Chapter

Countries Operating Under Article XIV

Author(s):
International Monetary Fund. External Relations Dept.
Published Date:
September 1955
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Australia

Origin and Essential Features

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

Exchange Rate System

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

Administration of Control

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

Prescription of Currency

The Commonwealth Bank, by notices in the Commonwealth Gazette, prescribes the currency which may be accepted for exports to each foreign country or monetary area. Conformity to this prescription is one of the conditions on which the Department of Trade and Customs issues the export license. For payments for imports and other outward payments, the same type of currency prescription operates through central bank directions to the authorized banks. The form of prescription in both cases follows closely that of the United Kingdom and other Sterling Area countries. All payments to and from Sterling Area countries must be made in sterling or another Sterling Area currency. Payments for imports from countries outside the Sterling Area may be made in the currency of the country of origin of the goods, in sterling through a sterling account appropriate for that country,1 or in Australian currency through an account of a bank in the country of origin of the goods with a bank in Australia. For exports, sterling or Australian currency through appropriate accounts (as for imports) is always acceptable, but provisions regarding the acceptance of foreign currencies vary.

Nonresident Accounts

There, is no formal classification, as in the United Kingdom, of the accounts of nonresidents—i.e., those resident outside the Sterling Area—because of the relatively few accounts involved; but the same principles as in the United Kingdom apply. Transfers are allowed freely, on application, between the accounts of residents of the same monetary area. All credits to nonresident accounts are subject to approval and are approved in the same circumstances and subject to the same conditions as if a transfer to the country of residence of the account holder were involved.

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

Imports and Import Payments

Apart from minor exemptions, imports of all goods require import licenses issued by the Department of Trade and Customs. All import licenses are specific in respect of country of origin of the goods. Licenses issued for imports from the dollar area are confined to items regarded as essential, especially raw materials, industrial supplies, and capital equipment. Licenses for imports from all other countries are granted freely for certain commodities, but for other items licenses are issued mainly on percentage quotas based primarily on imports in the fiscal year 1950–51. For some goods, e.g., machinery and capital equipment, for which quota control is inappropriate, the issuance of licenses is subject to administrative decision.

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

Payments for Invisible

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

Exports and Export Proceeds

All exports (with minor exceptions) require licenses issued by the Department of Trade and Customs. A condition of these licenses is that full proceeds must be received in a currency and within a period approved by the Commonwealth Bank. To assist supervision, there is a further condition that all shipping documents, bills of lading, etc., must be drawn to the order of and delivered to the Commonwealth Bank or a trading bank acting as its agent. Unless payment is to be received in a currency and within a period corresponding to those stipulated by the Commonwealth Bank, the exporter’s bank will not clear the documents without specific exchange control approval.

Proceeds from Invisibles

Proceeds from invisibles received in U.S. dollars, as well as U.S. and Canadian dollars in banknote or check form, must be offered for sale within specified periods. Other currency holdings and proceeds from invisibles received in other currencies (except Sterling Area currencies) must be reported and may be disposed of only with permission, but their surrender is not compulsory.

Capital

All transfers of capital from Australia require specific exchange control approval. Approval is granted freely for the repatriation of nonspeculative funds owned by Sterling Area residents; however, no advance commitments are given in such cases. Transfers of resident capital to countries outside the Sterling Area are not allowed other than in very exceptional cases; transfers of nonresident capital are treated on their individual merits, sympathetic consideration being given to cases of personal hardship, special cases of business liquidation, etc.

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

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

Changes during 1954

February 27

The basic allowance for tourist travel in the Sterling Area and the other non-dollar countries was increased from UK£900 per person per year to UK£1,300, of which UK£300 (previously UK£150) is available for travel in non-sterling, non-dollar countries.

March 22

The prescription of currency requirements attaching to settlements with foreign countries were revised and simplified in conformity with the changes in the payments regulations of the United Kingdom.

April 1

A further relaxation of restrictions on imports from non-dollar countries (other than Japan) took place (see Fifth Annual Report on Exchange Restrictions, page 33). A large list of goods was transferred to a “no quota restriction” basis, to be licensed without restriction provided importers could show that the goods were available for importation within one year.

Category “A” classification (essential items) was deleted from the import licensing schedule, following the transfer of most of the goods formerly classified therein to a “no quota restriction” basis and of the remaining few to an “administrative” basis.

The basis on which import licenses would be issued for Category “B” goods was raised from 50 to 60 per cent of the value of those imports in the base year, 1950–51.

April 15

In view of the increase in the basic allowance for tourist travel in the Sterling Area and other non-dollar countries (see February 27, above), the allowance for business travel in the Sterling Area was increased from UK£1,200 to UK£2,000 in any period of 12 months, with a maximum daily allowance of UK£15, and for business travel in other non-dollar countries from the equivalent of UK£600 to the equivalent of UK£1,000, on the same basis. An allowance of up to $200 per person was established to cover transit and other incidental expenses of Australian residents traveling to or through Canada and the United States, if dollar funds had not otherwise been provided; previously, this allowance had only been available under certain conditions.

October 1

The Australian Government announced that, because some importers had been obtaining licenses for goods in the “no quota restriction” category to a value which seemed to be far beyond their normal and reasonable needs, licenses for these goods (which had been placed on a “no quota restriction” basis from April 1, 1954) would be issued during the licensing year April 1954-March 1955 on the basis of 100 per cent of imports in 1950–51. (This was an increase over the rate of 90 per cent in force before April 1, 1954.) Some materials, such as raw cotton, crude rubber, nitrate of soda, and rock phosphates, continued to be licensed on a “no quota restriction” basis, together with certain other raw materials and such items as replacement parts which had previously been given “no quota restriction” treatment.

Category “B” imports from non-dollar sources continued to be licensed on the basis of 60 per cent of imports in the base year. Importers who had been granted special quotas for goods which were in Category “A” before April 1954 retained these special quotas.

November 22

The licensing treatment of imports from Japan was assimilated with that for imports from other non-dollar countries. Exceptionally, for imports from Japan of goods on a reserved list, an importer was limited to 25 per cent of the total value of his imports of these goods from all non-dollar countries during the year ended June 30, 1954, or to an annual rate based on licenses issued to him for imports of these goods from Japan during the six months ended September 1954, whichever is the greater.

Austria

Origin and Essential Features

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

Imports from OEEC countries are liberalized to the extent of 82.4 per cent of 1952 imports. Other imports are restricted through import and exchange licensing. All outgoing payments, including payments for invisibles, are channeled through a system of individual licenses issued by the Austrian National Bank, with the exception of payments to EPU countries under specific conditions; payments for invisibles effected through the EPU are almost completely liberalized. Capital payments and transfers are subject to individual license. Outstanding claims and exchange receipts have to be declared and surrendered, with the exception of EPU currencies, Egyptian pounds, and Argentine and Brazilian account (clearing) dollars. Some exports require licenses.

Exchange Rate System

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

Administration of Control

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

Prescription of Currency

Three methods of settling international payments arise from bilateral payments agreements:

  • 1. In the currency of the partner country. This method is applicable to Austria’s settlements with Belgium, Denmark, Egypt, Norway, and the United Kingdom (including all other territories of the Sterling Area).1

  • 2. In the currency of the partner country or in Austrian schillings. This method is applicable to Austria’s settlements with France, the Federal Republic of Germany, the Netherlands, Sweden, and Switzerland.1

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

Settlements with other countries are prescribed in the individual exchange licenses.

Nonresident Accounts

Nonresident accounts have a limited significance in the Austrian exchange control system.

Payments that may not be transferred abroad are, in some cases, credited to blocked accounts. Blocked accounts may also be credited with the proceeds of sales by nonresidents of real estate and related rights, securities, and enterprises. If held with authorized banks, these accounts may be debited without license with payments in Austria on behalf of the account holder for the following purposes: (1) donations (e.g., to relatives for personal aid, or to social, religious, or similar institutions) or payments of adequate maintenance to residents eligible for such payments, up to S 1,500 per person per month, but total withdrawals may not exceed S 6,000 per month; (2) payments to residents of certified claims arising in connection with the opening or the administration of a blocked account or other blocked property of the account holder (e.g., bankers’ commissions, handling charges, deposit fees); (3) payments of taxes and other public fees and charges, and legal counsel and notary fees owed by the account holder in Austria; (4) settlement of the travel expenses in Austria of the account holder and his family and accompanying servants, up to S 4,000 per person per week; (5) payments for the maintenance of graves, up to S 2,000 per year; (6) payments for real estate and related rights, securities, and enterprises purchased from residents. With permission of the Austrian National Bank, blocked accounts may be debited for investments in Austria by the account holder (e.g., participation in Austrian enterprises, purchase of securities, granting of loans to residents). The transfer of balances held by EPU residents as at June 30, 1954 on blocked accounts with authorized banks is authorized freely to EPU countries.

Imports and Import Payments

Listed goods (about 520 out of a total of 558 tariff items) are subject to import license. Liberalized goods may be imported from OEEC countries without a license. The main considerations in the issuance of import licenses are the terms of bilateral trade agreements and the fulfillment of quotas agreed therein, the needs of the Austrian economy, and the level of Austria’s foreign exchange reserves. An exchange license, generally issued jointly with the respective import license, is required to effect payment for imports. The foreign exchange is then made available upon presentation of the exchange license. This procedure does not apply to payments for imports settled through EPU; such payments may, subject to certain provisions, be effected without a license. Deposits of up to 10 per cent of the invoice value of the goods to be imported can be required by the Central Export and Import Office.

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

Payments for Invisibles

Payments for invisibles are subject to individual licensing by the Austrian National Bank, with the exception of those settled through EPU, which may, under certain conditions (the chief exception being capital transfers), be effected without license. Licenses are generally granted after taking into account the terms of existing bilateral trade agreements, and such other considerations as the principle of reciprocity, hardship cases, and the availability of foreign exchange. For payments connected with the international transport of goods, export commissions, installations, services, and performance, licenses are granted automatically.

Residents traveling as tourists to OEEC countries may receive yearly allocations of exchange up to the equivalent of S 5,200 per adult. Persons going abroad may take with them Austrian currency up to S 10,000, and any amount in foreign currency.

Exports and Export Proceeds

Listed items (approximately 300 out of a total of 558 tariff items), as well as those goods exported through compensation (barter) transactions, require individual export licenses. In the issuance of export licenses, due consideration is given to the provisions of the relevant bilateral trade agreements and the fulfillment of quotas established in accordance with such agreements, and to the needs of the Austrian economy. In principle, exports effected and export claims must be declared and export proceeds surrendered. If the exporter has obtained permission to maintain a foreign exchange account with an authorized Austrian bank, he may keep the export proceeds for six months. The use of these amounts is, however, subject to the same conditions as those applying to other outgoing payments.

The following items are exempt from the general obligation to declare export claims and surrender export proceeds: (1) Claims and proceeds settled through EPU (if the accounts are kept with authorized Austrian banks). Such exchange may be used freely for conversion into other EPU currencies or for payment of the holder’s debts to creditors in the EPU area (with the exception of capital payments and payments in the transit and processing trades). (2) Claims and proceeds arising from exports to Egypt and collected through a “Collector Account” established in accordance with the Austrian-Egyptian payments agreement of July 6, 1954, as well as those resulting from exports to Argentina or Brazil and collected in Argentine or Brazilian clearing dollars. Such exchange may be sold at free rates through authorized banks to Austrian residents holding valid exchange licenses for payments to Egypt, Argentina, or Brazil, respectively.

Proceeds from Invisibles

In general, exchange receipts from invisibles have to be surrendered within eight days from the date of collection, with the exception of EPU currencies held with Austrian banks and other credit institutions and proceeds credited to an account under the agreement with Egypt, Argentina, or Brazil (see section on Exports and Export Proceeds, above).

A number of institutions, such as insurance companies and patent offices, are granted open licenses to use their exchange proceeds for payments on their own account. Persons entering Austrian territory are free to bring in Austrian or foreign currency without limit.

Capital

The utilization of foreign capital by residents, as well as new investment in Austria by nonresidents, is subject to individual license. Foreign exchange brought in for investment purposes must, in principle, be surrendered. Requests for the transfer of capital and capital proceeds arising from new investments are granted under the terms originally laid down when the investment was authorized. The transfer of income and capital in respect of “old” investments is not permitted; proceeds accruing from “old” investments in any form are usually credited to blocked accounts (see section on Nonresident Accounts, above).

The exportation of foreign securities held by nonresidents is, as a rule, permitted. An open license has been granted for such transactions as (1) exports of securities for the purpose of realizing rights and claims thereunder abroad; (2) exports of securities owned by nonresidents which have been brought in for the purpose of realizing rights and claims in Austria; (3) exports of foreign securities owned by residents for sale abroad (the proceeds must be declared); and (4) exports of Austrian securities held by nonresidents which were acquired by them against convertible currency.

The transfer of capital by residents for investment abroad is subject to approval, which is granted only in exceptional cases.

Changes during 1954

During 1954, the Rome Agreement of December 6, 1952, in which Austria and certain of its creditors were participants, came into force. In general, it set forth the terms on which the settlement of Austrian pre-Anschluss debts would be acceptable, providing for a scaling down of debts and the fixing of a maximum interest rate. On March 19, 1954, Austrian debtors were required to establish contact with their foreign creditors in order to arrive at agreements; the draft agreement, before its final conclusion, must be submitted to the appropriate Federal Ministry for judgment whether the transfer terms were fulfilled.

January 25

The fulfillment of all obligations in the invisibles sector of the OEEC Liberalization Code was announced, with the modification that, in connection with the items “debt service” and “contractual amortizations” (the formal liberalization of which took effect on February 15, 1954), the provisions of the International Rome Conference on the Settlement of Austrian Prewar Public Foreign Debts would also apply to the settlement of prewar private foreign debts.

January 31

Under certain conditions, transit traders could be granted general licenses for transit trade transactions. Two types of such licenses could be issued, one for transactions in convertible currencies and another for transactions in EPU currencies against EPU or convertible currencies. Amounts up to $25,000 could be kept in foreign exchange accounts; the remainder had to be surrendered.

March 1

The percentage of liberalization of imports from OEEC countries was raised from 50 to 60.

March 31

The annual exchange allocation for residents traveling as tourists to EPU countries was increased from S 2,600 to S 3,900 per adult, as from November 1, 1953.

April 1

The percentage of liberalization of imports from OEEC countries was raised from 60 to 63.

April 14

A general license was issued permitting the free conclusion of various legal contracts, such as those connected with ocean freight, harbor dues, and transshipment and storage charges.

Another general license permitted residents to assume with nonresidents various pecuniary obligations, such as those connected with the production and distribution of goods, costs of processing, current repairs to private property abroad, and court expenses.

April 22

A general license was granted for various transfers abroad and for transactions between residents and nonresidents affected in connection with the purchase, sale, or exchange of real estate; settlements on this account between residents and nonresidents had to be made through blocked accounts.

May 6

The National Bank ceased to purchase Brazilian account dollars, which were now to be credited to Austrian authorized banks in favor of Austrian creditors. The authorized banks were permitted to sell Brazilian account dollars, on the basis of freely formed rates, to residents authorized to make payments to Brazil; however, one fifth of the Brazilian account dollars needed by residents, even when they used their own holdings, was to be acquired from the National Bank at the official rate for the U.S. dollar.

May 20

The percentage of liberalization of imports from OEEC countries was raised from 63 to 75.

May 29

The annual exchange allocation for residents traveling as tourists to EPU countries was increased from S 3,900 to S 5,200 per adult, as from November 1, 1953.

June 1

New regulations were issued governing the maximum amount of national and foreign currency that could be carried freely by residents and nonresidents in transit border crossings: S 5,000 in Austrian currency and the equivalent of S 500 in those foreign notes and coins officially quoted in Vienna; no limit was imposed for other currencies.

June 24

A general license was granted for the disposal and acquisition against payment of domestic fixed-interest-bearing securities and foreign securities. A general license was also granted for various operations and contracts involving rights or participation in companies and enterprises involving nonresident interests. Pecuniary obligations between residents and nonresidents to which such transactions, operations, and contracts could give rise were to be settled through blocked accounts.

Proceeds up to S 500 per person per year accruing to residents from coupons of foreign securities and Austrian external bonds were exempted from the declaration obligation.

June 29

The transfer of balances held by OEEC residents as at June 30, 1954 on blocked accounts with authorized banks was permitted freely to OEEC countries.

July 25

The National Bank ceased to purchase Argentine account dollars (except for exports made prior to July 25, 1954), which now had to be credited to Austrian authorized banks in favor of Austrian creditors. Authorized banks were permitted to sell Argentine account dollars, on the basis of freely formed rates, to residents authorized to make payments to Argentina.

July 27

The amount of foreign banknotes and coins in currencies quoted by the National Bank which travelers could take out of Austria freely was raised from the equivalent of S 500 to the equivalent of S 2,000.

August 16

Gold and EPU currencies were exempted from the obligations of declaration and surrender. Trade in gold, however, was still reserved for the enterprises authorized for this purpose. EPU currencies were to be held at the disposal of owners with authorized banks in Austria; such currencies could be exchanged against other EPU currencies on the basis of the rates announced by the National Bank. EPU currencies up to S 500 could be purchased freely from authorized banks, or could be debited to balances held with Austrian credit institutions, for any kind of payment (but not for the establishment of balances abroad). EPU currencies could be disposed of freely by their holders, or purchased by other residents, for payment of imports from other EPU countries.

September 16

Transfers through EPU, except capital transfers and transit and processing trade payments, for the settlement of obligations other than those arising from imports could be effected free of license, if they complied with specific requirements.

September 20

Travelers were allowed to bring any amount in foreign or domestic currency into Austria. They could take out any amount in foreign currency and up to S 10,000 in domestic currency.

November 16

A general license was issued permitting domestic shares owned by nonresidents to be sold to residents provided (1) the proceeds are credited to a blocked schilling account, to be delivered to the nonresidents owner, or (2) the proceeds are exchanged for other domestic shares on the basis of an offer made to all holders of that type of security.

December 1

The percentage of liberalization of imports from OEEC countries was raised from 75 to 82.4.

Belgium-Luxembourg

Origin and Essential Features

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

All incoming and outgoing payments must be made through authorized banks, or in certain cases through authorized stockbrokers, in the manner prescribed in the regulations. Exchange, or permission to credit an appropriate nonresident account in Belgian or Luxembourg francs, is granted for all payments to non-dollar countries without limitation as to amount. For payments to dollar countries, exchange (or its equivalent) is granted for all current transactions. Capital payments to dollar countries may be made freely through the “security” dollar market, where the Belgian franc is at a slight discount on the official market rate.

Some exports require licenses. Foreign exchange in Canadian or U.S. dollars derived from commercial transactions must be surrendered; alternatively, such proceeds, as well as those received in EPU currencies, may be retained on foreign currency accounts maintained with the authorized banks, and may be utilized on the basis of general or special authorizations. The sale of EPU currencies (except export proceeds and certain other commercial receipts) to authorized banks is subject to authorization. EPU currencies may be sold in a free market, but their use for residents is limited to payments for capital transactions and certain invisibles, such as travel and gifts.

Exchange Rate System

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

Exchange Control Territory

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

Administration of Control

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

Certain imports and exports require licenses issued by the trade authorities, but licenses must be stamped by an authorized bank in order to ensure that the exchange regulations are complied with before import or export can be effected and payment made.

Prescription of Currency

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

The regulations detail the currency which is appropriate for payments of imports and invisible transactions. In the main, payment must be made by transferring Belgian or Luxembourg francs to a nonresident account related to the country of residence of the beneficiary;2 or it may be made (1) in the currency of the country of residence of the beneficiary in most cases;2 (2) in U.S. or Canadian dollars if the beneficiary resides in the dollar area;3 or (3) in sterling if the beneficiary resides in Egypt, the Sudan, Eritrea, Ethiopia, Iran, Lebanon, Saudi Arabia, Syria, or Thailand.

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

Nonresident Accounts4

Belgian or Luxembourg franc accounts of nonresidents may be classified into three groups, as described below.

1. Foreign B-accounts. These are designated according to the country or monetary area appropriate to the residence of the account holder. Credits to foreign B-accounts require general or special authorization from the exchange control authority; they cannot be credited with banknotes or coin. Payments made in Belgian or Luxembourg francs to nonresidents in respect of imports must be made to the credit of a foreign B-account. However, only the foreign B-accounts of banks located in EPU countries may be credited with payments for goods and services from those countries. Foreign B-accounts may always be utilized to pay for subscriptions to new shares issued by Belgian, Luxembourg, or Congolese companies in Belgian, Luxembourg, or Congolese francs; but authorization by the exchange control authority is required to purchase securities with funds in the foreign B-account of a bank in an EPU country or in certain other payments agreement countries.

Foreign B-accounts may be freely debited, as follows:

  • a. For payments to residents of the Belgian Monetary Area, but authorized banks must conform with special requirements in order to be able to make such payments to the debit of a foreign B-account related to one of the EPU countries.

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

  • c. For payments to foreign B-accounts of account holders residing in any country, provided the holder of the account to be debited is resident in certain dollar countries.5

  • d. For payments to foreign B-accounts of other countries, except that special authorization from the exchange control authority is required for transfers from foreign B-accounts related to Argentina, Austria, Brazil, Bulgaria, Chile, Czechoslovakia, Denmark, Egypt, Finland, French Monetary Area, Eastern Germany, Federal Republic of Germany, Greece, Hungary, Italy, Japan, Lebanon, Netherlands Monetary Area, Norway, Poland, Portuguese Monetary Area, Rumania, Spain, Sweden, Switzerland, Syria, Turkey, U.S.S.R., Uruguay, Yugoslavia, or the Sterling Area, to foreign B-accounts related to Andorra, Lebanon, Spain, Switzerland, Syria, Tangier, U.S.S.R., Uruguay, or certain dollar countries.5 Special authorization is also required for all credits to foreign B-accounts related to EPU and certain other countries,6 and not held by banks, and for all transfers between those countries.

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

  • f. For transfers to foreign L-accounts (see below), if the foreign B-account to be debited is related to an EPU country but is not that of a bank.

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

Convertibility of balances in foreign B-accounts into the currency of the account holder is provided for account holders who reside in Canada, Czechoslovakia, Denmark, French Monetary Area, Federal Republic of Germany, Italy, Netherlands Monetary Area, Norway, Portuguese Monetary Area, Sweden, Switzerland, United States, or the Sterling Area, and into Canadian or U.S. dollars for account holders who reside in certain dollar countries.7

2. Foreign L-accounts. These are maintained for residents of EPU countries only, but are not designated by nationality. They may be credited with (a) the proceeds of the sale in Belgium-Luxembourg of securities owned by nonresidents; (b) the proceeds of the sale of real estate to residents; (c) the proceeds of the sale to a resident (other than an authorized bank) of balances on accounts in EPU countries; (d) the value of domestic or foreign banknotes remitted to an authorized bank by a foreign traveler in Belgium-Luxembourg or by an EPU resident; (e) payments from residents for their traveling, medical, or educational expenses abroad, gifts, inheritances, coupons, dividends, liquidation of investments, repayments of loans, and similar items; (f) transfers from other L-accounts; and (g) transfers from foreign B-accounts (other than of banks) related to any EPU country.

Foreign L-accounts may be debited for (a) the purchase in Belgium-Luxembourg of domestic or foreign securities; (b) the traveling expenses in Belgium-Luxembourg of EPU residents; (c) the purchase, from an authorized bank or other resident of Belgium-Luxembourg, of balances on accounts in EPU currencies; (d) the purchase of domestic or foreign banknotes remitted by an authorized bank to a bank or person in an EPU country; (e) payments to residents of the Belgian Monetary Area other than for the export of goods or transit trade operations; (f) transfers to other L-accounts; and (g) transfers to a foreign B-account of a bank in an EPU country.

3. Emigrants’ nonresident accounts. These accounts are those of former residents in Belgium-Luxembourg who established their principal residence in the dollar area after September 1, 1949. They may be debited or credited only on special authorization, except for security operations of the account holder or for his expenses while in Belgium-Luxembourg.

Imports and Import Payments

Many imports are free of import license, but an import declaration must be filled out for them. The requirements are simplified for imports not exceeding BF 10,000. However, certain imports from any country require import licenses, which are issued by the trade control authorities. The goods that require licenses are listed by an intergovernmental Belgian-Luxembourg commission. All imports from Eastern Germany or from Uruguay are subject to license.8

Both import licenses and import declarations must be stamped by an authorized bank before exchange can be made available and before importation can take place. The authorized bank is required to make certain that payment will be made by one of the methods laid down in the regulations (see section on Prescription of Currency, above). Various other requirements of the regulations must also be fulfilled before the documents can be stamped; however, submission to an authorized bank of supporting documents (invoices, contracts, etc.) is not required for payments for imports from non-dollar countries. In cases where the requirements are not fulfilled, the authorized bank may request the central exchange control authority for special permission to stamp the document.

Payments for Invisibles

Payments to the dollar area for invisible transactions require licenses, but there is a general allowance for normal current payments. Invisible payments to non-dollar countries may be made without limitation as to amount. Travelers may take out BF 50,000 in domestic and foreign banknotes, but nonresident travelers may take more in foreign banknotes if they can show that they brought in an amount equal to or higher than the amount they want to take out.

Exports and Export Proceeds

Except for minor cases where the goods have a limited value, all exports require either an export license issued by the trade control authorities or an export declaration filled out by the exporter. The requirements are simplified for exports not exceeding BF 10,000. An intergovernmental Belgian-Luxembourg commission lists the goods that require export licenses. Before the export can take place, the license or the declaration must be stamped by an authorized bank, in order to ensure that the proceeds will be received in accordance with the regulations (see section on Prescription of Currency, above).

Only export proceeds in Canadian or U.S. dollars need be surrendered to an authorized bank. Alternatively, export proceeds in these two currencies or in any EPU currency may be held in a “commercial” account with an authorized bank and used for all payments authorized to be made in these currencies. Export proceeds in an EPU currency not sold to an authorized bank may be sold in a free market for use for noncommercial payments (e.g., tourism and certain capital items).

Proceeds from Invisibles

Only exchange proceeds from invisibles connected with commercial transactions received in Canadian or U.S. dollars need be surrendered. Alternatively, they may be held in a “commercial” account with an authorized bank and used for all payments authorized to be made in these currencies. All other exchange proceeds may be retained and freely used for certain payments and transfers. EPU currencies may be sold in a free market. There is no restriction on the amount of foreign or domestic banknotes which travelers may bring into Belgium or Luxembourg.

Capital

Residents desiring to import foreign capital must consult the exchange control authority for authorization. As a general rule, the inflow of foreign capital for investment purposes is authorized. The exchange control authority may guarantee the repatriation of foreign capital invested in Belgium-Luxembourg. Capital transfers from EPU countries are, as a general rule, allowed only when they are effected outside the channels instituted by payments agreements, e.g., through foreign L-accounts (see section on Nonresident Accounts, above) or through a transfer of convertible currency.

If a resident has complied with certain formalities, he may use for current payments and for investments abroad his foreign exchange receipts derived from capital. However, such receipts in EPU currencies may be used only for investments and a few specified invisible payments, or they may be sold in a free market to other residents or to nonresidents against foreign L-account francs. Canadian or U.S. dollars retained by residents may be used for the purchase abroad of foreign securities through the intermediary of an authorized bank. These securities may be sold abroad through an authorized bank either for foreign currency or to other Belgian-Luxembourg residents against Belgian-Luxembourg francs; or they may be imported into Belgium-Luxembourg and sold against foreign L-account francs to residents in EPU countries,9 or against foreign B-account francs related to Canada or the United States, or to other residents of Belgium-Luxembourg against Belgian-Luxembourg francs; or they can form the subject of arbitrage abroad against other foreign securities.

Exchange, or credit to an appropriate nonresident account, is authorized for capital transfers to non-dollar countries without limitation as to amount. Individual authorization is required, however, for capital transfers to countries in the dollar area; such authorization is usually granted when an economic interest is the basis for the transfer, or if the transfer is aimed at maintaining the percentage of the investment in companies abroad when these companies increase their capital.

Banknotes

Authorized banks and other exchange dealers are permitted to buy from, and sell to, residents and travelers foreign banknotes at free market rates. Residents holding foreign exchange assets, other than those which have to be surrendered to an authorized bank, are authorized to repatriate these assets through authorized banks in the form of foreign banknotes for sale at free market rates. Banknotes may not be used to settle trade transactions; neither may they be paid into foreign B-accounts. However, through the use of foreign L-accounts, nonresidents in EPU countries10 may buy and sell foreign banknotes in the free market and also repatriate Belgian-Luxembourg banknotes.

Changes during 1954

January 20

Norway was included, for the purpose of forward exchange transactions up to three months, in the group of West European countries whose banks participate in multilateral foreign exchange arbitrage.

February 1

The percentages of proceeds received from EPU countries which were temporarily blocked were reduced from 3, 5, 6½, 9½, 13, 16, or 25½ to 2½, 4, 5, 7½, 10, 11, or 20, respectively.

March 10

Numerous goods requiring payment in dollars or the equivalent were added to the list of those which did not require the approval of the central exchange control authority before an authorized bank could stamp the import documents.

April 15

The system by which percentages of proceeds received from EPU countries were temporarily blocked was abolished.

May 26

The requirement of the central exchange control authority’s approval for certain dollar imports and the related payments in dollars (or to the credit of nonresident accounts related to Canada or the United States) was removed, thus abolishing in the payments mechanism the discriminatory treatment against dollar imports.

June 1

Revised and simplified foreign exchange control regulations went into operation.

The “common dollar free list,” designating goods imported from the dollar area which may move freely between the Benelux countries, became effective.

The amount of domestic and foreign banknotes which travelers may take out of Belgium-Luxembourg was increased from BF 25,000 to BF 50,000.

June 25

It was announced that the Belgian-Egyptian payments agreement of May 28, 1953 had been extended until June 27, 1955. The proportion of Belgian-Luxembourg exports to Egypt payable in Belgian francs was reduced from 40 per cent to 33⅓ per cent.

June 28

It was no longer necessary to submit supporting documents to an authorized bank for payments to EPU countries in respect of imports.

July 16

A new type of nonresident account—the foreign L-account—was introduced for the financial transactions of nonresidents in EPU countries. The free market in EPU currencies originally confined to transactions between residents was extended to nonresidents in EPU countries in connection with arrangements designed to facilitate the free movement of capital between Belgium-Luxembourg, the Netherlands, and other EPU countries.

September 21

Belgian-Luxembourg exporters were released from the obligation to sell their U.S. and Canadian dollar proceeds to authorized banks, provided they kept such proceeds on special “commercial” accounts held with authorized banks. The proceeds of exports received in EPU currencies could also be kept on “commercial” accounts and used for authorized payments abroad. Export declarations for less than BF 10,000 no longer required the stamp of an authorized bank. Import declarations not exceeding BF 10,000 could be stamped by an authorized bank even if the country of origin and the country of shipment of the goods were not the same as that of the seller. In transit trade operations, the submission of invoices and contracts to authorized banks was no longer required to justify payments for authorized transactions; this exemption from submitting supporting documents was also extended to imports from all non-dollar countries (it previously applied only to imports from EPU countries).

The limit up to which payments to the dollar area could be made for any purpose was increased from BF 5,000 to BF 10,000. Dollars acquired from nontrade transactions could be used to pay traveling expenses abroad.

December 23

The authorized banks were empowered to extend to residents of certain other dollar countries11 the conversion and other facilities available to residents of Canada and the United States in respect of their foreign B-accounts. At the same time, transfers of foreign B-accounts between certain other countries12 were made subject to the approval of the central exchange control authorities.

Note: Effective April 1, 1955, the choice of the method of payment open to residents in their transactions with other countries and the transferability of accounts held by nonresidents were widened, and the free market for capital and certain current transactions was extended. Nonresident accounts were arranged in five groups, as described below.

1. Convertible Accounts. Existing nonresident accounts related to certain dollar countries11 became Convertible Accounts. They are no longer denominated by the country of residence of the account holder, and may be opened in the name of any nonresident. Convertible Accounts may be credited with current payments due to the dollar area and with proceeds from the sale of U.S. and Canadian dollars to authorized banks and dealers in Belgium-Luxembourg. They may be transferred freely to any type of nonresident account.

2. EPU Accounts. These are the accounts of authorized banks in EPU countries, except Turkey. They may be transferred freely to all other EPU Accounts.

3. Bilateral Accounts. These are the accounts of authorized banks in Turkey and certain other countries.12 They may be transferred freely to Bilateral Accounts only of the same nationality.

4. No Agreement (sans accord) Accounts. These are the accounts of all persons, including banks, in countries outside the dollar area, the EPU, and the Bilateral group. They may be transferred freely to EPU, Bilateral, or other No Agreement Accounts.

5. Financial Accounts. These accounts, like the Convertible Accounts, are not denominated by the country of residence of the account holder, and may be opened for any nonresident. All existing foreign B-accounts, other than those of banks in EPU or Bilateral Account countries, and all foreign L-accounts, “arbitrage” accounts, and emigrants’ accounts (see section on Nonresident Accounts, above), were transferred to Financial Accounts. Like the previously existing foreign L-accounts, Financial Accounts are primarily for capital transfers and traveling expenses, although other specified settlements may be made through them. They may be transferred freely to any type of account except Convertible Accounts. Financial Accounts are exchangeable into any non-dollar currency, and as from May 1, 1955, into dollars at free market rates. Originally, these accounts could be used in Belgium-Luxembourg to purchase or sell dollars at free market rates only in the form of securities or banknotes, but on May 1, this limitation was removed.

Bolivia

Origin and Essential Features

Control over exchange transactions was introduced in Bolivia in October 1931 and has been amended at various times. In June 1937, the compulsory surrender of exchange from exports was introduced by a decree, which also gave a priority criterion for the sale of exchange by the Central Bank of Bolivia and contained a list of prohibited exports. Revisions introduced on April 8, 1950 produced a new set of exchange rates and taxes for the various specified categories of transactions.

The last major revision was introduced in May 1953. A new par value was established for the boliviano and the exchange system was simplified. All previously existing exchange taxes, multiple import and export rates, retention quotas, and compensation and divisas propias arrangements were eliminated, but the restrictive system continued to be based on multiple exchange rates, and on quantitative restrictions on imports applied through individual licenses granted on the basis of an exchange budget prepared by the Central Bank and the Ministry of Finance. An export tax is levied on sales at the official rate of exchange arising from major mining exports, when the world market price for tin exceeds the equivalent of US$1 per pound. There is also a tax on dollars sold at the official rate to students abroad.

Private exports are subject to license. Exports of several minerals are effected by the Banco Minero de Bolivia, which, by law, buys them from private companies. All export receipts, as well as other exchange income to which the official rate applies, must be surrendered at the official market rate. Domestically produced gold may be exchanged with the Central Bank for gold coins, which may be exported or sold at auction through the free market.

Exchange Rate System

The par value is Bolivianos 190 = US$1. The exchange rate system consists of an official market, where the rates are fixed on the basis of the parity, and a fluctuating free market, where the rate is regulated by demand and supply. The official market is for all trade transactions, government payments, registered capital, and certain specified invisibles; the free market is for all other items, including the official sale of dollars at auction. A tax equivalent to Bs 35 per US$1 is levied on sales at the official rate of exchange arising from exports of the Bolivian Mining Corporation, when the world market price for tin exceeds the equivalent of US$1 per pound. A tax of Bs 200 is payable on each U.S. dollar sold at the official rate to students abroad.

The Banco Minero and private individuals are authorized to exchange, at the Central Bank, domestically produced gold which they own for gold coins containing 7, 14, or 35 grams of fine gold. The coins may be exported or sold at auction through the free market.

Administration of Control

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

All sales of official exchange are made through the Central Bank or the authorized banks. Banks, hotels, and other private firms may be authorized to operate in the free market.

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

Prescription of Currency

Payments with payments agreement countries are made in the currencies and according to the methods laid down in the exchange control regulations for each of the countries involved.1 Payments for transactions with other countries are usually made in U. S. dollars.

Imports and Import Payments

Within the limits of the exchange available, as indicated by the exchange budget, the Central Bank grants import licenses for the various commodities and for various currencies. Applications for import permits are subject to a fee of ½ of 1 per cent. Global quotas are established for different commodities and are distributed among the importers. For essential commodities and certain essential consumer goods, the sole importer is the Government, which in turn distributes the goods among merchants or sells directly to the public.

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

Payments for Invisibles

Payments for invisibles are subject to a special permit if they are to be eligible for the official market rate. Payments for invisibles incidental to import transactions are treated in the same way as the corresponding imports. Purchases of exchange for government payments and the servicing of registered capital are effected at the official market rate. There is a tax of Bs 200 on each dollar sold at the official rate to students abroad. Exchange for other invisible transactions, with some exceptions, is obtained at the free market rate, without the requirement of a license.

Exports and Export Proceeds

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

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

An export tax equivalent to Bs 35 per US$1 is levied on purchases of exchange at the official rate arising from exports of the Bolivian Mining Corporation, when the world market price for tin exceeds the equivalent of US$1 per pound.

Proceeds from Invisibles

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

Capital

The investment of foreign capital must be registered and the capital surrendered at the official market rate, in order to obtain the privilege of remitting, at the official market rate, earnings up to 15 per cent per annum and amortization quotas up to 30 per cent. Nonregistered capital and earnings thereon may be repatriated at the free market rate, without a license. Residents may also make capital transactions through the free market.

Table of Exchange Rates (as at December 31, 1954)(bolivianos per U.S. dollar)
BuyingSelling
190.00 (Official Rate)

All export proceeds.2 Registered capital.
191.90 (Official Rate)

Government payments. All imports and incidental invisibles. Registered capital.
391.90 (Official Rate plus Bs WO Tax)

Payments to students abroad.
1,808.003 (Fluctuating Free Market Rate)

Invisibles. Nonregistered capital.
1,845.003 (Fluctuating Free Market Rate)

All other invisibles. Nonregistered capital. Auctions of official exchange.

Changes during 1954

January 15

Official intervention in the free market commenced with the sale there of dollars at auction.

February 11

A tax of ½ of 1 per cent was imposed on applications for import permits.

March 25

An Office for the Promotion of Exports was established within the Central Bank.

Importers were permitted to arrange imports against foreign exchange balances which had accrued in favor of those Bolivian exporters who had arranged individual barter transactions prior to May 14, 1953, but had been unable to complete the transactions as a result of the introduction of new exchange regulations on that date.

April 20

Supreme Decree No. 3706 provided for the Central Bank’s control over the utilization of foreign exchange by government agencies, which were required to comply with the same import licensing formalities as private enterprises.

August 12

Supreme Decree No. 3802 created a tax of Bs 200 on each dollar sold at the official rate to students abroad.

November 6

Retroactive to July 1, 1954, the Bolivian Mining Corporation became liable for the tax of Bs 35 per US$1 on exports only when the world market price for tin exceeds the equivalent of US$1 per pound fine.

Brazil1

Origin and Essential Features

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

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

Practically all private imports and all exports are subject to license or special authorization. In addition, exports require shipping permits, which are provided if the applications comply with all the regulations in force. Licenses for imports are granted freely to holders of exchange certificates purchased at auction. An exchange tax of 10 per cent on the official rate is applied to nearly all foreign payments made through the official market.

Exchange Rate System

The par value is Cruzeiros 18.50 = US$1. The official rates are Cr$18.36 buying, Cr$18.82 selling, per US$1. A 10 per cent exchange tax applied to nearly all payments made through the official market results in a selling rate of Cr$20.70 per US$1. However, the effective rates for most private import transactions are obtained by adding to this rate the prices of the related exchange certificates obtained at auction. These prices, and consequently, the effective rates, fluctuate. The effective rates for the proceeds of exports are obtained by adding the established fixed bonuses to the Cr$18.36 rate. There are now in force three different sets of fixed bonuses, and for each set two different bonuses are established, one for proceeds in convertible currencies and pounds sterling, the other for proceeds in all other currencies. All invisible transactions not directly related to the movement of goods and most capital transactions are effected at a fluctuating free market rate. (See Table of Exchange Rates, below.)

Administration of Control

The control system is operated by the Bank of Brazil under the direction of the Council of the Superintendency of Money and Credit. The Exchange Department of the Bank authorizes incoming and outgoing payments related to most trade transactions and to capital transactions in specified cases; it organizes the auctions of exchange for imports, establishes the total amount and the distribution among the various cities in Brazil where the exchange is auctioned, and issues exchange certificates. Government departments and public entities are requested to present to the Exchange Department a semiannual estimate of their needs for imports and service payments. With these estimates as a basis, the Council of the Superintendency of Money and Credit fixes the maximum quota to be utilized by each entity. The Foreign Trade Department of the Bank of Brazil issues export and import licenses, classifies import commodities into categories—subject to the approval of the Council of the Superintendency of Money and Credit—for the purpose of distribution of exchange availabilities, determines the percentage of total exchange auctioned to be distributed to each category of import commodity, and exercises control over prices, weights, measures, classification, and types declared in export and import operations. The Advisory Commission on Foreign Trade makes suggestions to the Foreign Trade Department regarding the classification of the import products into categories and on those measures which it considers advisable for the development of foreign trade. It also suggests general criteria concerning export and import licensing. A few government imports have to be approved by the President of the Republic. Imports of wheat, newsprint, and petroleum products are subject to specific treatment by specialized agencies. All sales and purchases of exchange pass through banks authorized for this purpose.

Prescription of Currency

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

Imports and Import Payments

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

1. Specified commodities for which payment, if necessary, is not effected through the auction system and which are exempt from import license; government imports, including imports of wheat; imports without exchange cover; imports by foreign diplomats; tools, capital goods, and luggage belonging to immigrants; goods belonging to persons transferring their permanent residence to Brazil, provided these goods are not intended for commercial use; personal luggage of travelers, within value limits; newsprint and paper imports by publishing companies or book printers; maps, books, newspapers, magazines, etc.; objects and materials for educational, social assistance, or religious institutions. Imports of wheat are subject to a surcharge of Cr$7 per US$1, or the equivalent in other currencies; maps, books, newspapers, magazines, etc., are imported with a surcharge equivalent to the “cost of exchange” (i.e., the weighted average of bonuses paid to exporters); and government imports are subject to the minimum premiums established for each category. Exchange for government imports and for imports of newsprint and other printing paper is allocated directly by the Council of the Superintendency of Money and Credit.

2. Imports of petroleum products. In addition to being subject to import license, these imports must be authorized by the National Petroleum Council. Exchange is allocated on a half-yearly basis, and purchases of exchange are not effected through special auctions. The premiums for the first half of 1955 are as follows (in cruzeiros per U.S. dollar): liquefied petroleum gas and diesel oil, Cr$15; aviation gasoline, Cr$25; crude oil, kerosene, fuel oil, and signal oil, Cr$35; gasoline, Cr$70; and “premium” gasoline, Cr$150.

3. Imports of groups of equipment financed in foreign currency and intended for the production of commodities classified in import Categorier I, II, or III (see paragraph 4, below) may be authorized by the the Foreign Trade Department if the annual payment installments do not exceed 20 per cent of the total value financed. Exchange for such equipment may be granted by the Exchange Department at the official rate, provided the importer prepays a surcharge, which until further deliberation is fixed at Cr$40 per US$1 or the equivalent in other currencies. The commitment on the part of the Exchange Department to provide exchange depends on exchange availability, and the amounts corresponding to the obligations assumed must be earmarked. The Exchange Department may also permit payment to be made, in whole or in part, through the free market. Capital goods used in the production of commodities other than those classified in the first three import categories may be imported in accordance with the above provision only by a decision of the Council of the Superintendency of Money and Credit, taking into account the criteria proposed by the National Council of Economy.

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

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

  • Category II: Essential raw materials and codfish

  • Category III: Other raw materials and highly essential spare parts and equipment

  • Category IV: Fresh fruits, less essential spare parts and equipment, office machinery, and certain consumer goods

  • Category V: All other products

The price of the exchange certificates purchased at auction must be paid within 3 days from the moment of purchase, and the application for an import license must be filed within the following 30 days. Importers in possession of an exchange certificate and an import license may purchase the exchange at the official rate at any time, for delivery in accordance with the terms of the exchange certificate; however, goods must be shipped within the period of validity of the import license. Most payments for private imports are subject to a remittance tax of 10 per cent on the official rate. As a rule, importers may not purchase more than US$50,000 worth of exchange certificates at each single auction. Minimum premiums per U.S. dollar, or the equivalent in other currencies, have been established for each category of imports (see section on Changes during 1954, September 16, below). The lowest and highest premiums, for delivery in 120 days, actually obtained at the auction held on March 1, 1955 were as follows (in cruzeiros per U.S. dollar):

Lowest PremiumHighest Premium
Category ICr$ 55.00Cr$ 56.20
Category II70.0071.20
Category III150.00171.50
Category IV231.00240.10
Category V372.00400.00

Payments for Invisibles

Payments for expenses incidental to trade transactions are effected at the same effective rates and conditions as the corresponding imports; but exchange is not provided for the insurance of goods in Brazil or where import licenses have been issued on a c. & f. basis. All other invisible transactions are effected through the free market and are not subject to the 10 per cent remittance tax. Travelers may take out freely domestic and foreign currency notes.

Exports and Export Proceeds

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

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

  • Category II (coffee, raw cotton, sawn pine wood, cocoa, carnauba wax, Brazil nuts, leaf tobacco, and bananas) : Cr$18.70 for proceeds in convertible currencies and sterling and Cr$17.19 for proceeds in other currencies

  • Category III (piassava, castor seeds, soybeans, hides and skins, sisal, and cocoa cake and paste) : Cr$24.70 for proceeds in convertible currencies and sterling and Cr$22.95 for proceeds in other currencies.

  • Category IV (all other exports) : Cr$31.70 for proceeds in convertible currencies and sterling and Cr$29.67 for proceeds in other currencies

Proceeds from Invisibles

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

Capital

1. Investments. The inflow and outflow of foreign investments are effected at the free market rate. The law assures the same guarantees to foreign capital as to domestic capital. The remittance of earnings on foreign investment depends on the interest the investment represents to the national economy: if classified as of “special” interest and duly registered by the Council of the Superintendency of Money and Credit, remittances of earnings may be effected up to the limit of 10 per cent per annum at the “cost of exchange”; all other transfers of income are effected at the free market rate. Imports by foreign investors of groups of equipment, or, exceptionally, of equipment intended to complete or improve the capacity of existing groups, may be authorized by the Director of the Foreign Trade Department, provided he has sufficient proof that no payment will be transferred abroad.

2. Financing. In the case of loans, credits, and other financing of unquestionable interest to the national economy, obtained abroad and registered by the Superintendency of Money and Credit, repayments of principal and transfers of interest not exceeding 8 per cent annually may be made at the “cost of exchange,” provided the original capital has been negotiated in the official market or applied abroad in the acquisition of equipment licensed expressly for that purpose, or applied abroad for the payment of contractual services approved by the Council of the Superintendency of Money and Credit. The Foreign Trade Department may issue licenses to Brazilian companies for the importation of groups of equipment financed abroad, under certain conditions (see section on Imports and Import Payments, above).

Table of Exchange Rates (as at March 1, 1955)(cruzeiros per U.S. dollar)
BuyingSelling
18.36 (Official Rate)

Government and official receipts. Registered loans, credits, and financing of unquestionable interest.
18.82 (Official Rate) Imports of newsprint.
20.70 (Cr$18.82 plus 10% Remittance Tax)

Theoretical rate, added to auction bids to obtain effective rates for most imports.
25.82 (Cr$18.82 plus Cr17 Surcharge)

Imports of wheat.
33.82 (Cr118.81 plus Cr$15 Surcharge)

Some government payments. Amortization and interest on registered financing of unquestionable interest, earnings on registered capital of “special” interest up to 10% a year; repatriation of capital of “relevant” interest after 10 years, up to 10% a year. Imports of certain publications, coal, and highly essential machinery. Miscellaneous service payments.
33.82–168.82 (Cr$18.82 plus Cr$15–150 Surcharge)

Petroleum products.
35.55 (Cr$18.36 plus Cr$17.19 Bonus)

Category II exports against inconvertible currencies other than sterling.
37.06 (Cr$18.86 plus er$18.70 Bonus)

Category II exports against convertible currencies or sterling.
41.31 (Cr$18.36 plus Cr$22.95 Bonus)

Category III exports against inconvertible currencies other than sterling.
43.06 (Cr$18.38 plus Cr$24.70 Bonus)

Category III exports against convertible currencies or sterling.
48.03 (Cr$18.36 plus Cr$29.67 Bonus)

Category IV exports against inconvertible currencies other than sterling.
50.06 (Cr818.36 plus Cr$31.70 Bonus)

Category IV exports against convertible currencies or sterling.
75.70–76.90 (CrS18.82 plus 10% Remittance Tax plus Cr$65–56 20 Auction Premium)

Category I imports.
76.00 (Fluctuating Free Market Rate)

All incoming capital except registered financing of unquestionable interest. Travel exchange and other items not dealt with in official market.
77.80 (Fluctuating Free Market Rate)

Amortization and repatriation of registered capital of “special” and of “relevant” interest, unregistered capital transfers and earnings, tourist expenses, and other invisible payments not made at more favorable rates.
90.70–91.90 (Cr$18.82 plus 10% Remittance Tax plus Cr$70–71.20 Auction Premium)

Category II imports.
170.70–192.20 (0418.82 plus 10% Remittance Tax plus Cr8150–171.50 Auction Premium)

Category III imports.
251.70–260.80 (Cr$18.82 plus 10% Remittance Tax plus Cr$231–240.10 Auction Premium)

Category IV imports.
392.70–420.70 (Cr$18.82 plus 10% Remittance Tax plus Cr$372–400 Auction Premium)

Category V imports.
Note : The auction premiums on which the selling rates are based are the lowest and highest for the U.S. dollar (120 days’ delivery) in Rio de Janeiro on March 1, 1955. Minimum bids for dollars for the five import categories were set by the Superintendency of Money and Credit on September 16, 1954 at Cr$15, Cr$18, Cr$23, Cr$30, and Cr$75, respectively. The auction premiums have been in excess of these minimums for U.S. dollars, German “dollars,” sterling, Japanese “dollars,” etc. For other currencies, and for government imports in the five categories, the minimums, in practice, establish the effective rates.

Changes during 1954

January 5

Decree No. 34893 was issued, containing the regulations pursuant to Law No. 2145 of December 29, 1953. The law abolished the Export and Import Department of the Bank of Brazil and created a Foreign Trade Department in the Bank. The Foreign Trade Department would handle the issuance of export and import licenses, enforce import, exchange, and price controls, classify imports of merchandise in accordance with their nature and degree of essentiality for the purpose of the exchange auctions, and in special cases finance imports of highly essential production and consumption goods.

February 25

Instruction No. 85 of the Superintendency of Money and Credit increased the maximum amount of cover that any one bidder could purchase at each exchange auction from US$10,000, or the equivalent in other currencies, to US$50,000; the new maximum could not be exceeded unless it could be proved to the satisfaction of the Council of the Superintendency that a larger quota was necessary.

March 20

Instruction No. 87 of the Superintendency of Money and Credit approved a new classification of imports, pursuant to Instruction No. 70 of October 9, 1953, which had established the auction system for private imports.

March 25

Instruction No. 88 of the Superintendency of Money and Credit altered the period of validity of the exchange certificates issued by the Bank of Brazil from 8 days to 30 days.

March 31

Instruction No. 89 of the Superintendency of Money and Credit extended, from 2 days to 3 days, the period within which payment must be made to the Bank of Brazil for exchange certificates.

June 2

The Brazilian Government raised the minimum price of coffee for the crop year beginning July 1, 1954 and ending June 30, 1955 to US$0.87 per pound.

August 16

Instruction No. 99 of the Superintendency of Money and Credit established new export rates for coffee and other products. The bonus of Cr$5 per US$1 paid to coffee exporters and Cr$10 per US$1 paid to exporters of other products now applied to only 80 per cent of the value of the exports, instead of 100 per cent as previously. On the remaining 20 per cent, a premium equal to the difference between the official rate of exchange and the average free market rate for the previous day was to be paid.

September 13

Instruction No. 673 of the Ministry of Finance raised the remittance tax applicable to most payments in the official market (but not to payments in the free market) from 8 per cent to 10 per cent, effective January 1, 1955. Revenues from this increase were to be earmarked for the electrification fund.

September 16

Instruction No. 103 of the Superintendency of Money and Credit raised the minimum bids in the auctions for the five import categories as follows (in cruzeiros per U.S. dollar):

Category Ifrom Cr$10 to Cr$15
Category IIfrom Cr$12 to Cr$18
Category IIIfrom Cr$15 to Cr$23
Category IVfrom Cr$20 to Cr$30
Category Vfrom Cr$50 to Cr$75

September 17

Instruction No. 104 of the Superintendency of Money and Credit provided that, for purposes of calculating the mixed export rates, the free market rate was to be the average buying rate for the previous week.

September 21

Circular No. 9 of the Banking Inspection and Control Division of the Bank of Brazil established surcharges of Cr$15 and Cr$18 per US$1 for certain official and other essential payments; the surcharges went into effect immediately except for petroleum products, for which they were to go into effect at the beginning of 1955.

September 27

Circular No. 45 of the Banking Inspection and Control Division of the Bank of Brazil raised the surcharge on small expenditures of banks abroad, and on interest on exchange operations, from Cr$12 to Cr$18 per US$1.

November 11

Instruction No. 109 of the Superintendency of Money and Credit established a fixed bonus of Cr$13.14 per US$1 for coffee exports in convertible currencies, resulting in a new fixed rate of Cr$31.50 per US$1. Fixed bonuses were also established for coffee export proceeds in other currencies.

November 18

Instruction No. 110 of the Superintendency of Money and Credit introduced certain changes in the categories of import goods.

Note: Changes that have taken place during the early months of 1955 are listed below.

January 1

The increase from 8 per cent to 10 per cent in the remittance tax applicable to most payments in the official market became effective (see September 13, above).

January 18

Exports were divided into four categories, and the premiums paid on export proceeds were fixed according to the type of commodity involved and the currency received. Category I consisted only of coffee. Prior to this, the bonuses for exports of goods other than coffee had been on a fluctuating basis.

February 7

Instruction No. 114 of the Superintendency of Money and Credit established the bonuses for coffee export proceeds at the same rate as those for Category II exports.

March 4

A resolution of the Council of the Superintendency of Money and Credit established new fixed surcharges on imports of petroleum products for the first half of 1955.

Burma

Origin and Essential Features

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

Exchange Rate System

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

Administration of Control

Exchange control is administered by the Exchange Control Board. Import and export controls are managed by the Ministry of Commerce, but export control powers are also exercised by the State Agricultural Marketing Board, the State Timber Board, and the State Mineral Marketing Board, according to the commodities concerned. The necessary registration of exporters and importers is carried out by the Registration Board (formerly the Import Licensing Board).

Prescription of Currency

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

Imports and Import Payments

The importation of all goods is subject to regulation. Except for dollar goods, however, the import policy is fairly liberal. Certain imports are permitted freely under open general license,1 while other imports require individual licenses, which must be obtained before the goods are shipped from the country of exportation. Licenses normally are granted freely to effect imports from all countries except Canada and the American Account countries.2 If evidence of importation has been or will be presented, the authorized banks automatically provide exchange in the form prescribed in the regulations (see section on Prescription of Currency, above) in payment for all permitted imports. All importers must be registered with the official Registration Board.

Payments for Invisibles

All payments for invisibles are subject to license, but authorized dealers may sell foreign exchange in accordance with the regulations. In general, payments for items connected with trade are allowed, and payments for other purposes are considered on a case-to-case basis. Remittances of income arising from investment are permitted freely on application, subject to presentation of evidence that all taxes due in Burma have been paid. Travelers to India may take out not more than Rs 270 in Indian notes and coin, of which not more than Rs 100 may be in currency notes.

Exports and Export Proceeds

Burma has a list of prohibited exports: iron and steel, brass, copper and aluminum and scraps thereof, foreign manufactures, and commodities of local origin which it is desired to conserve for local requirements. No license is required for the export of commodities not specifically included in the lists of items subject to license, but the exporter must obtain the export proceeds in a manner satisfactory to the exchange control authorities. In general, exporters are required to surrender their foreign exchange proceeds to an authorized dealer in foreign exchange. All exporters must be registered with the official Registration Board.

Proceeds from Invisibles

Exchange receipts arising from invisibles must be surrendered.

Capital

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

Changes during 1954

January 23

The effective date for the submission of survey reports in respect of imports from countries other than Hong Kong, Malaya, India, and Japan was postponed from January 1 to March 31, 1954.

January 27

The requirement of survey reports in respect of imports from Hong Kong, Malaya, India, and Japan was suspended until March 31, 1954.

March 18

The requirement of survey reports in respect of imports from all countries was suspended.

April 20

The prescription of currency requirements attaching to settlements with foreign countries were revised and simplified in conformity with the changes in the payments regulations of the United Kingdom.

May 1

Pursuant to the trade agreement with Mainland China, exports to and imports from that country would be handled only by recognized agents of the State Trading Boards appointed by the Civil Supplies Administrative Board. Open general licenses, special licenses, and permits covering trade with Mainland China were withdrawn. Authorized dealers were advised that prior approval of the exchange control would be necessary for opening letters of credit and effecting remittances for imports from, and for confirming letters of credit for exports to and imports from, Mainland China.

July 21

Permission to import, from places outside Mainland China, goods produced or manufactured in Mainland China was withdrawn.

August 3

No new life insurance or endowment policies in foreign currencies could be issued to foreign nationals resident in Burma without the approval of the exchange control, if the premiums were to be paid in kyats.

August 18

A number of State Trading Boards or their agents were exempted from the prior approval requirement in respect of trade with Mainland China (see May 1, above). The exemption applied to a number of goods, including tea, silk yarn, coal, raw cotton, timber, rice and rice products, and rubber.

August 23

The State Commercial Bank would sell Indian coins to bona fide travelers to India in amounts which, together with the Indian notes that a traveler may already have purchased, would not exceed the limit of Rs 270. (The maximum amount of Indian currency notes that may be taken out by a traveler to India is Rs 100.)

September 25

Authorized dealers were advised that no remittance should be effected for an importer and no documents or bills for collection accepted from an exporter, unless a registration booklet issued by the Exchange Control Department was presented, wherein all entries were to be recorded. These booklets were intended to serve as an easy reference for the authorized dealer in ascertaining overdue commitments.

October 1

Firms would not be permitted to negotiate any transaction in respect of imports or exports unless they were registered with the Registration Board (formerly the Import Licensing Board). Foreign firms could be registered only if they had complied with the regulations concerning the employment of Burmese personnel, had an establishment in Burma, and had been carrying out import and export transactions before January 4, 1948.

October 20

Permission was withdrawn for remittances by insurance companies of premiums collected in kyats on policies in foreign currencies issued in Burma after March 1, 1948; but insurance companies could transfer the records of existing policies in foreign currencies from Burmese registers to appropriate foreign registers, or could convert these policies into kyat policies.

October 26

The Exchange Control Board took over the administration of exchange control from the Union Bank of Burma.

December 16

Transit trade dealers were required to be registered as exporters, and their re-exports were made subject to exchange control.

Ceylon

Origin and Essential Features

Exchange control was introduced in Ceylon in September 1939. Since that time Ceylon has maintained an exchange control and restrictive system and policies similar, in major respects, to those of other members of the Sterling Area. The last major revision was on June 1, 1948, when exchange control was extended to include transactions with the Sterling Area. Restrictions were intensified in late 1952 and in the first half of 1953, particularly in respect of travel and personal remittances. Ceylon’s restrictive system is based on the principle of complete surrender of foreign exchange, which is then allocated by the control authorities to payments for goods, services, capital transfers, and other transactions.

Exchange Rate System

The par value is Ceylon Rupees 4.76190 = US$1. The exchange rate system is uniform, the rate for the U.S. dollar being based on the fixed sterling-Ceylon rupee rates and the sterling-U.S. dollar rates in London, maintained between official limits. The market rate as at December 31, 1954 was Cey Rs 4.770 buying, Cey Rs 4.795 selling, per US$1.

Administration of Control

Exchange control is administered by the Exchange Control Department of the Central Bank of Ceylon. All transactions in foreign exchange in Ceylon must be made through authorized dealers, which are banks authorized to transact business in specified currencies in accordance with the exchange control regulations prescribed by the Controller of Exchange. Remittances may also be made through post offices on permits issued by the Controller of Exchange. Import and export licensing is handled by the Controller of Imports and Exports.

Prescription of Currency

Since Ceylon avails itself of the payments mechanism provided by the Monetary and Payments Agreements made by the United Kingdom with foreign countries, Ceylon has detailed regulations prescribing the currencies to be received from abroad in payment for all exports and invisible transactions, and prescribing the currencies to be used to pay for all imports and invisible transactions, depending upon the country or monetary area with which the transactions are conducted. These prescriptions are similar to those used by the United Kingdom and other Sterling Area countries. In general, the regulations governing payments provide that beneficiaries resident in the Sterling Area are to be paid in any currency of the Sterling Area; beneficiaries resident outside the Sterling Area are to be paid (1) in sterling or rupees, to the credit of a nonresident account related to Canada, the American Account Area, the Transferable Account Area, or Turkey, according to the country of origin of the goods, or (2) in some cases, in the currency of the country of origin of the goods. Receipts from foreign transactions, in general, may be in local currency, or from appropriate nonresident sterling accounts in the United Kingdom, or, in some cases, in specified foreign exchange. Transactions involving deviation from the regulations on prescription of currency require the prior approval of the Controller of Exchange.

Nonresident Accounts

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

Imports and Import Payments

With the exception of a few items, such as firearms for use by the armed forces, imports of goods are subject to regulation. However, many commodities are governed by Open General Licenses and may be imported freely without individual licenses. Open General License No. 1 authorizes the import of a wide range of commodities from all sources except the dollar area1 and certain other countries2.

Open General License No. 2 lists items that may be imported from the dollar area. Open General License No. 3 permits the import of a few items from all sources except Australia and certain other countries3. Open General License No. 4 applies to certain goods which may be imported from all sources except the dollar area and certain other countries4. Open General License No. 5 permits the import of fish from the Maldive Islands. In addition, General Import Licenses are issued to registered Ceylonese importers, enabling them to import specified commodities without quantitative restriction from those countries excluded from the Open General License facilities. All other items require individual import licenses, and policy concerning their issue is announced annually. No licenses are issued for some products grown or manufactured locally. Some essential items, such as sugar, flour, and rice, are imported only on government account.

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

Payments for Invisibles

All payments for invisibles are subject to exchange license. Authorized dealers may sell foreign exchange in accordance with a detailed set of regulations. Payments for freight and other services in connection with the international transport of goods are allowed. Payments for international travel fares are permitted, provided certain conditions are met. Payments for business travel are also allowed, on application. The allocation of exchange for tourist travel is subject to basic rations, which vary according to the country to be visited; however, no basic ration is allocated for tourist travel to the dollar area. Other remittances of a personal nature are granted for reasonable requirements for education, travel, health, or family reasons.

Business remittances to any country normally are approved, particularly when they are of a recurring or contractural nature, e.g., insurance premiums. Emigrants (Ceylonese nationals) are permitted to transfer their entire assets if emigrating to a Sterling Area country or to Denmark, Norway, or Sweden, but only up to certain limits if emigrating to any other non-Sterling Area country. Remittances of profits and dividends of nonresidents are permitted freely. Travelers may export foreign exchange declared at the time of entry. The exportation of currency notes is limited to Cey Rs 50 per person per six months.

Exports and Export Proceeds

For purposes of exchange control, licenses issued by the Controller of Exchange are required for all exports; in addition, export licenses issued by the Controller of Exports are required for all but a few commodities. 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.

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

Proceeds from Invisibles

The surrender at official rates of incoming foreign exchange from invisibles is required. Specified currencies, following the prescription of currencies applicable to commodity exports, have to be received for invisible transactions.

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

Capital

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

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

Changes during 1954

March 15

The maximum of sterling exchange allowed for voyage expenses on journeys by sea from Ceylon to countries other than India, Pakistan, Burma, Malaya, Iran, Iraq, Saudi Arabia, and the Netherlands East Indies was reduced from £15 to £10 per person.

March 22

The approved methods of settlement for exports and imports were amended in conformity with the changes in the United Kingdom’s sterling payments arrangements. Settlement could now be made in respect of imports from and exports to the extended Transferable Account Area in sterling or Ceylon rupees from or to a resident in any Transferable Account country or, in some cases, in the currency of the exporting or importing country.

July 1

Quantitative restrictions (monetary ceilings) applied to certain imports from EPU countries were abolished.

Chile

Origin and Essential Features

Exchange control was introduced in Chile in 1931 and has since undergone a number of changes. Under a new exchange control law of November 21, 1950, the system was modified and certain administrative changes made: Payments and receipts of exchange for non-trade transactions were permitted freely through the free market, although payments by commercial enterprises continued to be subject to license; provision was made for a transfer guarantee to be extended to registered foreign capital. On July 7, 1953, two decrees were enacted for the purpose of simplifying the rate structure; however, subsequent decrees largely re-created the situation which had existed before that date, although most private imports continued to be effected through the banking rate. On November 11, 1954, the banking rate was changed from Chil$110 to Chil$200 per US$1.

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

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

Exchange Rate System

The par value is Chilean Pesos 110 = US$1. The exchange rate of Chil$110 per US$1, however, applies only to some specified exchange transactions. The banking rate, fixed at Chil$200 per US$1 for the U.S. dollar and fluctuating for other currencies with a ceiling corresponding to Chil$200 per US$1, applies to most imports and exports of goods and services. There are other effective rates resulting from special compensation arrangements for specified groups of imports and exports. Incoming and outgoing invisibles not directly related to trade, capital transactions, and some minor specified transactions are effected through the free market (see Table of Exchange Rates, below).

Administration of Control

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

Prescription of Currency

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

Imports and Import Payments

All imports are subject to license. The importation of certain luxury goods and goods of a type produced domestically is prohibited. Licenses are granted to established importers up to the limit of their individual quotas, which are fixed on the basis of an exchange budget prepared by the National Foreign Trade Council. Exchange to pay for nongovernmental imports of an essential nature is provided at the rate of Chil$110 per US$1. Most other imports are paid for at the banking rate of Chil$200 per US$1. For permitted imports of listed luxury goods, import licenses are granted on the basis of the exchange receipts from exports of wines, products of medium-sized mines, and other specified products. Exchange quotas are fixed on the basis of the availabilities of the various types of exchange and, particularly, on the basis of trade and payments agreements.

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

Payments for Invisibles

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

Exports and Export Proceeds

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

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

Proceeds from Invisibles

Receipts from invisibles are dealt with at the banking rate, but exchange receipts from tourists may be sold in the free market.

Capital

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

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

Table of Exchange Rates (as at December 31, 1954)(pesos per U.S. dollar)
BuyingSelling
19.37

Sales of exchange by the large mining companies to cover an agreed part of the legal cost of production.
110.00

Imports of raw sugar, wheat and flour, crude diesel and fuel oils, kerosene and gasoline, antibiotics, raw cotton, hides, and price-controlled articles imported prior to November 10, 1954. Government payments.
200.00 (Banking Rate)

Most exports and invisibles. Sales of exchange by the large mining companies not effected at the Chil$19.37 rate.
200.00 (Banking Rate)

Most imports and invisibles.
310.00 (Fluctuating Free Brokers’ Rate)

Other invisibles, including travel receipts. Exports of fish and fish products. Part of iron ore exports of medium-sized mines. Private capital.
310.00 (Fluctuating Free Brokers’ Rate)

Other invisibles, including travel expenses. Private capital.
350.00 (Banking Rate plus Chil$150)

Wine exports.
350.00 (Banking Rate plus Chil$150)

Specified less essential and luxury imports.
Note: This table reflects only effective rates for the U.S. dollar, and for the “agreement dollar” applicable to transactions with Argentina. The rates for other currencies are permitted to fluctuate with a ceiling equivalent to Chil$200 per US$1. The effective rates for these currencies, however, have never been below the ceiling. In the case of wine exports, the exchange rate for other currencies is equivalent to Chil$320.00 per US$1. The table does not take account of a tax of Chil$15 per US$1 on import licenses for less essential items, which expired on December 31, 1954.

Changes during 1954

February 2

Some changes were introduced in the treatment of foreign capital under existing legislation.

February 27

A decree (No. 215) of the Ministry of Economy established the list of products the importation of which was prohibited during 1954. The prohibition would not apply to imports by large mining companies with own exchange; nor would it apply to those cases in which the domestic industry does not supply satisfactory quantities or the prices of the products are 40 per cent higher, or more, than the prices of the corresponding foreign products at the banking rate.

March 9

The proceeds from exports of fish and fish products were allowed to be sold in the free market.

March 17

Regulations were issued to enforce more strictly the controls on outgoing payments for trade and invisibles.

It was decided (Decree No. 212) that, effective January 1, 1954, the banking rate would apply to proceeds from exports of agricultural products—excluding wool—and to proceeds from exports of products of small and medium-sized mines, of industrial products, of national petroleum, and of wine. It applies also to freight and insurance premiums incidental to exports.

March 30

A new procedure was established whereby the imports of certain specified products (liquors, tobacco, truck chassis, tires, etc.) would be permitted, subject to authorization, by using exchange proceeds from exports of small and medium-sized mines. Different fixed surcharges were established for each individual import item, as well as variable premiums for the export products involved.

April 21

It was decided (Decree No. 382) that the banking rate would apply to proceeds from exports of wool.

April 29

A trade and payments agreement with Italy was signed.

May 4

Exchange proceeds from exports of iron ore produced by medium-sized mining companies were permitted to be disposed of as follows: 55 per cent may be sold at the banking rate; 25 per cent may be sold in the free market; and 20 per cent may be retained to be used for their own imports.

The subsidies for exports of wine were raised to Chil$150 per US$1 for the U.S. dollar and to the equivalent of Chil$120 per US$1 for other currencies.

May 30

A regulation was issued for the application of the law concerning investment of new foreign capital in Chile.

July 30

The trade and payments agreement with Spain was extended for a period of three years.

August 23

Sanctions were established for the importation of goods without an exchange permit.

September 18

A trade and payments agreement with Portugal was signed.

October 14

A trade and payments agreement with Yugoslavia was signed.

October 18

A barter agreement with Bolivia was signed.

November 6

The trade and payments agreement with the Federal Republic of Germany, which had been in effect since December 17, 1953, was extended to March 31, 1955.

November. 11

The banking rate for the U.S. dollar was fixed at Chil$200 per US$1. A ceiling was also established for the exchange rates for other currencies at the equivalent of Chil$200 per US$1. The exchange rate of Chil$110 per US$1 would continue to apply to government payments, and to imports of raw sugar, wheat and flour, crude diesel and fuel oils, kerosene and gasoline, antibiotics, raw cotton, hides, and price-controlled articles imported prior to November 10, 1954. The sales of exchange at the Chil$110 rate would be effected by the Central Bank through commercial banks.

December 31

The tax of Chil$15 per US$1, applied on import licenses for less essential items, expired.

China (Taiwan)

Origin and Essential Features

Exchange control was first introduced in Taiwan on June 15, 1949. The present system has operated since April 9, 1951. Control is applied to all foreign trade and exchange transactions and there is no recognized free market. The structure of the restrictive system in Taiwan rests on a restrictive import licensing policy and restrictions on payments for invisibles and capital. A 20 per cent tax applies to most sales of exchange.

Exchange Rate System1

There is no par value for the New Taiwan Dollar. All exchange transactions take place at officially fixed foreign exchange deposit certificate rates, which for the U.S. dollar are NT$15.55 buying, NT$15.65 selling, per US$1. The Bank of Taiwan also quotes foreign exchange deposit certificate rates for pounds sterling, Hong Kong dollars, and Malayan dollars. A defense tax of 20 per cent is levied on most import payments and on payments for invisibles not associated with exports.

Administration of Control

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

Prescription of Currency

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

Nonresident Accounts

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

Imports and Import Payments

All imports require individual import licenses, which are issued to registered importers under a two-month import quota system. Imports of certain specified luxuries are prohibited, and imports of specified commodities which may be produced locally or of which there are sufficient stocks are temporarily suspended. Registered private importers must submit applications to a Preliminary Screening Committee on Imports, whose recommendations are subject to the final approval of the Foreign Exchange and Trade Control Commission. Previous export performance is taken into account in the determination of import quotas. Imports are subject to a 20 per cent defense tax on the amount of the foreign exchange allocation; but, subject to the approval of the Foreign Exchange and Trade Control Commission, imported industrial supplies, equipment, and raw materials allocated directly to final users, imported supplies designed to increase government revenues, and some other imports are exempt from the tax. The tax is collected by the Bank of Taiwan on behalf of the Government at the time the importer pays the Bank for the necessary exchange. The proceeds of the tax are deposited in a special account with the Bank of Taiwan.

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

Payments for Invisibles

Payments to nonresidents for invisibles are restricted by a quota fixed monthly by the authorities (except government payments, and such trade items as freight and insurance, for which permission to effect payment is determined by the approval to import the related commodities). Applicants for exchange for invisibles must apply to the Preliminary Screening Committee for Outward Remittances, which passes its recommendations to the Foreign Exchange and Trade Control Commission for final decision. In general, reasonable amounts of foreign exchange are granted for transfers of reinsurance premiums and for travel other than for pleasure. Payments for invisibles are authorized at the certificate rate and are liable to the 20 per cent defense tax, with the exception of freight, insurance, and commission expenses incurred in respect of exports. Travelers leaving Taiwan may take with them no more than US$200 in foreign currency. There are no limitations on the export of domestic currency.2

Exports and Export Proceeds

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

All export proceeds must be obtained in U.S. dollars, Hong Kong dollars, pounds sterling, or, in a few cases, Malayan dollars. Export proceeds must be surrendered to the Bank of Taiwan, either for local currency or for foreign exchange deposit certificates, with the exception of proceeds from (a) cotton piece goods and seasoning powder, (b) coal, firecrackers, and fireworks, and (c) oranges and tangerines. Exporters may retain 72 per cent of their proceeds from these three groups of goods. All the exchange retained under (a) may be used only for the importation, by the exporters concerned, of machinery or machinery parts or raw materials for their own use; 20 per cent of the exchange retained under (b) may be used only for the importation, by the exporters concerned, of machinery or machinery parts or raw materials for their own use, and the remaining 80 per cent for permitted imports; all the exchange retained under (c) may be used for permitted imports. The foreign exchange deposit certificates are of two kinds—transferable and nontransferable. The nontransferable certificates can be used only to pay for imports and are valid for four months, after which they can only be sold for local currency to the Bank of Taiwan. The transferable certificates are issued to any person against payment in U.S. dollar notes or gold and are valid for two months, during which time they can be sold to the Bank of Taiwan or exchanged for nontransferable certificates.

Proceeds from Invisibles

All residents of Taiwan receiving foreign exchange from invisibles are required to surrender their receipts to the Bank of Taiwan and may take either exchange certificates or local currency in return. Alternatively, current accounts in foreign currencies may be maintained with the Bank of Taiwan with deposits of foreign currencies or proceeds of inward remittances. Such deposits may be remitted abroad or withdrawn in local currency at the prevailing certificate rate, at the depositor’s option. Travelers entering Taiwan may bring in any amount of foreign currency and either hold or surrender it. The import of domestic currency is limited to NT$1,000 per traveler.3

In order to encourage inward remittances for certain designated purposes, the profits from the sale of certain government imports are appropriated to a special fund for incentive payments on certain remittances. These incentive payments are made at the rate of NT$6.00 per US$1, in addition to the local currency converted at the certificate rate, and are subject to the approval of the exchange authorities on a case-by-case basis. The following inward remittances are eligible for incentive payments: (1) for the benefit of educational, charitable, and missionary institutions, (2) for investments by foreigners and overseas Chinese, and (3) for the support of overseas Chinese students studying in Taiwan and overseas Chinese families in Quemoy. In the case of the American Association of Medical Aid to China, the incentive payment is NT$5.00 per US$1.

Capital

Capital payments due to nonresidents normally are not approved, and the repatriation of foreign capital is allowed only in special circumstances. Application may be made for the repatriation of new foreign investment two years after the investment has been made at a rate not exceeding 15 per cent each year of the total investment. New capital investment abroad by residents is prohibited. Residents are permitted to hold foreign exchange representing capital receipts; they may dispose of this exchange by selling it to the Bank of Taiwan for exchange certificates or local currency or they may deposit it in a current account in foreign currency.

Changes during 1954

January 1

The use of the NT$14.49 rate for exchange receipts derived from exports of rice and sugar was discontinued, so that all receipts and payments in U.S. dollars would be settled at the certificate rates of NT$15.55 buying, NT$15.65 selling, per US$1.

March 5

The amount of New Taiwan dollar notes which each traveler could bring into Taiwan without a license was limited to NT$1,000.

March 25

Exporters of cotton piece goods who had surrendered their export proceeds were entitled to apply for 72 per cent of such proceeds for permitted imports.

April 14

The foreign exchange deposit certificate rates for pounds sterling and Hong Kong dollars were adjusted so that the rates for these currencies were related to the rate for the U.S. dollar at the par values agreed with the Fund.

April 20

Exporters of coal who had surrendered their export proceeds were entitled to apply for 72 per cent of such proceeds for imports on the Permissible List.

May 4

An incentive payment of NT$6.00 or NT$5.00 per US$1, in addition to the local currency converted at the certificate rate, was given to inward remittances for the benefit of educational, charitable, and missionary institutions, for the support of overseas Chinese students and families in Taiwan, and for investments made by foreigners and overseas Chinese.

May 26

The foreign exchange deposit certificate rates for Malayan dollars were adjusted, after which all officially quoted rates were related at the par values agreed with the Fund.

June 29

The 20 per cent defense tax on foreign exchange granted for certain private imports was extended to apply to most sales of exchange.

October 19

Exporters of firecrackers and fireworks were allowed to retain 72 per cent of the foreign exchange proceeds of their exports.

November 4

Exporters of tangerines and oranges were allowed to retain 72 per cent of the foreign exchange proceeds of their exports.

November 19

The arrangement by which exporters of cotton piece goods who had surrendered their export proceeds were entitled to apply for 72 per cent of such proceeds for permitted imports was abolished.

December 3

Exporters of seasoning powder were allowed to retain 72 per cent of the foreign exchange proceeds of their exports.

Note: Effective March 1, 1955, negotiable exchange certificates were introduced. The Bank of Taiwan rates continue to be applied to government exports and imports in connection with approved industrial and development projects; specified exports, such as sugar, rice, and salt; specified imports, such as wheat, soybeans, cotton, chemical fertilizers, and crude oil; and inward and outward remittances in connection with these exports and imports and with government expenditures. All other exports and imports by public enterprises and by commercial firms, and other inward and outward remittances, are granted, or require, exchange certificates in addition to the exchange settlement at the Bank of Taiwan rates. The amount of exchange certificates issued to exporters as a percentage of export proceeds varies according to the category of goods exported. Exchange proceeds from invisible transactions receive the full benefit of the exchange certificate rate; the rate also applies in full to sales of exchange to make outward remittances, including payments for those imports which require exchange certificates. The Bank of Taiwan is authorized to buy and sell exchange certificates at fixed prices to be announced. The buying rate announced on March 1, 1955 was NT$21.55 per US$1 (the exchange certificate rate of NT$6.00 per US$1 plus the Bank of Taiwan rate of NT$15.55 per US$1).

Colombia

Origin and Essential Features

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

Exchange Rate System

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

Administration of Control

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

Prescription of Currency

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

Nonresident Accounts

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

Imports and Import Payments2

Most goods in a specified list (Group I) may be imported from any country. However, certain Group I articles (dried fruits, articles of natural or mixed silk, marble in polished slabs, iron objects for table service, receiving sets, other than television receiving sets, for domestic use, and motor bicycles) and all items in Group II (mainly nonessential and luxury goods) may be imported if they originate in, and are imported from, countries specified as maintaining an approximately balanced trade with Colombia or having a trade agreement with Colombia.3 Imports of potatoes, wheat, spelt and maslin, rice, barley, corn, and some legumes and vegetables may be made only by the Corporation for the Protection of Agricultural Products, but from any country the Corporation considers appropriate.

All imports require prior application for registration. If the application meets all legal requirements, approval is stamped on the application form, i.e., registration is granted. A stamp tax of 3 per cent is collected on each import registration, with the exception of official imports when they are not for commercial use, and of imports of foreign capital goods; the tax is not refundable. An additional stamp tax of 80 per cent is applied to Group II imports; an option is given to importers to pay half this tax (40 per cent) with “export vouchers” (see section on Exports and Export Proceeds, below) at the rate of Ps$1 per US$1 of the import registration value. In addition, a cash deposit of 20, 24, 30, 40, or 60 per cent of the peso value of the import, depending on the class of the import, has to be made as a prerequisite to import registration. The deposit is returned when the arrival of the goods in Colombia has been confirmed.

Payments for imports require exchange registration, which is granted in f.o.b. terms upon submission of the import registration and evidence that the goods have entered Colombia. Payments are effected at the basic selling rate of Ps$2.51 and must be made in the appropriate currency (see section on Prescription of Currency, above).

Payments for Invisibles

Payments and remittances abroad for invisibles require prior registration. Certain essential payments may be effected at the selling rate of Ps$2.51 without tax. Other authorized payments are effected at this rate plus the stamp tax or both the stamp tax and the resident tax. Importers are not permitted to register their imports on a c.i.f. basis and therefore cannot obtain exchange for insurance and freight payments. Exchange is, however, granted to registered insurance companies and foreign shipping companies.

Exchange for travel abroad is granted up to a limit of US$300 per year per person at the rate of Ps$2.51 plus taxes totaling 6 per cent.4 Students meeting the legal requirements are allowed remittances of up to US$250 or US$150 per month, depending on the type of study, at the rate of Ps$2.51 free of tax.5 For medical treatment outside Colombia, up to US$1,500 is granted at the selling rate of Ps$2.51 plus taxes totaling 6 per cent. Earnings on registered foreign capital may be transferred at any time at the rate of Ps$2.51 plus a 3 per cent stamp tax. All other nontrade payments may be effected freely in the gold exchange market.

Exports and Export Proceeds

All exports require prior application for registration. If the application meets all legal requirements, approval is stamped on the application form, i.e., registration is granted. Exchange proceeds must be surrendered as follows: within 10 days for foreign exchange derived from coffee exports or other exports payable by letter of credit usable upon presentation of the bill of lading; within 6 months for foreign exchange from shipments on consignment or from exports other than coffee, not reimbursable by credit payable upon presentation of the bill of lading; within one year for foreign exchange derived from exports of articles manufactured in the country. Minimum surrender prices are established for some exports, e.g., coffee and bananas. Part of the proceeds from coffee exports are purchased at the Ps$1.95 rate and the balance at the Ps$2.50 rate, the effective rate being Ps$2.384 per US$1.6 All other export proceeds are surrendered entirely at the Ps$2.50 rate. However, exporters of specified minor exports (some agricultural products, salt, tanned hides, leather manufactures, designated textiles, cement, beer, sugar, sulphur, tobacco, nonprecious metals, nonmetallic minerals) are granted, upon surrender of their exchange, “export vouchers” which they may use as part payment of the 80 per cent stamp tax on registration of Group II imports. These vouchers are negotiable and are sold at a premium in a free market. Exchange proceeds from exports of gold must be repatriated and deposited in accounts which the commercial banks are authorized to maintain for this purpose; such exchange may then be sold in a free market, at fluctuating rates, for making nontrade payments. Proceeds from exports and services must be obtained in the appropriate currency.

Proceeds from Invisibles

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

Capital

Imports of foreign capital in the form of foreign currency or industrial, farming, or mining machinery and equipment can be given registration which carries with it the right to repatriate the capital and profits thereon at the official rate plus tax. Such capital in the form of foreign exchange must be surrendered at the Ps$2.50 rate. The same facilities apply to foreign cash credits granted to persons domiciled in Colombia, provided the time for reimbursement of the credits is not less than one year, but the remittance of profits on such credits at the official rate is limited to 8 per cent per year. Transfers of capital abroad require prior approval, which is granted automatically if the capital investment has been properly registered. Transfers of capital are subject to a 3 per cent stamp tax.

Table of Exchange Rates (as at December 31, 1954)(pesos per U.S. dollar)
BuyingSelling
2.384 (21% at Ps$1.95 and 79% at Ps$2.50)

Exports of coffee.7
2.50 (Official Rate)

All other exchange proceeds, except from gold exports.
2.51 (Official Rate)

Official payments, including government imports. All other permitted imports.8 Certain invisibles, e.g., students’ essential expenses up to specified limits.
2.56 (Ps$2.51 plus Reduced Stamp Tax of 2% at Ps$2.50)

Certain foreign banking services and payments of certain organizations.
2.585 (Ps$2.51 plus Stamp Tax of 3% at Ps$2.50)

Most commercial invisibles. Registered capital.
2.66 (Ps$2.51 plus Stamp Tax of 3% and Resident Tax of 3%, both at Ps$2.50)

Other specified invisibles, e.g., travel abroad up to certain limits 7 and additional transfers to make up the cost of aviation courses.
3.40 (Fluctuating Gold Market Rate)

Exports of gold.
3.40 (Fluctuating Gold Market Rate)

All other nontrade payments.
Note: Another effective buying rate based on the official rate of Ps$2.50 plus a free market premium (about Ps 0.99 as at December 31, 1954) arises from the “export voucher” system; this rate applies to minor exports.

Changes during 1954

January 8

The official surrender price for coffee exports was increased from US$86.50 to US$91.00 per bag (70 kilograms).

January 13

The devaluation of the buying rate for exchange proceeds of coffee exports (at the rate of Ps$0.00825 per US$1 each month) was suspended.

February 11

Several food products were removed from the list of prohibited imports.

February 19

The list of prohibited imports was eliminated (Decree No. 513), and the imports on that list, including those that had been permitted under the “export voucher” system, were (with a few exceptions) denominated as Group II. All other commodities were classified as Group I. A stamp tax of 40 per cent was applied to import registrations of Group II imports. This tax could be paid by surrendering “export vouchers.” As a result, the market price for “export vouchers” was virtually pegged at about Ps$1 per US$1. Group II imports were allowed freely, provided they originated in countries with which Colombia maintains a bilateral agreement or an approximately balanced trade. In the case of certain listed items for which a minimum price is established, the tax was applied on the minimum price if the f.o.b. value of the import was lower.

February 20

The official surrender price for coffee exports was increased from US$91 to US$105 per bag.

March 27

The official surrender price for coffee exports was increased from US$105 to US$125 per bag.

March 31

A coffee export tax of 50 per cent was established on the difference between the official surrender price and a base price equivalent to US$105 per bag (70 kilograms).

May 4

A payments agreement with Argentina, signed April 23, became effective. Under this agreement, all payments (except capital transfers) between the two countries were to be made through U.S. dollar accounts in the central bank of each country.

Television sets and parts were transferred from Group II to Group I of merchandise imports.

May 5

The base price over which the 50 per cent coffee export tax was levied was raised from US$105 to US$115 per bag.

June 2

Restrictions on imports of various basic food staples were removed.

July 3

The official surrender price for coffee exports was increased from US$125 to US$128 per bag.

September 27

In accordance with a trade and payments agreement signed with the Federal Republic of Germany on August 27, 1954, all payments between Colombia and Germany must be effected in free U.S. dollars.

October 15

The official surrender price for coffee exports was reduced to US$115 per bag, and the 50 per cent export tax was eliminated.

October 16

A requirement was established that customs manifests, evidencing clearance of imports through the Colombian customs, had to be presented when applying for foreign exchange for imports. Alternatively, a bank guarantee or cash deposit was required to ensure that customs manifests would be delivered in 60 days.

October 22

A number of imports were shifted from Group I to the category subject to the stamp tax (Group II). The stamp tax was increased from 40 per cent to 80 per cent, of which half could be paid with “export vouchers,” at the rate of Ps$1 per US$1 or equivalent. Prohibitions were established on imports of several basic foods also produced locally. The advance deposits for imports were doubled, resulting in a range of 20 to 60 per cent of the import value, depending on the type of product. The official surrender price for coffee exports was reduced to US$110 per bag.

December 6

The Colombia-United Kingdom trade agreement of August 19, 1952 expired. The United Kingdom was removed from the list of countries which may supply Group II imports (see section on Imports and Import Payments, above).

December 14

Lightweight cars (up to 1,240 kilograms) were shifted from Group I to Group II, and thereby became subject to the 80 per cent stamp tax.

Note: Effective February 16, 1955, the following changes were made in the exchange system:

1. The differential exchange rate for coffee export proceeds was abolished, and in future the Ps$2.50 rate was to be applied to 100 per cent of such proceeds (Decree No. 333).

2. Imports were reclassified and made subject to stamp taxes on import registrations as follows (Decree No. 331) :

  • Preferential (raw materials for essential industries), 3 per cent

  • Group I (other raw materials and essential products), 10 per cent

  • Group II (essential durable and semidurable goods), 30 per cent

  • Group III (less essential goods, importable only from certain countries9), 80 per cent

  • Group IV (specified nonessential goods), 100 per cent (of which 60 per cent must be paid in “export vouchers”)

  • Prohibited (luxury goods), no tax

3. Exchange at the official rate would no longer be granted for travel (Decree No. 335).

4. Exchange allocations for students abroad were reduced from US$250 or US$150 to US$150 or US$100 per month, according to the type of study (Decree No. 335).

Costa Rica

Origin and Essential Features

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

Exchange Rate System

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

Administration of Control

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

Prescription of Currency

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

Imports and Import Payments

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

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

Payments for Invisibles

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

Exports and Export Proceeds

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

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

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

Proceeds from Invisibles

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

Capital

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

Table of Exchange Rates (as at December 31, 1954)(colones per U.S. dollar)
BuyingSelling
5.60 (Official Rate)

All exports except those at Ȼ 627 rate. Certain invisibles. Registered capital.
5.67 (Official Rate)

Essential imports. Government payments. Students’ expenses. Registered capital.
6.27 (35% at Ȼ 5.60 and 65% at Free Market Rate)

Certain exports by special authorization from the Central Bank.
6.63 (Free Market Rate)

All other receipts.
6.65 (Free Market Rate)

All other payments.

Changes during 1954

March 7

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

June 26

Exporters of cotton of the current crop and of ornamental plants were permitted to sell 65 per cent of their export proceeds in the free market, the balance being surrenderable at the official rate.

July 30

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

Permission to exporters of medlar gum to sell 65 per cent of their export proceeds in the free market was withdrawn.

August 11

Permission to exporters of lead to sell 65 per cent of their export proceeds in the free market was withdrawn.

The National Production Council was permitted to sell 65 per cent of the proceeds from its exports of cattle (under quotas) in the free market, the balance being surrenderable at the official rate.

August 18

Exporters of sauces and pickles, balsam of Peru, face powders, deodorant powders, cheese, and butter were permitted to sell 65 per cent of their export proceeds in the free market, the balance being surrenderable at the official rate.

September 17

Exporters of wooden shoe heels and of electric stoves were permitted to sell 65 per cent of their export proceeds in the free market, the balance being surrenderable at the official rate.

October 27

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

Denmark

Origin and Essential Features

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

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

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

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

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

Exchange Rate System

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

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

Exchange Control Territory

The Danish monetary area comprises Denmark, Greenland, and the Faroe Islands.

Administration of Control

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

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

Prescription of Currency

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

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

Nonresident Accounts

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

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

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

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

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

Balances on Krone Accounts I, II, or III related to most countries may at any time be transferred abroad in the currency of the nationality of the account holder. Where transfers between these three types of account are allowed, they may usually be made only between accounts of the same designation of nationality. However, transfers between Krone Accounts I of EPU nationality, transfers from Krone Accounts I to Krone Accounts III of different nationality and vice versa, and transfers between Krone Accounts III of different nationality are permitted. Balances on Krone Accounts IV may be transferred abroad within the limits set for capital transfers (see section on Capital, below).

Imports and Import Payments

Most imports from OEEC countries and their associated territories,1 and from Argentina, Brazil, Finland, Israel, Spanish Monetary Area, U.S.S.R., and Yugoslavia, are either free of import license or licenses are issued freely. Licenses are required for most imports from other countries.

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

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

Payments for Invisibles

The authorized exchange dealers are permitted to effect freely most payments for invisibles; only in a few cases is approval from the National Bank or from a special authority required. Transfers of not more than DKr 50 for any noncommercial purpose are permitted freely. Foreign exchange for travel outside the dollar area is allocated freely and an annual exchange allocation of US$100 per adult is given for tourist travel to the dollar area.

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

Exports and Export Proceeds

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

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

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

Proceeds from Invisibles

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

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

Capital

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

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

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

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

Changes during 1954

January 1

The basic exchange allowance for travel to the dollar area was increased from $75 to $100 per adult per year; for travel to other countries, the limit of DKr 2,000 per year was abolished.

January 20

Norway and Norwegian kroner were included in the multilateral arbitrage arrangements among nine West European countries for forward transactions up to three months.

February 25

The powers given to authorized exchange dealers to make freely certain current commercial payments, gifts, and maintenance payments were further expanded, and authorization was granted to permit freely transfers up to DKr 50 for noncommercial purposes.

The authority given to authorized exchange dealers to permit capital transfers was expanded. Income from foreign capital investments in Denmark could be transferred to the country of the owner of the capital or to any EPU country, or credited freely to Krone Accounts IV; previously, individual permission was required.

March 1

Exchange dealers were authorized under certain conditions to permit transfers for freight payments on general cargo shipments to all countries. Prior to this date, such transfers to countries outside the EPU were limited to certain weight or volume figures (see Fifth Annual Report on Exchange Restrictions, page 111).

April 7

Payments for film royalties were allowed freely to all countries; previously, such payments to countries outside the EPU area had been subject to special authorization.

April 12

The National Bank of Denmark discontinued charging certain small fees on exchange dealings, and the spread between the official selling and buying rates was narrowed.

April 21

Travel bureaus, shipping companies, and other firms arranging travel to and from abroad were, under certain conditions, permitted to disburse kroner in Denmark for the account of foreign travel bureaus and transport firms domiciled in countries outside the dollar area, to have such bureaus and firms make disbursements for them in countries outside the dollar area, and to offset such disbursements against one another.

May 20

Danish exporters were entitled to the benefits of the “title to import license” system only when the exports were made to “the dollar area proper,” to U.S. and Canadian military forces, or to the military forces of other countries when payments are made by the U.S. authorities. Previously, this entitlement had applied to all exports of goods paid in U.S. and Canadian dollars, regardless of destination.

July 7

It was announced that import licenses for private motorcars would be issued against the submission of “titles to import license” only if the “titles” cover 100 per cent of the import value; previously, the cover requirement was 75 per cent.

November 29

The authorized exchange dealers were allowed to remit foreign and Danish banknotes (except DKr 500 notes) and coins to correspondents abroad and to receive Danish banknotes (except DKr 500 notes) and coins from correspondents in Norway and Sweden.

Commercial bills of exchange could be freely accepted and sent abroad, provided a valid license to pay the bill at maturity exists.

Ecuador

Origin and Essential Features

Exchange control was established in Ecuador in 1922. In 1947 exchange surcharges went into effect. In 1949 a system of compensation for minor exports, matching them against otherwise prohibited luxury imports, was established; the compensation rate was determined in a separate market. The surcharges were eliminated on December 1, 1950, and a new par value was established. In February 1952, the compensation system was merged with the free market. Ecuador’s present exchange system comprises a multiple exchange rate structure, which arises from the coexistence of an official and a free market. Quantitative restrictions are not relied upon to restrain imports, although some commodities are prohibited.

Exchange Rate System

The par value is Sucres 15.00 = US$1. This rate applies to most exports, essential and semiessential imports, government payments, registered private and official capital, and certain other specified transactions. There is a controlled free market for exchange transactions related to selected minor exports, luxury imports, unregistered capital, and invisibles. Other effective rates result from the “mixing” arrangements for exchange proceeds from exports of chemical products, medicines, bananas, and rice (see Table of Exchange Rates, below).

Administration of Control

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

Prescription of Currency

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

Imports and Import Payments

A prior import license is required for substantially all imports other than those representing foreign loans and those of certain foreign companies; but apart from prohibited imports and a few other minor exceptions, import licenses are issued freely. Import licensing enables specified transactions to obtain the official market rate and ensures that imports are restricted to permissible goods. Imports are divided into two categories—essential and semiessential (List 1), and luxury (List 2)—and goods not included in these two classes are prohibited. Nevertheless, the Central Bank may authorize the importation of goods not included in the two categories.

The granting of an import license, issued by the Exchange Department of the Central Bank, carries with it the right to the required foreign exchange. Legally, the Bank must act on the application within three days, stating any advance deposits which must be paid before the license is issued. For imports of essential and semiessential goods, the Central Bank has the power to impose a requirement for prior deposits of local currency in certain circumstances: 50 per cent of the c.i.f. value of imports of essential and semiessential goods paid for in advance; 15 per cent of the c.i.f. value of imports of semiessential goods involving sight or time payments. For imports of luxury goods, foreign exchange to cover the import value and local currency to cover 40 per cent of the customs duties must be deposited with the Central Bank prior to the issuance of the import license. The Bank issues the import license as soon as the importer has made any advance deposit required and has paid the consular fee applicable to the import.

Payments for Invisibles

Most payments for invisibles are made through the free market and are not subject to control by the exchange control authorities. Certain invisibles may be paid for at the official rate but require an exchange license from the Central Bank, which grants such licenses for the following items: contractual interest payments, amortization of loans, and other obligations abroad which are registered at the Central Bank; payments of dividends, profits, interest, and amortization on registered foreign investments, up to at least 12 per cent annually; indispensable payments and remittances of the Government and official entities; and foreign exchange required by persons taking specialized courses abroad, provided that such persons register with the Central Bank and that the amounts do not exceed passenger fares, expenses of travel, tuition, and a maximum of US$100 per month for living expenses.

Exports and Export Proceeds

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

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

Proceeds from Invisibles

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

Capital

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

Transfers of a capital nature by residents into and out of Ecuador may be made freely through the controlled free market.

Table of Exchange Rates (as at December 31, 1954)(sucres per U.S. dollar)
BuyingSelling
15.00

Most exports (f.o.b. value). Requirements of foreign companies for actual operating costs. Registered capital. Foreign official loans. Government receipts.
15.15

Essential and semiessential imports (c.i.f. value). Government payments. Interest, dividends, and amortization on registered private and official foreign capital. Approved expenses of students. Press services.
15.92 (60% at S/ 15 and 40% at Controlled Free Market Rate)

Exports of chemical products and medicines.
17.30 (Controlled Free Market Rate)

Invisibles. Unregistered capital. Certain minor exports.
17.40 (Controlled Free Market Rate)

Luxury imports. Unregistered capital. Most invisibles.
Note: Other effective buying rates may be created by special surrender requirements for rice and banana exports. Banana export proceeds must be surrendered at the official rate to the extent of $1.50 per stem between October 1 and May 31, and $1.20 per stem between June 1 and September 30, of each year; for bananas exported from Esmeraldas province, the surrender requirement is $1.00 per stem throughout the year. Export proceeds of certain rice surpluses may be sold in the free market to the extent of $6.00 per quintal, but if higher prices are obtained, the excess over $6.00 must be surrendered at the official rate.

Changes during 1954

January 1

The taxes of 33 and 44 per cent applied to semiessential imports (List B) and luxury imports (List C), respectively, were eliminated through absorption into a new customs tariff structure. List A (essential imports) and List B were grouped together and named List 1, and List ₡ was renamed List 2. To replace the advance payment of the former taxes of 33 and 44 per cent, a requirement was established that 50 per cent of the estimated amounts of the duties on imports formerly in List B, and 70 per cent of those on imports in List 2, be deposited with the Central Bank as a prerequisite to the issuance of the corresponding import permits.

April 14

Cement imports were shifted from List 1 to List 2.

April 23

The free market rate would be applied to proceeds from exports of the 1953 rice crop surplus (about 400,000 quintals) if the dollar price did not exceed US$6 per quintal f.o.b.; if the dollar price was between $6 and $7, the excess over $6 must be surrendered at the official rate; if the price exceeded $7, all proceeds must be surrendered at the official rate.

The advance deposits of import duties (see January 1, above) were to be reduced by an absolute amount of 10 per cent a month, beginning May 1, 1954, until they would be eliminated in September and November 1954, respectively.

May 1

Export proceeds of bananas from Esmeraldas province were required to be surrendered at the official rate only to the extent of $1 per stem, the remainder being negotiable in the free market.

June 2

The exchange surrender provisions affecting proceeds from exports of surplus rice were modified: proceeds up to $6 per quintal could be sold in the free market, and any amounts in excess of that price were to be surrendered at the official rate.

July 16

Imports of whiskeys and liqueurs effected by the state monopolies were suspended for a period of three to four months.

September 24

Cement imports were reclassified under List 1, and an advance deposit requirement of 20 per cent of the import value was established for all cement imports, except when made by official agencies.

November 12

The advance payment to the Central Bank of an 8½ per cent consular fee for visas of import invoices was established as a prerequisite to the granting of import licenses; however, the consular fee is reduced to 6 per cent for shipments in the vessels of the Gran Colombiana Merchant Fleet or in national ships.

Egypt

Origin and Essential Features

A system of exchange control was initially introduced in Egypt on September 28, 1939. Restrictions were placed on nonessential imports in 1952, and individual licensing was applied to all imports as from October 7, 1952. In October 1949, a system of Export Accounts was introduced, by which payments in Egyptian pounds for imports from certain countries were allowed. The use of this mechanism was extended in subsequent years, but in the latter part of 1954 it was decided to liquidate the Export Account arrangements.

Basically, a unitary exchange rate system operates in Egypt. However, a tax of 10 per cent on certain transfers abroad on account of specified invisibles, and the Import Entitlement Account arrangements (see section on Exports and Export Proceeds, below), give rise to multiple exchange rates.

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

Export proceeds, as well as other exchange proceeds, are subject to surrender. All capital transactions between residents and nonresidents are subject to individual license.

Exchange Rate System

The par value is Egyptian Pound 1 = US$2.87156. Commercial banks’ rates as at December 31, 1954 were $2.8805 buying, $2.8619 selling, per LE 1. A tax of 10 per cent is charged in most cases on exchange allocated for travel, maintenance remittances if the beneficiary is either an Egyptian national or a foreigner holding an Egyptian residence visa, and revenue remitted to Egyptian nationals residing permanently abroad.

The negotiation of rights on Import Entitlement Accounts (see section on Exports and Export Proceeds, below) also gives rise to multiple exchange rates. These rates as at December 31, 1954 represented a discount on the official rates ranging between 6 and 10 per cent.

Administration of Control

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

Prescription of Currency

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

Nonresident Accounts

The main categories of nonresident accounts are described below.

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

2. Export Accounts. These accounts are in the names of nonresidents and are without geographic distinction. They may be credited with (a) payments for specified goods imported into Egypt under import permits stipulating settlements in Egyptian pounds through an Export Account;1 (b) transfers from other Export Accounts; (c) amounts specifically approved by the Central Exchange Control (e.g., balances on Provisionally Blocked Accounts); and (d) payments for international trade transactions financed in Egypt for which the prior approval of the Central Exchange Control has been obtained. Balances on these accounts may be utilized for (a) payments to residents of Egypt in settlement of the value of goods exported from Egypt to soft currency countries that have not concluded payments agreements with Egypt2 (provided permission has been given to accept payment from an Export Account); (b) payments to residents of Egypt for services, on a limited scale only; (c) transfers to other Export Accounts; and (d) payments to residents for international trade transactions financed in Egypt and for which the prior approval of the Central Exchange Control has been obtained.

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

4. Blocked Accounts. These accounts are credited with any payment to a nonresident not remittable under the exchange control regulations and not creditable to Provisionally Blocked Accounts (see 5, below). These accounts may be debited freely (a) with amounts up to LE 1,000 per year for living expenses of the account holder in Egypt; (b) for investments in Egyptian Government loans and in inscribed or registered shares in nominative form of companies established in Egypt (not redeemable on a date earlier than ten years); and (c) for subscriptions to increases of capital in Egyptian companies in which the account holder is already a shareholder. Income derived from such investments may be credited to an appropriate Ordinary (“Free”) Nonresident Account. Transfers from one Blocked Account to another Blocked Account of the same country or monetary area may be made without prior reference to the Central Exchange Control.

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

Imports and Import Payments

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

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

Payments for Invisibles

Banks are authorized to effect certain invisible transactions without prior exchange control approval; other invisibles require prior approval of the Central Exchange Control. Exchange is generally made available for expenses associated with approved trade transactions and other current payments. Expenses for travel, family maintenance, film royalties, and subscriptions and fees of professional organizations usually are approved within specified quotas. There is a basic exchange allowance for travel of LE 75 per adult per year, with additional amounts for elderly persons. In order to obtain exchange for travel, Import Entitlement balances (see section on Exports and Export Proceeds, below) must be surrendered. Remittances for travel and maintenance on behalf of Egyptian residents, either nationals or foreigners, are subject to a 10 per cent tax. Exemptions from this tax are granted on remittances of diplomats, students, certain officials, and others. Persons leaving Egypt may take with them Egyptian banknotes in amounts not exceeding LE 20. Foreign banknotes up to the equivalent of LE 20, purchased with the approval of the Central Exchange Control, and foreign banknotes brought in and declared by transit travelers or tourists, may be taken out by the travelers concerned.

Exports and Export Proceeds

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

Exporters who sell to an authorized bank export proceeds in U.S. dollars, Canadian dollars, or pounds sterling, or in Egyptian pounds through the payments arrangements with the Federal Republic of Germany, are credited on Import Entitlement Accounts for 100 per cent of the value of their earnings from exports of cotton yarn, cloth, vegetables, fruits, flowers, and rice from the 1954 crop, and for 75 per cent of the proceeds of other goods. For the proceeds of other goods exported to the Federal Republic of Germany, the percentage is approximately 66 per cent. The balances on these accounts are transferable and entitle the holder to purchase appropriate exchange for the import of certain goods (these are the same as those importable under the Export Account system)3 and for travel expenses. Import Entitlement Account balances are canceled automatically if not utilized by the end of the sixth month following that in which the original sale of exchange was made.

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

Proceeds from Invisibles

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

Capital

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

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

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

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

The Foreign Investment Law of April 2, 1953 and subsequent amendments provide for preferential treatment of new foreign investments that contribute to the development of the Egyptian economy in the fields of industry, agriculture, metallurgy, mechanization, transport, and tourism. Earnings accruing from such investments may be transferred abroad in the original currency of the investment without limitation at the exchange rate prevailing at the time of repatriation, or reinvested in Egypt to increase the original capital, or invested in Egypt in a different undertaking. Both the reinvested profits and those invested in a different undertaking receive the same treatment as the original foreign capital, the approval of an ad hoc committee being required in the latter case. After five years, the capital may be transferred abroad in yearly installments not exceeding 20 per cent of the value of the original capital. Repatriation of foreign capital may be authorized at any time after one year from the date it came in, if practical difficulties, recognized by a Special Committee, have prevented its investment. In addition, earnings and capital may be repatriated abroad, subject to license, through the exportation of goods.

Changes during 1954

During 1954, Egypt concluded trade and payments agreements with Rumania, Portugal, and Ceylon. Certain modifications were made in the payments agreements with Belgium-Luxembourg, the Federal Republic of Germany, Japan, Spain, Switzerland, Turkey, and the U.S.S.R.

February 1

It was decided to authorize payments for half the exported quantities of rice (within a quota of 75,000 tons) in sterling or in deutsche marks through the German agreement account, and the other half in U.S. dollars or Swiss francs. Previously all rice exports had to be paid for in dollars.

February 8

It was announced that imports of essential items required by local industry would be permitted regardless of whether or not the items in question were included in the list of essentials given in the so-called “Export Pound List.”

February 25

Many items, including some raw materials, semimanufactures, and finished products, were added to the list of commodities which could be imported through the “export pound” or the Import Entitlement Account systems.

March 10

The Ministry of Finance decided to issue permits for imports, at the official rate, of a specified list of machinery and other industrial equipment, to be paid for outside the Import Entitlement Account procedure in sterling and imported from Belgium-Luxembourg, the Federal Republic of Germany, Netherlands, Norway, Sweden, or the Sterling Area.

March 19

A trade and payments agreement was concluded with Rumania, according to which payments would be effected in Egyptian pounds. Current payments eligible for transfer under this agreement were defined.

March 23

Settlement of the value of exports in “export pounds” had now to be made either “in advance” or on the basis of “cash against documents.”

The Central Exchange Control was prepared to consider applications to export cotton to payments agreement countries against payment in “export pounds.” Such applications would be examined on an administrative basis, each case on its own merits.

Dollar and Sterling Area countries were added to the list of countries to which exports would not be authorized against payment from Export Accounts. Previously, three fourths of the value of exports to these countries were allowed to be settled in “export pounds.”

March 25

New regulations governing payments financed in Egypt by transit traders were issued.

May 12

The basic allowance granted to residents of Egypt traveling abroad was reduced from LE 100 to LE 75 per calendar year, with additional sums for elderly people. The release of an amount in excess of the basic allowance could be authorized by the Central Exchange Control for applicants undergoing medical treatment abroad or traveling on genuine business.

June 28

The payments arrangements with Belgium-Luxembourg were modified. Certain industrial goods imported into Egypt became payable in Belgian francs subject to a permit specifying this arrangement. Government imports could be paid in full in Egyptian pounds. Thirty per cent of the value of Egyptian exports of Karnak cotton were made payable in Belgian francs.

July 10

As an exception to the Import Entitlement Account regulations and in order to encourage investment of foreign capital, all products could be imported from the dollar area and the Sterling Area if the proceeds of their sale were subsequently invested in Egypt. The value of such imports should not exceed 65 per cent of the total foreign capital intended to be invested. The remaining 35 per cent should be received in dollars or in sterling at par.

July 14

Amendments to the Import Entitlement Account regulations made it possible for the Import Permit Office to consider applications to import any product from the Sterling Area or countries accepting payment in sterling (with the exception of payments agreement countries). Previously, only the so-called “export account goods” could be imported against payment through Import Entitlement Accounts.

Amendments were made to the payments agreement with Spain. Certain items were added to the schedule of current payments eligible for transfer under the agreement.

Payments with the Portuguese Monetary Area were regulated according to a new payments agreement with Portugal. Payments to and from Portugal were to be effected through an Egyptian account opened by the National Bank of Egypt with the Bank of Portugal.

July 19

The financing of transit trade was made possible without prior reference to the Central Exchange Control. Such transactions were to be effected in the same currency throughout. Settlements could be made in U.S. dollars or sterling, or in Egyptian pounds through an Export Account. One hundred per cent entitlement was permitted only when payment was made against entitlement.

July 21

The proceeds of securities purchased with funds from a Blocked Account, and drawn or redeemed in accordance with the original terms of issue, could be remitted abroad, subject to prior reference to the Central Exchange Control.

September 2

The law covering the investment of foreign capital in specified fields was amended. Limitations on the transfer of profits abroad were removed, and the repatriation of capital after one year from the date of entry was made possible in those cases where practical difficulties, recognized by a Special Committee, prevented its investment.

November 11

Import Entitlements for export proceeds repatriated in U.S. dollars, Canadian dollars, or sterling, or in Egyptian pounds through the German agreement account, would now be granted not only for exports of cotton yarn and cloth, but also for exports of vegetables, fruits, flowers, rice, and certain other products.

Special conditions applying to exports to Syria and Lebanon were canceled. Previously, payment in full in advance or by means of a confirmed bankers’ documentary credit had to be effected or a confirmation from a bank had to be produced before exports to these two countries could be approved.

December

A 100 per cent Import Entitlement on funds repatriated into Egypt in U.S. dollars, Canadian dollars, or sterling, or in Egyptian pounds through the German agreement account, was now granted to residents of Egypt importing citrus products in their own names from Gaza into Egypt for re-export abroad through an Egyptian port.

December 1

Revised instructions relating to payments in U.S. dollars, Canadian dollars, or Swiss francs, or in Egyptian pounds through the Swiss account or the German agreement account, were issued. It was decided that prior approval by the Central Exchange Control would no longer be required for payments for certain invisibles incidental to imports and other specified items.

Payments in U.S. or Canadian dollars for the import of books and periodicals for private use by individuals and firms could be effected without prior reference to the Central Exchange Control. Payments for such imports by book sellers continued to require the approval of the Central Exchange Control.

Banks were allowed to issue in favor of residents, without prior reference to the Central Exchange Control, letters of guarantee on behalf of their foreign correspondents in respect of tenders submitted by nonresidents under certain conditions.

December 6

The transfer of capital on behalf of applicants definitely leaving Egypt to take up permanent residence abroad was made subject to the presentation of a certificate from the Taxes Administration to the effect that it has no objection to the transfer of the capital concerned.

Ethiopia

Origin and Essential Features

Exchange control was established in Ethiopia on October 31, 1942. A significant revision occurred on September 11, 1949, when the controls were broadened and various restrictions were introduced. In January 1954, however, imports were completely liberalized. The exchange system is characterized by exchange licensing for all payments, surrender of all foreign exchange receipts, and prescription of currencies for exchange payments and receipts. Payments for invisibles and capital transactions are restricted.

Exchange Rate System

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

Administration of Control

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

Prescription of Currency

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

Imports and Import Payments

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

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

Payments for Invisibles

Payments for invisibles require exchange licenses, and for invisibles connected with trade transactions these are allowed on the same basis as licenses for the goods to which they relate. Persons traveling abroad are granted foreign exchange in the currency of the country of destination on a case-to-case basis; they may take with them a maximum of Eth$150 in Ethiopian banknotes. Exchange for education is granted within the reasonable limits of each case. Exchange for such purposes as charity and maintenance is granted in moderate amounts to residents not permanently domiciled in Ethiopia for remittances to their own country; remittances by nongovernmental foreign employees for family maintenance are usually limited to Eth$245 per month, but higher amounts may be sent by foreign employees in Ethiopia under special contracts. The transfer of “reasonable” amounts of dividends and similar current earnings due to nonresidents is permitted in the currency of the original investment.

Exports and Export Proceeds

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

In due time, exporters must surrender at the official rate the promised amount of foreign exchange. At least 50 per cent of an exporter’s total annual proceeds from exports of coffee must be obtained in U.S. dollars, while the remainder may be obtained in sterling.

Proceeds from Invisibles

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

Capital

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

Changes during 1954

January

Exchange licenses were granted freely for all imports in currencies appropriate to the country of origin of the goods or in a softer currency.

May

Basic remittances of exchange, authorized at the discretion of the Exchange Controller in accordance with the financial circumstances of the applicant, were increased for family maintenance by non-governmental foreign employees working in Ethiopia, from the previous maximum of UK£15 (or equivalent) per month to UK.£35 (or equivalent) per month; for travel, the amount allocated would not be less than UK£100 per year.

Finland

Origin and Essential Features

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

Exchange Rate System

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

Administration of Control

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

Prescription of Currency

The comprehensive licensing of exports and imports ensures that the methods of payment conform to the provisions of existing payments agreements and thus serves to protect Finnish exchange reserves.1 Sterling is a key currency in Finnish trade with western countries, and Finland uses the facilities of the Transferable Account arrangements (see United Kingdom, section on Nonresident Accounts).

Nonresident Accounts

A system of four types of nonresident account is operated under the control of the Bank of Finland. (1) Exchange markka accounts are, for exchange control purposes, equivalent to foreign exchange and may be freely transferred abroad to the country and in the currency of the account holder. (2) Inland markka accounts may be held only by foreign banks with the Bank of Finland or with authorized banks. These accounts, which are not transferable abroad, are credited with those current payments whose transfer abroad is not allowed. The debiting of these accounts cannot substitute for payment in foreign exchange from abroad. Balances on inland markka accounts may, without prior permission of the Bank of Finland, be utilized for the purchase of securities dealt in on the Finnish Stock Exchange. Certain other expenditures in Finland, including investments other than in securities, may, upon specific authorization which is liberally granted, be defrayed from inland accounts, and transfers are allowed between nonresidents, irrespective of country or monetary area. (3) The term “blocked” is applied to all markka assets of nonresidents other than those on nonresident account described under (1), (2), and (4). Blocked accounts are credited mainly with noncurrent payments. They are not transferable abroad, nor can they, without the consent of the Bank of Finland, be transferred between nonresidents. Certain expenditures in Finland may, however, be defrayed from blocked accounts, in particular, living and traveling expenses in Finland up to Fmk 100,000 per month per account holder or closely related person. (4) Travel markka accounts cannot be transferred abroad. They arise out of transfers from the country of the account holder of foreign exchange converted into Finnish markkas at the preferential tourist rates of exchange, and can be used only for the sale abroad of Finnish exchange to travelers going to Finland and for certain other settlements related to tourism.

Imports and Import Payments

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

Payments for Invisibles

Payments not connected with imports are subject to the approval of the Bank of Finland in each case, and all contracts involving payments to nonresidents must be submitted to the Bank for approval. Royalties, income on domestic securities, and other income from capital owned by nonresidents must be credited to blocked accounts 2 (see section on Nonresident Accounts, above). However, if the Bank of Finland has approved a contract providing for transfers abroad, exchange is granted automatically for such payments. For certain purposes, e.g., education and scholarships, the Bank of Finland may sell foreign exchange at the official rate.

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

Exports and Export Proceeds

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

On application, subsidies of up to 20 per cent of export proceeds are granted by the licensing authorities on a case-by-case basis to exporters of certain products. These subsidies are paid by the agency Ulkomaankaupan Clearingkunta, upon evidence that the related export proceeds have been surrendered, out of funds derived from fees charged on certain imports (see section on Imports and Import Payments, above).

Proceeds from Invisibles

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

Capital

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

Residents must declare their holdings of foreign securities. The importation and exportation of securities and any transactions in securities involving nonresidents require approval.

Changes during 1954

January 1

The fee on certain imports made under the Clearingkunta system was fixed at 20 per cent of the import value, irrespective of the origin of the imports. Prior to this change such imports, if payable in dollars, were subject to a fee of 30 per cent.

April 1

Authorized banks were given additional powers to approve import payments without prior reference to the Bank of Finland.

April 23

The list of “regular passenger routes,” travel tickets for which may be paid by Finnish residents at the official rate instead of the higher travel exchange rate, was enlarged.

May 28

Travel bureaus and similar agencies were permitted, under special license and under the supervision of authorized banks, to purchase foreign exchange from travelers.

July 20

The system of nonresident inland markka accounts and blocked accounts was simplified. Nonresident inland markka accounts could henceforth be held only by foreign banks with the Bank of Finland or the authorized banks. The Bank of Finland announced its policy with regard to payments which would normally be authorized for credit or debit to inland markka accounts. The designation “blocked accounts” would henceforth be applied to all markka claims and assets of nonresidents not designated as exchange markka, inland markka, or travel markka accounts. Blocked accounts could be held with authorized commercial banks, savings banks, and cooperative credit societies. Inland markka accounts held prior to the change by persons other than authorized banks were transformed into blocked markka accounts. At the option of the account holders, however, existing balances could be transferred to new inland markka accounts.

October 1

The clearing agreement with the Federal Republic of Germany, which provided for a swing credit of $20 million, was replaced by a decentralized payments agreement, under which all payments are made in deutsche marks with limited convertibility. The new agreement does not make any provision for swing facilities.

France

Origin and Essential Features

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

Almost all imports are subject to individual license. Licenses are granted automatically for a wide range of imports, especially when imported from OEEC countries and associated territories,1 whereas they are granted less liberally for “hard” currency imports. Payments for authorized imports are allowed automatically, subject to the presentation of supporting documents and provided the method of payment is in accordance with the regulations. Invisibles related to trade transactions are allowed freely where the basic trade transaction has been approved. Other invisible payments are either permitted freely or subjected to varying degrees of restriction according to the category of the invisible.

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

Exchange Rate System

Since January 1948, France has not maintained an official par value in terms of the Fund’s Articles of Agreement. In practice, however, exchange rates in France are stable and of an essentially unitary character, with orderly cross rates. The rate for the U.S. dollar has remained at, or very close to, F 350 since September 1949.

Exchange rates for the Canadian dollar, the Djibouti franc, and the U.S. dollar are formed through the interplay of authorized demand and supply and the intervention of the exchange authorities in the market. U.S. and Canadian dollars may, when needed for authorized payments, be acquired by the authorized banks through arbitrage transactions between the two currencies. Exchange rates for 15 other currencies fluctuate according to authorized demand and supply, between limits approximately ¾ of 1 per cent on either side of the parities based on F 350 per US$1. In respect of 8 of these currencies,2 authorized banks are free to conclude spot exchange arbitrage transactions with authorized banks in any of the countries concerned at or within the official limits, or forward exchange transactions for periods not exceeding three months, at rates determined by the interplay of demand and supply based on authorized transactions. These arbitrage arrangements are not in operation for the other 7 currencies.3

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

Rates representing a slight deviation from the officially published rates derive from the sale of “capital” francs by nonresident owners to other nonresidents of the same monetary area for investment or for tourist expenses in France. The “capital” account rate as at December 31, 1954 was approximately F 353 per US$1.

Exchange Control Territory

The French Franc Area comprises Continental France (including Corsica), the Principality of Monaco, the Territory of the Saar, the French Overseas Departments (Algeria, Guadeloupe, Martinique, Guiana, and Reunion), the Protectorates of Morocco and Tunisia, the French Overseas Territories (French West Africa, French Equatorial Africa, the Trust Territories of Cameroon and Togo, Madagascar and its dependencies, Comoro Islands, St. Pierre and Miquelon, New Caledonia and dependencies, the French Establishments in Oceania, and the Condominium of New Hebrides), and Cambodia, Laos, and Vietnam. Most payments agreements 4 relate to settlements between the French Franc Area as a whole and the other country concerned. Restrictions between the various territories of the French Franc Area either are not applied or are applied only to minor parts of the Area, although such territories are formally independent exchange control units, each with its own local exchange control. The foreign exchange reserves of the French Franc Area are managed centrally; and the exchange rates of the local currencies of these territories are fixed in relation to the French franc.

Administration of Control

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

Prescription of Currency

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

Nonresident Accounts

The main types of nonresident account in French francs are described below.

1. Free franc accounts. These accounts may be credited with the franc proceeds from sales of currencies considered as convertible, namely, Canadian dollars, Djibouti francs, and U.S. dollars; with transfers from other free franc accounts; and with payments authorized for credit to such accounts. Balances on free franc accounts are freely convertible into convertible currencies. They may be debited for all payments in the French Franc Area or for transfers to other free franc accounts. Free franc accounts may be opened for residents of the dollar area5 and the French Somali Coast.

2. Nonresident accounts (related to non-dollar countries). These accounts are designated geographically according to the country or monetary area in which the account holder resides. They are convertible into the currency of the country of residence of the account holder if that currency is dealt in on the Paris exchange market.6 They may be freely credited with the franc proceeds of the sale of convertible currencies on the free market, and with transfers from free franc accounts. Appropriate nonresident accounts may be credited with the proceeds of the sale of the currency related to the same country as the account holder. Transfers between accounts related to the same country or monetary area and between all accounts related to EPU countries are permitted freely. These accounts are available for payments in the French Franc Area due from a resident of the country of the account holder, including payments on account of imports from that country.

3. Tourist accounts. These accounts, which may only be in the names of individuals, are designated geographically according to the country of residence of the account holder. They may be credited freely with (a) French banknotes deposited by the owner in person; (b) funds from a free franc account or from any other nonresident account in francs, the holder of which is of the same nationality as the tourist’s country of residence (except in the case of Lebanon, Syria, and Tangier); (c) francs obtained by conversion of travelers’ negotiable instruments at the official rate; and (d) foreign banknotes corresponding to the tourist’s country of residence. Balances in tourist accounts are not transferable. Withdrawals may be made only by the owner in person at the bank of account, either in French franc notes or in French franc letters of credit or traveler’s checks payable in the French Franc Area (except New Hebrides and Cambodia, Laos, and Vietnam).

4. Capital accounts. These accounts are also designated geographically according to the country of residence of the account holder. They are credited with the proceeds of capital transactions not available for direct remittance to the account holder. Transfers between capital accounts of the same nationality, between those related to dollar area countries, and between those related to EPU countries and their monetary areas, are permitted freely. Balances on these accounts may be utilized freely for such purposes as purchasing investments quoted on stock exchanges in France and French short-term securities, and for the personal tourist expenses in France of the account holder, his family, or persons resident in the same country or monetary area as that of the account holder. Use of balances for the latter purpose is, however, limited to F 10,000 per person per day, with a maximum of F 500,000 for a month’s stay of a family in France.

Imports and Import Payments

Most imports are subject to individual license. However, licenses are granted freely for the following: (1) specified, liberalized imports from OEEC countries and associated territories;7 (2) goods liberalized within specified quotas (this group is of limited significance); (3) goods that are reimported, subject to various limitations, and a list of goods that includes such items as commercial samples, items brought in for or by diplomats, and a few other goods; (4) goods imported under the EFAC arrangements (see section on Exports and Export Proceeds, below); and (5) specified equipment goods, raw materials, and semifinished products for export-producing industries. Group (5) includes only imports under the so-called “equipment and raw material procedure,” under which producers of specified export products or groups of products may obtain from the Exchange Office, through the intermediary of their professional organizations, licenses for importing equipment and raw materials needed for production. The allocation of “import rights” under this scheme is limited to 5 per cent 8 of the respective export values.

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

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

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

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

Payments for Invisibles

Control over payments in respect of many categories of invisibles is supervisory, to ensure that other aspects of the control are not being circumvented. Payments for invisibles relating to trade are permitted freely when the basic trade transaction has been approved. Income accruing to nonresidents in the form of profits, dividends, and royalties is remittable, subject to supervision. Quantitative restrictions are applied to the allocation of exchange for travel; however, special facilities exist for business travel, particularly for exporters who have been allowed to retain a percentage of their export proceeds (see section on Exports and Export Proceeds, below). Foreign exchange is granted freely on an individual basis in reasonable amounts for travel abroad for education and health, and up to F 25,000 per beneficiary per month for family maintenance abroad. Appropriate foreign exchange is granted for banking commissions, patents and royalties, and specified categories of taxes. Transfers to nonresidents of current earnings from film rentals and royalties are approved on a liberal basis; however, amounts due to U.S. film companies may be partly transferred to the United States and partly credited to special accounts, called comptes cinéma and governed by special regulations. Transfers on account of membership fees, subscriptions, donations, and movements of emigrants’ funds are permitted up to specified limits. Foreign exchange is not granted to exporters and importers for insurance abroad of risks concerning persons, property, or liability in France, which may only be insured in France with French insurance companies or foreign companies authorized to conduct insurance business in France.

Travelers, as well as residents and nonresidents living near French frontiers, may take with them out of France banknotes or coins (except gold coins) in metropolitan francs, CFA francs, or CFP francs up to the value of F 20,000.

Exports and Export Proceeds

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

  • 1. Fifteen per cent of proceeds from exports

    • a. To Mexico, payable in Mexican pesos or their equivalent in francs from appropriate nonresident accounts; to Peru, payable only in francs from a Peruvian account; and to Cuba, in accordance with the Franco-Cuban agreements of September 5, 1952 and May 10, 1954;

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

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

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

These retained percentages of export proceeds are kept in special EFAC accounts,9 which are separate for each foreign currency or, for export proceeds received in francs, separate according to the designation of the nonresident franc account debited for the payment.

The proceeds that are retained must be used by the original exporter or supplier of the goods either for meeting incidental expenses or for certain imports, which are limited to raw materials, capital goods, and merchandise used directly by the importing firm. The Exchange Office may, on an individual basis, permit exporters to retain a percentage of export proceeds higher than indicated above; such permits are granted particularly for exports that require considerable publicity expenses abroad. Authorized banks with which EFAC accounts are held have at the end of quarterly periods to surrender 10 per cent of unutilized balances, except for certain minimum balances.

Proceeds from Invisibles

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

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

Capital

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

New investments in France or the French Franc Area by nonresidents can be given an unconditional guarantee of repatriation.

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

Other investments by nonresidents, namely, those made before September 1, 1949 or since then without being entitled to the facility mentioned above, do not (except for contractual amortization) benefit from this repatriation guarantee, and the proceeds accruing from the liquidation of such investments are credited to capital accounts (see section on Nonresident Accounts, above).

Banknotes

Banknotes in Belgian francs, Canadian dollars, Djibouti francs, Portuguese escudos, Swiss francs, or U.S. dollars may be purchased by the authorized banks, without any limitation on the amount, at the rates of the market prior to the day of transaction. Banknotes in Italian lire may be purchased by authorized banks on the basis of the market rate. In both these cases, authorized banks holding an amount of banknotes higher than that needed for their transactions may sell them to other authorized banks or to the Bank of France. Other foreign banknotes may be purchased by authorized banks from their customers at any rate and sold to other authorized banks.

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

Changes during 1954

January 20

In addition to spot transactions already permitted, forward transactions for up to three months’ delivery were allowed to be concluded with Norwegian banks and in Norwegian kroner within the multilateral foreign exchange arbitrage system in operation among nine West European countries.

February 1

Balances on nonresident capital accounts could be used to acquire new issues of short-term securities in francs issued by private institutions in the French Franc Area.

February 18

Authorized banks were permitted to sell to nonresident travelers staying temporarily in France (and to residents with foreign nationality) certain foreign travel exchange against exchange brought with them upon entering France or obtained from a nonresident franc account.

March 13

Sterling securities owned by French residents and quoted on exchanges in the Sterling Area could be negotiated in security arbitrage operations, provided both the sold and acquired securities were issued by institutions residing in the Sterling Area.

April 21

It was announced that import licenses for further commodities would be granted without quantitative restriction when imported from OEEC countries and dependent territories, raising the liberalization from 18 per cent to 51 per cent of metropolitan France’s 1948 private imports. Simultaneously, a transitional compensatory tax on imports of 10 or 15 per cent of the import value was introduced. The tax was assessed on a range of commodities newly freed from quantitative restriction.

April 28

Additional commodities were added to the OEEC liberalization list, raising the liberalization from 51 per cent to 52 per cent. Some of these commodities were, at the same time, subjected to the compensatory tax on imports.

June 20

Certain minimum balances on EFAC accounts (see section on Exports and Export Proceeds, above) were exempted from the quarterly 10 per cent surrender obligation applicable to unutilized EFAC balances.

June 29

The Austrian schilling was quoted on the Paris exchange market.

June 30

Authorized banks were granted power to carry out freely, under certain conditions, transfers of maintenance payments to close relatives abroad up to F 25,000 per month per beneficiary.

July 11

Geographically classified nonresident franc accounts held by residents of countries in the dollar area were transformed into free franc accounts. In addition, nonresident franc accounts held by residents of EPU countries were allowed to be transferred freely among residents of the EPU area. Capital accounts related to dollar area countries and those related to EPU countries, including their monetary areas, could also be freely transferred within each group.

July 12

The amount in French franc notes and coins that could be taken out of France by travelers was raised from F 10,000 to F 20,000.

July 21

Power was given to authorized banks to grant freely justified transfers for medical and health expenses abroad of French residents.

July 30

Additional commodities were inserted in the OEEC free list, raising the liberalization from 52 per cent to 57 per cent. Most of these goods also were added to the list of commodities subject to the compensatory tax on imports.

October 20

Additional commodities were inserted in the OEEC free list, raising the liberalization from 57 per cent to 62.5 per cent. Most of these goods also were added to the list of commodities subject to the compensatory tax on imports.

November 6

The OEEC liberalization was raised from 62.5 per cent to 65 per cent. Most of these newly liberalized commodities were subject to the compensatory tax on imports.

November 16

Nonresidents were allowed to carry out forward transactions in unroasted coffee on the Le Havre Commodity Exchange. For this purpose specific “forward coffee accounts” could be opened with authorized banks with permission from the Exchange Office.

November 29

Authorized banks were empowered to grant freely justified transfers for certain education (school and university) expenses abroad.

December 29

Authorized banks were given power to use freely, under certain conditions, liquid holdings in foreign exchange which were not under surrender obligation (mainly foreign exchange proceeds from sales of foreign securities) in order to carry out arbitrage transactions in foreign securities for their own account, for the account of their customers, and with other authorized banks.

Germany, Federal Republic

Origin and Essential Features

Exchange control was introduced in Germany on July 15, 1931. After World War II, foreign exchange was controlled by the Allied Military Governments. These powers were transferred in full to the Federal Republic in September 1953.

The control system applicable to imports is operated through import declarations for imports free from quantitative restriction and individual licenses for all other imports. Imports from EPU countries have been largely liberalized; imports from the dollar area have not been liberalized to the same extent. Restrictions on payments for invisible transactions have been largely eliminated. The regulations governing nonresident accounts (and the methods of payment with countries abroad) were coordinated and simplified in 1954. Specified nonresidents’ assets, investments, and balances subject to the Liberalized Capital Accounts arrangements (see section on Nonresident Accounts, below) may be transferred directly to all non-dollar countries. Transfers abroad of German external debts under the London Debt Agreement are authorized according to the terms of that agreement. Other transactions involving nonresidents or the transfer of capital are subject to individual license.

Exchange Rate System

The par value is Deutsche Marks 4.20 = US$1. Official market rates are maintained within the limits of 1 per cent on either side of the par value. Basically, exchange transactions are effected at uniform rates based on the par value. However, under a payments agreement with Brazil, special arrangements provide for a free market in Germany1 for “Brazilian account dollars,” in which the cruzeiro, in practice, is at a discount in relation to the deutsche mark. All proceeds of exports to Brazil are sold in this free market, while 80 per cent of foreign exchange payments for imports (in the case of coffee, 50 per cent2) from, and related invisible transactions with, Brazil are made through this market.

Authorized banks may carry out spot exchange transactions (1) in Belgian francs, Danish kroner, French francs, Netherlands guilders, Norwegian kroner, Swedish kronor, pounds sterling, Swiss clearing francs, and deutsche marks on a bilateral or a multilateral basis at rates within the official limits with authorized banks in any of the countries of these currencies; (2) in free Swiss francs, U.S. dollars, and Canadian dollars with banks in the United States and Canada and with authorized banks in EPU countries; (3) in Italian lire and Portuguese escudos against deutsche marks with banks in Italy and Portugal, respectively.

Authorized banks may carry out transactions with one another and with their customers in all the currencies mentioned above, as well as in Austrian schillings, Egyptian pounds, and Yugoslav dinars, against deutsche marks or any of these currencies. Authorized banks are permitted to carry out forward exchange transactions with each other or with their customers in their own name and at their own risk in any currency. Forward exchange transactions with foreign banks are permitted in the same manner as spot transactions; however, forward contracts on a multilateral basis in Belgian francs, Danish kroner, deutsche marks, French francs, Netherlands guilders, Norwegian kroner, pounds sterling, Swedish kronor, and Swiss clearing francs are permitted only for periods not exceeding six months. If it is considered necessary, the Bank deutscher Länder can intervene on this market.

German authorized banks may carry out spot and forward exchange transactions only in connection with licensed payments.

Administration of Control

The administration of controls in Germany in respect of imports and exports of goods and services is operated by the Federal Ministry of Economics, the Federal Office for Trade and Industry (Bundesamt für die gewerbliche Wirtschaft) and the Länder Ministries of Economics.

For capital transactions and for other payments, the Bank deutscher Länder is primarily the authority in charge of exchange control.

Prescription of Currency

In principle, foreign countries are divided, from the point of view of the prescription of currency, into two groups: the “free currency area,” 3 and “all other countries.” Incoming payments from “all other countries” may be received in any means of payment; those from the “free currency area” may be received only in freely convertible currencies, in deutsche marks debited to Freely Convertible DM Accounts (see section on Nonresident Accounts, below) or in German banknotes or coins for payments not exceeding DM 100. Payments from several countries4 included in the “free currency area” may be received also in any means of payment, provided it is proved that payment cannot be received in convertible currency. However, for payments over DM 30,000 from Peru, Thailand, and the U.S.S.R., an individual permit from the Bank deutscher Länder is required.

Payments due to “all other countries” may be made in inconvertible currencies (but not in notes or coins), or in deutsche marks credited to Partly Convertible DM Accounts (see section on Nonresident Accounts, below), or may be paid in deutsche marks to persons in Germany. Payments due to the “free currency area” may be made in any currency or means of payment (except foreign notes and coins) or paid in deutsche marks to persons in Germany. Payments in transferable sterling may not, however, be made to dollar area countries.5

Payments for goods which are purchased or produced in Brazil, Turkey, or Yugoslavia, or transfers to these countries for the purpose of investment, may be effected only through a clearing account in accordance with the relevant payments agreement.

Offsetting transactions (compensation) involving any currency are permitted; however, payments due from persons in the “free currency area” cannot be offset or compensated against payments due to persons in “all other countries.” Invoicing is permitted in any currency provided an applicable trade or payments agreement does not prescribe otherwise.

Nonresident Accounts

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

1. Freely Convertible DM Accounts. These accounts may be credited (1) with amounts which otherwise may be transferred abroad in freely convertible currencies; (2) with sums arising from specified exchange operations, such as transfers from abroad in freely convertible currencies and purchases from nonresidents of banknotes and other means of payment in freely convertible currencies; and (3) with redeposits by nonresidents of deutsche marks previously withdrawn from such accounts and not spent. Balances on these accounts may be remitted abroad, transferred to other nonresident accounts in Categories 1 and 2, paid to residents for all current transactions, or exchanged for any other currency.

2. Partly Convertible DM Accounts. These accounts may be credited with amounts which otherwise may be transferred abroad, except payments for imports from Brazil, Turkey, or Yugoslavia. They may also be credited with transfers from abroad, with domestic and foreign notes and coins paid in by nonresidents, with transfers from accounts in Categories 1, 3, and 4, and with receipts from the sale of freely convertible currencies. Transfers between Partly Convertible DM Accounts are entirely free. Balances on Partly Convertible DM Accounts may be used for payments in Germany (unless such payments have to be received in a freely convertible currency), or may be transferred abroad by using the manner of payment established under bilateral payments agreements where these are operative.6

3. Accounts Related to Payments Agreements. These are accounts in the names of authorized banks used for carrying out the terms of payments agreements operating with certain countries. 7 Transfers between these accounts may be made freely.

4. Liberalized Capital Accounts. These accounts are maintained for the capital transactions of nonresidents. Some of the chief sources of these accounts are proceeds from the sale of German real property by foreign owners, the sale of German securities held by nonresidents, and restitution or compensation due to nonresidents for confiscation or war damage. Certain foreign debts may be repaid in deutsche marks by crediting these accounts.

Transfers of Liberalized Capital Accounts from one nonresident to another are freely permitted, regardless of the account holder’s country of residence. Balances on these accounts may be transferred abroad in accordance with the provisions of bilateral agreements, credited to Partly Convertible DM Accounts, or used for specified expenditures (taxes, insurance premiums, travel expenses, etc.) or investments in Germany.

Imports and Import Payments

Most imports from OEEC countries and their associated areas8 are free; imports from the dollar area are liberalized to a lesser extent. Over 85 per cent of imports from bilateral agreement countries are not restricted. Goods free from quantitative restriction may be imported on the basis of an import declaration submitted to a Land Central Bank. This declaration constitutes an automatic entitlement to clear the goods with the customs and to obtain an exchange allocation in appropriate currency. No prior control is exercised over such import transactions; however, ex post control is carried out by the Land Central Banks or the federal authorities. For imports still subject to quantitative limitation, an individual license is required covering both the trade and the exchange aspects of the transaction.

Payments for Invisibles

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

Residents are permitted to make payments up to DM 200 per quarter to payments agreement countries, in accordance with the provisions of the relevant payments agreements, for any purpose other than on account of import or capital transactions.9

For business travel to countries with which payments are effected in freely convertible currencies, exchange up to the equivalent of DM 150 per day per person for a period up to 45 days may be allocated automatically; for business travel to other countries, exchange is allocated in accordance with the character and duration of the travel. For tourist travel to payments agreement countries, exchange is allocated automatically up to the equivalent of DM 1,500 per person per year in an appropriate currency. In addition, resident travelers leaving Germany are permitted to take out German banknotes and coins up to DM 300.10 Emigrants are automatically granted travel exchange up to the equivalent of DM 1,500 in an appropriate currency.

Interest and dividends due to nonresidents on German securities in German currency traded on a German stock exchange may, without special permission, be transferred abroad, or credited to a Liberalized Capital Account or to a Freely or Partly (according to the owner’s country of residence) Convertible DM Account. Dividends and other profits derived from subsidiary enterprises of foreign concerns, interest on credits and other obligations arising out of capital transactions, and property rents may be transferred abroad with the permission of the appropriate Land Central Bank, which is granted in every case. Transfers of indemnities paid on the basis of the Supplementary Federal Law on the Compensation for Victims of the National Socialistic Persecution, of September 18, 1953, may be effected freely.

Special arrangements are applicable to transfers of interest and amortization on account of specified German external debts, in accordance with the London Debt Agreement, signed February 27, 1953 and effective September 16, 1953 (see Fifth Annual Report on Exchange Restrictions, pages 153-54).

Nonresident travelers leaving Germany may take out foreign currency up to the equivalent of DM 500 and deutsche marks up to DM 300; amounts in excess of these limits may be taken out provided their import was certified on entry into Germany.

Exports and Export Proceeds

Exporters may, with few exceptions, freely conclude export contracts with foreign importers, carry through the export of commodities, and accept payments in an appropriate currency. All foreign exchange proceeds of exports must be reported. The exporter is responsible for obtaining the proceeds of the export, which must be received in accordance with the regulations (see section on Prescription of Currency, above). An export declaration is required for all exports, in order that claims and proceeds can be controlled, and for certain exports—mostly strategic commodities—individual licenses are required. The customs authorities exercise control over export declarations and also check to see whether a license is required. Control over the receipt of export proceeds is undertaken by the Bank deutscher Länder, which also undertakes the evaluation of the returns for exports exceeding DM 1,000.

Exporters are permitted, subject to certain limitations, to use their export proceeds to pay the customary commissions to their agents abroad, and for payments in settlement of claims arising from defects or to cover such usual discounts or other reductions in price as may have been agreed upon subsequently. Exporters are permitted to maintain foreign currency accounts with German authorized banks, but these accounts may be used only for authorized payments. In general, exports effected without payment require licenses (a “certificate of nonobjection”), although certain of such exports are exempt from this requirement.

Proceeds from Invisibles

Services for nonresidents do not require licenses, provided reasonable payment has been agreed with the recipients of the services. A special license is required for transactions relating to the sale of, or the granting of licenses for, inventions, patents, registered designs, trademarks, etc., as well as for the rendering of technical assistance through the delivery of constructional drawings, materials, and instructions for manufacture.

All residents are obliged to notify an authorized bank of any claims that have arisen in their favor against debtors abroad and any incoming proceeds.

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

Capital

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

Outgoing transfers of nonresident capital are generally permitted under various arrangements—Liberalized Capital Accounts, the London Debt Agreement, etc.—or under individual licenses.

Securities payable in German currency and owned by nonresidents may be sold to, deposited with, or transferred between, financial institutions in Germany. The proceeds of such sales must be credited to Liberalized Capital Accounts.

Residents may not dispose of prewar German assets abroad. German residents who are prevented by the exchange control regulations in other countries from repatriating their assets held abroad are given permission to sell them to residents authorized to make investments abroad, the parties concerned being permitted to agree among themselves as to the amount of compensation. The Economic Ministries of the Länder may grant authorization to resident enterprises to make the following investments abroad: up to DM 100,000 to establish, purchase, or to participate in, a production enterprise, and up to DM 200,000 for a commercial enterprise. It is required that such investments contribute to strengthening the economic or trade relations of Germany with other countries. Investments abroad by resident firms in the fields of banking, building, insurance, and transport, or where the value of the intended investment exceeds the limits indicated above, are considered by the Federal Ministry of Economy and the Bank deutscher Länder.

Changes during 1954

January 1

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

January 8

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

January 12

Up to DM 50,000 of any claim expressed in German currency arising out of financial transactions before May 8, 1945 could be transferred abroad.

January 13

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

January 20

The Norwegian krone was added to the currencies which could be dealt with forward up to three months in the multilateral exchange arbitrage arrangements among nine West European countries.

February 1

The proceeds of blocked deutsche mark investments could be transferred. The equivalent of bonds drawn by lot and payable as from January 1, 1954, and interest and dividends, payable as from January 1, 1954, on German securities in Germany currency traded on a German stock exchange, could be transferred abroad without a special license.

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

February 17

Imports from the dollar area were liberalized to the extent of 47 per cent of goods privately imported in 1953 from the dollar area.

March 1

Transit trade regulations were relaxed inter alia: by raising the amount of general licenses for transit transactions with EPU countries from DM 100,000 to DM 500,000; by permitting purchases for transit trade transactions to be stored in Germany first and sold later; and by the establishment of transit trade funds in the EPU currencies admitted to multilateral exchange arbitrage (such funds were previously permitted in dollars only).

March 6

Authorized banks were permitted to accept German banknotes in unlimited amounts from foreign banks in payments agreement countries,11 and to credit the counterpart of such banknotes to their DM accounts.

March 10

Land Central Banks were authorized to permit the exportation from Germany of the following categories of German securities expressed in German currency: (1) those brought into Germany from abroad after May 8, 1945 for such purposes as exchange or renewal, or which, in consequence of such operations, replaced previously imported securities; (2) those acquired by exchange or purchase against German securities expressed in German currency brought into Germany after March 1, 1954.

March 16

Liberalization of imports and payments was extended to all countries belonging to the monetary areas of EPU members and making settlements in EPU currencies, with the exception of a few goods on a “negative list.”

March 30

Nonresident travelers were permitted to bring into Germany without limitation means of payment in any currency.

April 1

German banknotes and coins were permitted to be brought or sent into Germany without limitation as to amount.

Two new categories of DM accounts for nonresidents were created: (1) Freely Convertible DM Accounts, available for payments authorized to be made in freely convertible currencies; and (2) Partly Convertible DM Accounts, available for the receipt of all other authorized payments. Representative DM Accounts D and Z and DM Agent Accounts and certain other accounts were abolished and their balances transferred either to Freely Convertible or to Partly Convertible DM Accounts.

April 8

Original and acquired blocked deutsche mark balances as at March 31, 1954 could be credited to Partly Convertible DM Accounts or transferred abroad in accordance with the provisions of payments agreements.

April 13

The transfer abroad of the equivalent of coupons, dividend warrants, and amortized securities in German currency brought into Germany was permitted, provided (1) the interest and dividends were not due before January 1, 1953 and the amortized debts before January 1, 1954; (2) the debts were in respect of loans the amortization of which will not be completed before December 31, 1963; and (3) the payments were in favor of residents of countries with which Germany maintains diplomatic relations.

April 21

The Economic Ministries of the Länder were authorized to grant permits to resident enterprises to invest up to DM 200,000 to establish or maintain commercial branches or to participate in commercial enterprises abroad, or up to DM 100,000 to establish, purchase, or maintain a production enterprise or to participate in a production enterprise abroad, on condition that such investments would contribute to the strengthening of economic relationships with foreign countries. Prior to this, the upper limit within the authority of the Economic Ministries of the Länder was DM 50,000, and the general condition was the promotion of German exports.

April 24

The percentage available for “recommercialization” of debts covered by the German Credit Agreement of 1953 was increased from 15 to 65.

May 1

Payments for invisibles, particularly those connected with or related to foreign trade, were almost entirely freed from individual licensing.

The basic exchange allocation for business travel to countries with which settlements are effected in freely convertible currencies was established at the equivalent of DM 150 per day per person for a period of up to 45 days. The yearly exchange allocation for tourist travel to payments agreement countries was raised from DM 800 to DM 1,500 per adult. The exchange allocation for emigrants was established at a maximum of DM 1,500 in an appropriate currency. The transfer of pension payments up to DM 3,000 per month was generally permitted; the transfer of larger amounts was subject to individual license.

May 3

The U.S. dollar used as a unit of account in settlements with 13 countries (Argentina, Bulgaria, Chile, Colombia, Ecuador, Finland,

Hungary, Iran, Japan, Paraguay, Poland, Turkey, and Uruguay) was to be traded on the German exchange market at the same rate as that quoted in the market for the free U.S. dollar. (The “Brazilian account dollar” continued to be dealt in, as before, on the free exchange market in Germany.)

May 7

Residents were permitted to open collection accounts with banks abroad, provided balances exceeding DM 100 were repatriated at the end of the month and those exceeding DM 20,000 were repatriated immediately.

May 26

Authorized banks could conclude spot and forward exchange transactions in Austrian schillings with their customers and among themselves.

July 8

Registered trade and industrial enterprises were permitted to conclude forward commodity transactions with members of foreign forward markets in order to insure themselves against market risks that might arise in their business activities in respect of sales, purchases, production, storing, or processing of certain commodities. All settlements and payments on account of such forward commodity transactions had to be effected through the intermediary of German authorized banks, and outstanding differences repatriated within 30 days unless otherwise permitted. Special instructions were issued for forward transactions connected with cotton, wool, rubber, tin, zinc, lead, copper, coffee, cocoa, shellac, and sugar.

July 9

Residents prevented from repatriating their foreign assets because of exchange regulations abroad were permitted to dispose of such assets by selling them to persons or firms holding a license granted by the Federal Ministry of Economics to make an investment abroad.

July 29

German authorized banks were permitted to deal in French franc balances on Capital Accounts with authorized banks in EPU countries against deutsche marks or any other EPU currency. The sale of French franc balances on Capital Accounts against freely convertible currencies was also permitted.

August 1

New procedures were established for imports. Purchase authorizations and exchange and import licenses, previously necessary, were replaced by single documents covering both exchange and trade aspects, i.e., import declarations for imports free from quantitative limitation and individual licenses in all other cases.

August 12

It was announced that balances on accounts under the foreign exchange working fund procedure (see Fifth Annual Report on Exchange Restrictions, page 155) would expire six months after the lapse of the calendar quarter in which such credits were made and that no new credits could be made after November 30, 1954.

August 30

German residents were permitted to hold for six months (instead of three months, as previously) foreign currency on their own account with German authorized banks.

September 9

The percentage available for “recommercialization” of debts covered by the German Credit Agreement of 1953 was increased to 100.

September 10

All interest and profits as well as the equivalent of bonds drawn by lot (German securities in German currency) owned by nonresidents could be freely transferred abroad, provided that the securities in question were dealt in on a stock exchange in Germany, and that payments to payments agreement countries were effected in accordance with the provisions of such agreements. The set dates and fixed periods which previously had to be observed were abolished.

September 15

The authorized banks were permitted to sell foreign banknotes and coins abroad, to exchange them against banknotes and coins in the same currency, and to trade them against other currencies; however, banknotes and coins in freely convertible currencies may not be exchanged against those in inconvertible currencies. For permitted transactions, the authorized banks could credit the accounts of foreign banks provided that Freely Convertible DM Accounts were not credited for transactions in inconvertible currencies.

September 16

By General License No. 67(54)N, dated September 10, 1954, blocked DM Accounts were abolished (except for some term deposits in blocked deutsche marks, which mature later) and their transfer abroad was made possible. A new category of nonresident account, “Liberalized Capital Accounts,” was established. Nonresidents could dispose of balances on such accounts for the following purposes: (1) for the purchase of German securities not expressed in a foreign currency and dealt in on a German stock exchange; (2) for granting credits in deutsche marks to residents for a period of at least five years and with interest not higher than 4½ per cent; (3) for the acquisition of land; (4) for the expenses of building, or reconstructing buildings, on land owned by the holder of the Liberalized Capital Account.

September 21

Land Central Banks were authorized to permit the transfer abroad of (1) dividends and profits due to nonresidents accruing from participation in, or operation of, enterprises in Germany; (2) surpluses from the renting, leasing, and farming of land in Germany owned by nonresidents; (3) interest accruing from claims such as loans, debts, and mortgages, subject to the following conditions: (a) the beneficiaries are residents of countries with which Germany maintains diplomatic relations; (b) transfers to countries with which bilateral or multilateral agreements are in effect are made in accordance with such agreements; (c) securities sent from abroad which are not dealt in on a stock exchange in Germany are accompanied by a declaration that they do not belong to a person residing in Germany or in Eastern Germany. The set dates and fixed periods which previously had to be observed were abolished. The transfer of certain other interest and profits had already been authorized under a general license (see September 10, above).

September 27

In accordance with a trade and payments agreement signed with Colombia on August 27, 1954, all payments between Colombia and Germany had to be effected in free U.S. dollars.

September 28

Authorized banks were permitted to grant credits in deutsche marks to foreign banks for periods not exceeding 180 days for financing of German exports.

October 1

In accordance with a trade and payments agreement signed with Finland on September 27, 1954, payments between Finland and Germany had to be effected through Partly Convertible DM Accounts and were subject to special conditions.

October 19

Purchases, sales, exchanges, or gifts of any gold coins were permitted between residents. Previously, this authorization applied only to gold coins minted prior to January 1, 1830 or which otherwise had a numismatic value. The new regulation did not apply to transactions in gold coins outside Germany and did not authorize the free importation and exportation of such coins.

November 9

A second list, containing some 1,800 tariff numbers, was published of specified goods produced in the dollar area which could be imported freely into Germany. Such imports when paid with freely convertible currencies could not normally be re-exported. This second list of dollar imports raised the total of liberalized numbers to 3,600 out of the total of 6,000 numbers on the official statistical list of foreign trade items. This was expected to raise the liberalization percentage of dollar imports to over 60 (with 1953 as the base year).

A further liberalization of transfers of indemnities and compensation for victims of the National Socialist persecution provided for the free transfer abroad, or to a Liberalized Capital Account, of all indemnities already made or to be made in the future.

December 1

The prescription of currency arrangements applicable to settlements with foreign countries were coordinated and simplified. The procedure concerning exports was also simplified.

Greece

Origin and Essential Features

A system of controls was introduced in Greece on September 28, 1931. The latest important revision took place on April 9, 1953, when existing multiple exchange rate practices were discontinued and the official rate of the drachma was raised from Dr 15,000 to Dr 30,000 per US$1, this rate in principle being then applied to all settlements for imports, exports, and invisibles. In May 1954, as part of a general currency reform, the official rate was amended to Dr 30 per US$1.

In general, there are no quantitative restrictions on imports. All payments for invisibles require individual licenses, which are granted freely for expenses incidental to authorized trade transactions and for certain other transactions. Most exports are free of quantitative restriction. Export proceeds as well as other proceeds must be surrendered. All capital transfers are subject to individual approval. Preferential treatment is granted to approved new foreign investments. Prescription of currency requirements are applied to exchange receipts and payments.

Exchange Rate System

There is no established par value for the Drachma. The official rates are Dr 29.90 buying, Dr 30.10 selling, per US$1. The rate of the drachma in relation to other currencies is determined by the Bank of Greece on the basis of the parity relationship of each of these currencies to the U.S. dollar.

Administration of Control

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

Prescription of Currency

Settlements on account of merchandise transactions and invisibles are effected in the currency and manner provided for by trade and payments agreements, or on the basis of the origin or destination of the goods and services involved. Under the terms of most of the trade and payments agreement,1 settlements are effected through controlled accounts, with the U.S. dollar as the currency of account, or in the currency of the partner country.

Imports and Import Payments

A general license permits freely, for all commodities except a few luxury items (List A), the opening of letters of credit and the granting of import licenses for payment against documents, and for certain commodities for payments on time settlement, provided that the prescription of currency requirements are observed. However, the general license does not cover commodities originating in or consigned from Albania, Mainland China, Japan, or North Korea. In most cases, authority has been delegated to the commercial banks to approve applications for non-dollar imports, subject only to the importer’s presentation of a pro forma invoice validated by the Price Check Committee of his local Chamber of Commerce. Exchange to pay for authorized imports is allocated automatically.

Import licenses, which are granted freely, are required for goods originating in and consigned from (1) countries specified in Procurement Authorizations for all transactions financed with Foreign Operations Administration funds, and (2) the United States and possessions, as well as Canada, when payment is made in free dollars; this is for the purpose of determining whether the transaction is to be financed with FOA funds or official free dollars. Individual import licenses are required for commodities with a country of origin or consignment, or a method of payment, that is different from that permitted by the general license. Special certificates issued by the Ministry of Industry are required for imports of certain types of machinery and spare parts. After payment has been made or the importer has accepted a draft, the banks issue customs clearance permits, which enable the importer to take delivery of the goods. Shipments against time drafts, for which payment may be effected up to 90 days after the issuance of the customs clearance certificate, are permitted automatically only for certain specified commodities. For shipments against time drafts, importers are required to deposit with a commercial bank a personal guarantee equivalent to 20 per cent of the c.i.f. value of the goods to be imported. Special regulations govern imports by state agencies, legal entities, and public utility companies.

Payments for Invisibles

Payments on account of invisibles require individual licenses, but these are granted freely for expenses incidental to authorized trade transactions and for certain other transactions. Transfers abroad on account of specified categories of insurance (e.g., ships and airplanes, merchandise transportation, fire, accident, and life insurance) are authorized by the Bank of Greece up to specified percentages of the amounts owed. Persons traveling abroad may take with them a maximum of Dr 200 2 in Greek banknotes.

Exports and Export Proceeds

All exports are subject to individual license, but most exports are free of quantitative limitation. An exchange tax of Dr 3 per US$1 is charged on exports of certain types of olive oil, and of Dr 2 per US$1 on exports of cotton.

Proceeds from Invisibles

Exchange receipts representing payments for services must be surrendered. Foreign exchange proceeds from shipping are exempt from the surrender requirement; however, shipowners have to pay taxes, fees, etc., and have to cover their disbursements and expenses in Greece in local currency obtained through the sale of foreign exchange to the Bank of Greece at the official rate. Individuals may bring in a maximum of Dr 200 2 in Greek banknotes.

Capital

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

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

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

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

Changes during 1954

January 7

The Bank of Greece was authorized to allocate foreign exchange to pay for certain invisibles, without the need of individual licenses from the Currency Committee.

February

The requirement of a special import license from the Ministry of Industry for imports of machinery and spare parts was limited to certain types that are also produced locally.

February 18

A temporary subsidy of Dr 4,000 per US$1 was established for cotton imports shipped before August 31, 1954.

May 1

A 10 per cent guarantee, to be deposited within ten days from issuance of the import approval, was required for all imports effected against supplier credit where a Foreign Operations Administration Procurement Authorization is involved. Penalties of 1 to 25 per cent of the import value were established for cases in which the bills of lading presented are dated prior to the issuance of the import approval.

A general currency reform was effected on the basis of 1 “new” drachma to 1,000 “old” drachmas. Accordingly, the official exchange rate was changed from Dr 30,000 to Dr 30 per US$1, and drachma quotations for other currencies were adjusted in the same proportion.

June 23

Passenger cars valued at more than $1,800 f.o.b. factory were deleted from List A and could be imported freely.

June 30

The Executive Committee of the Foreign Trade Administration was authorized to issue import approvals for time settlement payments for commodities other than those already specified, and for periods longer than 90 days.

August 7

Import approvals could be issued, in very exceptional cases, for imports from North Korea, Mainland China, and Japan.

November 1

The exchange tax on cotton exports was reduced from Dr 4 to Dr 2 per US$1, and the tax of Dr 5 per US$1 on rice exports was removed.

December 2

Several types of machinery were removed from the list of machinery imports requiring special certificates from the Ministry of Industry.

December 11

The exchange tax of Dr 4 per US$1 was removed from exports of certain types of olive oil and reduced to Dr 3 per US$1 for other types.

Hong Kong

Origin and Essential Features

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

Exchange Rate System

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

Exchange Control Territory

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

Administration of Control

The exchange control system in Hong Kong is operated by 27 banks fully authorized to conduct exchange transactions within the framework of the local regulations and subject to specific or general approval of the local control. These authorized banks are not permitted to conclude exchange transactions at other than the official rates.

Prescription of Currency

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

Nonresident Accounts

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

Imports and Import Payments

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

Payments for Invisibles

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

Exports and Export Proceeds

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

The U.S. dollar f.o.b. proceeds of most Hong Kong exports originating in Mainland China, Hong Kong, the Republic of Korea, Macao, and Taiwan are freely disposable. However, portions of the U.S. dollar f.o.b. proceeds of certain exports originating in these countries must be surrendered, viz., 50 per cent for cotton yarn, 25 per cent for lead, silver (subject to prior permission), and tin, 20 per cent for copper and feathers, and 15 per cent for wood oil; the remaining percentages may be sold in the free market. The U.S. dollar proceeds from exports originating in other countries must be entirely surrendered. Exchange proceeds in other currencies from exports to countries other than Mainland China, the Republic of Korea, Macao, Taiwan, and the Sterling Area must be received in foreign exchange appropriate to the country of destination (see section on Prescription of Currency, above) and surrendered.

Proceeds from Invisibles

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

Capital

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

Table of Exchange Rates (as at December 31, 1954)(sterling per Hong Kong dollar or Hong Kong dollars per U.S. dollar)
BuyingSelling
ls. 2 15/16d.

All transactions in sterling against Hong Kong dollars. (Rates for non-dollar currencies are based on the sterling rate.)
ls. 2 27/32d.

All transactions in Hong Kong dollars against sterling.

or
HK$5.694

Exports not originating in Mainland China, Hong Kong, Republic of Korea, Macao, and Taiwan, payable in U.S. dollars.
HK$5.776 as appropriate.

A few essential imports payable in U.S. dollars. Authorized invisibles and capital. All non-dollar imports.
HK$5.790 (50% at HK$5.694 and 50% at Free Market Rate)

Cotton yarn exports.2
HK$5.837 (25% at HK$5.694 and 75% at Free Market Rate)

Lead, silver, and tin exports.2
HK$5.847 (20% at HK$5.694 and 80% at Free Market Rate)

Copper and feather exports.2
HK$5.856 (15% at HK$5.694 and 85% at Free Market Rate)

Wood oil exports.2
HK$5.885 (Fluctuating Free Market (approx.) Rate)

All other exports. Invisibles and capital.
HK$5.885 (Fluctuating Free Market (approx.) Rate)

All other imports payable in U.S. dollars. Other invisibles and capital.

Changes during 1954

October 12

The basic travel allowance of exchange at the official rate for residents (for exchange control purposes) of Hong Kong traveling in certain countries was increased from £50 to £100 per person for the 12 months commencing November 1, 1954.3

Iceland

Origin and Essential Features

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

Exchange Rate System

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

Exchange Control Territory

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

Administration of Control

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

Prescription of Currency

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

Imports and Import Payments

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

Certain imports require import and exchange licenses, which are issued in combined form; these licenses are granted on a consideration of the essentiality of the goods and the availability of exchange to pay for them. Certain specified goods from any source and certain other specified goods from the “clearing” countries 1 can be imported without such licenses. Certain goods may also be imported without such licenses with certificates derived from the proceeds of specified exports—products of the small fishing boat industry, except codliver oil, herring, and herring products. These certificates are acquired through the payment of a premium according to the country from which the import is to be obtained: 60 per cent (plus 1 per cent fee) of the nominal value of the certificate for imports from EPU and dollar area countries and the U.S.S.R., and 25 per cent (plus 1 per cent fee) for imports from “clearing” countries (except the U.S.S.R.). (See also section on Exports and Export Proceeds, below.) When import licenses for passenger automobiles are issued, a fee amounting to 35 per cent of the amount licensed must be paid in Icelandic currency. A further, temporary, license fee amounting to up to 100 per cent of the f.o.b. value of imported passenger cars and delivery vans (under three tons) must also be paid in Icelandic currency.

Payments for Invisibles

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

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

Exports and Export Proceeds

All exports require licenses. Exchange receipts must be surrendered; exporters of products of the small fishing boat industry, except codliver oil, herring, and herring products, obtain, in addition to the local currency equivalent of the exchange surrendered, a certificate nominally equivalent to 50 per cent of the f.o.b. value of the goods exported. These certificates are, in effect, sold at fixed premiums to importers (or used by the Federation of Cooperative Societies), and they may be used to import designated less essential goods, which, when imported, are not subject to domestic price control. The premiums payable on these certificates are 60 per cent for certificates resulting from exports to EPU and dollar area countries and the U.S.S.R., and 25 per cent for certificates based on exports to “clearing” countries (except the U.S.S.R.). The proceeds derived from the sale of the certificates are collected in a central pool, from which a distribution is made periodically to exporters. (See also section on Imports and Import Payments, above.)

Proceeds from Invisibles

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

Capital

Outgoing transfers of capital require approval, which is granted only in exceptional circumstances. Exchange receipts from capital must be surrendered. All investments and transactions in securities by nonresidents require approval.

Changes during 1954

August 6

An additional license fee of up to 100 per cent of the f.o.b. value of imported passenger cars and delivery vans (under three tons) was introduced as a temporary measure.

India

Origin and Essential Features

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

Exchange Rate System

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

Administration of Control

Like other Sterling Area countries, India has an exchange control system similar to that in operation in the United Kingdom but adapted to suit local requirements. The administrative work and decisions on exchange control matters are handled by the Reserve Bank of India, in accordance with the general policy laid down by the Indian Government in consultation with the Reserve Bank. A great deal of routine work on exchange control is delegated to certain commercial banks, which act as authorized dealers permitted to buy and sell foreign exchange for specified purposes under regulations laid down by the Reserve Bank.

Prescription of Currency

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

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

Nonresident Accounts

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

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

There are also blocked accounts to which are credited capital proceeds that are due to nonresidents and cannot be remitted abroad. Balances in blocked accounts may be placed on fixed deposit or invested in approved Indian rupee securities. The income derived from such investments may be remitted to the owner’s country with the approval of the Reserve Bank.

Imports and Import Payments

Goods may be imported into India under either open general licenses or individual licenses. Open general licenses permit individuals or firms to import the goods listed therein without quantitative limitation from the countries or monetary areas specified. Individual licensing can be by quotas allocated to established importers and actual users or by ad hoc licensing. Currency-wise, there are two kinds of license, those for imports from soft currency countries and those for imports from hard currency countries. The licenses for hard currency countries are freely convertible into licenses for soft currency countries, but the conversion of the latter into the former is permissible only in certain cases, which are considered on their merits. No distinction is made between one country and another within either currency area. At the beginning of each half-yearly licensing period, an announcement on import control policy is made in the form of a Red Book, which gives in detail the policy for established importers, actual users, and newcomers. There are also special procedures applicable to capital goods, heavy electrical plant, and goods imported to fulfill government contracts and irrigation projects.

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

Payments for Invisibles

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

Foreign exchange facilities are granted for business travel and education abroad according to a scale of allowances fixed for each country. Foreign exchange normally is not granted for travel to American Account countries, other than for purposes of business, health, and education. Special provisions govern the granting of exchange for travel connected with medical treatment, visits to hard currency countries being subject to certain restrictions. A basic ration of £750 per adult and £375 per child, plus allowances for return fares, is available during a period of two years ending December 31, 1956 to all persons resident in India for personal trips to soft currency areas other than neighboring countries; for neighboring countries (except Pakistan and Afghanistan), a special allowance of Rs 3,000 per adult and Rs 1,500 per child, plus return fares, is available for the same period.1

Premiums on insurance policies issued to residents in foreign currency may be paid in rupees or in the currency in which the policy is issued; 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 beneficiary owners permanently resident in any country outside India.

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

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

Exports and Export Proceeds

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

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

Proceeds from Invisibles

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

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

Capital

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

Sterling Area nationals who are temporarily resident but not domiciled in India are permitted to repatriate their assets, including capital investments, to any Sterling Area country at the time of their repatriation. Sterling Area nationals who emigrate from India to countries outside the Sterling Area are permitted remittance facilities on the same scale as in the United Kingdom. Other nationals who are resident but not domiciled in India are permitted at the time of their retirement to transfer to their own country £5,000, or all their current remittable assets in India, whichever is higher. Any amount exceeding that authorized for free transfer is blocked.

There are no restrictions on the import into India of domestic or foreign securities. Domestic dealings in rupee securities are not subject to any restrictions. Persons resident in India may deal in the shares of sterling companies which are operating exclusively in India and which maintain two registers, one in India and the other in the United Kingdom, provided payment is made in rupees and the shares are on the Indian register. The export of securities and their transfer to nonresidents require approval. Persons resident in India who become owners of foreign securities are permitted to hold them, provided they have been acquired in a manner not involving a breach of the Indian exchange control regulations. The sale, transfer, or other disposal of foreign securities requires approval.

Changes during 1954

January 1

Import policy for the first half of 1954 came into effect; it represented mainly an extension of the policy in force during the second half of 1953. Import quotas were increased for 22 items and reduced for 34. Steps were taken to facilitate larger imports of industrial equipment and raw materials and also of a few consumer goods.

March 9

An agreement with Burma provided for India’s purchase of a specified quantity (900,000 tons) of Burmese rice in the three years 1954–56.

March 22

The prescription of currency requirements for settlements with foreign countries were revised and simplified in conformity with the changes in the payments regulations of the United Kingdom.

March 23

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

April 12

Import quotas for certain categories of goods were raised for the January-June period. It was also announced that import licenses for U.S. raw cotton of specified staple lengths would be issued freely for the same period.

June 7

Exports to Iran were to be treated on the same basis as shipments to any other country, and the requirement that importers in Iran had to open letters of credit in favor of the exporter before exports would be permitted was discontinued.

June 17

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

June 29

A more liberal import policy for the second half of the year was announced, with a view to aiding Indian industry by making available raw materials and other products needed for expansion. Quotas were increased for 60 items and scaled down for 35. For the majority of items, however, quotas remained unchanged.

July 24

Exports of rice which were hitherto banned were resumed.

August 2

Exports of groundnut oil, which were prohibited in the previous year, were allowed.

August 11

The export by post or otherwise of Indian currency notes and coins to Portuguese territories in India was banned. Travelers to the Portuguese territories were, however, permitted to take with them Indian currency notes and coins not exceeding Rs 100 per person per visit.

September 11

Import quotas were liberalized for a number of items from the hard and soft currency areas.

September 30

New open general licenses were issued, valid for one year, with little change from the previous licenses.

October 4

Indian and Sterling Area nationals emigrating from India to a country outside the Sterling Area were allowed to transfer their entire permissible “settling-in” allowance at the time of their departure, instead of in installments over a period of four years, as previously. The total amount transferable remained unchanged.

October 14 and 16

Trade agreements with Mainland China and Eastern Germany included payments provisions similar to those in the agreement with Rumania (see March 23, above).

November 1

The scope of the Foreign Exchange Regulation Act was extended to include the French Establishments in India.

December 24

The accounts of individuals, firms, companies, and banks resident in the Portuguese possessions in India were designated as nonresident. Operations on the nonresident accounts of persons and firms other than banks would be in accordance with the general conditions governing other similar accounts. Nonresident accounts of banks established in the Portuguese possessions in India could be debited freely for payments to residents in India, but all other debits and all credits would require the prior approval of the Reserve Bank of India.

December 27

General permission to bring into India Burmese currency notes without limit was granted, provided the currency was declared to the customs authorities by the persons concerned on their arrival in India.

December 31

Import policy for the first half of 1955 was announced. It provided for the extension of more liberal import licensing and a slight relaxation of restrictions on essential imports from the dollar area. Import quotas for certain items were reduced, with a view to protecting domestic industry. State trading was introduced for raw silk and a few chemicals.

Indonesia

Origin and Essential Features

Exchange controls were introduced in Indonesia on May 10, 1940. Since then they have been changed considerably. Restrictions are exercised through licensing requirements attached to imports and exchange payments. Official basic buying and selling rates apply to payments for most exports and essential imports. There are other effective rates applicable, through the use of “inducement” certificates, to the proceeds of exports of certain native products and to payments for certain luxury imports, and, by means of a tax (“TPT” certificates), to most foreign nontrade payments not of a personal nature. Exchange for certain invisibles is also restricted quantitatively. The currency and method of payment are prescribed for each transaction. Exports are subject to license, and all foreign exchange proceeds must be surrendered.

Exchange Rate System

The middle rate for the Indonesian Rupiah is Rp 11.40 per US$1, the official rates being Rp 11.355 buying, Rp 11.475 selling, per US$1. These rates are applicable to most transactions. There is also a system of “inducement” certificates, which applies to a small segment of Indonesia’s foreign transactions. The rate for these certificates as at December 31, 1954 was Rp 1.70 per “inducement” rupiah. In addition, the Foreign Exchange Institute collects a fee of ¾ of 1 per cent and a statistical tax of ¼ of 1 per cent on all imports and exports.

Administration of Control

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

Prescription of Currency

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

Nonresident Accounts

There are two classes of nonresident account:

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

2. All other nonresident accounts. The opening of these accounts and all entries require permission from the Foreign Exchange Institute. For nonresident accounts of private persons, the authorized exchange banks have been given permission to make routine personal payments in Indonesia and yearly transfers up to a maximum of Rp 15,000 in the currency of the nonresident out of his current income; these accounts are designated as Capital Accounts and Income Accounts, respectively, transfers from the former to the latter requiring approval. The granting of licenses for remittances to the debit of Capital Accounts, viz., capital remittances and remittances of inheritances, has been suspended since January 1, 1954. However, in cases of destitution, transfers to the debit of Capital Accounts may be permitted up to limited amounts at the discretion of the Foreign Exchange Institute.

Imports and Import Payments

Business establishments wishing to import must obtain the official recognition of the Ministry of Economic Affairs. A provisional import license is first issued by the Central Bureau of Imports on behalf of the Foreign Exchange Institute. Before this provisional document can be transformed into final form, i.e., a combined import and exchange license, the importer must obtain a statement from an authorized bank showing that (1) an advance deposit of 100 per cent (75 per cent for raw materials for industry and for capital goods for industrial enterprises) of the rupiah equivalent at the official selling rate of exchange has been paid to the Foreign Exchange Fund; (2) the appropriate additional import levy (“TPI” certificate), if any, has been paid to the bank; and (3) if “inducement” certificates are required, the importer has surrendered them to the Central Bureau of Imports. The combined import and exchange license enables the import to be effected and the foreign exchange specified on the license (see section on Prescription of Currency, above) to be obtained from an authorized exchange bank.

The additional import levy, referred to under (2) above, is paid by the importer through the purchase of a “TPI” certificate from his bank at the time he applies for the import-exchange license. These purchases are made in rupiah, at a percentage of the nominal c. & f. value of the import increased by the amount calculated for the freight insurance (which has to be covered with insurance companies in Indonesia), converted at the official bank selling rate. The percentage varies, depending on the commodity to be imported (see table, below). The amounts received from the sale of “TPI” certificates are transferred weekly for the account of the Foreign Exchange Fund.

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

Import Categories and Requirements for Obtaining Final Import-Exchange License
CategoryAdvance DepositAdditional Import Levy (“TPP”)Inducement Certificate
A.Prime necessities for local industry75%nilnil
Other essentials100%nilnil
B.IOrdinary textiles, small tools, paper, essential foodstuffs (except rice), etc.100%33⅓%nil
B.IIHousehold articles, office equipment, motor vehicles valued at less than $2,100, etc.100%100%nil
Less essential foodstuffs100%100%100%
C.Specified luxury articles: refrigerators, motor vehicles valued at $2,100 to $2,400, etc.
Other luxury articles100%200%100%
D.Motor vehicles valued at over $2,400, air conditioning apparatus, etc.nil200%nil

Payments for Invisibles

Most payments for invisibles are subject to special licenses from the Foreign Exchange Institute, although for items that represent the current income of individuals abroad, and for such items as rents and dividends, foreign exchange is granted freely up to certain limits in accordance with general licenses issued by the Foreign Exchange Institute to the authorized banks. A 66⅔ per cent tax (“TPT” certificate) is payable on transfers of foreign exchange for most invisibles not directly related to the movement of goods or to private remittances of a personal nature. To foreign nationals resident in Indonesia, foreign exchange up to 20 per cent of the remitter’s gross taxable salary is supplied for private remittances, such as the maintenance of families abroad, children’s educational expenses, and the remittance of savings. Foreign exchange is not made available to pay insurance premiums on import freight. For such items as advertising, film rentals, and charitable remittances, exchange is granted at the discretion of the Foreign Exchange Institute, on individual application. The export of Indonesian and foreign banknotes and coin is prohibited, but residents going abroad are provided with small amounts of foreign banknotes to meet traveling expenses.

Exports and Export Proceeds

All exports require licenses. Exporters (with the exception of those oil companies to which special arrangements apply) are required to surrender to an authorized bank in Indonesia all foreign exchange to which they become entitled. Exports must, as a rule, be financed by irrevocable bank credits, and the drafts drawn on such credits must be sight drafts or short-term drafts. Exports may not be invoiced in rupiah, but must be invoiced in a currency acceptable to the Bureau for Exports. There are no general limitations as to the destination of exports, but the Bureau for Exports may withhold licenses for certain exports if, for example, the shipment should not conform with existing trade agreements. Exports of high-grade rubber, estate coffee, and tea to Singapore and other Malayan ports are prohibited.

Exporters of the undermentioned native products receive “inducement” certificates for the indicated percentages of the total value of the export proceeds surrendered. These “inducement” certificates are expressed in rupiah and are valid for two months; they are required for the importation of all foodstuffs in Import Category B.II and most articles in Import Category C (see section on Imports and Import Payments, above), as well as a few other specified luxury items. The certificates are negotiable, and the premium at which they change hands creates additional effective rates (see Table of Exchange Rates, below).

Smallholders’ rubber: 1
Grades RSS I and RSS II10%
Grades RSS III and RSS IV8%
Grade RSS V, Blankets, and Crepes6%
Copal, damar, and rattan:
Graded10%
Not graded5%
Cows, pigs, water buffaloes, hides (except cowhides), cajuput oil, jelutong, merah, hangkang and ketijan gutta, incense, and art objects (silver work, wood carvings, pandan hats, etc.)10%

Proceeds from Invisibles

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

Capital

Residents are required to surrender exchange from capital, and approval is not normally given for capital payments abroad. There are no limitations on the remittance into Indonesia by nonresidents of capital which, if it were in the form of foreign exchange, would have to be surrendered in accordance with the regulations. The granting of licenses for remittances to the debit of private nonresident Capital Accounts, viz., capital remittances and remittances of inheritances, has been suspended since January 1, 1954. Foreign firms operating in Indonesia may transfer their gross profits less corporation taxes, subject to the payment from the profits remaining after payment of all other taxes of the 66⅔ per cent exchange tax (see section on Payments for Invisibles, above). However, transfers of the profits of foreign companies established after 1953 are not subject to this tax.

Table of Exchange Rates (as at December 31, 1954)(rupiah per U.S. dollar)
BuyingSelling
11.355 (Official Rate)

Most exports and related expenses. All other invisibles and capital.
11.475 (Official Rate)

Most imports and related expenses. Authorized invisibles directly related to the movement of goods or to remittances of a personal nature.
11.985–12.615 (Official Rate plus 5%, 6%, 8%, or 10% at Inducement Certificate Rate)

Exports of certain native products.
19.125 (Official Rate plus 66⅔% Tax)

Authorized invisibles and capital not directly related to the movement of goods or to remittances of a personal nature.
30.983 (Official Rate plus Inducement Certificate Rate)

Certain luxury imports.
Note: Additional import levies (“TPI” certificates) amounting to 33⅓%, 100%, or 200% (according to the nature of the goods) of the c. & f. value are payable on certain imports.

Changes during 1954

January 1

Transfers abroad by foreigners employed in Indonesia were limited to 20 per cent of their gross taxable salaries.

The granting of licenses for remittances to the debit of private nonresident Capital Accounts, viz., capital remittances and remittances of inheritances, was suspended.

March 2

A 66⅔ per cent tax (“TPT” certificate) was imposed on transfers of foreign exchange for most invisibles not directly related to the movement of goods or to private remittances of a personal nature. The tax does not apply to the transfer of profits of foreign companies established after 1953.

The administrative limit of 40 per cent applied since July 27, 1953 to transfers of the taxable profits earned in any accounting period which began in 1952 was raised to 100 per cent less taxes.

March 13

The Foreign Exchange Institute was brought under the direction of the Bank Indonesia.

March 17

Business establishments wishing to import were required to obtain the official recognition of the Ministry of Economic Affairs.

March 22

New regulations for visitors were issued, distinguishing between visitors planning to stay less than three months and those, including Indonesian residents returning from abroad, who planned a longer stay. The short-term visitor was permitted to retain, exchange, or re-export foreign currency brought into Indonesia.

April 15

Indonesia became a member of the International Monetary Fund.

July

Exports of high-grade rubber, estate coffee, and tea to Singapore and other Malayan ports were prohibited.

July 12

The advance deposit requirements for imports were increased from 75 per cent to 100 per cent (from 50 per cent to 75 per cent for raw materials for industry and for capital goods for industrial enterprises).

August 19

Foreign exchange would no longer be made available to pay insurance premiums on import freight.

November 9

The selling rates of all officially quoted foreign currencies were increased from Rp 11.445 to Rp 11.475 per US$1. The buying rates remained unchanged.

Iran

Origin and Essential Features

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

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

Exchange Rate System

The par value is Rials 32.25 = US$1. Most commercial transactions are classified in Category I and take place at rates fixed by the Bank Melli Iran: Rls 82.00 buying, Rls 84.50 selling, per US$1.1

The effective selling rate for Category II imports equals the official selling rate (Rls 32.50 per US$1) plus the rate for exchange certificates. These certificates are issued to exporters of Category II commodities when they surrender foreign exchange at the official buying rate; they are negotiable in a free market for such certificates. On December 31, 1954, the (fluctuating) rate for exchange certificates was Rls 50.50, resulting in effective rates for Category II transactions of Rls 82.50 buying, Rls 83.00 selling, per US$1.

Purchases and sales of noncommercial exchange on private account take place at rates fixed by the Bank Melli Iran: Rls 78.00 buying, Rls 80.00 selling, per US$1.1 Specially approved medical and students’ expenses are transacted at the rate of Rls 80.00. For all other purposes (e.g., foreign travel by Iranian residents), the (commercial) selling rate of Rls 84.50 is applied. In addition, a rate of Rls 41.00 per US$1 is used in paying the rial equivalent of dollar exchange provided by the U.S. Point Four Program to Iranian students. (See Table of Exchange Rates, below.)

Administration of Control

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

Prescription of Currency

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

Transactions with countries having payments or clearing agreements with Iran must be conducted in the currencies specified in the agreements. U.S. dollar accounts are used for transactions under the agreements with the Federal Republic of Germany and Italy; the Swiss franc is specified in the agreements with Czechoslovakia and Poland; and the French franc is used in the agreement with France.

Nonresident Accounts

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

Imports and Import Payments

Imports are classified in two categories; each commodity in a category receives a quota established in rials. In addition, there is a list of prohibited imports. The Ministry of National Economy decides both the quota and the prohibition regulations. Under the import regulations, if the quota limits should prove to be inadequate, they may be raised by the Ministry of National Economy, taking into account the availability of foreign exchange and the need for protecting domestic industries. Under a general license, authorized banks may make payments for nonprohibited imports, provided the Ministry of National Economy has not announced that the quota of the import commodity concerned is filled. Quota limitations on the importation of goods in Categories I and II were, however, lifted on December 26, 1954.

Before clearing goods, the customs authorities require an import license, which is automatically granted by the Ministry of National Economy upon presentation of documents indicating that payment for these goods has been or will be effected through an authorized bank. In addition, the customs authorities check whether the import is authorized (i.e., not prohibited) and under which category the import falls.

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

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

Persons holding “own exchange” are permitted to utilize the exchange for imports in Category I only, provided they pay Rls 2.50 per US$1 of the import value to the authorized bank. Imports effected with “own exchange” should fall within the quotas.

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

Agreements concluded between private merchants or commercial firms in Iran with private concerns abroad for the exchange of permitted products may be approved by the Ministry of National Economy upon submission of a detailed list of the goods to be exported and imported. Imports under private barter arrangements are authorized, provided the importer pays Rls 2.50 per US$1 of the import value to an authorized bank. Importation of Category II commodities under barter is approved upon submission of evidence that a corresponding amount of Category II exports has been received in the country of destination. The prohibited list and the quota regulations are applicable to imports under barter.

Payments for Invisibles

All payments for noncommercial purposes require licenses issued by the Exchange Control Committee. The Committee determines whether the exchange may be purchased at a rate of Rls 80.00 or Rls 84.50. Licenses are issued mainly for expenses of Iranian students studying abroad, according to the availability of foreign exchange, and for medical treatment and living expenses abroad, according to existing regulations.

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

Residents going abroad as tourists may acquire licenses to purchase exchange at the Rls 84.50 rate. Travelers may take Rls 2,000 in Iranian banknotes with them when going abroad. Iranian pilgrims to Iraq, however, may take Rls 3,600 in Iranian banknotes with them. Travelers of Iranian nationality may export foreign currency as authorized by the Exchange Control Committee. Nonresident travelers may not export foreign currency in excess of the amount they imported less the amounts they have sold to authorized banks.

Exports and Export Proceeds

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

Nonprohibited export commodities are classified in two categories. Exporters of commodities in Category I receive, for their export proceeds, the rial equivalent at a fixed rate of Rls 82.00. Exporters of goods in Category II receive the rial equivalent at the Rls 32.00 rate plus exchange certificates for the export value. Within their one-month validity period, these exchange certificates, which entitle the holder to purchase exchange to pay for Category II imports, may either be used by the exporter or be sold in a free market.

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

If the export exchange is transferred to Iran and sold by the exporter to an authorized bank prior to exportation of the goods, the bank credits the exporter with rials computed at the fixed rate of Rls 82.00. In such a case, however, an amount in rials equivalent to the difference between the commercial rate of Rls 82.00 and the noncommercial buying rate of Rls 78.00 is kept in a blocked account until the commodities concerned have actually been exported.

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

Re-exports are prohibited, except that goods to which 50 per cent or more of value has been added by manufacture may be re-exported, provided that foreign exchange equivalent to 150 per cent of the original landed value is liquidated on reshipment.

Proceeds from Invisibles

Exchange receipts derived from invisibles connected with commercial transactions must be surrendered at the same rate as the related commercial transactions. All noncommercial foreign exchange proceeds must be surrendered at Rls 78.00.

Travelers to Iran are permitted to bring with them an unlimited amount in foreign currencies and Iranian banknotes. Travelers of Iranian nationality must surrender their foreign exchange holdings to an authorized bank within 15 days after their arrival in the country. Other travelers, during their stay in Iran, may sell their exchange only to an authorized bank at the bank’s noncommercial buying rate (Rls 78.00).

Capital

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

In accordance with a decree of December 16, 1953, foreign capital invested in approved development or productive activities in industry, mining, or agriculture may be repatriated, together with earnings in the form of foreign exchange and/or goods. The decree guaranteed legal protection for foreign capital and established a committee to make recommendations on proposed investments to the Council of Ministers.

Table of Exchange Rates (as at December 31, 1954)(rials per U.S. dollar)
BuyingSelling
32.00 (Official Rate)32.50 (Official Rate)

….
41.00

Students’ expenses under Point Four Program.
78.002

All noncommercial exchange proceeds.
80.002

Specially approved medical and students’ expenses.
82.002

Category I exports.
84.502

Category I imports. Noncommercial expenditures not approved at other rates.
82.50 (Official Rate plus Fluctuating Certificate Rate)

Category II exports.
83.00 (Official Rate plus Fluctuating Certificate Rate)

Category II imports.
Note: The actual, fluctuating, certificate rate on December 31, 1954 was Rls 50.50 per US$1.

Changes during 1954

March 21

The annual import exchange quotas were announced. Import and export commodities were reclassified in two categories. Commodities falling in Categories I and II during the Iranian year 1953/54 were generally classified in Category I for 1954/55, and those falling in Category III during 1953/54 were classified in Category II for 1954/55. Exchange regulations previously applicable to Category III commodities became applicable to the new Category II.

August 1

The buying rate for Category I export proceeds was changed from an effective rate of Rls 87.10 to a fixed rate of Rls 82.00 per US$1. The selling rate for Category I imports was changed from an effective rate of Rls 90.50 to a fixed rate of Rls 84.50. The noncommercial buying rate was changed from Rls 80.00 to Rls 78.00, and the selling rate for students’ expenses and medical treatment from Rls 82.00 to Rls 80.00. The requirement that 5 per cent of all export proceeds (both Category I and Category II) had to be surrendered at the official buying rate of Rls 32.00 was abolished. There would no longer be transactions at the parity buying and selling rates. Foreign exchange transactions in respect of Category II commodities would continue to take place at a fluctuating rate, the effective buying and selling rates being equal to the parity rates plus the (fluctuating) rate for exchange certificates.

Imports with “own exchange” and barter arrangements were authorized, provided the importer paid Rls 2.50 per US$1 of the import value to an authorized bank; previously, imports against “own exchange” were authorized upon payment of the certificate equivalent (amounting to Rls 58.00 per US$1) of 5 per cent of the import value.

September 10

Payments in German-Iranian clearing dollars against both documentary credits and sight drafts were temporarily suspended.

September 18

Payments for imports from the United Kingdom against acceptance of sight drafts were temporarily suspended.

November 11

Payments on outstanding sight drafts from the Federal Republic of Germany and the United Kingdom, which had been discontinued in September, were resumed.

December 20

The effective selling rate for Category II imports was changed to Rls 83.00 per US$1.

December 26

Quotas applied to imports were eliminated, and goods in Categories I and II could be imported without limitation.

Iraq

Origin and Essential Features

Exchange control was introduced in Iraq on November 24, 1941 by Exchange Control Law No. 71 of 1941, which was superseded in 1950 by Exchange Control Law No. 18 of 1950. As in other Sterling Area countries, the Iraqi exchange control system is modeled after the U.K. system, modified to suit local requirements. It is based on the principle of surrender of foreign exchange receipts (with a few minor exceptions). Imports from hard currency countries are restricted on the basis of annual quotas, but imports from soft currency countries are, with a few exceptions, permitted freely.

Certain exports to neighboring countries are exempt from exchange surrender requirements, and import licenses are granted for certain goods from soft currency areas provided the importer makes his own arrangements for the amount of foreign exchange necessary to pay for the goods.

Exchange Rate System

The par value is Iraqi Dinar 1 = US$2.80. In the official market, most transactions are effected in sterling. For certain specified currencies, licensed dealers are authorized to deal on the basis of London rates. For the U.S. dollar, the National Bank of Iraq quotes an official rate at which it will sell exchange to licensed dealers to cover the excess of their dollar requirements over their purchases from customers or other banks.

Administration of Control

Exchange Control Law No. 18 of 1950 entrusts the Board of Administration of the National Bank of Iraq with all powers and responsibilities in connection with exchange control. In practice, however, the Board has delegated most of its administrative authority to the Directorate of Foreign Exchange of the National Bank. All foreign exchange transactions must be effected through licensed dealers unless especially authorized by the Bank. Import and export licenses, where required, are issued by the Director General of Imports.

Prescription of Currency

Transactions with most non-Sterling Area countries are governed by the terms of Sterling Payments and Monetary Agreements entered into between those countries and the United Kingdom and available to the whole Sterling Area. Payments must be effected in acceptable foreign currency appropriate to the country concerned, in sterling through an appropriate account in London, or in dinars through an appropriate dinar account of a nonresident.

Nonresident Accounts

Nonresident accounts are designated according to the residence of the account holder. The regulations governing the operation of these accounts are similar to those of the United Kingdom and other Sterling Area countries.

Imports and Import Payments

The import control policy aims at allowing adequate imports of all goods essential for domestic consumption and development. Imports of certain nonessentials are restricted. Partly for protective reasons, certain other imports are prohibited; these include a variety of agricultural products, such as* rice, the products of certain newly established industries, and certain types of aluminum ware.

All imports from hard currency countries require licenses, which are granted in accordance with an annual program. For imports from soft currency areas, both the control policy and the licensing procedure are more liberal. The licensing procedure does not apply to imports from soft currency countries (except certain listed goods for which the importer is allowed the option of purchasing exchange from a licensed dealer or using self-provided exchange), but the authorities require full documentary evidence that the goods are actually imported and that the prices are reasonable.

All payments are subject to prescription of currency, and payments to Cyprus require special authorization. For goods subject to license, the licensed dealer may make the exchange available upon presentation of the exchange control copy of the import license; for goods not subject to license, exchange is provided on application. The licensed dealers do not, of course, provide exchange for the importation of goods licensed on the understanding that the importer will provide his own exchange.

Payments for Invisibles

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

Foreign exchange is allocated to foreign nationals resident in Iraq in amounts up to ID 50 per month, provided the remittances do not exceed half the foreigner’s Iraqi salary, for remittance to their home countries, and within certain limits for foreign travel. The allocation of foreign exchange to nationals of Iraq for these purposes is subject to administrative decision on individual applications. For residents traveling abroad, there is a basic allowance of ID 100 per person per month for not more than three months in any one year. Travelers may take out only ID 15 in Iraqi currency notes or the equivalent of ID 25 in foreign currency. (For special arrangements applying to pilgrims to Saudi Arabia, see section on Changes during 1954, June 30, below.)

Exports and Export Proceeds

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

Exporters must declare their exports to ensure that foreign exchange proceeds are received and surrendered. However, foreign exchange proceeds arising from exports of dates to India, Pakistan, Syria, Lebanon, Jordan, Saudi Arabia, Kuwait, and the Persian Gulf Protectorates are exempt from the surrender requirement. Prescription of currency is applied to the collection of export proceeds, except in respect of certain commodities exported to neighboring countries.

Proceeds from Invisibles

Foreign exchange receipts from invisibles must be surrendered. Foreign currency, including notes, may be brought into Iraq by travelers in unlimited amounts provided they are declared to the Iraqi customs, and the unused amount may be re-exported. Travelers may bring in only ID 15 in Iraqi currency notes. (For special arrangements applying to pilgrims to Saudi Arabia, see section on Changes during 1954, June 30, below.)

Capital

In general, all transfers of capital abroad require special exchange control approval. Incoming capital funds must be deposited with licensed dealers. The National Bank may authorize the deposit of incoming capital funds in their original currency, which may be converted later into dinars at the official rate of exchange. The repatriation of foreign capital invested in Iraq is subject to the approval of the National Bank.

Changes during 1954

February 10

The period of validity of exchange control approvals was extended from one month to three months.

February 14

Authorized exchange dealers were given authority to remit, on account of foreigners living in Iraq, amounts up to ID 50 per month, provided the remittances did not exceed half the foreigner’s Iraqi salary, to the foreigner’s country of permanent residence.

February 28

The licensing procedure for imports from countries other than hard currency countries was modified. The list of goods which could be imported from such countries only against self-provided exchange was abolished and a new list introduced. Imports of goods on the new list could be paid for at the importer’s option either with exchange purchased from a licensed dealer or with self-provided exchange.

June 30

Permission was granted, until September 20, 1954, for each pilgrim to Saudi Arabia holding a valid Iraqi passport to take out of the country the equivalent of ID 150, including ID 40 in Iraqi notes, and to repatriate the notes exported under these arrangements.

Israel

Origin and Essential Features

Foreign exchange regulations were made effective in Israel by the Mandatory Government in 1939. When Israel became an independent state in 1948, exchange control was continued. The exchange rate structure was considerably revised on February 14, 1952 by the establishment of three fixed official rates. Subsequently, premiums and a surcharge on certain receipts and payments gradually became applicable to more and more transactions. On January 1, 1954, the exchange rate system was simplified by the adoption of a single official rate, to which, for most transactions, either one of two premiums or a surcharge applies. Since July 30, 1954, other effective rates have operated for payments for certain imports on which subsidies are paid. Discounts apply to the negotiation of certain clearing currencies.

Exchange Rate System

The official rate of exchange is Israel Pound 1 = US$1, to which a surcharge of 80 per cent on exchange payments or a premium of 80 per cent on exchange receipts is applied, with the exception of receipts from charitable organizations, for which the premium is 30 per cent. Subsidies on certain imports, ranging from I£0.150 to 1£1.550 per US$1, are paid at the time the exchange to pay for the import is purchased by the importer. Other effective rates derive from the conversion at different rates of the clearing units of certain countries with which Israel has bilateral agreements.1 Dealings in Blocked Accounts take place at unofficial rates of exchange; such accounts are available for use for certain purposes (see section on Nonresident Accounts, below).

Administration of Control

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

Prescription of Currency

Payments and receipts must be effected in the currency and manner prescribed by the exchange control authorities. Payments with countries with which payments agreements are in force 2 are usually settled in U.S. dollars as an accounting unit, pounds sterling, or the currency of the partner country.

Nonresident Accounts

The accounts of banks abroad are available for entries related to authorized transactions. Registered Accounts are maintained for foreign aviation, shipping, insurance, and film companies, and others. For capital and capital income items due to nonresidents, there are Blocked Accounts differentiated into “A” and “B,” according to the nature of the original transaction. These accounts are available for investment in Israeli securities, the purchase of real estate, payment of property tax payable by the account holder, and tourist expenses in Israel up to 1£25 per day for the account holder and a like amount for each member of his family if the account has been held for at least six months.

Imports and Import Payments

All imports require licenses. Certain of these licenses are issued on the understanding that no official exchange will be granted to pay for the imports. Exchange is automatically granted for other licensed imports. Payments for all authorized imports are effected at the official rate plus a surcharge of 80 per cent. Subsidies on certain imports, ranging from I£0.150 to I£1.550 per US$1, are paid at the time the exchange to pay for the import is purchased by the importer.

Payments for Invisibles

Payments abroad for invisibles require licenses. All authorized payments are made at the official rate plus a surcharge of 80 per cent. The annual transfer of profits, interest, and repayment of loans to a maximum of 10 per cent of invested capital approved under Clause 21 of the Law for the Encouragement of Foreign Investments (1950) is allowed. The exportation of Israeli banknotes is prohibited. Tourists leaving Israel are permitted to repurchase through authorized dealers part of the same foreign currency they previously exchanged into Israel pounds, but not more than the equivalent of I£36.

Exports and Export Proceeds

All exports require licenses. Export proceeds in foreign currencies must be surrendered. However, certain industries are permitted to keep all or part of their export proceeds in foreign currency accounts (PAMAZ accounts) and use them for the purchase abroad of raw materials required for their export production. PAMAZ accounts, when related to funds obtained in clearing account units, are maintained in three categories—A, B, and C—according to the countries involved. An exporter exercising his “PAMAZ export” (import) rights may, provided he has a license to obtain these currencies, purchase clearing account units at the officially published discounts—5 per cent on units in Category B and 10 per cent on units in Category C.3 A premium of 80 per cent is paid on all export proceeds sold to an authorized bank in Israel.

Proceeds from Invisibles

Exchange proceeds from invisibles must be surrendered. However, for a period of 2 years after their entry into Israel, immigrants and foreign residents are exempt from the surrender of their foreign currencies to the Treasury and may keep such currencies in deposit accounts with authorized banks in Israel. Residents may purchase Treasury Promissory Notes in foreign currency against dollars, sterling, or Swiss francs accruing to them from legacies, gifts, life insurance policies, liquidation of assets abroad, reparations, or restitution payments. The notes bear interest at 5 per cent payable semiannually, and are redeemable in 15 years, though holders may demand repayment by giving 90 days’ notice. Importers holding import licenses with allocation of foreign currency may use the notes registered in their name for payments of the value of the foreign currency allocated to them without the necessity of giving the 90 days’ prior notice. Payment will be effected at the rate of exchange prevailing on the date of redemption or repayment. A premium of 30 per cent on the official rate is paid for foreign currency received from appeals and charitable donations by institutions, organizations, funds, and similar bodies. A premium of 80 per cent is paid on all other receipts. Tourists visiting Israel are expected to bring with them the amounts of foreign currency that they will need during their stay. The importation of Israeli banknotes is prohibited. Tourists and others visiting Israel who are holders of Blocked Accounts are permitted to draw upon such accounts to the extent of I£25 per day for themselves and a like amount for each member of their families, provided they have held the account for six months or more.

Capital

Outward transfers of capital usually are not approved. The investment of foreign capital under the terms of the Law for the Encouragement of Foreign Investments (1950) requires approval if the investor wishes to benefit from the facilities granted by the law; if the investor does not intend to request the application of the law, approval is not required. The investment of foreign capital in securities quoted on the Tel Aviv Stock Exchange is entirely free; investment in nonquoted securities requires exchange control permission. Investment of foreign capital in mortgages and real estate is subject to the prior consent of the authorities concerned. The importation of certain securities denominated in foreign currency, e.g., Independence and Development Loan Bonds, is prohibited. Foreign capital is surrendered at the official rate plus a premium of 80 per cent.

Table of Exchange Rates (as at December 31, 1954)(Israel pounds per U.S. dollar)
BuyingSelling
1.000 (Official Rate)

….
1.000 (Official Rate)

….
1.300 (Official Rate plus 30% Premium)

Appeals and charitable donations.
1.800 (Official Rate plus 80% Premium)

All exports and invisibles. Incoming capital.
1.800 (Official Rate plus 80% Surcharge)

All imports and invisibles. Outgoing capital.
Note: This table does not take account of effective rates derived from the payment of subsidies on certain imports and the negotiation at a discount of clearing account units related to certain countries. Foreign exchange allocations for transactions arising out of allocations made in the previous period are made on the basis of the rates prevailing at that time.

Changes during 1954

January 1

The three fixed official rates introduced on February 14, 1952 were canceled; the official rate was changed to I£1 = US$1, with a surcharge of 80 per cent on certain payments and premiums of 30 per cent on certain receipts and 80 per cent on others.

January 7

Immigrants and temporary residents were exempted, for a period of two years after their entry into Israel, from the obligation to surrender their foreign exchange to the Treasury, provided they held the exchange in deposit accounts with authorized banks in Israel. Other persons authorized to hold exchange were allowed to hold it either in local banks or in banks abroad; the disposal of such currency must be authorized by the Treasury.

April 30

A nonresident visiting Israel, and drawing on his Blocked Account up to I£25 per day for himself and a like amount for each member of his family, could do so only on condition that he had held the Blocked Account for six months or more.

May 23

The official buying price of gold ingots was fixed at I£2,028.600 per kilogram of pure gold.

May 27

Exporters were permitted, subject to certain conditions, to repurchase export proceeds previously sold to the Treasury, including export proceeds in certain clearing accounts, at the officially published rates.

May 31

The surcharge of I£0.800 per US$1 was made applicable to payments for imports of fuel, asphalt, and insecticides.

July 12

Israel became a member of the International Monetary Fund.

July 18

The surcharge of I£0.800 per US$1 was made applicable to payments for imports of corn flour, spices, and certain other foodstuffs for industry.

July 30

The surcharge of I£0.800 per US$1 was made applicable to payments for all imports except diamonds, books, and phonograph records. At the same time, a list of imports was published for which subsidies would be given.

August 16

The surcharge of I£0.800 per US$1 was made applicable to payments for imports of books and phonograph records. The list of subsidized imports with the subsidies thereon was revised.

August 31

The surcharge of I£0.800 per US$1 was made applicable to all imports. Exchange received from diamond exports would continue to be paid at the official rate except where the Diamond Controller recommended a special premium. Payments for school fees and maintenance allowances for students abroad were also made subject to the surcharge of I£0.800 per US$1.

Treasury Promissory Notes in foreign currency were made available to residents of Israel against dollars, sterling, or Swiss francs accruing to them from legacies, gifts, life insurance policies, liquidation of assets abroad, reparations, or restitution payments.

September 2

The premium or surcharge of I£0.800 per US$1 became payable on diamond exports and imports.

October 24

Exporters holding export proceeds in foreign currency accounts with authorized banks could use these funds to purchase the clearing currencies of countries with which Israel has trade and/or clearing agreements, according to the scale of rates published from time to time.

Italy

Origin and Essential Features

Controls on international transactions were introduced in Italy on September 29, 1931. They were established on a more systematic basis in 1934, when the compulsory surrender of all foreign exchange and foreign assets was introduced; in 1939, with the prohibition of imports without a license; and in 1940, with the prohibition of exports without a license. The introduction in 1946 of a “free” market for receipts in U.S. dollars, Swiss francs, and pounds sterling resulted in a dual rate system for these currencies and in broken cross rates. Subsequent changes led to the elimination of the broken cross rate for pounds sterling and other currencies and in the actual unification of the exchange rate system. Italy has gradually increased the number of commodities that may be imported without license from OEEC countries.

The general regulation that imports of commodities and services must be authorized is waived for a short list of commodities, whatever their origin, and for nearly all commodities originating in OEEC countries and associated territories. The general regulation that exports must be authorized is waived except for those commodities included in a list that differentiates, to a certain degree, between exports paid for in U.S. dollars, Canadian dollars, or free Swiss francs and other exports.

All foreign exchange must be surrendered, but 50 per cent of receipts in U.S. or Canadian dollars may be retained by the recipient and either sold or used for authorized transactions during a period of 60 days. Payments abroad for authorized current transactions are approved provided they are effected in accordance with the methods laid down in the Italian exchange control instructions. Payments abroad for capital transactions must be authorized by the monetary authorities, except in a few cases.

Exchange Rate System

No par value for the Italian Lira has been established with the Fund. The exchange rates between the lira and other currencies are related to the exchange rate for the U.S. dollar, which is determined on the basis of daily “free” market quotations. These quotations result from the negotiation of .50 per cent of dollar proceeds from current account transactions, which may be retained by the recipient for a period of 60 days. During such a period the recipient may, among other things, sell the exchange so retained to importers, who may use it for authorized import transactions. The average of the closing market rates for the U.S. dollar on the Rome and Milan “free” markets is recognized as the official rate of the day. The daily official rates for the Canadian dollar and the free Swiss franc 1 are established in the same way. To establish the official rate for some other currencies, the lira-U.S. dollar official rate is related to the gold parity of the other currency with respect to the U.S. dollar; in other cases, the official rate is sometimes expressly stated in a payments agreement.

The rate for the U.S. dollar has remained between Lit 624 and Lit 625 per US$1 since September 1949. The relative stability of the dollar in the “50 per cent account” arrangement results from the fact that, between the supply of dollars derived from exports and invisibles and the demand for dollars for imports and invisibles, equilibrium is achieved by quantitative restrictions on imports, control of payments for incidental commercial expenses and invisibles, and control of the terms of payment.

Exchange Control Territory

Exchange control is not exercised over payments from the Italian Republic to the Republic of San Marino. There are special arrangements for payments between Italy and the territory of Somaliland under Italian administration.

Administration of Control

The exchange control system is operated by the Italian Exchange Office (Ufficio Italiano dei Cambi) on the basis of instructions issued by the Ministry of Foreign Trade. All sales and purchases of exchange, including those negotiated on the “free” market, pass through banks authorized for this purpose.

Prescription of Currency

Incoming and outgoing payments for transactions with countries in the dollar area or with countries with which there are no payments agreements generally are made in U.S. dollars, Canadian dollars, free Swiss francs, or pounds sterling. Incoming and outgoing payments for transactions with countries with which there are payments agreements 2 must be made according to the methods and in the currencies established by the agreements.

Imports and Import Payments

For most imports from OEEC countries and their associated territories,3 import licenses are not required. Imports from other countries with which Italy has payments agreements are subject to the licensing system or to customs authorization in accordance with the lists provided by the agreements. Most imports for which payment must be made in convertible currency are subject to license; however, for a wide range of dollar commodities in “List A,” import licenses are granted automatically by authorized banks. Trade with some countries with which no payments agreements exist is settled on a compensation basis (private compensations, global compensations, and transactions on a reciprocal basis).

For all authorized imports, the exchange control authorities grant exchange or approve payment forthwith for the necessary amount and in accordance with the established methods of payment (see section on Prescription of Currency, above). For private imports of goods and services, importers are authorized to acquire on the “free” market the U.S. or Canadian dollars they need for payment.

Payments for Invisibles

As a general rule, payments abroad for invisibles require licenses, which are issued by the exchange control authorities. Foreign exchange is granted freely for expenses incidental to trade transactions; in addition, holders of “50 per cent accounts” (see section on Exports and Export Proceeds, below) are entitled to use freely U.S. and Canadian dollars from these accounts for such expenses. For other types of expenditures, such as travel for business and tourism, health and education, and patents and trademarks, the authorized banks are permitted to approve payments abroad up to various specified limits. As a rule, when the cost of insurance premiums is being met by Italian exporters or importers, payment to domestic or foreign insurance companies operating in Italy is effected in Italian lire. Insurance may be paid in free currency, pounds sterling, or a clearing currency, as the case may be, only for goods arriving in Italy or being sent out of Italy where the insurance has been stipulated by contractual agreement with an insurance company chosen by the seller or buyer abroad.

Tourists traveling to EPU countries may obtain from the banks exchange to the value of Lit 130,000 per adult (Lit 65,000 per child) per year. Remittances to cover health and education expenses and business travel in EPU countries may be authorized by the banks up to the value of Lit 130,000 per person per year. Persons traveling abroad may take with them a maximum of Lit 30,000 in Italian banknotes.

Favorable treatment is accorded to earnings on investments in Italy made in free Swiss francs or in U.S. or Canadian dollars (see section on Capital, below), as well as to earnings on investments of residents of EPU countries. Shipping and insurance companies and travel and forwarding agencies may maintain operating accounts in U.S. and Canadian dollars, free Swiss francs, and pounds sterling.

Exports and Export Proceeds

Certain commodities listed in a special table (Tabella Esport) require export licenses. This requirement is waived for a few commodities if they are paid for in U.S. or Canadian dollars or free Swiss francs.4 Special credit facilities are provided to promote exports of special supplies. In addition, certain tax refunds are granted on a wide range of exported commodities; the funds for this purpose are made available by imposing an “equalization tax,” ranging from 1 to 4 per cent, on certain import commodities. Licenses for exports to Argentina or Brazil require that such exports be linked to an equivalent value of imports from Argentina or Brazil, respectively.

Exchange receipts in all foreign currencies must be surrendered entirely. Fifty per cent of exchange receipts in U.S. or Canadian dollars are credited by the banks to the recipient in a “50 per cent account” and may be retained for a period of 60 days. During such a period the sums in such an account may be disposed of by the recipient in one of the following ways: (1) they may be used for authorized payments; (2) they may be sold on the “free” market (the buyer must use them for an import or an authorized payment abroad); or (3) they may be sold to the Exchange Office.

Proceeds from Invisibles

Receipts from invisibles are subject to the same surrender requirements as receipts from exports, except that shipping and insurance companies and travel and forwarding agencies may keep operating accounts in U.S. and Canadian dollars, free Swiss francs, and pounds sterling. Persons may bring in Italian banknotes in any amount.

Capital

As a general rule, inward and outward capital movements require approval. Special regulations are in effect for transfers of foreign capital, and income therefrom, derived from investments made since April 7, 1948 with free Swiss francs, U.S. dollars, or Canadian dollars. Transfer abroad in the currency originally surrendered is granted freely for (1) earnings from such investments to a maximum of 1 per cent in excess of the legal rate of interest (currently 5 per cent); (2) sums derived from the disinvestment of such capital, within the limits of the exchange originally transferred from abroad, provided the transfer is not requested earlier than two years after the time of the investment and does not exceed 50 per cent of the capital for each succeeding period of two years; and (3) amounts corresponding to the exchange invested in machinery for industrial plants, provided the transfer is not requested earlier than five years after the time of investment.

Banknotes

Banks are authorized to buy banknotes in U.S. dollars, Canadian dollars, or Swiss francs at the official rates, and banknotes in other currencies at a price corresponding to the rate of exchange for such notes in foreign free markets.

Changes during 1954

January 26

The foreign exchange allowance available for Italian travelers to EPU countries was reduced from Lit 200,000 per person to Lit 130,000 per year for adults and to Lit 65,000 per year for children. However, an additional allowance of Lit 130,000 was made available for travel undertaken in connection with study, business, or health.

July 1

The system of refunding the general turnover tax on export deliveries was recodified and expanded by a law passed by Parliament. (The funds used to benefit exports are collected by imposing a special “equalization tax” on certain import commodities.)

August 7

The Exchange Office was given power to grant licenses for incoming capital transfers from EPU countries freely, without prior permission of the Ministry of Foreign Trade and without limitation as to the amount.

August 10

“List A,” which contains commodities the importation of which from dollar countries may be allowed directly by the customs, on evidence that payments are made from balances on “50 per cent accounts,” was considerably enlarged. The new list freed mainly raw materials and semimanufactures from quantitative restriction.

December 16

In respect of most commodities, transit traders were freed from the obligation to receive, for the resale to third countries of commodities obtained from the dollar area, the same currency they utilized to purchase those commodities.

Japan

Origin and Essential Features

Exchange controls, mainly intended to prevent a flight of capital, were initially introduced in Japan on July 1, 1932. They were made more stringent on January 8, 1937, and were gradually increased later. After the war, Japan’s trade and exchange transactions were subject to the strict control of the Supreme Commander for the Allied Powers (SCAP). The exchange rates established in the immediate postwar years were of limited use and settlements for trade abroad gave rise to multiple rates. A unitary exchange rate was established in April 1949. An entirely revised foreign trade and exchange control law was put into effect December 1, 1949. The Japanese Government took over from SCAP the administration of control of export trade from December 1, 1949 and of import trade and invisibles from January 1, 1950.

Settlements on account of merchandise transactions and invisibles are effected, according to the territory related to the transaction, in pounds sterling, U.S. dollars, Canadian dollars, Swiss francs, and “open account” dollars through prescribed channels. Practically all imports are subject to individual license and registration, and almost all payments on account of invisibles require individual licenses. All exports are subject to registration, and certain exports are subject to individual license. Export proceeds as well as exchange proceeds from invisibles must be surrendered, but a small percentage of export proceeds may be retained by the exporter and used for specific purposes.

All capital transactions and transfers having an exchange control aspect are in principle subject to individual license. However, repatriation of capital and income on foreign investments within the terms of the Foreign Investment Law are accorded preferential treatment.

Exchange Rate System

The par value is Japanese Yen 360 = US$1. The official rates of authorized banks for telegraphic transfers are ¥ 359.20 buying, ¥ 360.80 selling, per US$1. Exchange rates are uniform.

Administration of Control

A Ministerial Council whose main function is the drafting of exchange budgets is the highest control authority on the policy level. The Ministry of International Trade and Industry carries out exchange and trade control policy in respect of merchandise transactions, while the Ministry of Finance—through its Foreign Exchange Bureau and the Foreign Exchange Council—does so in respect of prescription of currency and method of settlement, the operation of the foreign exchange fund, payments for nonmerchandise transactions, and capital transactions and transfers. The Ministry of Finance also has the function of determining exchange rates. The Bank of Japan, as the Government’s agent, executes the above functions in part. Authorized banks carry out the controls on the technical administrative level.

Prescription of Currency

Settlements on account of merchandise transactions and invisibles are effected in (1) sterling in transactions with the Sterling Area; (2) “open account” dollars (clearing account units) through accounts established in accordance with payments agreements with Argentina, Brazil, China (Taiwan), Egypt, Finland, French Monetary Area, Federal Republic of Germany, Indonesia, Italy, Republic of Korea, Netherlands Monetary Area, Philippine Republic, Sweden, and Thailand (the open account countries) ;1 (3) Canadian dollars and Swiss francs in transactions with Canada and Switzerland, respectively; and (4) U.S. dollars in transactions with all other countries and monetary areas. Exports to the Sterling Area and the open account countries may also be settled partially or wholly in U.S. dollars if the authorities of the importing country agree or such agreement is not required. The prescribed technical and banking form and channel for effecting settlements differ according to various characteristic features and the category of transaction involved. Deviations from these prescription requirements are subject to individual license from the control authorities.

Nonresident Accounts

1. Nonresident Yen Deposit Accounts. Nonresidents may be authorized individually to keep Nonresident Yen Deposit Accounts. Debits to these accounts for the personal needs of the account holder or for certain payments in yen without compensation to a resident or to a nonresident are authorized freely. Debits to these accounts for conversion into foreign currency require individual licenses.

2. Nonresident Foreign Currency Deposit Accounts. As a measure to facilitate the application of exchange control, specified nonresidents are authorized to keep deposit accounts with banks in U.S. dollars.2

3. Foreign Investors’ Deposit Accounts. Certain proceeds of foreigners’ liquidated investments may be put in Foreign Investors’ Deposit Accounts. These accounts may be used for remittances abroad or for making other investments under certain conditions.

Imports and Import Payments

Practically all imports are subject to individual import license and, where payment is to be made, to registration with an authorized bank (“bank certification”) for prescription of currency purposes. Import licenses are granted rather freely for certain types of goods, e.g., foodstuffs, basic raw materials, and specified machinery and equipment. Most of the authorized imports are planned in the exchange budget and communicated through “Import Announcements.” Authorized imports that are not listed in the “Import Announcements” are such items as operating supplies and maintenance materials required for export or essential domestic production, and imports through compensation arrangements or under the “Special Foreign Exchange Allocation System” (retention quota). Other imports authorized outside the above arrangements include imports not requiring payment and those imported for processing and re-exportation.

There are three different licensing procedures: (1) The exchange allocation system, covering imports of foodstuffs, raw materials, and other essentials. Import allocation certificates are issued by the trade control authorities to importers entitling them to the necessary foreign exchange from the authorized banks. Exchange is automatically available for authorized imports covered by an exchange allocation. (2) The “automatic approval” system, under which licenses for specified commodities are issued on application, provided the amount appropriated for the currency area or open account country concerned has not been used up. There is no quantitative limitation for each commodity importable under this system, but there is a maximum amount of exchange assigned to each currency area or open account country for all eligible items, so that further applications will not be accepted when the budgeted amounts are exhausted. (3) The “first come, first served” procedure, under which the “Import Announcement” specifies both the maximum amount of exchange and the sources of import for each commodity. When the total of the applications received exceeds the outstanding balance appropriated for a particular commodity from a particular source, decisions are made by balloting. This system has not been used recently, however.

Licenses for imports covered by exchange allocation are issued by authorized banks; but when the proposed payments are not in accordance with the prescribed methods of settlement, such imports require prior approval of the Ministry of International Trade and Industry. Licenses for other imports are issued by the Ministry of International Trade and Industry.

As a general rule, applicants for import licenses must make a deposit, which is calculated by multiplying the value of the intended import by a coefficient that differs for various categories of goods. The deposit is returned after the goods have been imported or if the import transaction is canceled for a reason acceptable to the control authorities.

Payments for Invisibles

Contracts for specified services are subject to individual license, e.g., services between residents giving rise to foreign claimable assets, and services between residents and nonresidents when payment is to be effected by a nonstandard method or over a period longer than three months. Payments also are subject to individual license; however, payments considered as part of a transaction which has been authorized may be effected freely. Payments on account of costs incidental to authorized imports and exports and specified categories of transfers—e.g., those in connection with insurance and shipping—are permitted freely. Residents can take out of Japan ¥ 2,000 in Japanese currency to be spent only on Japanese ships or (as from January 28, 1955) on Japanese aircraft. Applications to take larger amounts are considered on a case-to-case basis.

Exports and Export Proceeds

All exports are subject to registration with an authorized bank (“bank certification”) in order to enforce the requirements concerning the prescription of currency and the surrender of proceeds. The following exports are subject to individual license: (1) goods in short supply in the domestic market; (2) strategic materials; (3) imported goods; (4) goods on the list of prohibited exports; (5) gold or gold alloy in bullion form; and (6) goods exported by transshipment or under consignment, processing, or compensation contracts. Export proceeds have to be surrendered within ten days from the date of acquisition. However, exporters are permitted to use, through simplified procedures, 10 per cent 3 of their export proceeds for specific purposes, which are listed as follows: traveling and living expenses abroad related to the promotion of foreign trade; expenses of overseas branch offices; imports (including incidental costs) needed for export promotion and/or economic recovery; imports of bona fide samples; catalogues, financial directories, and other similar trade publications.

Proceeds from Invisibles

Receipts by the standard methods of settlement may be accepted without a license. However, contracts for specified services are subject to individual license, e.g., services between residents giving rise to foreign claimable assets, and services performed for nonresidents when payment is to be received by a nonstandard method. Exchange receipts from invisibles must, as a rule, be surrendered. Residents can bring into Japan in Japanese currency any unspent balance of the amount which they legally took out. Otherwise, the importation of Japanese currency by residents or nonresidents is prohibited.

Capital

All purchases of stocks, debentures, and investment trust certificates by foreign investors are subject to individual license if remittance of income or principal is desired. Such purchases must be effected against the yen proceeds from the sale of foreign exchange or its equivalent. However, stocks in the form of stock dividends on earned surplus or revaluation of assets may be acquired freely, but application for remittance rights must be made within three months from the date of acquisition. Proceeds from the sale of debentures before maturity may not be reinvested.

The principal and capital gain from shares of stock, whether purchased or received as stock dividends, may be withdrawn in five equal annual installments, starting two years after the original acquisition. For stocks purchased with proceeds from the sale of other stocks, the two-year period runs from the date of the last purchase. In the event of capital loss, only the actual proceeds may be remitted. For debentures, the principal may be entirely remitted at maturity only. Principal on investment trust certificates may be remitted in five equal annual installments starting at the time of redemption.

Purchase rights on stocks may be sold if the issuing company gives its consent, or the value of the rights can be realized by selling the stocks with rights and purchasing the same stocks without rights or purchasing other stocks. This constitutes a preferential treatment of foreign investors, as under the Japanese commercial code stock purchase rights may not be sold.

All other capital transactions and transfers having an exchange control aspect are subject to individual license.

Changes during 1954

April 1

With a few minor exceptions, the ratios of deposit money required for import license applications were substantially increased.

June 1

A decentralized payments procedure was announced by the Ministry of Finance for transactions with the Federal Republic of Germany, under which the authorized exchange banks of the two countries are allowed to hold open account dollar balances and to conduct the usual permitted transactions.

June 23

Triangular exports to dollar area countries through open account countries were banned by the Ministry of International Trade and Industry.

July 1

The Canadian dollar was added to the list of currencies designated for the settlement of international transactions.

July 12

All exports to Indonesia were made subject to prior licensing procedure. Exports to Indonesia of textiles and iron and steel products were linked to actual imports from that country, under an “export right system,” and maximum export quotas were set for other items.

August 2

The Swiss franc was added to the list of currencies designated for the settlement of international transactions.

December 24

A reduction in the retention quota of export proceeds from 10 to 5 per cent under the “Special Exchange Allocation System” was announced by the authorities, to become effective March 1, 1955.

Jordan, Hashemite Kingdom

Origin and Essential Features

Transjordan, as part of the Mandated Territory of Palestine, became a member of the Sterling Area on September 21, 1939, and exchange restrictions were introduced. On February 22, 1948, owing to the impending termination of the British Mandate for Palestine, this area ceased to be a territory within the Sterling Area. On July 1, 1950, the Hashemite Kingdom of the Jordan was included in the Sterling Area.

As a member of the Sterling Area, Jordan has an exchange control system essentially similar to that of other members of the Sterling Area. In practice, however, a considerable part of Jordan’s trade and various nontrade transactions is carried on outside the official exchange market.

Restrictions are exercised through import licensing and the requirement of exchange permits for exchange provided at the official rate. A fee is payable on import licenses and a tax is applied to payments for invisible transactions at the official rate. There are no restrictions on transactions with Syria and Lebanon but, with a few exceptions, no official exchange is provided for such transactions. Imports without license and without official exchange are also permitted from other countries, subject to fine.1 The proceeds of certain exports and of all re-exports must normally be repatriated within six months of export.

Exchange Rate System

The par value is Jordan Dinar 1 = US$2.80. The official rates are US$2.82 buying, US$2.78 selling, per JD 1. Exchange is allocated at the official rate for licensed imports from, and for payments for invisible transactions to, countries other than Syria and Lebanon. Official exchange is also given for payments to countries other than Syria and Lebanon for such items as educational expenses and medical treatment. All other payments are financed with exchange obtained mainly in the exchange market in Beirut, where the rate for the Jordan dinar, expressed in terms of the U.S. dollar, as at December 31, 1954 was US$2.63 = JD 1.

A fee of 2 per cent is charged on each import license, and a tax of 2 per cent is levied on all sales of exchange for payments for invisibles, except for educational expenses abroad. Further, the import without license of goods originating in countries other than Syria and Lebanon and for which official exchange has not been allocated is subject to a fine, the amount of which varies according to the nature and source of the import (see section on Imports and Import Payments, below).

Administration of Control

The administration of exchange control is exercised by the Exchange Control Department of the Ministry of Finance under the responsibility of the Controller of Currency. Exchange is granted automatically for almost all imports authorized by the Controller of Imports.

Prescription of Currency

Imports for which official exchange is provided must in general be paid for according to the country of origin in a currency prescribed on the individual import license. Export proceeds must be surrendered, where required, in a currency appropriate to the country of destination. “Prescribed currency” includes the payment of sterling to or from an account in the United Kingdom appropriate to the country concerned. Most trade involving official exchange is financed through such accounts.

Nonresident Accounts

Authorized banks may open nonresident accounts designated geographically according to the residence of the account holder, subject to the prior approval of the Controller of Currency. These accounts, which may be used only for legitimate business purposes, must be fed by appropriate funds. The approval of the Controller of Currency is necessary for redesignation of residence, for transfers from resident to nonresident accounts, and for transfers to residents of hard currency countries from any other nonresident account. All other transfers between nonresident accounts and transfers from nonresident to resident accounts are permitted freely.

Imports and Import Payments2

A total exchange allocation is established each year covering imports from countries other than Syria and Lebanon. The allocation is divided between hard and soft currencies, with subdivisions for various categories of goods. The Controller of Imports issues licenses for individual imports to registered importers on the basis of this allocation. A fee of 2 per cent is payable on all import licenses. An importer who has been granted a license to import goods may arrange with his bank to apply on his behalf to the Controller of Currency for permission to open an irrevocable documentary credit within three months after issuance of the import license; or he may order the goods and arrange with his bank to apply for exchange after the shipping documents arrive in Amman; or he may clear the goods on arrival in Amman, on the presentation of the relevant import license, and arrange for his bank to submit the customs declaration to the Controller of Currency and apply for exchange. In all cases an exchange permit issued by the Controller of Currency is required in order to obtain foreign exchange at the official rate. In general, exchange licenses are granted automatically and without delay for all licensed imports.

Certain imports from Syria and Lebanon require import licenses, which are granted freely. No official exchange is provided for imports from Syria and Lebanon, whether under license or not. Imports without license and without official exchange from countries other than Syria and Lebanon are also permitted, but are subject to a fine. The general levels of these fines are as follows: for imports listed in the official program (a) from hard currency countries, including Canada and the United States, 12 per cent, and (b) from soft currency countries, 4 per cent for foodstuffs and 8 per cent for others; for imports not listed in the official program (a) from hard currency countries, 20 per cent, and (b) from soft currency countries, 15 per cent.

Payments for Invisibles

An exchange allocation, including an allocation in hard currencies, is established each year for payments for invisible transactions. The following types of invisible payments may be made with official exchange: income of nonresidents; savings up to JD 5,000 of foreign nationals who intend to return to their own countries; remittances to refugee dependents outside Lebanon and Syria, living expenses of Jordan nationals abroad, travel expenses of Jordan residents abroad (except to Syria and Lebanon), educational expenditures, and medical treatment, up to certain limits; business expenses abroad and insurance payments in accordance with special regulations. A tax of 2 per cent is levied on all payments for invisibles at the official rate.

Persons leaving Jordan for Lebanon or Syria may take out up to JD 100, and persons leaving for any other country, JD 20. Persons leaving Jordan for any destination may take out the equivalent of JD 10 in foreign banknotes and any amount of notes previously brought into the country. Up to JD 5 per person per month may be sent by postal or money order to neighboring Arab countries.

Exports and Export Proceeds

Exports are not allowed to be shipped unless the exporter has satisfied the Controller of Currency as to the manner in which payment for the goods will be received. Exporters are normally required to repatriate the value of exports within six months of export. However, exemption from repatriation is granted for all exports to Syria and Lebanon, and for all exports to any destination of such commodities as vegetables, fruits, leather, olive oil, olive seeds, soap, and straw mats. The proceeds of all re-exports must be surrendered.

Proceeds from Invisibles

Receipts from invisibles must, in general, be surrendered. Persons entering Jordan from Lebanon or Syria may bring in a maximum of JD 100, and those entering from other countries, JD 20, in domestic currency. All persons may bring in any amount in foreign currencies.

Capital

Capital may be imported freely, but the exchange must be surrendered. Capital exports require approval.

Table of Exchange Rates (as at December 31, 1954)(U.S. dollars per dinar)
BuyingSelling
2.82 (Official Rate)

Exports of phosphates, etc. All re-exports. Some invisibles.
2.783 (Official Rate)

Government payments. Imports authorized at the official rate.
2.7244 ($2.78 with 2% Tax)

Invisibles authorized at the official rate.
2.63 (Beirut Free Market Rate)

All other exchange receipts.
2.633 (Beirut Free Market Rate)

All imports from Syria and Lebanon. All other imports 4 and invisibles not granted official exchange.

Changes during 1954

February 1

The system of fines on imports was reintroduced for imports, from countries other than Syria and Lebanon, of goods for which licenses are not issued, or of goods which require an import license (by virtue of their being listed in the official import program) but have not been licensed at the time of importation. No exchange was made available for these imports. The amount of the fine varied according to the nature and the source of the import.

June

The import license fee on imports from hard currency countries and the tax on exchange covering payments for invisibles to hard currency countries were reduced from 6 per cent to 2 per cent, the rate applied to transactions with soft currency countries.

July 28

Authorized dealers were permitted to buy and sell Syrian currency within a range of 10 piastres on either side of the Beirut market rate. (A similar authorization had been given in December 1953 in respect of Lebanese currency.)

Note: On January 26, 1955, the following measures were taken:

1. The free exchange market in Arab League currencies (generally in Syrian and Lebanese pounds) was legally recognized and its use extended to payments for imports from all the Arab League states and all imports outside the official import program other than of prohibited goods. Further, certain less essential commodities, originally in the official program and hence entitled to exchange at the official rate, were shifted to the free market.

2. The system of fines applied to some imports (see February 1, above) was discontinued.

3. A license fee of 2 per cent was imposed on imports of non-Arab origin outside the official program. The fee payable on import licenses for commodities in the official program was increased from 2 to 5 per cent.

Lebanon

Origin and Essential Features

Exchange control was first introduced in Lebanon on December 3, 1939. Significant changes were made in 1944, 1945, and 1948. Subsequently, exchange controls were gradually relaxed, and on May 24, 1952 the last remaining exchange control requirement was officially abolished. There is a complete absence of controls and restrictions on payments. There is a multiple exchange rate structure, since official exchange is reserved for certain government purposes while all other transactions are effected in the free market, in which rates remote from the par value rates are in effect and in which there are broken cross rates.

Exchange Rate System

The par value is Lebanese Pounds 2.19148 = US$1. The official rates are LL 2.19 buying, LL 2.21 selling, per US$1. These rates apply only to certain government payments, and all other transactions take place at the free market rates (see Table of Exchange Rates, below). During 1954, the free market dollar rate has been prevented from falling below LL 3.20 per US$1.

Prescription of Currency

In general, no requirements are attached to exchange payments or receipts in Lebanon; but in some cases transactions with certain countries, with which Lebanon has concluded payments agreements specifying the method or channel of payment, may be made through specific accounts.1

Imports and Import Payments

Import licenses are required for all commodities, but they are issued freely (often after the arrival of the goods) except for a few commodities, mostly of a type produced locally. Exchange to pay for imports may be obtained freely through the free market.

Payments for Invisibles

Exchange to pay for invisibles may be obtained freely through the free market or payment may be made freely in local currency to any account.

Exports and Export Proceeds

Export licensing is applied to only a few items, such as livestock, wheat, barley, jute goods, cement, caustic soda, petroleum and petroleum products, and certain metals. There are no surrender requirements attached to exchange receipts from exports, which may be retained, used, or freely sold in the free market.

Proceeds from Invisibles

There are no surrender requirements attached to exchange receipts from invisibles, which may be retained, used, or freely sold in the free market.

Capital

There are no limitations on capital payments or receipts, and exchange in respect of capital movements may be obtained or sold freely through the free market.

Table of Exchange Rates (as at December 31, 1954)(Lebanese pounds per U.S. dollar)
BuyingSelling
2.19

….
3.243 (Fluctuating Free Market Rate)

Exchange receipts.
2.21

Some government payments.
3.245 (Fluctuating Free Market Rate)

All other payments.

Changes during 1954

February 11

Lard, oils, hydrogenated oils, and fatty acids were removed from the list of commodities subject to the restrictive import licensing system, i.e., those for which licenses must be obtained before importation.

March 2

Chocolate and confectionery were removed from the list of commodities subject to the restrictive import licensing system.

April 30

A trade and payments agreement with the U.S.S.R. provided that all payments between the U.S.S.R. and Lebanon should be effected through special accounts to be opened by the State Bank of the U.S.S.R. and the Compagnie Algérienne.

May 28

Biscuits and macaroni were removed from the list of commodities subject to the restrictive import licensing system.

July 15

Jams, beer, paints, and soap were removed from the list of commodities subject to the restrictive import licensing system.

August 3

Iron tubing and copper valves and taps were removed from the list of commodities subject to the restrictive import licensing system.

Netherlands

Origin and Essential Features

Exchange control was introduced in the Netherlands on May 10, 1940. The present exchange control system has its legal basis in a decree of October 10, 1945 (Foreign Exchange Decree 1945), which became effective October 20, 1945. The basic structure of the system has remained unchanged since then, although there has been considerable relaxation in detail. The restrictive system is implemented through licensing of all imports, exports, and payments to and receipts from nonresidents, but many transactions are covered by general licenses. The prescription of currencies for foreign payments and receipts is an integral part of the exchange control system. Since 1949, restrictions on payments in connection with intra-European trade and services have been relaxed considerably. During 1953, restrictions on payments for most purposes to all destinations were further relaxed, and in 1954 the discrimination against imports from and payments to dollar countries was considerably lessened.

Exchange Rate System

The par value is Netherlands Guilders 3.80 = US$1. The official rates are f. 3.77 buying, f. 3.83 selling, per US$1. Basically, exchange transactions are effected at uniform rates based on the par value.

For Canadian and U.S. dollars, sterling, Belgian francs, French francs, free Swiss francs, Swiss “agreement francs,” deutsche marks, Danish kroner, Norwegian kroner, Swedish kronor, and Argentine, Brazilian, Japanese, and Turkish “agreement dollars,” free spot and forward exchange markets have been established. Authorized banks are allowed to cover both spot and forward permitted transactions in these currencies against guilders, in the Amsterdam exchange market and, except for the “agreement dollars,” with banks in the country of the currency concerned. Spot transactions take place at rates within a fixed spread of 1 per cent on either side of parity. Forward transactions must be based on permitted merchandise or service transactions.

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

Authorized banks in the Netherlands are also permitted to conclude spot transactions, and forward transactions for up to six months’ delivery, multilaterally with banks abroad in convertible currencies (U.S. dollars, Canadian dollars, and free Swiss francs).

Special arrangements apply to exchange related to certain countries or in certain currencies, as follows: (1) Egyptian pounds are traded in a spot market without official buying or selling rates, as well as in a free forward market; (2) Belgian-Luxembourg francs on L-accounts (see section on Capital, below) are traded in a spot market to which the official rates do not apply.

Exchange Control Territory

All transactions with the Netherlands overseas territories (the Netherlands Antilles, Surinam, and New Guinea) are subject to exchange control. However, vis-à-vis third countries with which payments agreements are in force, the Netherlands and its overseas territories constitute the Netherlands Monetary Area. The Republic of Indonesia participates in several of the Netherlands’ payments agreements, in particular with EPU countries, and in those cases it also constitutes a part of the Netherlands Monetary Area.

Administration of Control

The administration of exchange control is conducted by the Netherlands Bank on behalf of the Ministers of Foreign Affairs, Overseas Territories, Finance, Economic Affairs, and Agriculture. Import licensing and export licensing are handled by the Central Import-Export Agency (CDIU) and its delegated offices, under directives from the Directorate-General for Foreign Economic Relations. Invisibles and capital transactions are licensed by the Netherlands Bank, as are all transit trade transactions. Sixty-eight authorized banks are permitted to handle foreign exchange transactions within the scope of general and special licenses granted by the licensing authorities.

Prescription of Currency

Payments to nonresidents, if eligible for transfer abroad, must always be made through an authorized bank, either to the credit of a transferable nonresident guilder account held by a foreign bank with an authorized bank in the Netherlands or to the debit of the authorized bank’s holdings abroad of the currency concerned. Such payments to nonresidents must be made in accordance with the prescriptions of Foreign Exchange Notice 1/53, unless approval has been given to effect the payments in another way, viz., (1) where a two-account payments agreement is in force, either in guilders held in a nonresident account related to the partner country or in the partner country’s currency; (2) for a single-account agreement, in the currency of the agreement; (3) in transactions with the United States and Canada, either by debiting an authorized bank’s holdings of the respective currencies in the United States or Canada, or by crediting a free guilder account or an appropriate transferable guilder account (American or Canadian account) held by a U.S. or Canadian bank with an authorized bank; (4) in all other cases, except that of Egypt, in the way indicated in the individual authorization, usually in U.S. dollars or sterling; (5) to Egypt, in Egyptian pounds for most commercial payments and in guilders for most other payments.

The prescription of currencies for exchange receipts is similar to that for exchange payments.

Nonresident Accounts

The main categories of nonresident accounts are given below. Apart from those listed under 5, they are designated by the country of residence of the account holder.

1. Guilder agreement accounts. These are transferable accounts in the names of banks abroad. They are applicable to Canada (Canadian accounts), to the United States (American accounts), to those countries with which there are payments agreements providing for accounts in guilders and in the partner’s currency or in guilders only,1 and to New Guinea. Agreement accounts are transferable to other agreement accounts of the same country or monetary area. They are used for payments and receipts mainly on account of current transactions. They are, in general, convertible into the currency of the country of the account holder in those cases where there is a two-account payments agreement.

2. T accounts. These accounts also are used for current transactions, and general licenses have been granted for current payments from them to residents. T accounts are transferable to other T accounts of the same country or monetary area. Balances standing to the credit of T accounts may be transferred to agreement accounts related to the same country. They may be held by all nonresidents (regardless of nationality) except those who reside in Indonesia or those who emigrated less than four years ago. Their use for capital transactions is prohibited unless the account holder resides or is domiciled in a dollar country,2 or in the Netherlands overseas territories.

3. N accounts—Indonesia. These accounts apply only to nonresidents residing or domiciled in Indonesia, regardless of nationality. There are special regulations applicable to the crediting and debiting of these accounts.

4. K accounts. These accounts may be held by all nonresidents, regardless of nationality, except those who reside in Indonesia or those who emigrated less than four years ago. They are used primarily for investments, but may be debited for some current payments, including travel expenses in the Netherlands up to a daily maximum of f. 100 per person. K accounts may be transferred to other K accounts of the same country or monetary area, and, if held by residents of EPU countries, may be transferred to T accounts. K accounts are classified as follows:

  • (a) K accounts related to Canada, Dominican Republic, El Salvador, Guatemala, Honduras, Mexico, Panama, Switzerland, United States, and Venezuela;

  • (b) K accounts related to other countries; these are subclassified as

    • (i) exportable—the proceeds of the sale or liquidation of securities imported from abroad after May 5, 1945, or derived from securities held in an “exportable security deposit” of a nonresident; or

    • (ii) nonexportable—all other capital proceeds not eligible for credit to an exportable K account.

Netherlands and Indonesian securities, as well as foreign securities denominated exclusively in guilders, which are purchased to the debit of K accounts related to the countries mentioned under (a) and of K accounts described under (b) (i) may be exported. The same applies to securities which are paid for in U.S. dollars, Canadian dollars, free Swiss francs, or free guilders.

5. Free guilder accounts. These accounts are available to all nonresidents except those residing in Indonesia. They may be credited with the proceeds in guilders of gold sold by nonresidents to the Netherlands Bank, and with Canadian dollars, U.S. dollars, and free Swiss francs sold to the Netherlands Bank or an authorized bank. They may be credited as follows: with transfers from other free guilder accounts, Canadian accounts, or American accounts; with amounts authorized to be credited to Canadian or American accounts; or with amounts authorized to be debited to authorized banks’ accounts in Canadian dollars, U.S. dollars, or free Swiss francs. Free guilder accounts may be debited with transfers to other free guilder accounts, guilder agreement accounts, K accounts, or T accounts. They may also be used for all payments within the Netherlands authorized to be made to the debit of an American account, for the purchase of any foreign exchange by a nonresident, and for making available Netherlands banknotes and Treasury notes to the account holder or other nonresidents.

6. E accounts. These are the accounts of emigrants from the Netherlands during the first four years after the date of their departure. After this four-year period, balances may, on application, be transferred to K accounts. The items that may be debited and credited are detailed in licenses applicable to these accounts. Earnings on the capital of emigrants must be credited to E accounts.

7. Z accounts (residual group). These accounts are those to which sums of doubtful origin have been credited. The debiting and crediting of Z accounts is only permitted if expressly allowed by a Foreign Exchange Notice or a general or special license.

Imports and Import Payments

For a large number of liberalized goods imported from OEEC countries and their associated areas, Egypt, Indonesia, New Guinea, Surinam, and the Netherlands Antilles, in consignments of f. 10,000 or less, no licenses are required, so that these goods may be imported upon submission of the customs copies of “import statements,” prepared by the importers, to the customs. Payments may be effected upon submission of the bank copies of the “import statements” to an authorized bank. If the amount does not exceed f. 200, no “import statement” is required and the importation and payment may be effected without documents. All other imports require combined import and exchange licenses. For most goods from OEEC countries and their associated areas,3 licenses are issued automatically upon application; the related liberalization list also applies to Egypt, Indonesia, New Guinea, Surinam, and the Netherlands Antilles. For most of these same goods imported from the dollar area, licenses are also issued automatically. For nearly all imports from the Belgian Monetary Area also, licenses are issued upon application.

Import, export, and transit licenses are combined with exchange licenses. In principle, whenever an import and exchange license is obtained, or if no license is required, payment may be effected without delay, provided that the method of payment is in conformity with the general rules (see section on Prescription of Currency, above).

Payments for Invisibles

All payments for invisibles are subject to exchange license. Many categories of invisibles, however, particularly if payable to OEEC countries or their associated territories and to certain other payments agreement countries, are covered by general licenses; in these cases, the supervision of payments rests with the authorized banks. Supporting documents need not be submitted to authorized banks for payments to OEEC countries which do not exceed f. 1,000 (f. 400 for payments to dollar countries), unless the debtor does not carry an account with the bank.

Tourist exchange, exclusive of the payment of fares, is provided up to the countervalue in the appropriate currency of f. 1,000 per person per trip for travel to any agreement account country (see section on Nonresident Accounts, above). This general license also extends to nonresidents who are domiciled in Indonesia or any of the overseas territories but are staying in the Netherlands temporarily.

Residents traveling abroad who hold passports may take with them all foreign notes acquired in accordance with a general or special license, and a maximum of f. 200 in domestic notes, which may be spent abroad. Nonresidents may, when leaving the Netherlands, export the unused portion of any foreign exchange they declared at the time of entry, as well as f. 1,000 in Netherlands banknotes.

Exports and Export Proceeds

All exports are subject to a combined export and exchange license. No special license, however, is required for a large number of goods exported to certain destinations in consignments not exceeding f. 10,000 in value and provided that payment is received from the country of destination. In these cases, the customs copies of “export statements” should be submitted to the customs and payment may be received upon submission of the bank copies of those statements to an authorized bank. If the value of the goods concerned does not exceed f. 200, no customs or bank copies are required, and the exportation and payment may be effected without documents. The method of payment must be in conformity with the regulations (see section on Prescription of Currency, above).

The prohibition of certain exports to certain East European destinations is based on NATO agreements. The exportation of a very few goods is prohibited in order to conserve domestic supplies.

Surrender of export proceeds is not obligatory; but if they are surrendered, this must be done at the official rate. The collection of export proceeds is obligatory; they must be received in accordance with the prescription of currency, and may then be held in appropriate “foreign currency accounts” with authorized banks. The use of such funds is subject to the usual licensing requirements.

Proceeds from Invisibles

Exchange receipts from invisibles need not be surrendered and may be credited to “foreign currency accounts” instead. For settlement in guilders of incoming exchange from invisibles or capital, the recipient must submit to an authorized bank a form “B” indicating the nature of the underlying transaction as well as the amount and currency received. The authorized banks must also verify that the underlying transaction comes within the scope of the categories of transactions for which the Netherlands Bank permits payments to be received from the remitting country by the method chosen, if payment in that case would have to pass through a transferable account held by a Netherlands or foreign central or private bank. This verification is not required in the case of receipts from Canada, the United States, Indonesia, the Netherlands Antilles, New Guinea, and Surinam. The Netherlands Bank may prescribe the submission of evidence as to the origin of each claim and give other directives pertaining to such exchange receipts to the authorized banks.

Nonresidents may bring into the Netherlands f. 1,000 in Netherlands banknotes and unlimited amounts in foreign banknotes and negotiable instruments. These may be sold only to an authorized bank or an authorized exchange office.

Capital

Inward and outward capital transfers and the shifting of foreign-owned capital within the Netherlands from one asset to another are subject to control. However, general licenses have been granted for the acquisition and sale by nonresidents of real estate in the Netherlands and of Netherlands securities. Payments for interest, dividends, and contractual amortization due to nonresidents are permitted freely to the country of their residence by crediting the appropriate T accounts or guilder agreement accounts.

The Netherlands Bank is prepared to grant licenses to residents for the purchase of foreign securities in EPU countries. These securities must be quoted officially and the capital amount or, as the case may be, the coupons or dividends must be payable in the currency of an EPU country. Payment for such purchases must be effected in an EPU currency. Moreover, residents may, by virtue of a general license, buy foreign securities abroad insofar as payment is made out of any balances abroad which cannot be transferred to the Netherlands owing to the foreign exchange regulations of the countries in which the balances are outstanding; real estate may also be bought to the debit of such balances.

“Liberalized capital accounts” (liberalisierte Kapitalkonten) held by residents with a Netherlands financial institution may be used to purchase securities which are quoted on exchanges in the Federal Republic of Germany and the coupons or dividends of which are payable in deutsche marks, as well as to purchase real estate. Under a general license, residents may make capital payments in Belgium-Luxembourg through the mechanism of L-accounts in Belgian-Luxembourg francs held with authorized banks in the Netherlands. Residents of EPU countries may have the proceeds of the sale of capital invested in the Netherlands transferred to them through the normal payment channels.4 Residents of Belgium-Luxembourg may have their capital transferred to them through guilder K accounts or in Belgian- Luxembourg L-account francs. The export of Netherlands securities and Indonesian securities, and of foreign securities denominated exclusively in guilders, not belonging to residents of Belgium-Luxembourg, is allowed insofar as (1) the owner resides in the United States, Canada, the Dominican Republic, El Salvador, Guatemala, Honduras, Mexico, Panama, Switzerland, or Venezuela; (2) the securities concerned have been imported into the Netherlands after May 5, 1945, or have been acquired by switching securities imported after that date; (3) the securities concerned have been paid for in convertible currency. In these three cases the securities are, on exportation, provided with “red documents.” For Netherlands securities and Indonesian securities, and foreign securities denominated exclusively in guilders, belonging to residents of Belgium-Luxembourg, special regulations have been promulgated in order, among other things, to prevent such securities that have been acquired within the scope of the liberalization of capital transfers between the Netherlands and Belgium-Luxembourg from being re-exported to other countries.

New capital investments in the Netherlands by nonresidents are in general only permitted if made in convertible currencies, but there are special facilities for such investments by residents of Belgium- Luxembourg. Capital proceeds held by nonresidents in K accounts may be reinvested in the Netherlands.

Emigrants are permitted to export on departure foreign exchange to the countervalue of f. 4,000 for an individual emigrant and for the head of a family, plus f. 2,000 for each member of the family, in addition to personal effects. Persons who are of age may, within four years after the date they have taken up residence abroad, have a maximum of f. 25,000 transferred for housing purposes and/or the independent pursuit of their trade or profession. Alternatively, they may buy and export goods up to the value of f. 40,000. Furthermore, every person of age may have four yearly remittances of f. 2,000, the first transfer to be effected one year after settlement. During this period of four years, their guilder funds are held on an E account (see section on Nonresident Accounts, above). After four years have elapsed, emigrants may apply for conversion of their E accounts into K accounts, which places them on the same footing as other nonresidents regarding transfer of their property and income in the Netherlands. Emigrants of 60 years of age or over may have their income from capital transferred forthwith. Pensions may be transferred irrespective of age.

Changes during 1954

January 8

The prohibition on prepayment for imports in Canadian or U.S. dollars or free Swiss francs was removed.

January 20

Authorized banks were permitted to conclude forward exchange transactions for up to three months’ delivery in Norwegian kroner with banks in most West European countries.

March 19

Special exchange facilities were made available for licensed traders in cacao in connection with the reopening of the forward market in cacao in Amsterdam.

March 22

A new Foreign Exchange Notice became effective, recodifying the nomenclature and treatment of nonresident guilder accounts. TN accounts were abolished; the ownership of N accounts was limited to residents of Indonesia, and other existing N accounts became K or E accounts. Other Foreign Exchange Notices recodified the treatment of securities (abolishing the previous distinction between domestic and international securities) and of inheritances involving foreign interests.

The following changes took place in the capital transactions permitted to nonresidents: (1) Residents of EPU countries other than Belgium-Luxembourg and Switzerland (but see May 29, below) could have the proceeds of the sale of capital invested in the Netherlands transferred to them, and assets on their K accounts could be transferred to T accounts or remitted direct to the country of the account holder. Residents of Belgium-Luxembourg and Switzerland could enjoy the same facilities if their respective exchange control authorities certified that the amounts concerned would be accepted by them through the normal payment channels. (2) On the other hand, new capital investments by nonresidents would only be permitted if made in convertible currencies. (3) Residents of Canada, United States, Dominican Republic, El Salvador, Guatemala, Honduras, Mexico, Panama, Venezuela, and Switzerland could have their securities exported. (4) The obligatory reinvestment by nonresidents of the proceeds of guilder securities and of immovable property in the Netherlands was abolished.

April 1

General licenses made the travel exchange allowance of f. 1,000 per person per trip available in most countries, including Canada and the United States; previously, the allowance had been available only in EPU countries and their associated territories, Finland, the Spanish Monetary Area, and Yugoslavia.

Special exchange facilities were made available for authorized contractors in connection with the reopening of the forward market in barley in Rotterdam.

May 1

A revised general license enabled intermediaries to transfer to dollar countries total amounts in excess of f. 400 in respect of funds collected by them from residents on account of certain current invisibles, provided the amount collected from each separate resident was not more than f. 400. The revision of another general license enabled intermediaries to pay to most countries (Canada and the United States excepted) total amounts in excess of f. 1,000 in respect of funds collected by them from residents on account of certain current invisibles, provided the amount collected from each separate resident was not more than f. 1,000. Previously, this facility did not exist for intermediaries, and the number of countries for which the second license was effective was more limited.

May 21

A new trade and payments agreement with Argentina came into effect. The guilder as the agreement currency was replaced by an “agreement dollar,” which, by the issuance of general licenses, was added to the list of currencies which could be dealt in between authorized banks and residents at spot rates at or between the official rates or on a forward basis up to 12 months.

May 29

Residents of Belgium-Luxembourg and Switzerland could have the proceeds of the sale of capital invested in the Netherlands transferred to them through an agreement account or credited to their T account; the related license authorizing the transfer of K account balances or credits to T accounts no longer made such transfers or credits dependent on certification by the Belgian-Luxembourg or Swiss exchange control authorities.

May 31

General licenses added Japanese “agreement dollars” to the list of currencies which could be dealt in between authorized banks and residents at spot rates at or between the official rates or on a forward basis up to 12 months.

The list of goods which could be imported from the dollar area without quantitative restriction was considerably enlarged, making it almost the same as the list of goods importable without quantitative restriction from OEEC countries and their associated territories.

June 1

A general license was issued enabling residents who hold passports to take out of the Netherlands f. 200 in domestic notes and coins (previously f. 50) and to dispose of them abroad for traveling expenses; nonresidents could bring in or take out f. 1,000, instead of f. 100 as previously.

June 25

A Foreign Exchange Notice was published by which nonresidents participating in enterprises in the Netherlands by virtue of an exchange license granted after November 1, 1950 could be granted, upon request, a license for the retransfer of the proceeds of their participation.

July 16

Capital transfers between the Netherlands and Belgium-Luxembourg were liberalized by the creation of a free capital market. Capital transactions must be channeled through the free market. Current payments would continue to be effected through the normal payment channels, with the exception of rentals, leases, mortgage interest, profits from business activities, contractual amortization, coupons, dividends, and traveling expenses, which could be effected either through the normal payment channels or through the free market. In the Netherlands, the K accounts of Belgian-Luxembourg residents would be used for capital payments; in Belgium-Luxembourg, the L-accounts of Netherlands residents would be used. Netherlands residents could only keep L-accounts on the books of Netherlands banks, and could not keep L-accounts in their own names in Belgium-Luxembourg. General licenses were issued enabling authorized banks to debit Belgian or Luxembourg franc L-accounts on their books in the names of residents to pay Belgian-Luxembourg residents for purchases of real estate, purchases of Belgian, Luxembourg, Congolese, Netherlands, or Indonesian securities, purchases of foreign bonds denominated exclusively in guilders, and for rentals, leases, mortgage interest, and life insurance premiums due in Belgian or Luxembourg francs. Such accounts could also be used for the purchase of travel exchange in Belgian or Luxembourg francs. Another general license enabled residents of Belgium-Luxembourg to buy the securities referred to above to the debit of their K accounts held in the Netherlands. Netherlands residents could buy Belgian L-account francs against guilders to be credited to K accounts and could sell L-account francs to Belgian and Luxembourg residents to the debit of K accounts. Moreover, Netherlands residents could sell to other residents of the Netherlands the amounts of L-account francs they possess on the books of Netherlands authorized banks.

August 1

A general license authorized residents to pay to and receive from nonresidents amounts up to f. 200 or the countervalue thereof on account of debts and claims arising out of current transactions. No “A” or “B” forms, licenses, or bank copies of import and export statements need be submitted to the authorized banks. The prescription of currency requirements must, however, be adhered to. For imports and exports falling within the scope of the “statement” procedure, no customs copies would be required, provided the amount concerned did not exceed f. 200 or the countervalue thereof (see sections on Imports and Import Payments, and Exports and Export Proceeds, above).

August 9

A general license, issued to authorized banks on August 7, enabled them to open free guilder accounts in the names of nonresidents not residing or domiciled in Indonesia. The license specified the permitted debits and credits to such accounts.

October 12

A general license was issued permitting authorized banks to sell to nonresidents claims in foreign exchange which cannot be remitted to the Netherlands, against free guilders, U.S. or Canadian dollars, or free Swiss francs. Residents were permitted to sell such claims to other residents, to use them to purchase real estate, or to purchase or subscribe to foreign securities expressed in the same currency as the claim.

Nicaragua

Origin and Essential Features

Control over exchange transactions was introduced in Nicaragua on November 13, 1931. Subsequently, certain changes affecting trade and payments transactions were introduced, and at various times exports and imports have been made subject to government control. The last major revision became effective November 9, 1950, when the exchange rate system was simplified by the elimination of compensation and certificate practices and of a system of individual import quotas.

The exchange system comprises a multiple exchange rate structure consisting of two official rates with, in addition, two surcharges. All exchange receipts (other than travel receipts) must be surrendered at a fixed rate. There are no quantitative restrictions or prohibitions to restrain imports. There is a fluctuating free market for transactions of minor importance.

Exchange Rate System

The par value is Córdobas 5 = US$1. The rate system is based on two official rates of C$5 and C$7 per US$1. By mixing these rates in different proportions and by adding surcharges of C$1 and C$3 per US$1 to certain types of payments, other effective rates are obtained for the various categories of incoming and outgoing payments (see Table of Exchange Rates, below).

Administration of Control

The control system is administered by the Issue Department of the National Bank of Nicaragua, which issues import and export permits and allocates import commodities to the established categories of “essential,” “semiessential,” and “nonessential” goods. All sales of exchange pass through the Issue Department and the Banking Department of the National Bank or through authorized banks.

Prescription of Currency

There is no prescription of currency; incoming and outgoing payments normally are made in U.S. dollars.

Imports and Import Payments

For the purpose of applying the established exchange rates and surcharges, private imports are classified in three categories, to which the rate of C$7.0525 applies: Category I (essential), Category II (semiessential), and Category III (nonessential). Surcharges of C$1 and C$3 per US$1 apply to payments for imports in Categories II and III, respectively. Specified government payments abroad are made at the rate of C$5.0375 per US$1. All imports are subject to license, but only to assure that the corresponding exchange transaction takes place at the applicable rate and that the relevant surcharge has been paid in advance.

Before making an application to import, the importer must deposit in domestic currency 75 per cent of the calculated value of imports in Category I (except for some specified goods) and 100 per cent of the calculated value of imports in Categories II and III.

Payments for Invisibles

All invisibles are subject to authorization, in order to apply the appropriate surcharge. Payments for invisibles incidental to import transactions are subject to the same rate and procedure as the corresponding import.

Students’ expenditures, payments of insurance premiums, and remittances on account of foreign investments are made at the rate of C$7.0525 per US$1. Other invisibles are treated like Category III imports and are therefore subject to the C$3 per US$1 surcharge added to the C$7.0525 per US$1 rate, and to a 5 per cent exchange tax; however, these invisibles are usually paid for through the free market without payment of surcharge or tax.

Domestic currency notes may be exported freely.

Exports and Export Proceeds

Exports are subject to a licensing procedure similar to that for imports, which serves to assure that all exchange receipts are surrendered at the effective rate of C$6.60 per US$1.

Proceeds from Invisibles

Proceeds from invisibles, except travel receipts, are subject to the same regulations as proceeds from exports. Domestic currency notes may be imported freely.

Capital

Remittances abroad of income and amortization of registered foreign capital require the authorization of the National Bank. Remittances for amortization may not exceed 10 per cent per annum of the capital. The rate of C$7.0525 per US$1 applies to these remittances.

No official exchange is sold to residents for transfers of capital abroad.

Banknotes

Foreign currency notes may be negotiated in a free market.

Table of Exchange Rates (as at December 31, 1954)(córdobas per U.S. dollar)
BuyingSelling
5.00

….
5.0375

Specified government payments.
6.60 (20% at C$5 and 80% at C$7)

All export proceeds. Most invisibles. Registered capital.
7.0525

Essential imports (Category I) and related invisibles. Students’ expenses. Insurance premiums. Registered capital.
7.10 (Fluctuating Free Market Rate)

Travel and similar expenses.
7.10 (Fluctuating Free Market Rate)

Travel receipts.
8.0525 (C$7.0525 plus C$1 Surcharge)

Semiessential imports (Category II) and related invisibles. Medical expenses.
10.0525 (C$7.0525 plus C$3 Surcharge)

Nonessential imports (Category III) and related invisibles. Other invisibles.

Changes during 1954

July 17

Imports of certain types of cotton cloth of ordinary quality were shifted from Category I to Category II.

October 28

The requirement of a 75 per cent advance deposit in córdobas was eliminated in respect of imports of prefabricated warehouses, cotton picking and ginning machinery, and large cargo trucks, subject to prior approval in each case by the Ministry of Economy.

Norway

Origin and Essential Features

An exchange control law was introduced in Norway on May 18, 1940 and revised on November 10, 1944 and July 19, 1946. A new law, embodying previous regulations, was issued on July 14, 1950, but it has not yet been implemented. Severe restrictions on all foreign payments were applied up to the end of 1949. During the period 1950–52, restrictions were relaxed, especially in connection with intra-European trade and services.

Exchange Rate System

The par value is Norwegian Kroner 7.14286 = US$1. The official rates for telegraphic transfers are NKr 7.135 buying, NKr 7.150 selling, per US$1. Parity rates for other currencies are based on the par value for the U.S. dollar.

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

Administration of Control

In principle, all imports and exports require licenses granted by the Ministry of Commerce. However, goods listed on the so-called “free list” may be imported against a “declaration.” All payments to nonresidents, and vice versa, must be made through one of the Norwegian authorized banks or through the Bank of Norway. Generally, all payments require approval from either the Ministry of Commerce (in respect of goods) or the Bank of Norway (in respect of invisibles). However, the authorized banks may effect payments to nonresidents in settlement of goods on the “free list,” and to a certain extent payments to nonresidents in respect of invisibles may be effected without prior permission from the Bank of Norway.

Prescription of Currency

The prescription of the methods in which payments to and receipts from nonresidents are to be made is set out in the payments agreements concluded with other countries.1 Usually, inward and outward payments must be made in either Norwegian kroner or the currency of the country of the nonresident (double-account payments agreements), or a single currency (single-account payments agreements). Payments effected in Norwegian kroner are made into and out of free accounts held in Norwegian kroner with the authorized banks (see section on Nonresident Accounts, below).

Nonresident Accounts

There are two types of nonresident account held in Norwegian kroner with the authorized banks: free accounts and blocked accounts. Free accounts may be used for all payments to and from the country of the nonresident holder in all cases where the payments agreement with the country concerned allows payment to be made in Norwegian kroner. Any balance in a free account may be converted at any time into the currency of the country of the holder.

Nonresident-owned capital, which normally cannot be transferred abroad, is deposited in blocked accounts. These accounts may be used by the holder to cover various expenses in Norway, such as personal taxes, insurance premiums, traveling expenses, etc., and for investment in bonds that are issued in Norwegian kroner only, are quoted on the Norwegian Stock Exchange, and do not mature earlier than five years from the date of purchase. Bonds acquired in this way may either be deposited with an authorized Norwegian bank or be sent to the owner abroad.

Imports and Import Payments

All goods on the so-called “free list” may be imported freely from OEEC countries and their associated areas 2 and from Czechoslovakia, Finland, Hungary, Israel, Poland, Rumania, the Spanish Monetary Area, and Yugoslavia. All other imports require import licenses.

Imports that must be paid for in U.S. dollars or other hard currencies are to a considerable extent limited to goods considered essential to the Norwegian economy.

If no license is required, or when an import license is obtained, payment may be effected without delay, subject to presentation of a copy of the import declaration or a copy of the import license, and provided that the method of payment is in conformity with the general rules (see section on Prescription of Currency, above).

Payments for Invisibles

Exchange for payments to nonresidents for most current invisible transactions is granted freely. Norwegian tourists to EPU countries, Finland, Spain, and Yugoslavia are granted the equivalent of NKr 700 per year for each adult.

Each person leaving Norway may export NKr 50 in Norwegian banknotes. Nonresidents leaving Norway may export any foreign banknotes that they can prove they brought into the country.

Exports and Export Proceeds

With the exception of a few commodities that may be exported freely to certain countries, all exports are subject to license. Payment must be received in conformity with the regulations (see section on Prescription of Currency, above). All exchange resulting from exports must be surrendered.

Proceeds from Invisibles

Incoming receipts from invisibles must be surrendered. Each person entering Norway may import NKr 50 in Norwegian banknotes and any amount in foreign banknotes.

Capital

Inward and outward capital transfers are subject to approval by the Bank of Norway. Payments for contractual amortization are permitted freely. Capital transfers to Denmark, Sweden, and the United Kingdom normally are permitted. Transfers to the United States and Canada may be made within certain limits, depending upon the merits of the case. Furthermore, inherited capital assets owned by residents in the United States and Canada may be transferred. Repatriation of moderate amounts of other nonresident-owned capital is permitted in cases of hardship. All transactions in securities involving nonresident interests are subject to approval.

Changes during 1954

January 20

The multilateral arbitrage arrangements with eight other West European countries were extended to include forward transactions for up to three months’ delivery at rates determined by market conditions.

February 27

Nonresidents staying temporarily in Norway were permitted to purchase, from authorized banks, the equivalent of NKr 400 in EPU currencies against any other EPU currency.

May 4

The tourist exchange allocation of NKr 700 per year was extended to cover trips to Spain.

May 25

Rumania was included in the Norwegian “free list” arrangements for imports.

June 9

Exchange allocations for business trips were increased.

August 10

Authorized banks were permitted to engage in forward dollar transactions with their customers for periods not exceeding 90 days. All such transactions must take place at the spot selling or buying rates quoted on the Oslo Exchange, and must be based on legitimate payments in connection with authorized trade or service transactions.

Pakistan

Origin and Essential Features

Exchange controls similar to those in effect in undivided India from September 1939 were continued by Pakistan in August 1947. On February 27, 1951, remittances to and from India also became subject to exchange control. Pakistan’s exchange control system is for the most part similar to that of other members of the Sterling Area. In general, Pakistan exercises control over exchange receipts, and requires the surrender within prescribed periods of time of most incoming foreign exchange and the approval of the control authorities for payments to nonresidents. Pakistan also avails itself of the Sterling Area payments arrangements made by the United Kingdom. These arrangements are reflected in Pakistan’s exchange control system through the prescription of currencies for payments and receipts.

Exchange Rate System

The par value is Pakistan Rupees 3.30852 = US$1. Exchange transactions are effected at uniform rates. All transactions in foreign exchange must be conducted through authorized dealers, whose transactions with the general public must be effected at rates authorized by the State Bank of Pakistan on the basis of par values established by the Fund and its members. Authorized dealers in Pakistan are permitted to cover in the London market their requirements of certain specified foreign exchange. They may also cover their permitted transactions in specified currencies against sterling or Pakistan rupees either spot, or forward for a limited period, with their agents in the countries concerned.

Administration of Control

All transactions in foreign exchange must be effected through authorized dealers. The State Bank of Pakistan has delegated to 22 commercial banks authority to deal in all foreign currencies, to supervise surrender requirements, and to sell exchange for specified purposes within limits prescribed by the State Bank.

Prescription of Currency

Regulations prescribe the currencies to be used for both trade and nontrade payments with different countries and monetary areas. The prescribed methods are similar to those of the United Kingdom and most other Sterling Area territories. Exchange receipts have to be obtained through a bank. Receipts from non-Sterling Area countries must be obtained either in sterling through a nonresident account in the United Kingdom related to any Transferable Account country, Canada, an American Account country, or Turkey, according to the country concerned, or, in some cases, in other specified currencies. Receipts from Sterling Area countries (other than India) must be received in Pakistan rupees or sterling from the account of a resident in the Sterling Area other than a resident of India or Pakistan.

Payments abroad by residents of Pakistan to countries within the Sterling Area are made by the transfer of sterling or any other Sterling Area currency to the appropriate account of a nonresident; payments to countries outside the Sterling Area are made by the transfer of sterling or Pakistan rupees to an account related to any Transferable Account country, Canada, an American Account country, or Turkey, according to the residence of the recipient, or, in some cases, in the recipient’s currency. Temporarily, however, imports from France and all cotton exports to France covered by special payments arrangements may be settled only in French francs. Exchange transactions with India are made only in Indian or Pakistan rupees. Transactions with Afghanistan are made in Pakistan rupees.

Nonresident Accounts

Different rules apply to nonresident rupee accounts of individuals, firms, or companies, on the one hand, and to nonresident rupee accounts of banks, on the other. Authorized dealers may open rupee accounts for foreign banks without reference to the State Bank, but approval is required for opening other nonresident accounts. Transfers from nonresident banks’ rupee accounts in Pakistan to the corresponding sterling accounts in the United Kingdom are allowed, but other nonresident account holders must obtain permission from the exchange control for transfers from their credit balances. Accounts of residents of India are governed by separate regulations.

Imports and Import Payments

All imports are subject to license, except goods imported by the Central Government for defense purposes, goods for which orders are placed directly by the departments of the Central Government, certain goods imported over the land route from Afghanistan, and certain other items permitted under a Ministry of Commerce Notification (No. 335/260/24, June 12, 1951). Individual import licenses are of three types: (1) those for the dollar area, which may be used for purchases in all countries; (2) those for the non-dollar area, including Japan; and (3) single country licenses, valid for imports from a particular country only, in terms of the trade agreement with that country.1 Import licenses are issued only on a c. & f. basis.

Foreign exchange under the regulations (see section on Prescription of Currency, above) is made available upon receipt of an import license from the applicant. His application must, however, be placed through an authorized bank in the exchange control area in which he resides; for this purpose there are four areas: (1) Karachi and Sind including Khairpur State; (2) Baluchistan and Baluchistan States Union; (3) Punjab, North West Frontier Province, Bahawalpur, and other states in West Pakistan; and (4) East Pakistan. Imports of capital goods on a deferred payments basis from Japan and the United Kingdom, as well as from other countries, may in some cases be approved. These arrangements provide for an advance remittance not exceeding 10 per cent of the value at the time of placing the order, 15 per cent on complete shipment of the goods, and the balance in approximately equal half-yearly installments over a period of five years from the date of contract or the date of shipment, as the case may be. There are also separate payments arrangements applying to special iron and steel imports on a deferred payments basis.

Payments for Invisibles

Payments for invisibles are controlled by the State Bank and require licenses. Authorized dealers may sell exchange or make remittances in accordance with detailed regulations. Although remittances for business and commercial purposes normally are permitted, remittances of a personal nature either are subject to annual quotas or are permitted on their individual merits. Separate regulations govern payments to India for invisibles, including limitations on travel and similar personal remittances. Remittances by Pakistan nationals to their families abroad require special authority. Foreign exchange is granted for expenses incidental to trade transactions, but not to importers for transport insurance, which may only be effected with insurance companies in Pakistan. Exchange is granted for transfers abroad of dividends and other earnings due to nonresidents. Payment for international travel fares is permitted if certain conditions are met. The allocation of exchange for tourist travel is subject to basic annual rations, which vary according to the country to be visited; however, there is no basic ration for tourist travel to North, Central, and South America, and the Philippine Republic.

Nonresident travelers may take out foreign currency not exceeding the amounts they brought in. Residents of Pakistan leaving for Afghanistan may take with them Afghan currency without limit; for other countries, foreign currency notes up to the equivalent of PRs 50 per person at any one time or sterling notes not exceeding £10 may be taken out.

Exports and Export Proceeds

The export of selected commodities is allowed, free of export control, under open general license. Other commodities are subject to export license. In both cases, the State Bank exercises control over exchange receipts and requires a declaration by the exporter, which ensures surrender of the foreign exchange earned.

An authorized dealer is empowered to certify an export shipment after making sure that the exporter’s declaration meets specified conditions. The exporter declares that, when payment in accordance with the prescribed method (see section on Prescription of Currency, above) is received, he will surrender the specified foreign currency within a certain period of time. Exporters of certain primary and manufactured goods may obtain licenses for specified imports up to about 20 or 30 per cent of the value of their exports.

Proceeds from Invisibles

Incoming foreign exchange from invisibles, with the exception of certain currencies,2 must be surrendered at the official rate within one month. Travelers entering Pakistan are permitted to bring with them Pakistan currency notes up to PRs 100 per person, sterling notes up to £10 per person, and coins that are legal tender in India up to Rs 5 per person. There is no limitation on the import of other currency notes, subject to declaration to the customs.

Capital

Regulations cover both inward and outward transfers of capital by residents and nonresidents. Detailed rules govern the transfer of capital by persons emigrating or retiring from Pakistan, depending upon the nationality of the person concerned and the country or monetary area to which transfers are to be made. Under an agreement with the United Kingdom, the transfer of capital assets belonging to U.K. nationals is freely authorized by the State Bank. Other foreign nationals resident in Pakistan may be permitted to transfer capital assets up to £5,000. Residents are permitted to buy and sell foreign securities upon approval by the State Bank, provided the foreign exchange proceeds resulting from such sales are surrendered.

Investments by nonresidents in Pakistan are subject to approval. In accordance with the new investment policy, foreign investors may invest capital, up to 60 per cent of the total investment, in approved industries. A supplementary statement of the Pakistan Government, dated November 3, 1954, states that the following decisions have been taken: “(1) Capital invested in industries after the 1st September 1954, in projects approved by the Government of Pakistan may be repatriated at any time thereafter to the extent of the original investment to the country from which the investment originated. (2) Any part of the profits derived from investment and ploughed back into approved industrial projects with the approval of the Government of Pakistan may be treated as investment for the purpose of repatriation. (3) Appreciation of any capital investment under (1) and (2) above may also be treated as investment for repatriation purposes. In the case of investment by means of goods and services the amount will be the rupee value of such goods or services as recorded in the books of the company or firm concerned at the time of investment. (4) Such repatriation facilities will be subject to exchange control regulations as are in force from time to time and will not apply (a) to purchase of shares on the stock exchange unless it is an integral part of an approved investment project and (b) to capital invested in Pakistan before the 1st September 1954. If any undertaking is nationalized, just and equitable compensation would be paid to the dispossessed owners and would be freely remittable to the country of residence of the foreign owners concerned.”

Transfers of capital abroad and repatriation of investments other than those of U.K. origin are not normally permitted, except where this has been arranged by prior agreement with the Government, or is in accordance with the new investment policy. Profits and other income, dividends, and interest may, after prior approval of the State Bank and subject to certain limitations, be remitted. The exportation of, and transactions in, securities involving nonresidents are subject to approval. Proceeds accruing from the liquidation of nonresident capital assets may be credited to blocked accounts. Balances on blocked accounts may be invested in approved securities payable in Pakistan rupees. Transfers of capital abroad by residents are not permitted.

Changes during 1954

February 16

The basic annual exchange allowance for travel to India was changed to 100 Indian rupees for adults with air or steamer tickets or 50 Indian rupees for adults proceeding by land.

March 4

The amount of Pakistan currency notes which could be brought in by travelers was increased from PRs 50 to PRs 100 per person.

April 22

The exchange allowances for the 1954 season for pilgrims going to Hejaz were announced.

May 10

The prescriptions of currency affecting settlements with other countries in sterling or Pakistan rupees were simplified in conformity with the changes made in the United Kingdom’s sterling payments regulations.

June 2

It was announced that the import of cinema films would be allowed from all countries, including India, on a rental basis, rentals to be subject to a ceiling for each country determined on the basis of the number of films imported and remittances made previously.

June 12

The basic exchange allowance for persons traveling by steamer deck class to Iraq, Iran, Burma, Ceylon, etc., was reduced from £43 to £30.

June 15

It was announced that the Pakistan-France trade and payments agreement, due to expire June 30, 1954, had been extended to June 30, 1955.

June 19

It was announced that a temporary scheme to increase receipts from marginal exports would operate until March 31, 1955. Exporters of certain primary and manufactured goods would be entitled to receive licenses for specified imports up to about 20 or 30 per cent of the value of their exports.

June 28

Cyprus was included in the group of countries for which the basic travel exchange allowance was £43 (or £30 if traveling by steamer deck class) ; previously, the basic allowance for travel to Cyprus had been £150.

July 1

All imports from Iran were made subject to import license, except for certain goods that are allowed freely provided payment is made by exporting goods on export open general license. Consequently, exports to Iran by the land route, where the goods are covered by export open general license, were exempted from the completion of an export control form.

July 10

The import policy for the second half of 1954 was announced. The number of items to be licensed was 270, against 287 in the first half of the year.

September 8

Payments for imports could be made only by an authorized bank in the same exchange control area of Pakistan as that in which the holder of the import license resides. For this purpose, Pakistan was divided into four exchange control areas.

September 17

All licenses for family maintenance remittances to India required revaluation by the State Bank.

October 5

It was announced that import licenses of a certain value would be issued for iron and steel imports under deferred payments arrangements providing for payment (after shipment) of one third in January 1955, one third in July 1955, and one third in January 1956.

October 15

New incentives to foreign investment in Pakistan were announced. No restrictions would be placed on the remittance of profits in the original currency of the investment, and the remittance of foreign investments made after September 1, 1954, including capital gains and reinvested profits, was guaranteed. The percentage of permitted foreign participation was raised from 49 per cent to 60 per cent, in all industries except public utilities, where the percentage of foreign capital would be decided in each case.

October 18

The export to India of securities, other than those of Indian companies, was made subject to the prior permission of the State Bank.

October 19

The range of export and import commodities to which the export incentive scheme (see June 19, above) applied was increased.

November 22

Hong Kong was included in the group of countries for which the basic travel exchange allowance was £43 (or £30 if traveling by steamer deck class); previously, the basic allowance for travel to Hong Kong had been £150.

Imports of books and magazines of literary or educational value were permitted against payment in Pakistan rupees, in accordance with an agreement entered into between the Governments of Pakistan and the United States for the import of books and magazines from that country under the “Informational Media Guarantee Program.”

December 8

Special arrangements were introduced to facilitate imports of books from the United States under the “Informational Media Guarantee Program.”

Paraguay

Origin and Essential Features

Exchange control as an instrument of monetary policy has been maintained in Paraguay since 1932, the first exchange control commission having been created under a government decree of June 28, 1932.

The surrender of foreign exchange derived from exports was originally limited to 50 per cent, or, with the agreement of the Ministry of Finance, full retention was allowed for certain exports. Since February 1941, an exchange monopoly and total surrender of the foreign exchange proceeds from exports have been in effect. Foreign exchange is traded on the official market, a controlled “free” market, and a free market conducted by exchange houses. Imports and most noncommercial payments require exchange licenses. Various exchange surcharges are applied to payments for certain imports and services effected through the official market. Export taxes and exchange subsidies are applied to certain exports.

Exchange Rate System

The par value is Guaraníes 21 = US$1, and this is the basic rate in the official market. Certain government payments receive a subsidy of ₲ 6, while other government payments are made at a rate of ₲ 30, per US$1. Payments for essential imports are made at the basic rate, while payments for less essential imports are subject to surcharges of ₲ 6 or ₲ 15 per US$1. Other surcharges of ₲ 28, ₲ 35, or ₲ 44 per US$1 apply to various categories of nonessential imports. Luxury imports and imports formerly made with privately held exchange enter at rates of ₲ 65 or ₲ 73.70. Three other fixed rates apply to specified invisible payments. The basic rate applies to export proceeds, but subsidies are given for most exports and taxes are applied to some other exports. A “free” market controlled by the Central Bank of Paraguay is used for most freight payments, certain other invisibles, and nonregistered capital transactions. Other transactions may be effected freely at fluctuating rates in a market conducted by exchange houses. (See Table of Exchange Rates, below.)

Administration of Control

Exchange controls are operated by the Central Bank of Paraguay, which issues all exchange licenses required in the official market and the controlled “free” market. Exchange transactions in the two markets must be effected through the Central Bank. The Bank also controls the operations and exchange rates in the fluctuating free market, except those of the exchange houses, to which no restrictions are applied.

Prescription of Currency

Paraguay maintains payments agreements with several countries, according to which exchange payments and receipts must be effected through clearing accounts in specified currencies.1 Most other exchange receipts and payments are effected in U.S. dollars, with some payments in sterling.

Imports and Import Payments

Imports may enter Paraguay only if an exchange contract having the effect of an import and exchange license has been concluded with the Central Bank. The import of nonessential items is restricted.

Applications for import licenses must be accompanied by bank certification of a prior deposit in local currency, ranging from 10 per cent of the import value for Group I imports to 35 per cent of the value for Group V imports. The deposit requirement is doubled for an application for the opening of an irrevocable letter of credit. These deposits are placed with the commercial banks, which must pass them on to the Central Bank each day.

In concluding exchange contracts, there is, in certain cases, some discrimination based on the limited availability of convertible currencies. Prescription of currencies is applied to payments for imports from countries with which Paraguay has payments agreements (see section on Prescription of Currency, above).

Imports are divided into five categories. Payments for essential imports (Group I) are made at the basic rate of ₲ 21 per US$1. The application of exchange surcharges of ₲ 6 and ₲ 15 per US$1 for Group II and Group III imports, respectively, results in effective exchange rates of ₲ 27 and ₲ 36 per US$1. Three additional effective rates, resulting from surcharges of ₲ 28, ₲ 35, or ₲ 44 on the basic rate, apply to subdivisions of Group IV imports. Imports in Group V and certain imports which formerly entered with privately held exchange are paid at rates of ₲ 65 or ₲ 73.70 per US$1.

Payments for Invisibles

Certain government payments are effected at the rate of ₲ 15, and other government payments at the rate of ₲ 30, per US$1. Payments for certain essential invisibles are permitted at the ₲ 21 rate. Rates of ₲ 45 and ₲ 55 per US$1 are applied to other specified invisibles. Most freight payments on account of exports and imports are made at the controlled “free” market rate. All these payments are subject to individual exchange license. All other invisibles may be transacted through the exchange houses, and in exceptional cases are permitted through the controlled “free” market. No licenses are required for payments through the exchange houses.

Exports and Export Proceeds

A sales declaration must be approved by the Central Bank for all exports, and an obligation to return the exchange proceeds of exports to Paraguay must be undertaken before shipment of the goods. With certain exceptions, irrevocable letters of credit are required for exports. The foreign currencies to be received for exports are specified (see section on Prescription of Currency, above). A few goods for domestic consumption that are in short supply require export licenses from the Ministry of Commerce and Industry. The export of strategic materials to Mainland China, North Korea, and certain other countries is prohibited.

Exchange proceeds of exports must be surrendered to the Central Bank at the ₲ 21 rate, in accordance with the sales declaration, to the extent of the officially appraised value (aforo) of the goods; the difference between this value and the actual receipts may be sold in the “free” market. For some minor exports, the surrender requirement applies to the actual sales value, i.e., the surrender requirement is 100 per cent. Export taxes ranging up to 28 per cent are applied to certain exports, and many exports receive exchange subsidies under a temporary arrangement. The surrender requirement is waived in respect of the proceeds of certain minor exports involved in border trade with Argentina, which may be used freely for minor imports; however, each such import may not exceed the equivalent of US$133, and only one transaction a week may be effected.

In addition, the surrender requirement is modified in respect of export firms (mostly foreign-owned) who possess foreign exchange resources. Such firms may enter into “exchange swaps” with the Central Bank. Under these arrangements, the exporting firm sells foreign currency to the Central Bank on a spot basis, thus acquiring guaraníes, and at the same time a forward contract is concluded by which the firm obtains the right to repurchase the foreign exchange against guaraníes at the same rate within a period of 180 days, renewable for a further period of 180 days. An exchange rate of ₲ 40 per US$1 is applied to these transactions. Exchange proceeds resulting from the sale of exports are surrendered against guaraníes, which are then used to acquire foreign currency under the terms of the forward contract.

Proceeds from Invisibles

Registered insurance and government receipts are the only invisibles for which exchange proceeds must be surrendered at the official rate. Receipts from all other invisibles may be negotiated freely in the “free” market.

Capital

Foreign capital registered by the Central Bank must be surrendered at the ₲ 21 rate, and transfers from Paraguay of such capital through the official market are subject to exchange license. Nonregistered foreign capital may enter freely through the controlled “free” market, but any outward capital payments through that market are subject to exchange license. No licenses are required for capital payments made through the exchange houses, either by residents or nonresidents.

Table of Exchange Rates (as at December 31, 1954)(guaraníes per U.S. dollar)
BuyingSelling
15.00 (₲ 21 less ₲ 6 Subsidy)

Certain government payments listed in Section I. Government basic imports.
21.00 (Basic Rate)

All exports.2 Registered capital. Government receipts.
21.00 (Basic Rate)

Group I imports. Registered capital. Certain invisibles listed in Section I.
27.00 (₲ 21 plus ₲ 6 Surcharge) Group II imports.
30.00

Certain other government payments listed in Section II.
35.00

Freight payments to Argentina and Uruguay.
36.00 (₲ 21 plus ₲ 15 Surcharge) Group III imports.
45.00

Certain authorized invisibles listed in Section II.
49.00 (₲ 21 plus (₲ 28 Surcharge) Some Group IV (Section I) imports.
55.00

Payments for approved correspondence courses.
56.00 (₲ 21 plus ₲ 35 Surcharge) Group IV (Section II) imports.
65.00 ((₲ 21 plus ₲ 44 Surcharge) Group IV (Section III) imports. Group V (Section I) imports and imports formerly made with privately held exchange.
61.50 (Controlled “Free” Market Rate)

Export oforo differentials. Invisibles. Nonregistered capital.
63.30 (Controlled “Free” Market Rate)

Freight payments and related expenses. Certain other authorized invisibles. Nonregistered capital.
66.70 (Fluctuating Free Market Rate)

Export aforo differentials. Invisibles. Nonregistered capital. Some minor export proceeds.
68.70 (Fluctuating Free Market Rate)

Other invisibles. Nonregistered capital. Parcel post imports.
73.70

Group V (Section II) imports.
Note: The above rates do not apply to transactions with Argentina (see section on Changes during 1954, August 10 and December 1, below). For invisible payments to Brazil and Uruguay, the rates are ₲ 1.14 per Cr$1 and ₲ 8.94 per Ur$1, respectively.

Changes during 1954

January 1

The par value was changed from ₲ 6 to ₲ 15 per US$1. The temporary subsidies on government payments abroad were abolished, except for payments outstanding under the fiscal 1953 budget. A new rate of ₲ 45 per US$1 was established for specified invisibles. A new Group V was created for imports, for which payment was to be made through the controlled “free” market.

February

The Central Bank of Paraguay signed a payments agreement with Czechoslovakia.

February 18

The rates in the controlled “free” market were altered from ₲ 55.00 to ₲ 59.50 buying, and from ₲ 56.00 to ₲ 61.00 selling, per US$1.

March

The Central Bank ruled that, in cases where imports of motorcars and vans are authorized by government decree, these decrees must be presented to the Central Bank within 45 days with an application for an import permit, which will be granted within 30 days. The importer must pay the equivalent of the cost of the vehicle at the “free” rate plus 10 per cent.

March 31

Among the concessions granted to certain eligible coffee producers was the privilege of retaining 50 per cent of the foreign exchange earned from exports of coffee of their own production. This exchange would be used for capital service payments connected with the coffee program. Any such exchange not utilized was to be sold to the Central Bank at the controlled “free” rate.

April

The Central Bank ruled that, in the case of imports authorized with the use of privately held exchange (divisas propias), the applicant must present to the Central Bank a certificate from a local bank authorized to deal in foreign exchange stating that the foreign currency has been deposited with that bank.

April 13

The rates in the controlled “free” market were altered from Or ₲ 59.50 to ₲ 62.00 buying, and from ₲ 61.00 to ₲ 63.50 selling, per US$1.

June 21

The rates in the controlled “free” market were altered from ₲ 62.00 to ₲ 65.00 buying, and from ₲ 63.50 to ₲ 67.00 selling, per US$1.

August 10

The par value was changed from ₲ 15 to ₲ 21 per US$1, and changes were made in the multiple rate structure. The new parity was applied to Group I imports. The import surcharges of ₲ 6 and ₲ 15 continued to be applied to Group II and Group III imports, respectively, but some commodities were regrouped. A new rate of ₲ 55 per US$1 was introduced for certain minor payments for services. Three new effective rates, resulting from the application of surcharges of ₲ 28, ₲ 35, or ₲ 44 to the basic rate, were applied to Group IV imports. For transactions with Argentina, different import groups from those for other countries were established and the following rates were applied: Group I, ₲ 21 per US$1; Group II, ₲ 25 and ₲ 27 per US$1; Group III, ₲ 30 and ₲ 36 per US$1; and Group IV, ₲ 42 per US$1. Subsidies or taxes on certain export items were altered to counteract the change in the par value. The exchange budget was revised downward by 21.4 per cent. A rate of ₲ 35 was applied to freight and other expenses connected with exports and imports.

August 11

It was required that advance deposits for imports be placed through the commercial banks instead of directly with the Central Bank as previously, and the requirements were altered to 10 per cent for Group I, 15 per cent for Group II, 20 per cent for Group III, 30 per cent for Group IV, and 35 per cent for Group V. These percentage requirements were doubled when an irrevocable letter of credit was opened. Previously, 50 per cent was required for Group IV, while deposits of 25 per cent for Group I and 50 per cent for Groups II and III were required when an irrevocable letter of credit was opened.

The commercial banks were authorized to extend credits to importers (for general imports up to six months and for capital goods from one to three years) to cover domestic price increases due to the exchange rate alterations.

September

The Central Bank announced that all import permits, except in cases where irrevocable letters of credit had been opened or where prior remittance of foreign exchange had been authorized, would be canceled for goods not shipped within the validity of the permits.

October 1

Commercial banks were to retain a copy of the export sales declaration and record the shipments made. Shipment was to be made in 90 days, but this limit could be extended to 150 days; if the unexported balance exceeded 5 per cent, a fine of 10 per cent would be levied on the balance. Collections on all export shipments valued in excess of US$1,000 were to be made prior to shipment unless covered by an irrevocable letter of credit.

October 22

The rates in the controlled “free” market were altered from ₲ 65.00 to ₲ 63.50 buying, and from ₲ 67.00 to ₲ 65.50 selling, per US$1.

October 28

The rates in the controlled “free” market were altered from ₲ 63.50 to ₲ 63.00 buying, and from ₲ 65.50 to ₲ 65.00 selling, per US$1.

October 30

The buying rate in the controlled “free” market was altered from 63.00 to ₲ 61.50 per US$1.

November 22

The Central Bank fixed a rate of ₲ 65.00 per US$1 for imports in Group V (Section I) and for those imports that previously had been permitted to enter with privately held exchange, and a rate of ₲ 73.70 per US$1 for imports in Group V (Section II).

The selling rate in the controlled “free” market was altered from ₲ 65.00 to ₲ 63.30 per US$1.

December 1

Commercial commissions connected with imports were to be liquidated at the exchange rate corresponding to the related import groups in the exchange budget.

Freight payments and related expenses for exports and imports were to be paid at the controlled “free” rate, and only freight payments to Argentina and Uruguay would be paid at the rate of ₲ 35 per US$1. Costs incurred in the ports of Buenos Aires or Montevideo would be paid in payments agreement dollars or Uruguayan currency, respectively.

For exports to payments agreement countries, subsidies were to be applied on the aforo value f.o.b. Paraguayan ports, whether or not the exports are sold f.o.b. or c.i.f. Buenos Aires or Montevideo; and taxes were to be assessed on the aforo value f.o.b. Paraguayan ports. The basic exchange rate was applied to the difference between the aforo value and the declared value f.o.b. Paraguay.

For exports of goods paid in freely disposable currencies, subsidies and taxes would be applied on the aforo value f.o.b. Paraguayan ports. If the exchange provided in the aforo price for freight and other connected costs were not utilized, the exporter was to surrender it to the bank at the official rate plus the subsidy if one applied to that product. Any balance remaining to exporters from goods sold f.o.b. or c.i.f. Buenos Aires or Montevideo after surrendering the value f.o.b. Paraguayan ports could be retained after deduction of freight and other connected costs.

Peru

Origin and Essential Features

Exchange controls were introduced in Peru on January 23, 1945. The most recent important revision of the exchange system occurred on November 11, 1949, when the present rate structure was introduced. Peru has two free fluctuating market exchange rates: an exchange certificate rate applying to most trade transactions, and a draft market rate for other trade and most nontrade transactions. Imports and other payments are permitted freely, but the currencies for trade transactions are prescribed. Foreign exchange from exports must be converted, either totally or partially, into exchange certificates.

Exchange Rate System

The initial par value of Peruvian Soles 6.50 = US$1, established on December 18, 1946, is not applied to any transactions under the present exchange system. No new par value has been proposed. Exchange certificates valid for 10 days are issued for 100 per cent of export proceeds in U.S. dollars, pounds sterling, and French francs, and certificates valid for 60 days are issued for 10 per cent of export proceeds in Argentine pesos. These certificates are negotiable in the certificate market and may be used to pay for imports and for certain nontrade transactions. All exchange transactions that do not qualify for the certificate market are permitted freely in the draft market. The exchange rates fluctuate and broken cross rates exist in both markets (see Table of Exchange Rates, below).

Administration of Control

Export permits and exchange licenses permitting the use of certificates for nontrade transactions are issued by the Ministry of Finance and Commerce. The exchange certificates (see section on Exchange Rate System, above) are issued by the Central Reserve Bank of Peru, which has conducted stabilization operations, from time to time, in the certificate market. Exchange certificate transactions are conducted through commercial banks; draft market transactions are conducted freely through banks and various other dealers, or directly between sellers and buyers.

Prescription of Currency

The issuance of exchange certificates only in certain currencies—at present in U.S. dollars, pounds sterling, French francs, and Argentine pesos—results in prescription of currencies for all transactions effected through the certificate market. Transactions through the draft market may be made in any currency.

Imports and Import Payments

Imports are permitted freely, with the exception of automobiles, which are permitted on a quota basis, and imports from Eastern Europe and Mainland China. Control over other imports exists only in that commercial banks must ensure that certificate exchange is used to pay for actual imports and not for unauthorized purposes.

There are no licenses or other controls applying to payments for imports. Importers may use either of the exchange markets to pay for imports. However, in the certificate market, through which most imports are paid, certificates are denominated only in U.S. dollars, pounds sterling, French francs, and Argentine pesos; payments in other currencies may be effected through the draft market or by converting the certificate currency into that required. Importers opening documentary import letters of credit through commercial banks must make advance deposits in foreign currency of 100 per cent of the import value.1 Banks may finance the local currency equivalent of such advance deposits—up to 100 per cent for wheat, meat, and milk, and up to 50 per cent for raw materials—but credit may not be extended to effect nonessential imports.

Payments for Invisibles

Exchange licenses are required in order to pay for invisibles with certificates. The types of invisible eligible for, and usually allowed in, the certificate market include freight and transit expenses, interest payments and dividends, rents on property, royalties, agents’ commissions, repayments of commercial debts, and insurance and reinsurance payments. Remuneration of foreign technicians and payments for pensions and certain types of business travel are also usually allowed through the certificate market. Exchange for all other invisibles, and for all invisibles in currencies other than the four in which certificates are denominated, is obtained in the draft market.

Exports and Export Proceeds

All exports are subject to license to assure the necessary supply of export proceeds to the certificate market. Export licenses are denied for goods in short supply domestically. The exportation of strategic materials to Mainland China and North Korea is prohibited.

Exports are authorized generally only against payment in the four currencies in which certificates are issued (U.S. dollars, French francs, pounds sterling, and Argentine pesos). The surrender requirements in respect of these currencies have been varied from time to time, and certificates in other currencies can be issued if it is considered necessary. Export proceeds in any of the four currencies in which certificates are issued must be surrendered within 5 days of the date of shipment for exports covered by irrevocable letters of credit and within 30 days for other exports. The portions of export proceeds not subject to surrender against exchange certificates, and the proceeds of exports authorized in currencies for which no certificates are issued, may be sold in the draft market.

Proceeds from Invisibles

All receipts from invisibles are free of control and may be sold in the draft market.

Capital

All inward and most outward capital movements may be effected without control in the draft market. Capital remittances representing contractual amortization and depreciation of foreign capital and depletion of mineral investment, effected through the certificate market, require exchange licenses and are allowed within certain limits

Table of Exchange Rates (as at December 31, 1954)(soles per U.S. dollar)
BuyingSelling
19.00 (Fluctuating Exchange Certificate Market Rate)

Exports (100% in French francs, pounds sterling, and U.S. dollars; 10% in Argentine pesos).
19.002 (Fluctuating Exchange Certificate Market Rate)

Most imports. Certain invisibles and capital transfers.
18.96 (Fluctuating Draft Market Rate)

All other export proceeds. Invisibles and capital.
19.06 (Fluctuating Draft Market Rate)

Occasional ‘imports. Other invisibles and capital.

Changes during 1954

January 24

The period of validity of exchange certificates was reduced to 5 days for all certificates except those in Argentine pesos, which remained valid for 60 days. Prior to the change, dollar and pound sterling certificates were valid for 15 days and other certificates were valid for 60 days.

May 6

Exporters were required to surrender certificate exchange against certificates within 5 days after date of shipment for exports covered by irrevocable letters of credit, and within 30 days after date of shipment for other exports.

May 13

The prohibition on automobile imports, which was introduced on November 13, 1953 for a period of six months, was extended for a further period of three months.

August 13

A quota system for imports of automobiles, including passenger cars, jeeps, trucks, and truck chassis, was established. The distribution of the quotas was put in charge of the Peruvian Automobile Association.

December 21

The period of validity of exchange certificates, regardless of the currency in which they are denominated, was established at 10 days for all certificates except those in Argentine pesos, which continued to be valid for 60 days.

Philippine Republic

Origin and Essential Features

Import restrictions were first imposed in the Philippine Republic in January 1949 on certain luxury and nonessential commodities, and in May 1950 they were expanded to include all goods. Exchange controls and restrictions were introduced on December 9, 1949. On March 28, 1951, a 17 per cent exchange tax was levied on sales of foreign exchange for a two-year period; this tax has since been extended until June 30, 1955, with minor modifications.

Exchange Rate System

The par value is Philippine Pesos 2 = US$1. The official rates are ₱ 2.00375 buying, ₱ 2.015 selling, per US$1. These rates represent the official minimum buying and maximum selling rates of commercial banks for demand drafts and telegraphic transfers of US$500 and over. A tax of 17 per cent imposed on most outgoing remittances yields an effective selling rate of ₱ 2.35755 per US$1 (see Table of Exchange Rates, below).

Administration of Control

Exchange controls are operated by the Central Bank of the Philippines, whose Monetary Board determines, on a six-month basis, the amount of exchange to be allocated for various purposes, including payments for imports. In the licensing of exchange for imports, the Monetary Board of the Central Bank is assisted by a committee of commercial banks in Manila appointed for this purpose. All sales and purchases of exchange must pass through authorized agent banks (the commercial banks and, for transactions connected with travel, the American Express Company. Post offices are also authorized to sell U.S. dollar money orders payable in the United States and its territories and possessions for certain specific purposes, subject to certain conditions and restrictions. The authorized agent banks are permitted, without prior approval of the Central Bank, to issue exchange licenses and sell exchange for specified transactions and in specified amounts. Applications for exchange licenses outside the scope of authority of the authorized agent banks are referred to the Central Bank.

Prescription of Currency

There are no prescription of currency requirements for outgoing payments other than that payments to Japan must be effected through a clearing account maintained at the Central Bank. It is required that all proceeds from exports be obtained in U.S. dollars, except that exports to Japan must be settled through the clearing account.

Nonresident Accounts

Nonresident accounts are composed primarily of nonresident peso funds that were in the Philippines prior to the imposition of exchange controls, savings of former residents, unremitted portions of income or other earnings of nonresidents, and other items of a similar nature. These balances are not ordinarily convertible into foreign exchange. They may be used for local investments or expenses.

Imports and Import Payments

Import licenses, as such, are not issued, but the Bureau of Customs will not permit the entry of goods without the presentation of a release certificate issued by an authorized agent bank in a form prescribed by the Monetary Board of the Central Bank. All payments for imports must be effected through letters of credit, except those made by importers who since 1950 have been permitted by the Monetary Board to remit such payments by demand draft, mail, or telegraphic transfer. All applications for the opening of letters of credit, customarily filed with authorized agent banks, are therefore considered as applications for licenses to purchase foreign exchange to pay for imports. Importers are classified, according to status, as government, old producer, new producer, old importer, new importer qualified under Republic Act No. 650, or new (1953) importer.

At the beginning of each half year, the Monetary Board certifies to each authorized agent bank the total amount of foreign exchange available to it for that period. This certification includes a breakdown by commodity categories, and by importers based on their actual use of exchange in 1952. In addition, the Monetary Board sets aside a contingency reserve of foreign exchange to provide for sales to customers not provided for in the regular budget; this reserve, the distribution of which is controlled by a bankers’ committee, is used primarily for the requirements of old producers to expand production over their 1952 figures and of new producers to import machinery and raw materials, for adjustments of quotas of old importers, and for new (1953) importers. For imports for which exchange is not requested, it is necessary to obtain a certificate of release from the Central Bank before the goods can be cleared through customs. There are no prescription of currency requirements other than that payments to Japan must be effected through a clearing account maintained at the Central Bank; U.S. dollar exchange is provided for import payments to all other countries.

Payments for Invisibles

All payments and remittances abroad for invisibles require exchange licenses. Such licenses are generally granted to effect full payment abroad for freight, insurance, cable and telephone services, interest and amortization, professional services, medical treatment, pensions, and similar items. Exchange licenses are granted on a limited basis to effect payments for travel, education expenses, maintenance, profits and dividends, income, royalties, salaries, etc. Travelers may take out with them a maximum of ₱ 100 in Philippine currency, of which coins may not exceed ₱ 5.

Exports and Export Proceeds

In general, exports are not restricted; but they are controlled to ensure that the foreign exchange proceeds are surrendered to an authorized agent of the Central Bank. Exports of certain strategic materials are prohibited.

The proceeds of all exports except those to Japan must be obtained in U.S. dollars and surrendered to an authorized agent. No commodity may be exported from the Philippines unless covered by drafts drawn in U.S. dollars and unless collection of the proceeds is to be undertaken by an authorized agent. Exports to Japan are settled through the clearing account maintained at the Central Bank of the Philippines.

Proceeds from Invisibles

All exchange receipts from invisibles must be surrendered. Travelers may bring in a maximum of ₱ 100 in Philippine currency, of which coins may not exceed ₱ 50 for first-class passengers, ₱ 20 for second-class passengers, and ₱ 10 for third-class passengers.

Capital

All exchange receipts from capital must be surrendered. The transfer abroad of capital invested prior to December 9, 1949 will not ordinarily be allowed, even if the transfer is to be made to the owner’s country of residence. The amount of exchange granted to transfer profits (40 per cent or more of the invested capital) is considered as providing for a reasonable return on the capital. Capital invested by nonresidents after December 9, 1949 with the prior approval of the Central Bank is eligible for transfer abroad, but all transfers of capital require approval of the Central Bank. Transfers on account of principal of foreign loans contracted under an obligation of the Philippine Government or any of its agencies are exempt from the 17 per cent exchange tax.

In general, the importation and exportation of, and transactions in, securities involving nonresident interests are not permitted. Certain transactions in securities involving nonresidents may be effected, but only through the intermediary of authorized dealers.

Foreign assets held by residents are subject to declaration, and their disposal is subject to approval. Transfers of capital abroad by residents are in principle not permitted.

Table of Exchange Rates (as at December 31, 1954)(pesos per U.S. dollar)
BuyingSelling
2.00375 (Official Rate)

All incoming exchange.
2.015 (Official Rate)

Government payments. Imports of machinery, raw materials for new and necessary industries, basic foodstuffs, fertilizers, etc. Certain specified invisibles.
2.35755 (₱ 2.015 plus 17% Exchange Tax)

Other imports. Other invisibles and capital.

Changes during 1954

January 25

The Central Bank announced that the 1953 quotas for new importers were increased by 20 per cent for the first semester of 1954.

February 3

Restrictions were removed from imports of beef and cattle.

June 30

The 17 per cent exchange tax was extended for one year until June 30, 1955, with minor modifications.

July 1

The Central Bank of the Philippines issued new regulations for allocating foreign exchange for Philippine imports in the second half of 1954. The new regulations provided for more liberal treatment of new producers manufacturing essential goods and for the omission of new wholesalers from those eligible to receive foreign exchange allocations.

September 8

Authorized agent banks were authorized to remit by mail or telegraphic transfer payments for imports in amounts not exceeding US$500 against delivery of the shipping documents.

December 17

All quota applications for imports of finished cars based on the amount of letters of credit opened or on remittances made by draft, mail, or telegraphic transfer during 1952, were canceled beginning in the first semester of 1955.

Sweden

Origin and Essential Features

In 1939, a law was passed in Sweden providing for the introduction of foreign exchange control. On February 25, 1940, exchange restrictions based on this law were introduced. The restrictions were more or less discontinued at the end of the war. In March 1947, however, a comprehensive system of controls on foreign payments was reintroduced, as a result of the deterioration in the Swedish balance of payments position. Since 1949, restrictions on payments in connection with trade and services have been relaxed considerably.

Exchange Rate System

The par value is Swedish Kronor 5.17321 = US$1. The official rates are SKr 5.17 buying, SKr 5.18 selling, per US$1.

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

Administration of Control

Import and export licenses when required are issued by the State Trade and Industrial Commission or, in the case of foodstuffs, the State Commission of Agriculture.

All payments to nonresidents, and vice versa, must be made through the Sveriges Riksbank or through one of the 16 Swedish authorized banks, and require approval by the Exchange Control Office, which has, however, delegated wide powers to the authorized banks to approve payments.

Prescription of Currency

The prescription of the methods by which payments to and receipts from nonresidents are to be made is set out in the payments agreements concluded with other countries.1 Usually, inward and outward payments must be made either in Swedish kronor or in the currency of the country of the nonresident (double-account payments agreements), or they must be made in a single currency (single-account payments agreements). Payments in kronor are made into and out of nonresident-owned Regular (current) Accounts held in kronor with authorized banks (see section on Nonresident Accounts, below).

Nonresident Accounts

Broadly speaking, there are three types of nonresident account held in Swedish kronor with authorized banks in Sweden: Regular (i.e., current) Accounts, Restricted Accounts, and Blocked Accounts. Regular Accounts may be used for all payments to and from the country of the nonresident holder if the payments agreement with the country concerned allows payment to be made in Swedish kronor. All balances in a Regular Account may, as a rule, be converted at any time into the currency of the country of the holder. Transfers may be made freely between the accounts of authorized banks in Belgium, Denmark, France, the Federal Republic of Germany, the Netherlands, Norway, Switzerland, and the United Kingdom, insofar as arbitrage transactions are concerned (see section on Exchange Rate System, above).

Nonresident-owned capital that cannot be transferred abroad usually is allowed to be deposited in Restricted Accounts or Blocked Accounts. A Restricted Account may be used to cover the holder’s and his family’s living expenses in Sweden up to a certain limit, for payment of the holder’s own taxes in Sweden, and for investment in bonds quoted on the Swedish Stock Exchange. Bonds purchased in this way must be deposited in a “restricted securities” account with an authorized bank. Blocked Accounts are credited with funds which are not permitted to be credited to other accounts. The disposal of balances on such accounts is subject to individual license.

Import and Import Payments

Most goods from OEEC countries and their associated areas,2 Finland, and Yugoslavia, as well as printed matter from all countries, may be imported freely. Some imports from other countries require import licenses. About 45 per cent of imports (on the basis of total imports in 1953) are free of import license for purchases in dollar countries against payment in U.S. dollars. In addition, licenses for a wide range of commodities with origin in dollar countries and listed on the “transit dollar list” are granted automatically provided that, in cases where purchases are made in dollar countries, payments are settled in “transit dollars” purchased from Swedish commercial banks, or where the commodities are purchased in non-dollar countries, payments are made in conformity with the regulations governing payments between Sweden and such countries. When an import license has been obtained, or if no license is required, payment may be effected without delay, subject to presentation of evidence of the dispatch of the goods to Sweden, and provided that the method of payment is in conformity with the general rules (see section on Prescription of Currency, above).

Payments for Invisibles

Payments to nonresidents for most current invisibles are allowed freely through the authorized banks. Restrictions are applied to a few items, particularly to payments in U.S. dollars. Tourists traveling abroad are granted any reasonable amount of exchange for travel to Denmark, Finland, Norway, and the Sterling Area countries; the equivalent of SKr 1,500 yearly for each person for travel to other OEEC countries, Egypt, Israel, Spain, and Yugoslavia; and the equivalent of SKr 500 yearly for travel to other countries.3

Each person leaving Sweden may export Swedish and/or foreign banknotes to a total amount of SKr 100, in denominations not exceeding SKr 50. Nonresidents may, when leaving Sweden, export foreign banknotes brought into the country by them. For this purpose, a certificate of “Means of Payment Imported and Intended for Re-Export” is issued on entry.

Exports and Export Proceeds

Most exports to North, Central, and South America (except Argentina) and all OEEC countries are exempt from licensing requirements. However, payment must be made within six months after the dispatch of the commodity and must be in conformity with the regulations (see section on Prescription of Currency, above). All proceeds from exports and from payments for invisibles received in hard currency (mainly U.S. dollars), or received in other currencies from North, Central, and South America, Portugal, and Switzerland, must be surrendered. There is no surrender obligation for other currencies, and they may be kept in a currency account with a Swedish authorized bank. These currency accounts may, however, be used by the holder to make payments abroad only if authorized, or they may be sold against Swedish kronor at the official rate.

Proceeds from Invisibles

Incoming receipts from invisibles have to be reported to the Exchange Control Office. Each person entering Sweden may import SKr 100 in Swedish banknotes, in denominations not exceeding SKr 50, and foreign banknotes without limitation.

Capital

Inward and outward capital transfers are subject to control. Payments for contractual amortization are permitted freely. Capital transfers between Sweden and Denmark, Finland, Norway, and the United Kingdom are generally permitted. Inheritances also may be transferred. In cases of hardship, repatriation of moderate amounts of other nonresident-owned capital is permitted.

Securities may be imported into Sweden through the intermediary of an authorized bank; their disposal, however, is subject to approval. The exportation of securities and transactions in securities involving nonresident interests also are subject to approval. Capital assets of nonresidents which are not permitted to be transferred abroad may be used in Sweden for certain purposes (see section on Nonresident Accounts, above).

Changes during 1954

January 2

The annual exchange allocation for tourists visiting OEEC countries, Egypt, Israel, Spain, and Yugoslavia was increased from SKr 1,000 to SKr 1,500 per person.

January 20

Norway and Norwegian kroner were included in the multilateral foreign exchange arbitrage arrangements for forward transactions for up to three months’ delivery.

March 29

Sweden withdrew from participation in the multilateral foreign exchange arbitrage arrangements with eight other West European countries in respect of forward transactions maturing after June 30, 1954.

June 30

Sweden resumed participation in the foreign exchange arbitrage arrangements for forward transactions (see March 29, above).

October 1

The OEEC free list was enlarged, raising the liberalization from 91.2 per cent to 92.4 per cent of the 1948 basis. A list (dollar free list) was introduced of goods of dollar area origin whose import was free of import license when purchase was made either directly in the dollar area against payment in dollars, or in OEEC countries and their associated areas, Finland, and Yugoslavia against payment in accordance with the regulations governing payments between Sweden and the respective country. The list covered some 45 per cent of Sweden’s total imports in 1953. Another list (“transit dollar list”) was published of dollar area goods not included in the dollar free list, for whose import licenses would be granted automatically, provided payments were settled either in “transit dollars” if the goods were purchased in dollar countries, or in accordance with the regulations governing payments between Sweden and the respective country if the goods were purchased in a non-dollar country.

Syria

Origin and Essential Features

Exchange control was first introduced in Syria on December 3, 1939, and subsequently the controls were relaxed gradually. The exchange control legislation was recodified and made more effective as from April 26, 1952, but it has subsequently become modified in its application. There is a multiple exchange rate structure consisting of an official rate and a fluctuating free market rate, but the area of application of the former has been progressively narrowed and most transactions take place in the free market, in which rates remote from the par value are in effect and in which there are broken cross rates. Certain imports and exports are entirely prohibited. Prescription of currency requirements apply to most export proceeds.

Exchange Rate System

The par value is Syrian Pounds 2.19148 = US$1. The official rates are LS 2.19 buying, LS 2.21 selling, per US$1. These rates apply only to purchases of local currency by an oil company and to petroleum imports. All other transactions take place at the free market rate (see Table of Exchange Rates, below). Since January 1953, the Exchange Office has been quoting daily rates at which it will buy and sell foreign exchange. Since August 1953, the rate for U.S. dollars has been around LS 3.57 per US$1.

Administration of Control

A decree-law of April 1952 established an Exchange Office, which is now the final authority on all matters pertaining to exchange policy and control. Import licenses are issued by the Ministry of National Economy. Authorized commercial banks have the responsibility of recording the exchange proceeds of most exports.

Prescription of Currency

Present regulations empower the Exchange Office to prescribe certain currencies in payment for exports of certain goods. In practice, however, the Exchange Office usually requires that proceeds of major exports to all but a few neighboring countries be obtained in the currency of the country to which the goods are exported (if it is an acceptable currency) or a stronger currency, at the exporter’s choice. Prescription of currency requirements are not applied to outgoing payments.

Imports and Import Payments

All imports require prior licenses, which, except for a short list of prohibited items, are issued freely. Exchange may be obtained freely at free market rates.

Payments for Invisibles

Exchange for invisibles may be obtained freely at free market rates.

Exports and Export Proceeds

Exports of a few goods essential to the domestic economy are prohibited. Most other exports are free of license. The proceeds of certain exports, including major exports1 to countries other than Bahrein, Iraq, Jordan, Kuwait, and Saudi Arabia, have to be obtained in acceptable currencies (see section on Prescription of Currency, above) according to destination, and recorded with and repatriated through authorized banks in Syria. There is, however, no obligation on exporters or others to sell their export proceeds, which may be held. But a sale must be effected through an authorized bank, and as export exchange has, for all practical purposes, no other outlet than the Exchange Office, this institution is the actual buyer.

Proceeds from Invisibles

There are no requirements attached to proceeds from invisibles and such exchange may be held, sold in the free market, or otherwise disposed of.

Capital

Imports and exports of capital are free of all restriction and may be dealt with in the free market without limitation.

Table of Exchange Rates (as at December 31, 1954)(Syrian pounds per U.S. dollar)
BuyingSelling
2.19 (Official Rate)

Local currency purchases by an oil company.
2.21 (Official Rate)

Petroleum imports.
3.555 (Fluctuating Free Market Rate)

All other receipts.
3.575 (Fluctuating Free Market Rate)

All other payments.

Changes during 1954

February 7

The import and export of gold (ingots, coins, or objects) were made free of license.

May 13

Certain textile items were removed from the list of prohibited imports.

June 16

The Exchange Office was charged with the buying of Syrian gold pounds from the Issuing Institute against surrender of an equal weight in gold. The selling rate of the Syrian gold pound would be fixed by the Exchange Office in terms of Syrian currency. (Syrian gold pounds were first put in circulation on June 4, 1951, and the Banque de Syrie et du Liban was then authorized to receive Syrian gold pounds from the Issuing Institute and to sell them against surrender by the buyer of an amount of fine gold equal to the gross weight of the gold pounds purchased.)

Thailand1

Origin and Essential Features

Exchange control in Thailand is based on the Foreign Exchange Control Act of January 27, 1942. A free market for sterling and U.S. dollars has existed since the end of World War II, but in March 1948 the Bank of Thailand began to sell sterling, and in April 1953, U.S. dollars, at preferential rates to commercial banks for approved import payments. During 1954 the scope of the preferential rates was progressively narrowed, and the Bank of Thailand began to sell sterling and U.S. dollars at free market rates. Effective January 1, 1955, the Bank of Thailand discontinued selling foreign exchange at preferential rates. On November 16, 1953 import licensing, which previously had limited application, was extended to all items. The restrictive system comprises, in addition, multiple rates for both exchange receipts and payments, capital controls, and limitations on payments for invisibles.

Exchange Rate System

There is no agreed par value for the Baht. The official rates are B 12.45 buying, B 12.55 selling, per US$1. The official rates apply only to government transactions, both expenditures and receipts, to certain educational expenses, and, on the receipts side, to 20 per cent of the proceeds of rubber and tin exports and to part of rice export proceeds based on fixed standard prices. All other transactions are effected at the fluctuating free market rate, but for transactions with Japan the Bank of Thailand fixes twice a month a rate of exchange on the basis of the average free market rate for U.S. dollars in the previous period.

Administration of Control

Exchange control is administered by the Bank of Thailand on behalf of the Ministry of Finance; the Bank delegates responsibility for most transactions to authorized agents, i.e., authorized banks and exchange dealers. All imports and many exports are subject to licensing by the Ministry of Economic Affairs.

Prescription of Currency

The proceeds of exports of rice, tin, and rubber must be obtained in sterling or U.S. dollars. The currency of payment for other exports is set forth on the export declaration required before exports can be cleared. Transactions with Japan are made through special accounts kept in U.S. dollars (the “open account” arrangements) under the terms of a trade and payments agreement with Japan. There are no special requirements attached to the method of payment to other countries, but in practice such payments are made largely in sterling and related currencies or in U.S. dollars.

Nonresident Accounts

Transfers of baht to and from the accounts of nonresidents (including transfers between nonresident accounts) require approval, which is granted automatically for certain current payments.

Imports and Import Payments

All imports require import licenses. For purposes of licensing, imports are classified into two categories, namely, those on the prohibited list and those permitted on a limited scale. No discrimination in licensing policy is exercised against any country or currency area. Payments for imports must be made by means of a letter of credit unless approval otherwise is given. Importers must obtain a “certificate of payment” in addition to the usual documents before imported goods exceeding B 3,000 in value can be cleared through customs. Certificates of payment are issued by the Bank of Thailand or an authorized agent on submission of documentary evidence and the import license.

Payments for Invisibles

Only government payments and the educational expenses of certain Thai students abroad may be remitted at the official rate. Other authorized payments for invisible transactions are effected at the free market rate. Authorized agents may, without reference to the Bank of Thailand, sell exchange to pay for invisibles associated with trade transactions, provided the applications are supported by documentary evidence as specified in the regulations. For certain other payments—foreign travel and family remittances—the authorized agent may sell limited amounts of exchange, but if additional amounts are desired, approval must be obtained from the Bank of Thailand for the total sum to be exported or remitted. The Bank of Thailand authorizes the payment of exchange for such items as head office administrative expenses and film royalties, after receiving proof that the request covers bona fide payments. In general, exchange is also made available for the remittance of earnings on foreign investments. Under the bilateral arrangements with Japan, payments for invisibles relating to current transactions must, in principle, be made through the “open account.”

No person may take out with him local currency exceeding B 500 or foreign currency exceeding the equivalent of £50 or US$140 without prior approval of the exchange control authorities. These limits are doubled for families traveling under the same passport. Persons in transit may take out any foreign exchange they imported on entry.

Exports and Export Proceeds

Certain commodities require export licenses.2 Further, all exporters must complete an export declaration and have it approved by an authorized agent in order to clear their shipments through the customs; the export declaration assures repatriation of the export proceeds. Exporters of tin and rubber must surrender at the official rate 20 per cent of their proceeds from tin exports and 20 per cent of the fixed standard prices of rubber exports; exporters of rice must surrender at the official rate an amount based on the fixed standard price. Other export proceeds, including that portion not surrendered of rice, rubber, and tin, must be sold to authorized agents at the free market rate within seven days of receipt but not later than three months after the date of export.

Proceeds from Invisibles

All receipts from invisibles must be sold to an authorized agent at the free market rate. The Bank of Thailand’s “open account” arrangements for transactions with Japan must be used for receipts from the services specified in that agreement. No person may bring into Thailand local currency exceeding B 500 in value without a permit.

Capital

All capital transfers by residents and nonresidents into and out of Thailand are subject to approval. Foreign exchange from inward capital movements must be sold to an authorized agent. Foreign investments in Thailand can be accorded preferential treatment under the Industrial Promotion Act of 1954; this treatment can include a guarantee of the transfer abroad of earnings and of the repatriation of capital.

Table of Exchange Rates(as at January 1, 1955)3(baht per U.S. dollar)
BuyingSelling
12.45 (Official Rate)

Government receipts. Part of rice export proceeds based on the fixed standard price per ton.
12.55 (Official Rate)

Government payments. Certain students’ expenses.
18.98 (20% at B 12.45 and 80% at Free Market Rate)

Rubber and tin exports.
20.64 (Fluctuating Free Market Rate)

All other exports. Invisibles and capital.
20.88 (Fluctuating Free Market Rate)

All other imports. Other invisibles and capital.
20.904

Exports to Japan except rice, tin, and rubber.
20.904

Imports from Japan except government imports.
Note: Other effective buying rates arise from the sale of rice export proceeds partly at the official rate and partly in the free market.

Changes during 1954

February 13

Several categories of imports connected with rubber production were exempted from licensing requirements under certain conditions.

March 4

The number of import categories to which preferential rates apply was reduced to four, viz., milk and milk products, essential textiles, petroleum, and medicine. Further, the Bank of Thailand’s selling rate for dollars to cover payments for such imports was reduced from B 16.75 to B 16.07 per US$1 (petroleum imports were already effected at the rate of B 16.07 per US$1). At the same time, the Bank of Thailand began to sell dollars and sterling at the free market rates.

April 22

Cotton grey shirting was removed from the list of essential textiles entitled to exchange at preferential rates.

June 8

Cotton white shirting and cotton sewing thread (the two remaining items) were deleted from the list of essential textiles entitled to preferential rates.

June 15

The Bank of Thailand announced that it was prepared to purchase dollars and sterling at free market rates.

July 1

No exchange allocation at preferential rates was made for petroleum imports for the second half of 1954. It was announced that imports of petroleum would henceforth be effected at free market rates.

September 1

The trade and payments agreement between Thailand and Japan was renewed.

November 26

Imports of 94 items were prohibited, and imports of some others were permitted only on a limited scale.

December 15

Certain new exchange control regulations were issued, incorporating 12 existing ministerial regulations and designed to secure more effective control over capital transfers by coordinating the receipts and payments of foreign exchange with the movement of the related merchandise through the customs. A “certificate of payment” for imports was required, payments for all imports were to be made normally through letters of credit, and the amounts of currency notes which could be taken in or out of Thailand were changed. Transfers of baht to and from nonresident accounts were made subject to authorization by the exchange control.

Note: The following changes were made, effective January 1, 1955.

1. The Bank of Thailand discontinued selling exchange at preferential rates for the two remaining categories of imports, viz., milk and milk products, and medicines.

2. The scope of government participation in rice trading was considerably reduced, and standard prices at which exporters were required to surrender exchange to the Bank of Thailand at the official rate were lowered by about 50 per cent for different grades of rice. Exporters were permitted to sell in the free market the foreign exchange proceeds not surrendered.

Turkey

Origin and Essential Features

A system of controls was initially introduced in Turkey on February 20, 1930. It was fundamentally revised by a decree of May 26, 1947, to which several modifications have since been made.

Payments for merchandise transactions and invisibles are effected in accordance with the provisions of payments agreements when applicable, and in other cases, in U.S. dollars, free Swiss francs, sterling through a Turkish account, other EPU currencies, or in any other manner approved by the exchange control authorities.

The degree and character of restrictions applied to imports are differentiated according to the origin and category of goods and the currency of payment. All imports are subject to approval or registration, which is generally given automatically by the import control authorities for goods of primary necessity and for certain goods when imported on a long-term credit basis. For other goods, import licenses are issued according to the availability of exchange. Payments on account of invisibles are in most cases restricted and subject to individual exchange license.

Licenses are required for specified exports. Export proceeds and other exchange receipts have to be surrendered. Subsidies on export proceeds of 25, 40, or 50 per cent (for some items, 40, 75, or 100 per cent), according to the currency obtained, are paid on certain products out of the proceeds of import contributions imposed on certain secondary and luxury imports.

Capital transactions are subject to individual license. Foreign investments in projects considered useful for the Turkish economy may be given an official guarantee covering the repatriation of the capital and earnings.

Exchange Rate System

The exchange rate system is basically uniform, based on the par value of Turkish Liras 2.80 = US$1. The official rates are LT 2.80 buying, LT 2.8252 selling, per US$1.

Administration of Control

Exchange control is administered by the Ministry of Finance; exchange allocation for imports is effected by the Ministry of Economy and Commerce. A Technical Committee that includes the representatives of various economic ministries and the Central Bank makes policy decisions, which are subject to approval by the Ministerial Committee consisting of the Deputy Prime Minister, and the Ministers of Finance, Economy and Commerce, and Exploitation. The Central Bank of the Republic of Turkey and the authorized banks operate the details of the exchange control.

Prescription of Currency

Settlements on account of merchandise transactions and invisibles must be effected in U.S. dollars, in free Swiss francs, in sterling through an account of the Central Bank, in other EPU currencies, in any other currency or manner acceptable to the Central Bank, or in accordance with payments agreements, which provide for the following methods of payment: (1) in U.S. dollars (as the currency of account in most cases) in respect to Austria, Denmark, Egypt, Finland, the Federal Republic of Germany, Greece, Hungary, Israel, Italy, the Netherlands, Norway, Poland, Spain, Sweden, and Yugoslavia; (2) in the currency of the partner country in respect to Belgium, Czechoslovakia, France, Sweden, Switzerland, and the United Kingdom (and other territories of the Sterling Area); (3) in Turkish liras in respect to Bulgaria; and (4) in sterling in respect to the U.S.S.R. An agreement with Switzerland provides for settlement in free Swiss francs of 20 per cent of payments by Switzerland in favor of Turkey.

Imports and Import Payments

All imports are subject to approval, which generally is given automatically for goods of primary necessity and for certain goods imported on a long-term credit basis. For other items, however, the issue of licenses is subject to the decision of the exchange and trade control authorities on individual applications. There may be some delay, however, between the granting of the license and the time that the exchange is actually made available. Imports on government account financed through intergovernmental loans and grants, which represent a considerable portion of the country’s imports, are not subject to these limitations. The Ministry of Economy and Commerce reserves the right to restrict imports from any particular country within the limits of exchange proceeds accruing from that country.

The Central Bank requires that an application for the allocation, of foreign exchange for merchandise payments be accompanied by a deposit of 10 per cent of the value of the application. If the allocation is not made within one month, the applicant is entitled to withdraw his deposit.

Payments for Invisibles

In principle, payments by residents to nonresidents on account of invisibles are restricted and subject to individual license, although payments incidental to merchandise transactions are permitted automatically. Exchange permits are usually given for payments on account of (1) interest, commissions, and similar payments connected with bank operations; (2) export commissions, registration fees, patent fees, etc.; and (3) advertisements and other expenses connected with trade. Payments effected by insurance companies also require permits, which usually are given.

Exchange for business travel is granted within limits varying according to the volume of business of the applicant firm. Travelers are permitted to export Turkish banknotes and coins up to LT 100. Nonresident travelers may take out, without permission, the unspent portion of the foreign exchange recorded in their passports on entry. Foreign tourists may export freely foreign coins up to the equivalent of LT 15.

Exports and Export Proceeds

Certain ġoods may be exported freely; but specified goods require individual licenses, mainly in order to prevent triangular trade in such goods resulting in payment of a soft currency to Turkey for goods finally sold for hard currency. Exporters are, in general, required to sell to a bank in Turkey the foreign exchange proceeds of goods exported, within 3 months from the date of exportation and within 15 days from the date on which the foreign exchange in question has been placed at their disposal. The proceeds of certain exports benefit from subsidies of 50 per cent for “free” dollars, 40 per cent for EPU currencies, or 25 per cent for settlements through clearing agreement accounts. For a few items, these subsidies are 100 per cent, 75 per cent, or 40 per cent, respectively. The subsidies on raisin exports are based on weight rather than on export value and vary both with the currency involved and the commercial grade of the raisins. These subsidies are paid from funds in an “Equalization Account” at the Agricultural Bank derived from taxes of 25, 50, or 75 per cent on specified secondary and luxury imports.

Proceeds from Invisibles

Foreign exchange accruing to residents on account of services rendered by them to nonresidents must be surrendered within 3 months from the date on which the service was rendered or within 15 days from the date of acquisition of the exchange.

Travelers are permitted to import Turkish banknotes and metallic currency up to LT 100.

Capital

Residents. Capital transfers abroad by residents and capital transactions between residents and nonresidents are subject to the approval of the exchange control authorities. The repatriation of foreign assets held by residents may, in cases specifically approved by the Ministry of Finance, be effected through the importation of specified commodities.

Nonresidents. Foreign investments in Turkey require approval. Foreign companies and contractors established abroad who wish to do business in Turkey must import in the form of foreign exchange the capital and operating funds required by the business. In principle, assets and balances owned by, and earnings accruing to, nonresidents cannot be converted into foreign currency, and if they exceed LT 500 they are blocked. Subject to individual permit, blocked assets and balances may be utilized within Turkey, except as capital for business, or may be transferred abroad through the exportation of specified goods.

Foreign capital invested in Turkey within the terms of the Law to Encourage Foreign Investments is accorded preferential treatment. The investment may be made in the form of (1) capital brought into Turkey in the form of foreign exchange; (2) installations, machinery, tools, and instruments, or their spare parts, and such special construction materials as may be needed; (3) nonphysical assets, such as concessions, trademarks, and patents. Under this law, as amended, annual profits, interest, and dividends on approved investments and all or part of the invested capital may be remitted abroad in the original currency of the capital.

The capital and interest of long-term loans and credits made by nonresidents to enterprises in Turkey (including those of an agricultural character) may be accorded the same transfer benefits as those described above for foreign investment. The Ministry of Finance can guarantee such loans to a total of LT 1 billion, subject to the approval of the Council of Ministers.

Transactions in securities, including their export and import, require approval where a nonresident interest is involved.

Changes during 1954

February 20

By Law No. 6258, the term of the Law for the Protection of the Value of Turkish Currency (Law No. 1567) was extended for another five years and some of its articles were revised.

July 1

Banks acting as intermediaries for import transactions were required to pay into an account at the Central Bank the equivalent of amounts received from importers covering the value of imports for which they had requested exchange licenses.

July 13

Decree No. K/945 extended for one year Decree No. K/917 of September 21, 1953. Under this decree the following premiums per kilogram were granted to exporters of No. 9 grade raisins: for exports to the dollar area, LT 0.10 to LT 0.18; for exports to EPU countries, LT 0.08 to LT 0.16; and for exports to other clearing agreement countries, LT 0.04 to LT 0.12.

September 22

The advance deposit required for applications for import exchange was increased from 4 per cent to 10 per cent of the value of the application.

The import control regulations were modified. All importers were required to possess a “certificate” issued by the Chamber of Commerce specifying the type of goods that they are authorized to import and the amount of their annual quota. Such quotas were equivalent to the highest value of imports in any one of the years 1948–1953. New firms would be granted quotas proportionate to their capital. Applications to import must be submitted every two months for amounts not exceeding one sixth of the annual quota.

October 19

Blocked liabilities of Turkey were classified in two categories—commercial and noncommercial. Commercial liabilities could be cleared by the export of commodities on List No. 1, and noncommercial liabilities by the export of commodities on List No. 2.

December 13

Exchange allocations for business travel were increased. Businessmen were classified in seven groups for this purpose, and were entitled to receive from LT 1,200 to LT 10,000 in foreign exchange within one year, according to their group.

December 28

The premiums granted to exporters of a few specified items were increased to 100 per cent for “free” dollars, 75 per cent for EPU currencies, or 40 per cent for clearing agreement currencies.

Union Of South Africa

Origin and Essential Features

Exchange controls and restrictions were introduced in the Union of South Africa on September 9, 1939. Under these controls and restrictions all payments to residents of countries outside the Sterling Area require exchange licenses, and all exchange receipts in currencies other than Sterling Area currencies must be offered for surrender. In November 1948, restrictions were introduced through a system of exchange quotas for imports from outside the Sterling Area and by the issue of a list of prohibited imports. On July 1, 1949, this system was replaced by an import licensing system, which also restricted imports from the Sterling Area other than goods produced in Southern and Northern Rhodesia. In January 1950, two types of import license were introduced: a general import license valid for imports from any country and a restricted import license valid only for imports from soft currency countries. On January 1, 1954, a substantial change was made in this system: discrimination in the application of import restrictions was abolished and all new import licenses were valid for purchases from any country.

Exchange Rate System

The par value is South African Pound 1 = US$2.80. Exchange rates are uniform and are based on the fixed rates for sterling-S.A. pounds and the London market rates for sterling against other currencies, maintained between official limits. The rates for the U.S. dollar as at December 31, 1954 were US$2.79⅛ buying, US$2.77⅜ selling, per £SA 1.

Exchange Control Territory

There are no exchange or trade restrictions between the Union of South Africa, South West Africa, Basutoland, Swaziland, and the Bechuanaland Protectorate. These territories may be regarded as forming with the Union of South Africa a single exchange control territory.

Administration of Control

Import and export licenses are issued by the Director of Imports and Exports acting on behalf of the Secretary for Commerce and Industries. Exchange licensing is the responsibility of the Treasury, which has delegated this authority to the Reserve Bank, which, in turn, has delegated to the commercial banks some of its licensing power. Appropriate exchange for licensed imports is made available by the authorized dealers upon presentation of suitable documentary evidence.

Prescription of Currency

All approved payments to and receipts from residents outside the Sterling Area must be made in the manner prescribed by the South African Treasury. For most transactions, the prescribed method is in sterling to or from an account related to the country or monetary area of the nonresident, following the United Kingdom’s exchange control system; for several countries, payments or receipts may alternatively be in the appropriate local currency, e.g., for Canada or American Account countries, in Canadian or U.S. dollars.

Nonresident Accounts

There are nonresident accounts for beneficiaries resident outside the Sterling Area, and Sterling Area accounts for beneficiaries resident in territories of the Sterling Area. Credits to the former are subject to control, and each deposit requires approval; withdrawals may be used to pay for exports to the country of the account holder, local payments, transfers to the country of the account holder or to other Sterling Area territories, and payments to a nonresident account of the same country or monetary area. Balances held in Sterling Area accounts may be used freely for local payments or transferred to any other territory of the Sterling Area.

Imports and Import Payments

A number of items, including petrol and oil, textile piece goods below certain ceiling prices, and the products of the Central African Federation, may be imported freely, but all other imports require import licenses, which are valid for purchases from any country. There are, moreover, quantitative limitations on different types of imports. Thus, for raw materials, consumable stores, and maintenance spares, licenses are granted to importers on the basis of quotas fixed in accordance with previous consumption and estimated requirements; for general merchandise, licenses are granted to importers on the basis of their previous imports. Import licenses granted for general merchandise may be exchanged for permission to import a smaller amount of certain goods on a “restricted” list; otherwise, the issuance of import licenses for goods on this “restricted” list is subject to administrative decision.

An importer is granted exchange to pay for all goods legally imported, upon presentation of satisfactory evidence that the transactions have been or will be properly effected; payment must be made in the prescribed manner (see section on Prescription of Currency, above).

Payments for Invisibles

There are no restrictions on payments to residents of the Sterling Area, nor is any license required. All payments to residents of countries outside the Sterling Area require exchange licenses, which are freely granted for most invisibles. Exchange to pay for travel expenses, membership fees, maintenance, etc., is granted in limited amounts. Persons leaving South Africa may take £20 in South African Reserve Bank notes and the equivalent of £10 in other notes.

Exports and Export Proceeds

Export licenses are required for exports of certain specific raw materials in short supply and manufactures therefrom (Schedule A) to any destination other than Basutoland, Swaziland, and the Bechuanaland Protectorate. They are also required, for strategic reasons, for certain other goods (Schedule B) exported to destinations other than the United Kingdom, any British Dominion, Colony, Possession, Protectorate, or Trust Territory, and the United States. Other goods (Schedule C) may be exported without a license.

Proceeds from exports must be received in the prescribed manner (see section on Prescription of Currency, above) and all foreign exchange other than Sterling Area currencies must be surrendered. Export control procedures operate to assure this.

Proceeds from Invisibles

Proceeds from invisibles must be received in the appropriate manner (see section on Prescription of Currency, above) and non-sterling exchange must be surrendered.

Capital

Proceeds of capital must be received in the appropriate manner and, if in non-sterling exchange, surrendered. Transfers of capital to countries outside the Sterling Area require approval. This is granted to emigrants within certain limits; otherwise residents are not normally allowed to export capital to countries outside the Sterling Area. Capital transferred directly to the Union from a country outside the Sterling Area normally may be retransferred to the country of origin and in the currency in which the original transfer was received.

Changes during 1954

January 1

Discrimination between hard and soft currencies in the application of import restrictions was abolished and all new import licenses were valid for purchases from any country.

March 22

The prescription of currency arrangements applying to the settlement of transactions with countries outside the Sterling Area were revised and simplified in conformity with the changes made in the United Kingdom’s sterling payments arrangements.

July 23

The lists of commodities subject to export control were revised and consolidated.

The authorities granted an exchange allotment bonus for imports of certain scarce consumer goods added to the Union’s priority list. Regular consumer goods permits were made exchangeable for priority list permits at the ratio of £1 to £2 in value of permits. The privilege was limited, however, to the items newly added to the priority list, and to merchants who had previously imported such goods (and only up to 200 per cent of the value of their 1953 imports of such goods). Some of the items added to the priority list were mustard powder, carpets, cutlery, electric vacuum cleaners, lawn mowers, sewing machines, watches, and fountain pens.

November 5

It was announced that imports would be further liberalized, effective January 1, 1955. Several items were removed from the “restricted” list and would be subject to license. Others would be put on the “free” list, requiring no import license. A few of these items, however, were still subject to ceiling prices.

November 16

The transfer of film royalties currently earned in the Union was permitted freely. Authority was also given for the release of royalties which were credited to blocked accounts in the Union.

Emigrants to countries outside the Sterling Area were now normally permitted on their departure from the Union to transfer to their new country in one lump sum capital up to a maximum of £5,000 per family unit, and all income on any balance of capital invested in the Union could be transferred freely to the emigrant as it accrued. Previously, transfer of capital was restricted to £1,250 per annum over a maximum period of four years and transfer of income was limited to £1,000 per annum.

December 1

Legatees in hard currency areas, to whom previously only £1,000 per beneficiary from each estate and £1,000 per annum of income on the balance remaining in the Union had been permitted to be transferred, were placed on an equal footing with those in soft currency countries, i.e., the transfer of £10,000 per beneficiary from each estate was now allowed and all income on any balance could be transferred freely as it accrued.

December 6

The annual exchange allowance for private travel to countries outside the Sterling Area was increased from £7/10/- to £10 per day for each adult (from £3 to £4 per day for children), while the maximum was increased from £400 to £500 for each adult (from £160 to £200 for children). The maximum permitted to an applicant who had not requested non-sterling travel exchange in the previous year was increased from £800 to £1,000 for each adult (from £320 to £400 for children). In addition, £100 per year for each adult (£40 for children) is available for short visits to the Belgian Congo and Portuguese East and West Africa.

United Kingdom

Origin and Essential Features

Exchange control was introduced in the United Kingdom on September 3, 1939. Since then there have been a considerable number of developments in details, but the essentials of the system have, in principle, remained unchanged. Exchange control is not imposed on transfers to other countries in the Sterling Area, but all payments to non-Sterling Area countries require exchange control approval, which, upon verification of the amount and provided the method of payment is in accordance with the general prescription of currency requirements, is granted automatically for licensed imports, contractual payments (except films), and many types of noncontractual payments. Some types of noncontractual payments are subject to monetary limitations and, in some instances, to discrimination according to the country of receipt. Export proceeds must be received in the manner prescribed in the regulations, and certain currencies must be sold to an authorized bank.

Exchange Rate System

The par value is United Kingdom Pound 1 = US$2.80. Market rates for spot exchange transactions in most currencies dealt with in the United Kingdom are maintained between official limits corresponding to US$2.82 buying, US$2.78 selling, per £1.1 In general, authorized banks are allowed to cover spot and forward exchange transactions at market rates against sterling in the London exchange market or with banks in the country of the currency concerned, where the authorities of that country have given their approval. The United Kingdom operates a single rate system based on the Fund par values or, where countries have not an agreed parity, on official rates. The United Kingdom participates with Belgium, Denmark, France, the Federal Republic of Germany, the Netherlands, Norway, Sweden, and Switzerland in a multilateral foreign exchange arbitrage arrangement, under which authorized banks in these territories may conclude spot transactions, and forward transactions for up to three months’ delivery, with other authorized banks in any of these territories in any of their currencies (except “free” Swiss francs). The spot exchange rates fluctuate between the official limits agreed by the exchange authorities of the countries concerned, while the forward premiums and discounts are left to the interplay of market forces.

Exchange Control Territory

Exchange control is not imposed on transactions with other parts of the Sterling Area (“Scheduled Territories” in the nomenclature of the U.K. exchange control); in addition to the United Kingdom, the Sterling Area comprises Australia, Burma, Ceylon, Iceland, India, Iraq, Irish Republic, Hashemite Kingdom of the Jordan, Libya, New Zealand, Pakistan, Federation of Rhodesia and Nyasaland, and Union of South Africa, together with all British Colonies, Protectorates, Protected States, and Trust Territories. Exceptionally, sterling payments to Hong Kong are screened to ensure that residents in other parts of the Sterling Area do not have access to Hong Kong’s free market.

Administration of Control

The administration of exchange control in the United Kingdom is conducted by the Bank of England on behalf of the U.K. Treasury. However, much of the authority for approving normal payments is delegated to the commercial banks, practically all of which are authorized for this purpose. Import and export licensing is handled by the Board of Trade.2

Prescription of Currency

The prescription of the methods for making payments to and receiving payments from countries outside the Sterling Area is an integral part of the U.K. exchange control system and provides a mechanism for payments between all Sterling Area territories and the rest of the world. Payments to and receipts from countries with which the United Kingdom has negotiated Monetary Agreements,3 the American Account Area, and Canada may be made either in sterling or in the currency of the paying/receiving country or monetary area. Payments to and from all other countries are effected predominantly in sterling—in most cases in conformity with Sterling Payments Agreements negotiated by the United Kingdom, under the terms of which the nonresident recipient can obtain his own local currency. These arrangements are facilitated and controlled by dividing nonresident sterling accounts, according to the residence of the account holder, into two main groups—Canada and American Account countries, and all other countries (except Turkey). General regulations show those transfers permitted between the various sterling accounts without reference to the exchange control authorities (see section on Nonresident Accounts, below).

Nonresident Accounts

The sterling accounts (other than Blocked Accounts—see Group 4, below) of nonresidents, i.e., those resident outside the Sterling Area, are available for payments in the Sterling Area and for transfers to other nonresidents, according to the groups described below. Additional transferability is achieved by granting licenses to effect payments outside the prescribed arrangements.

1. American Accounts (Bolivia, Colombia, Costa Rica, Cuba, Dominican Republic, Ecuador, El Salvador, Guatemala, Haiti, Honduras, Liberia, Mexico, Nicaragua, Panama, Philippine Republic, United States and possessions, and Venezuela) and Canadian Accounts. These accounts may be debited freely for payments to any sterling account (other than a Turkish Account or a Blocked Account). Balances on American Accounts and Canadian Accounts may be converted freely into Canadian or U.S. dollars, or used to purchase gold through the London market.

2. Transferable Accounts (all other countries outside the Sterling Area except Turkey, payments with which are on a bilateral basis). Payments from Transferable Accounts may be made freely to any account related to the Transferable Account Area (other than a Blocked Account).

3. Registered Accounts (all countries outside the Sterling Area except Group 1). These accounts are intended primarily for entries related to the purchase and sale of gold in the London market. In addition, Registered Accounts are freely convertible into Canadian or U.S. dollars. They may be credited with the proceeds of the sale of Canadian or U.S. dollars to an authorized bank in the United Kingdom, and are available for transfers to any sterling account, including payments to residents in settlement of U.K. exports to any destination.

4. Blocked Accounts (all countries outside the Sterling Area; however, these arrangements do not apply to residents of Denmark (including Greenland), the Faroe Islands, Norway, and Sweden, who may transfer all their sterling assets to their respective countries). The purpose of these accounts is to receive funds which are not placed at the free disposal of nonresidents, e.g., capital proceeds. Such funds are available for transfers to other Blocked Accounts, except that transfers may not be made to Blocked Accounts of residents of American Account countries or Canada if the transferor is resident outside those countries. Funds held in Blocked Accounts are available for the purchase of certain securities payable in a currency of the Scheduled Territories and not redeemable within ten years from the date of acquisition. (The income on such securities can, however, be remitted to the country of the account holder.)

The No. 2 Accounts of banks in Egypt, except for transfers to other No. 2 Accounts, are blocked under a special arrangement.

Imports and Import Payments

Imports on government account are not subject to import license, but imports on private account are subject to one of the following types of import license: World Open General License, Open General License, Open Individual License, Individual Import License.

Subject to the submission of evidence of importation or, if this has not yet taken place, the relevant import license, foreign exchange or permission to credit a nonresident sterling account appropriate to the country of export (see section on Prescription of Currency, above) is granted automatically for imports. For imports from other parts of the Sterling Area, payment may be made freely in sterling or in any other Sterling Area currency.

Commodity Markets and Transit Trade 4

There are special schemes to facilitate commodity market transactions and similar operations. The organized commodity market arrangements are as follows:

  • 1. Grain, cotton, and refined sugar may be re-exported or traded against Transferable Account sterling, but if purchased for dollars may only be re-exported or traded for dollars.

  • 2. Cocoa, coffee, and raw sugar of any origin, including the dollar area, may be re-exported or traded against Transferable Account sterling; but if these commodities are of other than Sterling Area or dollar area origin and are purchased for dollars, they may be resold only for dollars. Raw sugar, regardless of origin, may, after refining in the United Kingdom, be re-exported against Transferable Account sterling.

  • 3. Copra, rubber, copper, lead, tin, and zinc, whatever their origin, may be re-exported or traded throughout the world on a sterling basis.

Apart from the facilities for organized market transactions listed above, trading in goods originating outside the Sterling Area and not imported into the Sterling Area (except for transshipment) may be arranged on the basis that where payment is made in dollars, receipts must be obtained in dollars. When the Sterling Area trader makes payment in other currencies, receipts must be obtained in dollars from purchasers in the dollar area, but from purchasers in other countries receipts are acceptable in dollars, in Transferable Account sterling, or in the currency of the country to which the goods are consigned, if it is a specified currency.5

Payments for Invisibles

An exchange license is required for all payments for invisibles to countries outside the Sterling Area. These licenses normally are granted, without discrimination as to recipient countries, in respect of payments under contracts entered into up to September 3, 1939 and under contracts entered into with approval since that date. Films, however, are covered by special agreement. Applications for licenses for noncontractual payments are considered on their merits and some are subject to monetary limitations. In a few instances, noncontractual payments are subject also to discrimination as to the recipient country—e.g., in the case of tourists’ expenses, where the basic exchange allowance of £100 for each person of 12 years of age or over and £70 for each child under 12 years of age for the period November 1, 1954 to October 31, 1955 is available for use in all countries except the American Account Area and Canada. For travel to Denmark, the Faroe Islands, Norway, and Sweden, bona fide travelers may obtain “any reasonable amount” of the appropriate exchange. The basic exchange allowance is exclusive of the payment of fares, the cost of which is not limited for travel in countries outside the American Account Area and Canada, provided payment is made in sterling in the United Kingdom. No limits are placed on the cost of fares to and from the American Account Area and Canada, provided the journey is by a normal direct route. Not more than £5 in British banknotes6 may be taken out of the United Kingdom, except by persons traveling directly to the Irish Republic or the Channel Islands. A certain freedom in exchange operations is granted to the insurance market.

Exports and Export Proceeds

Certain exports, mostly of a strategic character, and all exports to Mainland China and Hong Kong require export licenses. 7

The proceeds of all exports to countries outside the Sterling Area must be received in the manner prescribed in the regulations (see section on Prescription of Currency, above), and this is a condition on which the export is permitted without specific exchange control approval. The exchange control procedure is waived for exports not exceeding £25 f.o.b., and simplified for those not exceeding £250 f.o.b. Exchange receipts in specified currencies 8 must be offered to an authorized bank.

Proceeds from Invisibles

Exchange receipts from invisibles in specified currencies 8 must be surrendered. Permission is given for foreign exchange to be retained in controlled accounts if it is required for operating purposes. Not more than £10 in British banknotes may be brought into the United Kingdom except by persons traveling directly from the Irish Republic or the Channel Islands.

Capital

Transfers of resident capital to countries outside the Sterling Area require approval, which normally is granted for commercial investment and where the investment is of benefit to the U.K. economy. Capital receipts in specified currencies 8 must be sold to an authorized bank, or permission may be obtained to invest such receipts in securities expressed in foreign currencies. Foreign exchange or permission to credit sterling to a nonresident account related to his country or monetary area is granted freely for repayments abroad due to a nonresident in respect of matured capital obligations; otherwise, the proceeds of nonresident-owned capital may be credited only to Blocked Accounts (see section on Nonresident Accounts, above). However, residents of Denmark, the Faroe Islands, Greenland, Norway, and Sweden may transfer their capital freely to their respective countries. Persons who reside outside the Sterling Area and make investments in the United Kingdom must provide appropriate foreign exchange or sterling from a nonresident account related to their country or monetary area. Capital directly invested after January 1, 1950 in projects approved by the exchange control authorities may be repatriated at any time, together with capital profits.

Banknotes

The authorized banks may buy and sell foreign notes and coin, within certain limitations, at market rates of exchange. Purchases of foreign notes and coin from residents of the Sterling Area may be made without limitation, but purchases from persons resident outside the Sterling Area are limited to reasonable amounts for their current maintenance expenses while in the United Kingdom. The authorized banks may purchase Canadian and U.S. dollar notes from anyone, but they may purchase other currencies only from sellers resident in the same country or monetary area as that of the currency being sold. Authorized banks may, under certain conditions, sell foreign notes and coin for travel outside the Sterling Area, but not more than the equivalent of £10 9 per traveler.

Changes during 1954

January 20

Norwegian authorized banks and Norwegian kroner were included in the multilateral exchange arbitrage arrangements for forward transactions for up to three months’ delivery, in operation among the authorized banks of certain West European countries.

February 4

The availability of the basic exchange allowance for private travel was extended to Japan.

March 22

The prescription of currency requirements for settlements with non-dollar countries other than Hungary, Iran, and Turkey were simplified by permitting receipts from and payments to those countries to be settled in sterling through any nonresident account (other than a Blocked Account) related to those countries. The facilities of transfer previously available only for Transferable Accounts in respect of current transactions were extended to all non-dollar countries (except Hungary, Iran, and Turkey) regardless of the nature of the transaction.

The London Gold Market was reopened. A new type of nonresident account, the Registered Account, was created for the settlement of transactions in gold by persons resident outside the Sterling Area, the American Account Area, and Canada. Registered Account sterling could also be used for the purchase of U.S. and Canadian dollars.

Danish and Faroese kroner, Norwegian kroner, and Swedish kroner were restored to the list of specified currencies required to be offered for sale to an authorized bank.

April 2

Exchange control forms were dispensed with for exports not exceeding £25 f.o.b., and a simplified procedure was introduced for exports not exceeding £250 f.o.b.

April 21

Special facilities giving a certain freedom in exchange operations were made available for participants in the U.K. Cotton Market Scheme.

April 28

The exchange control procedures which the authorized banks have to follow when credits involving a nonresident interest are established were simplified.

June 2

The transfer of Blocked Accounts between nonresidents was permitted freely, except for transfers to residents of Denmark, the Faroe Islands, Greenland, Norway, and Sweden, and for transfers to residents in the American Account Area and Canada from residents outside that group.

Certain limitations on dealings in securities payable in Belgian, Congolese, Luxembourg, or Swiss francs were removed.

August 30

Resident subsidiaries of nonresident companies were allowed to increase their borrowing in the United Kingdom to £50,000.10

August 31

The facilities available to emigrants from the United Kingdom to make “settling-in” remittances to their new country were increased. The allowance of £5,000 per family unit for emigrants to EPU countries was extended to emigrants to all non-dollar countries. The total allowance would be made available in one amount on departure from the United Kingdom, when the emigrants would immediately be redesignated for exchange control purposes as residents of their new country. (Previously, the allowance was normally available only in four annual installments.)

September 1

Hungary was included in the Transferable Account Area.

September 30

Authorized banks were permitted to credit to a nonresident account appropriate to the sender’s country of permanent residence the proceeds of Bank of England notes received by post which have ceased to be legal tender, viz., notes of denominations of £10 and above and notes of the denomination of £5 dated prior to September 2, 1944.

October 29

It was announced that the Bank of England was prepared to consider favorably applications to transfer to Canadian or American Accounts amounts credited to Blocked Sterling Accounts on or before December 31, 1951, in respect of legacies and other inheritances paid from the estates of deceased residents and still held by the beneficiary. (Since November 4, 1949, only £500 from any one estate had been allowed to be transferred to Canadian or American Accounts.)

November 1

The basic travel allowance for the next twelve months was announced as £100 for each person of 12 years of age or over and £70 for each child under 12 years of age, available everywhere except in Canada and the American Account Area. The previous allowance had been £50 for each person of 12 years of age or over and £35 for each child under 12 years of age. Travelers could purchase in sterling from travel agents in the United Kingdom, outside the basic allowance, tickets for transport on any journey in an EPU country, Spain, or Yugoslavia, regardless of whether the journey is by a normal direct route and of where it starts or finishes.

November 3

Iran was included in the Transferable Account Area.

November 16

The exchange control procedure for the issue of the basic travel allowance was simplified.

December 15

Details were announced of a simplified procedure for handling security transactions, to come into effect January 10, 1955.

December 21

Special facilities giving a certain freedom in exchange operations were made available for participants in the London Copra Market Scheme.

Uruguay

Origin and Essential Features

Exchange control was introduced in Uruguay in May 1931. On January 10, 1941, the Office of Export and Import Control was established under the jurisdiction of the Ministry of Finance and was charged with the tasks of controlling the declared values and origin of imports, intervening in the distribution of foreign exchange, and granting import permits. On October 6, 1949, new multiple rates for imports and exports were established, together with lists of commodities to which the various rates applied. Since then, additional rates applicable to certain export proceeds have been introduced, and on April 17, 1953, an exchange tax of 6 per cent was levied on payments for nearly all imports and related services. During 1953 and 1954, as a result of reduced dollar exports, import quotas were, for the most part, limited to inconvertible currencies.

The restrictive system comprises a multiple exchange rate structure with various fixed rates for imports and exports and related invisibles, exchange quotas established for various currencies and categories of imports, exchange taxes on nearly all foreign payments, and a fluctuating free market for other invisibles and for capital transactions. Transactions through the free market are not restricted. All exports require licenses, and foreign exchange derived from exports must be surrendered entirely, except in a few cases, at the official rates.

Exchange Rate System

No par value for the Uruguayan Peso has been established with the Fund. There are several official buying rates for exports and several official selling rates for imports. An exchange tax of 6 per cent is applied to nearly all payments abroad connected with imports of merchandise, and surcharges are applied to payments for certain nonessential and luxury imports. The fluctuating free market rates apply to certain invisibles and all capital transactions. (See Table of Exchange Rates, below.)

Administration of Control

The exchange control system is operated by the Bank of the Republic. Exchange transactions related to imports, exports, and some invisibles pass through the authorized banks. Import licenses are issued by the Office of Export and Import Control.

Prescription of Currency

Payments with countries with which Uruguay has official payments agreements or interbank compensation agreements are made through accounts kept in specified currencies as follows: with Argentina, Belgium, Netherlands, Sweden, and Switzerland, in the currency of the partner country; with Austria, Brazil, Czechoslovakia, Finland, France, Eastern Germany, Federal Republic of Germany, Greece, Hungary, Italy, Paraguay, Poland, Turkey, and Yugoslavia, in accounting dollars; and with U.S.S.R., in sterling. Payments with other countries are made in the currency indicated in the license.

Imports and Import Payments

Imports, with only minor exceptions, require licenses. These licenses are granted within the global exchange quotas established by the Bank of the Republic for various currencies according to their availability. The global quotas are distributed by fixing an individual exchange quota for each importer and by issuing import licenses up to the limit of each quota. Exchange quotas for dollar goods are not necessarily given in dollars; sometimes they are given in inconvertible currencies if there is a surplus of the latter. Payments for all imports, with a few exceptions, are subject to a 6 per cent exchange tax. Imports may not be effected with free market exchange.

Payments for Invisibles

Payments for invisible items covered by a payments agreement require a license. Expenditures in foreign exchange incidental to imports are authorized together with the payment for the corresponding imports, and are subject to a 6 per cent exchange tax if the merchandise for which the expenditure is made is subject to this payment. All other payments for invisibles may be made freely through the free market. There are no limitations on the exportation of foreign or domestic banknotes.

Exports and Export Proceeds

All exports require licenses, which are granted if the exchange proceeds have been sold contractually to an authorized bank. However, exports of essential goods in short supply may be prohibited.

Most export proceeds must be surrendered at the rates established for the various export commodities. Exporters of greasy and scoured wool, wool tops and broken tops, and wool by-products may retain 2½ per cent of the f.o.b. value of their exports, when made against inconvertible currencies. Exporters of greasy and scoured wool may retain 5 per cent, and exporters of wool by-products may retain 2 per cent, of the f.o.b. value of their exports, when made against U.S. dollars. Such retained exchange may be sold in the free market. Some exports benefit from subsidies paid from surcharges established on payments for less essential and luxury imports. There is an exchange tax of 1 per cent applied to the exchange proceeds of exports.

Proceeds from Invisibles

All proceeds from invisibles may be held, utilized, or sold in the free market, but the use of proceeds from invisible items covered by a payments agreement requires a license. There are no limitations on the importation of foreign or domestic banknotes.

Capital

Inward and outward capital transfers by both residents and nonresidents are free. The corresponding transactions may take place freely in the free market.

Table of Exchange Rates (as at December 31, 1954)(pesos per U.S. dollar)
BuyingSelling
1.519

Basic exports (meat, greasy wool, cattle hides, sheepskins, linseed, flour, and wheat).
1.519

Government payments. Imports of newsprint, inks, cardboard matrix, and seed potatoes.
1.60 (90% at Ur$1.519 and 10% at Ur$2.35)

Exports of washed wool.
1.78 (69% at Ur$1.519 and 31% at Ur$2.35)

Exports of edible oils, packing house products, bristles, and other animal skins.
1.967 (46% at Ur$1.519 and 54% at Ur$2.35)

Exports of combed wool tops and broken tops and wool by-products.1
1.90

Essential imports, such as fuel and machinery (exempt from exchange tax).
2.014 (Ur$1.90 plus 6% Tax)

Other essential imports.
2.10 (30% at Ur$1.519 and 70% at Ur$2.35)

Exports of crude crushed dolomite, linseed oil, and brown paper.
2.15 (24% at Ur$1.519 and 76% at Ur$2.35)

Exports of fabrics of rayon and rayon mixtures, wheat gluten, and native sandals.
2.20 (17% at Ur$1.519 and 83% at Ur$2.35)

Exports of iron bolts, canned meat, and meat extract.
2.35

Exports of woolen manufactures, pork, bricks, and other manufactured products, fresh fruits, wine, and specified quotas of rice and linseed oil.
2.60

Exports of leather goods (up to US$2.0 million).
2.597 (Ur$2.45 plus 6% Tax)

Most nonessential and luxury imports.
2.80

Exports of woolen textiles (up to US$2.0 million).
2.95 (Ur$2.45 plus Ur$0.35 Surcharge and 6% Tax)

Certain nonessential and luxury goods (up to US$8.9 million).
3.16 (Fluctuating Free Market Rate)

Certain invisibles and all capital.
3.18 (Fluctuating Free Market Rate)

Certain invisibles and all capital.
3.50 (Ur$2.45 plus Ur$0.90 Surcharge and 6% Tax)

Imports of automobiles (up to US$4.0 million).
3.65 (Ur$2.45 plus Ur$1.05 Surcharge and 6% Tax)

Certain other nonessential and luxury imports (up to US$8.7 million).
Note: This table does not take account of an exchange tax of 1% applied to the purchase of export proceeds, or of other effective “mixing” rates derived from the negotiation at the free market rate of that proportion of certain export proceeds not surrenderable at the official rates.

Changes during 1954

January 22

A rate of Ur$1.967 per US$1, instead of Ur$2.06 per US$1, was applied to exports of combed wool tops and broken tops.

February 9

A rate of Ur$2.20 per US$1, instead of Ur$2.05 per US$1, was applied to exports of canned meat and meat extract that had been in stock since May 23, 1953.

February 23

A rate of Ur$2.10 was applied to exports of linseed oil.

February 26

The list was announced of goods that could be imported at a rate of Ur$2.45 per US$1 plus a surcharge of Ur$0.35 per US$1.

April 1

By a decree of March 16, 1954, a rate of Ur$2.10 per US$1 was applied to exports of brown paper until July 30, 1954.

April 2

The rate of Ur$2.20 per US$1 was extended to exports of canned meat and meat extract produced after February 9, 1954.

June 2

Holders of U.S. dollar import permits were no longer required to obtain a special permit from the Bank of the Republic to enable them to contract dollar exchange.

June 3

Import permits issued in inconvertible currencies could now be used to pay for merchandise imported from any country, if the prior consent of the exchange authorities of the country whose currency was involved was obtained.

June 23

Most restrictions were removed from essential imports from Brazil.

June 24

Import quotas for nonessential and luxury goods were distributed for an amount equivalent to US$8.0 million, under the compensation arrangement introduced December 1, 1953 which provided that import quotas up to US$8.0 million were to be allotted at the rate of Ur$2.45 per US$1 plus an extra charge of Ur$0.35 per US$1. The proceeds were to be used to subsidize exports of woolen textiles up to US$2.0 million, at a rate of Ur$2.80 per US$1, and exports of leather goods up to US$2.0 million, at an effective rate of Ur$2.60 per US$1.

June 29

A payments agreement was signed with Eastern Germany.

August 2

Automobiles up to a total value of US$4.0 million could be imported at the rate of Ur$2.45 plus a surcharge of Ur$0.90 per US$1. The surcharges were to be used to pay exporters Ur$13.50 for each 100 kilograms of linseed oil and Ur$5.25 for each 100 kilograms of rice exported, in addition to the preferential rate of Ur$2.35 per US$1. This arrangement applied to 12,000 tons of rice of the 1954 crop and to 20,000 tons of linseed oil (decree of July 21, 1954).

July 28

A trade and payments agreement between Uruguay and the U.S.S.R. was signed.

August 4

It was announced that prior permission for the use of import permits in pounds sterling would not be required in order to import merchandise from anywhere in the world, but that the transfers of sterling must be made in favor of Transferable Accounts as classified in the U.K. regulations.

September 14

Exporters could retain 2 per cent (instead of 5 per cent, as before) of the f.o.b. value of wool exports from the 1954/55 clip made against U.S. dollars, and could still retain 2½ per cent when exports were made against inconvertible currencies. These allowances were intended to cover commission charges and other expenses originating abroad.

September 21

A rate of Ur$2.35 per US$1 was applied to exports of fresh fruits.

October 19

Exporters could again retain 5 per cent of the f.o.b. value of exports of greasy and scoured wool when made against U.S. dollars, and 2½ per cent when made against inconvertible currencies. The 2½ per cent retention for inconvertible currencies was also extended to exchange proceeds from exports of wool tops and broken tops. Exporters, except meat packing plants, of wool by-products could also retain 2 per cent of the f.o.b. value of exports made against U.S. dollars, and 2½ per cent of those made against inconvertible currencies. Wool exports to countries with which Uruguay has no payments agreements were to be made against U.S. dollars.

November 26

Import permits in inconvertible currencies were now (see June 3, above) to be handled as follows: (1) When the import permit stipulated the country of origin of the merchandise as other than the country of the currency involved, the import must be made from the country specified. (2) When the import permit indicated the country of origin of the merchandise as the same as that of the currency involved, the import could be made from any country. (3) The sale of inconvertible currency to obtain convertible currency could be effected in the free market in Uruguay without prior authorization from the exchange authorities of the country of the inconvertible currency involved.

December 10

An import quota of US$17.6 million was opened for nonessential and luxury goods. An exchange surcharge of Ur$1.05 per US$1 on the rate of Ur$2.45 was established for US$8.9 million of imports; most of the remaining US$8.7 million of the quota covered merchandise imported at rates of Ur$1.90, Ur$2.45, and Ur$2.80 per US$1, according to the type of goods.

Yugoslavia

Origin and Essential Features

An exchange control system was introduced in Yugoslavia on October 7, 1931, but since then it has been subject to fundamental changes. Following World War II and up to 1950, the functioning of the exchange system was determined entirely by a comprehensive economic plan. Beginning in 1950, individual enterprises were allowed to use freely a part of any exchange receipts realized in excess of the receipts planned. Since 1951, Yugoslavia has generally decentralized the exchange system, as well as the economic system, allowing some measure of freedom to market forces. In the latter part of 1954, because of balance of payments difficulties, the scope of these market forces was reduced, and changes were introduced in the exchange system to give greater emphasis to quantitative controls. The main features of the restrictive system continue to be the multiple exchange rates on both the buying and selling sides, including the use of a free market and various tax and subsidy devices.

Export and import transactions are carried out by registered domestic economic organizations. Exports of some goods are prohibited and exports of some others require individual licenses; all other goods can be exported freely. Some nontrade payments are subject to individual license, in many cases within annual exchange allocations. All capital transactions are subject to individual license.

Exchange Rate System

The par value is Yugoslav Dinars 300 = US$1. This rate is used for specified government payments, subject in many cases to a revaluation factor (multiplier) of 1.8, and for most invisibles; but the use of a premium of 100 per cent yields an effective rate of Din 600 per US$1 for payments and receipts for specified noncommercial invisibles. “Settlement” rates, fixed from time to time by the National Bank, apply to surrendered export proceeds: as at December 31, 1954 these rates were about Din 632 per US$1 and Din 1,752 per £1. A special market conducted by the National Bank is used to distribute exchange for payments of various essential imports. The price of exchange in this market often varies for different commodities and is strongly influenced by the National Bank, but it may not be less than the “settlement” rates: as at December 31, 1954, the rates in this special market were Din 632 per US$1 and Din 1,752 per £1. There is a free market with fluctuating rates for payments of other imports and for the sale of retained export proceeds (exchange is also supplied through this market by the National Bank) : as at December 31, 1954 these rates were Din 1,150 per US$1, Din 3,600 per £1, Din 290 per DM 1, Din 180 per SKr 1, and Din 2.50 per Lit 1. A system of coefficients (multipliers), varying for different import and export commodities and applied to the relevant (official, “settlement,” special, or free) rates, produces numerous effective exchange rates. As at December 31, 1954, there were 18 import coefficients, ranging from 0.5 to 4.0, and 35 export coefficients, ranging from 0.5 to 3.0. The “settlement,” special, and free rates include broken cross rates for various foreign currencies; consequently, the effective exchange rates produced by the application of coefficients are also disparate. In addition, in the event the retained exchange is sold by the exporter, a tax of 30 per cent is imposed on the difference between the value of the retained export exchange calculated at the “settlement” rate and its value calculated at the free rate.

Administration of Control

All foreign exchange transactions have to be effected through the National Bank, which manages a Central Exchange Fund. The Central Exchange Fund administers exchange accruing from that part of exchange proceeds surrendered by exporters and some other exchange earners. Markets for retained exchange and for special sales of exchange are established at the central offices of the National Bank in the six Yugoslav republics.

Prescription of Currency

Payments are made according to the method or channel of payment provided for in the payments agreement with the country concerned.1 If no agreement exists, payment is usually made in U.S. or Canadian dollars, pounds sterling, or Swiss francs.

Imports and Import Payments

Importing is confined largely to registered domestic economic organizations, and import licenses are not required. Payments for imports within the government plan are effected with exchange allocated at the official rate by the Central Exchange Fund, and for specified essential imports, with exchange sold by the National Bank in a special exchange market. In the latter case, quantitative limits are established on the amounts of exchange made available to the various sectors of the economy, and the National Bank can influence the allocation of exchange within these sectors. Payments for other imports may be made freely with retained exchange, or with exchange; purchased in the free market. Import coefficients are applied to most imports; these are determined on the basis that their application to the relevant rate of exchange equalizes the domestic price of the product with the foreign price. (See also section on Exchange Rate System, above.)

Payments for Invisibles

Payments for invisibles related to merchandise transactions are treated in a manner similar to that accorded to payments for merchandise transactions. Foreign exchange for travel, up to a maximum of Din 6,000 per person, is allocated at double the official rate. The Secretariat for the Budget allocates annual exchange quotas to the republics for education, health, and other purposes. Exchange is sold at the official rate for these transactions, and applicants must obtain authorization from the authorities of the republics. Not more than Din 1,500 in Yugoslav banknotes, in notes of Din 100 or less, may be taken out by travelers.

Exports and Export Proceeds

Exports of a number of goods are prohibited, and exports of certain other goods require individual licenses; all other goods can be exported freely. A percentage of export proceeds, which varies according to the category of exported commodity from 80 per cent to 99 per cent, has to be surrendered at the “settlement” rate; the remaining export proceeds may be used by exporters to pay for their imports or may be sold in the free market. In the event of sale of retained exchange, there is an exchange tax of 30 per cent on the difference between the value of the retained exchange calculated at the “settlement” rate and the value calculated at the free rate at which the exchange is sold.

The Economic Board of the Federal Executive Council can decide, with respect to individual products and services sold abroad, that a percentage of export proceeds exceeding the established limits may be retained by the exporter.

Proceeds from Invisibles

Exchange proceeds from most invisibles must be surrendered to the National Bank at the official rate. However, part of exchange proceeds accruing from the sale of services abroad by specified Yugo-slav enterprises are surrendered to the National Bank at the “settlement” rate, while the remainder may be used by the enterprise concerned to make payments abroad. A premium of 100 per cent on the official rate is paid on receipts from emigrants’ remittances and such items as inheritances, maintenance, and gifts. Not more than Din 1,500 in Yugoslav banknotes, in notes of Din 100 or less, may be brought in by travelers.

Capital

All transfers of a capital nature by both residents and nonresidents are subject to individual license. The authorization of the National Bank is necessary for participation in enterprises in Yugoslavia which are operated, in whole or in part, with foreign capital, and for the participation of Yugoslav capital in enterprises abroad. Unless specifically permitted to retain foreign exchange, residents are obliged to repatriate and surrender foreign exchange held abroad. Capital transfers abroad by residents are usually not approved.

Changes during 1954

January 1

The number and range of coefficients applied to both exports and imports were narrowed. The number of export coefficients was reduced from 26 to 15, with a range of 0.9 to 4 compared with the previous range of 0.8 to 6. Import coefficients were reduced from 29 to 13, with a range of 0.5’ to 4 compared with the previous range of 0.8 to 10. The import contributions and export premiums, including discriminatory export premiums, were eliminated. A “revaluation factor,” or coefficient, of 1.8, to be applied to the official rate, was established for imports of equipment for which exchange was to be received from the Central Exchange Fund.

The method of calculating import coefficients for import payments with retained exchange was modified. The coefficient was no longer to be multiplied by the official rate of exchange, but by the rate of exchange quoted on the retained (free) exchange market. Moreover, if the market rate of exchange rose above twice the official rate (i.e., above the equivalent of Din 600 per US$1), a supplementary co-efficient of 2 was to be applied to the excess over twice the official rate of exchange.

The retention quota arrangements for various exports were changed, the range of retention percentages being established at 40 to 80, compared with the previous range of 20 to 80. The surrender requirement of 100 per cent was retained for cereal exports. Retention quotas ranging between 40 and 80 per cent were to apply to exchange earnings of trading and building enterprises. Exchange surrender requirements for noncommercial transactions and exchange earnings of transportation and other service enterprises were removed. Special meetings of the retained exchange market were to be held, at which the National Bank would be the sole supplier of exchange, such exchange to be used only for imports to be specified, mainly nonessential goods, equipment for nonessential investments, and maintenance equipment. The tax rate on profits derived from retained exchange, which had varied from 50 to 70 per cent, was made uniform at a rate of 80 per cent.

Certain changes were made in the method and scope of foreign exchange allocations granted by the National Bank from the Central Exchange Fund. Also, the National Bank was authorized to effect forward exchange transactions in the retained exchange market.

Persons traveling abroad could obtain at the official rate exchange equivalent to Din 3,000. Exchange for study and medical treatment abroad could be obtained from the National Bank within special quotas.

There was effected an overall revision of export controls, which lifted prohibitions and relaxed restrictions on some exports, and established prohibitions or tightened controls on others.

January 20

Construction works carried out abroad and delivery and/or assembly of investment goods were made subject to the prior approval of the Federal Administration for Investment Construction. If such approval were granted, credits and banking guarantees in foreign currency for such projects would be approved by the National Bank on the basis of the profitability of the operation and the possibilities of repayment of the loan.

March 19

Export coefficients for export proceeds sold on the retained exchange market would be applied to the market exchange rate, and not, as before, to the official exchange rate. The range of the export coefficients, which was 0.9 to 4, was reduced to 0.5 to 2.5, the number of coefficients remaining at 15. The foreign exchange profits tax of 80 per cent was reduced to 30 per cent.

Exporters who previously had to surrender a fixed proportion of their export proceeds to the National Bank at the official rate could receive the free market rate for that exchange.

March 26

The range of the import coefficients, which was 0.5 to 4, was changed to 1 to 4, and their number was reduced from 13 to 9. The supplementary charge that importers pay on the amount by which the market exchange rate exceeds twice the official rate (i.e., equivalent to Din 600 per US$1) was made progressive.

July 14

Travelers could import and export Yugoslav banknotes in denominations of not more than Din 100 in amounts totaling not more than Din 1,500 per person.

July 15

For barter transactions involving certain exports, the authorities could fix a higher export coefficient or a lower import coefficient, or exempt the exporters from paying the supplementary coefficient on the corresponding imports.

December 1

The surrender requirements for export proceeds were raised from an average of 50 per cent to a range of 80 to 99 per cent, according to commodity. Surrender of export proceeds to the National Bank was to take place at “settlement” rates, to be fixed from time to time by the Bank at a level about twice the official rate. There were to be 35 export coefficients, ranging from 0.5 to 3.0, to be applied on the basis of the “settlement” rates. Transport and service enterprises could retain for their own use between 50 and 100 per cent of exchange receipts. Exporters no longer had to pay the 30 per cent foreign exchange profits tax on retained exchange used for their own payments. The basis for calculating this tax was changed to the difference between the “settlement” rate and any higher rate at which the exchange is sold. New regulations were to be issued in respect of barter transactions.

The following classes of payment could be made at the official rate: key investment and defense imports (multiplied by a revaluation factor of 1.8); foreign debt service; government food imports; payments. (subject to the specified coefficients) by government agencies and certain public agencies; and exchange for travelers to the equivalent of US$10 (subject to a 100 per cent premium). For various other essential imports, the National Bank would grant exchange at special rates which could not be less than the “settlement” rates; quantitative controls were to be established on the amounts of exchange to be made available for such imports and to individual enterprises. All other imports were to be paid through the free market. There were to be 18 import coefficients, ranging from 0.5 to 4.0, to be applied on the basis of the relevant (special or free) rates. The supplementary import coefficient was eliminated.

December 28

A premium of 100 per cent of the official rate was applied to exchange receipts representing emigrants’ remittances, gifts, and certain other noncommercial invisibles.

For dollar countries, an American or Canadian Account; for Turkey, a Turkish Account; and for all other countries, a Transferable Account.

As of February 28, 1955.

Effective April 1, 1955, this facility was extended to all non-dollar currencies.

Effective April 1, 1955, new regulations gave a wider choice of payment to the resident remitter.

The following countries and territories are included in the dollar area: Canada, Costa Rica, Cuba, Dominican Republic, Ecuador, El Salvador, Guatemala, Haiti, Honduras, Japan, Mexico, Nicaragua, Panama, Paraguay, Peru, Philippine Republic, United States and possessions, and Venezuela.

Effective April 1, 1955, considerable changes were made in the arrangements applicable to nonresident accounts; see note at the end of this survey.

Namely, Canada, Costa Rica, Cuba, Dominican Republic, Ecuador, El Salvador, Guatemala, Haiti, Honduras, Japan, Mexico, Nicaragua, Peru, Philippine Republic, United States and possessions, and Venezuela.

These are Argentina, Brazil, Bulgaria, Chile, Czechoslovakia, Egypt, Finland, Hungary, Poland, Rumania, Spain, U.S.S.R., Uruguay, and Yugoslavia.

See footnote 5, above.

As from January 12, 1955, all imports from Turkey were also made subject to license.

Effective April 1, 1955, foreign L-accounts were renamed Financial Accounts and were made available to persons resident in any country outside Belgium-Luxembourg.

See footnote 9, above.

See footnote 5, above.

See footnote 6, above.

Bolivia has payments agreements with Argentina, Belgium-Luxembourg, Brazil, Chile, France, Netherlands, Paraguay, Peru, Spain, and Yugoslavia.

A tax equivalent to Bs 35 per US$1 is levied on sales of exchange at the official rate arising from exports of the Bolivian Mining Corporation, when the world market price for tin exceeds the equivalent of US$1 per pound.

Average rate for the month of December 1954.

In view of the changes which took place in the early months of 1955 (see note at the end of this survey), this survey relates to the position as at March 4, 1955.

Effective March 11, 1955, all open general licenses were suspended, but since then new ones have been issued retroactive to that date.

The American Account countries are listed as Bolivia, Colombia, Costa Rica, Cuba, Dominican Republic, Ecuador, El Salvador, Guatemala, Haiti, Honduras, Liberia, Mexico, Nicaragua, Panama, Philippine Republic, United States and possessions, and Venezuela.

In the Ceylonese regulations, the dollar area comprises Bolivia, Canada, Colombia, Costa Rica, Cuba, Dominican Republic, Ecuador, El Salvador, Guatemala, Haiti, Honduras, Mexico, Nicaragua, Panama, Philippine Republic, United States and possessions, and Venezuela.

These countries are Albania, Austria, Bulgaria, Mainland China, Czechoslovakia, Estonia, Federal Republic of Germany, Hungary, Japan, Latvia, Lithuania, Poland, Rumania, U.S.S.R., and Yugoslavia.

See footnote 2.

These countries are those in footnote 2, together with Belgium, Denmark, France, Greece, Iceland, Italy, Luxembourg, Netherlands, Norway, Portugal, Sweden, Switzerland, and Turkey.

Effective March 1, 1955, negotiable exchange certificates were introduced. For a description of this system, see the note at the end of this survey.

Effective March 1, 1955, the amount of domestic currency which may be taken out of Taiwan was limited to NT$500 per traveler.

Effective March 1, 1955, this limit was reduced to NT$500 per traveler.

Effective February 16, 1955, the differential exchange rate for coffee export proceeds was abolished (Decree No. 333).

Effective February 16, 1955, considerable changes were made in the import arrangements; see note at the end of this survey.

In this respect, the following countries have been specified: Argentina, Canada, Denmark, Ecuador, Finland, France, the Federal Republic of Germany, Italy, Spain, Sweden, and the United States.

Effective February 16, 1955, exchange at the official rate was no longer made available for travel abroad.

Effective February 16, 1955, the remittances allowed for approved students were reduced to US$150 or US$100 per month.

Prior to January 13, 1954, the percentage to be surrendered at the Ps$2.50 rate was increased by 1½ per cent each month until the rate reached the Ps$2.50 level, but on that date, the arrangement was temporarily suspended. However, as from February 16, 1955, 100 per cent of coffee export proceeds are purchased at the Ps$2.50 rate.

See note at the end of this survey for changes effective February 16, 1955.

These imports are subject to a 3 per cent stamp tax collected on the value in Colombian currency of each application for registration, at the rate of Ps$2.50. An additional stamp tax of 80 per cent applies to the registration of Group II imports. But see note at the end of this survey.

See footnote 3, above.

These countries are listed as follows: Austria, Belgium, France, Federal Republic of Germany, Greece, Italy, Luxembourg, Netherlands, Norway, Portugal, Sweden, Switzerland, Turkey, their overseas territories, and all territories of the Sterling Area.

Effective January 18, 1955, the issuance of import licenses involving payment to the credit of Export Accounts was discontinued.

Countries with which Egypt has concluded payments agreements are Austria, Belgium-Luxembourg Economic Union, Bulgaria, Ceylon, Czechoslovakia, France, Eastern Germany, Federal Republic of Germany, Greece, Hungary, India, Italy, Japan, Lebanon, Netherlands, Poland, Portugal, Rumania, Saudi Arabia, Spain, Switzerland, Turkey, U.S.S.R., and Yugoslavia. However, payments from Export Accounts to residents of Egypt in settlement of Egyptian exports to these countries also are allowed, provided permission of the Egyptian exchange control authorities is obtained in each case.

Licenses for imports (except from payments agreement countries) may also be granted for other goods provided payment is made in sterling. But see also footnote 1, above.

Finland has payments agreements with Argentina, Belgium-Luxembourg, Brazil, Bulgaria, Mainland China, Colombia, Czechoslovakia, Denmark, France, Eastern Germany, Federal Republic of Germany, Greece, Hungary, Iceland, Israel, Italy, Japan, Netherlands, Norway, Poland, Portugal, Rumania, Switzerland, Turkey, United Kingdom (Sterling Area), U.S.S.R., Uruguay, and Yugoslavia.

As announced in a circular dated February 19, 1955, the regulations in respect to the transfer abroad of interest and dividends due to nonresidents were eased.

These include Austria, Belgium, Denmark, Federal Republic of Germany, Greece, Italy, Luxembourg, Netherlands, Norway, Portugal, Sweden, Switzerland, Turkey, their overseas territories, and the Sterling Area.

The currencies of Belgium, Denmark, Federal Republic of Germany, Netherlands, Norway, Sweden, Switzerland, and United Kingdom.

The currencies of Austria, Czechoslovakia, Egypt, Italy, Mexico, Portugal, and Yugoslavia.

Besides payments agreements with EPU countries, France has payments agreements with Argentina, Bolivia, Brazil, Bulgaria, Chile, China (Taiwan), Cuba, Czechoslovakia, Ecuador, Egypt, Finland, Eastern Germany, Hungary, Iran, Israel, Japan, Mexico, Paraguay, Peru, Poland, Rumania, Saudi Arabia, Spain, U.S.S.R., Uruguay, and Yugoslavia.

The countries to which this applies are Canada, Colombia, Costa Rica, Cuba, Dominican Republic, El Salvador, Guatemala, Haiti, Honduras, Nicaragua, Panama, Philippine Republic, United States and possessions, and Venezuela.

At present, this provision applies to balances on nonresident accounts related to the following countries or monetary areas: Austria, Belgium-Luxembourg, Czechoslovakia, Denmark, Egypt, Federal Republic of Germany, Italy, Mexico, Netherlands Monetary Area, Norway, Portuguese Monetary Area, Sterling Area, Sweden, Switzerland, and Yugoslavia.

Effective January 10, 1955, about 75 per cent of metropolitan France’s imports from OEEC countries (1948 basis, excluding state trade) were freed from quantitative restriction. A wide range of the freed commodities is, however, temporarily subject to a specific compensatory tax on imports.

As from January 1, 1955.

“EFAC” is an abbreviation for “Exportations-Frais Accessoires.”

The term “Germany” is used in this survey as an abbreviation for the Federal Republic of Germany. Trade and exchange control regulations established by the authorities of the Federal Republic of Germany are, for the most part, applied also in the British, French, and U.S. Sectors of Berlin.

In February 1955, this special arrangement for imports of Brazilian coffee was eliminated.

In the German regulations, the countries in the free currency area are Afghanistan, Albania, Andorra, Bhutan, Bolivia, Canada, China (Taiwan), Mainland China, Colombia, Costa Rica, Cuba, Dominican Republic, El Salvador, Ethiopia, French Somaliland, Guatemala, Haiti, Honduras, Israel, Lebanon, Liberia, Mexico, Mongolia, Muscat and Oman, Nepal, Nicaragua, North Korea, Panama, Peru, Philippines, Rumania, Saudi Arabia, South Korea, Syria, Tangier, Thailand, Tibet, U.S.S.R., United States and possessions, Vatican City, Venezuela, and Yemen.

Afghanistan, Albania, Andorra, Bhutan, Mainland China, Ethiopia, Israel, Lebanon, Mongolia, Muscat and Oman, Nepal, Peru, Rumania, Syria, Thailand, Tibet, and U.S.S.R.

Bolivia, Canada, Colombia, Costa Rica, Cuba, Dominican Republic, Ecuador, El Salvador, Guatemala, Haiti, Honduras, Liberia, Mexico, Nicaragua, Panama, Philippines, United States and possessions, and Venezuela.

The territories to which this applies are Argentina, Austria, Belgian Monetary Area, Brazil, Bulgaria, Chile, Czechoslovakia, Denmark, Ecuador, Egypt, French Franc Area, Greece, Hungary, Iran, Italy, Japan, Netherlands Monetary Area (including Indonesia), Norway, Paraguay, Poland, Portuguese Monetary Area, Spanish Monetary Area, Sterling Area, Sweden, Switzerland, Turkey, Uruguay, and Yugoslavia.

Australia, Austria, Belgium, Ceylon, Denmark, Egypt, France, Greece, Iceland, India, Indonesia, Ireland, Italy, Luxembourg, Netherlands, Norway, Pakistan, Portugal, Spain, Sweden, Switzerland, Union of South Africa, United Kingdom, and Yugoslavia.

These associated areas include Australia, Burma, Ceylon, India, Indonesia, Pakistan, New Zealand, Southern Rhodesia, and Union of South Africa.

Effective March 1, 1955, such payments were permitted to all countries (including the dollar area).

Effective March 1, 1955, the exchange allocation of DM 1,500 per year was extended to tourist travel to all countries (including the dollar area). In addition, resident travelers leaving Germany may take out German banknotes and coins and deutsche mark checks up to DM 300, and foreign banknotes and coins, in other than a free currency, up to the equivalent of DM 600; but the deutsche marks and foreign currency together may not exceed DM 600.

See footnote 6, above.

Apart from EPU countries, Greece maintains bilateral payments agreements with Brazil, Bulgaria, Czechoslovakia, Egypt, Finland, Eastern Germany, Hungary, Israel, Poland, Rumania, Spain, U.S.S.R., Uruguay, and Yugoslavia.

This amount was increased to Dr 450 in February 1955.

Export licensing in Hong Kong, as in some other areas, is not related to exchange control.

Originating in Mainland China, Hong Kong, the Republic of Korea, Macao, or Taiwan, and received in U.S. dollars.

These facilities, which are cumulative for a period of three years, are also available for residents of the United Kingdom and the Colonies who have been staying in Hong Kong for not less than three years.

These are listed as Czechoslovakia, Finland, Eastern Germany, Hungary, Israel, Poland, Spain, and the U.S.S.R.

These basic allowances came into effect on January 1, 1955. Previously, the limits for soft currency countries were £600 per adult and £300 per child, while those for neighboring countries were Rs 2,000 per adult and Rs 1,000 per child.

Effective February 11, 1955, “inducement” certificates were no longer issued for rubber exports.

Effective February 6, 1955, these rates were changed to Rls 75.00 buying, Rls 76.50 selling, per US$1. See footnote 2, below.

Effective February 6, 1955, the fixed rates were changed to Rls 75.00 buying, Rls 76.50 selling, per US$1. As a temporary measure, however, and until the existing holdings of exchange certificates by authorized banks are utilized, importers of Category I commodities are required to procure the required exchange 50 per cent at the new selling rate and 50 per cent at Rls 82.50. The regulations concerning imports of Category II goods remain unchanged. The new rates apply also to noncommercial transactions: exchange for approved medical and students’ expenses is granted at the new rate, while tourists and others have to procure their exchange 50 per cent at the new selling rate and 50 per cent at Rls 82.50.

Israel has clearing agreements with Argentina, Bulgaria, Denmark, Finland, France, Greece, Hungary, Iceland, Iran, Italy, Netherlands, Norway, Poland, Rumania, Turkey, U.S.S.R., and Yugoslavia. There is a 5 per cent discount on clearing funds of Category B (Denmark and Norway), and a 10 per cent discount on clearing funds of Category C (Argentina, Finland, Hungary, Poland, Turkey, and Yugoslavia). Clearing funds of the other countries are dealt in on a parity basis.

See footnote 1, above.

See footnote 1, above.

The quotation of the free Swiss franc on the Italian exchange market was resumed only on January 28, 1955.

Besides payments agreements with EPU countries, Italy has payments agreements with Argentina, Brazil, Bulgaria, Ecuador, Egypt, Finland, Eastern Germany, Hungary, Iran, Israel, Japan, Paraguay, Poland, Rumania, Spain, U.S.S.R., Uruguay, and Yugoslavia.

These are listed as Austria, Belgium, Denmark, France, Federal Republic of Germany, Greece, Iceland, Ireland, Luxembourg, Netherlands, Norway, Portugal, Sweden, Switzerland, Turkey, United Kingdom, and their overseas territories.

See footnote 1.

Effective February 8, 1955, open account arrangements apply also to Turkey.

Specified residents, such as shipping companies, airlines, tourist services, and insurance companies, also are authorized to keep Foreign Currency Deposit Accounts in U.S. dollars or pounds sterling.

Effective March 1, 1955, this percentage was reduced to 5.

The system of fines was discontinued on January 26, 1955.

On January 26, 1955, certain measures were taken affecting imports and import payments; see note at the end of this survey.

This selling rate does not include the fee payable on all import licenses (see section on Imports and Import Payments, above, and note at the end of this survey).

Imports outside the official import program from countries other than Syria and Lebanon are subject to fines (see section on Imports and Import Payments, above, and note at the end of this survey).

Lebanon has payments agreements with Czechoslovakia, Egypt, Eastern Germany, the Federal Republic of Germany, and the U.S.S.R.

Payments agreements of these types are in force with EPU countries and their associated territories, Argentina, Brazil, Bulgaria, Czechoslovakia, Egypt, Finland, Eastern Germany, Hungary, Indonesia, Israel, Japan, Netherlands Antilles, Paraguay, Poland, Spain, Surinam, U.S.S.R., Uruguay, and Yugoslavia.

Canada, Dominican Republic, El Salvador, Guatemala, Honduras, Mexico, Panama, United States, and Venezuela.

These are listed as follows: Austria, Belgium, Denmark, France, Federal Republic of Germany, Greece, Iceland, Ireland, Italy, Luxembourg, Norway, Portugal, Sweden, Switzerland, Turkey, United Kingdom, and their overseas territories.

However, the regulations of Belgium-Luxembourg and of Switzerland permit their residents to receive capital from other EPU countries only through their free exchange markets.

Norway has payments agreements with Argentina, Brazil, Czechoslovakia, Finland, Hungary, Israel, Poland, Rumania, Spain, U.S.S.R., and Yugoslavia, as well as with EPU countries.

These are listed as follows: Austria, Belgium, Denmark, France, the Federal Republic of Germany, Greece, Italy, Luxembourg, the Netherlands, Portugal, Sweden, Switzerland, Turkey, their overseas territories, and the Sterling Area.

Effective January 1, 1955, there are only two types of individual import license: those valid for imports from any country, and those valid for a particular country with which a trade agreement is operative.

The currencies of Aden, Afghanistan, Belgian Congo, Burma, Ceylon, East Africa, French Africa, India, Portuguese territories in India, Madagascar, Malaya, Mauritius, Nepal, Persian Gulf Sheikdoms, South Africa, and Tibet.

For this purpose, the following agreement account countries are specified: Austria, Czechoslovakia, Denmark, Finland, France, Federal Republic of Germany, Hungary, Italy, Netherlands, Spain, Sweden, United Kingdom (Sterling Area), Uruguay, and Yugoslavia.

A few exports are subject to export taxes of up to 28 per cent, and many exports receive exchange subsidies as a result of the negotiation in the “free” market of export proceeds in excess of the officially appraised value (aforo differential). Certain exports receive subsidies ranging from 14 to 133 per cent.

Effective January 24, 1955, the requirements for advance deposits were reduced as follows: no advance deposit for imports of wheat, meat, milk, and fats; 25 per cent for imports for production; 50 per cent for all other imports.

The banks are required to quote a single buying and selling rate for certificates, but they may charge a commission on certificate sales.

Besides payments agreements with EPU countries, Argentina, Bulgaria, Hungary, Indonesia, Japan, Poland, Spain, U.S.S.R., Uruguay, and Yugoslavia, Sweden has payments arrangements with Brazil and Eastern Germany.

In Sweden, these are listed as Austria, Belgium, Denmark, France, Federal Republic of Germany, Greece, Indonesia, Italy, Luxembourg, Netherlands, Norway, Portugal, Switzerland, Turkey, their overseas territories, and the Sterling Area.

At the end of March 1955, these basic allocations of travel exchange were increased to SKr 3,000 for all non-dollar countries and SKr 1,500 for the dollar area.

The commodities affected represent some 80 per cent of all exports and are listed as follows: living animals, eggs, animal casings, vegetables, apricot paste, barley, wheat, maize, cottonseed, raw cotton, cotton textiles, licorice, silk textiles, raw wool, hemp, olive oil, fruit, tobacco, soap, leather and hides, and footwear.

In view of the important modifications in the restrictive system which became effective on January 1, 1955 (see note at the end of this survey), this survey describes the position as at that date.

These commodities include timber (except teak), antimony, castor oil, castor seeds, iron, kapok, lead, rubber, tin, wolfram, zinc, gold, platinum, precious stones, certain chemical fertilizers, livestock, wild animals, meat, eggs, lard, sugar, river fish, rice, cotton textiles, machine-made gunny bags, machinery, cement, cow and buffalo hides, and all imported goods.

This table, being expressed in terms of U.S. dollars, does not take account of rates for sterling, which is at a discount in the free market when compared with the sterling-U.S. dollar parity rate.

Rate established for transactions during the first half of January 1955.

Official rates are quoted for the following currencies: Belgian francs, Danish kroner, deutsche marks, French francs, Netherlands, Netherlands Antilles, and Surinam guilders, Norwegian kroner, Portuguese escudos, Swedish kronor, Swiss francs, and U.S. dollars.

Export licensing in the United Kingdom, as in some other countries, is not related to exchange control.

Countries (monetary areas) covered by these Monetary Agreements are as follows: Belgian Monetary Area, Denmark (with the Faroe Islands and Greenland), French Franc Area, Federal Republic of Germany (and the British, French, and U.S. Sectors of Berlin), Netherlands Monetary Area, Norway, Portuguese Monetary Area, Sweden, and Switzerland (and Liechtenstein).

In this section, “dollars” includes Canadian dollars, U.S. dollars, Canadian or American Account sterling, and, in the case of receipts, Registered Account sterling.

See footnote 8, below.

Effective March 17, 1955, this amount was increased to £10.

Export licensing in the United Kingdom, as in some other countries, is not related to exchange control.

These specified currencies are listed as follows: Belgian francs, Canadian dollars, Congolese francs, Danish and Faroese kroner, deutsche marks, francs of the French Franc Area, French Somali Coast (Djibouti) francs, Indo-Chinese piastres, Luxembourg francs, Netherlands, Netherlands Antilles, and Surinam guilders, Norwegian kroner, Panamanian dollars, Philippine pesos, Portuguese escudos, Swedish kronor, Swiss francs, and U.S. dollars.

Effective March 17, 1955, this amount was raised to £25.

The remaining restrictions on such borrowing were further eased from February 1, 1955.

Effective February 8, 1955, the rate for these exports was changed to Ur$2.026 per US$1.

Yugoslavia has payments agreements with Argentina, Austria, Belgium-Luxembourg, Brazil, Burma, Czechoslovakia, Denmark, Egypt, Finland, France, Eastern Germany, Federal Republic of Germany, Greece, Hungary, Indonesia, Israel, Italy, Netherlands, Norway, Paraguay, Poland, Rumania, Sweden, Switzerland, Turkey, U.S.S.R., and Uruguay.

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