to industrial or agricultural producers who are considered as end-users of the imported goods. Certain products, contained in a liberalized list, may be imported freely from countries outside the French Franc Area.

Private persons cannot obtain import licenses, except for transactions not requiring foreign exchange. For certain goods admitted without quantitative restriction, certificates of importation are issued.

The import license or import certificate entitles the importer to purchase the necessary foreign exchange, provided that the shipping documents are submitted to the authorized bank.

Payments for Invisibles

Payments for invisibles to countries in the French Franc Area are permitted freely; those to countries outside that Area are subject to certain restrictions and require the approval of the Department of External Finance and Credit. Payments for invisibles related to trade transactions are permitted freely when the basic transaction has been approved. Payments for transportation costs may be made freely; for payments abroad for insurance, the approval of the Director of Insurance is required. The exchange allowances are as follows: for tourism, up to the equivalent of CFAF 125,000 a year; for business travel, up to the equivalent of CFAF 100,000 for each trip; for family support, up to the equivalent of CFAF 27,500 a month for each beneficiary. In all cases, supplementary allowances may be given, provided that the applicant presents reasonable justification. Income accruing to nonresidents from profits, dividends, various kinds of royalties, etc., may be remitted abroad, subject to verification. Payments in respect of many other categories of invisibles are also permitted subject to verification. Nonresident workers in Ivory Coast may remit abroad, monthly, 50 per cent of their salaries.

Travelers to Dahomey, Mauritania, Niger, Senegal, Togo, and Upper Volta may take out, without limit, banknotes issued by any bank of issue within the French Franc Area. Travelers going direct to other countries in the Area may take out, without limit, banknotes issued by any bank of issue in the Area, with the exception of those issued by the BCEAO, for which the limit is CFAF 75,000. Travelers going to countries outside the French Franc Area may take out in banknotes or coins up to a maximum of F 1,000 in French francs, or up to 75,000 in CFA or CFP francs, or the equivalent of F 750 in notes and coins denominated in any other French Franc Area currency. Nonresident travelers may take out foreign banknotes and coins up to the amount declared by them on entry.

Exports and Export Proceeds

Exports to countries in the French Franc Area may be made freely; exports to all other countries require licenses, mainly to ensure repatriation of the proceeds. For certain export commodities subject to international quotas, the export license must be accompanied by an authorization issued by the organization responsible for the management of the quota.

Export proceeds in currencies of countries outside the French Franc Area must be surrendered in their entirety within three months from the date of their receipt.

Proceeds from Invisibles

Proceeds from transactions in invisibles with countries in the French Franc Area may be retained. All amounts in respect of services, interest, and income due from residents of other countries must be collected and must be surrendered within three months of receipt. Travelers may bring in without limit CFA or other banknotes and coins (excluding gold coins), with the exception of Guinean and Malian currencies. Imported foreign banknotes must be declared to the customs authorities and must be surrendered to an authorized bank within one month.

Capital

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

Foreign investment in Ivory Coast is subject to prior approval by the Department of External Finance and Credit; approval depends on the nature and purpose of the proposed investment, a liberal policy being followed in this respect. Law No. 59-134 of September 3, 1959 provides tax and customs duty benefits and other special privileges for new enterprises recognized as having priority status.

Changes during 1965

March 1. Settlements with Rumania ceased to be made on a bilateral basis, as the bilateral payments agreement between France and Rumania, which was also applicable to Ivory Coast, was terminated.

Jamaica

Exchange Rate System

The par value is Jamaican Pound 1 = US$2.80. The currency is freely convertible into sterling at parity, subject to banking commissions. Exchange rates for other currencies are based on the buying and selling rates in the London market. The Bank of Jamaica is authorized by law to levy a commission charge of up to ¾ of 1 per cent on inward and outward transfers; at present, these charges are 316 of 1 per cent on inward transfers and 38 of 1 per cent on outward transfers. Jamaica accepted the obligations of Article VIII, Sections 2, 3, and 4, of the Fund Agreement, as from February 22, 1963.

Administration of Control

The Bank of Jamaica administers exchange control on behalf of the Ministry of Finance, subject to certain limitations in respect of which the approval of the Ministry is required. The commercial banks are designated as authorized dealers and have authority to release foreign exchange for imports, basic travel allowances, and certain other payments. Imports are regulated by the Ministry of Trade and Industry.

Prescription of Currency

Jamaica is a member of the Sterling Area and has prescription of currency requirements similar to those of other Sterling Area countries. Settlements with other parts of the Sterling Area may be made freely in any Sterling Area currency. Payments to countries outside the Sterling Area may be made by crediting Jamaican pounds to an External Account or in any foreign currency. Receipts from countries outside the Sterling Area must be received to the debit of an External Account, or in any specified currency,1 or in any other foreign currency that is freely exchangeable for sterling. Special regulations, however, apply to settlements with Rhodesia, and all payments to Rhodesia require specific authorization.

Nonresident Accounts

No distinction is made between the accounts of residents of Jamaica and those of residents of other parts of the Sterling Area.

The commercial banks are empowered to open External Accounts in Jamaican pounds for residents of countries outside the Sterling Area. The funds on these accounts are treated as equivalent to External Account sterling and may be transferred freely between residents of countries outside the Sterling Area. External Accounts may be credited with payments by residents of the Sterling Area approved by the exchange control authority, with transfers from other External Accounts, and with the proceeds from the sale to an authorized dealer of gold or foreign currencies. They may be debited for payments to residents of the Sterling Area, for transfers to other External Accounts, and for the purchase of foreign currencies.

Accounts which are credited with funds that may not be placed at the free disposal of nonresidents (e.g., proceeds from the sale of sterling and Jamaican pound securities or other capital proceeds) are designated Blocked Accounts. Permission may be given for these funds to be transferred to London, where their disposal is subject to the approval of the U.K. exchange control authorities. Blocked funds may be reinvested in Sterling Area securities which are not redeemable either optionally or contractually within five years from the date of acquisition; the income from such securities, and the proceeds at maturity of any that are redeemable, are normally available for credit to an External Account. Applications for the release of funds in Blocked Accounts for use in Jamaica by the nonresident owner must be referred to the Bank of Jamaica.

Imports and Import Payments

Most goods may be imported freely under an open general license.2 Other imports, i.e., some 120 tariff items or groups of tariff items included in a special schedule and all imports originating in Japan, the Sino-Soviet area, Rhodesia, South Africa, or Cuba, require individual import licenses. Licenses for imports from Japan are issued according to criteria of essentiality. The special schedule comprises (1) goods for which specific quotas are assigned to importers according to their past performance, e.g., footwear and detergents (for these items vouchers are issued to importers on the basis of which licenses are granted by the Trade Administrator); (2) goods which are prohibited, e.g., canned milk, cement, cheap clothing, sugar, and coffee; and (3) goods the licensing of which depends upon local supply, e.g., poultry, eggs, and vegetables.

Payments for imports from the Sterling Area may be made freely in any Sterling Area currency. Payments for imports from other countries may be made by crediting an External Account or by purchasing foreign exchange from an authorized dealer, provided that the licensing requirements, if any, have been met, and that the importer presents a copy of the settlement invoice or other evidence of purchase and value, together with documentary evidence that the goods either have been shipped or are about to be shipped, or that the importer is under contract to make prepayment up to six months prior to shipment; specific exchange control approval is required for advance payments preceding shipment by more than six months.

Certain imports from all sources are subject to a 2½ per cent consumption tax levied on the sum of customs value, customs duty, and tonnage tax.

Payments for Invisibles

Payments for invisibles originating in the Sterling Area may be made freely in any Sterling Area currency. Payments for invisibles originating outside the Sterling Area require the approval of the authorities. Except for transactions involving residents of Rhodesia, the following applies. Approval is granted freely for payments for all commercial transactions, when the application is supported by the appropriate documentary evidence. For payments for certain other purposes, e.g., insurance premiums, approval is granted upon request. A basic exchange allocation of £J 250 for each journey for travel outside the Sterling Area is made available automatically to residents by the authorized dealers, and additional amounts for travel will be approved by the Bank of Jamaica upon presentation of satisfactory documentation (e.g., tickets, hotel reservations, and estimates of daily expenditures). Moreover, authorized dealers may, subject to the presentation of supporting evidence, sell foreign exchange for the following: cash gifts of up to £J 250 annually from each donor; refunds of income tax due to nonresidents; consular fees without limit, as well as transfers from the Ministry of External Affairs to accounts in the names of embassies and their established staffs, High Commissioners, and diplomats; up to a limit of £J 1,000 for (1) advertising and promotional expenses, (2) renewal and refund of premiums due to nonresident insurers, and (3) subscriptions to trade organizations; up to a limit of £J 2,000 for commissions and expenses due by Jamaican firms to their agents and representatives and for serial rights in Jamaica of newspaper and magazine articles, photographs, strip cartoons, etc.; specified payments, up to a limit of £J 2,500, that are due by Jamaican insurers to nonresident insured parties under life or endowment insurance policies; agents’ expenses and fees, up to £J 2,500, due by Jamaican insurers to nonresidents in respect of direct insurance policies. Authorized dealers may, without reference to the exchange control authorities, make loans or overdrafts to nonresident individuals and nonresident-owned or nonresident-controlled Jamaican companies, up to £J 1,000 and £J 10,000, respectively. Other requests are referred to the Bank of Jamaica.

Travelers going abroad may take with them Jamaican banknotes not exceeding £J 10 and other notes, with the exception of U.K. notes, not exceeding £J 100 in value. Nonresidents may take out the foreign currency notes they brought in.

Exports and Export Proceeds

All exports to countries outside the Sterling Area require export licenses. Certain other exports require individual licenses irrespective of destination; these include all re-exports and some exports (mostly agricultural products) that are subject to licensing to ensure adequate local supplies. Exporters to countries in the Sterling Area are not required to repatriate their export proceeds; exporters to other countries are required to surrender their exchange proceeds, which must be obtained in one of the specified currencies, to authorized dealers within six months from the date of shipment. However, certain exporters may retain, with the approval of the exchange control authorities, an agreed portion of their proceeds to facilitate the import of items necessary for their operations.

Proceeds from Invisibles

Receipts from invisibles in specified currencies must be sold to an authorized dealer. Receipts in other currencies may be retained. Travelers to Jamaica may not bring in Jamaican and/or U.K. banknotes of an aggregate value exceeding £J 10 (i.e., £ stg. 10); nonresident travelers may bring in any amount of non-Sterling Area banknotes.

Capital

There are no restrictions on investments in the Sterling Area by residents. Investments in non-Sterling Area securities require the approval of the exchange control authorities, and such securities may only be purchased in the United Kingdom with investment currency. The sale of securities by residents to nonresidents may be allowed, provided that the full proceeds are received in External Account sterling or in foreign currency; the latter must be surrendered to an authorized dealer in Jamaica. Purchases of property for personal use outside the Sterling Area require the approval of the exchange control authorities, and such property may be purchased only through the United Kingdom and only with property currency.

Direct investments in the Sterling Area may be made freely by residents. Direct investments in other countries are only permitted through the investment currency market in the United Kingdom.

Direct investments in Jamaica by nonresidents for which “approved status” is sought require the approval of the exchange control authorities (which is usually granted) and must be made in the currency appropriate to the country of permanent residence of the investor or in External Account sterling. To qualify for “approved status,” an enterprise must have adequate capital and the nonresident investor must take an active part in management. For foreign investments granted “approved status,” repatriation of the capital (including any appreciation in value) is permitted at any time; remittances of profits and dividends are permitted when the application is supported by the appropriate set of accounts. Remittances of profits resulting from foreign investment in respect of which “approved status” was not sought or granted are not restricted, but the realization of the invested capital (if the enterprise is bought by a resident) has to take place through Blocked Accounts (see section on Nonresident Accounts, above).

Payments for amortization of, and interest on, foreign loans (i.e., loans made by nonresidents of the Sterling Area) are permitted upon application to the exchange control authorities. However, nonresidents are not normally permitted to take security in respect of loans made to Jamaican companies owned or controlled by them. Bank loans or overdrafts of £J 10,000 or more in favor of nonresident-controlled companies in Jamaica require exchange control approval.

Transfers to nonresident beneficiaries under wills and intestacies are approved, provided that all local indebtedness has been met.

Changes during 1965

During the year, many imports were added to the list of exceptions to the open general license; only the principal instances are listed below.

February 24. Imports of raw tobacco required a specific license.

April 1. Imports of upholstered furniture, cosmetics, and peanuts required a specific license.

April 7. All imports from Japan required a specific license.

April 7. Japanese yen and Spanish pesetas were listed as specified currencies.

April 23. The import of automobiles with a wheel base of over 115 inches was prohibited.

June 4. The Bank of Jamaica’s commission charge on outward transfers was reduced from 58 to 38 of 1 per cent.

June 8. A consumption tax of 2% per cent was levied on certain goods, whether imported or domestically produced.

July 1. Imports of sugar milling machinery and parts required a specific license.

July 27. All direct investment outside the Sterling Area was required to be financed with investment currency or by borrowing outside the Sterling Area. Official exchange was no longer provided for such investment outside the Sterling Area.

August 27. The maximum permitted wheel base of imported automobiles was increased to 116 inches.

November 11. Special regulations were applied to settlements with Rhodesia; all payments to Rhodesia required specific exchange control approval.

November 13. All imports from and all exports to Rhodesia required a specific license.

Japan1

Exchange Rate System

The par value is Japanese Yen 360.00 = US$1. The official limits of buying and selling rates for U.S. dollars (spot), which are set by the Ministry of Finance, are ¥ 362.70 (upper limit) and ¥ 357.30 (lower limit), per US$1; the exchange authorities will buy or sell exchange at rates within this range. Authorized banks may freely carry out spot and forward exchange transactions. Japan accepted the obligations of Article VIII, Sections 2, 3, and 4, of the Fund Agreement, as from April 1, 1964.

Administration of Control

The exchange control system is operated by the Ministry of Finance, the Ministry of International Trade and Industry (MITI), and the Bank of Japan as the Government’s agent. However, much of the authority for approving normal payments is delegated to authorized banks. Import and export licensing is handled by MITI. Inward capital investments of a long-term character require the approval of the Minister of Finance (in some cases at the same time that of the competent Minister) after deliberation by the Foreign Investment Council. Outward capital investments require the approval of the Minister of Finance.

Prescription of Currency

Payments to all countries except the Republic of Korea may be made in any currency, and receipts from those countries may be obtained in any of the designated receivable currencies;2 receipts in other currencies require an individual license. Settlements in yen with those countries must be made through a Nonresident Free Yen Account. Payments to and from the Republic of Korea are made through accounts established under the bilateral payments agreement with that country, but payments from Korea may also be accepted in any of the designated receivable currencies and payments for specified invisibles may be made without using these accounts.3

Nonresident Accounts

There are two main nonresident accounts, as described below.

1. Nonresident Free Yen Accounts. These accounts may be opened by any nonresident with any authorized bank in Japan and may be credited with the yen proceeds from exports of goods to Japan and from other authorized transactions incidental thereto, with yen proceeds from sales of designated receivable foreign currencies, with transfers from other Free Yen Accounts, and with the countervalue in yen of authorized outward payments. There are no restrictions on payments from these accounts. The yen balances on these accounts may be converted into any foreign currency.

2. Nonresident Yen Deposit Accounts. These accounts may be held by any nonresident with any authorized bank in Japan. They may be credited with yen proceeds from transactions other than those which are authorized to be credited to Nonresident Free Yen Accounts. Permitted credits to Nonresident Yen Deposit Accounts include proceeds from the sales of debentures and beneficiary certificates sold within six months from the date of validated acquisition, proceeds from sales of fixed assets which a nonresident acquired when he was a resident, and yen in excess of the amount of US$5,000 which permanent emigrants are allowed to take out of Japan. Balances on these accounts are not convertible into foreign currencies, although remittances are permitted each year up to one fifth of the balance at the end of the previous year or the equivalent of US$2,000, whichever is the higher. Withdrawals from these accounts are authorized for certain purposes, such as meeting the outlays involved in managing investments in Japan and the expenses of nonresidents staying in Japan. Transfers to other Nonresident Yen Deposit Accounts are authorized freely, thus enabling the individual account holder to repatriate his funds by selling them to another nonresident in return for foreign currency.

In addition, there are Foreign Investors’ Deposit Accounts in which certain proceeds from investments liquidated by foreigners may be placed. Balances on these accounts may be used for remittances abroad or for making other investments under certain conditions. However, these accounts are of limited importance, because proceeds from foreigners’ liquidated investments may be remitted through Nonresident Free Yen Accounts without having been placed in Foreign Investors’ Deposit Accounts.

Imports and Import Payments

Certain imports from Rhodesia are prohibited. Other imports are subject to individual licensing by the authorized banks, but in practice 93 per cent of nongovernment imports are liberalized. There are different licensing procedures for imports requiring payment in foreign currencies: (1) Under the Import Quota System (covering imports of goods on the “negative list,” which comprises 161 items), the importer must first obtain from MITI an import quota, which is based on the quantitative principle. If the quota is granted, the importer receives an import quota certificate which entitles him to receive an import license from an authorized bank automatically upon application. Practically all import quota certificates are issued on a global basis, without regard to the country of origin or the currency of settlement. (2) Under the Automatic Import Quota System, import quotas for specified categories of imports are granted automatically on a global basis and without restriction by MITI. (3) Under the Automatic Approval System, imports are, in effect, free of quantitative restriction, since licenses to import the commodities specified under this system are issued freely and without limitation by the authorized banks, on application. All items subject to the Automatic Approval System may be imported from any country.

Payment for imported goods must be made under one of the standard methods of settlement for imports (generally within a period from the date of receipt of the shipping documents or the goods to four months after customs clearance). When the settlement proposal is not in accordance with one of the standard methods, prior approval of MITI must be obtained.

In general, importers must make a deposit with an authorized bank when applying for an import license; currently the amount of this deposit is 1 per cent or 5 per cent of the value of the intended imports, depending on the goods to be imported (for imports from the Ryukyu Islands and the Bonin Islands, the deposit is 110 of 1 per cent). The deposit is returned after 80 per cent of the goods has been imported or if the import transaction is canceled for a reason acceptable to the control authorities. The percentage of deposit can be increased or decreased. The 1 per cent deposit may be made in cash, securities, or other collateral; the 5 per cent deposit must be made in cash.

Payments for Invisibles

Payments for invisibles require approval. However, most such payments are approved freely by authorized banks without any limitation or within certain established limits. Payments for certain invisibles, including payments that exceed the established limits, are referred to the Bank of Japan for the purpose of capital control; except for tourism, they are automatically approved without undue delay, upon verification of the authenticity of the current transaction. For tourism, an allowance equivalent to US$500 a person a trip is automatically made available; for additional amounts, special authorization is required. A tourist is permitted to pay in yen, before departure, the cost of transportation to and from his destination. Certain contracts require approval; but when a license for a contract has been granted, any payment resulting from the contract may be made freely. Settlements which are not made under a “standard” method require, in principle, individual approval; under this method, payments for services, etc., may not be made more than three months before, or later than six months after, receipt of the services, etc.

Both residents and nonresidents may take out freely ¥ 20,000 in Japanese currency. A nonresident may take out freely foreign currencies up to the amount which he brought into Japan.

Exports and Export Proceeds

All exports (except exports without exchange) must be registered with an authorized bank (“bank certification”), in order that the requirements concerning prescription of currency and surrender of proceeds may be enforced.

Licenses are not generally required, except for goods subject to the following restrictions: restrictions on strategic goods to control their export to communist countries; restrictions on goods in short supply in the domestic market (e.g., minerals, fertilizers, and staple foodstuffs); and restrictions designed to forestall the imposition of import restrictions by other countries (e.g., on such commodities as pottery and porcelain, sewing machines, and certain textiles). Exports under processing and consignment sale contracts and exports for which settlement is not under the standard method also require individual licenses.

Under the standard method of settlement for exports, the value of the exported goods must, in general, be settled by drawing a bill of exchange payable within five months after sight or within six months after shipment in a designated receivable currency.

Export proceeds must be surrendered within 10 days from the date of acquisition. However, trading concerns resident in Japan may be permitted to hold foreign currency deposit accounts with authorized banks, in which they may keep their proceeds in U.S. dollars and/or sterling from exports and invisibles for a maximum of 20 days; during this period, they may use the exchange to make approved payments for their imports or for current invisibles, or sell it to the authorized banks for yen.

Proceeds from Invisibles

Receipts under the standard method of settlement may be accepted without a license. Under this method, receipts for the value of services, etc., must be obtained within one year before, or within six months after, rendering the service, etc. But contracts for services performed for nonresidents when payment is to be received by a nonstandard method are subject to individual licensing. Receipts from invisibles must, as a rule, be surrendered. However, in order to facilitate payments for current invisibles, specified residents (shipping companies, etc.) are authorized to keep foreign currency deposit accounts with banks in the designated receivable foreign currencies.

Both residents and nonresidents may bring in freely any amount in foreign or Japanese currency.

Capital

Foreign investments in Japan are generally subject to approval, mainly in accordance with the Foreign Investment Law (Law No. 163 of May 10, 1950) or the Foreign Exchange Control Law (Law No. 228 of December 1, 1949). All acquisitions of stocks, bonds, debentures, beneficiary certificates, and claims in the form of loans by foreign investors are in principle subject to validation or license. However, acquisitions of stocks in the securities market are automatically approved by the Bank of Japan as follows: up to 15 per cent of the stock of a corporation not classified as a restricted industry, up to 10 per cent of the stock of a corporation classified as a restricted industry,4 and up to 5 per cent of the total capital of any corporation if acquired by a single holder. Acquisition of stock for participation in management is subject to individual validation, but it is approved in principle if there is no adverse effect on the Japanese economy. All these acquisitions, to be validated, must be made against yen proceeds from the sale of foreign exchange or its equivalent. Stocks in the form of stock dividends on earned surplus or revaluation of assets may be acquired freely, but application for remittance rights must be made within three months from the date of acquisition. The following are deemed to be the same as yen proceeds from the sale of foreign exchange, if they are reinvested in Japan and if approval had been obtained for their acquisition: proceeds from the redemption after maturity of debentures, beneficiary certificates, or claims in the form of loans; dividends on stocks; interest on debentures or on claims in the form of loans; distributed profits of beneficiary certificates; receipts from technological assistance contracts; and proceeds from sales of stocks, debentures, and beneficiary certificates.

In the event of expropriation or compulsory sale of a foreign investment, the amount paid on account of expropriation may be repatriated freely.

Remittance of the proceeds from the sale of validated stock, as well as transfer abroad of earnings on foreign investments acquired with foreign currency, is permitted. Proceeds from the sale of validated debentures and beneficiary certificates may be deposited in Nonresident Free Yen Accounts, if the securities have been held for six months from the date of acquisition.

Proceeds from the sale of stocks, bonds, debentures, beneficiary certificates, etc., acquired with yen withdrawn from Nonresident Yen Deposit Accounts may be deposited in Nonresident Free Yen Accounts, provided that the securities have been held for at least three years from the date of acquisition (or from December 18, 1964 for securities acquired before that date). Repayments of loans extended to residents from Nonresident Yen Deposit Accounts become remittable, subject to licensing by the Bank of Japan, beginning three years from the date of the loan.

Foreign investment in Japan requires approval by the Minister of Finance (in some cases at the same time that of the competent Minister) after deliberation by the Foreign Investment Council. When foreign companies desire to establish a branch or a plant in Japan, they are required to inform the Ministry of Finance and MITI through the Bank of Japan; and when the branches or plants wish to bring in funds from their main offices abroad, they are required to obtain licenses. The branches established in accordance with such procedures are permitted to remit their profits and principal abroad.

Residents require approval to transfer capital abroad or to make investments abroad. Japanese emigrants may remit their assets to their new country of domicile subject only to verification by an authorized bank or the Bank of Japan. Foreign immigrants leaving Japan may remit to their new country of domicile up to US$5,000 or its equivalent in other foreign currencies; additional amounts may be granted according to the merits of each case. The remaining liquid assets in Japan of such foreigners may be credited to Nonresident Yen Deposit Accounts.

Securities acquired with approval under the Foreign Investment Law may be imported and exported freely.

Changes during 1965

April 1. The rates for deposits which importers are required to make with an authorized bank were reduced; these rates were changed from 1, 5, and 35 per cent to 1 per cent and 5 per cent. Advance deposits no longer were required to be redeposited with the Bank of Japan.

October 1. Imports of complete passenger cars and glass jewelry were liberalized. This reduced the number of items still restricted, i.e., included on the “negative list,” to 161 and raised the liberalization ratio from 92.9 per cent to 93.2 per cent.

October 11. Charter contracts for periods longer than one year for the transportation of crude or heavy oil could be freely concluded with nonresidents.

November 15. Exports of copper were prohibited.

December 1. A “tariff drawback system” involving drawbacks on imported raw materials was introduced for 61 export commodities produced mainly from imported raw materials.

December 3. Imports of tobacco and sugar from Rhodesia were prohibited.

December 18. Letters were exchanged with the Republic of Korea to the effect that the bilateral payments agreement with that country would be terminated on March 19, 1966.

Note.—The following change took place in 1966:

January 1. The tourist travel allowance equivalent to US$500 a person for one trip a year was increased to the equivalent of US$500 a person for each trip.

Jordan

Exchange Rate System

The par value is Jordan Dinar 1 = US$2.80. The official limits for the U.S. dollar are US$2.82 buying, and US$2.78 selling, per JD 1. Authorized banks deal in U.S. dollars and other foreign currencies at rates usually based on the rates in the London market. Fees are levied on the issue of import licenses at the rate of 4 per cent when the goods are to be paid for in foreign exchange, and ½ of 1 per cent for goods imported without exchange. A fee of 110 of 1 per cent is levied on exchange permits approved by the Central Bank of Jordan for sales of exchange for imports and invisibles, except educational expenses and import payments and payments for invisibles by government departments and certain other approved institutions.

Administration of Control

Exchange control is administered by the Foreign Exchange Department of the Central Bank of Jordan, which also issues exchange licenses. Import policy is formulated by an Import Committee, which is composed of the Controller of Imports, the Undersecretary for National Economy, the Director of Customs, the Head of the Foreign Exchange Department of the Central Bank of Jordan, the Director of Income Tax, and two persons representing the Chambers of Commerce. The decisions of the Import Committee are carried out by the Controller of the Import Department of the Ministry of National Economy.

Prescription of Currency

Jordan is a member of the Sterling Area, and most of its trade is financed in sterling. Payments to residents of the Sterling Area may be made in any Sterling Area currency. In practice, such payments are made in sterling to a Resident Account in the United Kingdom, or in Jordan dinars to a nonresident Sterling Area Account with an authorized bank in Jordan. Payments to residents of countries outside the Sterling Area (except Yugoslavia)1 must be made in sterling to an External Account in the United Kingdom, or in Jordan dinars to a nonresident External Account with an authorized bank in Jordan, or in currency appropriate to the country of residence of the recipient and/or the country of origin of the goods.

Proceeds from exports and invisibles must be collected, and surrendered where required, as follows: from residents of the Sterling Area, in resident sterling or in Jordan dinars from a nonresident Sterling Area Account with an authorized bank in Jordan; from residents of countries outside the Sterling Area, in sterling from an External Account in the United Kingdom, in Jordan dinars from a nonresident External Account with an authorized bank in Jordan, or in any specified currency.2

Nonresident Accounts

Subject to the prior approval of the Central Bank of Jordan, authorized banks may open nonresident accounts designated either Sterling Area Accounts or External Accounts, according to the permanent residence of the account holder. These accounts must be fed with appropriate funds. The approval of the Central Bank of Jordan is necessary for redesignation of residence, for transfers from resident to nonresident accounts, and for transfers from Sterling Area Accounts to External Accounts. Transfers between similarly designated nonresident accounts, transfers from External Accounts to Sterling Area Accounts, and transfers from nonresident to resident accounts are permitted freely.

Imports and Import Payments

Imports of certain items3 from any source and all imports from Israel and Rhodesia are prohibited. Most other imports, unless covered by an agreement between Jordan and the exporting country, require import licenses if their c.i.f. value is JD 50 or more. These are granted freely by the Ministry of National Economy, except for certain items which are subject to scrutiny by either the Import Committee or the Undersecretary for National Economy, whose prior approval is also required for imports of industrial machinery and of all materials needed for the establishment or expansion of an industrial firm. Importers of specified commodities must obtain 30 per cent or 50 per cent of their annual requirements from India.

Imports valued at JD 50 or more require an exchange license from the Central Bank. Exchange licenses are granted automatically when an import license has been obtained.

A fee of 4 per cent is payable on licenses for imports paid for in nonresident account dinars or foreign exchange. A fee of % of 1 per cent is payable on licenses issued without exchange (e.g., for samples, household effects, charitable donations in kind).

Licenses for imports originating in Arab League countries4 are valid for 4 months and those for imports originating in other countries for 6 months. For the latter, the importer must open a letter of credit within 45 days of the date of issue of the license and must complete the process of importation within the period of validity of the license. If the importer chooses to pay against documents, the requirement that he open a letter of credit is dispensed with, provided that the goods are shipped within 3 months of the date of issue of the license.

Payments for Invisibles

All payments for invisibles except those of less than JD 25 are subject to exchange control approval. Payments for the following types of invisibles are generally permitted: income of nonresidents; savings of foreign nationals who intend to return to their own countries; remittances to refugee dependents; reasonable living expenses of Jordanian nationals abroad; expenses of Jordanian residents traveling abroad; expenditures for education; expenses of medical treatment; business expenses abroad; and insurance payments in accordance with special regulations.

The policy in respect of these payments is, in general, liberal and nondiscriminatory. However, foreign exchange is not granted for travel to Iraq, Kuwait, Lebanon, Saudi Arabia, or the Syrian Arab Republic, though residents of Jordan and nationals of these countries traveling to them may take out up to JD 100 in Jordanian notes and coins. Otherwise, persons leaving Jordan may not take out more than JD 25 in Jordanian notes and coins or the equivalent in foreign currency; in addition, tourists and other nonresidents may take out foreign currency notes which they had previously brought into the country. Remittances for family maintenance may be made by postal order at a rate not exceeding JD 10 a month to any one person resident abroad.

Exports and Export Proceeds

Export proceeds exceeding JD 50 must be collected and the foreign exchange, including sterling, surrendered. Proceeds from exports to Arab League countries of agricultural products and locally manufactured goods are exempt from the surrender requirement, except for the products of tobacco and cigarette factories, the phosphate company, the dyeing and tanning company, the cement plant, and the petroleum refinery. Exports to Israel and Rhodesia are prohibited.

Proceeds from Invisibles

Foreign exchange (including sterling) receipts from invisibles must be surrendered to an authorized bank. Travelers entering Jordan may bring in a maximum of JD 100 in Jordanian currency notes and any amount in foreign currencies. Any person regarded for exchange control purposes as resident in Jordan may be required by the Central Bank to surrender to an authorized bank any foreign currency (including sterling) at his disposal.

Capital

Capital may be imported freely, but exports of capital require approval. Current income resulting 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, repatriation of the capital is permitted in four annual installments in the same foreign currency in which the original investment was made. The Government may approve more liberal provisions upon application.

Changes during 1965

January 1. The Arab Common Market Agreement, signed by Iraq, Jordan, Kuwait, the Syrian Arab Republic, and the United Arab Republic, entered into effect.

January 1. The minimum amount of export proceeds that must be surrendered was raised from JD 20 to JD 50.

January 1. Exports of phosphates to India could no longer be settled in Indian rupees.

February 18. Commercial agencies could only be held by Jordanian nationals or by companies in which at least 60 per cent of the ownership was Jordanian.

November 9. The Central Bank delegated to authorized banks, effective January 1, 1966, the approval of payments for educational expenses of Jordanians studying abroad.

November 30. All trade with Rhodesia was prohibited.

December 7. The Central Bank delegated to authorized banks, effective January 1, 1966, the issuance of exchange licenses for opening documentary import credits and for import payments against documents.

Kenya

Exchange Rate System

No par value for the currency of Kenya has been established with the Fund. The unit of currency is the East African shilling, which is officially maintained at par with the U.K. shilling, giving the relationship EA Sh 1 = US$0.14. It circulates freely in the East African currency area, which comprises Kenya, Tanzania, and Uganda. In transactions equivalent to at least £ stg. 5,000 with the public, the East African Currency Board stands ready to issue East African currency in exchange for sterling and to supply sterling in exchange for East African currency; the official limits for the buying and selling rates for sterling differ from parity by % per cent and % per cent, respectively. The Board deals with its banking customers and, for large transactions, with the public at rates between the official limits. In transactions covering smaller amounts, the public has to deal through the authorized banks. The buying and selling rates for such transactions are at present within the official limits. The Board does not deal in foreign currencies1 other than sterling. Banks in Kenya base their rates for other currencies on the current market rates in London.

Administration of Control

Exchange control is administered by the Ministry of Finance. Authority for approving normal import payments and providing standard allocations of foreign exchange is delegated to authorized banks. Import and export controls are administered by the Director of Trade and Supplies in the Ministry of Commerce. Certain imports and exports are effected by State Marketing Boards. Payments from Kenya to Tanzania and Uganda are free of restrictions.

Prescription of Currency

Kenya is a member of the Sterling Area and maintains prescription of currency requirements similar to those of the United Kingdom; all settlements with Tanzania and Uganda, however, must be effected in East African currency. Settlements with residents of other countries in the Sterling Area except Tanzania and Uganda may be made in any Sterling Area currency. Authorized payments, including payments for imports, by residents of Kenya to residents of countries outside the Sterling Area other than Rhodesia may be made in sterling to an External Account in the United Kingdom, in East African shillings to the credit of an External Account, or in any other foreign currency except Rhodesian pounds. Receipts from countries outside the Sterling Area other than Rhodesia may be obtained in sterling from an External Account in the United Kingdom, in East African shillings from an External Account, or in any other specified currency2 that is not a Sterling Area currency. Special regulations apply to settlements with Rhodesia.

Nonresident Accounts

Nonresident Sterling Area Accounts are held by residents of other Sterling Area countries except Tanzania and Uganda. They may be credited with all authorized payments to such Sterling Area countries by Kenya residents, with transfers from other Nonresident Sterling Area Accounts, and with the proceeds from sales to an authorized dealer in Kenya of pounds sterling or the currency (excluding East African shillings) of any other country in the Sterling Area. They may be debited for payments for exports to countries in the Sterling Area other than Tanzania and Uganda and other payments due to Kenya residents by residents of other countries in the Sterling Area except Tanzania and Uganda, for payments to residents of other countries in the Sterling Area except Tanzania and Uganda for any purpose, for transfers to other Nonresident Sterling Area Accounts in Kenya, for purchases of any Sterling Area currency, and for withdrawals by the account holder while he is temporarily resident in Kenya.

Accounts in East African shillings held by residents of countries outside the Sterling Area other than Rhodesia with authorized banks are, with exchange control approval, designated External Accounts. They may be credited with authorized payments by residents of the Sterling Area, with transfers from other External Accounts, and with the proceeds from sales of foreign currency and gold by nonresidents of the Sterling Area to authorized dealers. They may be debited for payments to residents of the Sterling Area, for transfers to other External Accounts, and for purchases from authorized dealers of non-Sterling Area currencies.

Nontransferable funds of residents of countries other than Tanzania and Uganda are credited to Blocked Accounts. Subject to prior approval, balances on Blocked Accounts may be used for the purchase of bonds and shares officially quoted in Kenya; the redemption proceeds of certain government bonds so acquired are transferable. Also subject to individual permission, such balances may be used for payments to residents not related to export transactions. Transfers between Blocked Accounts in Kenya, and to Blocked Accounts in Tanzania and Uganda, require prior approval.

Imports and Import Payments

Some imports from all sources are prohibited for reasons of health or security. Certain other imports are not being licensed. Imports from Tanzania and Uganda are unrestricted, but certain goods imported from these countries require a specific license unless they are of Tanzania or Uganda origin. Specific import licenses are required for certain goods from all other sources; no licenses are being issued for imports of some of these goods from Japan. Other goods may be imported without licenses. All imports from South Africa, metropolitan Portugal, and Rhodesia are prohibited.

When the importer has obtained a license from the Director of Trade and Supplies, or if the transaction is covered by an open general license, exchange is provided automatically by an authorized bank upon application and submission of the necessary documentary evidence.

Payments for Invisibles

Payments for invisibles to all countries other than Tanzania and Uganda are controlled. Authorized banks are empowered to approve specified categories of current payments up to established limits; amounts above these limits as well as all other current payments are approved administratively, if the authorities are satisfied that such payments do not represent an illegal export of capital. The basic allowance for travel outside Tanzania and Uganda is EA Sh 5,000 a person a year. Travelers may take out up to EA Sh 500 in domestic currency notes. Nonresident travelers may take out foreign currency notes up to the amount they brought in upon entry.

Exports and Export Proceeds

Exports of certain foodstuffs and agricultural products require licenses and may be subject to restriction. Exports of minerals, precious stones, and strategic materials are also subject to licensing. Other goods may be exported without licenses. With relatively few exceptions, the movement of goods within the East African common market3 is unrestricted. All exports to South Africa, metropolitan Portugal, and Rhodesia are prohibited.

Export proceeds in foreign currencies must be offered to an authorized bank in Kenya for conversion into East African shillings.

Proceeds from Invisibles

Receipts from invisibles in foreign currencies must be sold to an authorized bank. Travelers may bring in freely foreign currency notes; the import of domestic currency notes must not exceed EA Sh 500 in value for each traveler.

Capital

Capital transfers to all countries other than Tanzania and Uganda are restricted.

Specified capital transfers up to established amounts to all countries other than Tanzania and Uganda are approved by authorized banks; all other capital transfers to destinations other than Tanzania and Uganda require individual exchange control approval. Persons leaving Kenya permanently may transfer their assets up to the equivalent of EA Sh 100,000 if they take up residence in a country outside the Sterling Area, or up to the equivalent of EA Sh 140,000 if they take up residence in a Sterling Area country other than Tanzania or Uganda. All remaining funds must be credited to a Blocked Account; they may then be invested in approved Scheduled Territory4 securities, and redemption proceeds become transferable five years from the date of purchase.

There is no restriction on the investment of foreign funds in Kenya, but to ensure eventual repatriation it is necessary to obtain a “certificate of approved enterprise” for the investment. Foreign and domestic investment in specified types of production require approval under the East African Licensing Ordinance.

Except in respect of Tanzania and Uganda, all imports and exports of securities require approval. Approval is freely granted for the purchase by nonresidents of Kenya securities on a recognized stock exchange, provided that payment is received in an appropriate manner. The income from such securities is remittable, but the proceeds on resale must normally be credited to Blocked Accounts. Purchases of securities outside Tanzania and Uganda by residents are not normally permitted.

Commercial banks are not permitted to grant overdraft facilities to individuals and companies in order to enable them to make overseas transfers.

Changes during 1965

January 28. Imports of rayon yarn or thread from countries other than Tanzania and Uganda required an individual license; licenses would not normally be issued for denier counts of 30 or below.

January 28. Imports of casein from all sources were freed from individual licensing.

February 16. The credit arrangement attached to the bilateral trade agreement with the United Arab Republic of December 24, 1963 was terminated with retroactive effect from the date of its conclusion.

April 1. Aden issued its own currency. The East African shilling would remain legal tender until July 1, 1965, and Aden would remain a member of the East African Currency Board until it was dissolved.

April 15. Imports of most textile fabrics, made-up articles, and clothing from countries other than Tanzania and Uganda required an individual license.

May 12. Imports of radios, record players, and low-speed agricultural trailers from countries other than Tanzania and Uganda required an individual license.

June 7. Imports of certain types of machinery and of secondhand clothing from countries other than Tanzania and Uganda required an individual license.

June 10. It was announced that the common currency arrangements of the three East African countries would be terminated by the middle of 1966.

June 11. The exchange control treatment applicable to countries outside the Sterling Area was extended to all Sterling Area countries other than Tanzania and Uganda. The existing exchange control definition of “Scheduled Territories,” previously referring to the Sterling Area, was narrowed to cover only Kenya, Tanzania, and Uganda. Consequently, the application of the restrictions on capital transfers and of the surrender requirements was extended to the Sterling Area except Tanzania and Uganda. The Exchange Control Act was made applicable also to residents of Kenya when outside Kenya. The currencies of all countries other than the Scheduled Territories were designated as foreign currencies. Japanese yen, Spanish pesetas, and all Sterling Area currencies other than the East African shilling were designated as specified currencies. It was officially stated that all reasonable requests for exchange for payments to Sterling Area countries for such items as family remittances, educational expenses, and insurance would be approved, and that no new restrictions were being imposed on trade with the Sterling Area.

June 11. The amount of domestic currency notes that travelers could freely take out or bring in was reduced to EA Sh 500.

June 18. Restrictions were placed on the sale of postal orders for transfers to countries other than Tanzania and Uganda.

June 25. Exports of millet, dried peas, rice, paddy, and certain other foodstuffs to any destination required an individual license.

July 1. The East African shilling ceased to be legal tender in Aden.

August 14. Imports of all types of soap from countries other than Tanzania and Uganda required an individual license.

September 10. Imports of further textiles from Japan required an individual license.

September 25. Individual licensing was imposed on the importation of all Japanese goods; licenses would not normally be issued except for certain raw materials and equipment needed for the development of local industry.

November 4. The East African Currency Board ceased redeeming currency notes of the design issued in East Africa from October 12, 1964 onward, except in East Africa.

November 17. Imports of biscuits and various other cereal products from countries other than Tanzania and Uganda required an individual license.

November 27. Special regulations were issued for settlements with Rhodesia.

December 2. All trade with Rhodesia was prohibited.

Korea

Exchange Rate System

No par value for the Korean Won has been established with the Fund. On May 3, 1964 a new fluctuating rate based on an exchange certificate system was introduced. Since March 22, 1965 there has been a fluctuating exchange rate determined in an exchange certificate market, where the rate is not permitted to appreciate beyond W 255 per US$1. On December 31, 1965 the exchange rate was W 272.60 per US$1.

Exchange certificates are issued by the Bank of Korea against all foreign exchange receipts except those from sales of won to the UN forces stationed in Korea. Exchange certificates are required for all foreign exchange expenditures except for payments of less than the equivalent of US$50; the certificates required for the Government’s exchange payments are issued against won by the Bank of Korea.

Administration of Control

The Ministry of Finance is in charge of exchange control, subject to the approval of the Cabinet. It carries out policy with respect to prescription of currency and method of settlement, foreign exchange operations, payments for nonmerchandise transactions, and capital transactions and transfers. The Bank of Korea, as the Government’s agent, executes the above functions in part; it regulates operations in the certificate market and is authorized to intervene in it. The Bank has also been delegated authority to control receipts and payments related to invisibles. The Bank of Korea and five commercial banks, as well as their branch offices, are authorized to deal in foreign exchange.

Some imports and exports are subject to approval by the Ministry of Commerce and Industry or the ministries concerned.

Prescription of Currency

Under a bilateral payments agreement with Japan,1 settlements with that country must be made through a bilateral clearing account, except for settlements on account of certain trade transactions requiring cash payment in U.S. dollars. There is also a bilateral payments agreement with Viet-Nam, but no clearing account has yet been established and all settlements are made in convertible exchange. Certain settlements with Indonesia are made through escrow accounts.

The proceeds of exports must be obtained in Canadian dollars, deutsche mark, French francs, Hong Kong dollars, Italian lire, pounds sterling, Swiss francs, or U.S. dollars. The methods of payment on account of other settlements require the approval of the Ministry of Finance.

Nonresident Accounts

Nonresidents may maintain foreign currency deposit accounts with the Bank of Korea and the authorized banks. Remittances from such accounts and withdrawals in the form of currency notes upon departure from Korea may, in general, be made freely. The approval of the bank where the account is held is required for remittances from balances that have accrued from remuneration for services in Korea, air or ship passage fares, or insurance premiums received in Korea, or from exchange deposited in accordance with a decision of the Ministry of Finance (except exchange registered at the customs on entry or remitted from abroad). The deposits may be disposed of by sale to the Bank of Korea or an authorized bank at the prevailing exchange certificate rate, and they may be debited for salary payments to foreign employees.

Foreign residents and nonresidents are permitted to hold foreign currency time deposit accounts with the Bank of Korea. Certain residents of Korean nationality, such as the airline and some insurance companies, may maintain current deposit accounts in foreign currencies with the Bank of Korea and with authorized banks.

Imports and Import Payments

Imports are permitted in accordance with semiannual import programs. All imports require licenses; for some imports (see below) licenses are issued upon application. No licenses are issued for any goods originating from communist countries and for certain imports from all other countries. Imports are divided into two categories: those paid for with Korean foreign exchange (so-called KFX imports) and those paid for with U.S. aid funds. KFX imports are classified as automatic approval, semirestricted, restricted, unspecified, or prohibited items. Automatic approval items (1,495) consist mainly of essential consumer goods and certain raw materials and capital goods; these items are licensed automatically and account for about 74 per cent of KFX imports. Semirestricted items (124) are not subject to individual quotas but require the approval of competent ministries for other than balance of payments reasons, such as reasons of public health. Restricted items (14) are subject to individual quotas. Prohibited imports cover 620 commodities. U.S. aid imports are classified as either automatic approval items or restricted items; automatic approval items (27) account for 40 per cent of U.S. aid imports other than imports under U.S. Public Law 480. In principle, no commodities imported with U.S. aid funds are included among the KFX imports, but in exceptional cases payment for imports usually financed with U.S. aid funds may be made with KFX exchange. Certain imports are reserved only for end-users, i.e., manufacturers and exporters who need specified raw materials.

Import licenses are granted only to registered traders; to maintain the status of a registered trader, a minimum value of US$50,000 of exports is required each year. For imports financed with KFX exchange, except imports for exports, exchange certificates corresponding to the full invoice amount must be deposited with an authorized bank when the letter of credit is opened. For imports used for exports, the importer must either comply with the same requirements or produce a letter of guarantee denominated in a foreign currency and issued by an exchange bank; the guarantee must provide for settlement within 135 days after release of the bill of lading. For imports financed with U.S. aid, except imports of agricultural commodities under U.S. Public Law 480, exchange certificates corresponding to the full amount of the invoice need not be deposited until the bill of lading is released by the Bank of Korea. Certain advance import deposits, however, are required for all imports financed with U.S. aid.

Payments for Invisibles

All payments for invisibles require individual licenses. Payments for invisibles connected with foreign trade transactions are licensed automatically. There are certain standard allocations for business travel; in addition, exporters are granted foreign exchange up to US$1,000 for expenses. Exporters whose foreign exchange earnings exceed the equivalent of US$100,000 a year may retain part of such earnings for business travel or other trade promotion purposes; the maximum amount that may be retained is US$10,000 a year, applicable to those exporting the equivalent of over US$1,000,000 a year. Foreign and Korean currency notes may not be exported without special permission. Departing foreigners may reconvert unused won notes into U.S. dollars up to US$100, and they may take out any foreign exchange that they had registered on entry.

Exports and Export Proceeds

All exports to communist countries, and exports of certain goods (such as raw cotton; raw hides; precious metals; certain ores and minerals; bituminous coal; pulp; and lumber) to all other countries, are prohibited.

Certain exports require individual licenses. All other exports may be made freely under an automatic approval procedure.

The export proceeds in foreign exchange must either be surrendered to the Bank of Korea at its buying rate or be exchanged into equivalent foreign exchange certificates.

Proceeds from Invisibles

All proceeds derived from invisibles must either be sold to the Bank of Korea at its buying rate or be exchanged for equivalent exchange certificates. The import of Korean currency notes requires special authorization. Travelers may bring with them any amount of foreign exchange, which must be declared upon entry.

Capital

All capital remittances require approval. Foreign capital investment, loans from abroad, and imports of capital goods on a long-term basis can secure a guarantee of repayment and repatriation under the Foreign Investment Encouragement Law, the Law Guaranteeing Repayment for Loans, and the Law Governing Importation of Capital Goods on Long-Term Repayment Basis, respectively.

Changes during 1965

February 6. Restrictions on payments for invisibles were relaxed. Licenses for payments for invisibles connected with foreign trade were granted automatically. Exporters could freely use a part of their foreign exchange earnings for business travel and other trade promotion purposes.

March 22. An exchange certificate market was created in which the exchange rate could fluctuate. Exchange certificates were issued against all foreign exchange receipts except those from sales of won to the UN forces. Exchange certificates were required for all payments of the equivalent of US$50 or more, except payments for imports under U.S. Public Law 480. The exchange rate would not be permitted to appreciate beyond W 255 per US$1, but no predetermined limit was set on the extent to which it might depreciate.

March 22. The export subsidies ranging from W 3 to W 25 per US$1 were eliminated. The barter arrangement, under which exporters of specified commodities were entitled to receive preferences in the granting of import licenses, was abolished. Export-import linking, under which merchants’ entitlements to import licenses were linked to their export earnings, also was terminated.

March 22. Restrictions on imports were relaxed and import procedures were simplified; the number of items authorized for import was increased from 694 to 1,431.

December 9. A barter agreement with Indonesia entered into effect; payments would be channeled through escrow accounts.

Kuwait

Exchange Rate System

The par value is Kuwaiti Dinar 1 = US$2.80. The dinar is officially defined in terms of gold and is at par with the pound sterling. The commercial banks’ rates for telegraphic transfers on London are KD 0.9975 buying, and KD 1.0025 selling, per £ stg. 1. Rates for other currencies in the official market are based on London market rates. There is a free market in which exchange other than Rhodesian pounds may be dealt in without restrictions as to its origin or use, and in which rates, in practice, differ from official market rates by less than 1 per cent. On December 31, 1965, the average selling rate for the U.S. dollar in the official market was KD 0.35900 per US$1, and in the free market it was within a range of KD 0.35925 to KD 0.35960 per US$1.

On April 5, 1963, Kuwait notified the Fund that it was prepared to accept the obligations of Article VIII, Sections 2, 3, and 4, of the Fund Agreement.

Administration of Control

There is no exchange control legislation in Kuwait. Control is exercised only over the provision of exchange in the official market for payments to territories outside the Sterling Area and over the manner of payment to other Sterling Area territories. It is administered by the Kuwait Currency Board. Authority to provide exchange for imports and related payments and, within limits, for travel is delegated to the banks operating in Kuwait. Individual Letters of Recommendation, required for other payments through the official market in currencies other than those of the Sterling Area, are issued by the Currency Board. General and individual import licenses are issued by the Ministry of Trade.

The limited control over exports is administered by the Customs and Ports Administration of the Ministry of Finance and Oil.

Prescription of Currency

Kuwait is a member of the Sterling Area, and the banks operating in Kuwait observe prescription of currency requirements broadly similar to those of other parts of the Sterling Area. Payments to other countries in the Sterling Area may be made in sterling or another Sterling Area currency. Payments through the official market to countries outside the Sterling Area other than Rhodesia may be made in sterling to the credit of an External Account or in a non-sterling currency appropriate to the area to which the payment is made. Payments from other countries in the Sterling Area may be received in any Sterling Area currency. Apart from payments to the Government, payments from countries outside the Sterling Area are not, in practice, received through the official market. All settlements with Rhodesia are prohibited.

Nonresident Accounts

No distinction is made between accounts held by residents and those held by nonresidents.

Imports and Import Payments

Import licenses are required for all private imports other than foodstuffs; licenses are issued freely. Registered importers handling a variety of commodities may obtain a general license valid for one year. Other importers must obtain specific licenses. All imports from Israel, including imports of Israeli manufacture and those which contain Israeli materials or are manufactured by companies financed by Israeli capital, and all imports from Rhodesia and South Africa are prohibited. Imports of alcoholic beverages are prohibited from all sources.

The importer must be either a Kuwaiti citizen or a firm in which all partners are Kuwaitis or a shareholding or limited liability company in which Kuwaitis own not less than 51 per cent of the stock. Firms in which partners are Kuwaitis and non-Kuwaitis may obtain nonrenewable general import licenses valid until November 26, 1966.

Sterling Area currencies are provided freely for payments to residents of the Sterling Area for imports or for other purposes. Imports from any source may be paid for with exchange acquired in the free market.

The banks operating in Kuwait are authorized to provide External Account sterling or a non-sterling currency other than Rhodesian pounds for payments for imports from outside the Sterling Area, provided that they receive a full set of documents covering the import and, when payment is to be made in sterling to the credit of an External Account, that they provide confirmation that they are satisfied that the goods will be landed in Kuwait. When payment is made in a non-sterling currency other than Rhodesian pounds, the banks operate on the basis of blanket or nonspecific Letters of Recommendation which authorize them to obtain non-sterling currencies other than Rhodesian pounds in London up to certain limits and to transfer them to accounts in the country of the currency involved. When the limits are reached, the banks obtain further authorizations under new Letters of Recommendation on accounting for the use of the previous allocations.

For payments for goods purchased in countries outside the Sterling Area for resale without shipment to Kuwait, exchange is provided through the official market only if a bank guarantees that the proceeds of the resale will be returned to Kuwait; however, the proceeds of re-exportation of imports financed through the official market need not be surrendered.

Payments for Invisibles

Payments for invisibles may be made freely to residents of other Sterling Area countries, or to residents of any country other than Rhodesia in exchange acquired in the free market.

Payments through the official market to residents of countries outside the Sterling Area other than Rhodesia may be made in sterling to the credit of an External Account or in a non-sterling currency other than Rhodesian pounds for expenses related to imports (such as freight and insurance), as part of the arrangements on payments for imports and thus subject to the same conditions (see section on Imports and Import Payments, above). The banks operating in Kuwait have been granted general authority to sell to Kuwaiti nationals non-sterling currencies other than Rhodesian pounds up to the equivalent of KD 250 a person for each trip for travel outside the Sterling Area, without specific reference to the Currency Board. For business travel, the amount may be increased up to KD 20 a day for a maximum period of three months; this allowance is applicable to all members of the family who accompany a business traveler. Travelers may take with them any amount in Kuwaiti or other banknotes except Rhodesian currency.

For all other payments for invisibles to countries outside the Sterling Area other than Rhodesia which are made through the official market, a separate Letter of Recommendation must be obtained from the Currency Board for each payment. Such authorization will be granted to provide exchange for medical or educational expenses abroad, if approval is obtained from the competent ministry. Foreign nationals working in Kuwait may remit abroad up to 75 per cent of their basic wages or salaries and, on departure, may transfer their savings. The transfer of income on foreign capital invested in Kuwait will be authorized up to the amount of net profits, including past earnings, on presentation of an audited statement. Similarly, a Letter of Recommendation will be issued to cover payments for business services, if the application is accompanied by an audited certificate.

The Currency Board will also issue to Kuwaiti nationals Letters of Recommendation providing an annual allowance in any currency except Rhodesian pounds of the equivalent of up to KD 3,000 for each family. This may be used for additional travel funds, for personal remittances, or for any other purpose including the transfer of capital. This exchange is automatically available; larger amounts require special authorization by the Currency Board.

Exports and Export Proceeds

Exports of live sheep and poultry are prohibited, and those of certain other items, such as sugar and fats, may be either licensed or prohibited in time of emergency or shortage in Kuwait. Exports of arms, ammunition, and scrap metal require licenses. Licenses are not required for other exports or re-exports. All exports to Rhodesia and South Africa are prohibited.

There are no requirements attached to receipts from exports or re-exports, except that these must not accrue in Rhodesian pounds; the proceeds need not be repatriated or surrendered, and they may be disposed of freely, regardless of the currency involved.

Proceeds from Invisibles

No requirements are attached to the use or disposal of receipts in any currency other than Rhodesian pounds. Travelers entering Kuwait may bring with them any amount in Kuwaiti or other banknotes except Rhodesian currency.

Capital

There are no exchange control obligations on the transfer to Kuwait of resident or nonresident capital in any currency. Government agreement is necessary for the participation of nonresident capital in corporations in Kuwait, and a license is required for the establishment and operation of industries in Kuwait; except for petroleum companies, 51 per cent of ownership of new Kuwaiti companies must be held by Kuwaiti nationals.

No control is imposed on outward capital payments by residents or nonresidents to other countries in the Sterling Area, or to any country other than Rhodesia if the payment is made through the free market. A Letter of Recommendation from the Currency Board is required if a currency other than a Sterling Area currency is to be transferred through the official market. When a firm in which nonresident capital is involved is liquidated, permission is given automatically for the repatriation through the official market of the nonresident capital involved, in a currency other than Rhodesian pounds appropriate to the residence of the investor.

Under a resolution of September 1963 of the Ministry of Finance and Industry, Kuwaiti nationals may be granted permission to transfer capital, within limits approved by the Exchange Control, to countries outside the Sterling Area other than Rhodesia for investment purposes, provided that the application is supported by sufficient information regarding the purpose of the investment and the country to which the remittance is made. Local banks are granted permission without restriction to invest their deposits outside the Sterling Area except in Rhodesia.

Transfers of capital for other purposes by residents through the official market to countries outside the Sterling Area other than Rhodesia are generally not permitted beyond an amount equivalent to KD 3,000 a family per annum (see section on Payments for Invisibles, above). Additional amounts are subject to the approval of the Currency Board, which is granted only in exceptional cases.

Changes during 1965

March 15. An Industrial Law was published which subjected the establishment and operation of industries to government license. Except for petroleum companies, any new Kuwaiti companies formed for the setting-up of a new local industry must be at least 51 per cent Kuwaiti-owned.

May 28. All government imports must be effected through registered local importers or Kuwaiti agents.

August 23. With minor exceptions, all imports by oil companies or their staff required an import license.

December 5. The Council of Ministers declared a comprehensive boycott covering all trade and all financial transactions with Rhodesia. Dealings in Rhodesian pounds and Rhodesian securities also were prohibited.

Laos

Exchange Rate System

No par value for the Laotian Kip has been established with the Fund. The official rate is K 240 = US$1. This rate applies to imports of aid goods, government requirements, 60 per cent of the proceeds from exports of tin ore, 10 per cent of other export proceeds, and specified invisibles. All other transactions take place in an official free market.1 The National Bank of Laos conducts exchange transactions with authorized banks only in U.S. dollars, French francs, and pounds sterling, at rates equivalent to K 240.00 buying, and K 242.40 selling, per US$1. Banks are authorized to charge commissions not exceeding 1 per cent on purchases and sales of these currencies.

Residents and nonresidents are permitted to maintain accounts in foreign currencies with authorized banks. These accounts may be credited with unlimited amounts in foreign exchange and may be debited for any payments by the account holder. Transfers between these accounts are free. Balances on these accounts may be sold against kips either at the free market rate or, for specified purposes, at the official rate.

Administration of Control

The Exchange Office of the Ministry of Finance jointly with the Department of Customs authorizes imports under the foreign assistance import programs, authorizes payments for invisibles, and records exports. The Foreign Trade Department of the Ministry of National Economy issues export licenses. The four commercial banks are authorized to deal, on account of customers only, in foreign exchange at the official and free market rates.

Prescription of Currency

No prescription of currency requirements are imposed on receipts or payments, but the National Bank provides exchange for authorized payments and accepts export proceeds only in U.S. dollars, French francs, and pounds sterling. There is a bilateral payments agreement with the U.S.S.R., providing for payments to be made through a clearing account maintained in French francs as the unit of account.

Nonresident Accounts

Nonresidents are permitted to maintain accounts in foreign currencies with authorized banks (see section on Exchange Rate System, above).

Imports and Import Payments

All importers must pay an annual registration fee to the Government. Imports of charcoal, bricks, roof tiles, matches, rubber sandals, coffee, and soft drinks are prohibited, although import licenses are granted when shortages arise. Imports are divided into two categories: (1) those made in accordance with the import programs financed by assistance from Australia, the United Kingdom, and the United States; (2) all other imports, for which the importer has to supply his own foreign exchange and which are not subject to licensing.

There is a list of commodities which may be imported under the import program financed by the United States; certain of these commodities may not be imported from specified countries.2 However, petroleum products, for which specific U.S. aid is made available, may be imported from some of the countries on the list of excluded countries. Under the various import programs financed with foreign aid, importers apply to the Exchange Office for licenses; after clearance by the customs authorities in respect of valuation, the exchange licenses automatically become import licenses. Under the U.S. import program, suppliers are paid direct from the Special Letter of Credit opened by the U.S. Government at the Chase Manhattan Bank of New York in favor of the Royal Lao Government, after the goods involved have been certified as conforming to the list of commodities qualified for foreign financing. Under the U.K. import program, foreign exchange is made available by the United Kingdom direct to the commercial banks upon the opening of letters of credit. Under the Australian import program, the Laotian Government requests the Australian Government to purchase and deliver to Laos specified goods. The Australian Government makes payment to the suppliers and covers all costs up to the Laotian port of entry, when the goods become the property of the Laotian Government.

The National Bank does not make foreign exchange available to pay for imports outside the import programs, with the exception of imports to meet government requirements. However, importers are free to obtain exchange through the official free market for any amount of imports.

Under the import programs financed with foreign aid, all importers are required to make a covering payment of 100 per cent for letters of credit opened.

For customs valuation purposes, the exchange rate for most imports not financed with foreign aid is K 500 per US$1; for all other goods it is K 240 per US$1.

Payments for Invisibles

Payments for certain specified invisibles that are granted foreign exchange at the official rate of K 240 per US$1 require licenses, which are issued by the Exchange Office. Freight and insurance in connection with imports under the foreign aid import programs are regarded as a part of the import payment. The following are the main categories of payments for invisibles for which the National Bank sells foreign exchange: official expenditures by the Government; study abroad (initial installation, monthly allowances up to specified limits, transport, and other miscellaneous expenses); family maintenance; and specified insurance payments. All other payments for invisibles are unrestricted, but must be conducted through the official free market.

Exports and Export Proceeds

Exporters must pay an annual registration fee to the Government. Exports of gold and silver are prohibited. All other exports are subject to authorization, but licenses are automatically issued. Sixty per cent of proceeds from exports of tin ore and 10 per cent of all other export proceeds must be surrendered in U.S. dollars, French francs, or pounds sterling at the official rate to the National Bank; the remainder may be kept abroad or with domestic banks or sold in the free market. Should an exporter be paid in a currency other than U.S. dollars, French francs, or pounds sterling, he must exchange the part that is subject to surrender into one of the acceptable currencies.

Proceeds from Invisibles

Exchange surrender requirements are applied to the following invisibles: official expenses, other than salaries of foreign employees, by embassies, missions, representatives, and various foreign institutions; settlements from insurance companies; and receipts of public service companies.

Capital

Incoming capital and outgoing capital are not subject to any exchange control requirements. Transactions are conducted through the official free market.

Changes during 1966

September 6. Many commodities were removed from the list of imports under the U.S. aid program; the items deleted included wheat flour, milk, sugar, live animals, tobacco, insecticides, many fertilizers, soap, all chemical and pharmaceutical products, pulp, paper and newsprint, most textiles, rubber and rubber products, many iron and steel products, most nonferrous metals and products thereof, motor vehicles, tractors, and electrical equipment. These items could henceforth be imported freely with exchange obtained in the official free market.

September 9. The proportion of the proceeds from exports other than tin ore that was required to be surrendered at the official rate was reduced from 60 per cent to 10 per cent.

September 28. Imports of matches and rubber sandals were prohibited.

Lebanon

Exchange Rate System

On July 29, 1947, a par value for the Lebanese Pound was established by Lebanon with the Fund. However, exchange transactions no longer take place at rates based on that par value. All transactions take place at free market rates, which for the U.S. dollar as at December 31, 1965 were LL 3.070 buying, and LL 3.074 selling, per US$1. Pending the establishment of a new par value with the Fund, a “provisional legal parity” of LL 3.08 = US$1 is applied for the valuation of official assets and government transactions in foreign exchange and for customs valuation purposes. There are no restrictions on foreign payments.

Prescription of Currency

In general, no requirements are imposed on exchange payments abroad or receipts in Lebanon. In some cases, transactions with certain countries with which Lebanon has payments agreements specifying the method or channel of payment may be made through specific accounts.1

Imports and Import Payments

Imports of a few goods from any source and all imports from Israel are prohibited. Imports valued at over LL 500 of certain commodities (wheat, barley, beet and cane sugar, menthol, leather bags, ladies’ dresses, industrial machinery, olive oil, molasses, brushes, poultry, gasoline, kerosene, liquid gas, etc.) that are for the most part produced locally are subject to prior licensing. Licenses are granted for six months and may be renewed for an additional six months (or longer, for imports of industrial machinery). All other commodities may be imported freely without license. Exchange to pay for imports may be obtained freely through the free market. A municipalities tax of 3.5 per cent is levied on the value of all goods imported by sea or air.

Payments for Invisibles

No restrictions are placed on payments for invisibles. Exchange may be obtained freely through the free market.

Exports and Export Proceeds

Exports of a few goods (scraps of iron, cast iron, copper, lead, and tin) to any country, re-exports of certain goods to any destination, and all exports to Israel are prohibited. Exports valued at over LL 200 of a few items—such as livestock, wheat and wheat products, barley, Egyptian cotton, newsprint, petroleum, petroleum products, industrial and agricultural machines and equipment, and certain metals—to any country and all products intended for export to North Korea require export licenses. Exchange receipts from exports may be retained, used, or sold freely in the free market.

Proceeds from Invisibles

Exchange receipts from invisibles may be retained, used, or sold freely in the free market.

Capital

There are no limitations on capital payments or receipts. Exchange may be obtained or sold freely through the free market.

Changes during 1965

January 1. A “provisional legal parity” of LL 3.08 = US$1 was established. It would be used for recording government transactions in foreign exchange, for valuation of official assets, and for customs valuation. Customs tariffs were adjusted so as to prevent any change in tax yields in Lebanese pounds.

March 9. A trade and technical cooperation agreement with the European Economic Community was initialed.

May 8. Several items, such as wall tiles, aluminum bars, and aluminum tubes and pipes, required an import license.

Liberia

Exchange Rate System

The par value is Liberian Dollar 1 = US$1. U.S. currency is in circulation along with Liberian coinage. Official accounts are kept in dollars and cents. There are no restrictions on foreign exchange transactions.

Prescription of Currency

No prescription of currency requirements are in force. There is an inoperative payments agreement with Guinea.

Imports and Import Payments

There is no general system of import control. A few items (e.g., arms and ammunition, explosives, used clothing, and pharmaceuticals) require prior licenses. Also, imports of certain goods (e.g., obscene literature, narcotics other than for medicinal purposes) and all imports from South Africa are prohibited.

Exports and Export Proceeds

Export licenses are required for precious metals, precious stones, ivory, agricultural products other than rubber, and certain other items. Licenses are issued freely; they serve mainly to enforce taxation or, for agricultural products, to assure certification of quality and origin and to safeguard the monopoly of the Liberian Produce Marketing Corporation. The surrender of the proceeds of exports is not required, and exchange receipts are freely disposable.

Payments for and Proceeds from Invisibles

There are no limitations on payments for or receipts from invisibles. There are, however, restrictions on the circulation of U.S. banknotes in denominations over $20.

Capital

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

Changes during 1965

No significant changes took place during 1965.

Libya

Exchange Rate System

The par value is Libyan Pound 1 = US$2.80. The Bank of Libya deals with commercial banks in pounds sterling and U.S. dollars only, at rates fixed daily. The rates for the U.S. dollar on December 31, 1965 were US$2.8027 buying and selling, per £L 1; for the pound sterling the buying and selling rates were at par. The commercial banks are permitted to buy or sell other currencies against pounds sterling and U.S. dollars through their foreign correspondents or branches; the banks’ rates are based on quotations in London and New York.

Administration of Control

Exchange control is administered by the Bank of Libya, which has delegated some of its powers to the authorized banks. Policy relating to import and export licensing is determined by a consultative Import and Export Council, under the chairmanship of the Minister of National Economy. Import and export licenses are issued by the Comptroller of Trade and Supplies of the Ministry of National Economy; imports of sugar, tobacco, cigars, and cigarettes also require the approval of the Monopoly Administration, and those of livestock and vegetable oils that of the Ministry of Agriculture.

Prescription of Currency

The Kingdom of Libya is a member of the Sterling Area. Settlements with other parts of the Sterling Area may be made in any Sterling Area currency or by crediting Libyan pounds or sterling to a Scheduled Territories Account (see section on Nonresident Accounts, below). Settlements with countries outside the Sterling Area other than Rhodesia may be made in Libyan pounds or sterling through an External Account or in any foreign currency. All settlements with Rhodesia are prohibited.

Libya has a trade and payments agreement with the United Arab Republic, under which settlements are made through a centralized bilateral clearing account maintained in sterling.

Nonresident Accounts

Subject to the approval of the Bank of Libya, nonresidents may open accounts with any authorized bank in Libya, in either Libyan or foreign currency. The accounts in Libyan pounds of residents of the Sterling Area are designated Scheduled Territories Accounts, and those of residents of other countries, External Accounts (the only exceptions being blocked accounts or accounts to which special procedures apply). Transfers may be made freely between Scheduled Territories Accounts, between External Accounts, and from External Accounts to Scheduled Territories Accounts. Funds held on Scheduled Territories Accounts may be converted into sterling or any other Sterling Area currency. Funds held on External Accounts may be converted into any foreign currency, including sterling.

With the approval of the exchange control authority, funds on blocked accounts may be used for expenditures in Libya up to £L 500 a year to cover the cost of current visits to Libya by the owner of the funds or a close relative; for payments in Libya of legal fees, taxes, etc.; for remittances to the owner of the funds in his country of permanent residence, up to £L 1,000 in a calendar year; and for remittances in cases of hardship. When the funds have been on a blocked Libyan pound account for five years, they qualify for remittance in full to the owner in his country of permanent residence. The blocked accounts of persons who have left Libya permanently are being released in installments; balances credited prior to January 1, 1964 have already been released.

Imports and Import Payments

Most imports are under open general license and do not require an individual import license. There are two lists of imports subject to individual licensing. One list comprises 42 items or groups of items which require no authorization other than an import license; these goods include various foodstuffs, certain local manufactures, and several revenue-producing commodities. Goods on the other list, which contains 8 groups of items, require the approval of the competent ministry prior to the granting of an import license; the goods include drugs and medicines, live animals, and edible vegetable oils. Imports of sugar, salt, tobacco, cigars, cigarettes, and cigarette paper are subject to government monopoly. The Bank of Libya has a monopoly over the import of fine gold. Imports of a few goods from all countries and all imports from Israel, Portugal, Rhodesia, and South Africa are prohibited. Exchange permits required for authorized imports are readily granted by the authorized banks, provided that there is a firm contract and any necessary import license has been obtained.

Payments for Invisibles

All payments for invisibles require licenses from the Bank of Libya. These are granted freely for expenses incidental to trade transactions. Applications for remittances in respect of other invisibles are considered on their merits and are granted liberally.

Persons leaving the country may take with them Libyan currency notes not exceeding a total of £L 20; residents may, in addition, take out without license foreign currency notes, travelers checks, and letters of credit not exceeding a total value of £L 300 in a calendar year as a basic travel allowance. Children under 12 years of age are allowed one half of this amount. Amounts in excess of the above may be granted in special circumstances. For business travel, residents may take out the equivalent of £L 250 a trip or, subject to a maximum of £L 2,500 in any period of 6 months, the equivalent of £L 20 a day. Temporary visitors may take out any travelers checks, letters of credit, or foreign currency notes which they declared on entry.

Exports and Export Proceeds

Export licenses are required for all commodities. Export proceeds must be surrendered. Exports of vegetable oils and mares are prohibited. All exports to Israel, Portugal, Rhodesia, and South Africa are prohibited.

Proceeds from Invisibles

Foreign exchange receipts from invisibles must be surrendered. Travelers checks or foreign currency notes may be cashed only at an authorized bank or at an exchange office licensed by the Bank of Libya.

Travelers entering Libya may bring with them Libyan currency notes, not exceeding a total of £L 20, and other currency notes, travelers checks, letters of credit, bonds, coupons, securities, and other negotiable instruments in unlimited amounts. Libyan currency notes may be repatriated through banking channels, provided that details are given to establish that the notes within the authorized amount were obtained from bona fide travelers from Libya.

Capital

Many aspects of the operations of oil companies operating in Libya are governed by Petroleum Law No. 25 of 1955, as amended. Under the provisions of the Foreign Capital Investment Law of January 30, 1958, foreign capital invested in projects deemed to contribute to the economic development of the country, as well as profits thereon, and salaries of foreign staff employed on such projects may be transferred freely to the country of origin. Real estate in Libya may be sold only to Libyans. The net sales proceeds after tax of real estate belonging to foreign nationals are freely transferable. Nonresident capital that is not permitted to be transferred abroad is credited to blocked accounts (see section on Nonresident Accounts, above). Residents require the prior approval of the Bank of Libya to borrow funds abroad or to import on consignment or on deferred payment terms. Residents of Libyan nationality are not as a rule permitted to purchase real estate situated outside Libya or foreign securities. Residents of Libya taking up permanent residence abroad are permitted to transfer up to £L 5,000 for a family; applications for the release of the balance of their assets over a number of years are approved liberally.

Changes during 1965

January 1. A major reform of the customs tariff took place. Import duties on about 100 tariff items were removed and those on about 200 items were reduced by 30-50 per cent. Duties on some 20 items were increased by up to 300 per cent. The 5 per cent customs surcharge was abolished.

February 8. The basic travel allowance was increased from £L 140 in any period of 12 months to £L 300 a calendar year. For business travel, residents could take out the equivalent of £L 250 a trip or, subject to a maximum of £L 2,500 in any period of 6 months, the equivalent of £L 20 a day.

April 7. The establishment or operation of any type of industrial firm required a license from the Ministry of Industry.

July 20. Foreign companies (other than transportation and catering companies) servicing oil companies on a contract basis were exempted from the requirement that 51 per cent of their share capital be Libyan owned.

November 22. Certain provisions of Petroleum Law No. 25 were amended by decree. The decree was ratified by Parliament on December 9.

November 30. Exports of oil to Rhodesia were prohibited.

November 30. Economic and financial relations with Rhodesia were suspended.

December 29. Imports of clay for oil drilling and imports of pottery required an individual license.

Malagasy Republic

Exchange Rate System

No par value for the currency of the Malagasy Republic has been established with the Fund. The official unit of currency is the Malagasy franc, which is equivalent to 0.02 French franc, giving the relationship FMG 246.853 = US$1. The Malagasy Institute of Issue stands ready, in transactions with commercial banks, to buy and sell Malagasy francs against French francs at the fixed rate of FMG 1 = 0.02 French franc. Exchange rates for other currencies are based on fixed buying and selling rates for the French franc and the Paris market rates for the other currency concerned, plus or minus a commission.

Administration of Control

Exchange control is administered by the Exchange Office under the direction of the Ministry of Finance and Commerce. Exchange transactions are handled by the commercial banks under the direction of the Exchange Office. Import and export licenses are issued by the Foreign Trade Office of the Ministry of Finance and Commerce; licenses for imports from countries outside the French Franc Area must be approved by the Exchange Office.

The Exchange Office charges a fee on all transactions authorized in currencies of countries outside the French Franc Area. This fee ranges from FMG 500 for transactions up to FMG 150,000 to FMG 3,500 for those exceeding FMG 1 million.

Prescription of Currency

The Malagasy Republic is a member of the French Franc Area, and settlements with other countries of the French Franc Area are made in any currency of that Area. Settlements with other countries may be made through accounts that Malagasy banks maintain with their correspondents in countries outside the French Franc Area; frequently, however, they are made through banks in France, in any of the currencies of those countries—provided that the currencies are quoted on the Paris exchange market—or through Foreign Accounts in Convertible Francs.

Nonresident Accounts

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

Imports and Import Payments

All imports from Rhodesia are prohibited. All imports from countries outside the French Franc Area are subject to import licensing. For protective reasons, a few imports (edible oils and batteries) are subject to licensing when originating in any country, including countries in the French Franc Area, and the import of certain other items (including beer and used clothing) from all sources is prohibited, suspended, or subject to special conditions. Licenses are also required for imports from countries in the French Franc Area if such goods originate from outside the Area and have not undergone transformation in a French Franc Area country in accordance with certain rules, and for all imports from French Somaliland. All other goods from the Area may be imported freely.

For restricted imports an annual import program is established. This program and the amount of foreign exchange required to implement it are determined by a joint French-Malagasy Committee. The import program is based on the establishment of quotas that fix the limits up to which specified commodities may be imported. The program contains global quotas applicable to all EEC countries other than France, and global quotas applicable to all countries outside the French Franc Area (including the EEC countries other than France). The quotas for EEC countries are for individual commodities, while those for all other countries are fixed for groups of commodities as defined in the customs tariff. Certain quotas (e.g., for radios, sewing machines, fabrics, clothing, tools, and cutlery) may be used only up to fixed percentages for imports from the Far East; this limitation, however, does not apply to Japan or the Republic of China. Within the program, there are ceilings on imports of dairy products and automobiles from all countries outside the French Franc Area. Many of the items subject to a global quota for EEC countries are de facto liberalized when imported from those countries. Imports from countries outside the French Franc Area that do not require financial settlement require licenses not involving foreign exchange.

Issue of an import license serves as authorization to the commercial bank to make payment.

Under the EFAC arrangements (see section on Exports and Export Proceeds, below), licenses are granted for imports of any goods that are not restricted for protective reasons, provided that such imports are paid for with funds from an EFAC account held by the person who was granted the import license.

Payments for Invisibles

All payments for invisibles may be made freely to countries in the French Franc Area. All payments for invisibles to other countries are, in general, subject to approval by the Exchange Office. Residents traveling abroad may obtain a foreign exchange allocation up to the equivalent of FMG 125,000 per annum; in addition, they may take out for each trip up to the equivalent of FMG 37,500 in French franc banknotes or up to FMG 75,000 in Malagasy francs. Residents of foreign nationality may transfer to countries outside the French Franc Area a part of their salaries earned in the Malagasy Republic; such transfers are limited to 50 per cent for persons having their families abroad and to 20 per cent for single persons and persons having their families in the Malagasy Republic. Payments for other invisibles are approved liberally upon production of documentary evidence.

Travelers may take out FMG 75,000 in Malagasy banknotes or the equivalent of FMG 37,500 in French franc banknotes. Nonresidents may, in addition, export any banknotes of countries outside the French Franc Area that they have previously imported and declared upon entry.

Exports and Export Proceeds

All exports to Rhodesia are prohibited. Exports to all destinations of products under quota and of so-called controlled products (see below) require an export license. Products under quota are coffee, vanilla, cloves, pepper, and superior-grade rice; these commodities require the visa of the appropriate stabilization fund before an export license is granted. Controlled products include lentils, rice, rice bran, peanut oil cake, sisal, and certain mining products; the re-export of wheat, flour, dairy products, lime and cement, automobiles, tractors, and public works equipment also is controlled. These goods require the visa of the competent ministry before an export license is granted. Exports of other commodities to the French Franc Area do not require an export license unless they have previously been imported from outside that Area.

With minor exceptions, export licenses or exchange surrender commitments are required for all exports to countries outside the French Franc Area. Proceeds of exports to countries outside the French Franc Area must be repatriated within three months from the date of their collection. Exporters paid in currencies of countries outside the Area may, however, retain 15 per cent of their proceeds in special, nontransferable EFAC (Exportations-Frais Accessoires) accounts. These accounts may be used by the holder to pay for representation and advertising expenses, for business trips abroad, for any imports not restricted for protective reasons, and for any type of payment permitted by a general or specific license.

Proceeds from Invisibles

Residents are obliged to collect, and surrender within one month from the date of receipt of foreign exchange, amounts due from nonresidents in respect of services and all income exceeding FMG 50,000 from foreign securities. Travelers may bring in any amount of domestic and foreign banknotes and coins (except gold coins).

Capital

Capital movements between the Malagasy Republic and other French Franc Area countries are free of control; those between the Malagasy Republic and all other countries are subject to authorization. The transfer of capital by residents to countries outside the French Franc Area is subject to individual approval. Residents require individual authorization to borrow outside the French Franc Area when the amount exceeds the equivalent of FMG 50 million, when the maturity exceeds two years, or when the interest rate exceeds by more than 1% points the discount rate of the Malagasy Institute of Issue. Foreign investments of any kind from countries outside the French Franc Area are subject to the prior authorization of the Exchange Office; this authorization implies a transfer guarantee—valid for all countries outside the French Franc Area—with respect to earnings as well as liquidation proceeds.

In accordance with the Investment Code of September 1962, as amended by Law No. 65-022 of December 16, 1965, foreign or domestic enterprises of special interest for the economy may be granted preferential treatment in accordance with an “order of approval” (arrêté d’agrément). Such enterprises may benefit from specified advantages relating to import and export duties, income taxes, supplementary foreign exchange allocations above those allotted in the annual import program, quotas for competing imports, etc. Exceptional treatment beyond the benefits provided for by the Investment Code and other existing legislation may be granted in a founding agreement (convention d’établissement); such an agreement requires parliamentary approval.

Changes during 1965

January 18. EFAC Accounts could be used freely for any type of payment to countries outside the French Franc Area, provided that the payment was permitted by a general or specific license. The obligation to surrender a portion of any unused balance in an EFAC Account was terminated.

March 1. Settlements with Rumania ceased to be made on a bilateral basis, as the bilateral payments agreement between France and Rumania, which was also applicable to the Malagasy Republic, was terminated.

March 15. The import program for the 12-month period beginning on March 15, 1965 was published.

December 16. Law No. 65-022 amended the Investment Code of 1962.

December 22. All transactions with Rhodesia were prohibited.

Malawi1

Exchange Rate System

The currency of Malawi is the Malawi Pound. The Malawi pound is at par with the pound sterling, the official value of the Malawi pound being 2.48828 grams of fine gold, which corresponds to £M 1 = US$2.80. The commercial banks base their rates for other currencies on the current London market rates. On December 31, 1965, the rate for the U.S. dollar was US$2.8158 buying, and US$2.78¾ selling, per £M 1.

Administration of Control

Exchange control is administered by the Reserve Bank of Malawi under powers delegated to it by the Minister of Finance. Much of the authority for approving normal current payments is in turn delegated to the commercial banks. The control of trade is the responsibility of the Minister of Commerce and Industry, who also issues import and export licenses.

Prescription of Currency

Malawi is a member of the Sterling Area and maintains prescription of currency requirements similar to those of the United Kingdom. For prescription of currency purposes, a distinction is made between the Sterling Area (the Scheduled Area) and all other countries except Rhodesia (the External Account Area). Settlements with residents of other countries in the Sterling Area may be made in Malawi pounds through a Scheduled Area Account, in sterling, or in other Sterling Area currencies. Payments to residents of countries outside the Sterling Area, other than Rhodesia, may be made in sterling or in Malawi pounds to the credit of an External Account, or in any foreign currency other than Rhodesian pounds. Payments from countries outside the Sterling Area except Rhodesia may be received in sterling or in Malawi pounds from an External Account, or in any non-Sterling Area currency freely exchangeable for sterling. Special regulations apply to settlements with Rhodesia.

Nonresident Accounts

Accounts in Malawi pounds held by residents of other parts of the Sterling Area are designated Scheduled Area Accounts. These accounts may be credited with the proceeds from sales of any Sterling Area currency, with authorized payments to Sterling Area countries by residents, and with transfers from other Scheduled Area Accounts. Balances on these accounts may be converted freely into other Sterling Area currencies, may be used to pay residents of Malawi, or may be transferred to other Scheduled Area Accounts.

Accounts in Malawi pounds held with authorized banks by residents of countries outside the Sterling Area other than Rhodesia are designated External Accounts. These accounts may be credited with authorized payments by residents to countries outside the Sterling Area except Rhodesia, with transfers from other External Accounts, with approved transfers from Scheduled Area Accounts, and with the proceeds from sales of any non-Sterling Area currency except Rhodesian pounds by nonresidents to authorized banks. They may be debited for payments to residents of Malawi and of any other country of the Sterling Area, for transfers to other External Accounts or to Scheduled Area Accounts, and for purchases of any non-Sterling Area currency other than Rhodesian pounds from authorized banks.

Blocked Accounts in Malawi pounds held with authorized banks by residents of any country other than Malawi are credited with nontransferable capital sums in Malawi currency which have accrued to nonresidents. All debits and credits to such accounts require the prior approval of the exchange control authorities. Normally, approval is given for the investment of balances on Blocked Accounts in Malawi securities, provided that these are held in Malawi to the order of an authorized dealer. The interest on Blocked Account balances is freely transferable to the account holder’s country of residence.

Imports and Import Payments

The statutory basis of the principal import restrictions is the Control of Goods Ordinance, which authorizes the Minister of Trade and Industry to regulate and control the distribution, disposal, purchase, sale, import, and export of any manufactured or unmanufactured commodity.

For a number of items,2 import licenses are required regardless of the country of origin. All other goods originating in the Sterling Area may be imported free of license or, if originating in certain other countries,3 may be imported under an open general license. With respect to other countries, an import license is required for all commodities except certain items, such as petroleum products, exposed cinematograph films, bona fide unsolicited gifts not exceeding £M 25 in value, samples, advertising material, etc.

Payments for imports from all countries must be made within six months after the date of import. Foreign exchange for these payments is automatically granted by the authorized dealers, subject only to the presentation of relevant documents and compliance with import licensing requirements. Any transfer of funds in anticipation of imports is prohibited, except with the permission of the exchange control authorities. Advance payments may, however, be made for imports valued at up to £M 50 on production of an invoice or other evidence indicating that the seller requires payment in advance.

Imports from any Sterling Area country may be paid for in Malawi currency to a local nonresident Scheduled Area account, in sterling, or in any other Sterling Area currency. Imports from other areas may be paid for in Malawi currency to a local external account, in sterling to an External Account, or in any non-Sterling Area currency.

Payments for Invisibles

Exchange to pay for invisibles related to imports, and also, up to certain limits, for other purposes, such as travel, is provided by the commercial banks without prior reference to the exchange control. The basic exchange allowance for travel is £M 10 a day for an adult, with a maximum of £M 300 a calendar year, and £M 5 a day for each child under 12 years of age, with a maximum of £M 150 a calendar year. The allowance is cumulative for a period of not more than 3 years. Exchange is provided, subject to certain limits, for other purposes, such as education, medical treatment, and business travel. Applications for amounts exceeding the limits for travel exchange may be submitted to the exchange control authorities. Foreign nationals employed in Malawi on contracts are permitted to remit up to two thirds of their net income to their country of normal residence. To facilitate small payments individuals are freely permitted to remit abroad up to £M 10 a month.

Travelers may take out up to £M 20 in Malawi currency notes and the equivalent of £M 10 in foreign currency notes in addition to their basic travel allowance.

Exports and Export Proceeds

Exports of goods of any description that exceed £M 50 in value are prohibited, unless the Controller of Customs and Excise is satisfied that payment has been made or will be made in foreign exchange not later than six months after the date of exportation. Certain commodities4 are subject to export licensing, mainly to insure the adequacy of their domestic supplies. Export proceeds in foreign currency must be sold to an authorized dealer.

Proceeds from Invisibles

Receipts from invisibles in any currency must be offered for sale to an authorized bank. There is no limitation on the amount of foreign currency notes that may be imported by travelers, but not more than £M 20 in Malawi currency notes may be imported. The import of currency notes of the former Federation of Rhodesia and Nyasaland is prohibited.

Capital

Inward transfers of capital are not restricted or controlled. Outward transfers of capital, including those to other parts of the Sterling Area, are controlled, but nonresidents are permitted to repatriate their investments when they have satisfied the authorities that the original investment was made with funds brought into the country from sources outside Malawi.

In general, residents are not permitted to transfer capital abroad and, with certain exceptions, are required to offer for sale to an authorized bank any foreign exchange which accrues to them. However, residents may purchase securities quoted on recognized stock exchanges in the Sterling Area, provided that the securities so acquired are registered in the names of specified nominees and that in the event of subsequent disposal of these securities the sales proceeds are repatriated. All income earned from these investments must be repatriated and the corresponding foreign exchange must be sold to an authorized dealer.

Emigrants are granted exchange as follows: (1) Persons 50 years of age and over who were self-employed and are leaving the country on retirement, or those qualifying for a pension in terms of their contract employment, are allowed exchange up to £M 7,500 whether single or married. (2) Married persons who have not reached the age of retirement are allowed £M 3,000 on departure, together with £M 250 for each child, up to a maximum of £M 4,000 for a family. (3) Unmarried persons who have not reached retirement age are allowed £M 1,500 on departure. (4) The balance of the emigrant’s funds is blocked, but he is permitted to transfer to his new country of residence a sum equal to the original emigration allowance on each anniversary of his departure from Malawi, up to a maximum of £M 4,000. Applications for emigrants’ allowances, whether initial or subsequent, must be submitted to the exchange control authorities for approval.

Residents require prior approval to lend to nonresidents or to resident firms controlled directly or indirectly from outside Malawi.

Changes during 1965

February 5. Certain cotton and rayon piece goods no longer required an individual import license.

June 1. The common monetary area with Rhodesia and Zambia was dissolved. The currency of the former Federation of Rhodesia and Nyasaland ceased to be legal tender, with the exception of 3d., Id., and ½d. coins.

June 1. The Exchange Control Act, 1965 came into effect. The Reserve Bank of Malawi assumed responsibility for the administration of exchange control. Exchange control was imposed on transactions with Rhodesia and Zambia.

November 17. The preferential trade agreement with Rhodesia was abrogated with immediate effect.

Malaysia

Exchange Rate System

The par value is Malayan Dollar 3.06122 = US$1. The Malayan dollar also circulates in Singapore.1 The Malayan dollar is pegged to the pound sterling at M$l = 2s.4d. The Central Bank of Malaysia has not established official buying and selling rates for foreign currencies. The Board of Commissioners of Currency, Malaya and British Borneo, stands ready to buy sterling from, and sell sterling to, banks in Malaysia, Singapore, and Brunei at 2s. 418d., and 2s. 378d., per M$l, respectively. The commercial banks quote mutually agreed rates for customers for most Sterling Area currencies and for specified currencies.2 The rates are calculated on the basis of quotations for Malayan dollars against sterling in the Kuala Lumpur exchange market and the quotations for other currencies against sterling in the London exchange market. On December 31, 1965, the market rate for the U.S. dollar was M$3.06 per US$1. Authorized banks are permitted to deal forward in all currencies.

Administration of Control

The Central Bank of Malaysia administers exchange control on behalf of the Malaysian Government throughout Malaysia (the States of Malaya and the States of Sabah and Sarawak).3 Much of the authority for approving normal current payments is delegated to commercial banks authorized for this purpose. The authority for import control rests with the Central Government. The day-to-day administration of import control in the States of Malaya is carried out jointly by the Ministry of Commerce and Industry and the Royal Customs and Excise, and that in Sabah and Sarawak by the Royal Customs and Excise.

Prescription of Currency

Malaysia is a member of the Sterling Area and follows the prescription of currency arrangements and the sterling payments system of the United Kingdom. All payments to and from Sterling Area countries must be made in sterling or another Sterling Area currency. Payments to countries outside the Sterling Area other than Rhodesia may be made either in Malayan dollars or another currency of the Sterling Area through an External Account, or in any foreign currency other than Rhodesian pounds. Receipts from exports to countries outside the Sterling Area other than Rhodesia must be obtained either in Malayan dollars or another currency of the Sterling Area through an External Account, or in any specified currency. Special regulations apply to settlements with Indonesia and Rhodesia.

Nonresident Accounts

The accounts of residents of other countries in the Sterling Area are treated as resident accounts. The accounts of residents of countries outside the Sterling Area are treated as nonresident accounts and, unless specially restricted, are designated External Accounts. External Accounts may be credited with the proceeds of any foreign currency other than Rhodesian pounds sold to a bank in Malaysia, with transfers of Malayan dollars or sterling from other External Accounts, and with funds eligible for transfer to countries outside the Sterling Area. Balances on External Accounts may be transferred to any other account, whether resident or nonresident, and may be converted into any foreign currency except Rhodesian pounds. Accounts of residents of Indonesia and Rhodesia are designated Indonesian Accounts and Rhodesian Accounts, respectively. All debits and credits to such accounts require prior approval.

Blocked Malayan Dollar Accounts are credited with those capital proceeds due to residents of countries outside the Sterling Area that are not permitted to be transferred abroad. Balances on Blocked Malayan Dollar Accounts may either be invested in Malaysian securities with a maturity beyond five years or, with permission of the Controller of Foreign Exchange, be transferred to a Blocked Account in the United Kingdom. Permission for such transfers to Blocked Sterling Accounts is given freely. In cases of hardship, moderate amounts are released from Blocked Malayan Dollar Accounts. Proceeds accruing from the liquidation of investments made out of Blocked Malayan Dollar Accounts must be credited to a Blocked Malayan Dollar Account. Earnings accruing from such investments, however, are freely transferable.

Imports and Import Payments

Tariffs and import controls of the various parts of Malaysia have not as yet been unified, although steps toward full unification are being taken. Some internal tariffs and other trade restrictions still exist between parts of Malaysia. Most imports are permitted freely under open general licenses. Depending on the nature and origin of the goods, specific licenses are required for certain imports for health, security, or moral reasons; certain conditions must be satisfied before licenses for such goods are issued. Certain other imports are subject to quantitative restriction pending the introduction of protective customs duties to protect local industries.

Imports into all parts of Malaysia of all commodities from South Africa, Rhodesia, or any territory administered by Rhodesia, and of certain categories of textiles and household articles from Mainland China, are prohibited; all imports of goods of Indonesian origin are subject to specific licensing. In respect of the States of Malaya, imports of rice from any country are conditional on the importer purchasing one ton of rice from the government reserve stockpile for every ton imported;4 imports of wheat flour5 and rice bran from all sources and imports of sugar6 are subject to quantitative restriction for protective reasons.

Where necessary, permission is given freely for payments in foreign currency for all permitted imports. Payments in foreign currency are permitted freely for goods on open general license; for imports that require a special license, exchange control approval is forthcoming when the license has been granted.

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, except Indonesia and Rhodesia, are, in general, authorized. There are no restrictions on the amount of foreign exchange made available for travel abroad. Special arrangements permit family remittances to Mainland China to be made through licensed remittance shops up to M$45 from a family in any one month. Remittances to nonresidents of dividends, interest, and agreed profits on all bona fide investments are subject to exchange control approval, which normally is given freely. Unless special permission is obtained, not more than M$500 in Malayan notes and the equivalent of £ stg. 250 in foreign notes may be taken out of Malaysia by travelers; there is, however, no restriction on the amount of Malayan notes that may be taken out of Malaysia by travelers going direct to Brunei or Singapore.

Exports and Export Proceeds

The three territories of Malaysia at present maintain separate export control systems, although the Federal Government retains the right to legislate in respect of exports from any Malaysian territory. Exchange control approval is required only for exports exceeding M$20,000 in value to countries outside the Sterling Area; this requirement serves to ensure that the proceeds are obtained in accordance with the prescription of currency regulations and are sold to an authorized bank. Exports of rubber and tin to South Africa and any territory administered by South Africa are prohibited. All exports to Rhodesia and any territory administered by Rhodesia are also prohibited.

Proceeds from Invisibles

The exchange control requirements governing exchange receipts from invisibles are, in general, the same as those for export proceeds. Travelers coming direct from Brunei or Singapore may bring in any amount in Malayan notes, and other travelers may bring in M$500; otherwise, permission is required for the import of Malayan notes. Permission is also required for the import of currency notes of India, Indonesia, and Rhodesia. No limitations are imposed on the import of currency notes of other countries.

Capital

There are no restrictions on capital transfers to and from other countries in the Sterling Area. Inward and outward capital transfers between Malaysia and countries outside the Sterling Area require exchange control approval; such approval is freely granted for inward transfers, but the subsequent utilization of nonresident-owned funds in Malaysia in most cases is subject to individual exchange control approval.

Investment by residents of countries outside the Sterling Area other than Indonesia and Rhodesia in quoted stocks and bonds is freely permitted if made through a recognized stock exchange with funds from an External Account or transferred in a specified currency; investment in stocks and bonds is subject to individual approval, if it is to be made otherwise. Investments in new industrial and development projects that have been granted “pioneer status” are not restricted. The repatriation of initial capital and appreciation to countries outside the Sterling Area is permitted only for investment projects that have been approved by the exchange control authorities since January 1, 1950; the proceeds realized from investments in recognized marketable securities are not remittable unless accruing to a resident of a Scandinavian country. Funds of a capital nature owned by residents of countries outside the Sterling Area, the transfer of which is not approved by the exchange control authorities, are in the first instance credited to Blocked Malayan Dollar Accounts. Balances in such accounts may, on application, be freely transferred to Blocked Accounts in the United Kingdom. However, remittances from Malaysia to the Scandinavian countries by residents of those countries in respect of their own assets are permitted freely on application. Banks are permitted to lend funds freely for working capital to nonresident-controlled companies, unless a limit has been set to such borrowings by the exchange control authorities.

All other transfers of a capital nature to countries outside the Sterling Area other than Indonesia and Rhodesia are approved liberally on an individual basis by the Controller of Foreign Exchange. They include (1) the remittance of funds invested by nonresidents in companies that have gone into voluntary liquidation, provided that the liquidation has not been initiated by the nonresident; (2) the transfer of proceeds from the sale by nonresidents of real estate, furniture, etc., provided that the property since purchase has been maintained solely for occupation and/or use by the owner and has not represented an investment; and (3) gifts up to an annual total of £ stg. 250, although in certain cases applications are approved to the extent of £ stg. 1,000 per annum.

Investments by Malaysian nationals in countries outside the Sterling Area may be made only upon approval of the exchange control authorities; this is given only when such investments are considered to serve the economic interest of the country.

Changes during 1965

January 21. The jurisdiction of the Central Bank of Malaysia was extended to Sabah, Sarawak, and Singapore.

April 1. The Pioneer Industries (Relief from Income Tax) Laws were amended to harmonize incentives for industrialization throughout Malaysia.

May 29. A second list of items to be considered for inclusion in the Malaysian Common Market was published. All customs areas of Malaysia imposed specific licensing, and in some cases quantitative restrictions, on a number of these items.

June 22. Exports of rubber and tin from Malaysia to South Africa or any territory administered by South Africa were prohibited.

August 9. Singapore ceased to be a part of Malaysia.

August 9. Singapore revoked Annex J of the Malaysia Agreement, which provided for the eventual establishment of a Malaysian Common Market.

August 12. All trade between Sabah and South Africa or any territory administered by South Africa was prohibited.

August 15. Malaysian Government agencies were required to purchase locally made goods whenever their price did not exceed by more than 10 per cent that of comparable foreign goods; previously, this margin was 5 per cent.

September 4. Imports of several further items from any source into the States of Malaya required a specific license; these items included barbed wire, wire netting, and household articles of plastic.

September 4. A consolidated list was issued of commodities subject to individual license and quota when imported from any source, including Singapore; the list contained 148 items.

October 1. Most restrictions on imports from Singapore were removed.

October 2. A revised list was issued of imports prohibited into the States of Malaya unless produced in Malaysia or Singapore. These items included condensed milk, glutamic acid, monosodium glutamate, insecticides, tires and tubes, air conditioners, and domestic refrigerators.

October 9. Imports into Sabah, Sarawak, and the port of Labuan of several of the prohibited items for the States of Malaya (see October 2, above) were prohibited unless the goods were produced in Malaysia or Singapore or imported from Sarawak.

October 9. Import duties on many goods were increased.

October 9. A number of imports were freed from individual licensing and quota restriction.

October 14. Imports into the States of Malaya, Sabah, and Sarawak of several commodities were prohibited unless a special license was issued. These included wheat flour and rice bran from all sources and certain textiles and household goods from Mainland China.

November 1. Customs duties were levied on imports from Singapore.

November 4. Imports into the States of Malaya of iron and steel bars and rods from all sources required a specific license. Imports into all territories of Malaysia of pencils from Mainland China were prohibited.

November 30. Settlements with Rhodesia were restricted. All payments to Rhodesia were required to be made through Malayan dollar accounts designated Rhodesian Accounts; all debits and credits to such accounts required prior approval. The Rhodesian pound was designated a foreign currency, and dealing in that currency was restricted. Exchange control approval was required for all exports to Rhodesia.

December 16. Imports into and exports from all territories of Malaysia of all goods consigned from or to Rhodesia or any territory administered by Rhodesia were prohibited.

Mali

Exchange Rate System

No par value for the currency of the Republic of Mali has been established with the Fund. The official unit of currency is the Mali franc, defined as a monetary unit containing 0.0036 gram of fine gold. Parity rates for the CFA franc, the French franc, and the U.S. dollar are MF 1, MF 50, and MF 246.853, respectively.

Only the Bank of the Republic of Mali is authorized to carry out exchange transactions with the public. Purchases and sales of French francs and CFA francs are made by the Bank of the Republic at their respective parities. The official buying rate for the U.S. dollar is MF 243.50, and the s