Chapter

Country Surveys

Author(s):
International Monetary Fund. External Relations Dept.
Published Date:
September 1977
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Afghanistan

(Position on December 31, 1976)

Exchange Rate System

On March 22, 1963, an initial par value was established of 0.0197482 gram of fine gold per Afghani, corresponding at the time to Af 45 = SDR 1. No exchange transactions take place at the par value. Da Afghanistan Bank (the central bank) quotes official buying and selling rates for the U.S. dollar of Af 44.70 and Af 45.30, respectively. The official selling rate applies to certain foreign exchange payments by the Central Government (debt service, contributions to international organizations, and the foreign exchange requirements of Afghan embassies and missions abroad). The official buying rate applies to 40 per cent of the foreign currency salaries of foreign employees of the Government, government enterprises, and domestic companies, and to purchases of bilateral agreement currencies for maintenance in Afghanistan of embassies and state trading organizations by the respective bilateral partner countries. Da Afghanistan Bank charges commissions ranging from of 1 per cent to ⅜ of 1 per cent on exchange transactions.

Special arrangements are applicable to wool when exported to bilateral countries, i.e., countries with which bilateral payments agreements are in force.1 The surrender rate for proceeds from wool exports to bilateral countries is Af 55 per US$1 (official rate plus subsidy of Af 10 per US$1). The surrender rate for proceeds from cotton exports to bilateral countries is in principle Af56 per US$1 (official buying rate plus subsidy of Af11.3 per US$1) and the surrender rate for cotton exports to all other countries is in principle AF 50 per US$1 (official buying rate plus subsidy of Af 5.3 per US$1), but the Afghani amount that the exporter effectively receives is subject to a uniform ceiling for all countries.2

All other transactions take place at free market rates through either the banks or the bazaar; proceeds from the export of walnuts received over bilateral payments accounts are subject in principle to an exchange tax of 9.5 per cent, which is suspended. Da Afghanistan Bank quotes fixed operational free market rates for the U.S. dollar, which are adjusted from time to time;3 on December 31, 1976, these rates were Af 50 buying, and Af 51 selling, per US$1, while the free market rate in the bazaar was Af 44.00 buying, and Af 44.50 selling, per US$1, and that in the commercial banks was Af 46.00 buying, Af 47.00 selling, per US$1. Da Afghanistan Bank also posts operational free market rates for deutsche mark, French francs, pounds sterling, and Swiss francs, which reflect their relative values to the U.S. dollar in international markets, and free market rates for the Indian rupee and the Pakistan rupee, which are determined by demand and supply for the currencies concerned.

Da Afghanistan Bank from time to time buys and sells in the free market bilateral agreement dollars and bilateral agreement sterling resulting partly from loans for consumer goods under certain of Afghanistan’s bilateral payments agreements; most of this exchange sold by the Bank is purchased by government commercial and industrial enterprises for their imports from the countries concerned. The selling rate for Czechoslovakian and U.S.S.R. clearing dollars was Af 57.00 per US$1 on December 31, 1976, and that for clearing sterling under the payments agreement with the People’s Republic of China was Af 95.00 per £ stg. 1.

Administration of Control

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

Prescription of Currency

Settlements with countries with which Afghanistan has bilateral payments agreements1 must be made in the foreign currencies specified in the agreements. The proceeds from exports of karakul, wool, and cotton to other countries must be obtained in convertible currencies. There are no other prescription of currency requirements.

Imports and Import Payments

Imports are not subject to license but import transactions must be registered before orders are placed abroad. Imports of a few items (e.g., some drugs, liquor, arms, and ammunition) are prohibited on public policy grounds or for security reasons; in some instances, however, special permission to import these goods may be granted. The importation of certain other goods (e.g., a few textiles and selected nonessential consumer goods) also is prohibited. There are no quantitative restrictions on other imports. Most bilateral agreements, however, specify quotas (and sometimes prices) for commodities to be traded, and the Government facilitates the fulfillment of the commitments undertaken in the agreements. On the whole, trade with bilateral agreement countries is carried out on a compensation basis and usually both imports and exports are arranged by the same trader; imports against exports of cotton and wool are carried out by the Government or government agencies, or the proceeds of exports are allocated for the Government’s external debt servicing.

Payments for imports through the banking system to payments agreement countries other than India may be made only under letters of credit; those to India may be made against bills for collection. Payments to other countries may be made under letters of credit, against bills for collection, or against an undertaking by the importer to import goods at least equivalent to the payment made through the banking system. A deposit of 100 per cent of the value of the imports in afghanis calculated at the prevailing free market rate, or in foreign exchange, is required upon establishment of a letter of credit. Such deposits may be used as collateral to obtain loans from commercial banks. Da Afghanistan Bank is authorized to refuse to sell foreign exchange for the importation of certain consumer goods that are regarded as nonessential; the commercial banks are obliged to conform with the central bank’s practices. However, exchange for these items may be purchased in the bazaar.

Payments for Invisibles

Central government payments for foreign debt service and certain other invisibles are made at the official rate. All other payments are settled at free market rates. There is an exchange allocation from the banks for tourist travel and business travel abroad of the equivalent of US$1,500 a person a trip, and for pilgrimages of the equivalent of US$1,000 a person a year. The allocation for medical treatment abroad is US$2,000 a trip for the United States, Europe, and Japan, and US$1,000 a trip for other Asian countries; there are, in addition, allocations for accompanying persons.4 The fee for a passport valid for one year is Af 10,000 for tourist travel and Af 5,000 for business travel (Af 1,000 to Af 2,500 for other types of travel). Specific permission is required for the export by travelers of foreign currency notes in excess of the equivalent of US$50. Travelers are not allowed to take out more than Af 1,000 in domestic banknotes.

Exports and Export Proceeds

Exports (other than gold) are not subject to license but export transactions must be registered. Exports of a few commodities (e.g., opium and museum pieces) are prohibited. Otherwise, control is exercised only over exports to bilateral agreement countries (see section on Imports and Import Payments, above). Karakul is not normally exported to payments agreement countries, but may be sold at auction at Leningrad.

Exchange receipts from exports of karakul, wool, and cotton must be surrendered at the appropriate exchange rate (see section on Exchange Rate System, above). The net proceeds of all other exports must either be sold at free market rates (to Da Afghanistan Bank, to a commercial bank, or in the bazaar) or be used by the exporter or a third party to pay for imports. Export taxes are levied on cotton, oilseeds, walnuts, and raisins.

Proceeds from Invisibles

Forty per cent of the foreign currency salaries of foreign employees of the Afghan public and private sectors must be converted into afghanis at the official rate, but the remaining 60 per cent may be remitted abroad or exchanged at the free market rate. Except in the case of India, receipts over bilateral payments agreement accounts from the embassies and state trading organizations of the countries concerned for their local expenses in Afghanistan are converted at the official rate. All other receipts from invisibles are sold at free market rates through either the banks or the bazaar. Travelers entering Afghanistan may not bring in more than Af 1,000 in Afghan banknotes.

Capital

Foreign investment in Afghanistan requires prior approval and is administered, as is domestic private investment, by an Investment Committee composed of five cabinet ministers. The Foreign and Domestic Private Investment Law of 1353 (issued on July 4, 1974) provides for a number of benefits, which include (1) income tax exemption for four years (six years outside Kabul province), beginning from the date of the first sales of products resulting from the new investment; (2) exemption from import duties on essential imports (mainly of capital goods) ; (3) exemption from taxes on dividends for four years after the first distribution of dividends, but not more than seven years after the approval of the investment; (4) exemption from personal income tax and corporate tax on interest on foreign loans which constitute part of an approved investment; (5) exemption from export duties, provided that the products are permitted to be exported; and (6) mandatory purchases by government agencies and departments of their requirements from enterprises established under the law where prices of such products are no more than 15 per cent higher than the price of importable equivalents. The law provides that foreign investment in Afghanistan can only take place through joint ventures, with foreign participation not exceeding 49 per cent. It also establishes that an investment approved by the Investment Committee shall require no further license to operate in Afghanistan.

Principal and interest installments on loans from abroad may be remitted freely to the extent of the legal obligation involved. Profits may be repatriated freely, and capital may be repatriated after five years at an annual rate not exceeding 20 per cent of the total registered capital. All the foregoing transfers are made through the free market.

Gold

Residents may freely purchase, hold, and sell domestically gold in any form in Afghanistan. Imports of gold are restricted. Exports of gold and silver in any form other than jewelry require licenses issued by the Council of Ministers; such licenses are not normally granted except for exports by or on behalf of the monetary authorities and industrial users. Commercial exports of gold and silver jewelry and of other articles containing minor quantities of gold or silver do not require a license and may be made freely. Customs duties are payable on imports and exports of silver in any form unless the import or export is made by or on behalf of the monetary authorities. The import duty on gold is 1 per cent.

Changes during 1976

During the year, the free market exchange rate in the bazaar appreciated from about Af 54 to about Af 44 per US$1.

January 2. Da Afghanistan Bank discontinued its practice of maintaining its operational free market rate within Af 2.0 per US$1 of the free market rate quoted in the bazaar and set fixed buying and selling rates of Af 57 and Af 58 per US$1, respectively. The commercial banks now were allowed to set their exchange rates freely rather than at the free market rates quoted by Da Afghanistan Bank; their quotations henceforth were close to those in the bazaar (which at the time were about Af 55 per US$1). Da Afghanistan Bank stood ready to purchase all proceeds from exports, and its free market selling rate (rather than the bazaar rate) was made applicable to import payments by certain government and public sector entities. The exchange rate for Czechoslovakian, U.S.S.R., and Yugoslav clearing dollars remained unchanged at Af 57 buying and Af 59 selling, per US$1.

March 4. Settlements with Yugoslavia were in principle placed on a convertible currency basis, following the expiration of the bilateral payments agreement with that country.

April 3. The surrender rate for proceeds from wool exports to bilateral countries was changed from Af 60 per US$1 (official rate plus subsidy of Af 15 per US$1) to Af 55 per US$1 (official rate plus subsidy of Af 10 per US$1).

May 12. Da Afghanistan Bank changed its operational free market rates from Af 57 buying and Af 58 selling, per US$1 to Af 56 buying and Af 57 selling, per US$1, respectively. The exchange rate for Czechoslovakian, U.S.S.R., and Yugoslav clearing dollars also was set at Af 56 buying and Af 57 selling, per US$1.

May 31. The exchange allocation for tourist travel was increased from US$800 to US$1,500 a person a trip. The allocation for business travel was raised from US$20 a day, for a maximum of one month, to US$ 1,500 a trip. Pilgrims could obtain US$1,000 a person a year. The allocation for medical treatment abroad was changed from US$20 a day for the United States, Europe, and Japan and US$10 a day for other countries to US$2,000 and US$1,000 a trip, respectively.

May 31. The limit on the amount of Afghan banknotes that travelers could take out or bring in was raised from Af 500 to Af 1,000.

September 10. Payments on a collection basis were allowed for imports from India.

October 26. Da Afghanistan Bank changed its operational free market rates to Af 50 buying and Af 51 selling, per US$1, for multilateral currency transactions only. The exchange rate for Czechoslovakian and U.S.S.R. clearing dollars was left unchanged at Af 56 buying and Af 57 selling, per US$1.

December 2. Passport fees were modified.

December 10. New surrender arrangements for the proceeds from cotton exports came into force.

Algeria

(Position on December 31, 1976)

Exchange Rate System

The par value is 0.180000 gram of fine gold per Algerian Dinar. Algeria avails itself of wider margins. Since January 21, 1974 Algeria has followed an independent exchange rate policy. Daily buying and selling rates for specified currencies1 are established by the Central Bank of Algeria. On December 31, 1976, the Central Bank’s buying and selling rates for the U.S. dollar were DA 4.1510 and DA 4.1660, respectively, per US$1. The Central Bank charges on its transactions in foreign currencies a commission ranging from 0.2 per mill to 0.4 per mill, depending on the nature of the transaction, and a tax of 6 per cent on the amount of the commission. An encouragement premium is granted on the conversion of convertible currencies repatriated by Algerians working abroad.

The foreign exchange reserves are centralized in the Central Bank; authorized banks must clear their foreign currency position with their foreign correspondents at the end of each day but, under certain conditions, they are permitted to hold outside Algeria cover for documentary credits. There are no forward exchange facilities.

Administration of Control

The Ministry of Finance and the Central Bank have general jurisdiction over exchange control. The Central Bank assists in the formulation of the exchange legislation and regulations and is responsible for their execution and for their application by the authorized banks. In addition, three commercial banks and the Postal Administration have been given authority to carry out many of the details of exchange control. Import and export licenses and global import quotas are issued by the Ministry of Commerce. Import and export licenses require the visa of the Central Bank. The Office National de Commercialisation (Onaco), the Office Algérien Interprofessionnel de Céréales (OAIC), the Office National de Commercialisation des Produits Vitivinicoles (ONCV), the Société Nationale des Tabacs et Allumettes (SNTA), the Société Nationale d’Edition et de Diffusion (SNED), the Société Nationale de Sidérurgie (SNS), the Société Nationale de Constructions Mécaniques (Sonacome), and other similar organizations have a monopoly over the import of a large number of commodities. The Société Nationale pour la Recherche, la Production, le Transport, la Transformation et la Commercialisation des Hydrocarbures (Sonatrach) has a monopoly over imports and domestic sales of petroleum and petroleum products, and handles most exports of these commodities. Investment of foreign capital in excess of DA 500,000 in Algeria requires approval by a National Investment Committee in order to obtain the benefits of the Investment Code. Foreign borrowing requires the prior approval either of the Minister of Finance or of the Central Bank.

Prescription of Currency

Settlements with countries with which no payments agreements are in force are made in convertible currencies. Settlements with countries with which Algeria has concluded bilateral payments agreements are made through special accounts under the terms of the agreements. Some of these accounts are denominated in Algerian dinars and others in U.S. dollars of account. Algeria maintains payments agreements with Albania, Bulgaria, Guinea, Guinea-Bissau, North Korea, and the U.S.S.R. Specified noncommercial settlements with Morocco and Tunisia are channeled through a dirham account at the Bank of Morocco and an account in Tunisian dinars at the Central Bank of Tunisia.

Nonresident Accounts

For residents of countries outside the French Franc Area, the regulations pertaining to nonresident accounts are similar to those applied before 1962; most of these accounts are Foreign Accounts in Convertible Dinars or Internal Nonresident Accounts. For residents of French Franc Area countries, there are three types of accounts in Algerian dinars: Individual Suspense Accounts, Franc Area Accounts, and Final Departure Accounts.2 Except as described below, all operations through these accounts are subject to authorization.

Individual Suspense Accounts may be opened without authorization and may be credited with payments from any country. Balances in such accounts opened prior to January 1, 1975 by nonresident physical persons of foreign nationality have been released for transfer abroad.

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

Final Departure Accounts may be opened, without prior authorization, in the name of any physical person residing in Algeria, but not of Algerian nationality, who intends to leave Algeria to return to the country of origin. These accounts may be credited freely with an amount equivalent to the holdings at October 20, 1963 in the account of the person concerned; with the proceeds from sales of real estate of the account holder, provided that the funds are paid directly by a notary public; with the proceeds of the sale of securities through the intermediary of a bank; and with any other payments, up to DA 2,000. The Central Bank may authorize the crediting of other specific payments. These accounts may be debited without prior approval for certain payments in Algeria on behalf of the account holder. Outward transfers require individual approval; certain balances were released on September 25, 1974 for transfer abroad.

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

Nonresidents may maintain certain accounts in Algeria that are fed with the proceeds from the conversion of convertible currencies (comptes épargne-devises). Depositors receive a premium equivalent in principle to one eighth of the amounts deposited: in practice, the premium is a flexible one ensuring an effective conversion rate of F 1 = DA 1. Withdrawals may be made in Algerian dinars only.

Imports and Import Payments

Imports from Israel, Rhodesia, and South Africa are prohibited. Certain imports are prohibited regardless of origin. Certain commodities are liberalized and do not require import licenses. All other imports are permitted, in principle, in accordance with an annual import program. This is implemented mainly through global import authorizations (autorisations globales d’importation or AGI) granted to public enterprises or sometimes to private enterprises. Imports made “without payment” (sans paiement), i.e., imports which do not involve compensation of any kind, are exempt from all exchange and trade control formalities, but not from any absolute import prohibition, when valued at DA 1,000 or less. The Government in principle has the monopoly over the importation of many commodities through Onaco, OAIC, SNTA, ONCV, SNED, SNS, Sonatrach. Sonacome, and other similar organizations, but imports are not necessarily restricted to the monopoly holders; these imports also are made within the framework of an annual import program.

All imports must prior to the transaction be domiciled with an authorized bank, to which the necessary import document must be presented and through which all payments related to the transaction must be made. Unless the Central Bank approves otherwise, advance payments may not exceed DA 5,000 or 20 per cent of the import value, whichever is smaller. All individual import licenses require the visa of the Central Bank.

Unless earlier payment is to be made in accordance with the provisions of the import license or of a commercial contract approved by the authorities, payment to the foreign exporter may be made only after the shipping documents have been presented to the bank; the importer may in this case, after having domiciled the import, open a documentary import credit payable upon presentation of the shipping documents.

Goods subject to import license and quota restrictions may be freely imported in small parcels, provided that the value of a shipment does not exceed DA 60 and the same addressee does not receive more than one parcel a day and that the parcels he receives during the year do not exceed DA 240 in value.

Payments for Invisibles

All payments for invisibles to all countries require the approval of the Central Bank. However, when supporting documents are presented, approval may be granted by authorized banks, or sometimes by the Postal Administration, either freely or up to specified limits for certain payments such as (1) those relating to approved trade transactions and maritime contracts, (2) travel expenses, (3) transfers of salaries and wages, (4) educational expenses, and (5) advertising expenses. For payments for which the approval authority has not been delegated, the granting of exchange must be authorized by either the Central Bank or the Ministry of Finance. Certain public enterprises, however, which receive special exchange allocations (budget devises) may use these freely for payments for specified invisibles, including transportation and other services contracted abroad. The transfer of family remittances is suspended.

Residents of other countries working in Algeria under the programs for technical cooperation or for public enterprises and agencies or certain mixed companies may transfer abroad a certain percentage of their net salaries, as follows: 55 per cent for single persons and married persons having their families in Algeria; 75 per cent for persons having their families abroad; 85 per cent for employees of mines, the hydrocarbon sector, and the Sahara works; and 100 per cent for employees who spend their vacations abroad (the transfer being limited to the duration of their leave and not to exceed one month). For other workers who have contracts with other employers and hold the necessary employment documents, the amounts that may be transferred are 35 per cent, 55 per cent, or 100 per cent. The payments must be transferred once a month on the basis of the remuneration for the previous month. Persons making such transfers of savings are not entitled to allocations for other personal transfers (e.g., for educational purposes).

For residents traveling by air or sea to other countries, including countries in the French Franc Area, the foreign exchange allocation is equivalent to DA 300 a person a trip (DA 150 for children under 15) and is issued on presentation of a valid passport and travel documents; for overland travel, the allocation is DA 300 a person a calendar semester for adults and DA 150 for children under 15. These allocations are not applicable to persons living in border areas. Algerian workers who have permission to immigrate into a foreign country are entitled to an exchange allocation upon departure. Such persons, when on holiday in Algeria, may upon return abroad repurchase foreign exchange equivalent to one fifth of the amount sold upon arrival, but not exceeding DA 1,000. Foreign exchange for private business travel, unless debited to an EDAC or EDAB Account (see section on Exports and Export Proceeds, below), is subject to authorization by the Central Bank and allocations cannot exceed DA 1,500 a trip.

Pilgrims traveling to Saudi Arabia may obtain Saudi Arabian riyals up to the equivalent of DA 3,400 a person; the allocation can be taken up in the form of a check by those traveling by air or sea. Travelers may take out Algerian dinar banknotes up to DA 50 a person. Nonresident travelers may also re-export any foreign currency declared upon entry.

Exports and Export Proceeds

All exports to Israel, Rhodesia, and South Africa are prohibited. Certain exports, including used equipment and machinery, livestock, firearms, ammunition, explosives, and certain radio equipment, are prohibited regardless of destination. All other exports may, in principle, be effected freely, without an export license, with the exception of exports to countries with which Algeria has bilateral payments agreements. Some commodities may be exported, subject to individual prior approval, on the basis of linked transactions (transactions liées) involving at the same time an authorized import transaction.

Exports must be domiciled with an authorized bank. Sales on consignment are expressly subject to authorization by the Ministry of Finance and registration must always take place prior to customs clearance.

The proceeds of exports of commodities must be repatriated immediately after collection; the due date of the export contract must not be later than 60 days following shipment, except when prior authorization from the Central Bank is obtained. Those petroleum companies holding mineral rights must repatriate to Algeria the proceeds from their exports of hydrocarbons calculated on the basis of a contractual price per barrel that is fixed by agreement with the companies concerned. For one petroleum company holding mineral rights, however, there are different repatriation requirements.

Exporters in the private sector may retain 2 per cent (1 per cent for consignment sales) of the export proceeds of all commodities other than hydrocarbons in special accounts, unless exports are made on a compensation basis (échanges compensés). These accounts are of two kinds—EDAC (Exportateurs-dinars convertibles) and EDAB (Exportateurs-dinars bilatéraux). Balances in these accounts are not transferable and may be used by the holder himself for business travel, certain services of foreign technicians, and imports of spare parts; balances in excess of DA 100,000 in either type of account are inconvertible.

Proceeds from Invisibles

Proceeds from invisibles must be repatriated and surrendered. Savings repatriated in the form of convertible currencies by Algerians working abroad are eligible for an “encouragement premium.” There are no restrictions on the import of foreign banknotes, coins (except gold coins), checks, and letters of credit, but nonresidents, including those of Algerian nationality, must declare such holdings when they enter Algeria. Resident travelers may reimport Algerian dinar banknotes up to DA 50 a person. Nonresident travelers are not permitted to bring in Algerian banknotes.

Capital

Residents are obliged to repatriate and surrender capital assets (or the sales proceeds thereof) held or acquired outside Algeria. Capital transfers to any destination are subject to individual license; residents are not normally permitted to acquire capital assets outside Algeria. All borrowing abroad or from nonresidents is subject to prior approval by the Minister of Finance.

A new Investment Code, superseding that of 1963, was promulgated by Ordinance No. 66-284 of September 15, 1966. It provides for state guarantees in respect of foreign investments of more than DA 500.000 in the industrial and tourist sectors. The new code provides for a retransfer guarantee in respect of the sale or liquidation proceeds of invested foreign capital, and establishes that profit remittances on such investments will be permitted up to 15 per cent annually of the foreign capital originally invested. Tax facilities may also be granted, and investments of more than DA 5 million may be given exclusive rights in a specified geographic area and may be accorded tariff protection. Remittances of profits and retransfers of capital are permitted only in respect of investments approved under Ordinance No. 66-284.

Gold

Residents may purchase, hold, and sell gold coins in Algeria for numismatic purposes. Under the terms of Ordinance No. 70-6 of January 16, 1970, unworked gold for industrial and professional use is to be distributed by the Agence Nationale pour la Distribution et la Transformation de l’Or et des Autres Métaux Précieux (Agenor). This agency is also authorized to purchase in Algeria, and to hold, process, and distribute any other precious metal, and, within the exchange control regulations, to import and export any precious metal, including gold. Furthermore, locally produced gold must be sold to this agency. Imports of gold for use by dentists and goldsmiths are made by Agenor, which receives import licenses from the Ministry of Finance and the Central Bank.

Changes during 1976

January 1. Following the expiration on December 31, 1975 of the bilateral payments agreements with the People’s Republic of China, Hungary, Romania, and Yugoslavia, settlements with these countries were placed on a convertible currency basis.

January 1. Ordinance No. 75-93 of December 31, 1975, containing the budget law for 1976, came into force. The suspension of import duty and/or production tax applicable in 1975 to various basic foodstuffs was extended until December 31, 1976. Imports “without payment” of equipment goods and professional accessories by Algerians who have been resident abroad at least five years became subject to import duties and taxes; these were payable in convertible currencies. Imports “without payment” of all types of automobiles also became subject to the ruling import duties and taxes, payable in convertible currencies.

February 10. A trade agreement was signed with India.

February 20. Two orders were gazetted containing new lists of prohibited imports and restricted imports. These orders had been issued on May 20, 1975.

April 30. The bilateral payments agreement with Egypt expired.

May 2. A long-term trade agreement was signed with Egypt.

May 8. A technical cooperation agreement was signed with the Comoros.

May 10. A maritime shipping agreement was signed with Cape Verde.

Argentina

(Position on December 31, 1976)1

Exchange Rate System

On January 9, 1957, a par value for the Argentine Peso was established by Argentina with the Fund. However, exchange transactions no longer take place at rates based on that par value.

At the end of 1976 all exchange transactions took place in a free exchange market with the exception of transactions relating to foreign loans covered by forward exchange operations (“swaps” or pases) approved and guaranteed by the Central Bank of Argentina. On December 30, 1976 the buying and selling rates in the free market were $a 272 and $a 277 per US$1, respectively, and the exchange rate for transactions relating to loans covered by swaps (including the interest on such loans) was $a 140 per US$1.

Exchange transactions between banks and individuals, other than transactions in banknotes, are subject to a tax of 1 per cent (10 per mill) on sales to customers and 3 per mill on purchases.

Forward exchange purchases by private firms are restricted to those concluded as part of a swap transaction and may only be undertaken through the intermediary of the Central Bank. Swap operations must be submitted to the Central Bank for prior approval and are subject to a premium of 57 per cent which is payable in advance.

Argentina formally accepted the obligations of Article VIII, Sections 2, 3, and 4, of the Fund Agreement, as from May 14, 1968.

Administration of Control

All exchange transactions must be carried out through entities authorized expressly for this purpose. These authorized institutions include exchange agencies, exchange houses, and exchange offices; each of these types of institutions may be subject to separate regulation.

Prescription of Currency

Virtually all payments between Argentina and Bolivia, Brazil, Chile, Colombia, Mexico, Paraguay, Peru, Uruguay, and Venezuela are made through accounts maintained with each other by the Central Bank of Argentina and the central banks concerned, under reciprocal credit agreements within the framework of the LAFTA multilateral clearing system.2 Transactions with other countries must be settled in convertible currencies. Proceeds from exports to 14 countries in Western Europe and to Canada and Japan must be received either in the currency of the importing country or in U.S. dollars. Import payments to these countries also may be made either in the currency of the country concerned or in U.S. dollars. All settlements with other countries with which no reciprocal credit agreement is in force must be made or received in U.S. dollars or in any of the 16 currencies referred to previously.

Nonresident Accounts

Authorized banks may open accounts in pesos and in foreign exchange in the name of any nonresident, provided that the accounts are fed with remittances of convertible currencies only. Balances on nonresident accounts may be used freely for any purpose, in Argentina or abroad. Transfers between accounts may be effected freely, except in payment of exports.

Imports and Import Payments

Imports are in principle free of import and exchange licensing. However, certain import suspensions are in effect.3 In addition, all imports by the private or public sector require a sworn declaration of need (declaración jurada de necesidad) submitted by the importer to the National Import Board. Furthermore, all public sector imports are screened by a special body, the Asesoría de Importaciones del Sector Oficial, and must be approved by the Secretariat of State for Commerce. The declarations of eight foreign-owned automobile assembly plants are automatically authorized if they have received the prior approval of the Secretariat of State for Industrial Development.

Imports of some vehicles, tractors, and engines are prohibited. Imports of used goods have been suspended until December 31, 1977, but used capital goods may be imported if authorization is obtained from the Secretariat of State for Industrial Development.

Minimum financing requirements have been established for capital goods valued at more than US$25,000. Payment against delivery of shipping documents for transactions in excess of US$25,000 is limited to 15 per cent of the f.o.b. value, of which 5 per cent may be paid in advance at the time of formalizing the purchase. Depending upon the import value, minimum grace periods ranging from 6 months to 12 months and minimum maturities of up to five years for transactions of up to US$1 million are required on the balance. The Central Bank must be consulted to determine acceptable financing terms for imports valued at more than US$1 million. Capital goods imports by the public sector require prior approval by the Central Bank. For most goods not covered by the preceding provisions, minimum foreign financing of 180 days is required for 50 per cent of the f.o.b. value. The Central Bank may approve financing of less than 180 days for a larger percentage of the f.o.b. value.4

Purchase of Foreign Trade Investment Bonds (Bonos de Inversión del Comercio Exterior or BICE), equal to 50 per cent of the f.o.b. value of the goods, is obligatory for many imports. These bonds are indexed to the price of Adjustable National Bonds, which in turn are indexed to the industrial wholesale price index. The Foreign Trade Investment Bonds, issued in multiples of $a 1,000, are to be purchased either at the time a letter of credit is opened or, in any case, at least 180 days before import payment is due, and are then redeemed at the time the payment is made, the proceeds of the bond being made available to make the purchase of foreign exchange. Exempt from this requirement are the following categories of imports: public sector imports; capital goods being financed for more than 180 days; goods imported from LAFTA countries, if the goods are included in Argentina’s concessional lists: iron ore, certain other ores, and certain iron and steel products imported by enterprises participating in the Argentine Iron and Steel Plan; books and other printed matter; imports for automobile producers; jute textiles; and certain types of iron and steel plates.5

Import taxes include the following: a consular fee of 3 per cent payable normally in foreign currency on most import invoices; statistical taxes of 1½ per cent or 310 of 1 per cent applicable to all imports; a stamp duty of 0.6 per cent; taxes ranging from 4 per cent to 10 per cent on imports of paper products, certain types of timber and timber products and forest products; and sales taxes ranging from 5 per cent to 22 per cent. All maritime imports are subject to a tax of 12 per cent on freight, unless transported in Argentine vessels.

Authorized banks are prohibited from opening documentary credits in respect of public sector imports (other than for those originating in LAFTA countries) except with prior authorization from the Government. Furthermore, the Central Bank requires authorized institutions to advise it of all requested payments covering imports for which no banking documents are submitted, in which case Central Bank approval is required. The same requirement applies when documents submitted do not specify the date of payment, or if the date originally indicated by the correspondent has been changed, and when bills or drafts expire more than five days prior to the date on which the transfer is required.

Payments for Invisibles

With the exception mainly of travel expenses, family remittances, and remittances of profits, dividends, royalties, and technical fees, payments for invisibles may be made freely. However, allocations of foreign exchange for licensing fees, royalties, and technical services are subject to prior approval of the contracts by the National Registry of Contracts, Licenses, and Transfer of Technology. Persons and firms eligible for remittances of profits, dividends, and royalties are not granted foreign exchange in amounts greater than US$1,000 for each transaction, but instead are permitted to purchase negotiable five-year U.S. dollar-denominated External Bonds issued by the Government.6 These may be freely exported and imported. Annual remittances of profits and dividends in excess of 12 per cent of the registered amount of the foreign investment are subject to a special tax of 15 per cent to 25 per cent (see section on Capital, below).

The sale of exchange for private travel abroad normally is limited to US$2,500 a person a trip, or, for neighboring countries, US$500 a person a trip. Of the travel allocation, up to the equivalent of US$250 may be taken out in the form of banknotes, travelers checks, or the currency of the country of destination; this limit is US$50 for travel to neighboring countries. The remainder of the allowance may be drawn by the traveler from correspondents’ accounts abroad. Travelers may take out any amount in domestic banknotes and coins except gold coins.

Exports and Export Proceeds

A number of exports are prohibited or restricted. Minimum export prices (reference prices) are established for many agricultural and livestock exports as a basis for the payment of duties and the surrender of export proceeds. The full f.o.b. proceeds from all exports must be repatriated and surrendered; the proceeds must not be less than the reference price or, if there is no reference price, the f.o.b. value declared on the shipping permit. Exporters of traditional commodities are required to receive the foreign exchange proceeds either before shipment or under an irrevocable documentary credit payable against shipping documents in Argentina, and they must sell these proceeds within 10 working days after shipment. The proceeds from promoted exports (listed in Circular R.C. 424) must be surrendered within 180 days of shipment, and payments may be received against drafts, in addition to the forms of payment prescribed for traditional exports. There are separate arrangements for exports of books, newspapers, periodicals, and sheet music. Certain nontraditional exports are eligible for rebates (reintegro and reembolso).

Many products are subject to export taxes (derechos de exportación) calculated on the basis of the f.o.b. sales value or on reference prices. The tax must be paid before shipment of the merchandise or within the following 31 days when there is a bank aval that guarantees its payment. All exports are subject to a 2 per cent tax on the freight. Certain other taxes on specific exports are also levied. These include a 2 per cent tax, the proceeds of which are destined for the National Institute for Agricultural and Livestock Technology, on exports of agricultural and livestock products, and a tax of 1 per cent or 2½ per cent, depending on the product, levied on grain exports and earmarked for the National Grain Board. Many exports, particularly nontraditional exports, are eligible for export incentives of various kinds.

The Central Bank has established a system of special financing, to be granted to Argentine exporters through banks, with a view to promoting certain exports of goods and services. The National Export Credit Insurance Commission provides credit insurance for exports of capital goods, consumer durable goods, and certain other consumer goods.

Proceeds from Invisibles

Exchange derived from invisibles must be surrendered within 30 days of receipt. Travelers may bring in freely any amount in domestic or foreign banknotes and coins.

Capital

Exchange proceeds from capital inflows received by residents must be surrendered within 30 days of receipt. Proceeds from foreign loans without exchange cover must be sold in the free market. There are in general no limitations on inward capital transfers by residents or nonresidents, although residents may not borrow for less than 180 days. Outward capital transfers are restricted. Argentine External Bonds may be exported freely. Sales of exchange in connection with investments, placements, or deposits within Argentina or abroad require the prior approval of the Central Bank. Argentine industrial or commercial firms require the authorization of the Central Bank to enter into swap operations under which loans of 180 days’ maturity may be accepted in a convertible currency. Foreign borrowing by the public sector is regulated by Decree-Law No. 19328 of October 29, 1971 and Decree No. 3532 of November 25, 1975.

A new Foreign Investment Law (Law No. 21.382 of August 13, 1976), which has replaced the norms of the previous one (Decree-Law No. 19.151 of July 30, 1971), governs all aspects of investments of foreign capital aiming at the promotion, expansion, or improvement of economic activities. Investments may be made in freely convertible foreign currency; new or used capital goods and their spare parts and accessories; profits and capital in Argentine pesos belonging to foreign investors, provided that these pesos are transferable abroad; capitalization of external credits in freely convertible foreign currency; intangible assets (bienes inmateriales); and any other form acceptable to the implementing authority or covered by a special regime or a promotion regime.

For purposes of their authorization, three types of investments are distinguished, as follows:

(1) Subject to prior approval by the National Executive are (a) investments in the defense and national security sectors; in public services in the field of health, posts, electricity, gas, transportation, and telecommunications; and in radio transmitters, television stations, newspapers, periodicals and magazines, energy, education, banks, insurance, and financial institutions; (b) the transfer of capital to an existing local firm, when this implies its conversion into a “domestic firm with foreign capital”; (c) investments whose object is the acquisition of participations in the capital of existing local firms that belong to national investors (exceptionally, and when a clear benefit to the national economy results); (d) investments in any sector when they are effected in the form of used capital goods; when special or promotional benefits are requested that can only be granted by the National Executive; when the amount of the investment exceeds US$5 million or its equivalent in other foreign currencies; and when the investor is a foreign state or a foreign juridical person under public law.

(2) No prior approval is required for (a) the reinvestment of profits from investments of properly registered foreign capital in the firms where the profits arise, provided that this does not result in the conversion of the receiving firm in a “domestic firm with foreign capital”; and (b) new investments in freely convertible foreign currency, provided that they do not exceed in any single year 10 per cent of the registered foreign capital of the receiving firm, that they are intended for the activities which it already is engaged in, and that they do not convert the firm into a “domestic firm with foreign capital.”

(3) All other foreign investments are subject to prior approval by the implementing authority, which must give its decision within 120 days from the date on which the investment proposal is submitted.

Foreign investments existing prior to the entry into force of the Foreign Investment Law are governed by its provisions, which include a special regime for their inscription and definitive recognition. Existing and new foreign investments, as well as all capital movements relating thereto, must be recorded in the Register of Foreign Investments, which is kept by the Central Bank.

Registered foreign investments may generally be repatriated three years after entry into Argentina, unless a longer period was fixed when the investment was approved. The right to transfer profits and to repatriate capital related to properly registered investments can only be suspended by the National Executive when external payments difficulties exist. In that case, foreign investors are entitled to receive, for the remittance of profits abroad, the equivalent of the sum to be transferred in external public debt securities denominated in foreign currency, at the rate of interest ruling in the international market, against provision of the equivalent in Argentine pesos.

Profits in money or in kind on registered foreign capital are subject to a special tax when they exceed 12 per cent of registered capital. This tax is 15 per cent on remitted profits of more than 12 per cent and up to 15 per cent of registered capital, 20 per cent for those of more than 15 per cent and up to 20 per cent of registered capital, and 25 per cent for those of more than 20 per cent of registered capital.

The extension of domestic credit to “domestic firms with foreign capital” is subject to special provisions. These have been implemented by decisions of the Central Bank and by Decree No. 2253/76.

Gold

Residents may hold gold coins and gold in any other form in Argentina or abroad. They may sell gold in coins and bars in Argentina to institutions and houses authorized to deal in foreign exchange, but the regulations permitting nonbank residents to buy gold coins and bars from these firms are in suspense. Imports of gold by industrial users are subject to a statistical duty of 610 of 1 per cent, and those by other users are subject in addition to sales tax. Exports of gold may be carried out by institutions and houses authorized to engage in exchange transactions; they require the prior approval of the Central Bank and the proceeds must be received in convertible currencies.

Changes during 1976

January 1. The statistical tax on imports of 3 per cent was applied to all goods. Previously, this rate applied only to goods subject to duty, while others were subject to a tax of 3 per mill. (Decree No. 4215/75.)

January 5. The exchange rate guarantee requirement was waived for importers who did not have sufficient funds to make the necessary deposit. They could now make the import payment at the exchange rate prevailing on the date of the actual transfer plus 20 per cent. (Ministry of Economy Resolution No. 5.)

January 5. Authorized exchange dealers and exchange houses were empowered to buy and sell foreign exchange for transactions related to travel at freely negotiated exchange rates. Exchange offices and exchange agencies were allowed to buy foreign exchange from the public on the same basis but were required to sell the foreign exchange to authorized dealers and exchange houses. Authorized exchange dealers were required to sell their surplus positions to the exchange houses, while the exchange houses had to use their surplus foreign exchange positions to purchase External Bonds. (Ministry of Economy Resolution No. 6.)

January 5. The exchange allocations for travel abroad were increased to US$1,000 a person a trip for travel to neighboring countries and to US$3,000 a person a trip for other travel. Children between the ages of 3 and 12 were entitled to one half of these amounts. (Ministry of Economy Resolution No. 6.)

January 5. Remittances of dividends, profits, royalties, and technical assistance fees accrued after July 1, 1975, as well as approved capital repatriation, henceforth could be effected either in foreign exchange or by means of External Bonds, to be determined by the authorities, at the average of the peso selling prices of External Bonds communicated to the Central Bank by the exchange houses for the previous three working days. In practice, External Bonds continued to be the only means of making these payments. (Central Bank Circular R.C. 598; Ministry of Economy Resolution No. 8.)

January 7. Circular No. T316 provided implementing instructions for the purchase of External Bonds against surplus foreign exchange positions in accordance with Ministry of Economy Resolution No. 7 of January 5.

January 8. Surplus foreign exchange positions in the free market accumulated by commercial banks had to be sold to the exchange houses (Circular R.C. 588 and Ministry of Economy Resolution No. 7).

January 12. The peso was depreciated from $a 60.80 to $a 63.10 per US$1 (buying) in the financial market and from $a 86.40 to $a 89.70 per US$1 (buying) in the special financial market.

January 15. Additional tariff preferences were extended to Uruguay (Decree No. 1).

January 19. A series of resolutions substantially altered the coverage of the exchange markets. The financial market rate henceforth applied only to transactions related to financial loans. The exchange rate applicable to imports and to exports without a reference price, including exports from the special customs territory, would be the financial rate plus 20 per cent. For exports with a reference price, 3 per cent of the reference price as well as any proceeds in excess of the reference price could be sold in the free market, while 97 per cent of the reference price was to be sold at the financial rate plus 20 per cent. The special financial rate would cover freight and insurance and other trade-related services. All other transactions were allocated to the free market. The tax of $a 4 per US$1 on foreign exchange purchases by travelers was abolished. The optional exchange rate guarantee was lowered from 100 per cent to 50 per cent of the f.o.b. value, and the corresponding guarantee deposit was reduced accordingly. The charge for exchange cover was eliminated. (Ministry of Economy Resolutions Nos. 35, 36, 37, and 80.)

January 19. Export taxes were increased by 5 per cent and export subsidies were reduced by 5 per cent for most export items; List II exports received a 15 per cent subsidy. For exports to nontraditional markets or from the special customs area, taxes were reduced by 5 per cent and subsidies increased by 5 per cent. Exports from the special customs area also received an exchange rate 20 per cent more favorable than that in the financial market. (Ministry of Economy Resolutions Nos. 45 and 46.)

January 19. Payments and receipts in respect of the chartering of ships were shifted to the special financial market (Ministry of Economy Resolution No. 72 and Circular R.C. 604).

January 26. The peso was depreciated from $a 63.10 to $a 65.50 per US$1 (buying) in the financial market and from $a 89.70 to $a 93.10 per US$1 (buying) in the special financial market (Ministry of Economy Resolution No. 59).

January 26. For all exports not subject to a reference price, 3 per cent of the f.o.b. value could be sold at the free market rate (Ministry of Economy Resolution No. 69).

January 28. The export prohibition on barley was suspended (Ministry of Economy Resolution No. 78).

January 28. Importers who had submitted sworn declarations of import need for the first half of 1976 were authorized to import 40 per cent of the value of their imports in the appropriate base year, 1974 in most cases. If, however, the declaration had been accompanied by a customs license, authorization was granted to import for 100 per cent of the value given in the customs license. (Ministry of Economy Resolution No. 42.)

January 30. Central Bank Circular R.C. 605 extended until February 27 the period during which new swap agreements could be entered into, and entitled the holder of the swap to special credit facilities equal to 40 per cent of the amount of the swap.

February 10. The peso was depreciated from $a 65.50 to $a 68.70 per US$1 (buying) in the financial market and from $a 93.10 to $a 97.70 per US$1 (buying) in the special financial market.

February 12. The exchange allocations for travel abroad were reduced to US$300 a person a trip for travel to neighboring countries and to US$1,500 a person a trip for other countries. Children between the ages of 3 and 12 were entitled to one half of these amounts. (Circular R.C. 609.)

February 12. The minimum grace period for imports of capital goods valued at US$200,000 or more was reduced from two years to one year. For all capital goods subject to minimum financing terms, the period for the calculation of the relevant cumulative total values was reduced from one year to six months. (Circular R.C. 610.)

February 16. The peso was depreciated from $a 68.70 to $a 71.00 per US$1 (buying) in the financial market and from $a 97.70 to $a 101.00 per US$1 (buying) in the special financial market.

February 23. The peso was depreciated from $a 71.00 to $a 74.30 per US$1 (buying) in the financial market and from $a 101.00 to $a 105.70 per US$1 (buying) in the special financial market.

February 27. Decree No. 837 delegated to the Minister of Economy the authority to determine the conditions, markets, and exchange rates for all foreign exchange transactions and empowered the Minister to delegate this authority to the Central Bank.

March 4. The peso was depreciated from $a 74.30 to $a 76.70 per US$1 (buying) in the financial market and from $a 105.70 to $a 109.10 per US$1 (buying) in the special financial market.

March 8. The financial market and the special financial market were abolished. A new official market was established, with an exchange rate of $a 140 per US$1. The official market covered financial loan transactions, the f.o.b. value of imports, 97 per cent of the f.o.b. value or of the reference price of exports, and trade-related services. All other transactions were allocated to the free market, where the exchange rate was a fluctuating one. (Payments for royalties, profits, and dividends continued to be made through sales of External Bonds, at effective exchange rates close to the free market rate.) The exchange rate guarantee deposit system was abolished, but firms were authorized to purchase indexed public bonds as self-insurance against exchange risk. Most exceptions to the 40 per cent advance import deposit requirement were cancelled. The only imports which remained exempt were those listed in Circulars R.C. 371 of December 31, 1969 and R.C. 376 of June 15, 1969; these exemptions included public sector imports, imports of LAFTA origin, pharmaceuticals, and newsprint.

March 8. The system of special domestic credit facilities for firms contracting new swaps was abolished.

March 8. Export taxes were increased from a range of 0–40 per cent to a range of 28–56 per cent. Export items whose proceeds had formerly been sold in the financial market and had received subsidies of 0–35 per cent were now subject to taxes of 3–28 per cent. For goods whose proceeds had been sold in the special financial market, those formerly receiving subsidies of 0–20 per cent were now subject to taxes of 0–17 per cent, and those formerly receiving subsidies of 25–35 per cent now received subsidies of 4–12 per cent. (Ministry of Economy Resolution No. 621.)

March 11. Goods imported under special preferential regimes from Bolivia, Ecuador, Paraguay, and Uruguay were exempted from the obligation of being included in semiannual import programs (Resolution No. 35 of the Secretariat of State for Foreign Trade).

March 17. Imports of certain chemicals were suspended until the end of the year (Ministry of Economy Resolution No. 128).

March 19. A new quota for imports of natural and synthetic rubber was set for the remainder of 1976 (Ministry of Economy Resolution No. 135).

March 24. Exchange markets were closed and transactions in External Bonds were prohibited until further notice (Central Bank Communication No. 69).

April 2. Export duties were lowered and export reimbursements were raised across the board (Ministry of Economy Resolution No. 8).

April 5. The premium on swap transactions in respect of short-term borrowing abroad was increased from 32 per cent to 40 per cent. The premium was now payable in advance rather than at maturity. (Central Bank Telephone Communication No. 3525.)

April 5. Exchange markets were reopened (Central Bank Communication No. 79).

April 5. Mixing rates were established for exchange transactions in respect of trade and trade-related transactions. Exports, List B imports (capital goods, spare parts, and consumer goods), and trade-related invisibles were settled 65 per cent in the official market and 35 per cent in the free market. For imports of industrial raw materials and intermediate goods, the corresponding ratios were 83 per cent and 17 per cent. List A imports (fuels, lubricants, and newsprint), as well as financial loans and interest thereon, remained at the official exchange rate, and other transactions continued to be settled in the free market. Payments for royalties, profits, and dividends continued to be made by means of sales of External Bonds, at effective exchange rates close to the free market rate. (Circular R.C. 628.)

April 13. Imports of pure sulfur were exempted from advance deposit (Telephone Communication No. 3532).

May 6. Exports of works of art and art objects were freed of all export duties and charges, and the exchange proceeds were shifted to the free market (Ministry of Economy Resolution No. 56).

May 10. The premium on swap transactions was increased to 47 per cent (Telephone Communication No. 3547).

May 10. The mixing rates for trade and trade-related transactions were modified. Exports, List B imports, and trade-related invisibles were settled 55 per cent in the official market and 45 per cent in the free market. An Import List D (containing certain consumer goods) was introduced; these goods were settled in the free market. List A imports continued to be settled at the official exchange rate, and other imports were settled 75 per cent through the official market and 25 per cent through the free market. Import payments that had to be settled in the free market could be made in cash against surrender of shipping documents up to 15 per cent of the total f.o.b. value. (Circular R.C. 631.)

May 10. Importers were required to purchase Foreign Trade Investment Bonds; exempt were capital goods with import financing exceeding 180 days and public sector imports. The bonds were to be purchased at the time of opening a letter of credit, or, for imports financed by other means, either at the time of placing a purchase order, or not later than 180 days before payment was made. The amount of each bond (expressed in multiples of $a 1,000) was to equal the f.o.b. value of the import. It would be redeemed at the time of making an import payment and its proceeds were to be used to make that payment. The nominal peso value of the bonds was to be indexed on the price of National Adjustable Bonds, which was pegged to the index of nonagricultural wholesale prices. (Circular R.C. 632.)

May 10. A number of items were added to the List B imports, including certain types of livestock, machines, and vehicles (Circular R.C. 633).

May 10. Several additional items were exempted from the import prohibitions (Ministry of Economy Resolution No. 63).

May 12. The export prohibition on viscose rayon yarn was terminated (Resolution No. 33 of the Secretariat of State for Foreign Trade).

May 13. Sworn declarations of import need for the first half of 1976 were automatically revalidated for imports during the second semester by private sector importers. Public sector importers, however, were required to submit sworn declarations for the second semester. Importers ceased to be subject to the rule that no more than 50 per cent of the semiannual programs could be imported in the first quarter of the semester and that imports had to reach at least 20 per cent of the amounts declared in the programs. (Ministry of Economy Resolution No. 123.)

May 13. The prohibition on exports of kraft paper and kraft paper envelopes was terminated (Ministry of Economy Resolution No. 133).

May 13. Export duties were reduced, and reimbursements raised, by 10 percentage points for most export items. With respect to other items, reductions were either of different amounts or temporary. (Ministry of Economy Resolutions Nos. 113, 115, 116, 117, and 118.)

May 26. The purchase of Foreign Trade Investment Bonds became optional for imports of iron ore and certain iron and steel products by enterprises participating in the Argentine Iron and Steel Plan (Telephone Communication No. 3556).

June 1. Export reimbursements were increased for certain iron and steel products (Ministry of Economy Resolutions Nos. 159 and 160).

June 4. The mixing rates for trade transactions were modified. Export proceeds were now to be sold 44 per cent at the official exchange rate and 56 per cent at the free market rate. The same mixing rate applied to List B imports and trade-related invisibles. The corresponding proportions for List A imports were 92 per cent at the official exchange rate and 8 per cent at the free market rate; those for imports of other raw materials and producer goods were 65 per cent and 35 per cent, respectively. List D imports were made entirely through the free market. Import payments assigned to the free market could be made in cash against surrender of shipping documents up to 15 per cent of the total f.o.b. value. (Circular R.C. 634.)

June 14. The prohibition on exports of rice was terminated (Ministry of Economy Resolution No. 225).

June 14. The prohibition on exports of meat was terminated, subject to domestic demand being met (Ministry of Economy Resolution No. 236).

June 14. The prohibition on exports of fish meal, oleostearin, and margarine made of vegetable oils was terminated (Ministry of Economy Resolutions Nos. 240 and 241).

June 14. Export duties on raw sugar, refined sugar, and sugarcane were eliminated, and their export proceeds were shifted to the free market (Ministry of Economy Resolution No. 277).

June 14. A minimum import duty of 5 per cent was established for all items in the tariff schedule except for 84 items, including printed matter, airplanes, ships, art objects, and works of art (Ministry of Economy Resolution No. 260).

June 14. The export of leather and hides for use in furriery was prohibited (Ministry of Economy Resolution No. 239).

June 15. The indemnity payment for the unutilized portion of imports declared in sworn declarations of import need was abolished (Circular R.C. 635).

June 17. The list of imports subject to advance import deposit was modified (Circular R.C. 637).

June 29. Proceeds of sugar exports had to be sold in the free market (Circular R.C. 638).

June 29. All existing import prohibitions were terminated, with the exception of those on automobiles, certain alcoholic beverages, cigarettes, perfumes, and furriery items (Ministry of Economy Resolution No..292).

June 29. Export prohibitions on a wide range of products were terminated (Ministry of Economy Resolution No. 291).

July 1. Sheet music was given the same exchange rate treatment as exports of books (Circular R.C. 639).

July 1. A number of import items were added to List D (Circular R.C. 640).

July 5. The rules regarding the purchase of Foreign Trade Investment Bonds became optional for transactions covered by documentary credits (Telephone Communication No. 3589).

July 5. The minimum financing terms for capital goods imports were shortened for imports of US$10,000 and above (Circular R.C. 641).

July 6. The Ministry of Economy published regulations to implement Decree No. 3532 (November 24, 1975). The latter required every public sector entity to submit a Draft Exchange Budget and Tentative Program of External Indebtedness for the coming year. This would then be subject to approval of the Ministry of Economy. No operations involving foreign debt could be undertaken after the end of 1976 without the prior authorization of the Central Bank, based upon the approved exchange budget (Ministry of Economy Resolution No. 312 and Circular R.C. 653).

July 12. Swap arrangements in connection with proceeds of foreign financial credits were only permitted for loans of 180 days’ maturity. The proceeds, amortization, and interest related to credits contracted without exchange insurance had to be settled in the free market. Foreign financial credits of less than 180 days’ maturity were not permitted (Circular R.C. 642).

July 13. Export duties on gold were eliminated (Ministry of Economy Resolution No. 330).

July 13. The regulations that prevented payment for certain animals were revoked (Telephone Communication No. 3594).

July 14. Export duties on pedigree livestock were eliminated (Ministry of Economy Resolution No. 337).

July 20. The obligation to purchase Foreign Trade Investment Bonds became optional for books and other publications (Telephone Communication No. 3601).

July 22. Soy meal became subject to the 1½ per cent exchange tax earmarked for the National Grain Board (Decree No. 1372).

July 28. Export proceeds from many manufactured goods were shifted to the free market. The levels of both export taxes and export subsidies were reduced for many items while certain formerly taxed items now received subsidies (Circular R.C. 645 and Ministry of Economy Resolution No. 459).

July 29. The mixing exchange rates for trade and trade-related transactions were modified. Proceeds from exports (except those assigned to the free market), payments for List B imports, and trade-related invisibles were settled 31 per cent in the official market and 69 per cent in the free market. Payments for List A imports were settled 78 per cent in the official market and 22 per cent in the free market, while payments for List D imports continued to be made entirely through the free market. Other imports were settled 53 per cent in the official market and 47 per cent in the free market. No changes were made in the maximum permissible cash payment for imports (Circular R.C. 646).

August 1. The 1976 issue of External Bonds took place, for an initial total of US$100 million, which amount was subsequently increased (Decree No. 1229 and Circular R.C. 648; Decree No. 2210 and Circular T342).

August 6. The export duty on cattle on hoof was reduced (Ministry of Economy Resolution No. 468).

August 12. Imports by automobile producers were exempted from the obligatory purchase of Foreign Trade Investment Bonds (Circular R.C. 647).

August 13. A new Foreign Investment Law (Law No. 21.382) eased previous restrictions on foreign direct investment in Argentina and set a schedule of special taxes on remittances of profits and dividends. Such remittances were free of this tax up to an amount equal to 12 per cent of the registered capital. For remittances in excess of 12 per cent and up to 15 per cent, the tax was 15 per cent; for those in excess of 15 per cent up to 20 per cent, the rate was 20 per cent; and for those above 20 per cent, 25 per cent. The law provided the legal basis for the National Executive to suspend the right of foreign investors to transfer profits and repatriate their investments when there existed a situation of foreign payments difficulties. In such cases, foreign investors would have the right to receive the equivalent of the amount to be transferred in bonds of the external public debt in foreign currency, at the interest rate prevailing in the international market, in return for the corresponding amount of Argentine pesos.

August 19. Imports of various ores (other than iron ore) by firms participating in the Argentine Iron and Steel Plan were freed from the obligation to purchase Foreign Trade Investment Bonds (Telephone Communication No. 3628).

August 24. Imports of jute textiles and certain types of iron or steel plate were exempted from the obligation to purchase Foreign Trade Investment Bonds (Telephone Communication No. 3630).

September 3. Export taxes on wheat, rye, barley, and oats were reduced to 10 per cent, and the export proceeds were shifted to the free market. However, these measures were only applicable to the 1976/77 crop (Ministry of Economy Resolution No. 505 and Circular R. C. 652).

September 3. The list was enlarged of spare parts or replacements which could be exported in connection with exports of machinery and equipment without corresponding foreign exchange proceeds (Resolution No. 229 of the Secretariat for Foreign Trade).

September 6. The mixing rates were further modified. Export proceeds, except those already assigned to the free market, were settled 25 per cent at the official rate and 75 per cent at the free market rate. The corresponding ratio for List A imports and imports of raw materials was 53 per cent and 47 per cent. All other import payments were now settled entirely at the free market rate, as were payments and proceeds resulting from trade-related invisible transactions. Import payments channeled through the free market (except those for capital goods) could be made in cash against surrender of shipping documents up to 30 per cent of the total f.o.b. value of the import. Amortization and interest payments for foreign loans prior to July 12, 1976 were settled 53 per cent at the official rate and 47 per cent at the free market rate (Circular R.C. 650).

September 6. The premium on swap transactions was increased to 50 per cent (Telephone Communication No. 3642).

September 6. Imports from LAFTA countries could be settled at less than 180 days, and the purchase of Foreign Trade Investment Bonds became optional for such imports (Telephone Communication No. 3641).

September 6. Imports from LAFTA countries of goods included in the Argentine National List or included in complementarity agreements were freed from the 180-day import financing requirement and from the purchase of Foreign Trade Investment Bonds (Telephone Communication No. 3641).

September 8. Proceeds from exports of vegetables were shifted to the free market and export subsidies were reduced by 5 percentage points on those items that had been receiving them (Ministry of Economy Resolution No. 510 and Circular R.C. 651).

September 17. The purchase of Foreign Trade Investment Bonds became optional for further import commodities (Telephone Communication No. 3653).

September 17. Imports of certain paper and cardboard products no longer required the purchase of Foreign Trade Investment Bonds (Telephone Communication No. 3653).

September 21. The reimbursement on exports of condensed and evaporated milk, dried milk, butter, candies, chocolate preparations, and caseins, was increased from 5 to 15 per cent (Ministry of Economy Resolution No. 527 and Circular R.C. 654).

September 24. The premium on swap transactions was increased to 57 per cent (Telephone Communication No. 3659).

September 27. The 30 per cent duty on the export quota for raw cotton was eliminated (Ministry of Economy Resolution No. 550).

September 29. The existing restriction on the remittance abroad of profits and dividends, prescribing that such payments be made in the form of External Bonds, was continued under a provision of the new Foreign Investment Law permitting such restriction in case of balance of payments difficulties. Banks were authorized to continue to extend medium-term and long-term loans to foreign-owned local companies, provided that they served to finance exports or deferred-payment sales of capital equipment to official bodies (Decree No. 2253 and Circular R.C. 657).

October 4. Additional products were exempted from advance deposit (Telephone Communication No. 3662).

October 4. Chrome-plated steel hoops and sheets were exempted from advance import deposit (Telephone Communication No. 3662).

October 5. The purchase of Foreign Trade Investment Bonds became optional for inputs for the production of exports (Telephone Communication No. 3665). The same occurred for certain additional imports on October 8 (Telephone Communication No. 3673).

October 8. Imports of certain steel wire products were shifted to List D (Circular R.C. 655).

October 8. Export duties were reduced by 25 percentage points for various types of wool (Circular R.C. 656).

October 14. Applications would be considered for exemption from the purchase of Foreign Trade Investment Bonds for imports of inputs for the production of goods to be sold to the public sector (Telephone Communication No. 3680).

October 14. Imports to be used in the manufacture of goods whose sale to public sector entities had been contracted before May 7, 1976, the date on which the purchase of Foreign Trade Investment Bonds became required, were exempted from the requirement (Telephone Communication No. 3680).

October 20. A 15 per cent reimbursement was granted on exports of aluminum cables and cords (Ministry of Economy Resolution No. 731).

October 27. Materials and parts imported as inputs for capital goods to be manufactured in Argentina were excluded from the restrictions on financing terms for imports of capital goods (Circular R.C. 658).

October 29. The following items were exempted from certain limits with regard to import financing: jute sackcloth used for bags for agricultural products, fuels, and newsprint of LAFTA origin (Circular R.C. 659).

November 1. The mixing rates were altered for most trade transactions. Exchange proceeds from exports other than those already assigned to the free market were settled 85 per cent in the free market and 15 per cent in the official market. Payments for imports not already assigned to the free market were made 70 per cent through the free market and 30 per cent through the official market. Furthermore, 40 per cent of the f.o.b. value of imports could now be paid upon receipt of shipping documents; this permission did not apply to most capital goods (those listed in Circular R.C. 641). (Circular R.C. 660.)

November 1. The allocations for travel abroad were increased from US$300 to US$500 for neighboring countries and from US$1,500 to US$2,500 for other countries. The portion of these allowances that could be taken up in travelers’ checks or currency was raised from US$30 to US$50 for neighboring countries and from US$100 to US$250 for other countries. (Circular R.C. 661.)

November 9. The 10 per cent duty on exports of wheat flour was eliminated (Ministry of Economy Resolution No. 791 and Circular R.C. 662).

November 10. Sworn declarations of import need were freed from all restrictions with regard to quantitative limits or obligations to utilize the declared amount. Declarations for the first half of 1977, covering shipments through June 30, could be filed between November 22 and May 31, 1977. Authorized exchange agencies were permitted to grant a tolerance of 10 per cent of the total f.o.b. value of an import to cover differences between actual and declared import value resulting from changes in unit price. (Ministry of Economy Resolution No. 794.)

November 12. Imports valued at US$2,000 or less, f.o.b., were excluded from the rules of Telephone Communication No. 2600 (the 180-day financing requirement); the purchase of Foreign Trade Investment Bonds became optional for such imports (Telephone Communication No. 3714).

November 17. The export duty on wheat was eliminated (Ministry of Economy Resolution No. 803).

November 17. The export duty on molasses was reduced from 50 per cent to 5 per cent (Ministry of Economy Resolution No. 805).

November 19. The requirement of a 40 per cent advance import deposit was abolished (Circular R.C. 664).

November 22. All exchange transactions henceforth took place in the free exchange market, with the exception of new or renewed swap transactions (Circular R.C. 663).

November 22. Authorized banks were permitted to sell their surplus positions in the official market at the official exchange rate of $a 140 per US$1 (Circular R.C. 665).

November 22. Export duties were increased, and export subsidies reduced, by 5 to 10 percentage points for many items. On some items, the changes were larger. Most “nontraditional” exports were not affected. (Ministry of Economy Resolution No. 822 and Circular R.C. 666.)

November 24. Circular R.C. 667 clarified that for specified agricultural export products (including all grains and vegetable oils), export duties were calculated at the rate of exchange prevailing on the date of shipment, not the date of surrender of the export proceeds.

November 25. Capital goods whose value did not exceed US$10,000 could be imported without any special restriction as to terms of payment, subject to the same regulations as imports that were not capital goods (Circular R.C. 668).

November 29. Import duties were reduced across the board. In the new tariff schedule duties ranged from 5 to 100 per cent, compared with 5 to 220 per cent previously. (Executive Decree No. 3008.)

December 24. Export duties were reduced by 5 to 10 percentage points and export rebates increased by 5 to 10 percentage points for a wide range of items. Duties on exports of corn and sorghum were reduced from 40 per cent to 10 per cent. (Ministry of Economy Resolution No. 936.)

December 28. The Central Bank announced details of a new instrument for the financing of foreign trade under reciprocal credit agreements, the Latin American Bankers’ Acceptance (ABLA). Profits from the issue of such acceptances were tax exempt, and the transactions involved were exempt from all exchange taxes. (Circular R.C. 669.)

December 30. The maximum percentage of the f.o.b. value of imports of noncapital goods which could be financed for terms of less than 180 days—including payment in cash against surrender of shipping documents—was increased from 40 per cent to 50 per cent. The obligation to purchase Foreign Trade Investment Bonds was now applicable to only 50 per cent of the f.o.b. value of imports of noncapital goods. (Circular R.C. 671.)

December 30. Imports of capital goods valued at US$25,000 or less were exempted from special payment terms and could be imported subject to the same regulations as applicable to noncapital goods (Circular R.C. 672).

Australia

(Position on December 31, 1976)

Exchange Rate System

The par value is 1.09578 grams of fine gold per Australian Dollar.1 From September 25, 1974, the direct link with the U.S. dollar was discontinued and a trade-weighted system of calculating the exchange rate was introduced; under this system the exchange rate for the Australian dollar was determined by changes in an average of foreign currency values weighted in accordance with their trading significance to Australia. The value of the Australian dollar changed from day to day against individual foreign currencies, but remained constant against the trade-weighted average of overseas currencies. From November 29, 1976, a changed pattern of management of the exchange rate was adopted. The amended arrangements provide for a variable link to a trade-weighted “basket” of currencies. The practice of pegging the rate for lengthy periods was discontinued and the level of the exchange rate in relation to the “basket” is kept under continuing review. The rate is expressed in terms of the U.S. dollar. On December 31, 1976, the Reserve Bank’s middle rate for the U.S. dollar was $A 1 = US$1.0864, and the official limits at or within which banks were to effect spot transactions with the public in U.S. dollars were US$1.0888 and US$1.0840 per $A 1. Banks are free to determine their own spot rates for all other currencies; quotations are based on rates in overseas markets.

Forward exchange cover may be arranged through the authorized banks by residents for periods appropriate to the nature of the transaction in respect of most exchange risks arising out of trade transactions. Forward exchange cover for transactions in certain invisibles of a noncapital nature may also be arranged. The Reserve Bank provides forward cover to the trading banks in U.S. dollars. Banks act as principals in all foreign currency transactions, both spot and forward, and are free to determine their own forward rates for all currencies; they are required to restrict their uncovered positions and may not carry excessive balances abroad.

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

Administration of Control

Exchange control policy is determined by the Government with the advice of the Department of the Treasury and of the Reserve Bank. The Reserve Bank administers the exchange control on behalf of the Australian Treasurer and delegates considerable discretionary powers to the trading banks authorized to handle foreign exchange transactions. Import and export controls are administered by the Department of Business and Consumer Affairs. Other departments are responsible for some policy aspects of controls on imports and exports.

Prescription of Currency

Where imports are invoiced in Australian dollars, payments may be made in Australian currency through the account of an overseas bank with a bank in Australia, or in any foreign currency;2 if imports are invoiced in foreign currency, payment must be made in foreign currency. Proceeds from exports may be received in Australian currency from an account of an overseas bank with a bank in Australia, or in any foreign currency.

Nonresident Accounts

All credits to the accounts of nonresidents are subject to approval, which is granted in the same circumstances and subject to the same conditions as if a transfer to the country of residence of the account holder were involved. Transfers are allowed freely, on application, between accounts of nonresidents, provided that for amounts of $A 50,000 or more any necessary Reserve Bank approval has been issued for the underlying transaction. Under current policy, the balance on an account held by any nonresident may be withdrawn in convertible currency. There are no blocked accounts. Nonresidents are not generally permitted to borrow in Australia.

Imports and Import Payments

Generally goods may be imported without import licenses, and no restrictions are imposed on payments for imports. The latter normally must be made not earlier than six months before and not later than six months after the arrival of the goods in Australia; consent to longer periods is given only where it is established that longer periods are normal commercial practice.3 Import restrictions are imposed for a number of reasons, though not for exchange control purposes. Import controls are maintained on certain goods, mainly for reasons of industry assistance, health, community protection, or security, or to maintain quality standards. Ships are treated as prohibited imports, and new or secondhand ships may only be imported with the written consent of the Minister of Transport. The treatment accorded to ships also applies to aircraft, with the variation that the written consent of the Secretary of the Department of Transport is required. In accordance with the relevant Resolutions of the UN Security Council, mandatory sanctions have been applied against Rhodesia.

Payments for Invisibles

All payments for invisibles are subject to exchange control, but, with the exception of remittances to Rhodesia which are contrary to the UN sanctions, they are not restricted. The control operates primarily to prevent unauthorized capital transfers; in addition, remittances to the New Hebrides are subject to a screening procedure to ensure that no tax minimization transactions are involved. Applications for outward transfers in connection with current invisibles are normally dealt with immediately by banks; forms do not have to be filled out for amounts up to $A 2,000, and banks need not report these smaller transfers to the Reserve Bank. There is no limit on travel funds. Banks may approve for each person up to $A 4,000 for any one journey plus, for journeys of more than two months, $A 1,500 for each additional month up to a total of $A 10,000 a person; additional amounts may be obtained on application, provided that the exchange control authorities are satisfied that the exchange is to be used for bona fide travel expenses and not for an authorized capital transfer. Similarly, no limits are placed on remittances for family maintenance and gifts, but beyond certain amounts, applications must be referred to the exchange control authorities; such applications are treated liberally.

Payment to overseas suppliers of services must be made no later than six months after the date when payment is contractually due; consent to longer deferment is given only where it is established that longer periods are normal commercial practice. Dividends and interest due to overseas residents must be paid within one month of the date on which they become payable. Foreign exchange is not normally provided to enable residents to take out personal life insurance with foreign insurers. Travelers may take out, without special authorization, up to $A 250 in Australian currency notes plus $A 5 in Australian coins. Travelers who are not residents of Australia may take out any amount in foreign banknotes within six months of entry, provided that they brought the notes into Australia.

Exports and Export Proceeds

The export of all commodities, unless specifically exempted, requires an export license in terms of the Banking (Foreign Exchange) Regulations, to ensure that the full proceeds are received in a currency and within a period approved by the Reserve Bank; the approved period is within six months prior to or after the date of exportation, but where the value of the goods exceeds $A 10,000 the approved period for receipt prior to the date of exportation is one month, longer periods being allowed only where the prepayment is in accordance with normal commercial practice.

With effect from February 1, 1976, the export licensing requirements applicable to all other countries were extended to American Samoa, Cook Islands, Fiji, Gilbert Islands, Nauru, New Hebrides, Papua New Guinea, Solomon Islands, Tonga, Tuvalu, and Western Samoa. Thus, only Australia’s external territories remained exempt from export licensing requirements. To assist supervision, there is a further condition (in the case of export licenses covering goods exported by ship) that all shipping documents, bills of lading, etc., must be drawn to the order of and delivered to the Reserve Bank or to a trading bank acting as its agent. Under the Customs (Prohibited Exports) Regulations the export of specified goods may be prohibited absolutely or may be permitted subject to prescribed conditions. The export control power over raw or semiprocessed minerals is regarded as a reserve power, which will not be invoked provided the export prices commercially negotiated by exporters are related to world market levels and the export sales do not conflict with the national interest. Controls have also been utilized to ensure adequate supplies to meet domestic requirements (e.g., agricultural products, primarily stock foods and fertilizers), to enable Australia to comply with obligations under international agreements, and to assist in the orderly marketing of primary products. Provision also exists for government control over the export of defense material. Controls exist over exports of Australian-registered ships to ensure that at all times adequate shipping is available for the purpose of trade and commerce among the states and territories of Australia. In accordance with UN Resolution No. 253 of 1968, Australia enforces trade sanctions against Rhodesia.

Proceeds from Invisibles

Proceeds from invisibles in foreign currencies may be disposed of only with permission. Travelers may bring in any amount in foreign or domestic banknotes for travel expenditure.

Capital

All transfers of capital from Australia require approval. Lending overseas by residents is normally not permitted other than in association with direct investments. Proposals for direct investment overseas are considered on a case-by-case basis. Transfers abroad for direct investment involving the export of a significant measure of Australian managerial or technical skills are readily approved. Approval is also readily given for all types of investment which promote Australian exports or protect existing Australian investments abroad. Approval is normally granted for the repatriation of capital by nonresidents, but no advance commitments are given. Foreign securities owned by Australian residents need not be surrendered; approval is given to residents to reinvest the sales proceeds from foreign securities for their own account in other foreign securities, but they are not normally permitted to trade among themselves in foreign securities except those issued off an Australian register. The export of securities and certain transactions in foreign securities are subject to approval.

Applications by resident individuals to invest abroad in amounts up to $A 10,000 in any 12-month period normally are readily approved; institutional investors and public companies can expect to receive permission to make investments abroad of up to $A 1 million in any 12-month period. Applications for investments in larger amounts may be approved in special circumstances. Eligible investments include portfolio investments abroad in stocks and shares and investments in real estate; they do not include investments in loans or other fixed-interest securities. When exchange control approval is being sought, investment in and other transactions of a capital nature with countries designated as tax havens4 require a certificate from the Commissioner of Taxation to the effect that tax evasion or avoidance is not involved.

Approval is required for residents to borrow Australian or foreign currency from any nonresident, or to incur a liability to a nonresident; the coverage of the controls over overseas borrowings includes not only formal contracts to borrow but also indirect forms of borrowing and transactions having a similar effect on capital inflow. In addition, residents are required to obtain approval to draw, issue, or negotiate any bill of exchange or promissory note, to enter into contracts (except for the purchase of goods) or to acknowledge debts so that actual or contingent rights to payments, any other valuable consideration, or services are created in favor of any nonresident, or to allot or transfer securities to, or register securities in the name of, any nonresident. The issue of guarantees in Australian or foreign currency by or on behalf of Australian residents is permitted where the underlying transactions conform with exchange control policy. Controls have been established over borrowings (other than for trade transactions on normal trade credit terms) from overseas lenders of foreign or Australian currency in amounts exceeding $A 100,000 a borrower in any 12-month period. There is an embargo on such borrowings which are repayable, or carry options to repay, in less than 6 months. Under the terms of the variable deposit requirement scheme (at present suspended),5 persons receiving approval for foreign borrowings for periods in excess of the embargo period are required to lodge a proportion of the amount drawn with the Reserve Bank, through their own banks, as a nonassignable, noninterest-bearing deposit in local currency. Deposits are held for the period of the borrowing and are refunded pro rata as loans are repaid.

The borrowing restrictions, including the deposit requirement, also are applicable to the acceptance of deposits from overseas residents by a wide range of financial intermediaries. The borrowing embargo also applies to subscriptions by nonresidents to new issues of fixed-interest securities having a maturity of 6 months or less, and to purchases by nonresidents of existing securities having 6 months or less to run to maturity. The variable deposit requirement scheme also applies to subscriptions to new issues of fixed-interest securities maturing in a period in excess of the embargo period.6 Australian banks are required to cite specific Reserve Bank approval for all inward capital remittances of $A 50,000 or more. Increases in indebtedness through intercompany accounts which could have the effect of circumventing the borrowing controls are prohibited.

Inward equity investment requires exchange control approval. In addition, the Government has a general policy on foreign investment which applies to all forms of foreign investment, whether or not exchange control approvals are required for them. This policy, which was set out in a comprehensive statement on April 1, 1976, is basically one of encouragement because of the various economic benefits that the Government believes foreign investment confers on the Australian economy. Certain categories of such investment are, however, subject to examination to ensure that they would not be contrary to the national interest. The examination procedures are kept as simple as possible and interference with normal commercial processes is kept to a minimum. The Government is advised on foreign investment matters generally by a Foreign Investment Review Board which includes experienced businessmen. The examinable categories of investment are: (1) proposals falling within the scope of the Foreign Takeovers Act including certain significant increases in foreign ownership of businesses, even where there is no change of control; (2) proposals involving the establishment of new nonbank financial institutions and insurance companies; (3) proposals to establish other new businesses or to undertake mining or natural resources projects, where the amount of investment is $A 1 million or more; and (4) certain acquisitions by foreign interests of Australian real estate. The basic criteria for examination encompass the net economic benefits and employment opportunities offered by the proposal, the level of Australian equity participation and management involved, and the likely effect of the proposal on the Government’s general economic and social policies. Additional criteria apply to proposed investment in certain industries of particular significance. The most notable of these are mineral, agricultural, pastoral, fishing, and forestry developments. Uranium developments require a minimum of 75 per cent Australian equity and Australian control. In the remaining natural resource areas, the goal is 50 per cent Australian equity together with at least 50 per cent of board voting strength to be held by Australian interests. However, apart from uranium, projects in natural resource areas may be allowed to proceed with less than 50 per cent Australian equity if such equity is not available on reasonable terms and conditions.

There are no special restrictions on domestic bank credit to overseas-owned or overseas-controlled companies in Australia.

Gold

With effect from January 30, 1976 all restrictions of the Australian Commonwealth Government on the owning, buying, or selling in Australia of gold and gold coins by residents were lifted. Furthermore, residents could henceforth export and import gold subject to normal exchange control and customs procedures. Existing legislation in some Australian states to regulate certain gold dealings was not affected.

Changes during 1976

January 1. Transactions between residents of Australia and residents of Papua New Guinea became subject to exchange control. The Foreign Takeovers Act of 1975 came into force.

January 15. The Government announced a two-month extension of the import quotas first applied to motor vehicles in February 1975.

January 30. All restrictions by the Australian Commonwealth Government on the owning, buying, or selling in Australia of gold and gold coins by residents were lifted. Furthermore, residents could henceforth export and import gold subject to normal exchange control and customs procedures. Existing legislation in some Australian states to regulate certain gold dealings was not affected.

February 1. The export licensing requirements applicable to all other countries were extended to American Samoa, Cook Islands, Fiji, Gilbert Islands, Nauru, New Hebrides, Papua New Guinea, Solomon Islands, Tonga, Tuvalu, and Western Samoa. Only Australian external territories remained exempt from export licensing requirements.

February 17. The Government announced that certain selective import restrictions applying to knitted tops when imported from the People’s Republic of China, the Republic of China, the Philippines, Singapore, and Thailand were being lifted. These controls were replaced by global tariff quotas to apply on and after February 1. It was also announced that selective import restraints on dresses and woven blouses from the Philippines were being lifted. Under the terms of the voluntary restraint arrangements with Hong Kong and Macao, goods from these sources would be allowed entry at normal rates of duty.

February 29. Tariff quotas on domestic refrigerators, washing machines, and clothes dryers were continued pending a government decision on long-term assistance for the industry.

February 29. Tariff quotas, applied in March 1975, on precision-ground ball bearings were terminated.

March 1. Quantitative restrictions on imports of sunglasses, sunglass frames, and ophthalmic spectacle frames were continued pending a decision on the Industries Assistance Commission report.

March 5. Global quota restrictions in respect of imports of uncoated steel sheets were terminated. These restrictions had been in effect since March 10, 1975.

March 30. Global quota restrictions in respect of imports of light commercial vehicles were terminated. Simultaneously, it was announced that the quantitative restrictions applying to imports of completely assembled passenger automobiles would remain in effect until December 31, 1976. Import duties on wholly imported automobiles would remain at 45 per cent until December 31, 1977, while duties on imported automobiles fully assembled in Australia would remain at 30 per cent until December 31, 1976, and would then be raised to 35 per cent; duties may be reduced by 10 per cent from the beginning of 1978, in both cases, if imports fall below 20 per cent of total new car registrations over a full year.

April 1. Tariff quotas were imposed on certain sheets and plates of iron and steel and on galvanized or corrugated and galvanized sheets and plates until March 31, 1977.

April 1. Certain changes in the policy on foreign investment in Australia were announced. These included the establishment of a Foreign Investment Review Board (including members from the business community) in place of the interdepartmental Foreign Investment Advisory Committee; deletion of the screening process of expansion proposals of existing foreign businesses; and a somewhat less restrictive policy in respect of minerals and real estate.

April 28. The Government announced its decision to become a signatory to the International Tin Agreement.

April 30. The Government applied a duty of 15 per cent on imports of fluorescent lamps.

May 7. Quantitative restrictions on imports of footwear were extended to cover sandboots, shoes, and parts for footwear including parts for thongs.

May 21. The Government announced that the duty on sound and visual signaling apparatus would be reduced to 15 per cent and that minimum rates of duty would apply on speech trainers, hearing aids, and medical X-ray equipment.

May 25. The Government announced its decision to phase down the duties on sunglass frames and sunglasses and parts to 25 per cent and to discontinue import licensing.

May 28. In order to clarify issues concerning the foreign investment guidelines in uranium projects, the Government issued a statement reiterating that a uranium project involving an investment by foreign interests, not already in production, would be allowed to proceed only if it had a minimum of 75 per cent Australian equity and was Australian controlled. This was to be achieved by the time the project came into production. Furthermore, in the administration of the guidelines in this area, it was the Government’s intention to look closely at participating companies in order to determine whether the holdings were of sufficient size or importance to warrant inclusion in the calculation of whether a particular project meets the Government’s 75 per cent Australian equity requirements. Individual foreign portfolio shareholdings of less than 10 per cent in an Australian uranium company would, in general, be disregarded.

June 9. Temporary global import quotas were imposed on iron or steel plates and sheets. The quotas would remain in effect until the end of March 1977.

June 9. The Government announced its decision to continue the tariff quota arrangements already applying to the textile and apparel industry and to extend the coverage of tariff quotas to certain other clothing products. For goods already covered by tariff quota arrangements it was decided that there should be some increases in quotas. Imports from New Zealand continued to be exempt.

June 11. The Government announced temporary import restrictions on files and rasps. The restrictions would not apply to such imports when of New Zealand origin.

June 30. The bounty on cellulose acetate flake was terminated.

July 1. A new system of import valuation for customs duty purposes, based on the Brussels definition of value, came into effect. Previously, imports had been valued for duty purposes on the f.o.b. selling price or domestic selling price in the country of export, whichever was higher.

July 1. Tariff quotas on imports of stainless steel flatware products were extended until the end of September.

July 1. Changes in the Australian tariff preferences scheme for developing countries came into effect. They included further reductions in rates of duty on imports from developing countries of manufactured, semi-manufactured, and substantially processed primary products; these rates generally ranged up to 10 per cent ad valorem, but some were in excess of 10 per cent. Concurrently, there were some upward adjustments in the rates of duty on some products. In addition, special preferential arrangements, which had existed for certain developing Commonwealth countries were extended to all developing countries.

July 1. Tariff quotas were imposed on imports of orange juice from all sources except New Zealand, to apply until June 30, 1977.

July 1. Temporary global tariff quotas on a range of textile and apparel products came into effect. All selective import controls and voluntary export restraints were terminated.

July 13. The Government announced that a duty of 30 per cent would be applied on hosiery. In addition, Israel would be excluded from the developing countries tariff preference system in respect of panty hose.

August 2. Australia signed a trade and industrial cooperation agreement with India.

August 5. The Government announced that the duty on unwrought aluminum would remain at 6 per cent, the duty on aluminum foil would be increased to 20 per cent, the duty on semifabricated aluminum products, powders, pastes, and flake would be reduced to 15 per cent, and that on most other aluminum products would be reduced to 20 per cent.

August 5. The Government announced that duty on putties, mastics, and artists colors would be reduced to 20 per cent and a duty of 15 per cent would be applied to paints, varnishes, and lacquers.

August 11. Temporary global quota restrictions were applied to imports of domestic electrical chest freezers up to a capacity of 350 liters. Licensing would apply to all imports other than those under existing special trading arrangements provided for in the New Zealand-Australia Free Trade Agreement.

August 13. The Government announced that the duty on railway and tramway locomotives and rolling stock generally, would be reduced to 15 per cent, except for battery operated locomotives which would be dutiable at 6 per cent.

August 18. The Government announced that with effect from July 1, tariff quotas would be applied in respect of certain imports of plywood.

September 1. Tariff quotas were imposed on most types of uncoated paper and paperboard having a f.o.b. price of not more than $A 350 a ton. The quotas would apply until May 31,1977.

September 23. Australia and New Zealand agreed to extend their free trade agreement for a further ten years from December 31, 1976.

October 1. Tariff quotas on uncoated cold rolled iron and steel sheets were terminated.

October 9. A “Buy Australian” policy was introduced for the public sector.

October 15. The Government announced that duties on most perfumes, cosmetics, and toilet preparations would be reduced to 20 per cent.

November 9. The Government announced that it subscribed to the principles of the Declaration of Official Support for Export Credits, in a bid to avoid counterproductive competition in the terms and conditions of export credits extended to overseas buyers.

November 16. The Government announced that duties on handbags, wallets, belts, travel goods, and similar products would be reduced to 25 per cent over four years and that the duty on artificial fur and articles of artificial fur would be 12 per cent.

November 28. It was announced that the Australian dollar would be depreciated from $A 1 = US$1.2329 to $A 1 = US$1.0174 effective November 29. The exchange rate would continue to be set by reference to changes in a trade-weighted basket, but the pegging of the rate for lengthy periods would now be discontinued. More frequent and smaller shifts in the relationship of the Australian dollar to the basket of currencies would take place.

Between November 29 and December 31, the rate for the Australian dollar was appreciated in terms of the U.S. dollar, on several occasions. On December 31, the middle rate was $A 1 = US$1.0864.

December 7. A reform of the tariff structure was announced affecting more than 900 tariff items in a total of about 2,750. The preferential tariff margin in favor of the United Kingdom was eliminated on some 700 items and reduced on a further 100 items by a reduction in the general tariff rate; the general tariff rate was eliminated on another 10 items. These tariff reductions covered about $A 1,800 million of Australia’s imports. Quantitative restrictions on assembled automobiles were removed as were tariff quotas on completely knocked-down vehicles. Tariff quotas were removed on galvanized steel sheets as was the temporary duty on monochrome television receivers and certain related electronic components.

December 15. The Government announced that the Industries Assistance Commission Report on Footwear had been deferred and for that reason, pending a decision on the long-term levels of assistance, import licensing controls on footwear would be extended for a year at the same levels and remain on a volume basis.

December 20. Pending a decision on the long-term assistance for the industry, the Government announced its decision to continue, for the time being, the import restrictions on certain files and rasps but at an amended level, on an annual basis of 90,000 dozen instead of 75,000 dozen.

December 24. The Government announced its decision that duties be reduced on copper rolled products and certain copper based semifabrications and that minimum rates apply on certain other semifabrications.

December 24. The Government announced the introduction of a revised bounty scheme for agricultural tractors and to remove the licensing control on imports of used and secondhand agricultural tractors.

December 29. The Government announced the implementation of a number of trade concessions for the benefit of developing countries in the context of the Multilateral Trade Negotiations in Geneva. The Government had decided that some tariffs would be reduced and that consideration would be given later in the negotiations to binding these rates against increase. In respect of some goods that were already duty free, the Government would accept the binding of these rates at zero.

December 31. Tariff quota arrangements on brassieres were continued for a period of up to two years. Imports from New Zealand continued to be exempt.

December 31. Tariff quota arrangements on certain polyester and polyamide yarns were continued. Imports from New Zealand continued to be exempt.

Austria

(Position on January 1, 1977)

Exchange Rate System

The par value is 0.0359059 gram of fine gold per Austrian Schilling. Austria has notified the Fund that the rate for the Austrian schilling is S 1 = SDR 0.0423597. In practice, and without having assumed any formal obligations in this respect, the authorities observe margins of 4½ per cent either side of cross parities for currencies participating in the European common margins arrangement. However, since July 13, 1976 temporary new limits of S 705 and S 719 per DM 100 have been established in relation to the deutsche mark. On December 31, 1976, the authorized banks’ buying and selling rates for the U.S. dollar were S 16.7175 and S 16.8175, respectively, per US$1. Forward premiums and discounts are, in principle, left to the interplay of market forces.

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

Administration of Control

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

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

Prescription of Currency

Settlements with all countries may be made either in convertible currencies or through Free Schilling Accounts. The exchange control regulations generally are based on the distinction between “multilateral member countries” (IMF or OECD members with which settlements take place in convertible currencies) and “multilateral nonmember countries” (other countries with which settlements are made in convertible currencies).

Nonresident Accounts

There are three categories of nonresident accounts in schillings: Free Schilling Accounts, Interim Accounts for nonresidents residing in member countries of the IMF or the OECD, and Blocked Accounts for nonresidents residing in other countries.

Free Schilling Accounts may be freely credited with proceeds from the sale of gold coins or convertible currencies by a nonresident to the Austrian National Bank, or to an authorized bank, provided that the conversion serves to make a current payment to a resident, as well as with payments permitted by the National Bank on the basis of a general or individual authorization. The accounts may be freely debited for payments to Austrian residents, who must, however, apply for individual licenses if they are to receive loans from nonresidents or if the nonresident’s payment serves to finance direct investment in Austria or the purchase of real estate in Austria. Balances may be freely converted into any foreign currency. Transfers between these accounts are free.

Blocked and Interim Accounts consist of funds that are due to nonresidents. General licenses permit their use for payments for many current and some capital transactions. The transfer abroad of funds in Blocked and Interim Accounts is subject to an individual license. In most cases licenses are granted freely if the funds belong to residents of countries that are members of the IMF or the OECD. Balances in Blocked Accounts exceed by far those in Interim Accounts.

Nonresidents may also maintain nonresident accounts in convertible foreign currencies. These accounts may be debited for the same purposes as Free Schilling Accounts, and subject to the same conditions.

Imports and Import Payments

All commodities not included in the Annex to the Foreign Trade Law are free of import licensing and may be imported from any country without quantitative restriction. All goods included in the Annex require licenses. Most of these goods are free of quantitative restriction. For many goods licenses are granted by the customs, at the time of clearance, when they are imported from any country other than Rhodesia.1 Nearly all imports from GATT countries, their associated territories, and some other countries2 are liberalized. Austria’s GATT liberalization is applied worldwide, except in respect of cotton textiles. Nonliberalized imports may be obtained under various procedures, namely, state trading, global quotas, bilateral quotas, discretionary licensing, and compensation (barter). State trading covers tobacco in any form, ethyl alcohol, and salt. Global quotas apply to specified imports from GATT countries. Discretionary individual licensing is applicable to all other private imports not covered by the procedures listed above, including imports of certain textiles from specified countries. Licenses are usually granted if the imports concerned do not adversely affect domestic industries.

Import licenses may not be granted for goods imported under compensation transactions, unless there is no other way of settling payments; at present, trade under such arrangements is negligible. Grains, milk and butter, and cattle, pigs, and horses for slaughter and products from these animals for human consumption are imported in accordance with a special system of controls and regulations maintained under the Agricultural Marketing Law. Certain agricultural products and specified textile products are subject to import levies.

In principle, import licenses are issued only to importers who have received trade licenses. Licenses granted to new importers take into account the amount up to which the corresponding global quota has been utilized. Import licenses are not transferable and are valid for six months, but this period may be extended. Payments for imports from, and originating in, countries with which Austria makes settlements in convertible currencies do not require exchange licenses.

Payments for Invisibles

With few exceptions, residents are permitted to conclude transactions involving current invisibles with residents of countries that are members of the IMF or the OECD. Exceptions comprise certain transactions concerning transport and insurance. As to transactions in current invisibles that involve payments to residents of other countries, general licenses cover the majority of these (e.g., freight, commissions, and the cost of assembly and repairs); for the remaining transactions, individual licenses are required. The licenses are granted after account is taken of certain considerations, such as the principle of reciprocity, and in hardship cases.

Payments on account of generally authorized invisibles to nonresidents may be made freely, provided that no capital transfer is involved. Other payments abroad up to S 1,000 may be made freely and at any time. The remaining payments to “multilateral nonmember countries” for invisibles require special licenses.

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

Exports and Export Proceeds

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

Export claims exceeding the equivalent of S 26,000 must be declared. Export proceeds may either be surrendered or be deposited in accounts with authorized banks. Such deposits in convertible currencies may be used freely for authorized payments abroad.

Proceeds from Invisibles

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

Capital

Some inward capital transfers, some transactions that could lead to such inflows, and most private sector borrowing from nonresidents are at present restricted. The acquisition by nonresidents of Austrian securities from authorized banks is permitted freely, but the acquisition of shares or participations in Austrian companies or firms, and of most Austrian real estate not intended for personal use is subject to individual approval by the National Bank; direct investments by nonresidents normally are permitted when they serve to create or maintain lasting economic relations and provided that they are financed from foreign currency accounts or Free Schilling Accounts, in freely convertible foreign currency, or from profit claims on the domestic firm concerned.

Loans and credits extended by nonresidents to residents, including those in schillings from Free Schilling Accounts, at present require prior approval by the National Bank and many are restricted. Approvals are granted particularly, but not exclusively, for (1) investment credits for producing enterprises, (2) import and export finance, and (3) loans from nonresident relatives to residents up to S 260,000 a borrower a year (which are licensed freely). The granting of permissions for commercial credits with a maturity of one to five years to finance imports of consumer goods, especially passenger automobiles, is restricted; import credit with a maturity customary in the trade concerned, but not exceeding one year for consumer goods, is licensed freely.

The short-term foreign assets and liabilities in convertible currencies of authorized banks are not subject to limitation, but a gentlemen’s agreement with the National Bank provides that the domestic credit institutions are to abstain from increasing domestic liquidity by taking up foreign currency funds abroad and thus raising their schilling liabilities, and from calling in their foreign loans prior to maturity. A number of authorized banks are permitted to accept convertible currencies from abroad for onlending abroad at maturities of up to five years.

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

The transfer of funds owned by emigrants, and payments due to nonresidents on account of dowries, inheritances, and settlements under certain agreements between heirs, are permitted. Residents may freely grant loans to nonresident relatives.

Residents are allowed, for purposes of direct investment, to acquire participation rights in foreign companies, associations, and other enterprises, and to establish, acquire, or extend foreign agencies or individually owned firms; earnings accruing from such investment usually may be reinvested. Residents also are permitted to acquire real estate abroad (provided that it is intended for the personal use of the buyer within one year), to grant commercial or investment credits, to grant direct investment loans (provided that the resident can actually exert influence on the management of the nonresident enterprise), and to grant credits secured by mortgages in Austria or abroad, provided that the proceeds of the credit are not used within Austria (except for commercial credits). Domestic insurance companies may conclude with nonresidents life insurance contracts in Austria.

Transactions and operations mentioned in the three preceding paragraphs are licensed upon documentation, provided that they are concluded with residents of countries that are members of the IMF or the OECD.

Residents are allowed to purchase from nonresidents, without restriction, foreign securities issued in “multilateral member countries” and registered on stock exchanges3 and Austrian securities; for foreign securities and Austrian external bonds, the transactions must be carried out on a spot basis through authorized banks and, with certain exceptions (e.g., in the case of securities listed on the Vienna stock exchange), the securities purchased must be kept with such banks. Payments for these purchases to nonresidents may be made in convertible currencies. Residents may sell foreign securities and Austrian external bonds to nonresidents only on a spot basis against payment in convertible currencies and, for securities deposited in accordance with the aforementioned provision with Austrian authorized banks, only through such banks. The proceeds of the sale, as well as the foreign exchange obtained as a result of redemption of the foreign securities by the debtor, may be kept on account with an authorized bank.

Gold

Transactions in gold (excluding jewelry and medallions, which are considered jewelry) are governed by the Foreign Exchange Law. The National Bank is authorized by this law to deal in gold as defined therein; the Bank has granted a number of general permissions widely liberalizing the domestic gold trade, but does not itself buy or sell gold or gold coins, except in transactions with monetary authorities of other countries or with international financial institutions. The Bank has authorized credit institutions, exchange offices, and coin dealers to buy or sell in Austria gold coins that are not legal tender on their own behalf or on behalf of their customers (including nonresidents); the prices are based on those for coins and unmanufactured gold in free markets abroad. A general license also permits other residents to purchase and sell among themselves, in Austria and against payment in schillings, gold coins that are not legal tender.

The Mint releases certain types of gold coins (restrikes) to authorized credit institutions for resale to the public. It has also issued a commemorative gold coin with a face value of S 1,000, which is legal tender. Residents may hold gold in any form, including bars, in Austria, and they may acquire in Austria any gold coins that are not legal tender and any gold medals or medallions; furthermore, domestic trading between residents in gold with a fineness of less than 0.585 is unrestricted. With the exception of coins, medals, and gold with a fineness of less than 0.585, the acquisition from residents of gold subject to the Foreign Exchange Law is reserved for the monetary authorities, authorized industrial users, dentists, and jewelers; the Mint, gold refiners, and jewelers are permitted to trade or exchange among themselves gold in any form. Domestic sales of gold coins that are not legal tender are subject to value-added tax at the general rate of 18 per cent.

Where the Foreign Trade Law prescribes import licenses for gold imports (e.g., for gold sheets), the license is either issued by the Ministry of Trade, Commerce, and Industry, which usually grants any license applied for by industrial users, or by the customs office concerned, which issues licenses automatically for certain gold imports within its competence. Where this law does not require an import license (e.g., for the import of gold bars), the Foreign Exchange Law prescribes a license issued by the National Bank covering the purchase of gold; such licenses are issued after consideration of the merits of each case. Exports of gold in any form other than jewelry require authorization by the National Bank; the Bank has issued a general license permitting nonresident travelers to take out coins that are not legal tender up to a weight of 200 grams a person a trip, and allowing resident travelers to “multilateral member countries” to export such coins up to a value of S 1,000 a person a trip. The National Bank’s imports and exports do not require import, exchange, or export licenses. Commercial imports of jewelry and of articles containing a minor amount of gold, such as watches, are liberalized, licenses being issued automatically by the customs; commercial exports of a number of such articles, however, must be licensed by the Ministry of Trade, Commerce, and Industry.

Changes during 1976

January 1. Foreign Exchange Announcement DE 2/75 of December 19, 1975 came into effect, which provided for a considerable degree of liberalization of inward capital movements from “multilateral member countries” and revoked Announcement DE 12/71. It specified the outward and inward capital transfers for which the National Bank was prepared to issue individual licenses; in most cases, the payments or contracts had to relate to “multilateral member countries.” The restrictions imposed in 1972 on inward direct investment and on inward portfolio investment in quoted and unquoted securities were lifted. The restrictions on inward financial credits (from which investment credits for producing enterprises were already excepted) and on the acquisition by nonresidents of domestic real estate were maintained. The restrictions on inward commercial credits were lifted for credits with a maturity of less than one year and, where the maturity was one to five years, were limited to those intended to finance the import of consumer goods. Until further notice, there were excepted from the transactions that had been generally permitted by virtue of Foreign Exchange Announcements DE 10/71 and DE 11/71, any acts in connection with the acquisition by nonresidents from residents of (1) domestic securities, (2) shares or participations in domestic enterprises, (3) domestic real estate, and (4) real rights to such real estate. In a separate action, however, the National Bank granted the commercial banks a general permission to sell domestic securities to nonresidents.

January 1. The validity of all existing unilateral tariff reductions (introduced under the price containment program that began in 1969) was carried over into 1976.

January 1. In accordance with the free trade arrangement with the EEC, import duties on most industrial products of EEC origin were reduced by a further 20 per cent.

January 1. The general rate of value-added tax was increased from 16 per cent to 18 per cent.

January 22. The National Bank announced that the additional tranche of S 1 billion made available for one year on May 1, 1975 for the unconditional rediscounting of export promotion bills would remain available until the end of 1976. On October 27, this tranche was extended until end-1977.

March 31. The limit on the total amount of export credit guarantees was increased from S 60 billion to S 80 billion.

April 27. The general permissions contained in Foreign Exchange Announcements DE 4/71 and DE 8/71 were amended so as to exclude the purchase, exchange, or acceptance of Italian banknotes in denominations exceeding Lit 10,000.

July 1. The agreement of December 2, 1975 between the Ministry of Finance, the National Bank, and the commercial banks on the maintenance of a ceiling of 12 per cent per annum on the expansion of domestic bank credit was extended, with certain modifications, to December 31, 1976. The 12 per cent ceiling continued to be unenforced. Some of the credit institutions’ commitments to prevent capital inflows continued in force. (The gentleman’s agreement was renewed, substantially unchanged, on January 1, 1977.)

July 13. The National Bank announced that it would, with immediate effect, follow a somewhat more flexible exchange rate policy. Thus, in establishing the rate for the deutsche mark, essentially the highest and lowest quotations of the years 1975 and 1976 (S705 and S 719, respectively, per DM100) would be used as limits. Nevertheless, the principle of Austria’s autonomous alignment on the European common margins arrangement, within the 4½ per cent margins previously chosen by Austria, would be maintained.

October 10. The basic interest rate for export financing by the Österreichische Kontrollbank was lowered by ½ of 1 per cent.

October 18. An exchange rate realignment took place within the European common margins arrangement. Austria continued the exchange rate policy announced on July 13, 1976.

October 22. A commemorative gold coin with a face value of S 1,000 was issued. The coin was declared legal tender.

October 27. Austria ceased to invoke Article XXXV of the GATT with respect to Japan.

October 31. The regulation of December 6, 1975 imposing minimum import prices, implemented by import levies, on specified textile products, irrespective of origin, expired. It was replaced on November 1 by a similar regulation valid until October 31, 1977.

The following change took place at the beginning of 1977:

January 1. Foreign Exchange Announcement DE 3/76 of December 16, 1976 came into effect, which amended Announcement DE 2/75 and further liberalized the remaining restrictions on capital inflows. Nonresidents were freely permitted to purchase real estate in Austria for personal use, provided it would be utilized for this purpose within one year.

Bahamas

(Position on December 31, 1976)

Exchange Rate System

The par value is 0.736662 gram of fine gold per Bahamian Dollar, which corresponds to B$l = US$1, and the Bahamas avails itself of wider margins. The U.S. dollar circulates concurrently with the Bahamian dollar. The Central Bank of the Bahamas deals only in U.S. dollars and pounds sterling, and only with commercial banks. It buys U.S. dollars at par and charges a commission of ½ of 1 per cent when selling. It buys sterling at the New York market mid-rate against the U.S. dollar and charges a commission of ½ of 1 per cent on this mid-rate when selling. For transactions in transfers and drafts with the public, banks are authorized to charge a commission of ½ of 1 per cent buying, and ¾ of 1 per cent selling, per US$1, and ½ of 1 per cent, buying or selling, per £ stg. 1 ; these charges are additional to the Central Bank’s charges. In addition, a stamp tax of ¼ of 1 per cent is imposed on outward transfers; remittances from Freeport on behalf of the Port Authority or any licensee in respect of their own business within the port area and remittances from bank accounts outside the Bahamas are exempt.

There is also a market in which “investment currency”1 may be negotiated between residents through the intermediary of an investment currency dealer at freely determined rates, usually attracting a premium over the official market rate. This premium was 13 per cent on December 31, 1976, unchanged since March 1974.

As from December 5, 1973, the Bahamas formally accepted the obligations of Article VIII, Sections 2, 3, and 4, of the Fund Agreement.

Administration of Control

Exchange control is administered by the Central Bank, which delegates to authorized dealers the authority to approve normal allocations of foreign exchange for certain current payments; the approval authority for import payments, travel exchange, and cash gifts is not delegated, except in Grand Bahama and the Family Islands. Import and export licenses are not required except for crawfish, arms and ammunition, and, in certain cases, industrial gold. The Department of Agriculture and Fisheries issues export licenses for crawfish and the Police Department issues import and export licenses for arms and ammunition. The administration of exchange and trade controls is not uniform throughout the Bahamas. Imports of industrial gold are licensed by the Central Bank.

Prescription of Currency

The Bahamas’ exchange controls extend to all territories outside the Bahamas and make no distinction between foreign territories. Settlements with residents of foreign countries may be made in any foreign currency2 or in Bahamian dollars through an External Account.

Nonresident Accounts

Authorized banks may freely open External Accounts denominated in Bahamian dollars for winter residents and for persons with residency permits but without work permits. With the prior approval of the Central Bank, authorized banks may also open External Accounts for nonresident companies that have direct investments in the Bahamas and for nonresident investors. External Accounts are normally funded entirely from foreign currency originating outside the Bahamas, but income on registered investment may also be credited to these accounts. Balances may be converted freely into foreign currency and transferred abroad.3

Accounts which are credited with funds that may not be placed at the free disposal of nonresidents are designated Blocked Accounts. These are held mainly by emigrants. Where the value of an emigrant’s assets exceeds B$25,000, the excess is credited to a Blocked Account. Balances on Blocked Accounts are transferable through the official exchange market after four years or through the investment currency market at any time; they may also be invested in certain resident-held assets or spent locally for any other purpose.

Imports and Import Payments

The importation of certain commodities is prohibited or controlled because of health, social, or humanitarian reasons. All other goods may be imported without a license. The prior approval of the Central Bank is required for making payments for imports, irrespective of origin;4 this approval is normally given automatically upon submission of pro forma invoices or other relevant documents proving the existence of a purchase contract. An import surcharge (“emergency tax”) of 12½ per cent ad valorem is levied on most imports. Customs entries are subject to stamp tax at a rate of 1 per cent.

Payments for Invisibles

There are no restrictions on current payments. Authorized dealers have been given authority to make payments to nonresidents on behalf of residents for certain services and other invisibles within specified limits. Such payments include freight, ships’ disbursements, commissions, royalties, interest on Bahamian assets, and insurance payments. Residents are entitled to a foreign currency travel allowance of the equivalent of B$ 1,000 a person a year for tourist travel and of B$5,000 a person a year for genuine business or professional travel. The amount of B$ 1,000 for tourist travel excludes the cost of fares and travel services, which are normally obtained against payment in Bahamian dollars to a travel agent in the Bahamas. Applications for foreign exchange in excess of these amounts must be referred to the Central Bank, which approves all bona fide applications. Foreign exchange facilities obtained for travel may not be retained abroad for use on a journey or be used abroad for other purposes; any unused balance must be surrendered within one month of issue or, if the traveler is still abroad, within one month of his return to the Bahamas. Subject to adequate documentary evidence, an education allowance of up to B$6,000 a person an academic year is normally given upon application to authorized dealers. Applications for facilities in excess of this amount have to be referred to the Central Bank. Temporary residents may remit up to 50 per cent of their wages and salaries which are in excess of their need in the Bahamas. Where commitments outside the Bahamas are larger than 50 per cent of wages and salaries, however, such amounts may also be remitted.

There are no restrictions on the export of coins expressed in any currency, but in principle, the export by travelers of domestic banknotes is limited to B$70 and of foreign currency notes to the equivalent of B$ 1,000; in practice these limits are not enforced.

Exports and Export Proceeds

No export licenses are required except for crawfish and arms and ammunition. The proceeds of exports must be offered for sale to an authorized dealer as soon as the goods have reached their destination or within six months of shipment; alternatively, export proceeds may be used in any manner satisfactory to the Central Bank. The surrender requirements are seldom enforced.

Proceeds from Invisibles

Residents are obliged to collect without delay all amounts due to them from nonresidents and to offer the foreign currency proceeds for sale to an authorized dealer without delay, but these requirements are seldom enforced. There are no restrictions on the import of foreign banknotes. The import of domestic banknotes is subject in principle to the approval of the Central Bank, but in practice any amount may be brought in by travelers.

Capital

All capital transfers to countries outside the Bahamas require exchange control approval and outflows of resident-owned capital are restricted. Inward transfers do not require exchange control approval, although the subsequent utilization of the funds in the Bahamas may require authorization. The permission of the Central Bank is required in respect of any act whereby nonresidents acquire control of an incorporated company controlled by residents. Resident individuals and companies require the specific permission of the Central Bank to maintain bank accounts outside the Bahamas.5

The use of official exchange for outward direct investment is limited to B$ 150,000 or 50 per cent of the total cost of the investment, whichever is greater, for investments from which the additional benefits expected to accrue to the balance of payments from export receipts, profits, or other earnings within 18 months of the investment, will at least equal the total amount of investment and continue thereafter. Investments in excess of B$ 150,000 must be financed by investment currency or by foreign currency borrowed on suitable terms, subject to individual approval by the Central Bank. Projects which do not meet the above criteria may be financed by foreign currency borrowing, the purchase of foreign currency in the investment currency market, or the use of retained profits of foreign subsidiary companies. Permission is not given for projects which are likely to have adverse effects on the balance of payments.

Inward investment by nonresidents in principle is unrestricted. However, the consent of the Central Bank is required for the issue or transfer of shares in a Bahamian company to a nonresident and for the transfer of control of a Bahamian company to a nonresident. Where the investment takes the form of a purchase of real property, the nonresident must obtain permission. Such permission is normally granted, provided that a fair price is paid, and payment may be made either in Bahamian dollars from an External Account or in foreign currency.

For all investments with approved status, permission is automatically given for the transfer of profits and dividends, representing earned trading profits and investment income. In the event of a sale or liquidation, nonresident investors are permitted to repatriate the proceeds, including any capital appreciation, through the official foreign exchange market.

Residents require the specific approval of the Central Bank to buy property outside the Bahamas; such purchases, if for personal use, can only be made with investment currency, and approval is limited to one property for each family. Any incidental expenses connected with the purchase of property for personal use may normally be met with investment currency; expenditures necessary to preserve the property or arising directly from its ownership, may with permission be met with foreign currency bought at the current market rate in the official foreign exchange market.

The transfer of legacies and inheritances due to nonresident beneficiaries under wills or intestacies of persons who were Bahamian residents at the time of their death is permitted. However, permission is not normally given for Bahamian residents to settle any property, other than by will, for the benefit of nonresidents.

A resident may make cash gifts to nonresidents not exceeding a total of B$ 1,000 a donor each year. This amount may be exceeded, with permission, in special circumstances.

Foreign nationals domiciled in the Bahamas, even if considered resident for exchange control purposes, may be eligible for a measure of exemption from certain exchange control obligations, notably with respect to the mandatory deposit of foreign currency securities and the surrender of certain other foreign capital assets.

Nonresident buyers of Bahamian securities must pay for such purchases in Bahamian dollars from an External Account, in funds eligible for credit to an External Account, or in Bahamian dollars arising from the sale of foreign currency in the official foreign exchange market; interest, dividends, and capital payments on such securities may not be remitted outside the Bahamas unless the holdings have been properly acquired by nonresidents. Bahamian residents are not permitted to purchase foreign currency securities with official exchange or out of export proceeds or other current earnings; payment must be made with investment currency. All purchases, sales, and switches of foreign currency securities in the Bahamas and all switches in foreign currency securities by Bahamian residents, wherever the switch takes place, require permission from the Central Bank, and all transactions must take place through authorized agents.6 All foreign securities purchased by residents of the Bahamas must be held to the order of an authorized agent. Securities of other former Sterling Area countries are considered foreign currency securities, and sales proceeds of such securities held by residents, if registered at the Central Bank by December 31, 1972, are eligible for sale in the investment currency market; securities not properly registered may be offered for sale at the official rate of exchange.

Residents leaving the country with the intention of residing outside the Bahamas permanently are redesignated upon departure as nonresidents. Under normal rules a family (or an individual), leaving the Bahamas to take up residence elsewhere, may transfer at the current market rate in the official foreign exchange market, up to B$25,000 of its (or his) Bahamian dollar assets to the new country of residence, and may also take normal household and personal effects with them. Where the total value of their Bahamian dollar assets is over B$25,000, the excess is transferable through the official exchange market after four years or through the investment currency market at any time. After a person’s redesignation as a nonresident, income accruing from his assets remaining in the Bahamas is normally remittable at the current market rate in the official foreign exchange market.

Residents other than authorized banks require permission to borrow foreign currency from nonresidents, and authorized dealers are subject to exchange control directions with regard to their lending of foreign currency to residents. Residents also require permission to pay interest on, and to repay the principal of, foreign currency loans through the conversion of Bahamian dollars. Where permission is granted for residents to accept foreign currency loans, such permission is normally conditional upon the currency being offered for sale without delay to an authorized dealer, unless the funds are required to meet payments to nonresidents for which permission has been specifically given.

A resident company which is wholly owned by nonresidents of the Bahamas is not normally allowed to raise working capital in Bahamian dollars unless such funds are a small proportion of the total investment. If the company is partly owned by nonresidents, approval of such local currency borrowing is determined on a basis pro rata to the nonresident interest in the equity of the company. Banks and other lenders resident in the Bahamas require permission before they make loans in domestic currency to any body corporate (other than a bank), which is resident in the Bahamas and is by any means controlled, whether directly or indirectly, by nonresidents. However, companies which are set up by nonresidents primarily to import and distribute products manufactured outside the Bahamas are not normally allowed to borrow Bahamian dollars from residents either for fixed or working capital but must provide all their finance in foreign currency; borrowings in a foreign currency normally are permitted on application.

Generally, authorized dealers may provide credit in Bahamian dollars to nonresidents in respect of imports, where the purchase of foreign currency is duly authorized and provided that the validity of the credit does not exceed the period of authorization. Foreign currency deposits with authorized dealers may be on-lent to nonresidents for any purpose.

Gold

Residents of the Bahamas other than authorized dealers are not permitted to hold or deal in gold bullion. Those residents, however, who are known users of gold for industrial purposes may, with the approval of the Central Bank, meet their current industrial requirements. Import licenses are freely issued by the Central Bank to industrial users. Authorized dealers are not required to obtain licenses for bullion or coins. Commercial imports of gold jewelry do not require a license. There is no import duty on gold bullion or gold coins; however, an import duty of 30 per cent is imposed on imports of gold jewelry from all sources. A 7½ per cent stamp tax payable to the customs is also levied on gold jewelry from any source. There is no restriction on the acquisition or retention by residents of gold coins. The Bahamas has issued commemorative gold coins in denominations of B$10, B$20, B$50, B$100, B$150, B$200, and B$2,500; these are legal tender but do not circulate.

Changes during 1976

No significant changes took place.

Bahrain

(Position on December 31, 1976)

Exchange Rate System

The par value is 1.86621 grams of fine gold per Bahrain Dinar, corresponding to BD 0.394737 = US$1, and Bahrain avails itself of wider margins. The Bahrain Monetary Agency quotes daily rates for the U.S. dollar based on the par value and daily rates for pounds sterling and deutsche mark based on the latest available rates for the U.S. dollar against those currencies. On December 31, 1976, the Monetary Agency’s buying and selling rates for the U.S. dollar were BD 0.39550 and BD 0.39580, respectively, per US$1, and those for sterling were BD 0.67135 and BD 0.67385, respectively, per £ stg. 1. The Monetary Agency does not deal with the public. In their dealings with the public, commercial banks are required to use the Agency’s rates for U.S. dollars, pounds sterling, and deutsche mark but they are authorized to charge an exchange commission of 2 per mill (special rates of commission apply for transactions up to BD 1,000). The banks’ rates for other currencies are based on the Monetary Agency’s rates for the U.S. dollar and the New York market rates for the currencies concerned against the U.S. dollar.1

Bahrain formally accepted the obligations of Article VIII, Sections 2, 3, and 4, of the Fund Agreement on March 20, 1973.

Administration of Control

The Monetary Agency is the exchange control authority but there is no exchange control legislation in Bahrain. No import or export licenses are required (except for arms and ammunition, television cameras, and alcoholic beverages). However, importers and exporters must be registered with the commercial registry, Ministry of Commerce and Agriculture, and must be members of the Bahrain Chamber of Commerce and Industry.

Prescription of Currency

All settlements with Israel and Rhodesia are prohibited. Otherwise, no requirements are imposed on exchange payments or receipts.

Nonresident Accounts

A distinction is made between accounts held by residents and those held by nonresidents. Offshore Banking Units are not normally permitted to hold resident accounts.

Imports and Import Payments

All imports from Israel and Rhodesia are prohibited, as are products manufactured by foreign companies that have been blacklisted by the Arab League. Imports of a few commodities are prohibited from all sources for reasons of health, morals, or security; imports of cultured pearls also are prohibited. Import licenses are required only for arms and ammunition, television cameras, and alcoholic beverages. Rice and sugar are in practice imported only by the Bahrain Import-Export Company. Exchange for payments in respect of permitted imports may we obtained freely.

Exports and Export Proceeds

All exports to Israel and Rhodesia are prohibited and exports of certain refined petroleum products to South Africa have been suspended. Otherwise, all commodities may be exported freely. There are no requirements attached to receipts from exports or re-exports; the proceeds need not be repatriated or surrendered, and they may be disposed of freely, regardless of the currency involved.

Payments for and Proceeds from Invisibles

Payments for and proceeds from invisibles are not restricted, except that payments must not be made to or received from Israel or Rhodesia. Travelers may bring in or take out of Bahrain any amount in domestic or foreign banknotes.

Capital

No exchange control requirements are imposed on capital receipts or payments by residents or nonresidents, but no payments may be made to or received from Israel or Rhodesia. Profits from foreign investments in Bahrain may be transferred abroad freely with the exception that under the Banking Control Law, banks are subject to special rules regarding the payment of dividends and the remittance of their profits. Licensed Offshore Banking Units may freely engage in transactions with nonresidents; transactions with residents are not normally permitted.

Gold

Residents may freely and without a license purchase, hold, and sell gold in any form, at home or abroad. Imports and exports of gold in any form are freely permitted and do not require a license. Imports of gold jewelry are subject to a 10 per cent customs duty but gold ingots are exempt.

Changes during 1976

March 30. Cement could be imported freely, provided it was of acceptable quality.

Bangladesh

(Position on December 31, 1976)

Exchange Rate System

No par value for the Bangladesh currency, the Taka, has been established with the Fund. On December 31, 1976 the official exchange rate was Tk 25.9750 = £ stg. 1; Bangladesh avails itself of wider margins. The official exchange rate is subject to adjustment from time to time. The pound sterling is the intervention currency. Exchange rates for currencies other than sterling are based on the London market rates for the currencies concerned. On December 31, 1976, the spot buying and selling rates of the Bangladesh Bank (the central bank) for authorized dealers were Tk 25.95 and Tk 26.00, respectively, per £ stg. 1. On December 31, 1976, the spot buying and selling rates (telegraphic transfers) of authorized dealers were Tk 25.9344 and Tk 26.0313, respectively, per £ stg. 1. A different effective exchange rate arises through the operation of the wage earner’s scheme. On December 31, 1976 this rate was Tk 35.85 per pound sterling.

Forward transactions of the Bangladesh Bank are confined to purchases and sales of sterling and U.S. dollars. Forward facilities at authorized banks are available for export proceeds in sterling and U.S. dollars and for import payments in sterling and U.S. dollars, as well as certain sterling payments of shipping companies and airlines.

Administration of Control

Exchange control is administered by the Bangladesh Bank in accordance with general policy formulated in consultation with the Ministry of Finance. The six foreign and six domestic commercial banks have been appointed authorized dealers (authorized banks). The Chief Controller of Imports and Exports of the Ministry of Commerce (Foreign Trade Division) is responsible for the issuance of import licenses. Certain trade transactions are conducted through state trading agencies, including the Trading Corporation of Bangladesh (TCB) and the Bangladesh Jute Marketing Corporation.

Prescription of Currency

Settlements with all countries are subject to exchange control. Settlements with countries with which Bangladesh has bilateral payments agreements1 normally must be effected through clearing accounts specified in the agreements. Payments to, and receipts from, the other member countries of the Asian Clearing Union (India, Iran, Nepal, Pakistan, and Sri Lanka) in respect of current transactions (other than those relating to petroleum, natural gas, and their products) may, but need not, be effected in Asian monetary units through the Clearing Union.2,3 As regards other countries, settlements normally take place in sterling and other convertible currencies or through Nonresident Taka Accounts. Payments for imports may be made to the country of origin of the goods or to any other country (with the exception of those countries from which importation is prohibited); they may be made (1) in takas for credit to an account in Bangladesh held by a resident of the country concerned or of any country in the former Overseas Sterling Area; (2) in the local currency of the country concerned; or (3) in pounds sterling, U.S. dollars, or any other currency specified by the exchange control authorities. Export proceeds must be received in freely convertible foreign exchange, or in takas from a Nonresident Taka Account of a bank in any country of the former Overseas Sterling Area. All settlements with Rhodesia and South Africa are prohibited.

Nonresident Accounts

The accounts of individuals, firms, or companies resident in countries outside Bangladesh are designated Nonresident Accounts. All such accounts are regarded for exchange control purposes as accounts related to the country in which the account holder is permanently residing.4

Specified debit and credit entries to nonresident accounts may be made by authorized dealers without prior approval of the Bangladesh Bank during the absence of the account holder from Bangladesh. Certain other debits and credits may be made without the prior approval of the Bangladesh Bank but subject to reporting ex post.

All diplomatic missions operating in Bangladesh, their diplomatic officers, home-based members of the mission staffs, and international nonprofit humanitarian organizations functioning in Bangladesh and their expatriate employees are allowed to maintain Convertible Taka Accounts. These accounts may be credited freely with receipts of inward remittances in convertible foreign exchange, and may be debited freely and at any time for remittances abroad in convertible currencies and for transfers to Nonconvertible Taka Accounts. Transfers between Convertible Taka Accounts are freely permitted.

Under the Wage Earners’ Scheme, Bangladesh nationals and persons of Bangladesh origin who are working abroad are permitted to open Foreign Currency Accounts denominated in pounds sterling or U.S. dollars. These accounts may be credited with (1) remittances in convertible currencies received from abroad through normal banking channels; (2) proceeds of convertible currencies (currency notes, travelers checks, drafts, etc.) brought into Bangladesh by the account holder while on temporary visits to Bangladesh, provided they were declared to the customs upon arrival in Bangladesh; and (3) transfers from other Foreign Currency Accounts opened under the Wage Earners’ Scheme. The accounts may be debited, without restriction, for the following purposes: (1) all local disbursements; (2) transfers to other Foreign Currency Accounts opened under the Wage Earners’ Scheme; (3) payments for imports of specified goods; (4) payments of bank commissions and other bank charges connected with the handling of the accounts; and (5) travel expenditures abroad for business or private purposes by the account holder and his nominee authorized to operate the account, or travel expenditures up to US$300 by any other person proceeding to destinations abroad other than Burma, India, Nepal, Pakistan, and Sri Lanka.

Nonresident accounts may be opened only with the prior approval of the Bangladesh Bank.

Imports and Import Payments

Imports are financed either from Bangladesh’s own resources or with foreign aid, loans, and barter arrangements. Imports financed from Bangladesh’s own resources are licensed within the framework of a semiannual import policy (import budget). Under the import policy for the “shipping” period July-December 1976, items permissible for import were classified into four broad categories : (1) goods permitted to be imported by “commercial importers,” including the TCB; (2) raw materials and packing materials permitted to be imported by “industrial units” recognized as such under an entitlement system; (3) items permitted to be imported exclusively by the TCB and/or jointly by the TCB and private sector importers; and (4) items that could be imported under the Wage Earners’ Scheme against payment abroad or from Foreign Currency Accounts. No provision was made for commercial imports of any other goods, whose importation, therefore, was de facto prohibited unless financed by foreign aid. Imports from Israel, Rhodesia, and South Africa are prohibited.

All imports require licenses or approval on letter of credit authorization forms. Single country licenses are issued for imports under bilateral trade or payments arrangements and for most aid imports. Other import licenses are valid world-wide, except for Israel, Rhodesia, and South Africa. Licenses and letter of credit authorization forms issued to commercial importers remain valid for 9 months and 6 months, respectively, from the date of issuance. Licenses issued to industrial consumers are valid for 12 months. Licenses (other than those issued under the Export Performance Scheme and the Wage Earners’ Scheme) are not transferable, and when they expire are not normally revalidated except where, owing to circumstances beyond the control of importers, the letter of credit requirement could not be met or shipping arrangements could not be made.

Irrevocable letters of credit must be opened within four months from the date of issuance of licenses, except for books and periodicals, which may be imported on a consignment basis. Many imports are reserved for the TCB, including certain chemical and metal products, cement, sugar, certain cotton textiles, and woolen fabrics. In addition, the importation of a number of items is reserved exclusively to other public sector agencies; these include airplane parts, fire engines, coal and coke, cinematographic films, certain cotton textiles, edible oil, fertilizers, insecticides, and wood and timber. There are limited facilities outside the import program for minor imports by specified end-users, such as hospitals and educational or technical institutions.

The licensing of imports of specified raw materials and packing materials by industrial consumers is governed by an entitlement system, based on the requirements for various industries during each “shipping” period as established by the Director-General of Industries. Firms in the industrial sectors are given an entitlement for importation of specified raw materials and packing materials, and licenses are issued on the basis of the entitlement. Separately, industrial consumers may be granted import licenses for parts and accessories of machinery. Goods imported against licenses issued to industrial consumers must be used in the industry concerned and must not be sold or transferred without prior approval.

Under an Export Performance License Scheme aimed at encouraging industrial exports, industries engaged in export business (other than jute, jute goods, or tea), or with export potential, may receive licenses in excess of their normal entitlement for the importation of their raw material requirements, on the basis of their export performance. Licenses issued under the scheme have to be claimed within six months of the realization of the export proceeds.

Foreign exchange for licensed imports is provided automatically by authorized dealers when payments are due. Advance payments for imports require approval by the Bangladesh Bank, which normally is given only for specialized or capital goods.

Payments for Invisibles

Payments for invisibles connected with authorized trade transactions generally are not restricted. Payments for most other invisibles require prior approval and are restricted. No foreign exchange is provided for tourist travel. Applications for foreign exchange for business travel, medical treatment, and education abroad are considered on an individual basis; as a rule, for business travel the amount granted is US$35 a day, subject to a maximum of US$2,000 a calendar year for exporters whose total export earnings in the preceding year were Tk 1 million or above and a maximum of US$525 for those whose export earnings were less than Tk 1 million; for medical treatment the amount granted is about £ stg. 400. Travel abroad may be financed freely from balances held in Foreign Currency Accounts. Foreign nationals working in Bangladesh must obtain approval before making remittances abroad for family maintenance purposes; such approval is usually granted for 50 per cent of wages or salaries, subject to a maximum of £ stg. 200 a month (net of tax) if the terms of employment have been approved by the Government.

Nonresident travelers may take out the foreign currency and travelers checks they declared on entry less the amount sold to authorized dealers or money changers; they may also, without obtaining the approval of the Bangladesh Bank, reconvert taka notes up to Tk 250 into convertible foreign currencies. Resident travelers may take out foreign currency and travelers checks up to the amount of any travel allocation they have been granted. Bangladesh nationals may take out Tk 20 in domestic currency; otherwise, the export of Bangladesh currency notes and coins is prohibited.

Exports and Export Proceeds

Exports to Israel, Rhodesia, and South Africa are prohibited. The proceeds from exports of jute goods and tea must be received within six months of shipment, those from exports of perishable goods to India within two months of shipment, and those from other exports within four months of shipment. Additional import licenses are issued to certain export industries on their export performance.

Proceeds from Invisibles

All proceeds from invisibles must be surrendered, but Bangladesh nationals working abroad may retain the countervalue of certain foreign exchange in Foreign Currency Accounts. The import of Bangladesh currency notes and coins exceeding Tk 20 is prohibited. Foreign currency travelers checks and foreign currency notes may be brought in by nonresident travelers without limit, provided that the total amount brought in is declared to the customs authorities upon arrival.

Capital

All outward transfers of capital require approval; such approval is not normally granted in respect of resident-owned capital. Inward capital transfers also require approval, which generally is given. All Bangladesh nationals who are resident in Bangladesh must surrender any foreign exchange coming into their possession, whether held in Bangladesh or abroad, to an authorized dealer within one month of the date of acquisition; movable and immovable assets, other than foreign exchange, owned in any country other than Bangladesh have to be declared to the Bangladesh Bank. Foreign nationals residing in Bangladesh continuously for more than six months are required to surrender any foreign exchange representing their earnings abroad in respect of business conducted in Bangladesh or services rendered, within one month of the date of acquisition.

There is no restriction on the importation of securities into Bangladesh, but the transfer of securities in favor of a person resident outside Bangladesh requires approval. This requirement applies to all Bangladesh securities, whether held by persons resident in Bangladesh or outside Bangladesh, and to all foreign securities held by persons resident in Bangladesh. Approval is given if securities are returned to Bangladesh within a specified period or, if they are sold, if the proceeds are repatriated to Bangladesh.

Authorized dealers may obtain short-term loans and overdrafts from overseas branches and correspondents for a period not exceeding seven days at a time, provided that they are obtained only in the currency of the country or monetary area in which the overseas bank branch or correspondent is situated. Borrowing abroad by resident nonbank firms of Bangladesh origin is prohibited. Borrowing by nonresident-owned or nonresident-controlled enterprises from commercial banks in Bangladesh, as well as from abroad, requires approval, and loans in local currency against overseas guarantees or collateral outside Bangladesh by authorized dealers also require approval. Authorized dealers may, however, approve loans, overdrafts, or credit facilities against goods intended for export from Bangladesh to companies controlled by persons resident outside Bangladesh. Authorized dealers must obtain approval before making any long-term loans in foreign currencies to residents or nonresidents, whether secured or unsecured. They are not normally permitted to hold short-term foreign assets other than small working balances.

As an amendment to the Foreign Exchange Regulation Act of 1947 it was decreed in October 1976 that the Bangladesh Bank’s permission is required for nonresidents other than banks to establish or continue a business in Bangladesh. Foreign firms with branches in Bangladesh are required to submit statements of their foreign exchange earnings as of the end of each quarter of the year.

Under the revised Industrial Investment Policy announced on July 16, 1974, as amended in December 1975, foreign private investment is permitted in collaboration with both the Government and private entrepreneurs. In the private sector, however, foreign participation will be limited to those industries where technical know-how is not locally available; where the technology involved is very complicated; or where capital outlay is high; and to industries that are either based on local raw materials or that are wholly export oriented. For a new investment, the foreign investors generally are to provide the entire amount of the project’s foreign exchange component as equity capital. The ceiling on private investment is Tk 100 million. Tax holidays are granted for periods of up to seven years, depending on location. All foreign investments require approval by the Investment Board.

Under this policy, dividends on foreign capital can be remitted net of tax. Also remittable are 50 per cent of the net salary of foreign nationals, up to a maximum of £ stg. 200 a month a person, and savings from earnings, retirement benefits, and personal assets on termination of services or retirement.

Gold

The import and export of gold or silver in any form are prohibited without special permission, which is not normally granted. There are no restrictions on the internal sale, purchase, or possession of gold or silver ornaments (including coins) and jewelry, but there is a prohibition on the holding of gold and silver in any other form except by licensed industrialists or dentists.

Changes during 1976

January 1. The import program for the shipping period January–June 1976 was announced. The program was designed to assure fuller utilization of existing industrial capacities by liberalizing imports of raw materials and spare parts; industrial exporters were granted additional licenses on the basis of their export performance since January 1975. Import procedures were further improved: registered commercial importers were authorized to submit letter of credit authorization forms to their nominated banks instead of having to apply for import licenses (Public Notice No. 1 [76] and F.E. Circulars Nos. 5 and 8).

January 19. Modifying F.E. Circular No. 83 dated December 5, 1972, F.E. Circular No. 6 informed authorized dealers that they were permitted to reconvert into foreign exchange foreign tourists’ unspent taka up to Tk 250 a person at the time of their leaving the country. Previously, the reconvertible amount was limited to Tk 150 a person.

January 20. Preferences for duties on a wide range of imported goods grown, manufactured, or produced in the United Kingdom, British colonies, or Sri Lanka, enacted by notification SRO 84(R)/66 of June 1966, were suspended (notification SRO-L/76/270/D/Cus).

January 21. The Government announced it would not allow separate remittances abroad on account of head office expenses by branches of foreign companies, banks, and firms. Remittances by Bangladesh branches of foreign companies were limited to their current surplus after income tax (payable on the entire amount at the full rate) (F.E. Circular No. 7).

January 22. The general authority extended to authorized dealers by F.E. Circular No. 86 of 1975 to allow remittance of up to Tk 500 for each applicant in a calendar year for import of books and magazines was revoked. Instead, readers and students were authorized to apply for licenses under the scheme for actual user imports for books and journals for up to Tk 1,500 a person a year; likewise, individuals might apply for actual user licenses for imports of allopathic drugs and medicines up to Tk 500 a person a year (F.E. Circular No. 8).

February 26. F.E. Circular No. 21 announced a barter trade agreement with Egypt, which was signed on December 27, 1975 and came into force on January 1, 1976; the agreement is valid up to December 31, 1976. The commodity list included, as exports from Bangladesh, raw jute, jute goods, and tea, and as exports from Egypt, raw cotton, cotton yarn, pig iron, and rock phosphate.

February 27. It was announced that the Bangladesh Bank was prepared to purchase U.S. dollars forward for one month on the basis of the spot rate. The practice of maintaining a spread of US$0.1 per £ stg. 1 was abolished. Also, a grace period of one month would be allowed for delivery of three months’ forward sales if conditions so warranted (F.E. Circular No. 22).

March 2. In modification of the announcement in F.E. Circular No. 8 of January 22, 1976, authorized dealers were permitted to approve applications for remittances of up to Tk 1,500 a person a year for import of books, journals, and periodicals; likewise, applications for remittance of up to Tk 500 a person a year for import of allopathic medicines and drugs could be approved. No licenses would be required for such imports (F.E. Circular No. 24).

March 17. A barter trade agreement was signed with Bulgaria. Bulgaria is to supply machinery, scientific and medical equipment, pharmaceuticals, and other commodities while Bangladesh, in exchange, is to supply raw jute, jute goods, leather, and tea (F.E. Circular No. 49).

March 18. Martial Law Regulation No. XI required Bangladesh citizens, except students residing abroad and wage earners employed in foreign countries, to declare to the Controller of Foreign Exchange of the Bangladesh Bank, any foreign exchange held within or outside the country. The declaration should also cover immovable or movable assets, other than foreign exchange, owned in any country other than Bangladesh.

March 24. A barter trade agreement, valid until December 31, was signed with the U.S.S.R. Commodities to be supplied by the U.S.S.R. included machinery, spare parts, steel products, cotton, and medicines; in exchange, Bangladesh was to supply raw jute, jute goods, goat skins, tea, and other products.

April 2. A trade agreement was signed with Nepal. Goods to be traded included rice, cereals, and forest products (exports from Nepal) and raw cotton, tea, and fish (exports from Bangladesh). Also, a transit agreement was signed providing for exemption of import licensing and customs inspections for goods in transit through Bangladesh to Nepal.

April 26. Bangladesh established a central rate for the taka of Tk 28.10 = £ stg. 1 and availed itself of wider margins.

April 30. Nationals residing in Bangladesh holding assets abroad had to remit income derived thereon to Bangladesh regularly. Assets were not to be sold without approval of the Bangladesh Bank. Liquidation proceeds had to be repatriated through normal banking channels as and when assets held abroad were disinvested (F.E. Circular No. 56).

April 30. A trade agreement was signed with Pakistan providing for the commencement of trade covering a wide range of commodities and the establishment of banking arrangements between the two countries. Trading in commodities covered by the arrangement was subject to exchange and trade control regulations of both countries. Payments for imports were to be made in convertible foreign exchange outside the Asian Clearing Union arrangement (F.E. Circular No. 61).

June 7. Quotation of export prices for raw jute and jute products was switched from pound sterling to U.S. dollars (F.E. Circular No. 68).

June 7. The central rate of the taka was adjusted from Tk 28.1 = £ stg. 1 to Tk 26.7 = £ stg. 1 (F.E. Circular No. 66).

June 17. As a first step in implementing the Bangkok Agreement, signed on July 31, 1975, Bangladesh, India, Korea, and Sri Lanka implemented mutual preferential tariff cuts affecting some US$25 million worth of annual trade.

July 1. The import program for the July-December 1976 shipping period was announced. The main features of the new import program were an increase in the entitlements of industrial importers based on their past export performance and an expansion of items eligible to be imported by private commercial importers, by end users, and under the wage earner’s scheme (Public Notice No. 40(76) and F.E. Circular No. 90).

July 17. The deadline for imports under the credit agreement with the U.S.S.R. of December 1, 1972 was extended until December 31, 1977. Effective January 1, 1976, prices, guarantees, letters of credit, and bills for contracts under this agreement had to be denominated in U.S. dollars, while the currency of payment continued to be the pound sterling (F.E. Circular No. 93, modifying F.E. Circular No. 39 of 1973).

August 2. Foreign firms with branches in Bangladesh (excluding foreign banks) were instructed by the Bangladesh Bank henceforth to submit quarterly statements of their foreign exchange earnings as of March 31, June 30, September 30, and December 31 of each year (F.E. Circular No. 102).

August 14. It was announced that the Bangladesh Bank would henceforth sell U.S. dollars forward in respect of cash imports. Furthermore, it would provide forward cover facilities in respect of imports under commodity loans, credits, and grants against which importing agencies would be required to deposit counterpart taka funds into the Government’s account (F.E. Circular No. 104).

August 17. It was announced that the Bangladesh Bank would henceforth sell U.S. dollars forward for three and six months to authorized banks, in multiples of US$1,000 with a minimum of US$10,000 (F.E. Circular No. 109).

August 26. Private exporters were allowed to export jute goods in their own names under licenses issued by the Bangladesh Jute Mills Corporation (F.E. Circular No. 118).

August 27. Supplementing the provisions under the Bangladesh-Pakistan trade agreement (F.E. Circular No. 61 of May 17, 1976), it was decreed that shipment of goods under the agreement must be effected by Bangladesh and Pakistan flag vessels only (F.E. Circular No. 119).

September 20. Remittances of foreign bank charges in respect of letters of credit opened for imports of goods and services into Bangladesh were prohibited; this prohibition also applied to imports under loans, credits, grants, and trade agreements unless specified otherwise (F.E. Circular No. 127). It was clarified in F.E. Circular No. 146 of October 27, 1976 that the prohibition would not apply to exports in the private sector.

September 21. The Bangladesh Shipping Corporation was authorized to issue waiver certificates at its discretion enabling the shipment of goods under the Bangladesh-Pakistan trade agreement (F.E. Circular No. 61 of May 17, 1976) to be effected also by third-country flag vessels (F.E. Circular No. 128, modifying F.E. Circular No. 119).

October 18. A commercial cooperation agreement was signed with the European Community providing for promotion of trade, increased economic and commercial cooperation in third world countries, and a review of possible measures for overcoming trade barriers and adapting market structures. Thus, as part of the agreement, the European Community rendered permanent certain temporary customs duty reductions and suspensions such as on fish, tea, and specified hides and skins.

October 19. The Foreign Exchange Regulation Act of 1947 was amended to provide that the permission of the Bangladesh Bank was a prerequisite for a person wishing to act or accept an appointment as agent in trading or commercial transactions, or as a technical or management advisor in Bangladesh of a foreign business other than banks; likewise, the Bangladesh Bank’s permission was required for nonresidents to establish or continue a business in Bangladesh (F.E. Circular No. 141).

October 22. Allocations of Saudi Arabian riyals to Hajj pilgrims, originally amounting to SRls 1,862 a person, were supplemented by an additional SRls 143 (or the U.S. dollar equivalent) for each pilgrim (F.E. Circular No. 143).

November 3. The official rate of the taka was appreciated from Tk 26.7 = £ stg. 1 to Tk 25.45 = £ stg. 1 (F.E. Circular No. 152).

December 30. The Bangladesh Bank’s spot buying rate was depreciated from Tk 25.40 = £ stg. 1 to Tk 25.95 = £ stg. 1 and the selling rate from Tk 25.50 = £ stg. 1 to Tk 26.00 = £ stg. 1 with corresponding revisions in the rates of authorized banks for the public (F.E. Circular No. 177).

Barbados

(Position on December 31, 1976)

Exchange Rate System

The par value is 0.444335 gram of fine gold per Barbados Dollar. A central rate of BDS$2 = US$1 has been established, and Barbados avails itself of wider margins. The intervention currency is the U.S. dollar.

The Central Bank of Barbados buys and sells U.S. dollars, Canadian dollars, and pounds sterling; under clearing arrangements with regional monetary authorities, it sells but does not purchase East Caribbean dollars, Guyana dollars, Jamaica dollars, and Trinidad and Tobago dollars. Dealings by the Central Bank are chiefly with the commercial banks. The Central Bank has fixed rates for dealings in East Caribbean dollars, Guyana dollars, Jamaica dollars, Trinidad and Tobago dollars, and U.S. dollars; the rates include commission charges of ⅛ of 1 per cent buying and ½ of 1 per cent selling for the U.S. dollar and ⅛ of 1 per cent selling for the other currencies. The Central Bank quotes on a daily basis its dealing rates for Canadian dollars and pounds sterling; commission charges of 316 of 1 per cent buying and ⅝ of 1 per cent selling for these currencies are included in the rates.

The Central Bank regulates the commission which may be charged by the commercial banks in dealings with their customers in East Caribbean dollars, Guyana dollars, Jamaica dollars, pounds sterling, Trinidad and Tobago dollars, and U.S. dollars; commission on dealings by the commercial banks in Canadian dollars and other currencies is not so regulated.

On December 31, 1976, the Central Bank’s buying and selling rates for the U.S. dollar were BDS$ 1.9975 and BDS$2.0100, respectively, per US$1, and those for sterling were BDS$3.3953 and BDS$3.4230, respectively, per £ stg. 1.

Under clearing arrangements with the East Caribbean Currency Authority and the Central Bank of Trinidad and Tobago, the Central Bank of Barbados purchases from the commercial banks currency notes issued by these monetary authorities and repatriates them in return for reciprocity of treatment with respect to collections of Barbados notes. The rate applied mutually for the purchase of currency notes is the parity rate between each pair of currencies determined through the U.S. dollar.

Administration of Control

Exchange control applies to all countries. It is administered by the Central Bank of Barbados, to which the Minister of Finance has delegated the performance of his ordinary functions as the Exchange Control Authority. The Central Bank delegates to authorized dealers the authority to approve normal import payments and the allocation of foreign exchange for certain other current payments and for cash gifts. The exchange control system provides that foreign exchange should normally be surrendered to an authorized dealer. The normal exchange control directives do not apply to transactions between residents and persons resident in Rhodesia or South Africa. Trade controls are administered by the Ministry of Agriculture, Food and Consumer Affairs.

Prescription of Currency

Settlements with residents of the former Sterling Area countries, other than member countries of the Caribbean Common Market (Caricom),1 may be made in sterling, in any other former Sterling Area currency, or in Barbados dollars from External Accounts. Settlements with residents of countries outside the former Sterling Area other than Rhodesia may be made in any foreign currency2 or through an External Account in Barbados dollars. Settlements with residents of Caricom countries must be made either through External Accounts (in Barbados dollars) or in the currency of the Caricom country concerned.

Nonresident Accounts

With the permission of the Central Bank, authorized dealers may maintain Foreign Currency Accounts in the names of residents of other countries.3 Permission to open Foreign Currency Accounts, which are maintained in foreign currencies, is given on the basis of the anticipated frequency of receipts and payments in foreign currency. Certain receipts and payments may be credited and debited to Foreign Currency Accounts, subject to the conditions of approval at the time the account was opened. Other credits and debits require individual approval.

External Accounts may be opened for nonresidents by authorized dealers without reference to the Central Bank. These accounts are maintained in Barbados dollars. They may be credited with proceeds from the sale of foreign currencies, with transfers from other External Accounts, with bank interest (payable on External Accounts or Blocked Accounts), and with payments by residents for which general or specific permission has been given by the Central Bank. They may be debited for payments to residents of Barbados, for the cost of foreign exchange required for travel or business purposes, and for any other payments covered by delegated authority to authorized dealers. Other debits and any overdrafts require individual approval.

The Exchange Control Act, 1967 (as amended) empowers the Central Bank to require certain payments in favor of nonresidents which are ineligible for transfer to be credited to Blocked Accounts. Balances in Blocked Accounts may not be withdrawn without approval, other than for the purchase of approved securities.

Imports and Import Payments

All imports from Rhodesia and South Africa are prohibited and imports originating in the People’s Republic of China, the CMEA countries, North Korea, Japan, and Portugal require individual licenses. Certain imports are prohibited; these include various foodstuffs and beer. Certain other commodities require individual licenses; these include passenger automobiles, buses, refrigerators, cement, unrefined gold, sewing machines, certain petroleum products, certain foodstuffs and beverages, and certain textiles. Individual licenses are also required for imports of commodities subject to the provisions of the Oil and Fats Agreement between the Governments of Barbados, Dominica, Grenada, Guyana, St. Lucia, St. Vincent, and Trinidad and Tobago. Where commodities are placed under license, it is necessary to seek a license, whether the goods are being imported from Caricom countries or elsewhere. Special licensing arrangements have been made for the regulation of trade between Barbados and other Caricom countries in 22 agricultural commodities.

Payments for authorized imports are permitted upon application and submission of documentary evidence (invoices and customs warrants) to authorized dealers. Advance payments for imports require prior approval by the Central Bank.

Payments for Invisibles

Payments for invisibles require exchange control approval. Except for transactions involving residents of Rhodesia and South Africa, payments for all commercial transactions are permitted freely when the application is supported by appropriate documentary evidence. Authority has been delegated to authorized dealers to provide basic allocations of foreign exchange for certain payments of a personal nature and for sundry payments. These include foreign travel (for which up to BDS$1,500 a person a calendar year may be allocated for private travel and up to BDS$4,500 a person a calendar year for business travel), expenses of education abroad (BDS$5,000 a person a year), subscriptions to newspapers and magazines, income tax refunds, official payments, and life insurance premiums. With the exception of tourism, applications for additional amounts or for purposes for which there is no basic allocation are approved by the authorities, provided that no unauthorized transfer of capital seems to be involved. Applications in respect of tourism in excess of BDS$ 1,500 a person are considered on their merits. The cost of transportation to any destination may be settled in domestic currency and is not deducted from the travel allocation.

Residents traveling to any destination outside Barbados may take out foreign currency notes and coins up to the value of BDS$500 and Barbados notes up to BDS$100. Nonresident visitors are not permitted to take out any Barbados currency but may freely export any foreign currency they had previously brought in.

Exports and Export Proceeds

Exports to Rhodesia and South Africa are prohibited. Specific licenses are required for the export of certain goods to any country; these goods include rice, cane sugar, rum, molasses, and certain other food products, sewing machines, portland cement, and petroleum products. All other goods may be exported without license. The collection of export proceeds is supervised by the Central Bank to ensure that proceeds in foreign currencies are surrendered within six months from the date of shipment.

Proceeds from Invisibles

Foreign currency proceeds from invisibles must be sold to an authorized dealer. Travelers to Barbados may bring in freely notes and coins denominated in Barbados dollars or in any foreign currency. Resident travelers are required to sell their holdings of foreign currencies to an authorized dealer upon return to Barbados.

Capital

All outward capital transfers require exchange control approval. Direct investments outside Barbados by residents require exchange control approval. The purchase by residents of foreign currency securities and of real estate situated abroad for private purposes also requires exchange control approval. Certificates of title to foreign currency securities held by residents must be lodged with an authorized depository in Barbados and earnings on these securities must be repatriated and surrendered to an authorized dealer.

Personal capital transfers, such as inheritances to nonresidents, require exchange control approval, which is granted subject to the payment of estate and succession duties. Dowries in the form of settlements, and cash gifts normally up to BDS$500 a donor a year may be transferred, with exchange control approval, to nonresidents; the authority to approve cash gifts up to BDS$50 a donor a year is delegated to authorized dealers. Emigrating Barbadian nationals are granted settling-in allowances from their declared assets at the rate of BDS$24,000 a family unit a year. The Central Bank also considers applications from foreign nationals who have resided in Barbados and are proceeding to take up permanent residence abroad, provided that they declare their assets held in Barbados.

Direct investment in Barbados by nonresidents may be made with exchange control approval. The remittance of earnings on, and liquidation proceeds from, such investment is permitted, subject to the submission of documentary evidence that the amount to be remitted is accurate, to the discharge of any liabilities related to the investment, and to the registration of the original investment with the Central Bank.

The issuance and transfer to nonresidents of securities registered in Barbados require exchange control approval, which is freely given on condition that an adequate amount of foreign currency is brought in for their purchase. Proceeds from the realization of these securities may be remitted when it is established that the original investment was financed from foreign currency sources. Nonresidents may acquire in Barbados real estate for private purposes with funds from foreign currency sources; local currency financing is not ordinarily permitted. Proceeds from the realization of such investments equivalent to the amount of foreign currency brought in may be repatriated freely. Capital sums realized in excess of this amount may be repatriated freely on the basis of a rate of return on the original foreign investment, calculated at the following rates: for the last five years at 8 per cent per annum; for the five years immediately preceding the last five years at 5 per cent; and for any period preceding the last ten years at 4 per cent. Amounts in excess of the sum so derived are restricted to the remittance of BDS$24,000 a year.

The approval of the Central Bank is required for residents to borrow abroad or for nonresidents to borrow in Barbados. Authorized dealers may freely assume short-term liability positions in foreign currencies for the financing of approved transfers in respect of both trade and nontrade transactions. They may also freely accept deposits from nonresidents. Any borrowing abroad by authorized dealers to finance their domestic operations requires the approval of the Central Bank.

Gold

A gold coin with a face value of BDS$100 is legal tender and is in limited circulation. Residents who are private persons are permitted to acquire and hold gold coins for numismatic purposes only. Otherwise, any gold acquired in Barbados must be surrendered to an authorized dealer unless exchange control approval is obtained for its retention. Residents other than the monetary authorities, authorized dealers, and industrial users are not permitted to hold or acquire gold in any form other than jewelry or coins for numismatic purposes. Imports of gold by residents are permitted for industrial purposes and are subject to customs duties and charges. Licenses to import gold are issued by the Ministry of Agriculture, Food and Consumer Affairs; no license is required to export gold but exchange control permission is required to do so.

Changes during 1976

During the year, additional goods were made subject to specific import license.

January 1. The Caricom common external tariff came into force. This terminated Barbados’ Commonwealth tariff preferences.

June 23. Authorized dealers required the prior permission of the Central Bank to redesignate as External Accounts the local bank accounts of residents leaving Barbados to take up permanent residence abroad.

October 12. The Miscellaneous Controls (General Open Import License) Regulations, 1976 lifted a number of restrictions on the source of import and on items imported. Goods no longer requiring licensing included pork, lamb, poultry, eggs, evaporated or condensed milk, certain vegetables, plantains, pineapples, oranges, tea, certain spices, rice, and wheat flour.

October 18. The Customs (Rate of Exchange) Notice, 1976 was published. For customs valuation purposes, the rates of exchange on imported goods would be the selling rates for sight drafts.

Belgium-Luxembourg

(Position on January 1, 1977)

Exchange Rate System

The par values are 0.0177734 gram of fine gold per Belgian Franc and per Luxembourg Franc. Belgium and Luxembourg have established central rates of BF/Lux F 48.6572 = SDR 1, and avail themselves of wider margins. There are two spot exchange markets—the official (réglementé or regulated) and the free; these markets are separated and foreign currency acquired in one may not be sold in the other. Most current transactions are settled in the official market and most capital transactions in the free market.

In the official exchange market, only authorized banks may carry out exchange transactions permitted in that market.1 Belgium-Luxembourg maintains a maximum margin of 2¼ per cent for exchange rates in the official market between the Belgian franc/Luxembourg franc and the Danish krone, the deutsche mark, the Netherlands guilder, the Norwegian krone, and the Swedish krona. No announced margins are maintained for any other currency. On December 31, 1976 the buying and selling rates for the U.S. dollar in the official market were BF 35.88¼ and BF 36.08¼, respectively, per US$1. Most exchange transactions are settled through the official market. For all inward and outward payments in excess of BF 10 million through that market, supporting documents must be submitted to the Belgo-Luxembourg Exchange Institute (Institut Belgo-Luxembourgeois du Change or IBLC).

In the free exchange market, all currencies (including domestic and foreign banknotes) may be bought and sold at freely fluctuating rates. On December 31, 1976 the free market rates between banks for the U.S. dollar were BF 35.70 buying, and BF 35.80 selling, per US$1.

Depending on the category of payments and receipts, either one exchange market or the other must be used; in a few cases, however, there is freedom of choice as to the exchange market in which conversion is to be effected.

In the official market, authorized banks in Belgium-Luxembourg may deal with other authorized banks and with nonresidents in any of the convertible currencies: however, there are special regulations for the zaïre.

The external position of authorized banks in the official market is subject to control; a ceiling has been imposed on the net spot creditor and debtor position in foreign currencies, and the overall foreign currency position (spot and forward combined) should normally be close to balance and must not register a substantial creditor or debtor position.

Nonbank residents may not acquire or surrender convertible currencies in the official spot market until a foreign payment is due. Nonbank residents may make forward purchases and sales of convertible currencies in the official market through authorized banks, provided that any foreign currency thus purchased is used for the authorized settlement of obligations within 15 working days from delivery (on the delivery date itself if the maturity of the forward contract is less than 15 days); exchange not used within that period must be resold in the official market. Profits resulting from forward contracts not covering authorized inward or outward payments through the official market must be given up to the Treasury. Any resident or nonresident, banks included, may deal in any currency in the free market. Forward transactions in the free market, whether by banks or nonbanks, are uncontrolled and do not require a permitted underlying transaction. There is normally no intervention in either forward exchange market.

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

Exchange Control Territory

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

Administration of Control

The ultimate responsibility for the administration of exchange control in the Belgian-Luxembourg Economic Union is exercised by the Belgo-Luxembourg Exchange Institute. Exchange control powers for most payments and transfers are delegated to authorized banks. The BLEU Convention of May 23, 1935 (revised with effect from August 1, 1965 by a Protocol of January 29, 1963 and with effect from May 1, 1972 by a Protocol of October 27, 1971) conferred on the Belgo-Luxembourg Administrative Commission the authority to license trade transactions; this Commission determines import and export policy, but has delegated the issuance of import and export licenses to the licensing offices of the BLEU, one of which is located in each country.

Prescription of Currency

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

Foreign countries are divided into two groups: the bilateral countries2 and the convertible area (all other countries).

All inward and outward transactions are classified in four groups, which may be summarized as follows: List A covers merchandise, transport expenses, industrial expenses (e.g., costs of processing), and other commercial expenses, including insurance; List B covers settlements of travel firms, salaries, pensions, fees, subscriptions, taxes, and public administration payments; List C covers (1) administration expenses, (2) income on securities, loans, etc., rents, and operating profits, and (3) repatriation of certain foreign long-term investments and transfers by emigrants of foreign nationality; List D covers gifts, life insurance payments, family maintenance payments, capital investments, liquidation of investments, dealings in gold, transfers by emigrants of Belgian or Luxembourg nationality, transfers by immigrants, inheritances, forward covering of merchandise, private travel expenses (except when settled through travel agencies), and all transactions not in any of the other three lists.

The permissible methods of settlement for foreign payments are summarized in the accompanying table. In dealing with countries in the convertible area, transactions contained in Lists A and B must be settled through the official market (or, if made in Belgian and Luxembourg francs, through Convertible Accounts) and those contained in List D through the free market (or through Financial Accounts). Transactions in List C may be settled through either the official or the free market (or through either Convertible or Financial Accounts). Transactions that may or must be settled through the free market may also be effected in domestic or foreign banknotes.

Summary of Permissible Methods of Settlement for Foreign Payments
Transaction ListCountry GroupForeign CurrencyExchange MarketNonresident Account In Francs
Outward Payments
A, BConvertibleConvertibleOfficialConvertible
CConvertibleAnyOfficial or freeConvertible or Financial
DConvertibleAnyFreeFinancial
A,B,C,DBilateralBilateral*
Inward Payments
A,BConvertibleConvertibleOfficialConvertible
CConvertibleConvertible OtherOfficial or free FreeConvertible or Financial
DConvertibleAnyFreeFinancial
A,BBilateralConvertibleOfficialBilateral or Convertible*
CBilateralConvertible OtherOfficial or free FreeBilateral or Convertible*
DBilateralAnyFreeBilateral*

Bilateral Account of the country concerned. Settlements with Zaïre may alternatively be made by debit or credit to Convertible Accounts in zaïres held with banks in Zaïre.

Bilateral Account of the country concerned. Settlements with Zaïre may alternatively be made by debit or credit to Convertible Accounts in zaïres held with banks in Zaïre.

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

Payments for goods of Egyptian origin (other than rice, raw cotton, and crude petroleum) are subject to special rules.

Nonresident Accounts

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

1. Convertible Accounts. Balances on these accounts are equivalent to currencies negotiated on the official market, and these accounts may be opened freely in the name of any nonresident.3 They are not related to any country or monetary area. They may be used freely for settlements with residents which either must or may be made through the official market and for retransfer abroad through the official market, and they may be credited freely with proceeds from the sale by a nonresident of convertible currencies in the official market to authorized banks in Belgium-Luxembourg. Balances on Convertible Accounts may be transferred freely to other Convertible Accounts or be converted into any currency in the official market. Advances on Convertible Accounts other than mail-credit advances are subject to authorization by the IBLC. Convertible Accounts may be held in the form of sight accounts (demand deposits), prior notice accounts, and time deposits.

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

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

Imports and Import Payments

All imports of Rhodesian origin are prohibited. Individual licenses are required for (1) all imports from Albania, Bulgaria, the People’s Republic of China, Czechoslovakia, the German Democratic Republic, Hong Kong, Hungary, Japan, North Korea, Outer Mongolia, Poland, Romania, the U.S.S.R., and Viet Nam,5 and (2) a number of imports from all other countries except Luxembourg.6 The commodities for which individual licenses are required include many textile products, certain agricultural products and foodstuffs, coal and petroleum products, and diamonds. All other commodities are free of license and quantitative restriction; only a form completed by the importer and giving notification of the payment (payment declaration) is required, which must be presented to an authorized bank. Many commodities subject to individual licensing are also admitted without quantitative restriction.

Imports from non-EEC countries of most products covered by the Common Agricultural Policy of the EEC are subject to import levies which have replaced all previous barriers to imports; common EEC regulations are also applied to imports from non-EEC countries of most other agricultural and livestock products. Imports of beef and cattle from “third” countries are subject to safeguard clauses.

No exchange control documentation is required for imports not exceeding BF 50,000 in value. The authorized bank is required to make certain that payment is made by one of the methods laid down in the regulations (see section on Prescription of Currency, above) and that foreign exchange is not acquired until the import payment is due; for all payments in excess of BF 50,000 the bank must require documentary proof of the due date. If these requirements are not fulfilled, the authorized bank submits a request to the central exchange control authority for special permission. Exchange control approval is also required for payments for imports more than three months before or six months after the date of customs clearance; prior examination of supporting documents by the IBLC is required for payments exceeding BF 10 million and for payments more than 30 days before the date of customs clearance, except, in the latter case, if payment takes place either under a documentary credit or on a documentary collection basis, provided that documents are submitted to the authorized bank showing that the goods have already been shipped to the BLEU. Payments for transit transactions must be made not later than three months from the date of any advance payment collected from the foreign buyer, and may not be made earlier than three months before the date on which payment is expected to be received from the foreign buyer.

Payments for Invisibles

Payments to convertible area countries for transactions included in Lists A and B must be made through the official exchange market or by crediting Belgian or Luxembourg francs to a Convertible Account. Supporting documents must be presented to an authorized bank for all payments in excess of BF 50,000; for payments exceeding BF 10 million and in other exceptional cases, prior examination of the supporting documents by the IBLC is required. Payments to convertible area countries for items in List C may be made through either the official market (alternatively, by crediting Belgian or Luxembourg francs to a Convertible Account) or through the free market (alternatively, by crediting Belgian or Luxembourg francs to a Financial Account, or in foreign or domestic banknotes); payments for items in List D must be made through the free market (alternatively, by crediting Belgian or Luxembourg francs to a Financial Account, or in foreign or domestic banknotes); payments to bilateral countries (see footnote 2) must be made by crediting Belgian or Luxembourg francs to a Bilateral Account related to the country concerned; payments to Zaïre, however, may also be made in zaïres through a convertible account in Zaïre. Foreign and domestic banknotes may be exported freely.

Exports and Export Proceeds

The export of all goods to Rhodesia is prohibited in accordance with UN Security Council Resolution No. 253(68) of May 29, 1968. Individual licenses are required for specified exports to all countries except Luxembourg.7 All other exports are free of license; only a form completed by the exporter and giving notification of the export is required.

No exchange control documentation is required for exports not exceeding BF 50,000 in value. The authorized bank is required to make sure that export proceeds are received in accordance with the regulations (see section on Prescription of Currency, above). Special authorization is required to collect export proceeds more than six months after the date of exportation. Export proceeds in convertible currencies must, within eight days of receipt, be surrendered to an authorized bank (i.e., sold in the official exchange market), or, alternatively, they may be deposited in a Controlled Resident Account in Foreign Currency with an authorized bank if they are to be used later for current payments authorized to be made in these currencies. Advance collection of export proceeds more than three months before the expected date of exportation requires prior authorization by the IBLC. Proceeds from transit transactions must be collected within three months from the date of payment to the foreign supplier. Prior examination of supporting documents by the IBLC is required for receipts exceeding BF 10 million.

Proceeds from Invisibles

Receipts in convertible currencies from invisibles connected with commercial transactions (Lists A and B—see section on Prescription of Currency, above) must, within eight days of receipt, be surrendered (i.e., sold in the official exchange market), or, alternatively, be credited to a Controlled Resident Account in Foreign Currency with an authorized bank if they are to be used later for current payments authorized to be made in these currencies. Prior examination of supporting documents by the IBLC is required for receipts exceeding BF 10 million through the official market. Receipts in convertible currencies from transactions included in List C may be retained or sold in the official or the free market. Receipts from other transactions (List D) and receipts in all other currencies may be retained or sold in the free market. Proceeds from transactions included in Lists C and D may also be collected in domestic or foreign banknotes. Foreign and domestic banknotes may be imported freely.

Capital

All capital transactions with convertible area countries may be carried out freely through the free market, by settlement in Belgian or Luxembourg francs through the Financial Account of a nonresident, or in domestic or foreign banknotes. Direct investments by enterprises and some capital transfers by individuals, including gifts, family maintenance payments, remittances by emigrants of Belgian or Luxembourg nationality, and inheritance, but not transactions of a financial character, may also be made through the official market, subject to individual license. The exchange control authorities may guarantee the repatriation of approved foreign investments made in Belgium-Luxembourg. In that case, capital brought in through the official market (under special license and as an exception to the standard prescription of currency set out above) may be repatriated through that market.

Also eligible for outward transfer through the official market are the amortization and redemption proceeds of bonds denominated in Belgian or Luxembourg francs, quoted on a stock exchange in the BLEU, and owned by residents of convertible area countries, provided that such securities had been held at least six months prior to the maturity date. All transactions in securities by residents or nonresidents are free, but the financial settlement of such transactions must conform to the general regulations for capital transactions. The prior approval of the Minister of Finance is required for issues of securities on the Belgian capital market by nonresidents; most of the Belgian franc bond issues on the domestic capital market have in practice been made by international organizations, while issues of Eurobonds denominated in Belgian francs are not normally permitted. The Luxembourg authorities from time to time have permitted Eurobond issues denominated in Luxembourg francs. Public bids by foreign companies or individuals for the purchase or exchange of shares issued by Belgian companies require the prior approval of the Ministry of Finance. Outward payments for capital transactions with bilateral countries must be made only in Belgian or Luxembourg francs through Bilateral Accounts or, in the case of Zaïre, in zaïres; inward payments for capital transactions with bilateral countries may be made in Belgian or Luxembourg francs through Bilateral Accounts, in any currency through the free market, or, in the case of Zaïre, in zaïres.

Gold

Residents may freely purchase, hold, and sell gold in the form of coins or bars, at home or abroad. Imports and exports of gold in these forms by residents and nonresidents are unrestricted and free of license. Settlements in respect of gold transactions with convertible area countries (other than payments for semiprocessed gold imported by professional users) may only be made through the free market, through Financial Accounts in Belgian or Luxembourg francs, or in domestic or foreign banknotes. No customs duties or other charges are levied on imports or exports of gold, except imports for industrial or handicraft purposes. Licenses are required for imports of semiprocessed gold; these are issued to professional users, who have to make payment through the official market. Transactions in monetary gold are exempt from value-added tax in Belgium but not in Luxembourg.

Changes during 1976

In addition to the changes listed below, certain changes in quantitative import regulations were made in accordance with EEC decisions, regulations, and directives; most of these related to textiles or beef and veal.

January 12. The Luxembourg Banking Commissioner introduced stricter reporting requirements regarding the maturity structure of Luxembourg banks’ foreign currency assets and liabilities.

February 19. Exports of potatoes became subject to export levies until June 30, in accordance with EEC regulations.

February 27. The ceiling on the amount of guarantees that could be granted, for its own account, by the Office National du Ducroire, was increased from BF 100 billion to BF 120 billion. It was further increased to BF 140 billion on November 16.

March 1. The restrictions on the use by residents of checks denominated in Belgian or Luxembourg francs in making payments in favor of nonresidents were eased.

March 10. The ceiling on the liabilities (including all endorsements and guarantees) of the Rediscount and Guarantee Institute was increased from BF 45 billion to BF 50 billion.

March 15. France again suspended its participation in the European common margins arrangement. Accordingly, the BLEU ceased to observe maximum margins of 2¼ per cent for the French franc. At the same time, the special Benelux arrangement was terminated under which Belgium-Luxembourg and the Netherlands had maintained maximum margins of 1½ per cent rather than 2¼ per cent for each other’s currencies.

March 22. The 1972 regulation setting a coefficient for banks’ investment in Belgian Government securities was reintroduced, in the form of a monetary policy recommendation for the period ending April 30. Subsequently it was reinstated in the form of an obligation to maintain a minimum amount of such securities. This system was revoked on June 2, reintroduced on July 23, and revoked again on December 1.

April 1. Exchange controls over import payments, transit trade, and forward exchange transactions were tightened.

Authorized banks were required to submit supporting documents to prior examination by the IBLC before making any import payment earlier than 30 days before the prospective date of importation. In addition, for any payment in excess of BF/Lux F 50,000, banks were required to ascertain that it was not being made before the due date and therefore had to request the submission of documentation establishing the due date of the payment.

Payments to the nonresident seller of goods involved in a transit trade transaction could, in principle, no longer be made before payment from the foreign buyer had been received: payment up to three months before that date could, however, be made (1) where the foreign currency to be received from the nonresident buyer had been sold forward on the official market, through the same bank, at three months or less, or (2) where the foreign currency needed to make the payment had been borrowed on the official market from an authorized bank, provided that the borrowing was not repaid before payment from the foreign buyer was received.

For all forward sales of foreign currency on the official market with a maturity of less than 15 days, authorized banks were required, before concluding the forward exchange contract, to have in their possession any documentary evidence needed to execute an authorized payment in favor of a nonresident; the foreign currency sold forward had to be used on the date of its delivery to execute the intended payment (or, where this proved impossible, the authorized bank had to repurchase the foreign currency on the official market upon expiry of the forward contract). If the forward exchange contracts concerned exceeded the equivalent of BF/Lux F 10 million, banks were in addition required to submit the necessary supporting documents to the IBLC for approval before concluding the forward contract.

April 21. Some of the regulations issued on April 1 were eased.

Prior examination of shipping documents and supporting evidence by the IBLC for import payments earlier than 30 days before the prospective date of importation ceased to be required where payment took place either under a documentary credit or on a documentary collection basis, provided in the latter case that documents were submitted showing that the goods had already been shipped to the BLEU; furthermore, in these cases banks no longer were required to ascertain from the importer the date of importation, if the goods concerned were subject to import license.

Where transit trade was involved, authorized banks were now permitted to make the payment to the nonresident seller up to three months before the date on which the payment from the foreign buyer was expected to be received, provided that supporting documents were presented to the IBLC for payments exceeding BF/Lux F 10 million.

April 28. Authorized banks and licensed exchange dealers agreed not to acquire Italian banknotes in denominations of Lit 50,000 and Lit 100,000.

June 9. A general permission to authorized banks was issued allowing them, under certain conditions and subject to certain safeguards, to sell foreign currency on the official market to residents before obtaining the necessary supporting documents. Banks could until further notice undertake such sales to nonbank residents, either spot or for less than 15 days forward, before obtaining the documentation needed for making a payment in favor of a nonresident, provided that the customer undertook to present the documents to the bank not later than the second working day after the sale of the foreign currency. Where the bank had to submit this documentation to the IBLC, the foreign currency sold could be kept in a special temporary account until the bank received the IBLC’s decision.

Banks had to repurchase the foreign exchange on the official market, at their own initiative, where these conditions were not met, where payment was not made on the day the foreign currency was delivered, or where payment was not made on the day the IBLC decision authorizing the payment was received. In all cases of repurchase, banks had to deduct and transfer to the IBLC, for the account of the Treasury, any exchange profit in excess of BF/Lux F 1,000.

June 18. The IBLC tightened the supervision over authorized banks’ foreign currency positions in the official market.

October 4. Until further notice the above-mentioned general permission to authorized banks of June 9, together with the related implementing provisions of the same date, were suspended. These facilities were restored on October 25.

October 18. An exchange rate realignment took place within the European common margins arrangement. The central rates of the Belgian franc and the Luxembourg franc and their relationship to the European monetary unit of account were maintained unchanged. The intervention rates for the other currencies participating in the arrangement were modified accordingly, with the exception of those for the Netherlands guilder, which remained unchanged.

November 29. The Luxembourg Banking Commissioner requested Luxembourg banks to report by January 21, 1977 the geographic breakdown and maturity structure of their claims (as well as unutilized irrevocable credit lines) as at December 31, 1976 on countries other than the EEC members, Switzerland, Sweden, the United States, Canada, and Japan. The data had to be provided separately for each of seven currencies, including the Belgian franc.

December 22. The National Bank of Belgium requested Belgian banks to report the geographic breakdown of their long-term (more than one year) claims as at December 31, 1976 on countries other than the EEC members, Switzerland, Sweden, the United States, Canada, and Japan. The data had to be provided separately for each of seven currencies, including the Belgian franc.

The following changes took place on January 1, 1977:

January 1. A general permission came into effect which permitted authorized banks to execute certain payments from nonresidents on the basis of an oral declaration by the beneficiary as to the nature of the transaction and before receiving the prescribed supporting documents. The facility was subject to a written undertaking by the beneficiary to the effect that the documents would be submitted within five working days.

The general permission allowed banks to purchase on the official market from residents foreign currency received in payment from nonresidents, to credit residents on official market accounts with foreign currency received in payment from nonresidents, and to execute in favor of residents payments in Belgian or Luxembourg francs to the debit of Convertible or Bilateral Foreign Accounts, provided in all cases that the beneficiary made an oral declaration allowing the bank to determine whether the nature of the transaction was such as to allow the use of the payment methods referred to.

January 1. A general permission came into effect which permitted authorized banks to undertake certain forward arbitrage transactions between foreign currencies in the official market for the account of resident customers. Such transactions were permitted when customers were to receive payments in foreign currency from nonresidents (for transactions for which the sale of the foreign currency in the official market was either prescribed or authorized) and at the same time had to make payments in another foreign currency (for transactions for which payment in foreign currency in the official market was either authorized or prescribed). Any exchange profit resulting from forward arbitrage transactions not covering authorized inward or outward payments through the official market had to be given up to the Treasury.

Benin

(Position on December 31, 1976)

Exchange System

No par value or central rate for the currency of Benin has been established with the Fund. The unit of currency is the CFA Franc,1 which is officially maintained at the rate of CFAF 1 = 0.02 French franc. Exchange transactions in French francs, the intervention currency, between the Banque Centrale des Etats de l’Afrique de l’Ouest (BCEAO) and commercial banks take place at the rate of CFAF 1 = F 0.02; the BCEAO levies a commission of of 1 per mill on transfers from countries outside the West African Monetary Union and a commission of 2.50 per mill on transfers to countries outside the Union.2 Exchange rates for foreign currencies are based on the fixed rate for the French franc and the Paris exchange market rate for the currency concerned, and include a commission. Banks levy a commission on transfers to all countries outside the West African Monetary Union, part of which must be surrendered to the Treasury.

With the exception of those relating to gold, Benin’s exchange control measures do not apply to (1) France (and its Overseas Departments and Territories, except the French Territory of the Afars and the Issas) and Monaco; and (2) all other countries whose bank of issue is linked with the French Treasury by an Operations Account (Cameroon, the Central African Empire, Chad, the People’s Republic of the Congo, Gabon, Ivory Coast, Mali, Niger, Senegal, Togo, and Upper Volta). Hence, all payments to these countries may be made freely. All other countries, except Benin itself, are considered foreign countries, and in principle financial relations only with foreign countries are subject to exchange control. For purposes of certain capital controls, however, the countries specified in this paragraph are also considered foreign countries.

Administration of Control

Exchange control is administered by the Directorate of External Commerce in the Ministry of Commerce and Tourism, which also supervises borrowing abroad, the issuing, advertising, or offering for sale of foreign securities in Benin, inward direct investment, all investment in foreign countries, and the solicitation of funds in Benin for placement in foreign countries. The Ministry of Finance, however, has the main responsibility for drawing up the exchange control regulations. The BCEAO is authorized to collect (either direct or through the intermediary of banks, financial institutions, the Postal Administration, and notaries public) any information necessary to compile the balance of payments statistics. All exchange transactions relating to foreign countries must be effected through authorized intermediaries. Import licenses are issued by the Directorate of External Commerce. Exports of diamonds and other precious or semiprecious materials require prior approval granted by a decree issued by the Council of Ministers. There are three special offices for the import and export of precious metals and precious mineral materials, but these are inoperative. Import certificates for liberalized commodities originating in OECD countries other than Japan are made out by the importer himself and approved by the Directorate of External Commerce.

Prescription of Currency

Benin is an Operations Account country of the French Franc Area, since the BCEAO maintains an Operations Account with the French Treasury; settlements with France (as defined above), Monaco, and the other Operations Account countries of the French Franc Area are made in CFA francs, French francs, or the currency of any other Operations Account country. Settlements with The Gambia, Ghana, Liberia, Nigeria, and Sierra Leone are normally made through the West African Clearing House. Settlements with all other countries are usually made through correspondent banks in France in any of the currencies of those countries or in French francs through Foreign Accounts in Francs. Certain settlements with the People’s Republic of China, however, are made through special accounts.3 All settlements with Portugal, Rhodesia, and South Africa are prohibited.

Nonresident Accounts

The regulations pertaining to nonresident accounts are based on those applied in France. The crediting to nonresident accounts of CFA banknotes, French banknotes, or banknotes issued by any other institute of issue that maintains an Operations Account with the French Treasury is not permitted, except for BCEAO banknotes mailed direct to the BCEAO agency in Cotonou by authorized banks’ foreign correspondents for credit to the Foreign Accounts in Francs opened for the latter by authorized banks.

Imports and Import Payments

All imports originating in or shipped from Portugal, Rhodesia, or South Africa are prohibited. Certain imports, such as narcotics, are prohibited from all sources. The Société Nationale d’Importation du Bénin (Sonib) has a monopoly over the importation of sugar, rice, wheat, wheat flour, condensed milk, alcoholic beverages, tobacco, and khaki cloth. Certain other agencies, such as the Société Béninoise pour le Développement des Ressources Animales (Sodera), have an import monopoly for other specified commodities. Imports of all other goods originating in countries in the French Franc Area may be made freely without an import license. Imports of all other goods originating in EEC countries other than France may also be made freely; these goods require a license, which is issued automatically. Certain imports are liberalized when originating in OECD countries other than Japan and only require an import certificate made out by the importer himself. Imports of nonliberalized commodities originating in OECD countries, all imports originating in Japan, and all imports originating in non-OECD countries are subject to licensing: they are admitted in accordance with an annual import program. Under this program, a global quota is established for imports from all countries outside the French Franc Area except EEC countries. Certain French textiles processed in foreign countries are licensed separately.

All imports originating in foreign countries, when valued at more than CFAF 500,000, must be domiciled with an authorized bank. The import licenses or import certificates entitle importers to purchase the necessary exchange, but not earlier than eight days before shipment if a documentary credit is opened or one month before the payment is due if the commodities have already been imported.

Payments for Invisibles

Payments to Portugal. Rhodesia, and South Africa are prohibited. Payments for invisibles to France (as defined above), Monaco, and the other Operations Account countries in the French Franc Area are permitted freely; those to other countries are subject to the approval of the Directorate of External Commerce, but for many types of invisibles the approval authority has been delegated to authorized banks. Authorized banks and the Postal Administration have been empowered to make payments abroad freely on behalf of residents, up to CFAF 50,000 a transfer. Payments for invisibles related to trade are permitted freely when the basic trade transaction has been approved or does not require authorization. Transfers of income accruing to nonresidents in the form of profits, dividends, and royalties are also permitted.

For tourist travel, residents traveling to countries other than France (as defined above), Monaco, and other Operations Account countries of the French Franc Area may obtain an exchange allocation of an amount equivalent to CFAF 175,000 a trip for each person (CFAF 87,500 for children under ten) for any number of trips a year; any foreign exchange in excess of the equivalent of CFAF 5,000 remaining after return to Benin must be surrendered. For business travel, there is a special allocation of the equivalent of CFAF 20,000 a day, subject to a maximum of CFAF 400,000 a trip.

The transfer of the entire net salary of a foreigner working in Benin is permitted upon presentation of the appropriate pay voucher, provided that the transfer takes place within three months of the pay period. Travelers going to foreign countries may take out up to a maximum of CFAF 25,000 in BCEAO banknotes, French banknotes, and banknotes issued by other Operations Account countries. Resident travelers to other countries of the French Franc Area may take out any amount in BCEAO banknotes, but if going to a country that is not a member of the West African Monetary Union, they must declare to the customs the amount taken out if it exceeds CFAF 150,000.

Nonresident travelers may take out any unutilized foreign banknotes and coins up to the amount declared by them on entry, subject to adjustment for amounts exchanged for CFA francs or obtained by exchange of foreign currency. Nonresident travelers may take out freely the equivalent of CFAF 25,000 in BCEAO banknotes, French banknotes, and banknotes issued by the Operations Account countries; the equivalent of CFAF 25,000 in foreign banknotes; and any amount in other foreign means of payment (travelers checks, etc.) established abroad in their names.

Exports and Export Proceeds

All exports to Portugal, Rhodesia, and South Africa are prohibited. Exports to all foreign countries must be domiciled with an authorized bank when valued at CFAF 500,000 or more. Exports to all countries are free of license, except those of gold and diamonds, but require an export application visaed by the Directorate of External Commerce. The due date for payments for exports to foreign countries cannot be later than 180 days after the arrival of the commodities at their destination. The proceeds must be collected and, if the contract is denominated in a non-Franc Area currency, sold on the exchange market, within two months of the due date. Prior authorization is required for the holding, sale, import, export, or trading of raw diamonds and of precious and semiprecious materials; this authorization is granted by decree issued by the Council of Ministers acting on the proposal of the Minister in Charge of Mines after a technical commission has given its opinion.

Proceeds from Invisibles

Proceeds from transactions in invisibles with France (as defined above), Monaco, and other Operations Account countries in the French Franc Area may be retained. All amounts due from residents of other countries in respect of services, and all income earned in those countries from foreign assets, must be collected and surrendered. Resident and nonresident travelers may bring in any amount of banknotes and coins issued by the BCEAO, the Bank of France, or a bank of issue maintaining an Operations Account with the French Treasury, as well as any amount of foreign banknotes and coins (except gold coins) of countries outside the French Franc Area; resident travelers must declare to the customs and within eight days of return surrender to an authorized bank any foreign banknotes and foreign currency travelers checks in excess of CFAF 5,000 they bring in.

Capital

Transfers of capital between Benin and Portugal, Rhodesia, and South Africa are prohibited. Capital movements between Benin and France (as defined above), Monaco, and other Operations Account countries in the French Franc Area are free of exchange control; capital transfers to all other countries require exchange control approval and are restricted, but capital receipts from such countries are permitted freely.

Special controls (additional to any exchange control requirements that may be applicable) are maintained over borrowing abroad, over inward foreign direct investment and all outward investment in foreign countries, and over the issuing, advertising, or offering for sale of foreign securities in Benin; these controls relate to the transactions themselves, not to payments or receipts. With the exception of those over foreign securities, these control measures do not apply to France (as defined above), Monaco, the other member countries of the West African Monetary Union, and those other countries whose bank of issue is linked with the French Treasury by an Operations Account. Special controls are maintained also over imports and exports of gold, over the soliciting of funds for deposit or investment with foreign private persons and foreign firms and institutions, and over all publicity aimed at placing funds abroad or at subscribing to real estate building operations abroad; these special controls do apply also to France (as defined above), Monaco, and the Operations Account countries.

All investments abroad by residents of Benin require prior authorization by the Minister of Commerce and Tourism.4 Foreign direct investments in Benin5 must be declared to the Minister before they are made. The Minister has a period of two months from receipt of the declaration during which he may request the postponement of the projects submitted to him. The full or partial liquidation of either type of investment also requires declaration. Both the making and the liquidation of investments, whether these are Beninese investments abroad or foreign investments in Benin, must be reported to the Minister and to the BCEAO within 20 days following each operation. Direct investments are defined as investments implying control of a company or enterprise. Mere participation is not considered as direct investment, provided that it does not exceed 20 per cent in the capital of a company whose shares are quoted on a stock exchange.

The issuing, advertising, or offering for sale of foreign securities in Benin require prior authorization by the Minister of Commerce and Tourism. Exempt from authorization, however, are operations in connection with (1) loans backed by a guarantee from the Beninese Government, and (2) shares that are similar to or may be substituted for securities whose issuing, advertising, or offering for sale in Benin has previously been authorized.

Borrowing by residents from nonresidents requires prior authorization by the Minister of Commerce and Tourism. The following are, however, exempt from this authorization: (1) loans constituting a direct investment, which are subject to prior declaration, as indicated above; (2) loans taken up by industrial firms to finance operations abroad, by international merchanting firms (approved by the Minister of Commerce and Tourism) to finance transit trade, or by any type of firm to finance imports and exports; (3) loans contracted by authorized banks; and (4) subject to certain conditions, loans other than those mentioned above, when the total amount outstanding of these loans, including the new borrowing, does not exceed CFAF 50 million for any one borrower. The repayment of loans not constituting a direct investment requires the special authorization of the Minister if the loan itself was subject to such approval, but is exempt if the loan was exempt from special authorization. Lending abroad is subject to prior authorization by the Minister of Commerce and Tourism.

The Investment Code (Ordinance No. 72-1 of January 8, 1972) provides for preferential status that may be granted to foreign and domestic investments in industry, mining, fisheries, agriculture, and tourism, when such investments are deemed to be of value to national development. Four preferential regimes are established. Plan A is intended for medium-sized investments and provides for exemption, during a period of up to 5 years, from import duties and taxes on materials necessary for the production of the proposed product, and from certain other taxation. Plan B, for larger projects, is granted for a maximum period of 8 years and provides, in addition to the benefits of Plan A, certain other tax privileges. Plan C is intended for enterprises undertaking to invest more than CFAF 500 million and is granted for a period of up to 15 years. In addition to the benefits of Plan B, Plan C guarantees stability of tax status, free choice of suppliers, and certain other advantages. Plan D provides certain benefits for Beninese entrepreneurs investing at least CFAF 10 million. The method of application of the Investment Code is set out in Decree No. 72-7 of January 17, 1972.

Gold

Prior authorization granted by a decree issued by the Council of Ministers, acting on the advice of the Minister in Charge of Mines, is required to hold, sell, import, export, or deal in, raw diamonds and precious or semiprecious materials. In practice, residents are free to hold, acquire, and dispose of gold in any form in Benin. Imports and exports of gold from or to any other country require prior authorization by the Minister of Commerce and Tourism, which is seldom granted. Exempt from this requirement are (1) imports and exports by or on behalf of the Treasury or the BCEAO; (2) imports and exports of manufactured articles containing a minor quantity of gold (such as gold-filled or gold-plated articles); and (3) imports and exports by travelers of gold articles up to a maximum weight to be determined by an Order of the Minister. Both licensed and exempt imports of gold are subject to customs declaration.

Changes during 1976

January 1. Ordinance No. 76-3 of January 9 extended the tariff preferences granted to the original EEC member states to the new EEC member states (Denmark, Ireland, and the United Kingdom).

January 26. Ordinance No. 76-5 gave the Société Nationale d’Armement et de Pêche (Sonapeche) a monopoly over the importation of fresh, frozen, salted, and smoked fish, with retroactive effect from December 10, 1975.

March 15. France again suspended its participation in the European common margins arrangement; the parity between the CFA franc and the French franc remained unchanged.

June 28. Decree No. 76-34 gave the Société Béninoise pour le Développement des Ressources Animales (Sodera) a monopoly over the importation of livestock.

July 1. The West African Clearing House formally came into operation.

Bolivia

(Position on December 31, 1976)

Exchange Rate System

The par value is 0.0409256 gram of fine gold per Bolivian Peso. A central rate has been established of $b 20 = US$1. The U.S. dollar is the intervention currency, and Bolivia avails itself of wider margins.

For operational purposes, the exchange market is divided into two sectors: the public sector and the private sector. The Central Bank of Bolivia operates in both sectors, buying foreign exchange from the Government, the official enterprises, including the Bolivian Mining Corporation (Comibol), and private export firms, and selling foreign exchange without any restriction to the Banco del Estado, the commercial banks and exchange houses, the Government and its official agencies, and—through the banks—to the public. The commercial banks and exchange houses purchase exchange accruing to the private sector on account of capital and invisibles, and they cover all foreign exchange requirements of the private sector. The exchange rate of the Central Bank on December 31, 1976 was $b 20.00 buying, and $b 20.02 selling, per US$1. All sales of foreign exchange are subject to a 1.6 per cent exchange tax, a 2 per mill stamp tax, and a 1 per mill banking commission. Accordingly, the effective selling rate of the commercial banks and exchange houses on the same date was $b 20.40 per US$1.

Bolivia formally accepted the obligations of Article VIII, Sections 2, 3, and 4, of the Fund Agreement, as from June 5, 1967.

Prescription of Currency

There are no prescription of currency requirements. Settlements are usually made in U.S. dollars or other convertible currencies. Payments between Bolivia and Argentina, Brazil, Chile, Colombia, Ecuador, Mexico, Paraguay, Peru, Uruguay, and Venezuela may be made through accounts maintained with each other by the central banks.

Imports and Import Payments

All imports by public sector agencies require the prior authorization of the Ministry of Industry and Commerce; these agencies are not permitted to import commodities also available in Bolivia. Private imports of certain commodities also require such prior authorization; these goods include live cattle, various foodstuffs, and petroleum and petroleum products. The import of furniture, garments, electric batteries, detergents, and certain other locally produced goods is prohibited. All other goods may be imported freely. Exchange to pay for imports may be purchased freely from commercial banks. Most foreign credits, including officially guaranteed suppliers credits, are subject to authorization by the National Council for Planning and Economy and to control by the Financing Institute.

Most private sector imports are subject to an advance deposit of 5 per cent. 10 per cent, or 25 per cent ad valorem, which must be lodged 120 days prior to the anticipated release from customs.

Most private sector imports are subject to a customs surcharge of 1 per cent ad valorem. Most imports also are subject to an “additional tax,” to an import surcharge of 3 per cent, and to an 8 per cent tax on services rendered.

Payments for Invisibles

Payments for invisibles may be made freely. (For profits and dividends on foreign investments, however, see section on Capital, below.) Residents of Bolivian or foreign nationality must pay a travel tax when leaving the country. The tax is $b 150 for air travel to neighboring countries. $b 60 for overland travel to such countries, $b 300 for air travel to other Latin American countries, and $b 400 for air travel to countries outside Latin America.

Exports and Export Proceeds

Exports are not normally subject to licensing, although certain exports may be prohibited or restricted from time to time owing to domestic demand and supply factors. All proceeds from exports of the public and private sectors must be sold to the Central Bank within 15 days of receipt, with the exception of reasonable amounts deducted for foreign exchange expenditures undertaken to effect the export. As regards minerals, Comibol and the medium-sized mines export their own production and the Mining Bank that of the small mines of the private sector.

Proceeds from Invisibles

Exchange derived from invisibles may be retained or sold in the exchange market.

Capital

Outward capital transfers by residents or nonresidents are free of control and may be made freely; inward capital transfers also may be made freely, but government receipts of transfers and grants and all proceeds of borrowings from foreign public sector agencies must be surrendered to the Central Bank. All foreign credits, including suppliers’ credits, to government agencies and autonomous entities, and credits to the private sector with official guarantees, are subject to prior authorization by the National Council for Planning and Economy and to control by the Financing Institute. Most foreign loans must be registered with the National Investment Institute.

Foreign investments in Bolivia, except those involving petroleum and mining, are governed by the provisions of the Investment Law of December 16, 1971 (Decree-Law No. 10045). The law is administered by the National Investment Institute. Investments in petroleum and mining are governed by the General Hydrocarbons Law and the Mining Code. Certain foreign investments are considered subject to Decisions 24 and 103 of the Cartagena Agreement.

Gold

By virtue of Supreme Decree No. 07771 of August 2, 1966, imports and exports of gold and domestic trading in gold are subject to regulation by the Central Bank. The Decree also designated the Central Bank to purchase, for its use or for export in the form of gold bars, the total national production of gold. Supreme Decree No. 8635 of January 9, 1969, without affecting the existing powers of the Central Bank, authorized the Mining Bank to purchase at home and sell abroad, in unworked form, the production of gold, silver, and platinum. The Mining Bank sells gold, silver, and platinum on the domestic market subject to conditions that it establishes jointly with the Central Bank. The Central Bank is empowered to purchase its full requirements of gold from the Mining Bank. Cooperatives and other producers must sell the gold they produce to the Central Bank. The Mining Bank is authorized to sell a specified quantity of gold annually to domestic jewelers and dentists and is obliged to sell the remainder to the Central Bank. Residents may freely purchase, retain, hold, and sell gold in any form other than bars in Bolivia.

Changes during 1976

January 23. Supreme Decree No. 13328 prohibited the import of rice.

January 30. Supreme Decree No. 13341 prohibited the import of edible oils.

February 14. Supreme Decree No. 13362 increased the additional tax on certain luxury items and made general goods subject to an import surcharge of 3 per cent of the c.i.f. value; exempt from the latter were staples, medicine, industrial raw materials, aviation fuel, newsprint, books, and spare parts for automobiles and trucks.

February 14. Supreme Decree No. 13362 prohibited imports of automobiles for official or private use and imports of certain trucks.

May 20. The bilateral payments agreement with Poland expired.

June 9. Supreme Decree No. 13646 extended the exemptions and other benefits of the Investment Law to imports of materials, equipment, and tools for hotel construction.

June 30. Supreme Decree No. 13707 reduced the import deposit of 25 per cent introduced by Decree-Law No. 12929 of October 3, 1975 to 10 per cent for private manufacturing enterprises importing machinery and equipment, tools, spare parts, and raw materials, and for hotels and restaurants importing construction materials and equipment. The import deposit for capital goods and inputs imported for the agricultural sector (as specified in Supreme Decree No. 13129 of December 4, 1975) was reduced to 5 per cent. The following were exempted from import deposit requirements: books, newspapers, periodicals, and other commercially printed matter; equipment, machinery, tools, spare parts, and raw materials for firms whose products were subject to price control; and machinery, equipment, tools, and spare parts for firms eligible for incentives under the Investment Law.

July 9. Supreme Decree No. 13741 regulated the production, importation, and marketing of pharmaceutical and chemical products.

July 20. Supreme Decree No. 13759 made imports of heavy-duty vehicles subject to prior license issued by the Ministry of Transport and Communications.

August 27. Supreme Decree No. 13905 modified the import tariff.

December 23. Supreme Decree No. 14222 prohibited the importation of toys valued at more than US$10.

Botswana

(Position on December 31, 1976)

Exchange and Trade System

Botswana’s currency is the Pula. No par value or central rate has been established. The official exchange rate is P 1 = US$1.15.1

The exchange control powers are vested in the Minister of Finance and Development Planning, who has delegated most of the administration of exchange control to the Bank of Botswana (the central bank). The latter, in turn, has delegated certain powers to banks appointed as authorized dealers.

Exchange control is applicable to transactions with all countries. Payments to or from residents of countries outside Botswana must normally be made or received in a foreign currency (a specified foreign currency in the case of export proceeds) or through a nonresident-held pula account in Botswana. There are no bilateral payments agreements. Payments to nonresidents for current transactions, while subject to control, are not restricted, but applications for outward transfers of capital are considered on their merits. The rulings on applications for inward and outward capital transfers may depend on whether the applicant is a temporarily resident foreign national, a nonresident, or a resident. Authority to approve some types of current payments is delegated to commercial banks up to established limits: this is true, for example, of the basic exchange allowance for tourist travel (the equivalent of P 2,000 in a calendar year for an adult and P 800 for a child). Travelers may freely bring in any amount of domestic banknotes and coin, and take out P 50 in such banknotes and coin.

Botswana is a member of a customs union with Lesotho, South Africa, and Swaziland, and there are no import restrictions on goods originating in any country of the customs union. Imports from South Africa do not require licenses and include an unknown quantity of goods originating outside the customs union. Insofar as Botswana imports goods direct from countries outside the customs union, such imports are licensed by the Botswana Government, provided that the goods are intended for consumption in Botswana. Import licenses are valid for all countries and entitle the holder to buy the foreign exchange required to make the import payment. Certain exports are subject to licensing, mainly for revenue and similar reasons. Furthermore, goods of domestic origin may move freely between Botswana and Rhodesia by virtue of a customs agreement of 1956, provided that they are not intended for re-export; imports of Rhodesian beer, tobacco, and cigarettes are not permitted, however.

Changes during 1976

March 8. The Minister of Finance and Development Planning in his budget speech stated that, while exchange control was shortly to be extended to the Rand Monetary Area, there was no intention to use exchange controls as a major instrument of economic policy. Foreign exchange would continue to be readily available for the payment of imported goods and services, while generous foreign currency allowances would be granted for business and holiday travel and for personal remittances.

August 13. The Exchange Control Regulations, 1976 (Statutory Instrument No. 110) of August 10 were gazetted. They came into effect on August 23. The Exchange Control Regulations, 1965 (Legal Notice No. 63 of 1965) were revoked. The new regulations made no distinction between residents of the Rand Monetary Area and residents of other countries outside Botswana, and regarded the South African rand as a foreign currency. Previously, transactions with residents of the Rand Monetary Area were not subject to exchange control.

August 13. Statutory Instrument No. 111 of August 13 was gazetted, by which the Minister of Finance and Development Planning delegated all his powers under the Exchange Control Regulations, 1976 to the Bank of Botswana, with the exception of his powers under the Regulations specified in a Schedule.

August 13. Statutory Instrument No. 1 12 of August 13 was gazetted, by which the Minister of Finance and Development Planning exempted from the provisions of Regulation 31(3) the lending of any money or securities by any person resident in Botswana to any office or branch in Botswana of any bank or building society which is by any means controlled, whether directly or indirectly, by persons resident outside Botswana.

August 13. Statutory Instrument No. 113 of August 13 was gazetted, by which the Minister of Finance and Development Planning ordered that the provisions of Regulations 3. 4, and 5 would not apply in respect of gold coins and manufactured gold. (A legal tender gold coin with a face value of P 150 came into circulation on February 16, 1977.)

August 13. Statutory Instrument No. 114 of August 13 (Exemption for Bailees) was gazetted, by which the Minister of Finance and Development Planning exempted from the obligation imposed under Regulation 5 any banker to the extent that he would not be required to notify the Bank of Botswana in any case where he was satisfied that the person for whom or by whose order any gold or specified currency in the form of notes was held was not required, by virtue of Regulation 4, to offer or cause to be offered that gold or specified currency for sale to an authorized dealer.

August 13. Statutory Instrument No. 115 of August 13 (Exemption for Temporary Visitors) was gazetted, by which the Minister of Finance and Development Planning exempted from the provisions of Regulation 4 all persons in Botswana who are not resident in Botswana.

August 23. Botswana issued its own currency, the pula, and withdrew from the Rand Monetary Area. The South African rand ceased to be legal tender and became a foreign currency. For a transitional conversion period until November 30, rand and pula circulated concurrently and a fixed relationship of P 1 = R 1 was guaranteed. During this period, the exchange rate was maintained at P 1 = US$1.15.

November 12. The Exchange Control (Payments) Order, 1976 of November 4 was gazetted. It specified the transfers and payments that were exempt from Regulation 7 and, for the application of Regulation 21, prescribed that payment for exports to all countries had to be received either in any specified currency or in pula from an account with an authorized dealer in Botswana of a person resident outside Botswana.

November 12. The Exchange Control (Import and Export) Order, 1976 of November 4 was gazetted. It provided for certain exemptions from Regulation 22 (including the import of any notes and coin that are legal tender in Botswana) and Regulation 23 (including the export by any traveler, on his person or in his baggage, of up to P 50 in notes and coin that are legal tender in Botswana and up to P 200 in notes and coin that are or have at any time been legal tender in any country outside Botswana; and the export by any traveler not resident in Botswana of any travelers check or letter of credit imported by that traveler).

November 12. The Exchange Control (Branches and Residence) Order, 1976 of November 4 was gazetted. Business by branches in Botswana was deemed to be business by a person resident in Botswana, and the term branch of a business was deemed to include a reference to the head office of that business.

December 1. The guaranteed relationship of P 1 = R 1 ceased to be in effect. The pula was pegged to the U.S. dollar. The official exchange rate continued to be P 1 = US$1.15.

Brazil

(Position on December 31, 1976)

Exchange System

On July 14, 1948, a par value for the Brazilian Cruzeiro was established by Brazil with the Fund. However, exchange transactions no longer take place at rates based on that par value. Since August 1968 Brazil has followed a flexible exchange rate policy.

Exchange transactions are carried out by the Central Bank, the Bank of Brazil, the authorized banks, and the exchange houses. The Central Bank operates in foreign exchange in Belo Horizonte, Curitiba, Pôrto Alegre, Recife, Rio de Janeiro, Salvador, and São Paulo, and the Bank of Brazil undertakes exchange transactions in the name of the Central Bank in other parts of the country. The exchange houses deal only in banknotes and travelers checks in a “manual market.” Uniformity between the rates quoted by the monetary authorities and the effective rates of the authorized banks is ensured by the practice of the monetary authorities of standing ready to purchase exchange from the banks and to sell it to the banks on an adequate basis, for approved transactions; such purchases and sales are made at the official rate. On December 31, 1976, the buying and selling rates quoted by the monetary authorities to the public were Cr$ 12.275 and Cr$12.345, respectively, per US$1; those quoted by the authorized banks for transactions other than in banknotes or travelers checks were the same (see Table of Exchange Rates, below). The same exchange rates are applicable to “agreement dollars” used for settlements with bilateral agreement countries. Rates for other currencies are based on the U.S. dollar rates in Brazil and the rates for the currencies concerned in New York and Europe. With specified exceptions, foreign exchange transactions are subject to brokerage fees, calculated on a sliding scale, which for the rates listed above result in effective rates within 1 per cent on either side of the rates of the monetary authorities.

On the buying side, other effective rates result from the following arrangements: (1) special regulations apply to coffee exports (see section on Exports and Export Proceeds, below); (2) a 10 per cent contribution (“contribution quota” or quota de contribucão) is levied on proceeds from exports of cocoa beans and products except for those in respect of exports of sweetened cocoa powder containing up to 50 per cent of cocoa cake as raw material, for which the contribution quota is 5 per cent; (3) a contribution quota of 10 per cent is applied to proceeds from exports of rawhides of wild animals, and one of 5 per cent on export proceeds from tanned or processed hides of wild animals; and (4) a contribution quota of 40 per cent is applied to proceeds from export of quartz chips.1

On the selling side, a different effective rate arises from the provision of the Foreign Investment Law (see section on Payments for Invisibles, below), which specifies that the sum of profits and dividends effectively remitted to persons and companies resident abroad is subject to a supplementary income tax when the average of actual remittances in any three-year period is in excess of 12 per cent a year of registered capital and reinvestment.

The Bank of Brazil, acting on its own behalf or on behalf of the Central Bank, carries out a considerable proportion of all exchange transactions. The following arrangements assure the Bank of Brazil of a large proportion of the country’s foreign exchange receipts: (1) Petrobrás surrenders to the Bank its entire foreign exchange proceeds from certain exports of petroleum. (2) Proceeds from exports of iron ore by the Vale do Rio Doce Company also are surrendered to the Bank of Brazil. (3) All other public sector agencies carry out all of their exchange operations through the Bank of Brazil.

The Bank of Brazil sells foreign exchange for the requirements of the Government at the exchange rate prevailing on the date the transaction is made. Like the other commercial banks the Bank of Brazil also sells foreign exchange for payments in respect of a large number of imports, including crude oil and petroleum products, wheat, newsprint, fertilizers, and the requirements of the Vale do Rio Doce Company. The Central Bank handles all exchange transactions in bilateral currencies.

The authorized banks are required to surrender to the Central Bank or to the Bank of Brazil (operating for the account of the Central Bank), at the close of each business day, any foreign exchange in excess of a net position of US$25,000 for each branch. The Central Bank and the Bank of Brazil, operating for the account of the Central Bank, supply foreign exchange to authorized banks in amounts not exceeding those needed to eliminate an oversold position of up to US$500,000 and limited to 90 per cent of the exchange sold the previous day by the bank concerned to its customers; included in this limit is their “manual market” position (banknotes and travelers checks). The banks are permitted to sell foreign exchange to each other, provided that they are situated in the same trading center; transfers between branches of the same bank in different trading centers are also allowed, subject to certain conditions. In addition, exchange transactions are permitted between banks in Rio de Janeiro and banks in São Paulo; such transactions may be carried out either by cable on a spot basis or on a forward basis and must be executed within 2 working days for spot transactions or not later than after 180 days for forward transactions. Authorized banks are also permitted to engage in arbitrage among themselves when operating in the same trading center or between establishments in Rio de Janeiro and São Paulo. The “manual market” is conducted mainly by exchange houses, which are not permitted to maintain a sold position and are not entitled to obtain exchange cover from the monetary authorities.

Administration of Control

The National Monetary Council, chaired by the Minister of Finance, is responsible for the formulation of overall foreign exchange policy. In accordance with the guidelines established by the Council, and under the supervision of the Director in charge of Foreign Exchange Operations of the Central Bank, exchange control is operated by the Central Bank’s Exchange Operations Department (Gecam) and Department for the Control and Registration of Foreign Capital (Firce); the latter processes the registration of foreign capital for the purpose of its repatriation and of the remittance of income therefrom; it also exercises approval authority over the terms of foreign financing of imports for periods in excess of 360 days. Certain borrowing abroad requires the prior approval of the interministerial Foreign Loans Commission (Cempex).

The National Council of Foreign Trade (Concex), chaired by the Minister of Industry and Commerce and established within his Ministry, formulates foreign trade policy. The Ministry of Foreign Affairs is the Council’s executive organ for dealing with foreign countries, while the Foreign Trade Department of the Bank of Brazil (Cacex) implements the Council’s decisions within Brazil. Cacex issues export and import certificates (guias de exportação and guias de importação), and verifies price quotations, weights, measures, classifications, and types in import operations. Cacex also is in charge of approving import financing with terms of up to 360 days.

Coffee exports are regulated by the Brazilian Coffee Institute (IBC), which is an autonomous body responsible to the Minister of Industry and Commerce and operates within the general guidelines of the National Monetary Council.

The Customs Policy Council (CPA), established within the Ministry of Finance, is responsible for formulating guidelines for tariff policy, subject to the legal powers of the National Monetary Council and Concex. The CPA also decides on changes in customs duties under the provisions of existing legislation. The import policy of the public sector is coordinated by the Brazilian Foreign Trade Committee (CBI).

Prescription of Currency

Prescription of currency is in principle related to the country of origin of imports or the country of final destination of exports, unless otherwise specifically prescribed or authorized. Settlements with payments agreement countries are made in clearing dollars through the relevant agreement account. Purchases or sales of exchange relating to transactions of any kind under bilateral payments agreements must be agreed in U.S. dollars; such transactions are exempt from the contracting of specific surrender or cover with the Central Bank. Bilateral accounts are maintained with Bulgaria, the German Democratic Republic, Hungary, Israel, Poland, Romania, and Yugoslavia. Reciprocal credit agreements providing for settlements through accounts denominated in U.S. dollars are in force with Argentina, Bolivia, Chile, Colombia, the Dominican Republic, Ecuador. Mexico, Peru, Uruguay, and Venezuela. Settlements with countries with which Brazil has no payments agreements or special payments arrangements are made in U.S. dollars or other convertible currencies. However, proceeds from exports to Latin American member countries of the Inter-American Development Bank, other than Argentina, Mexico, and Venezuela, may be received in the currency of the importing country.

Imports and Import Payments

Special arrangements described below apply to imports of petroleum and petroleum products. The import of recreational boats of a value of over US$3,500 and of commodities originating in or shipped from Cuba and Rhodesia is prohibited. In addition, Cacex has suspended the issuance of import licenses of a large number of “superfluous” imports. Unless as an exception, the prior authorization of the President is obtained, there is also a prohibition on the direct import of consumer goods (and on the purchase on the domestic market of any imported consumer goods) by the public and semi-public sector (direct organs of the Government, autonomous agencies, public enterprises, and companies with mixed public and private participation). Furthermore, imports and the leasing or purchase in the domestic market by ministries or agencies controlled by the Federal Government of machinery, equipment, vehicles, and spare parts of foreign origin for which satisfactory domestic equivalents (similares nacionais) are available are prohibited, except under specified conditions. All other imports may be grouped into the following two broad categories: (1) imports that are free of any requirement to secure prior administrative documentation, e.g., samples without commercial value and certain educational material; and (2) imports that require an import certificate. The bulk of imports falls into the second category. The import certificate is issued subject to the presentation of data on the foreign price of the commodity and other relevant information Cacex may require. Import certificates are issued on an f.o.b. basis. Cacex is authorized to make a processing charge of up to 0.9 per cent on the value of import certificates; as a rule, they are valid for 90 or 180 days, depending on the commodity (60 days for goods subject to price controls). For a number of specified imports in the second category, the import certificate may be obtained after the disembarkation of the commodity in Brazil, e.g., live plants, fish, various minerals, and paper. For certain other imports in the second category the prior approval of Cacex is required; these include goods imported by public bodies,2 imports for which tariff concessions are being sought, goods to be brought in with foreign financing with terms between 180 and 360 days, certain imports without exchange cover, goods for use in fairs and trade exhibitions, and used instruments, machinery, and equipment. Most commodities subject to an import certificate are exempt from this requirement when the value of the import transaction does not exceed US$2,000. All importers must be registered with Cacex, and imports can be effected only by registered firms or persons. Importers are required to submit to Cacex programs of their anticipated import operations. The Minister of Finance may, on a temporary basis, and in accordance with the directives of the Economic Development Council and without prejudice to commitments under LAFTA, authorize Cacex to reject applications for import certificates where (1) imports are for speculative stock building purposes; (2) imports are causing or threaten to cause serious damage to the national economy; or (3) imports originate in or are shipped from countries that in any way impede Brazilian exports.

Goods imported into the Manaus free zone are subject to an annual quota. The transfer of foreign goods imported into the Manaus free zone to other parts of Brazil for any reason is prohibited.

With certain exceptions,3 all imports are subject to a compulsory advance deposit requirement equal to 100 per cent of the f.o.b. value of the imports. The deposits must be lodged before import certificates are collected and are held without interest by the Central Bank for a period of 360 days.

As a general rule, imports may be cleared through customs before an exchange contract is closed. However, Cacex may approve applications for the payment of imports of any goods at terms of up to 360 days from the date of shipment, without any test for similares nacionais, provided that no import duty concessions or other tax concessions are involved. External financing at terms in excess of 360 days for imports of capital goods, intermediate products, raw materials, and other goods and merchandise regardless of the classification of the importer and the purpose of the merchandise, must be registered with the Central Bank. Financial terms in respect of external financing for imports of more than one year must be submitted for approval to the Central Bank, which will evaluate them in the light of foreign debt policy, before a request can be made for registration with Firce. Registration with Firce is also dependent on a ruling by Cacex that similares nacionais do not exist and that Brazilian firms are unable to supply the imports. Payment of the amount financed, and of interest thereon, may only be made upon presentation of a certificate of authorization issued by the Central Bank approving the credit terms. Prior to shipment of the goods, total payments to suppliers for the nonfinanced amount may not exceed 20 per cent of the import value. Furthermore, installments of the financed amount must be distributed to ensure that amortization of the debt is scheduled in proportion to the terms of the financing operation.

Spot exchange contracts may be closed if the contract is intended to settle drafts, at sight or on maturity, and the appropriate shipping documents are presented. Spot exchange contracts must be settled on maturity of the draft; this may take place 2 working days in advance of the maturity date if the exchange transfer is processed by telegram or telex, or 10 working days in advance if processed by airmail or check. Forward contracts, for up to 180 days, may be closed when a letter of credit is being opened. A deposit requirement equivalent to 100 per cent of the value of the exchange operation is applied, with some exceptions, to the contracting of forward exchange for the opening of letters of credit. Deposits are payable to the Central Bank on the working day following the exchange operation and are released on the date of settlement or the date of cancellation of the contract, up to a maximum period of 180 days.4 Letters of credit must be opened within 5 working days from the date of the exchange contract. Letters of credit for more than 360 days may be opened without prior closing of an exchange contract.

Commercial banks ordinarily require a guarantee deposit for their own protection for forward exchange contracts; the amount of the deposit varies with the credit standing of the customer. When the contracts are liquidated, guarantee deposits may be used for payment of the foreign exchange concerned. In certain cases, interest at about 0.5 per cent a month is charged on the portion of the forward contract not covered by a deposit. Advance payments in amounts up to US$300 for imports of books may be made without prior authorization.

Special procedures are applicable to certain imports of petroleum and petroleum products and of wheat. For petroleum and specified petroleum by-products, Petrobrás concludes for each import transaction an individual foreign exchange contract at the selling rate prevailing on the day of the closing of the exchange contract. At the same time, the Bank of Brazil concludes a foreign exchange contract with the Central Bank, to cover its position for an amount equivalent to the value of the individual contract at the exchange rate at which the Central Bank sells foreign exchange to commercial banks. In establishing the selling rate to be applied to the liquidation of the contract, the selling rate used is that which prevailed 10 days prior to the date of the latest fixing of the domestic price of petroleum by the National Petroleum Council (NPC). The difference, if any, between the rate of the contract concluded between Petrobrás and the Bank of Brazil and the rate used at the liquidation of that exchange contract is borne by the NPC. Payments by Petrobrás against such contracts are made in the following manner: for collections, 100 per cent upon the liquidation of the contract covering the importation, and for letters of credit. 10 per cent when the letter of credit is issued and 90 per cent upon the liquidation of the contract.

For some commodities, the application of import duties may be affected by the existence of similares nacionais or the establishment of a minimum import price (pauta de valor mínimo) or of a reference price.

Payments for Invisibles

Payments for current invisibles related to income from foreign capital, royalties, and technical assistance are governed by the provisions of the Foreign Investment Law. In addition to certain restrictions on remittances stipulated in that law, limits are placed, by virtue of Normative Act No. 15 of the National Institute of Industrial Property of September 11, 1975, on remittances of all royalties and technical assistance fees (see below). Subject to certain conditions authorized banks may sell foreign exchange up to the equivalent of US$300 a month for personal remittances abroad. The sale of foreign exchange for travel abroad is subject to special regulations as described below. Payments for other current invisibles require the approval of Gecam or Firce, which authorize remittances freely, subject to the presentation of supporting documents as evidence that a bona fide current transaction is involved.

Sales of foreign exchange to meet personal expenses connected with travel abroad are permitted up to US$1,000 a person a trip, without the prior approval of the Central Bank, on the following terms: for neighboring countries (1) in banknotes up to US$100, and (2) in payment orders for the remainder; and for other countries (1) in banknotes up to US$100, and (2) in payment orders or travelers checks for the remainder. Applications for purchases of travel exchange in excess of US$1,000 must be submitted to the Central Bank, which considers each case on its merits; amounts in excess of US$1,000, when authorized, may be taken up in the form of payment orders only. Foreign residents in transit in Brazil are permitted to purchase foreign currency up to the equivalent of the amount they sold during the period of their stay in Brazil; however, purchases in excess of 30 per cent of the amount previously sold require the approval of the Central Bank. Each purchase transaction is registered, and the records of these operations, which must contain the names of clients, are submitted daily to the Central Bank. The issuance of Brazilian passports, the granting of police exit visas in these passports, and the issuance of police exit visas to foreigners permanently resident in Brazil are subject to a deposit requirement of Cr$12,000.5 The deposit is held in the Bank of Brazil for one year without interest and without monetary correction. Persons wishing to purchase foreign exchange for travel must first produce evidence of payment of the deposit requirement in respect of passports and exit visas.6

Outward remittances in respect of foreign investment in Brazilian securities are governed by special regulations (see below). Otherwise, remittances abroad of foreign capital, income from foreign direct investments and reinvestments, and remittances in respect of royalties and technical assistance are governed by Decree No. 55762 of February 17, 1965 which contains the regulations implementing the Foreign Investment Law (Law No. 4131, as amended by Law No. 4390). Remittances are allowed only when the foreign capital concerned, including reinvestments, and the contracts for patents and trademarks, and for technical, scientific, and administrative assistance, are registered at Firce in accordance with the established rules (see section on Capital, below). The registration of contracts or deeds for technical assistance or the use of patents or trademarks is subject to the furnishing of proof that the document has been approved by the National Institute of Industrial Property and complies with its Normative Act No. 15 of September 11, 1975. Remittances are normally authorized in the currency of registration. Remittances of interest on loans and credits and of related amortization payments are permitted freely in accordance with the terms stipulated in the respective contract and recorded in the certificate of registration.

A progressive supplementary income tax is levied on remittances to persons and companies resident abroad of earnings on foreign capital (other than capital invested in Brazilian securities) if their average over a three-year period exceeds 12 per cent of the registered capital and reinvestments. For registered portfolio capital, the supplementary income tax is levied if remittances of dividends, bonuses, and capital gains in each fiscal year exceed 12 per cent of the registered investment. For foreign capital that produces goods or services for luxury consumption, remittances of profits are limited to 8 per cent per annum of the registered capital. Remittances of royalties by a branch or subsidiary established in Brazil to its head office abroad are not permitted when 50 per cent or more of the local firm’s voting capital is directly or indirectly held by the foreign principal firm or when the majority of the firm’s capital in Brazil belongs to the recipients of the royalties abroad. Remittances of technical assistance fees (either with or without the use of trademarks and patents) are not permitted, as a rule, when remuneration for such services exceeds specified percentages, ranging from 1 per cent to 5 per cent, of gross receipts from the sale or manufacture of given products for which such payments are incurred abroad. The percentages are the same as those established in Brazil’s taxation laws for determining the maximum permissible deductions for such expenses.

Travelers may take out domestic and foreign banknotes freely.

Exports and Export Proceeds

Exports are free of licensing requirements but require an export certificate issued by Cacex to ensure compliance with the requirements of exchange and trade regulations. Some exports are free of controls, but exports of many commodities require prior approval of Cacex, while exports of specified commodities are prohibited or suspended, including certain primary products and raw materials required for domestic consumption, and exports of certain other commodities are conditional on prior domestic sales. Exports requiring approval include those effected through bilateral accounts or payable in inconvertible currencies, exports without exchange cover, exports on consignment, re-exports, commodities for which minimum export prices are fixed by Cacex, and exports requiring prior authorization by government agencies. Exports of certain commodities, including beef, are subject to an annual quota. Exports of coffee are subject to authorization by the IBC.

The IBC does not grant the authorization to export coffee unless the sale contract is based on a price per pound that is at least equal to the minimum registration price (in U.S. dollars a pound, f.o.b.) fixed from time to time by the IBC. The minimum registration price is fixed separately for the various types of coffee. Exporters of coffee are required to surrender, without compensation, a portion of their proceeds in the form of a contribution quota which may also vary according to the type of coffee. The cruzeiro proceeds from the contribution quota are transferred to the Coffee Defense Fund. The contribution quotas are set from time to time by the IBC and are fixed in terms of foreign currency; on December 31, 1976 they were US$80 a bag for green coffee, ground or roasted coffee, and decaffeinated green coffee, and US$1.50 a pound for spray-dried and freeze-dried soluble coffee.

Exporters may convert exchange proceeds, after deduction of the contribution quotas, at the prevailing official market rate of exchange. Thus, the exchange rate for exports of coffee depends on (1) the amount of the contribution quota, (2) the actual price received (f.o.b. Brazil, in U.S. dollars a pound), and (3) the official market rate of exchange. On December 31, 1976, the minimum registration prices were US$1.90 a pound for green coffee and US$2.10 a pound for decaffeinated green coffee. The corresponding cruzeiro payments a bag, after deduction of the contribution quota, were Cr$2,096.57 for green coffee and Cr$2,420.63 for decaffeinated green coffee. Thus the exchange rates for proceeds from coffee exports on sales at the minimum registration price were Cr$8.359 per US$1 for green coffee and Cr$8.732 per US$1 for decaffeinated green coffee. The exchange rate for coffee exports is higher to the extent that sales are made in excess of the minimum registration price. Proceeds of exports of spray-dried and freeze-dried soluble coffee are also subject to a contribution quota. On December 31, 1976, the minimum registration price for spray-dried soluble coffee was US$5 to US$6 a pound and for freeze-dried soluble coffee US$7.50 to US$8.50 a pound. The contribution quota on both types of coffee was US$1.50 a pound. Thus the exchange rates for proceeds from exports of spray-dried and freeze-dried soluble coffee on sales at the minimum registration price were Cr$8.592 to Cr$9.206 and Cr$9.820 to Cr$10.109, respectively, per US$1.

The proceeds from all other exports are also sold at freely negotiated exchange rates, within the limits of the official market,7 but exporters of cocoa beans and cocoa products are required to surrender without compensation 10 per cent of their exchange proceeds. The cruzeiro equivalent of these deductions is used to finance a program of price support and plantation improvement for cocoa. Furthermore, a contribution quota of 10 per cent is applied to proceeds from exports of unprocessed hides of wild animals, 5 per cent on export proceeds from tanned or processed hides of wild animals, and 40 per cent on export proceeds from quartz chips.

A large number of fiscal incentives apply to exports, principally of manufactured commodities. These incentives include exemptions from indirect and income taxes, customs duties, and certain fees and charges, as well as credits related to the amount of exemption from tax liability. Various lines of credit for exporters, some at preferential rates of interest, are provided by the Bank of Brazil and the commercial banks. These financing facilities include both export financing and the financing of production and warehousing for export, particularly for manufactures. In addition, assistance is provided to exporters in the field of export credit insurance and by way of guarantees.

Proceeds from Invisibles

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

Capital

Capital inflows in the form of financial loans under Central Bank Resolution No. 63 (as amended) or under the provision of the Foreign Investment Law (Law No. 4131) are subject to ceilings and require the prior approval of the Central Bank. The prior approval of Cempex is also required for borrowing by the public sector, when the foreign funds originate with official financial institutions abroad for borrowing by the private sector, and when the transaction is to be guaranteed by the National Treasury or, on its behalf, by any official credit institution. External financing for imports must be registered with the Central Bank. Moreover, import financing with credit terms exceeding one year requires the approval of the Central Bank. Otherwise, inward transfers are unrestricted and free of control, although the subsequent utilization of the proceeds for the acquisition of certain domestic assets may be subject to control. There is a separate regime for inward portfolio investment. For the purpose of repatriation and the remittance of income, however, inward transfers of foreign capital and the reinvestment of profits on foreign capital must be registered with Firce. Foreign capital is defined for this purpose as (1) goods, machinery, and equipment which have entered the country without an initial corresponding expenditure of foreign exchange and which are to be used to produce goods or to render services, and (2) financial and monetary resources brought into the country for investment in economic pursuits, provided that, in either case, the owner is a person or firm resident or domiciled abroad or with headquarters abroad.

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

Persons domiciled or resident abroad may make portfolio investments in Brazilian commercial and industrial securities, provided that transactions are channeled through a Brazilian “investment company” and are effected on Brazilian stock exchanges. Such capital is subject to registration with the Central Bank and must remain in the country for at least three years, following which repatriation may be made free of income taxes at an average rate of up to 20 per cent every six months. The minimum participation in portfolio investment companies by foreign firms or individuals is US$10,000.

For financial imports and for investments made in the form of goods, registration is made in the currency of the country of domicile of the creditor or investor (or of its head office) or, in special circumstances, in the currency of the country of origin of the goods or of the credit. To register loans that are made in foreign currency it is necessary to certify that the interest rate corresponds to that prevailing in the original market of the loan, that the amortization schedule is not disproportionately heavy in the early stages of repayment, and, in the case of import financing loans, that the prices of the imported goods correspond to the prices of comparable goods in the country of origin. If the terms of financing are approved, Cacex examines the applications for some foreign borrowing in the light of the price and essentiality of the proposed import and of the availability of similares nacionais.

The registration of direct investment is subject to the following rules: The capital that enters or has entered Brazil is registered in foreign currency. Reinvestments are defined as profits of companies established in Brazil and accrued to persons or companies resident or domiciled abroad; such profits must have been reinvested in the same companies that produced them or in another sector of the Brazilian economy. The registration of reinvested profits is made simultaneously in Brazilian currency and in the currency of the country to which the profits could have been remitted. The conversion is calculated at the average exchange rate prevailing between the date on which the profits appeared on the balance sheet in the case of a company, and the date of their reinvestment.

Special regulations govern borrowing abroad. Under Central Bank Resolution No. 63, as amended, private commercial and investment banks and the National Bank for Economic Development may be authorized to take up foreign currency credits abroad for domestic relending for purposes of financing working capital. The certificate of registration of the loan for the purposes of the Foreign Investment Law is furnished by Firce upon approval of the loan by the Central Bank. Safeguards against excessive use of such credits include limitations on the foreign obligations that each bank may assume (related to the terms of the credit and the size of the bank) and the provision that the ultimate borrower must agree to bear the exchange risk. The Central Bank assures the availability of cover for the repatriation of the loan at maturity. All other financial loans in foreign currency are effected under the general provisions of the Foreign Investment Law (Law No. 4131). Loans under this law also require prior Central Bank authorization, but the Central Bank does not undertake to provide exchange cover for them. Loans under Resolution No. 63 as well as those under Law No. 4131 must have a minimum term of five years but no maximum term is set.

Under a program for the management of external debt, the National Monetary Council has since December 1971 imposed quantitative limits on the amount of financial loans under Resolution No. 63 and Law No. 4131 for which authorization may be given by the Central Bank. Loans are authorized only if maturities conform with minimum requirements established from time to time by the Central Bank, which permits the total of loans outstanding to rise only to the extent that the servicing commitments on Brazil’s total external indebtedness do not depart from the path approved by the National Monetary Council. At the end of 1976 the Central Bank’s minimum acceptable maturity stood at five years (unchanged since 1975). However, provided that the full amount of the foreign exchange remains committed to Brazil for the minimum specified maturity, loans to the final borrower in Brazil, as well as loans to banks under Resolution No. 63, may be made at terms shorter than the final maturity of the debt abroad and these funds may subsequently be re-lent to the same or a second borrower.

Banks are not permitted to pay interest on demand deposits, whether held by residents or nonresidents.

Outward capital transfers not mentioned above require authorization by Gecam and Firce, which consider applications on their merits. Approved exchange transactions involving outward transfers of private capital are effected through an authorized bank or the Bank of Brazil at the prevailing official market rate.

Table of Exchange Rates (as at December 31, 1976)8
(cruzeiros per U.S. dollar)
BuyingSelling
7.365 (Official Market Rate less 40% Contribution Quota)9
8.359 (Calculated on the Basis of Official Market Rate, Contribution Quota, and Minimum Registration Price)10
Exports of green coffee effected at a price equal to the minimum registration price, for payment at sight.
8.592–9.206 (Calculated on the Basis of Official Market Rate, Contribution Quota, and Minimum Registration Price)10
Exports of spray-dried soluble coffee.
8.732 (Calculated on the Basis of Official Market Rate, Contribution Quota, and Minimum Registration Price)10
Exports of green decaffeinated coffee effected at a price equal to the minimum registration price, for payment at sight.
9.820–10.109 (Calculated on the Basis of Official Market Rate, Contribution Quota, and Minimum Registration Price)10
Exports of freeze-dried soluble coffee
11.047 (Official Market Rate less 10% Contribution Quota)
Exports of cocoa beans and cocoa products other than sweetened cocoa powder. Exports of rawhides of wild animals.
11.661 (Official Market Rate less 5% Contribution Quota)
Exports of tanned or processed hides of wild animals.
Exports of sweetened cocoa powder.
12.275 (“Manual Market” Rate)12.345 (“Manual Market” Rate)
Foreign banknotes and travelers checks.Foreign banknotes and travelers checks.
12.275 (Official Market Rate)12.345 (Official Market Rate)
All other export proceeds. Other proceeds.Imports. Invisibles.11 Capital.

Gold

Residents may freely purchase, hold, and sell gold coins in Brazil. Gold mining is ruled by Law No. 4425 of November 2, 1964. Residents other than the monetary authorities and licensed industrial users are not permitted to purchase, hold, or sell gold (other than alloys for dental use) abroad unless special permission is obtained from the Central Bank. Sumoc Instruction No. 27 of December 1948 stipulated that producers of gold must sell 20 per cent of their output to the National Treasury, through the Bank of Brazil, at the official market price, i.e., then at US$35 an ounce; the other 80 per cent would remain at the free disposal of the person concerned. However, this provision was in force until December 1962 only, and the monetary authorities do not deal in gold. The domestic negotiation of newly mined gold, which takes place at free market prices, is subject to a mining tax of 1 per cent. The mining tax may be offset against the other tax liabilities if and when gold is manufactured. The import of gold is subject to the issuance of an import certificate by Cacex; imports of native gold and of gold in the form of powder are free of customs duty. Exports of gold coins and gold bars are prohibited and the export of gold in any other form (except jewelry constituting the personal effects of a traveler) requires an export certificate.

Changes during 1976

During 1976 the buying and selling rates of the monetary authorities were changed on 16 occasions as follows: January 21, from Cr$9.020 and Cr$9.070 to Cr$9.195 and Cr$9.245 per US$1; February 17, Cr$9.370 and Cr$9.420 per US$1; March 9, Cr$9.550 and Cr$9.600 per US$1; March 30, Cr$9.885 and Cr$9.935 per US$1; April 13, Cr$ 10.220 and Cr$ 10.270 per US$1; April 30, Cr$10.315 and Cr$ 10.365 per US$1; May 24, Cr$10.500 and Cr$10.55O per US$1; June 8, Cr$10.600 and Cr$10.650 per US$1; June 23, Cr$10.730 and Cr$10.800 per US$1 ; July 23, Cr$10.885 and Cr$ 10.995 per US$1; August 18, Cr$ 11.100 and Cr$ 11.170 per US$1; September 10, Cr$ 11.300 and Cr$.11.370 per US$1; October 12, Cr$l 1.550 and Cr$ 11.620 per US$1; October 28, Cr$ 11.760 and Cr$ 11.830 per US$1; November 25, Cr$ 11.985 and Cr$12.055 per US$1 ; December 22, Cr$l 2.275 and Cr$ 12.345 per US$1.

January 1. IBC Resolution No. 960 of December 31, 1975 came into effect, which established contribution quotas of US$29 a bag for exports of green and washed coffee and US$0.20 a pound for decaffeinated green coffee, for exchange contracts closed after December 31, 1975. (On January 22, the IBC announced that the contribution quotas had been frozen at these levels and would no longer be adjusted when changes were made in the cruzeiro parity.)

January 1. IBC Resolution No. 961 of December 31, 1975 came into effect, which established a contribution quota of US$0.15 a pound for exports of soluble coffee for exchange contracts closed after December 31, 1975.

January 8. Central Bank Circular No. 284 regulated Central Bank Resolution No. 353 of December 2, 1975, which had introduced a Special Program of Export Incentives. The circular provided for special financing facilities for the working capital requirements of companies producing and exporting manufactured products, at a term of 360 days, in amounts equivalent to 100 per cent of the increase in their exports in the previous year. Cacex Communication No. 539 of January 8 specified the conditions firms had to meet in order to qualify for these benefits. Communication No. 1 of January 15 of the Fund for the Financing of Exports (Finex) regulated the utilization of the corresponding lines of credit to banks.

January 9. Firce Circular Letter No. 75 specified the rates of interest to be applied to import financing at terms in excess of 360 days, and their relationship to the New York prime rate or the London interbank offered rate.

January 9. Import letters of credit with payment terms in excess of 360 days from the date of shipment could henceforth be opened without prior conclusion of the exchange contract. External financing for imports under such arrangements was subject to registration with the Central Bank. The exchange contract could be concluded within two working days of the due date of the obligation to transfer funds abroad if the transfer was to take place by telegram or telex, and within ten working days of the due date if by airmail or check (Firce Communications Nos. 25 and 26).

January 14. The Economic Development Council announced the guidelines and procedures for economic policy in 1976. In the external policy field, they included an import budget for Federal Government Ministries representing a reduction of 25 per cent (to US$1,500 million) from the level of actual government imports in 1975 (other than petroleum and wheat); ceilings were also established for Ministries’ foreign exchange expenditures on services (freight, travel, and purchase of technical services).

January 20. Decree No. 77065 defined the terms and conditions for exemptions and reductions of customs duty and the tax on manufactured products (IPI tax) provided for in Decree-Law No. 1428 of December 2, 1975 (see March 9, below).

January 30. Ministry of Finance Order No. 529 of November 29, 1975 established at 25 per cent the withholding tax to be paid on 70 per cent of the earnings on the exhibition of foreign films, when remitted abroad.

February 5. Central Bank Resolution No. 358 exempted additional items from advance import deposit in respect of the issuance of an import license.

February 6. Cacex Communication No. 543 suspended until June 30, 1976, the issuance of import certificates for 292 commodities regarded as superfluous. Exempt were imports approved by Cacex for inclusion in exports or re-exports; imports under drawback, when approved by Cacex; goods of LAFTA origin when imported from LAFTA countries and appearing in the Brazilian National List or in the special concession lists for Bolivia, Paraguay, and Uruguay; and imports effected directly by the Federal Government to supply the domestic market.

February 12. Resolution No. 36 of the Conselho de Não-Ferrosos e Siderurgia (Consider) placed the marketing of imported coal under the control and supervision of Siderurgica Brasileira (Sidebras).

February 13. Decree-Law No. 1446 granted exemption from income taxes to earnings derived from the rendering of technical services abroad.

February 17. Central Bank Circular No. 288 included investment banks in the program operated by Cacex for the financing of the working capital requirements of manufacturers and exporters.

February 17. It was announced that purchases or sales of exchange relating to transactions of any kind under bilateral payments agreements carried out on or after February 23, 1976 must be agreed in U.S. dollars; such transactions became exempt from the contracting of specific surrender or cover with the Central Bank (Gecam Communication No. 300).

February 18. Central Bank Circular No. 289 increased the number of eligible borrowers in respect of foreign currency loans and import financing at terms of over five years who could receive a rebate equivalent to 85 per cent of the withholding tax of 25 per cent payable on remittances of interest, commissions, and expenses.

February 24. Exporters of coffee were permitted to finalize exchange transactions up until the date of the shipment of the goods. Previously, they were required to close exchange contracts within 24 hours of the registration of the sale. The new regulations gave exporters up to 90 days, between registry and shipment, to use the most suitable rate of exchange available.

March 9. CPA Resolutions Nos. 2717, 2718, and 2719 granted the following customs duty concessions:

(1) A reduction of 50 per cent of the import duty on equipment, machinery, apparatus, or instruments, provided there were no similares nacionais, when imported by public bodies and mixed economy companies engaged in public transport services, rail, underground, or water; hydraulic systems manufacture; the generation, transmission, and distribution of electric energy; telecommunications; operating airports; concessionary companies producing piped combustible gas; and other firms when imports were essential for the construction, expansion, or conservation of the importer’s installations.

(2) A reduction of 50 per cent of the import duty on equipment, machinery, apparatus, or instruments, without similares nacionais, when imported by public works or service contractors and intended solely for use in the execution of approved projects or programs for public works or services, provided the beneficiary was included in one of the following sectors: rail, road, or underground transport, ports, airports, hydraulic systems manufacture, the generation, transmission and distribution of electric energy, telecommunications, steel, or petroleum (exploration, drilling of wells, and production).

(3) A reduction of 40 per cent of the import duty on essential replacement parts and components for the industrial sectors mentioned in (2).

The concessions under (1) and (2) applied also to spare parts imported with the equipment, provided that their value did not exceed 10 per cent of that of the machinery. The concession under (3) was subject to proof to Cacex that such parts were unobtainable in Brazil or that their production in Brazil was economically unfeasible. The concessions under (1) and (3) applied only to shipments for which an import license for more than US$5,000 had been issued.

March 24. Decree-Law No. 1450 exempted from import duties and the advance import deposit requirement imports of capital goods without similares nacionais for use in the Itaipú hydroelectric complex.

March 24. Gecam Communication No. 303 further revised arrangements for personal remittances abroad.

March 26. Order No. 100 of the Ministry of Finance established a Commission for Export Incentives (Ciex) to administer programs of incentives for imports of capital goods under Decree-Law No. 1428 of December 2, 1975. The Commission would be responsible for administering tax incentives for exports, including the concession of credits in respect of the tax on manufactured products (IPI tax).

March 31. The Commission for Coordination of the Activities of Electronic Processes (Capre) was authorized to control imports of computers and related equipment (Cacex Communication No. 549).

April 1. Interministerial Order No. 518 re-established a compulsory register for imports. Merchandise for the importer’s own use was exempt from registration. Registration was to cover all inputs, outputs, and stocks of foreign goods acquired by importation, option, or purchase on the domestic market, which were for the use or consumption of third parties.

April 2. Personal remittances in favor of beneficiaries abroad totaling more than US$300 a month for any single remitter required individual approval by the Central Bank (Gecam Communication No. 305).

April 7. The regulations regarding baggage imported by foreign tourists and Brazilians were tightened. The duty-free limit for persons entering Brazil, other than for used clothing and the passenger’s books and magazines, was fixed at US$100; any additional goods up to a value of US$900 would be subject to duty, and any goods in excess of US$1,000 would be impounded. Duties on alcoholic beverages purchased abroad were set at 400 per cent, and those on perfumes, cosmetics in general, furs, playing cards, alarm clocks, and lighters, at 350 per cent. Furthermore, foreign goods admitted through the Manaus free zone could no longer be transferred to other parts of Brazil. Provision was made for the operation of customs warehouse regimes for imports and exports. The Ministry of Finance was empowered to authorize the operation of duty-free shops at ports and airports (Decree-Law No. 1455).

April 20. The existing requirements to be met by persons purchasing foreign exchange for travel abroad were tightened (Central Bank Resolution No. 376).

April 20. Gecam Communication No. 307 introduced additional regulations affecting sales of foreign exchange for travel abroad. Travelers whose passports contained a record of a previous purchase of travel exchange could not acquire any further exchange allocation from banks or tourist agencies, without authorization from the Central Bank, unless proof was provided either that the trip abroad had been made or that the foreign exchange has been resold to an authorized dealer. Persons wishing to purchase travel exchange for travel abroad by private means of transport had to request prior authorization from the Central Bank. Authorized institutions selling foreign exchange for travel were required to indicate on the travel ticket the amount sold, the date of the transaction, and the number of the voucher relating to the operation.

April 23. IBC Resolution No. 977 established contribution quotas of US$25 a bag, US$35 a bag, US$0.24 a pound, and US$0.20 a pound for exports of washed coffee, green coffee, decaffeinated green coffee, and soluble coffee, respectively. They would apply to registrations for shipment after July 1 in respect of washed, green, and decaffeinated green coffee, and after October 1 in respect of soluble coffee.

April 29. Firce Communication No. 27 stipulated that imports without exchange cover, in the form of foreign investment, would be restricted to machinery and equipment intended for industrial use or, in exceptional circumstances, to goods needed to complement or modernize plants already in operation.

April 29. Interministerial Order No. 146 prohibited the transfer for any reason of foreign goods imported into the Manaus free zone to other parts of Brazil.

May 24. Decree No. 77657 restricted imports in 1976 into the Manaus free zone (other than wheat and petroleum) to US$280 million.

May 26. Order No. 183 of the Ministry of Finance permitted exporters of manufactured goods to classify as operating expenses certain promotional expenditures abroad, including expenditures for the registration of Brazilian trademarks and patents and for the maintenance of offices and warehouses. Remittances for the payment of such expenses would be exempt from the withholding of income tax.

June 2. Interministerial Order No. 192 introduced the requirement of an import certificate for goods imported into the Manaus free zone. Licenses had to be obtained from Cacex prior to shipment, after approval was given by the Manaus Free Zone Superintendency (Suframa).

June 4. The issuance of Brazilian passports, the granting of police exit visas in passports, and the issuance of police exit visas to foreigners permanently residing in Brazil became subject to the payment, in cash, of a deposit of Cr$ 12.000. The payment was also required in respect of each additional person appearing in the holder’s passport. The deposits would be held for one year, without interest or monetary correction. The persons concerned, when purchasing foreign exchange from banks and travel agencies for purposes of travel abroad, were required to produce the receipt of payment of the deposit. Persons exempt from the deposit requirement included students and teachers; athletes: priests and nuns; technicians and specialists whose travel abroad was of national interest to Brazil; artists; and exporters. (Decree-Law No. 1470 and Decree No. 77745.)

June 4. Central Bank Resolution No. 380 and Gecam Communication No. 311 introduced the implementing regulations for the deposit requirement in respect of passports and exit visas.

June 4. Gecam Communication No. 312 prescribed a deposit equivalent to 100 per cent of the value of the exchange transaction in respect of forward exchange contracts for the opening of import letters of credit. Deposits were payable to the Central Bank on the working day following the date of the exchange transaction and would be released on the date of settlement (or, if applicable, of cancellation of the exchange transaction).

June 4. Gecam Communication No. 313 suspended the authorization of registered tourist agencies to issue tickets or vouchers covering expenses of ground transportation and hotels.

June 9. Registered exporting firms were permitted to apply for exemption from the Cr$ 12,000 prior deposit requirement for international travel by their representatives (Cacex Communication No. 552).

June 10. Gecam Communication No. 315 exempted certain import items from the prior deposit requirement on forward purchases of exchange for imports. They included printing paper for newspapers, magazines, and books; fertilizers and agricultural chemicals, as well as raw materials for their production, provided these materials were included in the exemptions from the import deposit requirement established in Central Bank Resolutions Nos. 354 and 358; and goods imported into the Manaus free zone.

June 15. Cacex Communication No. 555 continued the import suspension for superfluous goods until December 31. This Communication was revoked by Cacex Communication No. 556 of June 21.

June 18. International Order No. 218 provided for certain exemptions from the requirement to produce either a receipt showing payment of Cr$ 12,000 on the issuance of a passport or police exit visa, or a certificate of exemption, when purchasing the foreign exchange allocation for travel. The exemptions included holders of passports issued or renewed prior to June 4, 1976 for a period of six months from the date of issuance or renewal; and holders of passports for which a police exit visa was granted prior to June 4, 1976 for a period of six months from the granting of the visa on the passport.

June 21. Cacex Communication No. 556 extended until December 31 the suspension of the issuance of import certificates for items covered by Cacex Communication No. 555, added 32 items to the list of goods regarded as superfluous (while allowing the issue of certificates for 5 items of those originally suspended), and allowed the import of any items covered by foreign financing even if classified as superfluous. Cacex Communications Nos. 543, 546, and 555 were cancelled.

June 21. Order No. 223 of the Ministry of Finance extended export tax incentives to manufacturers supplying machinery and equipment to service companies carrying out operations abroad. Exemption from income tax payable on earnings abroad from the supply of technical assistance, as well as from income arising from fairs and exhibitions was also granted to companies performing the services concerned.

June 23. Order No. 225 of the Ministry of Finance detailed goods which could be accorded customs warehousing facilities on entry into Brazil. The list of goods covered most of those in the tariff schedule. Goods imported under these arrangements for exhibitions and fairs were not affected. Moreover, only products subject to prior import licensing by Cacex were eligible for this treatment.

June 30. Gecam Communication No. 317 provided that, effective July 1, exchange transactions related to coffee exports covered by sales declarations registered by the IBC could be contracted up to two working days before the date of expiration of the period for shipping, where the shipping documents were issued at the same location as the exchange contract, and up to five working days before expiration where these documents were issued at another location.

June 30. Gecam Communication No. 318 provided that, with effect from July 1, advances relating to exchange contracts covered by declarations for the sale of green coffee registered with the IBC could be granted by authorized banks only where the exporter presented, as a guarantee, a warrant representing the physical volume of coffee involved.

July 2. IBC Resolution No. 986 established a contribution quota of US$0.30 a pound for exports of soluble coffee, with effect from July 5.

July 2. Order No. 251 of the Ministry of Finance instituted obligatory registration of importers, as provided for in Decree-Law No. 1427 of December 2, 1975.

July 2. Cacex Communication No. 559 provided, with effect from September 30, that only firms registered in the general registry of exporters and importers of Cacex could engage in foreign trade operations. Both importers and exporters were required to submit to Cacex detailed programs of expected import and export operations.

July 2. The trade agreement with Greece signed on June 9, 1975 came into effect and the provisional trade and payments agreement of 1960 was terminated. Settlements between the two countries were placed on a convertible currency basis. The new agreement was promulgated by Decree No. 78228 of August 12.

July 2. Cacex established an Export Procedures Committee on which representatives of export and trade organizations, banks, and agencies would serve under the chairmanship of the Director of Cacex to make recommendations for the rationalization of export rules and procedures and to prepare measures to facilitate and strengthen the export trade (Cacex Communication No. 560).

July 6. Cacex Communication No. 561 exempted from import duty certain fertilizers when used exclusively in agriculture.

July 8. Gecam Communication No. 320. in conjunction with Gecam Communication No. 315, regulated the deposit requirement of Communication No. 312 and exempted contracts relating to imports of goods linked to drawback transactions authorized by Cacex.

July 9. Cacex Circular Letter No. 1138 listed a number of goods subject to new import measures; most were applicable when the goods were of Paraguayan or Argentine origin, but certain items were affected regardless of origin. The restrictions fell into two categories: (1) For some goods the issue of import licenses was suspended. These included raw cotton (when of non-LAFTA origin), rice, pork, beans (when originating in Paraguay), cotton pads, castor beans, harvesters, butter, corn, and fresh eggs. (2) For other goods import licenses could be obtained only from the Rio de Janeiro office of Cacex; these included acrylonitrite butadrene styrene. garlic, canary seed, manually operated knitting machines, equipment for recreation grounds, incomplete motor vehicles, potatoes, certain fertilizers, live cattle for slaughter, rubber, natural rubber latex, powdered milk, and pharmaceuticals.

July 9. Exports of cottonseed and cottonseed cake and meal were suspended.

July 16. Cacex Communication No. 562 extended the 100 per cent. 360-day import deposit requirement to the placing of goods in Brazilian customs warehouses. Imports of merchandise from customs warehouses were limited to those products listed in Order No. 225 of the Ministry of Finance of June 23. The Communication also regulated the placing of goods in the Manaus free zone and prohibited their transfer to other parts of Brazil without prior government authorization.

July 22. Decree No. 78118 established an import quota of US$20 million a month for the Manaus free zone for the second half of 1976. Thus, the ceiling on imports into the free zone (excluding imports of wheat and petroleum) was increased from US$280 million to US$400 million.

July 26. Gecam Communication No. 322 introduced new regulations affecting foreign currency deposits held with the Central Bank in connection with the unused portion of foreign currency loans brought to Brazil for purposes of leasing operations. (Such loans, when intended for the eventual purchase of leased property, were permitted under Central Bank Resolution No. 351 of November 11, 1975.) The deposits had to be made in the currency of registration of the loan; their total or partial release could take place at the request of the depositor, for the equivalent in cruzeiros, if the foreign exchange was sold to the Central Bank at the swap rate effective on the date of the exchange contract. The deposits would earn interest at the London interbank offered rate for six-month deposits.

July 27. Coffee exporters were permitted to engage in exchange transactions related to futures transactions on foreign commodity exchanges (Gecam Communication No. 323).

August 1. A reciprocal credit agreement with Venezuela came into operation.

August 18. Central Bank Resolution No. 387 exempted from the 100 per cent advance import deposit imports by exporters of manufactures of goods already exempt from customs duties and the IPI tax under Decree-Law No. 1189 of September 24, 1971. (Exemptions under the Decree-Law applied to imports valued at no more than 10 per cent of any increase in exports over the previous year.)

August 18. Order No. 318 of the Ministry of Finance on the basis of Decree No. 1428 established general criteria for import duty and IPI tax concessions to companies having an export program or export commitment.

August 30. The Central Bank issued a manual updating and consolidating existing regulations on exchange transactions.

August 31. Permanent residents of Argentine, Uruguayan, Paraguayan, or Chilean nationality could henceforth travel to Argentina, Uruguay, and Paraguay under the same conditions as Brazilian nationals, i.e., exempt from the Cr$ 12,000 deposit requirement in respect of the issuance of passports and police exit visas. Foreign residents of other nationalities continued to be subject to the requirement.

September 3. IBC Resolution No. 991 established a contribution quota of US$0.50 a pound for exports of soluble coffee, with effect from September 6.

September 6. The Central Bank announced the introduction by the central banks of LAFTA countries of the Latin American Bank Acceptance—ABLA (Gecam Communication No. 326).

September 10. IBC Resolution No. 992 established contribution quotas of US$25.30 and US$35.30 for washed and green coffee, respectively, with effect from October 1. Of the above amounts, US$0.30 was to be deposited within 48 hours of the date of registration at the exchange rate declared; the deposit was not refundable if, for any reason, a sales declaration was cancelled. The deposits were to finance Brazil’s contribution to the International Coffee Organization’s Promotion and Special Funds.

September 13. Exports of soybeans and soybean oil were suspended, and export sales for future delivery against the 1977 crop required the prior authorization of Cacex (Cacex Communication No. 565).

September 27. Cacex Communication No. 569 exempted from advance import deposits, new goods, intermediate products, and raw materials intended for the importer’s own use and directly related to manufactures. The exemption was applicable to an amount equivalent to 10 per cent of any increase in exports over the level in the period 1974–75.

September 29. Seeds and fruits for planting were exempted from the deposit requirement of Gecam Communication No. 312 provided they were exempt from the 100 per cent deposit requirement of Central Bank Resolution No. 354 of December 2, 1975 (Gecam Communication No. 328).

October 5. IBC Resolution No. 996 established a contribution quota of US$0.60 a pound for soluble coffee, with effect from January 1, 1977.

October 6. IBC Resolution No. 997 established contribution quotas of US$30.30 a bag, US$40.30 a bag, and US$0.28 a pound for washed coffee, green coffee, and decaffeinated green coffee, respectively, for transactions registered at the IBC as of October 7.

October 25. Goods purchased in Brazil with foreign currency by travelers were exempted from all federal taxes. Payments with international credit cards also were exempt (Decree No. 1485).

November 1. It was announced that with effect from January 1, 1977, export exchange contracts normally could be liquidated only after receipt of foreign exchange through an account maintained abroad by an authorized bank. Contracts could also be liquidated, however, on delivery of export documents and, in special cases, by the receipt of foreign banknotes or travelers checks. For goods subject to payment of a contribution quota, the authorized bank purchasing the foreign currency export proceeds would be responsible for collection of the amount to be surrendered (Central Bank Resolution No. 391 and Gecam Communication No. 331).

November 1. Maximum commission charges on exchange transactions were fixed as follows: for amounts up to US$500,000, 0.1875 per cent; for amounts between US$500,000 and US$1 million, 0.125 per cent; and for more than US$1 million, 0.0625 per cent (Central Bank Resolution No. 392).

November 1. The Central Bank announced new daily limits for the foreign exchange position of authorized banks. The limits, covering the global position for each bank, were as follows: (1) bought position in foreign exchange, US$500,000; (2) sold position for banks with capital and free reserves of up to Cr$150 million, US$500,000; and (3) for banks with capital and free reserves of more than Cr$150 million, US$5 million. The maximum of the bought exchange position for establishments authorized to operate in the manual market was fixed at US$25,000 for each location. Exchange purchased in excess of the net bought positions detailed above had to be sold to the Central Bank on a daily basis (Central Bank Resolution No. 393).

November 1. The Central Bank issued supplementary regulations dealing with banks’ foreign exchange positions. Within the global limits established under Central Bank Resolution No. 393, banks would also be required to observe limits with respect to currencies other than U.S. dollars. To this effect, a bank’s overall bought position in currency other than U.S. dollars must not exceed 200 per cent of the global limit on its bought position, and the overall sold position must not exceed 20 per cent of the global limit placed on its sold position. Each bank would be free to allocate foreign exchange positions for its various branches and departments within the established overall limit. The base level of capital and free reserves on which the foreign exchange position would be calculated for each bank would be the amounts registered as at June 30, 1976 (Gecam Circular-Letter No. 304).

November 1. The Central Bank announced the introduction of a new classification of exchange transactions, to be effective January 1, 1977 (Gecam Communication No. 333).

November 5. IBC Resolution No. 1000 established a contribution quota of US$1 a pound on soluble coffee, with effect from January 1, 1977.

November 9. Authorized banks no longer required prior approval to purchase the exchange proceeds from exports to countries with which bilateral payments agreements were in force (Gecam Communication No. 335).

November 16. Advances relating to exchange contracts for exports of green coffee could be granted by authorized banks only upon the receipt, as a guarantee, of a quantity of coffee not less than the quantity shown on the sales declaration and not linked to other indebtedness of the exporter. If the coffee was linked to an international transaction of any kind, the bank purchasing the exchange could grant the advance provided that the amount was applied in whole or in part to settlement of the previous debt of the customer (Gecam Communication No. 337).

November 19. IBC Resolution No. 1001 established contribution quotas of US$50 a bag and US$0.35 a pound for green coffee and decaffeinated green coffee, respectively, for transactions to be registered on or after November 22. A nonrefundable amount equivalent to US$5 in respect of the contribution quota on green coffee was to be deposited in cruzeiros within 48 hours from the date of registration, at the exchange rate declared.

December 3. IBC Resolution No. 1002 established a contribution quota of US$1.50 a pound on soluble coffee with effect from March 1, 1977.

December 9. Exports of hides and skins were restricted to one half of sales in the domestic market (Cacex Circular Letter of December 9).

December 10. IBC Resolution No. 1003 established contribution quotas of US$50 a bag and US$0.38 a pound on green coffee and decaffeinated green coffee, respectively, for transactions registered on or after December 13. A nonrefundable amount equivalent to US$5 was to be deposited in cruzeiros, within 48 hours from the date of registration at the exchange rate declared.

December 15. Decree No. 78945 provided that in the fiscal year 1977 the importation, leasing, rental, or purchase on the domestic market of goods of foreign origin by organs and agencies of the direct and indirect Federal Administration and the supervised foundations could only be effected within overall value limits approved by the President. The limits for individual ministries, agencies, and foundations were not to exceed 88 per cent of the overall ceilings for 1976, except for the steel program and the oil sector, which would be subject to separate limits. Import applications accompanied by express statements of approval by the Minister concerned had to be filed with Cacex.

The organs and agencies referred to could import, lease, or rent machinery and equipment, apparatus, instruments, and vehicles of foreign origin only if no similares nacionais existed. Exempt from this provision were goods of LAFTA origin when included in Brazil’s National List, in the special lists for Bolivia, Ecuador, Paraguay, or Uruguay, or covered by a complementarity agreement to which Brazil was a signatory.

The Decree came into force on January 1, 1977. Decrees Nos. 74908, 76184, 76406, 76407, 76408, and 76704 were revoked, as were any other conflicting provisions.

December 20. IBC Resolution No. 1004 established a contribution quota of US$80 a bag on green coffee and decaffeinated green coffee for transactions registered on or after December 21. A nonrefundable amount equivalent to US$8 in respect of the contribution quota was to be deposited in cruzeiros within 48 hours from the date of registration, at the exchange rate declared.

December 20. Cacex Communication No. 574 extended until December 31, 1977 the suspension of the issuance of import certificates for goods enumerated in Cacex Communication No. 556 of June 31 and added some 200 items to the list concerned.

December 20. Decree-Law No. 1499 extended income tax benefits to commercial export companies in respect of net earnings on exports of manufactured products. The benefits would remain in effect until 1980.

December 20. Decree-Law No. 1501 extended until December 31, 1977 the increases in import duties provided for in Decree-Laws Nos. 1334 of June 25. 1974, 1364 of November 28, 1974. and 1421 of October 9. 1975.

December 21. Decree No. 78986 amended Article 1 of Decree No. 64833 of July 17, 1969, which regulated the tax incentives granted by Decree-Law No. 491 of March 5, 1969 to exporters of manufactured products.

December 22. Central Bank Resolution No. 398 introduced a special program for the financing of production for export. (See December 30, below.)

December 23. Decree-Law No. 1507 provided that the emergency tax established by Decree-Law No. 8311 of December 6, 1945 would be collected in the form of the Port Improvement Tax and would be levied on goods moved in ports and from or to ships, when imported from abroad, at a rate of 3 per cent of the commercial value of the goods.

December 24. Decree No. 79028 established an overall limit for 1977 on imports through the Manaus free zone (excluding petroleum and wheat) of US$320 million.

December 27. Decree-Law No. 1509 extended until December 31, 1979 the fiscal incentives to exporters of manufactured goods introduced in Decree-Law No. 1189 of September 24. 1971.

December 30. Cacex Communication No. 580 established the conditions under which firms producing for export could avail themselves of the special program for the financing of production for export provided for in Central Bank Resolution No. 398 of December 22.

December 31. IBC Resolution No. 1005 established a contribution quota of US$100 a bag on green coffee and decaffeinated green coffee for transactions to be registered on or after January 3, 1977. A nonrefundable amount equivalent to US$10 in respect of the contribution quota was to be deposited in cruzeiros within 48 hours from the date of sales registration, at the exchange rate declared.

December 31. Gecam Communication No. 343 changed the contribution quota on exports of quartz chips, with effect from January 1, 1977. to 20 per cent for products of second or third quality; the quota would be unchanged at 40 per cent for products of first quality.

Burma

(Position on December 31, 1976)

Exchange Rate System

The par value is 0.186621 gram of fine gold per Burmese Kyat. The central rate is K 7.74289 = SDR 1, and Burma avails itself of wider margins. On December 31, 1976 the buying and selling rates for the U.S. dollar of the Myanma Foreign Trade Bank, the sole authorized dealer in foreign exchange, were K 6.6658 and K 6.7991, respectively, per U.S. dollar. The Bank’s buying and selling rates for sterling on the same date were K 11.3352 and K 11.5619, respectively, per £ stg. 1.

Administration of Control

Exchange control is administered by the Exchange Control Board in accordance with instructions from the Ministry of Planning and Finance, through the Myanma Foreign Trade Bank. A Foreign Exchange Control Committee headed by the Minister of Planning and Finance is in charge of the allocation of foreign exchange to the public sector. Most exports are handled by the Myanma Export-Import Corporation (MEIC). The MEIC also imports goods for the use of the private sector, whose requirements are determined by the Central Trade Council. Government agencies and departments make imports of goods for their own use, including imports under loan and aid agreements, in the name of the MEIC. Most payments for imports are made in accordance with an annual foreign exchange budget drawn up by the Ministry of Planning and Finance.

Prescription of Currency

Certain settlements with Bangladesh are channeled through a nonresident bank account at the Myanma Foreign Trade Bank, and certain settlements with India are channeled through special rupee accounts in that country. Payments to other countries may be made in any foreign currency or by crediting kyats to an External Account in Burma. Receipts must be collected in convertible currencies or to the debit of an External Account in Burma.

Imports and Import Payments

An import program is drawn up annually as part of the foreign exchange budget. All imports are made by, or in the name of, the MEIC. All imports from Rhodesia and South Africa are prohibited. Also prohibited are imports of a few commodities from any source—principally opium and similar narcotics, monkeys, playing cards, and gold and silver bullion. Most imports are purchased on an f.o.b. basis, and shipments are made on vessels owned or chartered by the Burma Five Star Line whenever possible. All payments for imports are made through the Myanma Foreign Trade Bank.

Payments for Invisibles

All payments for invisibles are subject to licensing. In general, payments for items connected with foreign trade are allowed automatically, and payments for most other purposes are considered on a case-by-case basis. Payments for membership fees to educational or technical institutions abroad and payments for subscriptions to certain foreign periodicals are as a rule allowed freely. Family remittances are permitted only by foreign municipal workers or foreign technicians employed under contract by the Government, the limit being one half of the net salary if the wife is living abroad, and one third of the net salary if the wife is living in Burma. Remittances of income resulting from investment other than that guaranteed under the Investment Act have been suspended. The remittance of pension payments to retired government employees who served the Government as Burmese nationals but took up foreign citizenship before departure from Burma is not permitted. Most personal money order remittances to neighboring countries through post offices are not permitted.

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

Exports and Export Proceeds

Exports are generally effected by the MEIC but some commodities are exported direct by other government agencies and departments. There is a list of prohibited exports which comprises iron and steel, brass, copper, and aluminum and scraps thereof, foreign manufactures, and commodities of domestic origin the conservation of which is desired for domestic requirements. All exports to Rhodesia and South Africa are prohibited. Export proceeds must be obtained in a manner satisfactory to the exchange control authorities: the exchange must be surrendered to the Myanma Foreign Trade Bank within six months from the date of shipment. Certain exports are subsidized through the Export Price Equalization Fund. When exports are made on an f.o.b. basis, buyers are free to choose the carrier, but exports on a c.i.f. basis are usually shipped by the Burma Five Star Line or on vessels nominated by it.

Proceeds from Invisibles

Exchange receipts from invisibles must be surrendered. Travelers may bring in, subject to declaration, any amount in foreign currency; foreign nationals who intend to stay for more than six months must surrender all foreign exchange in their possession unless special permission is given to the contrary. The import of Burmese currency is prohibited.

Capital

Foreign investments in Burma are governed by the provisions of the Union of Burma Investment Act, 1959 and the Investment Rules of February 25, 1960 issued under authority of the Act. Investment proposals are to be considered by an Investment Committee to ascertain whether the proposed enterprise will utilize domestic raw materials, increase domestic employment, conserve foreign exchange, and generally conform to the economic plans of the Government. No private investments have been made under the Act; since February 15, 1963, when the Government announced a new policy of nationalization, permission has not been granted for any foreign private investment in Burma.

The investment law provides for the transfer abroad of profits after taxes and for the withdrawal of imported capital at any time after five years from the time of entry, in annual quotas not exceeding 25 per cent of its original value. In principle, proceeds from the liquidation or sale of an enterprise may also be transferred abroad. All such transfers may, subject to prior approval, be made at the official rate of exchange prevailing at the time of the transaction. However, transfers of capital proceeds from the voluntary liquidation of foreign companies were suspended in July 1963.

All outward transfers of capital require prior approval. Residents are not permitted to remit funds abroad for investment. The repatriation of personal assets and the making of family remittances have been suspended, with minor exceptions, for foreign nationals employed in the private sector; those employed in the public sector may remit their personal savings when leaving the service. When the transfer abroad of payments in favor of nonresidents is not permitted, the authorities can allow such payments to be credited to kyat nonresident accounts. All debits and credits to such accounts require prior permission. The import, export, and transfer of securities involving nonresident interests require individual licenses.

Gold

Residents may hold and negotiate gold jewelry, gold coins, and unworked gold in Burma. Licenses for imports and exports of gold are not granted unless they are effected by or on behalf of the monetary authorities of Burma. Jewelry for personal wear may be brought into Burma subject to customs declaration at the port of arrival. The export of personal jewelry is permitted under license, subject to the condition that the jewelry will be repatriated. No conditions are attached, however, to the taking out of personal jewelry that was declared to the customs when it was brought into Burma.

Changes during 1976

April 1. A number of government agencies and departments were empowered to effect exports of some commodities direct rather than through the intermediary of the Myanma Export-Import Corporation.

April 1. A bank reform became effective creating the Myanma Foreign Trade Bank which was made the sole authorized dealer in foreign exchange.

August 1. An Export Price Equalization Fund came into operation. Exports excluded from the subsidy scheme were those of minor volume and value, as well as gems and jewelry, which were sold at auction at the Gem Emporium.

Burundi

(Position on December 31, 1976)

Exchange Rate System

The par value is 0.00935443 gram of fine gold per Burundi Franc. The central rate is FBu 90.00 = US$1, and Burundi avails itself of wider margins. The exchange rates quoted by the Bank of the Republic of Burundi (the central bank) for the U.S. dollar, the intervention currency, are fixed at FBu 89.55 buying, and FBu 90.55 selling, per US$1. The Bank quotes buying and selling rates for the Belgian franc based on its fixed rates for the U.S. dollar and the official market rates for the U.S. dollar in Brussels; the Bank also quotes buying and selling rates for other specified currencies1 which are based either on its quoted rates for the Belgian franc and the official market rates for the currencies concerned in Brussels, or, for the Kenya shilling, the Rwanda franc, the Tanzania shilling, the Uganda shilling, and the zaïre, on their official parities in terms of SDRs as communicated daily by the International Monetary Fund.

Authorized banks must carry out permitted exchange transactions at the buying and selling rates established by the Bank of the Republic of Burundi for currencies quoted by that Bank; they may agree rates freely with their customers for Uganda shillings.

Administration of Control

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

Prescription of Currency

Settlements with Rwanda and Zaïre are effected through special accounts. With this exception, outgoing payments may be made in any currency, while receipts must be obtained in one of the currencies quoted by the Bank of the Republic of Burundi.

Nonresident Accounts

Nonresident Accounts in Burundi Francs may be maintained, subject to the approval of the central bank, by (1) physical persons of foreign nationality who are temporarily established in Burundi and are not considered as residents, such as diplomats, and (2) juridical persons of foreign nationality with special status, such as foreign embassies and international organizations. These accounts may be credited freely with the proceeds of foreign currencies quoted by the central bank and they may be debited freely for withdrawals of Burundi francs for any normal current payments in Burundi and for conversion into foreign exchange (except banknotes). All other debits and credits require the prior approval of the central bank. These accounts cannot bear interest and must not be overdrawn.

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

Imports and Import Payments

All imports originating in or shipped from Rhodesia are prohibited. All imports except trade samples and merchandise not intended for sale and valued at FBu 20,000 or less require licenses; these are generally issued freely, except for certain used clothing, but importers have been instructed not to order abroad certain goods of which domestic stocks are adequate or that are also produced locally. Applications for licenses must be submitted to the Bank of the Republic of Burundi on a form entitled Import License and Payment Authorization. The approval of such an application constitutes an authorization also to obtain foreign exchange. With certain exceptions, applications for amounts under FBu 100,000 are approved by the authorized banks. Import licenses must be presented to the customs officials when the goods are cleared through customs. The license is valid for a period of 12 months starting at the end of the month following that of validation (6 months for goods shipped from neighboring countries); in special cases, extensions may be granted by the central bank. The number and date of expiration of the license must be entered on the customs clearance form, the Consumption Declaration, a copy of which is then sent to the central bank by the customs office. Sugar, salt, and matches are imported either by public sector agencies or are reserved for Burundi nationals.

Advance deposits calculated on the c.i.f. value are required from private sector importers for certain luxury goods. The deposit on such commodities is 100 per cent; it is not required, however, when the goods are imported in small amounts, i.e., when the amount of the license is less than FBu 10,000. The deposit must be made at the time the import license is validated; it is released when the import payment is made.

In principle, foreign exchange is made available at the time of shipment of the goods. For certain prime necessities, however, documentary credits may be opened for which exchange is supplied immediately. For goods under global licenses, foreign exchange is not made available until after customs clearance.

All imports are subject to a statistical tax of 3 per cent ad valorem, in addition to any applicable customs duties and fiscal duties.

Payments for Invisibles

All payments for invisibles require approval. Shipping insurance on coffee exports normally must be taken out in Burundi francs with brokers or insurers established in Burundi. Upon proof of payment of taxes, transfers of earnings of foreign nationals are freely permitted at rates ranging from 18 per cent up to 60 per cent of the net annual income, depending on the amount of such income; this regime applies to earnings under a labor contract, to income earned in a profession, and to profits earned by any enterprise operated by an individual or a partnership. Private joint-stock companies may freely transfer 50 per cent of net distributed profits to their foreign nonresident stockholders or to stockholders who are resident foreign nationals (to the latter, after payment of all taxes); however, enterprises that have obtained approved status under the Investment Code may obtain a guarantee of full transferability of net declared profits. Persons leaving Burundi permanently are authorized to transfer abroad their holdings of Burundi francs that consist of unremitted savings or of the proceeds of the sale of their personal effects. Transfer of income from rental properties to nonresident owners of foreign nationality is permitted up to 50 per cent of net rental income (after payment of taxes and deduction of 20 per cent for maintenance expenses); resident owners of foreign nationality may remit the same proportion of such income. Residents of Burundi nationality may apply for exchange needed for foreign travel. All travelers may take out up to FBu 2,000 in Burundi banknotes. In addition, residents may freely purchase foreign travel tickets, up to reasonable amounts, against payment in Burundi francs.

Exports and Export Proceeds

All exports to Rhodesia are prohibited. All exports valued at over FBu 3,000 are subject to a prior declaration entitled Declaration of Collection of Foreign Exchange. The Declaration must be presented for certification by the central bank through an authorized bank, with the exception of those for cotton, which may be certified by authorized banks. Exports of arabica coffee are the monopoly of the Burundi Coffee Company, while exports of robusta coffee require the prior approval of the central bank. Declarations are valid for six months, but extensions may be granted by the central bank. Payments must be collected not later than 45 days after the goods have left the country when they are sold to neighboring countries, and not later than 90 days for goods shipped to other destinations. All exchange proceeds from exports must be surrendered to an authorized bank within 8 days from their collection. Virtually all exports, including coffee, are subject to export taxes and a statistical tax. Exports of manufactured goods may receive a refund of 3 per cent of the f.o.b. value, provided that they incorporate raw materials on which import duty has been paid.

Proceeds from Invisibles

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

Capital

The Investment Code of August 25, 1967 provides for fiscal and other benefits for domestic and foreign private investors. New investment that fulfills specified conditions as to amount and economic importance may be granted priority status to which specified privileges are attached, mainly in the form of exemptions from import duties and from taxes on income from the investment. Import duties and taxes may be reduced or suspended for goods and equipment needed for starting a particular project and, during a period of 5 years, for other merchandise needed for the manufacturing operation or for the upkeep of the original investment. Taxes on profits and real estate may be likewise reduced or suspended. Enterprises which are granted priority status may obtain protection against foreign competition, priority in the allocation of government contracts, and a guarantee from the central bank for the free transfer of profits and dividends as well as the repatriation of the invested capital. In addition to these privileges, companies undertaking investments that are considered to be of prime importance to Burundi’s economic development may be granted, under a separate convention, a guarantee that direct taxes on their activities will not be increased for a period of up to 15 years. An Investment Commission under the Secretariat of the Presidency is charged with examining requests for priority status and granting the necessary authorization.

Capital transfers by residents require individual authorization, as does foreign capital on which a repatriation guarantee has been granted. The guarantee is given to foreign exchange imported in any of the currencies quoted by the central bank by resident enterprises for working capital purposes and is valid for one year from the date on which the exchange is surrendered to the central bank through an authorized bank. The guarantee provides for the transfer of the original amount surrendered at the official rate ruling on the day of transfer.

Gold

Dealings in gold coins must be carried out through the central bank, since all private dealing in gold is prohibited. The central bank purchases unrefined gold from domestic producers at FBu 350 a gram. After refining abroad, this gold is included in the official monetary reserves. Imports and exports of gold may be made only by the central bank, with the exception that private firms may be licensed to import gold for dental use.

Changes during 1976

January 1. Private joint-stock companies could freely transfer 50 per cent of net distributed profits to foreign nonresident stockholders or to resident stockholders of foreign nationality, subject in the latter case to prior payment of all taxes.

January 1. The list of goods subject to the 100 per cent advance deposit was modified.

May 3. A central rate of FBu 90.00 = US$1 was established. Burundi continued to avail itself of wider margins. Previously, the parity for the U.S. dollar had been FBu 78.7501 = US$1.

Cameroon

(Position on December 31, 1976)

Exchange System

No par value or central rate for the currency of Cameroon has been established with the Fund. The unit of currency is the CFA Franc,1 which is officially maintained at the rate of CFAF 1 = 0.02 French franc. Exchange transactions in French francs, the intervention currency, between the Banque des Etats de l’Afrique Centrale (BEAC) and commercial banks take place at the rate of CFAF 1 = F 0.02, free of commission. Exchange rates for currencies of countries outside the French Franc Area are based on the fixed rate for the French franc and the Paris exchange market rate for the currency concerned, and include a commission.

With the exception of those relating to gold, Cameroon’s exchange control measures generally do not apply to (1) France (and its Overseas Departments and Territories, except the French Territory of the Afars and the Issas) and Monaco; and (2) all other countries whose bank of issue is linked with the French Treasury by an Operations Account (Benin, the Central African Empire, Chad, the People’s Republic of the Congo, Gabon, Ivory Coast, Mali, Niger, Senegal, Togo, and Upper Volta). Hence all payments to these countries may be made freely. All countries, except Cameroon itself, are considered foreign countries. All financial transfers in excess of CFAF 500,000 to countries of the French Franc Area must be declared to the authorities for statistical purposes.

Administration of Control

Exchange control is administered by the Directorate of Economic Controls and External Finance in the Ministry of Finance, which also supervises borrowing and lending abroad, the issuing, advertising, or offering for sale of foreign securities in Cameroon, and inward and outward direct investment. Exchange transactions relating to all countries must be effected through authorized intermediaries, i.e., the Postal Administration and authorized banks. Import licenses are issued by the Ministry of Economy and Planning, while export licenses require the visa of the Ministry of Finance.

Prescription of Currency

Cameroon is an Operations Account country of the French Franc Area, since the BEAC maintains an Operations Account with the French Treasury; settlements with France (as defined above), Monaco, and the other Operations Account countries of the French Franc Area are made in CFA francs, French francs, or the currency of any other Operations Account country. Settlements with all other countries are usually made through correspondent banks in France in any of the currencies of those countries or in French francs through Foreign Accounts in Francs. All settlements between Cameroon and Rhodesia and South Africa are prohibited.

Nonresident Accounts

The regulations pertaining to nonresident accounts are based on those applied in France. BEAC banknotes may be credited to Foreign Accounts in Francs when mailed direct to the National Directorate of the BEAC in Yaoundé by the foreign correspondents of authorized banks.

Imports and Import Payments

Imports from Portugal, Rhodesia, and South Africa are prohibited. The import from all sources of certain “controlled” goods requires a special authorization (autorisation spéciale d’importation), in addition to an import license. All other imports, irrespective of origin, are subject to licensing when valued at CFAF 500,000 or more, but licenses for these are issued freely.

All import transactions must be domiciled with an authorized bank when their value exceeds CFAF 50,000. Import licenses entitle importers to purchase the necessary exchange, provided that the shipping documents have been submitted to the authorized bank.

Payments for Invisibles

Payments in excess of CFAF 500,000 for invisibles to France (as defined above), Monaco, and the other Operations Account countries in the French Franc Area require prior declaration but are permitted freely; those to other countries are subject to the approval of the Ministry of Finance. Payments for invisibles related to trade are permitted freely when the basic trade transaction has been approved or does not require authorization. Transfers of income accruing to nonresidents in the form of profits, dividends, and royalties are also permitted freely, subject to declaration, when the basic transaction has been approved. For tourist travel, residents traveling to countries other than France (as defined above), Monaco, and the other Operations Account countries of the French Franc Area may obtain an exchange allocation of an amount equivalent to CFAF 200,000 a person a year; any foreign exchange remaining after return to Cameroon must be surrendered. For business travel, the corresponding allocation is the equivalent of CFAF 15,000 a day, subject to a maximum of CFAF 450,000 a trip.

The transfer of rent from real property owned in Cameroon by foreign nationals is limited in principle to 50 per cent of the income declared for taxation purposes, net of tax. Remittances for current repair and management of real property abroad are normally limited to the equivalent of CFAF 200,000 every two or three years. Depending on family status, the transfer of 20 per cent or 50 per cent of the salary of a foreigner working in Cameroon is permitted upon presentation of the appropriate pay voucher, provided that the transfer takes place within one month of the pay period concerned. Except in the case of foreigners working in Cameroon temporarily, payments to foreign countries of insurance premiums are not permitted if the same type of insurance is available in Cameroon. Resident and nonresident travelers going to countries outside the French Franc Area may take out up to CFAF 20,000 in BEAC banknotes. Travelers to other countries of the French Franc Area may, subject to prior declaration, take out any amount in BEAC banknotes.

Nonresident travelers may take out foreign banknotes and coins up to the amount declared by them on entry, or up to CFAF 50,000 if no declaration was made.

Exports and Export Proceeds

All exports to Portugal, Rhodesia, and South Africa are prohibited. Export transactions must be domiciled with an authorized bank when valued at CFAF 50,000 or more and exports to all countries are subject to license, which requires the approval of the Ministry of Finance. Proceeds from exports to all countries must be collected within 30 days of the date of arrival at their destination, and proceeds received in currencies other than those of France or an Operations Account country must be surrendered within a month after collection.

Proceeds from Invisibles

Proceeds from transactions in invisibles with France (as defined above), Monaco, and other Operations Account countries in the French Franc Area may be retained. All amounts due from residents of other countries in respect of services and all income earned in those countries from foreign assets must be collected within a month of the due date and surrendered within a month of collection if received in foreign currency. Resident and nonresident travelers may bring in any amount of banknotes and coins issued by the BEAC, the Bank of France, or a bank of issue maintaining an Operations Account with the French Treasury, as well as any amount of foreign banknotes and coins (except gold coins) of countries outside the French Franc Area.

Capital

Capital movements between Cameroon and France (as defined above), Monaco, and other Operations Account countries in the French Franc Area are free of exchange control; capital transfers to all other countries require exchange control approval and are restricted, but capital receipts from such countries are permitted freely. Emigrants to countries outside the French Franc Area may transfer abroad their full savings, provided that they have met their tax obligations.

Special controls (additional to any exchange control requirements that may be applicable) are maintained over borrowing and lending abroad, over inward and outward direct investment, and over the issuing, advertising, or offering for sale of foreign securities in Cameroon; these controls relate to the transactions themselves, not to payments or receipts. With the exception of those over the sale or introduction of foreign securities in Cameroon, the control measures do not apply to relations with France (as defined above), Monaco, and those other countries whose bank of issue is linked with the French Treasury by an Operations Account. The provisions of Decree No. 67/DF/365, which introduced these special controls, have been suspended insofar as they are contrary to Decree No. 74/249, on which the present exchange controls are based. All foreign securities, foreign exchange, and titles embodying claims on nonresidents must be deposited with an authorized intermediary, whether they belong to residents or nonresidents.

Direct investments abroad2 require the prior approval of the Ministry of Finance, unless they take the form of a capital increase resulting from reinvestment of undistributed profits; the full or partial liquidation of such investments requires only a report ex post to the Minister of Finance, unless the operation involves the relinquishing of a participation that had previously been approved as constituting the making of a direct investment abroad. Foreign direct investment in Cameroon3 require prior declaration to the Minister of Finance, unless they take the form of a capital increase resulting from reinvestment of undistributed profits; the Minister has a period of two months from receipt of the declaration during which he may request the postponement of the projects submitted to him. The full or partial liquidation of direct investments in Cameroon requires only reporting ex post to the Minister of Finance, unless the operation involves the relinquishing of a participation that had previously been approved as constituting the making of a direct investment in Cameroon. Both the making and the liquidation of direct investments, whether these are Cameroonian investments abroad or foreign investments in Cameroon, must be reported to the Minister of Finance within 20 days following each operation. Direct investments are defined as investments implying control of a company or enterprise. Mere participation is not considered as direct investment, provided that it does not exceed 20 per cent of the capital of a company whose shares are quoted on a stock exchange.

The issuing, advertising, or offering for sale of foreign securities in Cameroon requires prior authorization by the Minister of Finance, and must subsequently be reported to him. Exempt from authorization, however, and subject only to an ex post report, are operations in connection with (1) loans backed by a guarantee from the Cameroonian Government, and (2) shares similar to securities whose issue, advertising, or offering for sale in Cameroon has previously been authorized.

Borrowing abroad by physical or juridical persons, whether public or private persons, whose normal residence or registered office is in Cameroon, or by branches or subsidiaries in Cameroon of juridical persons whose registered office is abroad, requires prior authorization by the Minister of Finance and must subsequently be reported to him. The following are, however, exempt from this authorization, and require only a report ex post: (1) loans directly connected with the rendering of services abroad by the persons or firms mentioned above, or with the financing of commercial transactions either between Cameroon and countries abroad or between foreign countries, in which these persons or firms take part; and (2) loans contracted by registered banks and credit institutions.

Lending abroad by physical and juridical persons, whether public or private persons, whose normal residence or registered office is in Cameroon, or by branches or subsidiaries in Cameroon of juridical persons whose registered office is abroad, requires prior authorization by the Minister of Finance and must subsequently be reported to him. The following are, however, exempt from prior authorization and are subject only to a report ex post: (1) loans constituting a direct investment abroad for which prior approval has been obtained, as indicated above; (2) loans directly connected with the rendering of services abroad by the persons or firms mentioned above, or with the financing of commercial transactions either between Cameroon and countries abroad or between foreign countries, in which these persons or firms take part; and (3) loans not exceeding CFAF 500,000, provided the maturity does not exceed two years and the rate of interest does not exceed 6 per cent a year.

An Investment Code promulgated in 1960 and revised in April 1964 establishes four categories of fiscal and other benefits which may be granted to both foreign and domestic firms undertaking approved new industrial or agricultural projects in Cameroon. The scope and duration of the benefits vary depending on the size of the investment, the degree to which it helps implement the economic and social development plan, and its importance to national economic growth. Category A permits mainly duty-free entry of capital goods and raw materials required for manufacturing and processing. Under Category B, firms may be entitled to the benefits of Category A and also to exemption for 5 years from the tax on industrial and commercial profits and from various other taxes and fees. Under Category C, large companies may conclude an “establishment agreement” with the Government, under which special conditions for the operations of the company are agreed and the nature and extent of tax concessions are determined. Normally, an “establishment agreement” is valid for 25 years and defines also the legal, economic, and financial guarantees granted to the company, including the assurance of stable conditions for financial transfers and marketing of goods. Category D grants to firms making investments of particular significance to the national economy the benefits of Category C, as well as a guarantee of stability of taxation for up to 25 years. A decree of August 30, 1973 provides that at least one third of the share capital of each banking or insurance institution should be held by the public sector and that its headquarters should be in Cameroon. This decree also requires banks with foreign majority participation to submit to the monetary authorities information on all their current transactions abroad and to obtain prior approval for any changes in the structure of their equity holdings.

Gold

Residents are free to hold, acquire, and dispose of gold jewelry in Cameroon. They require the approval of the Directorate of Mines to hold gold in any other form. Such approval is normally given only to industrial users, including jewelers. Newly mined gold must be declared to the Directorate of Mines, which authorizes either its exportation or its sale to domestic industrial users; exports are made only to France. Imports and exports of gold require prior authorization by the Directorate of Mines and the Minister of Finance, which is seldom granted for imports. Exempt from this requirement are (1) imports and exports by or on behalf of the monetary authorities, and (2) imports and exports of manufactured articles containing a minor quantity of gold (such as gold-filled or gold-plated articles). Both licensed and exempt imports of gold are subject to customs declaration.

Changes during 1976

January 1. The tariff preferences accorded to imports from EEC countries were eliminated from the common external customs tariff of the Central African Customs and Economic Union.

January 1. All imports of woven textiles required prior authorization from the Ministry of Economy and Planning.

March 15. France again suspended its participation in the European common margins arrangement; the parity between the CFA franc and the French franc remained unchanged.

July 3. Further import items became subject to the additional import tax; the tax was raised for some other imports.

July 8. Law No. 76/9 provided that, in principle, foreign commercial and industrial firms, or affiliates of such firms, operating in Cameroon must set up their headquarters and accounts in Cameroon.

August 21. Decree No. 76/363 lifted the prohibition on settlements with Portugal.

Canada

(Position on December 31, 1976)

Exchange Rate System

The par value is 0.822021 gram of fine gold per Canadian Dollar. Since May 31, 1970, however, the authorities have not maintained the exchange rate of the Canadian dollar within margins. The closing free market rate for the U.S. dollar on December 31, 1976 was Can$1.0088 per US$1. Canada has no exchange restrictions on foreign payments other than certain restrictions on payments to Rhodesia.

On March 25, 1952, Canada notified the Fund that it was prepared to accept the obligations of Article VIII, Sections 2, 3, and 4, of the Fund Agreement.

Prescription of Currency

No prescription of currency requirements are in force. In implementation of UN Security Council Resolution No. 253(68) of May 29, 1968, payments and transfers to Rhodesia are restricted.

Imports and Import Payments

Payments and transfers abroad may be made freely. Import licenses are required only for certain drugs, a few agricultural items, certain textile products and clothing, certain endangered species of fauna and flora, natural gas, and material and equipment for the production or use of atomic energy. For some of the agricultural items, such as certain dairy products, licenses are generally not being issued. Commercial imports of certain commodities from any source are generally prohibited; these include oleomargarine, used automobiles, secondhand aircraft, certain periodicals, and goods of Rhodesian origin.

Exports and Export Proceeds

The surrender of the proceeds from exports is not required, and exchange receipts are freely disposable. For supply reasons, the export of a few commodities to all destinations is under export control. This includes the export of crude petroleum, certain petroleum products, and natural gas, most of which is sold to the United States. For security reasons, the export of certain specified commodities to all destinations except the United States is under export control. All exports to Albania, Bulgaria, the People’s Republic of China, Czechoslovakia, the German Democratic Republic and East Berlin, Hungary, North Korea, Mongolia, Poland, Romania, Viet Nam, and the U.S.S.R. are subject to control, although certain goods of Canadian origin may be exported to these destinations under the authority of a general export permit. The export of all goods to Rhodesia is prohibited, except medical supplies, news material, educational equipment and materials for use in educational institutions, and books, magazines, and periodicals.

Payments for and Proceeds from Invisibles

No requirements are imposed on exchange payments for, or exchange receipts from, invisibles. However, travelers may not take out any Canadian silver coins minted in or prior to 1968.

Capital

No exchange control requirements are imposed on capital receipts or payments by residents or nonresidents. Apart from restrictions in certain specific sectors such as banking, insurance, and uranium, inward direct investment is governed by the Foreign Investment Review Act. It stipulates that the acquisition of control over a Canadian business enterprise by persons other than Canadians, or the establishment of a new business by such persons not previously established in Canada, or whose proposed new business is unrelated to their existing business in Canada, will be allowed if it is assessed that such investments are of significant benefit to Canada. A Foreign Investment Review Agency is charged with the review of proposed takeovers and the screening of the establishment of new businesses. There are no controls over outward direct investment, nor over inward or outward portfolio investment.

Gold

Residents may freely purchase, hold, and sell gold in any form, at home or abroad. Exports of gold are subject to the following conditions: (1) exports to Albania, Bulgaria, the People’s Republic of China, Czechoslovakia, the German Democratic Republic and East Berlin, Hungary, North Korea, Mongolia, Poland, Romania, Viet Nam, and the U.S.S.R. are included among those exports subject to control and require a license from the Department of Industry, Trade and Commerce; (2) gold of U.S. origin may only be re-exported from Canada when covered by a permit issued by the Minister of Industry, Trade and Commerce under the authority of the Export and Import Permits Act; and (3) movements of gold to or from Rhodesia are prohibited. Commercial imports of articles containing minor quantities of gold, such as watches, are unrestricted and free of license. A legal tender gold coin with a face value of Can$100 was issued on June 1, 1976.

Changes during 1976

January 1. The quota on crude oil exports to the United States was reduced from 700,000 barrels a day to 510,000 barrels a day. Further reductions in these quotas occurred during the remainder of 1976; at the beginning of 1977 the quota was set at 305,000 barrels a day. Moreover, export taxes on crude oil and petroleum products continued to be adjusted in response to changes in oil prices at home and abroad; the export tax on crude oil was reduced from Can$4.50 a barrel at the beginning of 1976 to Can$3.75 by year-end.

February 26. The Government announced its decision not to proceed with the proposed special levy on excess profits derived from exports, as part of the anti-inflation program of October 1975. However, the Government would monitor developments for signs of diversion of goods to export markets at the expense of adequate domestic supply. Also, the Anti-Inflation Board would maintain surveillance over the profits of exporting firms and the way in which they were reinvested.

April 1. The global quota for cheese established under the Export and Import Permits Act in conjunction with the Canadian supply management program for manufacturing milk was converted to a dairy year basis. The quota established for April 1, 1976 to March 31, 1977 was 50 million pounds.

April 15. Measures were introduced under GATT Article XIX aimed at protecting the domestic clothing and yarn industries, namely (1) a global import quota, with retroactive effect from January 1, to be maintained for three years on 100 per cent acrylic worsted spun yarn within a specified price range, and (2) extension up to 1978 of the global import quota on men’s and boys’ shirts.

May 25. Under the budget proposals the temporary tariff cuts first introduced in February 1973 on imports valued at Can$1.5 billion were extended to June 30, 1977.

June 1. A legal tender gold coin with a face value of Can$100 was issued.

June 10. It was announced that the export price of natural gas would be raised in two stages from Can$1.60 per thousand cubic feet to Can$1.80 on September 10, 1976 and to Can$1.94 on January 1, 1977.

July 1. A three-year global import quota was imposed on work gloves valued at Can$7.00 a dozen or less.

July 8. A surtax effective for six months was imposed on imports of textured polyester filament yarns; the surtax would be equal to the difference between the export price of these imports and corresponding unit values set by the Canadian Government.

July 29. Imports of winter outerwear from the People’s Republic of China, the Republic of China, Hong Kong, Korea, and the Philippines were suspended pending consultations with these exporting countries.

October 8. Negotiations were completed with the Republic of China, Hong Kong, Korea, and the Philippines on restraining exports of winter outerwear.

October 8. Interim quota limits were introduced on imports of double-knit fabrics from all countries.

October 17. A global quota for imports of beef and veal was established for the period October 17 to December 31. The amount of the quota was set at 17.5 million pounds, divided on a fixed country-share basis among Australia, New Zealand, and the United States.

October 18. Import licensing requirements under the Import Control List were extended for surveillance purposes to imports of worsted fabrics from all except eight specified countries, namely, France, the Federal Republic of Germany, Italy, Japan, the Netherlands, Switzerland, the United Kingdom, and the United States.

November 29. A global import quota was announced for 1977 with respect to imports of a range of clothing items; such imports in 1977 would be limited to the level in 1975.

December 23. The surtax on textured polyester filament yarn was lifted.

December 24. The Government announced quotas for 1977 on imports of beef and veal from the United States, Australia, and New Zealand.

Cape Verde1

(Position on December 31, 1976)

Exchange Rate System

No par value or central rate has been established for the currency of Cape Verde, the Cape Verde Escudo, which is at par with the Portuguese escudo. The day-to-day rates for foreign currencies are fixed on the basis of the rates quoted by the Bank of Portugal on the previous day. The rates of the Bank of Cape Verde (the central bank) for the U.S. dollar on December 31, 1976 were C.V. Esc 31.42 buying, and C.V. Esc 31.98 selling, per US$1.

Administration of Control

All foreign exchange transactions are under the control of the Directorate of Foreign Relations and Exchange Control (DRECC), which is a department of the central bank. All imports, exports, and re-exports are subject to licensing, except for transactions not exceeding C.V. Esc 2,500. Foreign exchange transactions are effected through authorized dealers, including the surrender of foreign exchange proceeds. Authorized dealers may hold foreign exchange up to a maximum amount decided by the DRECC. Foreign exchange in excess of this amount must be surrendered to the central bank.

Prescription of Currency

The central bank determines the currency in which export proceeds should be repatriated. Cape Verde has a bilateral payments agreement with Guinea-Bissau.

Imports and Import Payments

All imports are subject to licensing, except for transactions not exceeding C.V. Esc 2,500. Licenses are issued by the National Directorate of Commerce in the Ministry of Economy and are generally valid for 180 days. The provision of foreign exchange is guaranteed when the licenses are approved by the central bank. Licenses are granted liberally for imports of essential commodities such as foodstuffs, petroleum products, and construction materials. Imports of nonessentials are restricted.

Payments for Invisibles

All payments for invisibles require prior authorization. Transfers for tourism are limited to a maximum of C.V. Esc 6,000 a person a year (C.V. Esc 3,000 for children less than 15 years old). When traveling accompanied by his family, a Cape Verde resident may take out in foreign currency up to C.V. Esc 6,000 plus C.V. Esc 4,000 for each member less than 15 years old but the total transfer for each family should not exceed C.V. Esc 20,000. Cape Verdean nationals studying abroad are allowed up to a maximum of C.V. Esc 6,000 on leaving the country and thereafter C.V. Esc 5,000 a month. The equivalent of C.V. Esc 20.000 is authorized for each business trip and C.V. Esc 15,000 a trip for medical treatment. These latter amounts may be increased upon presentation of evidence of need. Transfers by foreigners who are technical assistance personnel working in Cape Verde are authorized within the limits specified in the individual contract. Requests by other foreigners are examined on a case-by-case basis. The export of domestic currency by travelers is restricted to C.V. Esc 500 a person. Foreign travelers may bring in any amount of foreign currency but may re-export only the amount of currency declared upon entry.

Exports and Export Proceeds

All exports are subject to licensing, except for transactions not exceeding C.V. Esc 2,500. Export proceeds must be repatriated within six months from the date of issuance of the license.

Capital

Any private capital transaction must be approved in advance by the DRECC, but imported capital may be re-exported without limitation. The export of resident-owned capital is not normally permitted.

Gold

Imports, exports, or re-exports of gold either in coins or bars requires prior licensing by the monetary authorities.

Changes during 1976

July 26. A bilateral payments agreement with Guinea-Bissau entered into force. The swing limit was set at US$250,000.

Central African Empire

(Position on December 31, 1976)

Exchange System

No par value or central rate for the currency of the Central African Empire has been established with the Fund. The unit of currency is the CFA Franc,1 which is officially maintained at the rate of CFAF 1 = 0.02 French franc. Exchange transactions in French francs, the intervention currency, between the Banque des Etats de l’Afrique Centrale (BEAC) and commercial banks take place at the rate of CFAF 1 = F 0.02, free of commission. Exchange rates for foreign currencies are based on the fixed rate for the French franc and the Paris exchange market rate for the currency concerned.

With the exception of those relating to gold, the Central African Empire’s exchange control measures do not apply to (1) France (and its Overseas Departments and Territories, except the French Territory of the Afars and the Issas) and Monaco; and (2) all other countries whose bank of issue is linked with the French Treasury by an Operations Account (Benin, Cameroon, Chad, the People’s Republic of the Congo, Gabon, Ivory Coast, Mali, Niger, Senegal, Togo, and Upper Volta). Hence, all payments to these countries may be made freely. All other countries, except the Central African Empire itself, are considered foreign countries, and in principle financial relations only with foreign countries are subject to exchange control.

All remittances to non-BEAC countries are subject to a commission of 0.25 per cent; the commission is applicable also to the purchase of banknotes.

Administration of Control

All draft legislation, directives, correspondence, and contracts having a direct or indirect bearing on the finances of the State require the prior approval of the Minister of Finance (the Deputy Prime Minister in charge of the Public Treasury and Finance), who has delegated his approval authority to the Director of the Budget. The Office of Foreign Financial Relations in the Ministry of Finance supervises borrowing and lending abroad, the issuing, advertising, or sale of foreign securities in the Central African Empire, and inward and outward direct investment. Exchange control is administered by the Minister of Finance, who has delegated some of his approval authority to the BEAC2, to the authorized banks, and to the Postal Administration. All exchange transactions relating to foreign countries must be effected through authorized banks. Import and export licenses are issued by the Directorate of Foreign Trade in the Ministry of Commerce and Industry, except those for gold, which are granted by the BEAC.

Prescription of Currency

The Central African Empire is an Operations Account country of the French Franc Area, since the BEAC maintains an Operations Account with the French Treasury; settlements with France (as defined above), Monaco, and the other Operations Account countries of the French Franc Area are made in CFA francs, French francs, or the currency of any other institute of issue that maintains an Operations Account with the French Treasury. Settlements with all other countries are usually made in any of the currencies of those countries or in French francs through Foreign Accounts in Francs.3

Nonresident Accounts

The regulations pertaining to nonresident accounts are based on those applied in France. The principal nonresident accounts are Foreign Accounts in Francs. BEAC banknotes received by the foreign correspondents of authorized banks and mailed direct to the BEAC agency in Bangui by the Bank of France or the BCEAO may be credited freely to Foreign Accounts in Francs.

Imports and Import Payments

All imports from Portugal, Rhodesia, and South Africa are suspended. The import from all countries of a few commodities also produced domestically is prohibited. The import of certain foodstuffs is not authorized unless local production of these commodities is inadequate. Imports of certain goods, when not originating in a member country of the Central African Customs and Economic Union (UDEAC), may be made only in given ratios to purchases of the local product. The import of firearms is prohibited irrespective of origin. All other imports from countries in the French Franc Area may be made freely and without an import license. All other imports from EEC countries (the original member states) also are free from quantitative restrictions. Imports from all countries outside the French Franc Area are subject to licensing within the framework of an annual import program of an indicative character.

All import transactions relating to foreign countries must be domiciled with an authorized bank. The import license entitles importers to purchase the necessary exchange, provided that the shipping documents are submitted to the authorized bank.

Payments for Invisibles

Payments for invisibles to France (as defined above), Monaco, and the other Operations Account countries in the French Franc Area are permitted freely; those to other countries are subject to approval. For many types of payment the approval authority has been delegated to authorized banks. Payments for invisibles related to trade are permitted freely when the basic trade transaction has been approved or does not require authorization. Transfers of income accruing to nonresidents in the form of profits, dividends, and royalties are also permitted freely when the basic transaction has been approved.

Resident tourists traveling to countries other than France (as defined above), Monaco, and the other Operations Account countries of the French Franc Area may obtain an exchange allocation of an amount equivalent to CFAF 50,000 a year for each person: of this allocation, an amount equivalent to CFAF 25,000 may be taken out in foreign banknotes. Any exchange in excess of the equivalent of CFAF 5,000 that remains after return to the Central African Empire must be surrendered. For business travel to foreign countries, there is a special allocation of the equivalent of CFAF 10,000 a person a day, subject to a maximum of CFAF 100,000 a trip, for travel to certain listed countries; the allocation is CFAF 15,000 a day, up to CFAF 150,000 a trip, for business travel to any other foreign country; of this allocation, an amount equivalent to CFAF 5,000 may be taken out in foreign banknotes.

The transfer of the entire net salary of a foreigner working in the Central African Empire is permitted upon presentation of the appropriate pay voucher, provided that the transfer takes place within three months of the pay period. Travelers going to foreign countries may take out up to a maximum of CFAF 10,000 in BEAC banknotes, French banknotes, and banknotes issued by any other institute of issue maintaining an Operations Account with the French Treasury. Travelers to other countries may take out any amount in BEAC banknotes.

Nonresident travelers may take out foreign currency and other foreign means of payment up to the amount declared by them on entry; they may reconvert up to CFAF 50,000 in BEAC banknotes into foreign currency.

Exports and Export Proceeds

All exports to Portugal, Rhodesia, and South Africa are suspended. All exports of cotton, coffee, corn, tobacco, peanuts, palm oil, meat, and diamonds require a license. All other exports to countries in the French Franc Area may be made freely. All exports to countries outside the French Franc Area require licenses, which are issued freely.

Proceeds from exports to foreign countries must be collected and repatriated within one month from the due date; the latter must not be later than 90 days after the arrival of the goods at their destination, unless special authorization is obtained. Export proceeds received in currencies other than those of France or another Operations Account country must be surrendered. All export transactions relating to foreign countries must be domiciled with an authorized bank.

Proceeds from Invisibles

Proceeds from transactions in invisibles with France (as defined above), Monaco, and the other Operations Account countries in the French Franc Area may be retained. All amounts due from residents of other countries in respect of services and all income earned in those countries from foreign assets must be collected within a month of the due date and, if received in foreign currency, surrendered within a month of the date of receipt. Resident and nonresident travelers may bring in any amount of banknotes and coins issued by the BEAC, the Bank of France, or any other bank of issue maintaining an Operations Account with the French Treasury, as well as any amount of foreign banknotes and coins (except gold coins) of countries outside the French Franc Area.

Capital

Capital movements between the Central African Empire and France (as defined above), Monaco, and the other Operations Account countries in the French Franc Area are free of exchange control; capital transfers to all other countries require exchange control approval and are restricted, but capital receipts from such countries are permitted freely. All foreign borrowing by the Government or its public and semipublic enterprises, as well as all foreign borrowing with a government guarantee, requires the prior approval of the Director of the Budget within the Ministry of Finance.

Special controls (additional to any exchange control requirements that may be applicable) are maintained over borrowing and lending abroad, over inward and outward direct investment, and over the issuing, advertising, or offering for sale of foreign securities in the Central African Empire: these controls relate to the transactions themselves, not to payments or receipts. With the exception of those over the sale or introduction of foreign securities in the Central African Empire, the control measures do not apply to relations with France (as defined above). Monaco, and those other countries whose bank of issue is linked with the French Treasury by an Operations Account.

Direct investments abroad4 require the prior approval of the Ministry of Finance, unless they take the form of a capital increase resulting from reinvestment of undistributed profits; the full or partial liquidation of such investments also requires the prior approval of the Ministry of Finance unless the operation involves the relinquishing of a participation that had previously been approved as constituting the making of a direct investment abroad. Foreign direct investments in the Central African Empire5 must be declared to the Minister of Finance unless they take the form of capital increase resulting from reinvestment of undistributed profits; the Minister has a period of two months from receipt of the declaration during which he may request the postponement of the projects submitted to him. The full or partial liquidation of direct investments in the Central African Empire must also be declared to the Minister, unless the operation involves the relinquishing of a participation that had previously been approved as constituting the making of a direct investment in the Central African Empire. Both the making and the liquidation of direct investments, whether these are Central African Empire investments abroad or foreign investments in the Central African Empire, must be reported to the Minister within 20 days following each operation. Direct investments are defined as investments implying control of a company or enterprise. Mere participation is not considered as direct investment, provided that it does not exceed 20 per cent in the capital of a company whose shares are quoted on a stock exchange.

The issuing, advertising, or offering for sale of foreign securities in the Central African Empire requires prior authorization by the Minister of Finance. Exempt from authorization, however, are operations in connection with (1) loans backed by a guarantee from the Central African Empire Government and (2) shares similar to securities whose issuing, advertising, or offering for sale in the Central African Empire has previously been authorized.

Borrowing abroad by physical or juridical persons, whether public or private persons, whose normal residence or registered office is in the Central African Empire, or by branches or subsidiaries in the Central African Empire of juridical persons whose registered office is abroad, requires prior authorization by the Minister of Finance. The following are, however, exempt from this authorization: (1) loans constituting a direct investment abroad for which prior approval has been obtained, as indicated above; (2) loans directly connected with the rendering of services abroad by the persons or firms mentioned above, or with the financing of commercial transactions either between the Central African Empire and countries abroad or between foreign countries, in which these persons or firms take part; (3) loans contracted by registered banks; and (4) loans other than those mentioned above, when the total amount outstanding of these loans does not exceed CFAF 50 million for any one borrower. The contracting of loans referred to under (4) that are free of authorization, and each repayment thereon, must be reported to the Office of Foreign Financial Relations within 20 days of the operation, unless the total outstanding amount of all loans contracted abroad by the borrower is CFAF 500,000 or less.

Lending abroad by physical or juridical persons, whose normal residence or registered office is in the Central African Empire, or by branches or subsidiaries in the Central African Empire of juridical persons whose registered office is abroad, requires prior authorization by the Minister of Finance. The following are, however, exempt from this authorization: (1) loans granted by registered banks and (2) other loans when the total amount outstanding of these loans does not exceed CFAF 50 million for any one lender. The making of loans that are free of authorization, and each repayment thereon, must be reported to the Office of Foreign Financial Relations within 20 days of the operation except when the amount of the loan granted abroad by the lender is less than CFAF 500,000.

Under Law No. 62/355 of February 19, 1963 (as amended by Ordinance No. 69/47 of September 2, 1969) and UDEAC Decision No. 18/65 of December 14, 1965, industrial, tourist, agricultural, and mining enterprises (both foreign and domestic) established in the Central African Empire are granted, under certain conditions, reduced duties and taxes on the import of specified equipment; in addition, certain enterprises receive exemption from direct taxes on specified income.

The law also provides for three categories of preferential treatment in accordance with which fiscal and other privileges may be accorded to firms investing in new enterprises or in the expansion of existing ones in most sectors of the economy, except the commercial sector. Requests for approval for preferential treatment must be submitted to the Minister of Industry, who is the Chairman of the Investment Commission which considers the application. If a positive decision has been given by the Commission, the proposed authorization is submitted to the Council of Ministers. Preferential treatments A and C are granted by decree issued by the Council of Ministers. Preferential treatment B is granted by an Act of the Board of Directors of the former Equatorial Customs Union upon the recommendation of the Council of Ministers.

Gold

Residents are free to hold, acquire, and dispose of gold in any form in the Central African Empire. Imports and exports of gold from or to any other country require a license, which is seldom granted; in practice, imports and exports are made by an authorized purchasing office. Exempt from prior authorization are (1) imports and exports by or on behalf of the Treasury and (2) imports and exports of manufactured articles containing a minor quantity of gold (such as gold-filled or gold-plated articles). Both licensed and exempt imports of gold are subject to customs declaration. Certain companies have been officially appointed as Offices for the Purchase, Import, and Export of Gold and Raw Diamonds.

Changes during 1976

January 1. The tariff preferences accorded to imports from EEC countries were eliminated from the common external customs tariff of the UDEAC.

January 1. The export tax on diamonds was modified by Ordinances Nos. 75/094 and 75/095 of December 31, 1975.

March 15. The parity between the CFA franc and the French franc remained unchanged when France suspended its participation in the European common margins arrangement.

Chad

(Position on December 31, 1976)

Exchange System

No par value or central rate for the currency of Chad has been established with the Fund. The unit of currency is the CFA Franc,1 which is officially maintained at the rate of CFAF 1 = 0.02 French franc. Exchange transactions in French francs, the intervention currency, between the Banque des Etats de l’Afrique Centrale (BEAC) and commercial banks take place at the rate of CFAF 1 = F 0.02, free of commission. Exchange rates for foreign currencies are based on the fixed rate for the French franc and the Paris exchange market rate for the currency concerned, and include a commission.

With the exception of those relating to gold, Chad’s exchange control measures do not apply to (1) France (and its Overseas Departments and Territories, except the French Territory of the Afars and the Issas) and Monaco; and (2) all other countries whose bank of issue is linked with the French Treasury by an Operations Account (Benin, Cameroon, the Central African Empire, the People’s Republic of the Congo, Gabon, Ivory Coast, Mali. Niger, Senegal, Togo, and Upper Volta). Hence, all payments to these countries may be made freely. All other countries, except Chad itself, are considered foreign countries, and in principle, financial relations only with foreign countries are subject to exchange control.

A commission of 0.25 per cent is levied on all capital transfers to countries that are not members of the BEAC, except those made for the account of the Treasury.

Administration of Control

The Office of the Minister of Finance, Buildings, and Supply supervises borrowing and lending abroad, the issuing, advertising, or offering for sale of foreign securities in Chad, and inward and outward direct investment; it also issues import and export authorizations for gold. Exchange control is also administered by the Minister of Finance, who has delegated his approval authority in part to the authorized banks. All exchange transactions relating to foreign countries must be effected through authorized banks. Import and export licenses are issued by the Foreign Trade Office in the Ministry of Economy, Planning, and Transportation.

Prescription of Currency

Chad is an Operations Account country of the French Franc Area, since the BEAC maintains an Operations Account with the French Treasury; settlements with France (as defined above), Monaco, and the other Operations Account countries of the French Franc Area are made in CFA francs, French francs, or the currency of any other institute of issue that maintains an Operations Account with the French Treasury. Settlements with all other countries are usually made through correspondent banks in France in any of the currencies of those countries or in French francs through Foreign Accounts in Francs.

Nonresident Accounts

The regulations pertaining to nonresident accounts are based on those applied in France. BEAC banknotes may be credited freely to Foreign Accounts in Francs maintained by the foreign correspondents of authorized banks, provided that the notes are mailed direct to the BEAC agency in Chad by the correspondent banks concerned.

Imports and Import Payments

Imports from Rhodesia and South Africa are prohibited. Imports from all sources of wheat, wheat flour, and sugar require licenses. All other imports from countries in the French Franc Area and from EEC countries (the original member states) other than France may be made freely. All imports from non-EEC countries outside the French Franc Area are subject to licensing in accordance with an annual import program. This program and the amount of foreign exchange required to implement it are determined by the Minister of State in Charge of the Economy, Planning, and Transportation on the basis of proposals drawn up by the Committee on Imports.

The import program contains global quotas for imports from non-EEC countries outside the French Franc Area and a special quota for imports of cotton textiles from countries with abnormal competitive advantages. In addition, the program contains global quotas for imports of wheat, wheat flour, and sugar from EEC countries, countries in the French Franc Area, as well as other countries.

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

All import transactions valued at CFAF 100,000 or more and relating to foreign countries must be domiciled with an authorized bank. Import licenses entitle importers to purchase the necessary exchange, provided that the shipping documents are submitted to the authorized bank. Forward cover for imports from foreign countries is only permitted for specified commodities and requires the prior approval of the Office of the Minister of Finance, Buildings, and Supply.

Payments for Invisibles

Payments for invisibles to France (as defined above), Monaco, and the other Operations Account countries in the French Franc Area are permitted freely; those to other countries are subject to approval. For many types of payment the approval authority has been delegated to authorized banks. Payments for invisibles related to trade are permitted freely when the basic trade transaction has been approved or does not require authorization. Transfers of income accruing to nonresidents in the form of profits, dividends, and royalties are also permitted freely when bona fide. Some current payments, however, may be subject to delay.

For tourist travel, residents traveling to countries other than France (as defined above), Monaco, and the other Operations Account countries of the French Franc Area may obtain an exchange allocation of an amount equivalent to CFAF 175,000 a person a trip, for any number of trips a year; any foreign exchange remaining after return to Chad must be surrendered. For business travel to foreign countries, there is a special allocation of the equivalent of up to CFAF 400,000 a person a trip; the Office of the Minister of Finance, Buildings, and Supply may issue exceptional allocations in excess of CFAF 400,000. Tourist and business travel allocations may not be combined. Travelers going to foreign countries may take out up to a maximum of CFAF 10,000 in BEAC banknotes. Travelers to other countries may take out any amount in BEAC banknotes. A resident going abroad for less than 24 hours may not take out more than CFAF 5,000 in CFA banknotes.

Nonresident travelers may take out foreign banknotes and coins up to the amount declared by them on entry, or, if no declaration has been made, up to the equivalent of CFAF 100,000; they may reconvert into foreign currency BEAC banknotes up to CFAF 25,000 that have been obtained from the sale of foreign means of payments that were declared upon entry.

Exports and Export Proceeds

Exports to Rhodesia and South Africa are prohibited. All exports to non-EEC countries outside the French Franc Area require licenses. Specified exports to the Libyan Arab Republic, Nigeria, and the Sudan may be made through compensation transactions. Exports of cotton are the monopoly of the Société Cotonnière du Tchad (Cotontchad).

Export transactions relating to foreign countries must be domiciled with an authorized bank when their value exceeds CFAF 50,000. Export proceeds received in currencies other than those of France or an Operations Account country must be surrendered. Export proceeds normally must be received within 180 days after the arrival of the commodities at their destination. The proceeds must be collected, and surrendered if received in a foreign currency, within two months of the due date.

Proceeds from Invisibles

Proceeds from transactions in invisibles with France (as defined above), Monaco, and other Operations Account countries in the French Franc Area may be retained. All amounts due from residents of other countries in respect of services and all income earned in those countries from foreign assets must be collected and, if received in foreign currency, surrendered within two months of the due date. Resident and nonresident travelers may bring in any amount of banknotes and coins issued by the BEAC, the Bank of France, or any other bank of issue maintaining an Operations Account with the French Treasury, as well as any amount of foreign banknotes and coins (except gold coins) and other foreign means of payment.

Capital

Capital movements between Chad and France (as defined above), Monaco, and other Operations Account countries in the French Franc Area are free of exchange control; capital transfers to all other countries require exchange control approval and are restricted, but capital receipts from such countries are permitted freely. All foreign securities, foreign currency, and titles embodying claims on foreign countries or nonresidents that are held in Chad by residents or nonresidents must be deposited with authorized banks in Chad. A commission of 0.25 per cent is levied on capital transfers to foreign countries, except those made for the account of the Treasury.

Special controls (additional to any exchange control requirements that may be applicable or suspended insofar as they would be contrary to the exchange control regulations) are maintained over borrowing and lending abroad, over inward and outward direct investment, and over the issuing, advertising, or offering for sale of foreign securities in Chad; these controls relate to the transactions themselves, not to payments or receipts. With the exception of those over the sale or introduction of foreign securities in Chad, the control measures do not apply to relations with France (as defined above), Monaco, and those other countries whose bank of issue is linked with the French Treasury by an Operations Account.

Direct investments abroad2 require the prior approval of the Minister of Finance, Buildings, and Supply unless they take the form of a capital increase resulting from reinvestment of undistributed profits; the full or partial liquidation of such investments also requires the prior approval of the Minister, unless the operation involves the relinquishing of a participation that had previously been approved as constituting the making of a direct investment abroad. Foreign direct investments in Chad3 require prior declaration to the Minister of Finance, Buildings, and Supply unless they take the form of a capital increase resulting from reinvestment of undistributed profits; the Minister has a period of two months from receipt of the declaration during which he may request the postponement of the projects submitted to him. The full or partial liquidation of direct investments in Chad must also be declared to the Minister, unless the operation involves the relinquishing of a participation that had previously been approved as constituting the making of a direct investment in Chad. Both the making and the liquidation of direct investments, whether these are Chadian investments abroad or foreign investments in Chad, must be reported to the Minister within 20 days following each operation. Direct investments are defined as investments implying control of a company or enterprise. Mere participation is not considered as direct investment, provided that it does not exceed 20 per cent of the capital of a company whose shares are quoted on a stock exchange.

The issuing, advertising, or offering for sale of foreign securities in Chad requires prior authorization by the Minister of Finance, Buildings, and Supply. Exempt from authorization, however, are operations in connection with (1) loans backed by a guarantee from the Chadian Government and (2) shares similar to securities whose issue, advertising, or offering for sale in Chad has previously been authorized.

Borrowing abroad by physical or juridical persons, whether public or private persons, whose normal residence or registered office is in Chad, or by branches or subsidiaries in Chad of juridical persons whose registered office is abroad, requires prior authorization by the Minister of Finance, Buildings, and Supply. The following are, however, exempt from this authorization: (1) loans constituting a direct investment abroad for which prior approval has been obtained, as indicated above; (2) loans directly connected with the rendering of services abroad by the persons or firms mentioned above, or with the financing of commercial transactions either between Chad and countries abroad or between foreign countries, in which these persons or firms take part: (3) loans contracted by registered banks; and (4) loans other than those mentioned above, when the total amount outstanding of these loans does not exceed CFAF 50 million for any one borrower. The contracting of loans referred to under (4) that are free of authorization, and each repayment thereon, must be declared to the Minister within 20 days of the operation, unless the total outstanding amount of all loans contracted abroad by the borrower is CFAF 5 million or less.

Lending abroad by physical or juridical persons, whether public or private persons, whose normal residence or registered office is in Chad, or by branches or subsidiaries in Chad of juridical persons whose registered office is abroad, requires prior authorization by the Minister of Finance, Buildings, and Supply. The following are, however, exempt from this authorization: (1) loans granted by registered banks; and (2) other loans, when the total amount outstanding of these loans does not exceed CFAF 50 million for any one lender. The making of loans that are free of authorization, and each repayment thereon, must be declared to the Minister within 20 days of the operation, unless the amount of the loan is less than CFAF 500,000, provided, however, that the total outstanding amount of all loans granted abroad by the lender does not exceed CFAF 5 million. Commercial banks must maintain in Chad a specified minimum proportion of their assets.

Under the Investment Code of August 26, 1963, any enterprise established in Chad, whether domestic or foreign, is granted, under certain conditions, reduced duties and taxes on specified imports, as well as exemption from direct taxes on specified income. The Code also provides for three categories of preferential treatment, in accordance with which certain fiscal and other privileges may be accorded to firms investing in specified new industries or in the expansion of existing ones. Requests for preferential treatment must be submitted to the Minister of State in Charge of the Economy, Planning, and Transportation, who, after examining the documents, transmits them to the Investment Commission. After an opinion has been given by that Commission, the project is submitted to the Council of Ministers.

Gold

Chad has issued five gold coins of CFAF 1,000, 3,000, 5,000, 10,000, and 20,000 which are legal tender. Ordinance No. 3/PR/TP of February 10, 1968 concerning nonmonetary gold (ratified by Law No. 23 of June 4, 1968), in conjunction with relevant exchange control regulations, governs the holding, sale, import, circulation, export, and processing of gold and diamonds. Residents who are not producers of gold may not hold unworked gold unless they have obtained an authorization issued by the President acting on the advice of the Minister of Mines. Imports and exports of gold, whether unworked or refined, require prior authorization by the Office of the Minister of Finance, Buildings, and Supply and by the Directorate of Mines and Geology as well as the visa of the Foreign Trade Office. Exempt from this requirement are (1) imports and exports by or on behalf of the monetary authorities and (2) imports and exports of manufactured articles containing a minor quantity of gold (such as gold-filled or gold-plated articles). Exports of unworked gold and of raw diamonds (as well as domestic purchases and sales of both) are the monopoly of an approved Office for Purchases, Sales, Imports, and Exports (Bavie), which is a private company. Unworked gold may be exported only to France. Both licensed and exempt imports of gold are subject to customs declaration.

Changes during 1976

January 1. The tariff preferences accorded to imports from member states of the EEC were eliminated from the common external customs tariff of the Central African Customs and Economic Union.

March 15. The parity between the CFA franc and the French franc was maintained unchanged when France suspended its participation in the European common margins arrangement.

Chile

(Position on December 31, 1976)

Exchange Rate System

The currency is the Chilean Peso, which replaced the Chilean Escudo on September 29, 1975. There are two exchange markets: the official market (known as the banking market) and the brokers’ market. Only the Central Bank of Chile, the Banco del Estado, authorized commercial banks, foreign exchange houses, brokers, and other persons or entities authorized by the Central Bank may operate in these markets. Transactions in both exchange markets are for spot delivery only. Outward transfers through both markets are controlled. The spot rates of exchange in both markets have been identical since August 25, 1975: they are set by the Central Bank and are adjusted periodically. Transactions passing through the brokers’ market are confined to outward payments in respect of obligations resulting from earlier capital inflows through that market (interest, dividends, royalties, and amortization and repatriation). Exchange rates for the currencies of Argentina. Bolivia, Brazil, Paraguay. Peru, and Uruguay may be established freely.

On December 31, 1976 the exchange rate in both spot exchange markets was Ch$ 17.42 per US$1. In both markets, commissions of 410 of 1 per cent were permitted only on sales of exchange: the same commission was permitted on purchases of exchange in the brokers’ market, where, however, no purchases took place. The Central Bank issues, for sale to the public through the banking system, bearer certificates denominated in U.S. dollars (certificados para cobertura en mercado bancario or Cepacs) which may be used for import payments or other payments eligible for the banking market rate or as collateral for the opening of import letters of credit. The certificates are valid for two years from the date of issue; within the validity period, the Central Bank makes available to the owner or holder, upon his request, the sum in U.S. dollars stated on the certificate. On or after their maturity date, the certificates are redeemable in pesos at the exchange rate prevailing on the due date. Banks and stockbrokers can purchase them from the Central Bank, either for the account of their customers or the general public or for their own account, at the banking market exchange rate in effect on the date of issue, plus such premium or minus such discount as may be established by the Central Bank, plus a 2 per mill commission charge.

Administration of Control

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

Prescription of Currency

Settlements with Argentina, Bolivia, Brazil, Colombia, Ecuador, Mexico, Paraguay, Peru, Uruguay, and Venezuela (except those in respect of specified commodities and any imports valued at less than US$1,500 f.o.b. and effected under a simplified registration procedure) must be made through accounts maintained with each other by the Central Bank of Chile and the central bank of the country concerned, within the framework of the LAFTA multilateral clearing system. Settlements with the Dominican Republic must be made through clearing accounts established under a reciprocal credit agreement. Settlements with other countries must take place in specified convertible currencies. Certain payments and transfers to South Africa are prohibited.

Imports and Import Payments

All imports from Rhodesia and imports of military equipment from South Africa are prohibited. There is a List of Prohibited Imports, which contains only a few commodities. A small number of other commodities may be considered as effectively prohibited for private importation since, although not on the List of Prohibited Imports, they are subject to an advance deposit requirement of 10,000 per cent of the c.i.f. value unless they are imported either by public sector agencies or under a special regime, or are on the National List of LAFTA concessions and originate in a LAFTA country; the Executive Committee of the Central Bank may grant specific exemptions for certain other items that are conditionally subject to the 10,000 per cent deposit. There is also a list of goods whose importation requires prior authorization by the Ministry of National Defense. Goods may normally be imported in any amount. Prior to shipment, all imports valued at over US$1,500 f.o.b. must be registered with the Central Bank, which is empowered to reject import applications but currently is not exercising this authority. Imports of goods subject to the 10,000 per cent deposit that are imported into “free port” zones, such as Arica, Magallanes, Aysén, Chiloé, and Punta Arenas, may not be shipped to other parts of the country unless they are first processed or assembled in the “free port” zone. Certain commodities (including automobiles and most trucks) may only be imported into a “free port” zone for use in that zone.1

Importers may purchase spot exchange as soon as their import applications have been approved and the shipping documents have been received. Imports on deferred payment terms (cobertura diferida) require prior authorization of the credit terms by the Central Bank. Virtually all imports are subject to a registration tax of up to 3 per cent of the c.i.f. or f.o.b. value, depending on the terms of the transaction, and all imports are subject to a maritime tax of 3 per cent on the freight costs; the registration tax is offset against the applicable import duty. Value-added tax is levied at 20 per cent on the sum of c.i.f. value and import duty.

Payments for Invisibles

All payments for invisibles are subject to exchange control. Most are settled in the banking market, including travel expenses. There are established limits for a number of purposes. For tourist travel the allocation (in addition to fares) is the equivalent of US$1,000 a person a trip for travel to neighboring countries and the equivalent of US$3,000 for travel to other countries. Banks may sell up to US$120 a person a month for payment of insurance premiums contracted prior to July 23, 1974 in foreign currency with national insurance companies or with foreign companies authorized to operate in Chile. Transfers of other insurance premiums are freely permitted through the commercial banks. Other established limits include those for study abroad. At the end of 1976 the basic allocation for family remittances remained suspended. Transfers in excess of the limits and those in respect of transactions for which no basic allocation has been announced require the prior authorization of the Central Bank. Payments for medicines and pharmaceutical products may only be made provided that the product in question is not available in Chile.

For some invisibles the Central Bank must approve a transfer application (solicitud de giro); the only documentation required for invisibles that are neither covered by the approval authority delegated to authorized commercial banks nor by a solicitud de giro is an application form (carta petición) addressed to the Central Bank through an authorized bank. Residents of Chilean nationality and residents of foreign nationality who have spent more than a year in Chile, when traveling to countries outside Latin America, are required to pay a travel tax of 10 per cent of the value of the ticket.

Exports and Export Proceeds

With minor exceptions for humanitarian reasons, exports to Rhodesia are prohibited. Exports of arms and related equipment to South Africa also are prohibited. With the exception of three prohibited items and one item that is subject to quota, all commodities may be freely exported.

All exports must be registered with the Foreign Trade Department of the Central Bank (with the Chilean Copper Committee in the case of copper), and the proceeds of exports are subject to surrender requirements. Commercial banks are authorized to purchase certain foreign exchange proceeds spot from exporters. Receipts from exports of the large copper mines, however, must be sold to the Central Bank on a spot basis, either direct or through commercial banks.

Most export proceeds subject to surrender requirements must be repatriated within 90 days from the date of shipment, and surrendered within 10 days thereafter, but for specified goods this period is extended to between 120 days and 480 days. However, exporters are permitted to repurchase up to 10 per cent of export proceeds for travel expenses and certain other purposes.

Proceeds from Invisibles

In general, foreign exchange proceeds from invisibles must be surrendered in the banking market. There are a number of exemptions, however. These include the receipts of shipping and insurance companies, proceeds from certain services (including royalties and copyright fees) and from family remittances, and generally, income earned abroad. In addition, any remaining foreign exchange from travel allocations may be retained.

Capital

Capital inflows are free, but most outflows are restricted. All new foreign borrowing or refinancing of existing credits by commercial banks requires prior approval by the Central Bank, with the exception of the taking up of lines of credit with foreign correspondents. Foreign capital may enter Chile under one of three different arrangements depending on the purpose and type of the investment.

(1) Article 14 of Decree No. 1272 of September 7, 1961, stipulates that capital brought into the country in the form of foreign exchange (aporte de capital) may be sold freely through authorized banks when the investor (individual or corporation, national or foreign) has registered with the Central Bank. Such capital can only be repatriated with the prior approval of the Central Bank, and not normally earlier than 24 months after the inflow took place.2 The interest rate must not exceed specified limits. Repatriation normally is allowed only in accordance with the amortization schedule established at the time of registration.

(2) Article 15 of the same Decree provides that the Executive Committee of the Central Bank may authorize the use of foreign credit without any minimum period of repayment. The foreign exchange may be used for payments abroad and is not required to be sold to the Central Bank.

(3) Decree-Law No. 600 of July 7, 1974. the Foreign Investment Law. establishes a regime both for foreign exchange transfers and long-term capital investment. Authorization to make a foreign investment in Chile is granted by a Foreign Investment Committee through a fixed-term contract containing undertakings regarding the applicable exchange regime, the withdrawal of capital and remittances of interest and profits, and taxes. The contracts normally are for 10 years, which may be extended to 20 years in special cases. Any foreign credits involved must be authorized by, or registered with, the Central Bank. Foreign capital which entered Chile prior to the promulgation of Decree-Law No. 600 continues to be subject to the regulations prevailing on the date of entry but had to be registered with the Foreign Investment Committee within a year from its promulgation. Decision No. 24 of the Cartagena Agreement is no longer considered applicable, and the same is true of its 14 per cent per annum limit on transfers of profits, dividends, and interest on foreign capital.3

Gold

Chile has issued three gold coins, which are not legal tender. Residents may freely hold and negotiate gold in any form in Chile. Imports and exports of gold are unrestricted, subject to compliance with the normal formalities for import and export transactions, including registration with the Central Bank.

Changes during 1976

January 5. Central Bank Circular No. 2437 specified 16 convertible currencies that the Central Bank stood ready to purchase.

January 6. Circular No. 2438 depreciated the peso in both spot exchange markets from ChS8.50 to Ch$9 per US$1.

January 15. Circular No. 2439 depreciated the peso in both spot exchange markets to Ch$9.40 per US$1.

January 16. Circular No. 2440 modified the regulations regarding commissions on foreign trade transactions. All commissions received by Chilean firms had to be surrendered within 10 days after receipt. Partial surrender was required for foreign firms operating in Chile. Circular No. 2441 amended certain import regulations accordingly.

January 20. With effect from February 1, authorized banks could no longer purchase foreign exchange forward from exporters. The Central Bank continued to sell foreign exchange for imports forward to banks for delivery in 90 or 120 days (Circular No. 2442).

January 20. Circular No. 2443 modified the rules for the financing of exports, with effect from February 1. The validity of export registrations was increased from 60 to 120 days, although the Central Bank could establish shorter periods. Prefinancing in foreign currency was substituted for the arrangements allowing the forward sale of export proceeds; such prefinancing could cover 50 per cent of the f.o.b. value for most exports (20 per cent for exports by foreign enterprises), but was not available for certain specified exports (mostly minerals). This financing would not be available earlier than 120 days before shipment, and for some goods not until shipment had taken place.

January 26. Circular No. 2444 provided that Cepacs issued after January 28 could on maturity be redeemed in pesos, for the full dollar amount of the certificate, at the prevailing exchange rate. Previously, the redemption was only for the peso amount originally paid.

January 27. Circular No. 2446 depreciated the peso in both spot exchange markets to Ch$10.00 per US$1.

January 29. Circular No. 2448 reduced the minimum period of repayment or re-export of capital imported under the general regime of Article 14 of Decree No. 1272 from 18 months to 6 months, for transactions authorized by the Central Bank on or after February 3. Also, capital imported under this regime no longer had to be sold to the Central Bank in the spot banking market.

January 30. Circular No. 2447 authorized the importation of automobiles by exempting these from the 10,000 per cent advance deposit requirement.

February 8. Decree-Law No. 72 substantially reduced import duties on many goods.

February 20. Circular No. 2451 depreciated the peso in both spot exchange markets to Ch$ 10.30 per US$1.

February 20. Circular No. 2452 allowed access to the spot banking market for capital outflows originating from certain direct investments (provided they had been financed by an aporte de capital), irrespective of the exchange market through which the capital inflow had taken place. This measure was applicable to both old and new capital.

February 26. Investments of capital up to US$50,000 to be imported under Decree-Law No. 600 could initially be registered under Article 14 of Decree No. 1272, for a maximum period of one year (Circular No. 2453).

February 27. Future capital inflows to be registered under Articles 15 and 16 of Decree No. 1272 could only be repatriated through the forward banking market (Circular No. 2454).

February 28. Decree-Law No. 1349 created the Chilean Copper Committee.

March 5. A 10,000 per cent advance import deposit was again required for automobiles (Circular No. 2457).

March 5. Circular No. 2458 depreciated the peso in both spot exchange markets to Ch$10.75 per US$1.

March 5. The Central Bank authorized trading in Cepacs on the stock exchanges of Santiago and Valparaiso. Previously, only banks were authorized to deal with these instruments (Circular No. 2459).

March 19. Circular No. 2463 depreciated the peso in both spot exchange markets to Ch$ 10.90 per US$1.

March 22. Cepacs henceforth could be purchased at the spot banking market rate prevailing at the time of purchase. Previously, the forward banking market rate prevailing on the date of purchase was applicable (Circular No. 2464).

March 25. With effect from June 1, banks could provide financing in foreign currency up to 50 per cent for exports to foreign as well as domestic firms. With effect from April 1, all powers relating to copper exports were transferred from Codelco to the Chilean Copper Committee (Circular No. 2465).

March 26. Circular No. 2466 established the procedures to be followed by the Chilean Copper Committee with respect to imports (commencing April 30) and exports (commencing April 1).

March 26. Hotels and similar establishments authorized to deal in foreign exchange could charge a commission of 4 per mill, the commission already applied by banking institutions (Circular No. 2467).

March 29. Circular No. 2468 depreciated the peso in both spot exchange markets to Ch$ 11.15 per US$1.

April 1. Natural and juridical persons henceforth could freely purchase, sell, deal with, or transfer gold in any form in Chile (and, subject to Central Bank approval, abroad). Exports and imports of gold became subject to the general trade controls. Previously, dealings in gold in Chile were limited to the Central Bank and authorized dealers, while imports and exports were severely restricted (Circular No. 2469).

April 1. Chilean nationals and foreigners with at least two years’ residence in Chile no longer were obliged to convert their foreign currency earnings into domestic currency (Circular No. 2470).

April 1. The Central Bank authorized commercial banks and other financial institutions to purchase Cepacs for their own account. Previously, they could not acquire these certificates for their own portfolios (Circular No. 2471).

April 1. The Central Bank eased the foreign exchange surrender requirement for hotels and similar firms, eliminating the need to indicate the purpose of the transaction (Circular No. 2472).

April 1. Circulars Nos. 2473 and 2474 modified the regulations governing sales of foreign exchange by commercial banks for their own account and without prior authorization by the Central Bank. Such sales were now permitted for certain tax payments, a wide variety of insurance and freight payments, and a number of other charges.

April 1. Exporters could repurchase foreign exchange corresponding to 10 per cent of export proceeds (previously 5 per cent); retained foreign currency balances were permitted up to US$100,000 (previously US$50,000) (Circular No. 2475).

April 5. The sale of foreign exchange was authorized to cover expenses for the promotion of invisibles (Circular No. 2476).

April 6. Circular No. 2477 depreciated the exchange rate in both spot exchange markets to Ch$ 11.45 per US$1.

April 8. Circular No. 2479 authorized persons importing capital under Article 14 of Decree No. 1272 to repurchase foreign exchange in the spot banking market corresponding to the full amount of the transaction. The amount repurchased at the moment the capital was imported could be maintained in an account denominated in foreign currency for purposes of converting it into local currency for the repayment of the outstanding loan or for import payments.

April 9. The sale of foreign exchange was authorized for the commissions and insurance fees on foreign loans imported under Articles 14 to 16 of Decree No. 1272 (Circular No. 2478).

April 13. Circular No. 2480 depreciated the peso in both spot exchange markets to Ch$ 11.55 per US$1.

April 15. Contributions, loans, and other transfers in foreign currency to nonprofit organizations had to be registered with the Central Bank (Circular No. 2481).

April 19. The Central Bank authorized the establishment of foreign exchange houses. These could effect a number of service-related exchange transactions, notably those related to travel and various service payments abroad but no trade or capital-related transactions. An exchange differential,4per mill, maybe charged on sales and purchases of exchange, in addition to a freely established commission. Foreign exchange houses were required to sell their excess holdings of foreign exchange to commercial banks at the end of every week, although the Central Bank could prescribe their sale at an earlier date (Circular No. 2483).

April 22. Circular No. 2484 provided that foreign exchange for travel abroad could be purchased 30 days before departure (previously, 7 days before departure).

April 22. The Central Bank authorized commercial banks to sell foreign exchange forward for imports valued at US$1,500 or less, f.o.b.; the registration requirement for such imports was revoked. Automobiles and other vehicles weighing more than 1,500 kilograms and imports subject to the 10,000 per cent prior deposit requirement were excluded (Circular No. 2487).

April 22. Additional imports from LAFTA countries henceforth could be settled outside the reciprocal credit agreements with the countries concerned (Circular No. 2488).

April 22. Circular No. 2489 depreciated the peso in both spot exchange markets to Ch$ 11.80 per US$1.

April 23. Imports of new automobiles were exempted from the mandatory 10,000 per cent advance deposit requirement and became conditionally subject to the deposit (Circular No. 2490).

April 23. Decree No. 1444 imposed a tax of 100 per cent on automobiles and light motor vehicles with a landed value in excess of US$11,000 (the equivalent of about US$3,000 f.o.b.).

April 29. The Central Bank unified the two compulsory waiting periods for the purchase of foreign exchange for imports, at 90 days. Previously, this was 120 days for imports effected under letters of credit and 90 days for those on a collection basis (Circular No. 2491).

April 29. The Central Bank authorized commercial banks to advance, at a free established interest rate, the total amount of foreign exchange for imports valued at US$1,500 or less, f.o.b. Banks were also authorized to advance foreign exchange for payments in respect of a number of invisible transactions in the banking market, including certain interest payments, insurance premiums, and freight payments (Circular No. 2492).

April 29. The regulations governing remittances of capital brought in under Article 14 of Decree No. 1272 were modified. All capital whose inflow had been registered under Decree-Law No. 326 of February 21. 1974 (capital that had entered before December 31. 1973) could now be transferred promptly, while previously certain minimum repayment schedules had to be observed (Circular No. 2494).

April 30. Circular No. 2497 established new regulations governing import transactions to be authorized by the Chilean Copper Committee. With effect from June 1. the Committee would be responsible for the authorization of imports to be used by copper producing firms, performing in this respect the duties of the Central Bank. On May 27, the effective date was postponed to September 1 by Circular No. 2516.

May 3. Circular No. 2498 depreciated the peso in both spot exchange markets to Ch$ 12.20 per US$1.

May 13. The exchange allocation system for study abroad was simplified and the maximum allocations were increased. The transfer of US$1,000 a month a student was now permitted, regardless of country of destination, level of studies, number of members in the household, or studies previously undertaken (Circular No. 2506).

May 13. The exchange allocation system for travel abroad was simplified. Among other things, proof of residence ceased to be required for trips within Latin America (Circular No. 2507).

May 14. Circular No. 2509 depreciated the peso in both spot exchange markets to Ch$ 12.45 per US$1.

May 20. Circular No. 2512 depreciated the peso in both spot exchange markets to Ch$ 13.00 per US$1.

May 27. Foreign investors who had imported capital were permitted to retain export proceeds corresponding to the amount of their profits if authorization to remit the latter had been delayed a year or more since the remittance application had been submitted (Circular No. 2514).

May 28. An automatic roll-over period of 10 days after the due date was introduced for capital imported under Article 14 of Decree No. 1272. Where no specific renewal period was laid down or where the capital was re-exported, the validity was considered extended automatically for the same period originally registered, with a minimum of 6 months (Circular No. 2517).

June 1. Circular No. 2521 depreciated the peso in both spot exchange markets to Ch$ 13.30 per US$1.

June 7. Decree-Law No. 501 effected a further general reduction in import duties.

June 17. Circular No. 2525 depreciated the peso in both spot exchange markets to Ch$ 13.90 per US$1.

June 17. The Central Bank reduced the compulsory waiting period for the delivery of foreign exchange from 90 to 60 days (Circular No. 2526). This period was further reduced to 30 days on July 28 (Circular No. 2533).

June 21. Circular No. 2527 provided that imports and exports of gold would be authorized by the Central Bank in accordance with the regular procedures for other imports and exports.

June 29. Circular No. 2533 announced a modification of the system of periodical exchange rate adjustments. The peso would be appreciated to Ch$ 12.50 per US$1 on June 30, after which it would gradually be depreciated to Ch$13.21 per US$1 by August 4.

July 1. Henceforth, the only copper export proceeds subject to surrender to the Central Bank were the proceeds from copper, copper products, and copper by-products exported by the large copper mines. Previously, all export proceeds of all copper mines had to be surrendered to the Central Bank (Circulars Nos. 2534 and 2536).

July 8. Commercial banks were no longer permitted to incur an oversold foreign currency position. Banks had to regularize any existing oversold position by purchasing foreign exchange from the Central Bank (Circular No. 2537).

July 19. The bilateral payments agreement with Poland expired.

July 29. The foreign exchange allocations for travel abroad were again increased (Circular No. 2542). The allocation for travel to neighboring countries was raised from US$200 to US$1,000 and an allocation of US$3,000 was set for all other countries (previously US$400 for other Latin American countries and the Caribbean and US$1,000 for all other countries).

July 29. The compulsory waiting period for foreign exchange delivery for imports was further reduced from 60 to 30 days (Circular No. 2543).

July 29. Circular No. 2544 broadened the scope of exchange transactions that foreign exchange houses could undertake.

July 30. Circular No. 2545 increased the minimum re-export period for capital imported under Article 14 of Decree No. 1272 from 6 months to 24 months from the date of sale of the foreign exchange, for transactions concluded after August 2. Capital re-exports could be authorized at an earlier date, however, where the average period during which the capital had remained in Chile was at least 24 months.

July 30. Decree-Law No. 1534 modified Decree-Law No. 619 of 1976. The registration tax on imports was henceforth deducted from the applicable import duty.

August 4. A new list of daily exchange rates was announced. The rate was to move from Ch$ 13.23 per US$1 on August 5 to Ch$ 14.04 per US$1 on September 4 (Circular No. 2548).

August 26. Borrowing abroad for periods of less than 24 months was permitted, provided the loans were used to repay outstanding loans in foreign currency owed to the banking system for transactions not subject to control by the Central Bank (Circular No. 2551).

August 30. A new list of imports was issued that required the prior authorization of the Ministry of National Defense, in accordance with Law No. 17798 of June 23. 1975 (Circular No. 2552).

September 1. Circular No. 2554 modified and simplified the rules regarding the remittance abroad of preliminary dividends and/or profits on foreign investments. This measure was complemented on October 14 by Circular No. 2581.

September 3. A new list of daily exchange rates was issued. The rate was to move from Ch$I4.07 per US$1 on September 5 to Ch$ 14.80 per US$1 on October 4 (Circular No. 2558).

September 6. Certain motor vehicles were exempted from the mandatory 10.000 per cent advance import deposit and became conditionally subject to the deposit (Circular No. 2559).

September 10. Circular No. 2562 established new rules and conditions for export financing.

September 11. Decree No. 480 of the Ministry of Economy, Development, and Reconstruction abolished the List of Permitted Imports and instead introduced a List of Prohibited Imports. It comprised caviar, artificial fur articles, unworked pearls, precious, semiprecious, and synthetic unworked stones, and color television receivers.

September 24. Circular No. 2573 revoked Circular No. 2552 and provided a new list of imports that required the prior authorization of the Ministry of National Defense.

October 4. A new list of daily exchange rates was issued. The rate was to move from Ch$ 14.83 per US$1 on October 5 to Ch$ 15.76 per US$1 on November 4 (Circular No. 2577).

October 15. Banks were authorized to open, negotiate, and confirm credits without access to the exchange market, i.e., against their own foreign currency resources (Circular No. 2582).

October 30. Chile withdrew from the Andean Pact. It would continue to comply with the Pact’s Decisions Nos. 40, 46, 56, and 94 of the Cartagena Agreement regarding double taxation, Andean multinational corporations, and regional highways and telecommunications systems, but not with Decision No. 24 regarding foreign investments. (In March 1977, Chile enacted a new Foreign Investment Law.)

November 25. Certain new motor vehicles were exempted from the mandatory 10,000 per cent advance deposit and made conditionally subject to this deposit (Circular No. 2594).

December 1. The forward banking market was eliminated. Henceforth, all exchange transactions had to be effected on a spot basis. The main effect was that foreign exchange for import payments was made available on a spot basis, without a compulsory waiting period—which had last been reduced to 30 days on July 29 (Circular No. 2596).

December 2. A new list of daily exchange rates was issued. The rate was to move from Ch$ 16.75 per US$1 on December 5 to Ch$ 17.54 per US$1 on January 4, 1977 (Circular No. 2599).

December 3. A reciprocal credit agreement with Ecuador came into force (Circular No. 2600).

December 7. Decree No. 1098 provided for a further large reduction in import duties.

December 22. The total charges on foreign credits obtained for the prefinancing of exports could not exceed the London interbank offered rate (LIBOR) plus 2.5 percentage points, or the U.S. prime rate plus 2 percentage points (Circular No. 2608).

December 23. Development banks authorized to deal in foreign exchange were permitted to contract foreign debt with a maturity in excess of one year (Circular No. 2606).

Republic of China

(Position on December 31, 1976)

Exchange Rate System

The par value is 0.0204628 gram of fine gold per New Taiwan Dollar. On February 16, 1973, the Republic of China established a central rate of NT$1 = SDR 0.0218144, corresponding at the time to 0.0193858 gram of fine gold per new Taiwan dollar or NT$38 = US$1, and availed itself of wider margins. The official buying and selling rates for the U.S. dollar are NT$37.95 and NT$38.05, respectively, per US$1. Buying and selling rates for certain other currencies1 are also officially posted, with daily quotations based on the buying and selling rates for the U.S. dollar in markets abroad. Currencies for which rates are not officially posted may be accepted by authorized banks (“appointed banks”), and the rates are calculated in accordance with foreign market quotations.2 With certain exceptions, earners of foreign exchange must sell it to banks appointed by the Central Bank of China. There is no exchange market. The appointed banks clear their exchange transactions with the Central Bank on the following business day. Forward cover facilities are limited to import and export transactions and to the officially posted currencies, with the exception of the U.S. dollar.

Administration of Control

The Executive Yuan is responsible for policies concerning foreign exchange and trade controls. Foreign exchange and trade matters are entrusted to the Ministries of Finance and Economic Affairs and the Central Bank. The Ministry of Finance has general jurisdiction over foreign exchange laws and regulations, and is in charge of government remittances. The Foreign Exchange Department of the Central Bank is responsible for the overall management of foreign exchange, for the determination of the official buying and selling rates of exchange, and for the supervision of the appointed banks, of which the Bank of Taiwan is the most important. The Central Bank also licenses private remittances and capital movements. The Board of Foreign Trade of the Ministry of Economic Affairs coordinates industrial and trade policies, including those relating to the import regime and export promotion, and is in charge of the issuance of import and export licenses. By delegation, the Application Receipt and Dispatch Center at the Board of Foreign Trade screens applications for import licenses and issues the licenses: for some goods, however, import applications and licenses are screened and issued by 20 appointed banks and their branches. Export applications are screened, and export permits are issued, by 33 appointed banks. Most foreign exchange transactions are conducted through appointed banks.

Prescription of Currency

Export receipts must be obtained in Australian dollars, deutsche mark, Hong Kong dollars, pounds sterling, Singapore dollars, Swiss francs, or U.S. dollars. Currencies not officially posted may be accepted by appointed banks but must be converted into posted currencies in exchange markets abroad. The Central Bank supplies foreign exchange in the form of any of the posted currencies for making payments to residents of foreign countries.

Nonresident Accounts

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

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

Residents may maintain accounts in U.S. dollars or Hong Kong dollars, as follows: Holders of foreign banknotes or travelers checks may have these credited to Foreign Currency Accounts, and recipients of remittances from abroad or of money orders or other negotiable instruments drawn on foreign banks may have the proceeds credited to Foreign Exchange Accounts. Balances in Foreign Currency Accounts may be withdrawn in the original currency or in new Taiwan dollars, after conversion at the official buying rate. Balances in Foreign Exchange Accounts may be withdrawn in new Taiwan dollars; they may also be remitted abroad freely, with the exception that foreign exchange that originated in the United States may not be remitted to Hong Kong. Foreign Exchange Accounts and Foreign Currency Accounts are subdivided into interest-bearing time deposits and passbook accounts (which do not bear interest).

Imports and Import Payments3

Most imports require individual licenses. Appointed banks have authority to screen import applications for most items on the permissible list (see below), to issue import licenses on behalf of the Central Bank, and to make the necessary foreign exchange available; these goods are automatically approved for an import license. For other commodities subject to license, license applications are screened, and import licenses are issued, by the Application Receipt and Dispatch Center at the Board of Foreign Trade. The holder of an import license is entitled to obtain the necessary foreign exchange from an appointed bank.

Importers of goods on the permissible list may enter into contracts on documents against payment (D/P), documents against acceptance (D/A), or usance letter of credit terms (credit terms of less than 180 days may be approved by appointed banks, while longer terms require approval by the Central Bank). For imports on a letter of credit basis, exchange settlement corresponding to 15 per cent of the letter of credit must be made within 28 days of approval of the license for imports taking place on the basis of sight letters of credit, usance letters of credit, letters of credit financed by self-provided exchange, and letters of credit on an installment payment basis; for letters of credit covering bulk imports specially approved by the Ministry of Economic Affairs, the settlement requirement is 10 per cent. This advance settlement requirement, the so-called performance deposit, is a condition for the issuance of a letter of credit.

Imports from communist countries are prohibited in principle, although imports of bulk goods, industrial raw materials, and many consumer goods from any source other than the People’s Republic of China are now being licensed. The authorities license and check imports from Hong Kong in order to induce importers to obtain certain imports direct from the country of production and to control effectively imports from the People’s Republic of China; for similar reasons, certain commodities are not permitted to be imported from Hong Kong, Japan, Macao, Malaysia, and Singapore. Certain commodities financed with U.S. aid funds (including tied letter of credit funds) can be imported only from the United States. Imports of color television sets and many types of scrap metal are prohibited when originating in Japan. Applications for imports from Japan of machinery valued at over US$200,000 for each individual order require the approval of the Board of Foreign Trade. Imports of 1,202 items on the permissible list (see below) are allowed only when the goods originate in Western Europe, the United States, or Canada.

Imports are divided into three groups: (1) prohibited, (2) controlled, and (3) permissible. The prohibited imports comprise not only narcotics and some other goods excluded by most countries from importation but also a wide range of pharmaceuticals. The controlled list contains, in addition to such items as arms and ammunition, ships, and poisonous chemicals, a number of luxury goods and less essential items (such as certain Chinese luxury foods, cigarettes, cigars, liquor, certain medicines, tea, sugar and its substitutes, molasses, made-up clothing, consumer durables, antiques, certain jewelry, gold, and silver) and goods subject to domestic regulation and allocation. The first type of goods are licensed restrictively;4 goods of the second type are often imported by government agencies, which offer them for sale either by allocation or by auction. Liquor and cigarettes are imported by a government monopoly organization, which is also responsible for domestic distribution of these commodities. Goods on the permissible list are licensed liberally and can be imported by both end-users and traders. The importation of items on the controlled list is permitted only to factories and end-users. Manufacturers applying for licenses for raw materials are encouraged to give preference to locally produced supplies. On December 31, 1976, of 15,710 classified import items, 13 were prohibited, 529 were controlled, and 14,768 were permissible: on the same date, only 140 items on the permissible list required approval by the Board of Foreign Trade, while all others could be imported under the automatic approval system.

A general (covering) licensing procedure applies in respect of a few items on the controlled list. Under this procedure, manufacturers and other direct end-users are granted authorization semiannually for the importation of listed items specified by value and by quantity. Exchange for such imports is obtainable automatically each time the importer presents the general approved license at an appointed bank. Furthermore, an automatic approval system is applied to most items on the permissible list. Under this system, importers may obtain foreign exchange at any appointed bank by submitted import licenses which are automatically approved. On December 31, 1975, the system applied to 14,675 items, and on December 31, 1976 to 14,628 items.

Special regulations apply to seven commodities normally imported in bulk shipments.5 They are subject to annual quotas and priority must be given to Chinese flag vessels for their importation.

According to the intended utilization, goods may be imported by one of the three main groups of importers: government trading agencies, qualified private traders, and end-users and manufacturers. The import of crude oil is confined to the Chinese Petroleum Corporation. The Central Trust of China is the main government trading agency. It handles imports for government and military organizations, public enterprises, and other customers. Another government trading agency is the Taiwan Supply Bureau, which is in charge of imports for the Taiwan Provincial Government, some local industries, and certain other customers.

Firms that wish to operate as authorized (“registered”) importers must obtain approval (“registration”) from the Board of Foreign Trade; the firms must be operating in accordance with certain laws and have a minimum capital of NT$500,000 and an “export record” equivalent to more than US$100,000 for the last year. Traders licensed to operate on a commission basis may act only as agents for foreign suppliers. They also must be registered by the Board of Foreign Trade.

End-users and manufacturers are permitted to import raw materials, machinery, and replacement equipment needed for their factories. In granting licenses to this category of importer, the licensing authorities take into account such criteria as production capacity and equipment. In processing applications for licenses to import capital equipment for the construction of new plants, the licensing authorities consider the feasibility of the project and its priority from the point of view of the economic needs of the country. When the capital goods concerned are available from domestic sources, import licenses usually are not issued. Imports to be used for processing or producing goods for export are licensed up to requirements (e.g., raw cotton, wool, and wood for the production of plywood).

According to the methods of financing, imports may be divided into two broad categories: (1) imports for which exchange is allocated directly out of official exchange reserves, and (2) imports which are made without recourse to official exchange reserves and which comprise (a) those made under the U.S. P.L. 480 program and (b) those paid for with self-provided exchange or exchange supplied by foreign investors, foreign lenders, or overseas Chinese. Imports obtained with self-provided exchange are those financed by importers out of their own foreign exchange obtained by them prior to their coming to the Republic of China or originating from exchange receipts exempt from the surrender requirement.

Imports are subject, in addition to customs duty, to harbor dues of 4 per cent of the customs value and, for some goods, to a commodity tax of 10–60 per cent ad valorem.

Payments for Invisibles

All payments for invisibles require approval from the Central Bank. Payments for invisibles directly related to trade are permitted freely when the basic trade transaction has been approved. The transfer of interest, profits, and earnings on authorized foreign investments in the Republic of China may be made without restriction. Residents may at any time (but not more often than four times a year) make outward transfers up to the equivalent of US$250 for any purpose other than import payments; applications for such personal remittances are approved automatically.

Foreign exchange for payments for certain other invisibles is allocated only up to established limits or on a percentage basis. Foreign technicians are allowed to remit to their dependents abroad up to 60 per cent of their monthly salary. In cases where the salary is exempt from income tax under the certificate of tax-exemption (or the income tax is borne by the employer) and/or living expenses of the employee are borne by the employer, the amount to be remitted may be increased by 20 per cent. Employees of the Government or of educational institutions may remit to their dependents in Hong Kong or Macao up to HK$150 a month. Membership fees of foreign institutions and certain payments for news services, books, and magazines (personal subscriptions for reference purposes) are also approved. Receipts from local subscriptions to, and sales of, imported newspapers and periodicals are remittable. Up to 70 per cent of the net amount of motion-picture film rentals may be transferred abroad; the remainder is to be used for local expenses. The remittance of the earnings of foreign entertainers may be approved on a case-by-case basis. The full amount of tuition and living expenses during the first academic year of students studying abroad may be remitted, and up to US$4,000 a year in the second to sixth academic years, but may be applied for only three times during the five years. Residents are granted an exchange allowance equivalent to US$1,200 a person a trip (US$600 for each accompanying dependent under the age of 12) for any approved type of travel; visas for tourist travel, however, are not normally granted to Chinese nationals. For business travel, an allowance equivalent to US$1,500 a month for up to three months is granted for living expenses. All travel allocations are net of fares and tickets. Applications for exchange to pay for certain other types of invisibles are approved on their merits.

Residents leaving the Republic of China may take with them no more than NT$2,000 in domestic banknotes and 20 coins and the equivalent of US$600 in foreign currencies. Nonresident travelers who have stayed in the Republic less than six months may take with them any unspent portion of the foreign currency which they registered upon entry, and may in addition convert local currency into foreign currency upon submission of the foreign exchange memorandum evidencing their acquisition of local currency by sale of exchange.

Exports and Export Proceeds6

All exports require licenses, mainly in order to ensure the surrender of foreign exchange. Licenses may be issued only for exports to noncommunist countries. The re-exportation of imported goods is permitted after they have been processed. Exports of sugar, rice, and salt are handled by government trading agencies.

Quota limitations are maintained on the export of canned mushrooms and asparagus. The export of some foodstuffs, as well as of fertilizers, logs, cement, steel, and scrap of iron and steel, is either prohibited or suspended. There are ceilings on the export of textiles and stainless flatware to specified countries.

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

With minor exceptions, exporters are required to surrender exchange earnings accruing from exports immediately after their collection. Most exports to any permitted destination may be made on a consignment or collection basis, provided that payment is not deferred for more than 180 days from shipment. Subject to approval, bona fide gifts and commodity samples up to the value of US$200 may be sent abroad. When leaving the Republic of China, tourists are allowed to take out domestic products valued up to US$500 without providing evidence that they have surrendered foreign exchange.

Proceeds from Invisibles

Exchange surrender requirements applicable to proceeds from invisibles are generally similar to those applicable to export proceeds. Interest, earnings, and profits on investments made by Chinese investors outside the country, and originally approved by the Investment Commission of the Ministry of Economic Affairs, must be surrendered to the banks; otherwise, earnings may be retained. Private inward remittances may be retained by the recipients for deposit on a foreign exchange account.

Travelers may bring in any amount of foreign currency and either hold or surrender it; the amount imported must be declared upon entry. The import of domestic banknotes expressed in new Taiwan dollars is limited to NT$4,000 for each traveler; a license from the Ministry of Finance is required for importing a larger amount.

Capital

Investments by nonresidents (including overseas Chinese) may be made in capital equipment or raw materials, or through the transfer of foreign currency to the Republic of China. In accordance with the Foreign Investment Law of July 14, 1954 (as amended in 1959 and 1968) and the Statute for the Encouragement of Investment of September 10, 1960 (as amended in 1965, 1967, 1970, and 1974), new foreign investments approved by the authorities are guaranteed (1) unrestricted transfer of net annual profits or earned interest; (2) repatriation of capital, including reinvested earnings, two years after completion of the investment plan, at an annual rate not exceeding 15 per cent, calculated in relation to the invested funds; (3) the right to re-export invested capital in its original form; (4) favorable treatment in respect of rezoning and requisition of agricultural land for industrial use; (5) certain benefits with respect to business income tax and import duties; and (6) compensation for expropriation where the foreign investment constitutes less than 51 per cent, and immunity from expropriation for 20 years where the foreign investment constitutes at least 51 per cent, of the total investment. In addition, foreign investments are granted treatment at least as favorable as that accorded to new domestic investments. Laws for the encouragement of foreign investments provide for additional benefits in specific cases.

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

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

Subject to approval, direct investments may be made outside the Republic of China in the form of technical know-how, semifinished products, locally manufactured equipment, and remittances of foreign exchange. Applications that receive sympathetic treatment include those which would assist in assuring a stable supply of raw materials for domestic industries. Portfolio investment abroad by residents who are private persons is not normally permitted.

Chinese nationals who wish to emigrate, and foreign persons who have settled in the Republic of China and wish to return to their native countries, are not accorded any transfer facilities in respect of proceeds from the liquidation of their assets in the Republic, other than an exchange allowance of US$2,000 for each Chinese emigrant. Persons outside the Republic of China who acquired in the Republic assets or balances in new Taiwan dollars on account of dowries, inheritances, gifts, and so forth, are not normally granted the right of transferring them from the Republic.

Certain inflows of short-term capital are restricted. Domestic banks are permitted to hold short-term deposits (with maturities up to three months) with their correspondents but they are not normally permitted to make longer-term time deposits abroad or to acquire foreign securities.

Gold

Producers of gold must sell their output to ornamental gold processors (registered goldsmiths, silversmiths, and jewelers), through the Central Trust of China; gold delivered to the Central Trust for refining must have a fineness of 0.995 or better. Any newly produced gold that remains unsold must be kept in the custody of institutions specifically designated by the Government; at present, only the Central Trust is so designated.

Other residents may hold gold in any form and of any fineness, but its use as collateral for loans is prohibited. Travelers may bring in any amount of gold, which must be declared upon entry if its weight exceeds 5 shih liang, i.e., 156.25 grams; other imports of gold are under control. Residents may freely take out gold in the form of jewelry, provided that its weight does not exceed 2 shih liang, i.e., 62.5 grams. Otherwise, exports of gold and gold jewelry by travelers are not normally permitted.

Changes during 1976

January 1. An export allotment system was introduced governing textile sales to the EEC and designed to reduce the adverse impact of the import quota system imposed by the EEC in 1975.

January 25. The 50 per cent reduction of import duties on crude petroleum and petroleum products was extended for another year.

January 27. Revised customs regulations permitted new and unused personal effects up to a value of US$100 to be brought in by passengers free of duty.

February 25. The 50 per cent reduction of import duties on corn was extended for another year.

February 27. Several paper and cloth products were deleted from the list of commodities which can only be imported from Western Europe, the United States, and Canada.

August 11. The export of wheat that had earlier been imported for processing into flour was permitted under special approval.

Colombia

(Position on December 31, 1976)

Exchange Rate System

The currency of Colombia is the Colombian Peso. All exchange transactions are effected through the Bank of the Republic (the central bank) or the authorized banks in the official market—the exchange certificate market—in which the rate fluctuates. On December 31, 1976, the average selling rate in the certificate market was Col$36.34 per US$1. The peso equivalent of the Government’s exchange receipts from the export tax on coffee is credited to the Treasury’s Special Exchange Account at the central bank’s accounting rate of Col$35 per US$1; the Government purchases exchange for all public debt payments and other expenditures included in the national budget at the same exchange rate. There are also certain other effective exchange rates, some of which result from a system of tax credit certificates granted on export proceeds. The different exchange rates and the types of transaction to which they apply are set out in the Table of Exchange Rates, below. On December 31, 1976, the fluctuating buying rate for proceeds from coffee exports (after taking into account an 18 per cent exchange tax) was Col$29.78 per US$1, and that for most other exports about Col$36.35 per US$1. In principle, all imports are paid for at the certificate market rate, and all payments and receipts in respect of current invisibles and capital also take place at that rate.

The Bank of the Republic stands ready to sell to the public, against payment in pesos at the certificate market selling rate ruling on the date of issue, exchange warrants (títulos canjeables por certificados de cambio, títulos de divisas, or certificados de futuro). These warrants, which are expressed in U.S. dollars and have a maturity of six months or one year, are negotiable and may also be exchanged, provided that the holder presents an exchange license, for exchange certificates (for the same amount of foreign currency and free of charge). Within their period of validity, warrants may also be sold to the Bank of the Republic for pesos, at the certificate market buying rate ruling on the date of repurchase. Warrants bear interest at 7 per cent per annum. Warrants held until after maturity cease to bear interest and can no longer be converted into exchange certificates but may be resold to the Bank at the certificate market rate ruling on the maturity date.

Administration of Control

All imports and exports require prior registration at the Colombian Institute of Foreign Trade (Incomex). Exchange for payments must be purchased through the Bank of the Republic or the commercial banks, with an approved exchange license issued by the Exchange Office of the Bank of the Republic; however, payments for specified current transactions, when made through credit institutions, do not require prior exchange licenses. The Monetary Board periodically draws up a foreign exchange budget. It also establishes priorities within that budget for the delivery of exchange, after setting aside the amounts necessary to cover the obligations of the Bank of the Republic and to service the external debt of the public agencies and the National Federation of Coffee Growers. Overall import and export policy is determined by the Foreign Trade Council (FTC). Incomex, through its Import Board, controls imports that are subject to prior licensing. The National Council for Economic and Social Policy issues directives concerning direct investment in Colombia to the Exchange Office and the National Planning Department, which evaluates new projects. The Exchange Office of the Bank of the Republic keeps an accounting record both of foreign investment in Colombia and of debts abroad, and controls the movement of foreign capital as well as the transfer of profits, dividends, commissions, and royalties for trademarks, patents, etc. The Superintendency of Exchange Control, which is an autonomous agency reporting to the Presidency of the Republic, enforces the control and supervision over exchange transactions and is responsible for applying penalties for any violation of the exchange regulations.

Prescription of Currency

The Monetary Board establishes the list of currencies which it accepts for exchange surrender and provides for import payments. Payments and receipts are normally effected in U.S. dollars, but importers and exporters are also free to use Belgian francs, Danish kroner, deutsche mark, French francs, Italian lire, Japanese yen. Netherlands guilders, pounds sterling, Swedish kronor, Swiss francs, and Venezuelan bolívares. Settlements with Bulgaria, the German Democratic Republic, Hungary, Poland, Romania, Spain, and Yugoslavia for commercial transactions must be made through clearing accounts in accordance with the provisions of the relevant bilateral payments agreement.

Payments between Colombia and Argentina, Bolivia, Brazil, Chile, the Dominican Republic, Ecuador, Mexico, Paraguay, Peru, Uruguay, and Venezuela are made through accounts maintained within the framework of the LAFTA multilateral clearing system. There is also a reciprocal credit agreement with Cuba.

Nonresident Accounts

Credit establishments are authorized to receive short-term deposits in foreign currency from physical or juridical persons not resident in Colombia; these deposits are freely available to the holders, but any foreign currency deposits that they may wish to convert into Colombian currency must be sold to the Bank of the Republic. Before releasing the accounts of nonresidents, banks must obtain authorization from the Exchange Office.

Imports and Import Payments

There is no prohibited import list. Imports are classified as either goods whose import is subject to prior licensing by Incomex, or goods that may be imported freely without license although subject to registration. In the latter category, there are a global free list applicable to all countries, a National Free List applicable to LAFTA countries only, and a free list applicable to Andean Common Market countries only. Liberalized imports on the global free list corresponded to over one half of reimbursable imports in 1976.1 All import registrations by public sector agencies are screened by Incomex to determine whether local substitutes are available. Import licenses for certain items are not normally issued; these include arms and habit-forming drugs, certain foodstuffs, certain textiles and garments, jewelry, and a number of other consumer goods.

Prior registration of the import transactions at Incomex is required for all imports other than those classified as “minor imports” or shipments with an f.o.b. value of less than US$100. Registration is not automatically accepted by Incomex and may be rejected. The charge for import registration is Col$200 plus a consular invoice tax of I per cent of the f.o.b. value (with a minimum of US$4). Advance import payments deposits (depósitos anticipados para pago de importaciones) in Colombian currency of 30 per cent of the registered amount must be made with an authorized bank before customs clearance in order to obtain exchange licenses. The advance import payments deposit is calculated on the total value of the goods, at the current selling rate for exchange certificates. In exchange, importers receive nonnegotiable, interest-free deposit certificates for foreign payments (títulos de depósito para pagos al exterior) denominated in foreign currency and valid for 24 months. These may be used to purchase foreign exchange for partial payment of the import transaction (within any maximum payment terms specified for the type of transaction concerned by the Monetary Board). Unused certificates may be sold to the Bank of the Republic at the original exchange rate in the certificate market.

The following are exempt from advance import payments deposits: certain nonreimbursable imports; imports brought into Colombia under special import-export arrangements (the Vallejo Plan); foodstuffs for direct consumption; direct imports for the military and the police; imports from Eastern Europe and Spain (when financed under Monetary Board Resolution No. 75 of 1973 or the Spanish revolving fund); imports from countries with which reciprocal credit arrangements are in force (LAFTA countries and the Dominican Republic); books, newspapers, and magazines; and capital goods.

A prior exchange license issued by the Exchange Office is required for payments for imports. Most reimbursable imports are subject to maximum payment terms; these generally are six months for consumer goods and raw materials and three years or five years for capital goods.

Import duties are calculated at the “Ministry of Finance exchange rate” (the average selling rate for exchange certificates for the previous month, as determined by the Ministry of Finance). In addition to customs duties, there is an ad valorem tax on imports equal to 5 per cent of the c.i.f. value, the proceeds of which go to the Export Promotion Fund. Exempt from this tax are imports by public entities; goods of LAFTA origin; imports under the Vallejo Plan; diplomatic, consular, and similar imports; gifts; and imports destined for the free port of San Andrés y Providencia or effected through the port of Leticia. Imports are also subject to a tax of 1.5 per cent of the c.i.f. value, whose proceeds accrue to the ordinary budget of the National Government, and a consular invoice tax of 1 per cent of the f.o.b. value.

Payments for Invisibles

Payments for invisibles are made at the exchange certificate rate. In principle, all payments for invisibles are subject to exchange licenses, which are granted according to officially established priorities determined by the Monetary Board; however, the Bank of the Republic may make payments abroad on behalf of credit institutions without prior exchange license, and commercial banks in cities where Exchange Offices are located may sell exchange directly for the purpose of foreign travel and may also transfer without prior approval payments for certain other current invisibles (including banking commissions, interest on suppliers’ credit, and the monthly allowances of students studying abroad with government support) and for the service on registered foreign loans taken up by the private sector. Payments for travel abroad are limited to US$60 a person a day, not to exceed US$2,100 a year; this limit may be raised to US$200 a day and US$18,000 a year when the travel may be especially beneficial to the country. Transfers to professionals and technicians undertaking courses abroad are generally restricted to US$450 a month for up to 12 months, while for other students the ceilings vary from US$200 to US$300 a month, depending on the cost of living in the country concerned. Remittances for the support of relatives abroad are limited to US$250 a month for each beneficiary. The Exchange Office, however, is empowered to grant larger allocations. Foreign tourists who have stayed in Colombia for a period not exceeding three months may, on leaving the country, purchase foreign currency not exceeding US$60 on presentation of their boarding pass. A remittance tax of 12 per cent is applicable to a number of current payments; for transfers of profits, the tax is 20 per cent.

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

Exports and Export Proceeds

Exports of crude oil and certain other commodities are prohibited, and exports of certain foodstuffs are subject to quotas. Exports of certain other items, such as beef, are reserved for Idema. No export licenses are required. Prior application for registration, however, is required for all exports except crude oil, samples, and Colombian products in noncommercial quantities. If the application meets all legal requirements, approval is stamped on the application form, i.e., registration is granted. When registering an export transaction, exporters must provide Incomex with either a personal guarantee in pesos (but without depositing any funds) or a bank guarantee corresponding to 20 per cent of the registered amount, calculated at the Ministry of Finance exchange rate, to ensure that the proceeds will be surrendered to the Bank of the Republic. The periods for surrendering export proceeds normally are as follows: (1) for coffee, within 20 days from the date of registration of the export; and (2) for other goods, generally within 270 days of registration. However, longer terms are permitted for goods sold on a commission basis, capital goods, and other goods that normally require more extended payment terms.

The Bank of the Republic is empowered in certain cases to retain a portion of the exchange proceeds surrendered by the exporter of any product to repay debts for imports under the Vallejo Plan incurred by the exporter concerned. All exchange proceeds from exports, except those from the export of crude oil not produced by Ecopetrol, must be surrendered to the Bank of the Republic: Ecopetrol, however, is permitted to retain part of its export proceeds abroad for the settlement of its imports.

On surrendering their export proceeds to the Bank of the Republic, exporters of commodities, other than coffee, raw cattle hides, or petroleum and petroleum products receive tax credit certificates (certificados de abono tributario or CATs) in an amount corresponding to a specified percentage of the total earnings surrendered, converted at the Ministry of Finance exchange rate. This ratio is of 1 per cent, 5 per cent, or 7 per cent,2 depending on the commodity; the rates are calculated on domestic value added for exports under the Vallejo Plan. These certificates, which are freely negotiable and are quoted on the stock exchange, are accepted at par by tax offices three or six months after issuance for the payment of income tax, customs duties, and sales taxes.

The surrender of foreign currency earned by exports is carried out by exchanging the foreign currency for exchange certificates that are negotiable in the bankers’ market. The certificates have a validity of five to ten days, after which they must be surrendered to the Bank of the Republic at 90 per cent of the lowest certificate rate quoted by the Bank in the preceding week.

Minimum surrender prices for coffee, bananas, and a few other exports are set from time to time by the Monetary Board. Exports of coffee (other than soluble coffee)3 are subject to the following regulations: (1) A minimum surrender price (reintegro) is fixed after deduction for freight and insurance, at US$307.60 per 70-kilogram bag. (2) Exporters pay a tax in foreign exchange at the rate of 18 per cent ad valorem. Of this tax, 4 percentage points are paid to the National Coffee Fund while the remainder provides revenue for the Treasury’s Special Exchange Account, of which the net product forms a contribution to the national budget. (3) Exporters must either surrender in the form of untreated coffee to the National Federation of Coffee Growers and without payment the equivalent of 80 per cent of the volume of excelso coffee that they wish to export (retención cafetera) or pay the Federation the peso equivalent. (4) Exports of coffee are subject to an additional tax of 6 per cent ad valorem (pasilla y ritio tax); the tax must be paid, either in kind or in pesos, to the Federation. (5) Exporters receive Coffee Savings Bonds with a face value of Col$4 per kilogram exported; these bonds bear interest at 18 per cent per annum and have a maturity of three years. (6) A committee composed of the Ministers of Finance and Agriculture and the Managing Director of the Federation establishes a domestic buying price for export-type coffee, expressed in pesos per arroba of 12.5 kilograms.

Proceeds from Invisibles

All exchange receipts from invisibles must be surrendered; they are converted, in principle, at the certificate market buying rate. Receipts in excess of US$500 must be registered. If the amount surrendered exceeds US$1.000, exchange certificates rather than pesos are given for the excess. Banks require the prior approval of the central bank to accept surrender in excess of US$20,000 for each transaction.

Capital

All inward and outward capital transfers are effected at the certificate market rate.

All foreign investment in Colombia, all new foreign loans, direct lines of foreign credit obtained by nonbank residents,4 and the movement of capital previously imported (except loans previously registered under Decree No. 2322 of September 2, 1965) must be registered with the Exchange Office of the Bank of the Republic.5 Capital imports also require prior approval by the National Planning Department in accordance with directives issued by the National Council for Economic and Social Policy; capital for the petroleum industry or for other mineral exploration in addition requires approval by the Ministry of Mines and Energy. Capital registration entitles the investor to export profits and to repatriate capital at the certificate market rate on certain conditions specified in Decree No. 1900 of September 15, 1973. The transfer of profits is limited to 14 per cent of the net capital value in any one year (beginning with profits earned in 1968), except for profits resulting from investments of outstanding importance or involving special risks in view of the circumstances prevailing in the international money market. If in any year the earnings remitted are less than 14 per cent, the balance may be remitted in subsequent years; where the profits were obtained (and not remitted) prior to the coming into force of Decree-Law No. 444 of 1967, the additional remittances must not exceed 3 per cent a year. New investments may be granted exemptions from import duty and from any advance deposit and import license requirements. Capital invested in the petroleum industry is subject to special rules and to contractual provisions. Following a transitional period ending on June 30, 1978, all foreign banks and their branches must have Colombian majority participation. New direct foreign investment in banks, insurance companies, and other financial institutions is restricted to investors from Andean Pact member countries and to “national” or “mixed” companies. Foreign participation is also restricted in new or established companies engaged in the international resale of imported and domestic products or in tourism-related activities.

Foreign loans contracted by private Colombian individuals or firms are generally subject to a minimum maturity of five years and to an interest rate ceiling of 2 per cent over the New York prime rate or the London interbank offered rate. Such loans normally are permitted only when mining companies are involved or juridical persons who are established in Colombia and are contributing to the construction of public works of national interest as representatives of foreign firms. Special regulations govern the periods for which resident banks may provide import financing from foreign currency borrowed abroad. Foreign loans for national or governmental entities in excess of Col$10 million or US$500,000 require prior authorization by the Ministry of Finance and the National Planning Department. For loans to the Government, or guaranteed by the Government, the following are also required: prior authorization by the National Council for Economic and Social Policy and by the Monetary Board, prior consultation with the Interparliamentary Committee on Public Credit, and ex post approval by the President of the Republic.

Contracts involving royalties, commissions, trademarks or patents, and similar arrangements must be registered with the Exchange Office to enable the beneficiary to make transfers abroad. They require approval by the Royalties Committee before they can be registered.

Colombian nationals who have invested abroad must surrender to the Bank of the Republic, at the prevailing certificate market rate, not only the interest, profits, commissions, and royalties but also the proceeds of the sale or liquidation of the investment. Exports of capital by residents are restricted and such exports by private individuals are not normally permitted.

Gold

Natural and juridical persons may trade in Colombia in gold coins for collection purposes only. With this exception, only the Bank of the Republic is entitled to purchase, sell, hold, import, or export gold. The Bank of the Republic purchases locally produced gold at US$42.2222 an ounce and pays 50 per cent in foreign currency on presentation by foreign capital mining companies of exchange licenses entitling them to make payments abroad for services, dividends, capital repayments, taxes, etc. The remaining 50 per cent and all payments to domestic producers are paid in pesos at the certificate market exchange rate. On selling their gold to the Bank of the Republic, the producers receive tax credit certificates equivalent to of 1 per cent of the value of the gold sold on the basis of US$42.2222 an ounce.6 The certificates held by the small producers are bought by the Bank of the Republic in Colombian pesos at their market value. The Bank of the Republic pays producers a premium to offset the difference between the international price and the official gold price. In addition, the Bank of the Republic levies an ad valorem tax of 2 per cent on the total payment received by the miner.

The Bank of the Republic makes domestic sales of gold for industrial use either direct or through the Colombian Mining Association at a price equivalent to the average quotation in gold markets abroad during the previous month; this price is translated into pesos at the prevailing selling rate of exchange certificates on the date of sale. Imports and exports of gold are a monopoly of the Bank of the Republic; imports of nonmonetary gold are not normally undertaken.

The assay and refining houses and the mining companies producing gold are under the supervision of the Superintendency of Exchange Control. In addition, the mining companies must obtain a license from the Superintendency in order to carry on their operations.

The Bank of the Republic from time to time strikes commemorative gold coins which are legal tender. Residents and nonresidents may freely buy such coins, but export licenses are not normally granted.

Changes during 1976

January 1. The exchange tax on proceeds from coffee exports was reduced from 19 per cent to 18 per cent (Presidential Decree No. 2374 of October 31, 1974).

January 1. The fixed exchange rate applicable to purchases of crude petroleum from foreign-owned companies in Colombia for domestic refinery was further depreciated from Col$25 to Col $26 per US$1. (Monetary Board Resolution No. 75 of December 17, 1975.)

January 1. The common minimum external tariff of the Andean Group took effect (Decree No. 2677 of December 5, 1975 of the Ministry of Finance and Public Credit).

January 1. The Exchange Office was empowered to grant exchange licenses for 95 per cent of the value of freight on imports and exports (MBR No. 77 of December 17, 1975).

January 15. The minimum surrender price per 70-kilogram bag of coffee was increased from US$117 to US$130 (MBR No. 1).

January 19. The General Directorate of Customs was reorganized (Presidential Decree No. 075).

January 20. The quota for rice exports in the first half of 1976 was set at 80,000 metric tons (FTC Resolution No. 3).

January 20. Prior licenses were no longer required for the import of lentils (FTC Resolution No. 4).

January 21. Bills of exchange and foreign letters of credit were exempted from the stamp tax (Law No. 2).

January 27. Incomex was reorganized (Presidential Decree No. 151).

January 28. The minting of 50 kilograms of commemorative gold coins was authorized. The seigniorage was earmarked for the Bank of the Republic’s Special Exchange Account (MBR No. 2).

Table of Exchange Rates (as at December 31, 1976)
(pesos per U.S. dollar)
BuyingSelling
29.78 (Certificate Market Rate less 18% Exchange Tax, Fluctuating Rate)
Coffee exports.
35.00 (Accounting Rate of Bank of the Republic) Conversion of Government’s receipts from exchange tax on coffee exports.35.00 (Accounting Rate of Bank of the Republic) Government’s purchases of exchange for servicing of public debt, diplomatic expenses, official travel, etc.
36.32 (Certificate Market Rate, Fluctuating Rate)36.34 (Certificate Market Rate, Fluctuating Rate)
Net proceeds from exports of crude oil and petroleum derivatives.7 Exports from free ports. All receipts from invisibles and capital transfers.All imports. All other transactions.8
36.36 (Certificate Market Rate plus Tax Credit Certificates for ⅒, of 1% of Export Value Converted at Average Certificate Market Rate of Previous Month, Fluctuating Rate)
Exports of cement and specified agricultural and mineral commodities (including milk and dairy products, live animals other than cattle, cereal grains, sugar, sulfur, emeralds and other precious stones, and gold)9,10
38.14 (Certificate Market Rate plus Tax Credit Certificates for 5% of Export Value Converted at Average Certificate Market Rate of Previous Month, Fluctuating Rate)
Specified agricultural exports.9.10
38.86 (Certificate Market Rate plus Tax Credit Certificates for 7% of Export Value Converted at Average Certificate Market Rate of Previous Month, Fluctuating Rate)
All other exports.9,10,11

January 28. With effect from February 1, the fixed exchange rate for crude petroleum was further depreciated from Col$26 to Col$27 per US$1 (MBR No. 5).

January 30. With effect from February 2, the advance import deposit (consignación) of at least 25 per cent of the registered amount, which had been required to obtain import licenses, was abolished (MBR No. 6). By General Circular No. 7 of February 3. the Exchange Office stressed that the 20 per cent guarantee deposit requirement remained in effect.

January 30. MBR No. 7 revoked MBR No. 65 of November 19, 1975.

February 3. FTC Resolution No. 1/76 was repealed and the export of sugar was suspended (FTC Resolution No. 5).

February 11. Exchange allocations for travel abroad were increased. For persons older than 12 years the daily entitlement was raised to US$60, up to a limit of US$2,100 a year. (Previously US$40 a day, up to a limit of US$1,400 a year, was granted to persons older than 15 years.) For children 12 years or younger, the daily entitlement was set at US$30, up to a limit of US$1.050 a year. (Previously, there were no exchange allocations for that age group, but persons between 12 and 15 years of age were granted US$20 a day. up to a limit of US$700 a year.)

Where the journey was considered of particular national benefit, the daily limit could be raised to US$100 (previously US$70), up to a total of US$9,000 (previously US$4,200) a year (MBR No. 8).

February 12. The Exchange Office modified the system of global import guarantees provided for by MBR No. 14 of 1974 (General Circular No. 9).

February 20. The minimum surrender price for coffee exports was raised further from US$130 to US$143 (MBR No. 9).

February 25. With effect from March 1, the fixed exchange rate for crude petroleum was further depreciated from Col$27 to Col$28 per US$1 (MBR No. 10).

February 25. Until February 28, 1977 the Bank of the Republic was authorized to rediscount up to 80 per cent and up to US$50 million of loans extended by credit institutions to Colombian residents for the acquisition of shares or property rights from foreign investors in all sectors designated by the Exchange Office, except the financial and insurance sectors. The rediscounted amounts were to be used by the credit institutions to defray the payments abroad in favor of the foreign sellers. Implementation of the facility was delegated to the Bank of the Republic and the Exchange Office (MBR No. 11). Implementing guidelines were issued by Regulatory Circular No. 31 of April 20 of the Credit Department.

February 25. With effect from March 1, exporters of coffee who obtained foreign prefinancing had to complete the export transaction within 30 days (previously within 60 days) of the sale of foreign exchange to the Bank of the Republic. This term could be extended by another 30 days (previously another 60 days) upon recommendation by the National Federation of Coffee Growers and on submission to the Bank of the Republic of evidence of coffee inventories sufficient to cover the prefinanced transaction (MBR No. 13).

February 25. With effect from March 1, the Bank of the Republic would definitively buy any foreign exchange derived from loans to prefinance exports of meat and textiles at the certificate market rate prevailing at the time the exchange was purchased (MBR No. 12).

March 1. The Ministry of Finance and Public Credit modified the Monetary Board’s control powers over the contracting of foreign debt originating from cash loans and imports of goods, services, and capital (Decree No. 404). If such indebtedness was incompatible with the Government’s exchange and monetary policies, the Monetary Board was empowered to (1) fix maturity terms for import payments, (2) determine the point in time from which such maturities would be counted, (3) regulate the maturity and conditions for issuing of letters of credit, and (4) regulate the maturity terms of credit granted for the payment of imports. In addition, the Decree obliged the Exchange Office to report monthly to the Monetary Board the amount and nature of import liabilities, and to inform the Superintendency of Exchange Control about any infractions of the regulations governing external indebtedness.

March 1. A reciprocal credit agreement with Cuba came into effect.

March 3. The tariffs for extraordinary customs services were doubled (Decree No. 413 of the Ministry of Finance and Public Credit).

March 8. The Ministry of Economic Development tightened the requirements for the use of domestically produced parts in the assembly industry (Decree No. 434).

March 10. With effect from March 11, the foreign borrowing program under MBR No. 73 of October 21, 1974 (as amended) was suspended, which had permitted private sector producers of industrial and mining products for export and of agricultural goods, as well as the tourist industry, to finance abroad their working capital and investment capital requirements. The Exchange Office was authorized to permit the sale of foreign exchange for advance repayment of such loans (MBR No. 14). The Exchange Office clarified on March 17 that extension of the loans, with or without change of creditor, continued to be possible, subject to a minimum maturity of five years (General Circular No. 19).

March 10. The Fondo de Promoción de Exportaciones (Proexpo) was authorized to finance the working capital requirements of enterprises producing, storing, or selling meat and tobacco for export. At the same time the Bank of the Republic and the commercial banks ceased to accept advance exchange surrender for the financing of exports of meat and tobacco (MBR No. 15).

March 10. With effect from March 15, the Exchange Office was authorized to grant exchange licenses for the payment of certain tickets sold by foreign air and sea transport companies (MBR No. 16).

March 17. The FTC revoked its Resolution No. 50/ 75, thus suspending the export of cottonseed cake (Resolution No. 8).

March 24. With retroactive effect from January 1, 1976, tariff reductions were introduced on a number of mechanical equipment items if imported from the Andean Group countries (Decree No. 557 of the Ministry of Finance and Public Credit).

March 24. MBR No. 17 recapitulated the regulations governing the financing of reimbursable imports through credit institutions in Colombia. The maximum term remained at six months for products for immediate use, i.e., consumer goods and raw materials (18 months for books and other printed matter) and at three years for capital goods (except where the Foreign Trade Council permitted a maximum term of five years). These terms were applicable as from the date of the bill of lading (the date of customs clearance for imports from industrial and commercial free zones and for books and other printed matter). They could generally not be extended, except for 30 days or less, subject to approval by the Exchange Office. The interest rates on import financing remained freely negotiable between banks and importers. (See also MBRs Nos. 52/76 and 64/76, below.)

Implementing guidelines were issued in Exchange Office General Circular No. 24. The Superintendency of Banks subsequently introduced a weekly reporting requirement for credit institutions regarding import financing operations (Circular No. DG-075 of August 20, 1976).

March 24. With effect from April 1, the fixed exchange rate for crude petroleum was further depreciated from Col$28 to Col$29 per US$1 (MBR No. 18).

March 24. Proexpo was authorized for one year to use the remaining balance of the one-year discount line of US$10 million under MBR No. 18/75 to extend credit lines to financial institutions located in countries of the Andean Group, in order to finance exports to those countries. The foreign financial institutions were to pay interest at 7 per cent per annum, of which six points were earmarked for the Special Exchange Account and one point for the Colombian intermediary credit institution. Maturity and other terms of the loans were to be prescribed by Proexpo, acting in conjunction with the Bank of the Republic (MBR No. 19).

March 31. The minimum surrender price for coffee exports was increased from US$143.00 to US$153.50, with effect from April 1 (MBR No. 20).

March 31. The Exchange Office announced that public sector agencies (except public or mixed enterprises) could obtain foreign exchange for service payments abroad upon presentation of certification from the creditor concerned (General Circular No. 20). With effect from April 12, public and mixed enterprises could also avail themselves of this simplified procedure (Exchange Office General Circular No. 25).

April 6. The minimum surrender price for coffee exports was increased from US$153.50 to US$170.00 with effect from April 7. Also with effect from April 7, an exchange rate of Col$28 per US$1 was established for the provisional surrender of coffee export proceeds. The peso payment to the coffee exporter at the time of actual surrender continued to be based on the certificate market rate on the day of advance surrender and remained net of the 18 per cent tax on such proceeds. Any temporary suspensions in the registration of coffee contracts by Incomex would not count toward the 30-day limit for contract fulfillment set by MBR No. 13/76 (MBR No. 21).

April 9. The minimum surrender price for coffee exports was raised from US$170 to US$193, with effect from April 12 (MBR No. 22).

April 9. With effect from April 12, the quantity of coffee that must be surrendered to the National Federation of Coffee Growers was increased from 30 per cent to 46.5 per cent of export volume (Decree No. 699 of the Ministry of Finance and Public Credit).

April 20. The export of cowhides and processed cowhide leather was suspended (FTC Resolution No. 9).

April 28. MBR No. 23 abolished the fixed exchange rate of Col$29 per US$1 for crude petroleum, with effect from May 1, when the certificate market exchange rate became applicable.

May 4. FTC Resolution No. 11 exempted many products from import licensing. Most of these were luxury foodstuffs and beverages.

May 6. The minimum surrender price for coffee exports was increased from US$193 to US$207, with effect from May 7 (MBR No. 24). MBRs Nos. 25 and 26 introduced further increases to US$231 (with effect from May 18) and US$245 (with effect from May 28).

May 6. As from May 7, the coffee surrender requirement was increased from 46.5 per cent to 57 per cent of export volume (Decree No. 853 of the Ministry of Finance and Public Credit).

May 18. A number of goods, mostly textiles and machinery items, were exempted from import licensing (FTC Resolution No. 13).

May 26. MBR No. 27 amended MBR No. 13/76 by reducing from 30 days to 20 days the maximum period for completing the export transaction following the sale to the Bank of the Republic of exchange derived from prefinancing of coffee exports. The maximum permissible extension of this period was also reduced to 20 days. On June 4, the Exchange Office announced that, if the prefinancing came direct from a foreign source and was registered within 10 days following the sale of the foreign currency, exchange could be made available for interest accruing during the 20 days following the sale of the loan proceeds; this period could be extended for another 20 days. Interest rates could not exceed those established by the monetary authorities (General Circular No. 32).

May 26. With effect from May 31, the exchange allocations for foreign travel were again increased, to US$200 a person a day, subject to a limit of US$18,000 a person a year, for journeys deemed to benefit the economic and social development of Colombia (MBR No. 28). On June 3, the Exchange Office required a bank guarantee of 30 per cent on any daily amount in excess of US$100 (General Circular No. 28); the requirement was revoked on November 23 (General Circular No. 71).

May 26. With effect from June 1, the Exchange Office was empowered to authorize mining companies to contract foreign loans, provided that the project was previously approved by the Ministry of Mining and Energy and that the amount of the loan did not exceed 80 per cent of the total project outlays. The minimum terms of such loans had to satisfy the limits laid down in MBRs Nos. 73/74 and 50/75, as amended. At the same time the Exchange Office was permitted to register foreign loans to cover the working capital needs of companies established in Colombia and undertaking public projects on behalf of foreign companies that were awarded tenders, provided that the foreign exchange proceeds were placed in a revolving fund and that foreign exchange was sold to the Bank of the Republic whenever domestic currency was required for the projects. Such working capital loans were exempt from the minimum maturity of five years established by MBR No. 50/ 75 (MBR No. 29). On June 15, the Exchange Office issued guidelines for the registration of both types of loans (General Circular No. 37).

June 4. The deadline for obtaining tax credit certificates was set at six months following surrender of the exchange. For exports involving advance surrender of exchange, the six-month term would commence with the expiration of the maximum period permitted for the completion of the transaction (Decree No. 1115 of the Ministry of Finance and Public Credit).

June 7. The minimum surrender price for coffee exports was increased to US$259.25, with effect from June 8 (MBR No. 30).

June 7. The coffee surrender requirement was increased to 85 per cent of export volume (Decree No. 1168 of the Ministry of Finance and Public Credit).

June 7. The Ministry of Finance and Public Credit endorsed Decision No. 6 of the National Committee of Coffee Growers of June 3, which provided for the issuance of Coffee Savings Bonds (títulos de ahorro cafetero) intended to neutralize in part the domestic impact of rising coffee prices (Decree No. 1167). The bonds would have a maturity of three years and bear interest at 18 per cent per annum. Starting June 8, they would be issued to exporters by the National Coffee Fund in amounts of Col$8 per kilogram of coffee sold. Whenever the foreign market price of coffee would rise by US$0.15 a pound over the market price of June 8, additional Coffee Savings Bonds amounting to 50 per cent of that price increase would be issued per kilogram of coffee sold; the remainder of the price rise would be reflected in an increase in the domestic price of coffee. Whenever the foreign market price of coffee would fall by US$0.15 a pound, however, the retention quota and the amount of Coffee Savings Bonds issued would be lowered, so that the domestic price prevailing on June 8 could be maintained.

June 21. Decree No. 1239 of the Ministry of Finance and Public Credit introduced a substantial simplification and acceleration of the customs clearance process for imports. Decree No. 1238 of the same Ministry expanded the types of nonessential documentation which could be submitted within 90 days of customs clearance.

June 23. Goods imported temporarily or provisionally under Articles 269 to 272 of the Customs Code and subsequently cleared through customs became subject to the payments terms of MBR No. 17/76 (MBR No. 31).

June 23. MBR No. 33 consolidated and modified the regulations on bank endorsements and guarantees in domestic and foreign currency. Endorsements and guarantees in foreign currency remained limited to the sum of paid-up capital and reserves of the financial institution concerned. The monthly increase in endorsements and guarantees in foreign currency was limited to 1 per cent of the outstanding amount in excess of US$1 million on June 30 and December 31 of each year. Monthly excesses and shortfalls could be carried over within each six-month period. In no case, however, could the six-month growth exceed 6 per cent of the total of endorsements and guarantees in foreign exchange at the beginning of the period. Certain operations, such as guarantees on export credits by Proexpo, remained exempt from the limitations.

June 30. The export quota for rice during the second half of 1976 was set at 150,000 metric tons (FTC Resolution No. 16).

July 1. Proexpo was authorized to finance outside the credit line established by MBR No. 59/72 (as amended) the working capital requirements of enterprises producing, storing, or selling textiles for export. At the same time, the Bank of the Republic and the commercial banks ceased to accept advance exchange surrender for the financing of textile exports (MBR No. 34).

July 5. Decree No. 1361 of the Ministry of Economic Development regulated the issuing of tourism development certificates.

July 7. The Bank of the Republic was authorized to acquire Coffee Savings Bonds from the credit institutions at face value, provided that they served to finance (1) the acquisition of up to US$50 million of registered foreign investments in Colombia, (2) the importation of up to US$25 million of capital goods for diversification projects or agroindustrial programs (with the joint approval of the Bank of the Republic, the National Coffee Growers Federation, and Incomex), or (3) the repayment of registered private foreign loans (MBR No. 35). On August 2, the Exchange Office issued guidelines on the use of Coffee Savings Bonds for foreign payments (General Circular No. 45).

July 7. The maximum period between advance surrender of coffee export proceeds and the conclusion of the underlying transaction was further reduced from 20 days to 10 days. The maximum extension of this period was also reduced to 10 days (MBR No. 37).

July 8. Decree No. 1413 of the Ministry of Finance and Public Credit extended until June 30, 1977 the deadline for the importation of certain machinery at the reduced tariff rate of 5 per cent and added five tariff items to the list concerned. The Decree carried further the rationalization and unification of tariffs by levying a uniform duty of 20 per cent on passenger transport vehicles valued at not more than US$2,000 f.o.b. ex factory.

July 13. The export of sugar was resumed. The quota for the second half of 1976 was set at 120,000 metric tons of crude cane sugar (FTC Resolution No. 17).

July 16. The Exchange Office clarified that the remittance tax on personal services (including pensions) would only be levied on amounts in excess of legal exemptions; for pensions the exemption was Col$ 12,000 a month (General Circular No. 40).

July 26. Incomex announced that import registrations under special import-export schemes (the Vallejo Plan) would be valid for six months only and could not be renewed (Mail Circular S.E. No. 015).

July 28. Proexpo was authorized to negotiate the extension of up to 75 per cent of export credits extended to the textile industry under MBR No. 43/75. Their interest rate was raised (MBR No. 41).

July 28. Proexpo was authorized to finance within the credit line of MBR No. 59/72 (as amended) the working capital requirements of enterprises producing, storing, and selling bananas for export. At the same time, the advance exchange surrender facility for bananas was terminated (MBR No. 42).

August 10. The Foreign Trade Council announced that applications for export licenses could at the discretion of the importer or exporter be submitted direct to Incomex even if the transaction required prior approval by another agency; such approval would henceforth be sought by Incomex (FTC Resolution No. 23; clarified by Incomex Mail Circular No. SI-48 of October 4).

August 10. A large number of goods, principally foodstuffs, raw materials, and certain machinery, were exempted from import license (FTC Resolution No. 22). At the same time, four tariff items were transferred from the regime of free importation to that of prior licensing (FTC Resolution No. 20).

August 10. Exports of cowhides and cow leather were subjected to a quota of 250,000 pieces for 1976 (FTC Resolution No. 21).

August 11. The advance exchange surrender facility for coffee exports was terminated, with effect from August 12 (MBR No. 44).

August 11. With effect from August 13, a minimum exchange surrender price for instant coffee was set at US$6 per kilogram (MBR No. 45).

August 11. Proexpo was authorized to finance within the credit line of MBR No. 59/72 (as amended) the working capital requirements of enterprises producing, storing, and selling cotton for export. At the same time, the advance exchange surrender facility for cotton was suspended until December 15 (MBR No. 46; see also MBR No. 74, below).

August 11. With effect from September 1, importers desiring to obtain an exchange license for import payments had to present to the Exchange Office (1) a copy of the import registration or import license and (2) the import summary for payment (instead of the commercial invoice required previously) and/or a copy of the customs declaration. The new import summary for payment (extracto de importación para el reembolso) would be issued by the Exchange Office itself and was designed to monitor foreign payments obligations. Therefore, imports under special import-export schemes remained excluded from this requirement (MBR No. 47). The import summary for payment was regulated by General Circular No. 55 of the Exchange Office of September 24.

August 11. The rate of interest on exchange warrants was lowered from 7 per cent to 6 per cent per annum (MBR No. 49; see also MBR No. 62, below).

August 12. With effect from August 16, the time period within which final exchange surrender for exports other than coffee must take place was extended from 180 days to 270 days after approval of the export registration. Incomex remained empowered to permit longer terms for goods sold on a commission basis, capital goods, and other goods that normally require more extended payment terms (MBR No. 50). On August 23, Incomex fixed these terms at two years, three years, and 360 days, respectively; for capital goods, exchange surrender could also be permitted after more than three years (Incomex Resolution No. 1114).

August 12. Exports of coffee ready for shipment had to take place within 20 days after registration with Incomex of the contract between the National Federation of Coffee Growers and the exporter. For coffee not ready for shipment, this period was increased to 40 days (Incomex Resolution No. 1058). The latter period was increased to 45 days by Incomex Resolution No. 1097 of August 18.

August 24. A large number of goods were exempted from prior import license (FTC Resolution No. 24).

August 25. An Electricity Development Fund was created in the Bank of the Republic with resources stemming from bonds whose placement was to be authorized periodically by the Monetary Board. The Bank was authorized to use the resources of this fund to rediscount at 19 per cent per annum up to 90 per cent of certain loans granted by commercial banks to the electricity sector for the purchase of foreign currency needed to service foreign loans falling due before December 31, 1977 (MBR No. 51). The rediscount rate was lowered from 19 per cent to 18.5 per cent by MBR No. 70 of November 17.

August 25. With effect from August 30, the time period for payment of imports through the industrial and commercial free zones was calculated from the date of the bill of lading rather than the customs withdrawal. This brought the terms of payment for imports through free zones in line with those governing other reimbursable imports (MBR Resolution No. 52; see also MBRs Nos. 17/76 and 64/76).

August 25. With effect from October 1, an advance import payments deposit (depósito anticipado para pago de importaciones) was required in order to obtain exchange licenses for import payments. The peso deposit was to cover 10 per cent of the foreign currency amount of the exchange license and had to be made, prior to customs clearance, at the prevailing certificate market exchange rate. In exchange the importer obtained a nonnegotiable and interest-free deposit certificate for foreign payments (títulos de depósito para pagos al exterior) of 24 months’ maturity, which could be used in partial payment of the import bill, provided that payment was made within the maximum periods stipulated by the Monetary Board. If the certificate was not used within those time limits, the importer could sell it to the Bank of the Republic at the original exchange rate. Exempt from this deposit requirement were foodstuffs for direct consumption; direct imports by the armed forces and police; books and other printed matter; imports from Eastern Europe and Spain; imports under special import-export schemes; and imports of capital goods (MBR No. 53; see also MBR No. 63, below). Detailed instructions were issued in General Circular No. 54 of the Exchange Office of September 24.

August 25. The ceiling on the credit institutions’ foreign exchange positions was raised from 1 per cent to 4 per cent of total foreign exchange liabilities. In addition, the Bank of the Republic could, as before, place renewable three-month deposits in foreign exchange with credit institutions up to 20 per cent of their short-term foreign exchange liabilities. This percentage could be exceeded if the credit institution was recently created or if it had a low amount of short-term exchange foreign liabilities outstanding. The legal reserve requirement for such deposits by the Bank of the Republic was lowered from Col$15 to Col$5 per US$1. The ratio between the Bank of the Republic’s foreign exchange deposits and the credit institutions’ foreign exchange positions was to be 2:1 (MBR No. 54).

August 27. All residents receiving foreign exchange other than credit institutions (previously, only certain companies were excepted) had to register with the Superintendency of Exchange Control. They had to report their foreign exchange transactions on a monthly basis and to surrender all foreign exchange receipts within 10 days of receipt (Resolution No. 0430 of the Superintendency of Exchange Control).

September 8. The Bank of the Republic was empowered to rediscount up to 100 per cent of loans granted by the commercial banks and the Agricultural Bank to commercial and industrial firms in the agricultural and livestock sectors to cover the domestic currency requirements in respect of letters of credit issued against food imports and maturing on or before December 31. The rediscounts were for one year, renewable, and at the same rate of interest as the rediscounted loan but not higher than 3 per cent per annum. As a condition for the contracting of future foreign exchange obligations, firms in the sectors concerned had to submit for approval by the Monetary Board half-yearly programs of imports to be financed by letters of credit, and to report on the execution of these programs on a monthly basis (MBR No. 56: see also MBR No. 59, below).

September 8. MBR No. 57 brought the permissible terms of foreign loans to the private sector for the construction of plants and other projects of economic and social interest into line with those governing reimbursable imports (see MBR No. 17, above). Such loans could only be registered with the Exchange Office if Incomex had issued a nonreimbursable import license for the goods covered by the loan and if the Exchange Office had approved any part of the contract providing for the import of technical services. As before, suppliers’ credits could not be registered. Interest rates had to conform to the maximum rates specified by the Monetary Board, while the maturity had to be three years in general or five years at most if special approval was given by the Executive Council for Foreign Trade; for imports under global import licenses that Council was empowered to approve maturities in excess of five years. MBR No. 57 also authorized the Bank of the Republic to acquire Coffee Savings Bonds if the banks used the proceeds to retire registered foreign loans of the private sector at least one year prior to maturity.

September 22. MBR No. 58 consolidated and partly amended the regulations governing foreign currency deposits, revolving funds in foreign currency and foreign exchange donations. Credit institutions were authorized to accept foreign currency deposits from diplomats, international organizations, nonresidents in general, and resident entities whose activities normally involved receipts and expenditures in foreign currency (including credit institutions, insurance companies, transportation companies, exporters, companies located in free zones, official entities, and hotel and tourism agencies). With prior approval from the Monetary Board, the Exchange Office could also permit other resident entities to open foreign currency accounts. Revolving funds generating foreign exchange through foreign operations or through exchange licenses could be used for payments in respect of office expenses abroad, export freight, freight on imports effected through free zones, expenditures under import-export schemes, fuel purchased by Colombian international carriers, and the construction of public works by Colombian firms on behalf of foreign companies: the Monetary Board could also permit the use of revolving funds for other purposes. A minimum reserve of 20 per cent had to be lodged with the Bank of the Republic against both foreign currency deposits and revolving funds. The Exchange Office was empowered to exempt residents receiving gifts of foreign currency from the surrender requirements.

September 22. MBR No. 59 modified MBR No. 56 by limiting the rediscount facility for foreign agricultural and livestock credit to the equivalent of US$78 million and by giving priority to the servicing of letters of credit that had matured prior to the issuance of MBR No. 56. The balance of the rediscount line was to be used to refinance letters of credit in strict order of maturity.

September 22. Proexpo was authorized to use the balance of the US$10 million credit line established by MBR No. 18/75, as well as repayments of loans from that credit line, for the financing of exports to Andean Group countries under the credit agreement with the Andean Development Corporation (MBR No. 60).

September 22. With effect from September 24. the rate of interest on exchange warrants was raised again from 6 per cent to 7 per cent per annum (MBR No. 62).

September 30. With effect from January 1, 1977 both the rates of tax credit certificates (CATs) and the eligibility therefor were altered. The CAT rate was set at 8 per cent for about 2.000 industrial items (including gold) and about 300 agricultural and livestock items. A rate of 5 per cent was applicable to meat, fish, shellfish, unprocessed wood, cotton yarns and textiles, and potatoes. A small number of items, including cattle, bananas, tobacco, cotton, tires, and boxes, were eligible for CATs at the rate of ⅒ of 1 per cent (Decree No. 2091 of the Ministry of Finance and Public Credit).

October 19. FTC Resolution No. 43 listed all capital goods eligible for payments terms of three years. In addition, it specified those capital goods which would be eligible for external financing of up to five years.

October 19. FTC Resolution No. 42 regulated the exportation of forestry products.

October 20. MBR No. 63 exempted from the advance import payments deposit of MBR No. 53 imports from countries with which Colombia maintained reciprocal credit and clearing arrangements and imports financed with loans from international organizations or foreign governments.

October 20. The payment terms of MBR No. 17 for raw material imports processed in free zones were counted again from the date of customs clearance (MBR No. 64).

October 20. MBR No. 65 provided that foreign exchange expenditures by credit institutions for commissions, interest charges, etc., had to be made in the month following that in which payments obligations had arisen either by virtue of prior exchange licenses or through advance payments without prior authorization (as permitted by MBR No. 59/75).

October 20. A reserve requirement of 6 per cent was introduced applicable to the level of financial institutions’ total foreign currency liabilities. In addition, a marginal reserve requirement of 100 per cent was applied to all increases in such liabilities over their level on October 22, 1976. Financial institutions had to meet 50 per cent of the former requirement by November 15 and the balance by December 15 (MBR No. 66: see also MBR No. 67. below). This measure was estimated to sterilize about Col$1.8 billion.

October 29. MBR No. 67 eased and complemented MBR No. 66. Where reserve requirement deficiencies arose, a penalty rate of 2.5 per cent a month would be levied on the shortfall and the credit institution concerned would be barred from access to the Bank of the Republic’s rediscount facilities for one month. Foreign exchange liabilities to international lending agencies were exempted from the reserve requirement. Also, credit institutions whose total foreign liabilities were below US$10 million on October 22 were exempted from the 100 per cent marginal reserve requirement. The latter requirement had to be met by January 1. 1977.

November 9. Glass products were exempted from import license (FTC Resolution No. 51).

November 17. The special foreign credit lines for importers of capital goods under MBR No. 61/72 were terminated. (This left unaffected the normal credit lines from Colombian banks regulated by MBRs Nos. 37/72 and 17/76.) Also terminated were the regulations of MBR No. 16/72 on sales of travel services and expenditures on credit. At the same time the Exchange Office was authorized to register foreign investments not only in U.S. dollars, as previously, but also in Belgian francs, Danish kroner, deutsche mark. French francs, Italian lire. Japanese yen, Netherlands guilders, pounds sterling, Swedish kronor. Swiss francs, and Venezuelan bolívares. The Venezuelan bolivar was also added to the list of currencies accepted for exchange surrender by the Bank of the Republic and sold by it for import payments (MBR No. 68).

November 17. The Foreign Trade Council was instructed to determine the tariff items which would remain exempt from the advance payments deposit of MBR No. 53 (MBR No. 69).

November 25. Various capital goods were exempted from import license (FTC Resolution No. 59).

November 26. The minimum surrender price for coffee exports was increased from US$259.25 to US$284.65, with effect from November 27 (MBR No. 73).

November 26. The amount of Coffee Savings Bonds given to coffee exporters was reduced from Col$8 to Col$4 per kilogram of exported coffee. At the same time, the formula determining the amount of such bonds as a function of the world market price was abolished (Decree No. 2482 of the Ministry of Finance and Public Credit).

November 26. The coffee surrender requirement was reduced from 85 per cent to 80 per cent of export volume (Decree No. 2483 of the Ministry of Finance and Public Credit).

December 1. A unified and slightly modified export regime took effect. Exports could be (1) free, (2) free subject to approval by certain agencies, (3) limited to export by the producer (applicable only to cement). (4) subject to quota (mostly agricultural and livestock products), or (5) suspended (FTC Resolution No. 58 of November 25).

December 2. The Bank of the Republic instructed commercial banks to register individually all exchange receipts in excess of US$500 stemming from invisibles. In addition, where these receipts exceeded US$1,000 banks were required to issue exchange certificates in lieu of domestic currency. If individual receipts exceeded US$20,000 banks had to receive approval from the Bank of the Republic to make the purchase (Resolution No. 2 of the Bank of the Republic).

December 7. The temporary suspension of advance exchange surrender for cotton exports (MBR No. 46) was made permanent (MBR No. 74).

December 7. The Bank of the Republic was empowered to use the resources of the Electricity Development Fund to refinance banks’ foreign payments on behalf of electricity companies (MBR No. 75).

December 15. Financial intermediaries satisfying the requirements of Colombian capital participation of Decree No. 1900 of 1973 (mixed companies) were granted access to the rediscount facility established by MBR No. 11 to finance the acquisition of foreign capital participations (MBR No. 80).

December 15. The personal bond or bank guarantee (MBR No. 38/74) which exporters had to establish with Incomex in order to ensure exchange surrender was henceforth to be converted at the Ministry of Finance exchange rate in effect during the preceding month (MBR No. 81).

December 15. The Bank of the Republic was to base on a gold price of US$42.2222 per troy ounce the 8 per cent in tax credit certificates which producers of gold were to receive as of January 1, 1977 (MBR No. 82).

December 15. The accounting exchange rate of the Bank of the Republic was changed from Col$30 to Col$35 per US$1 to be applicable for the first time to the balance sheet for December 1976 (MBR No. 83).

December 15. The validity of MBR No. 77/75 (which had empowered the Exchange Office to grant exchange licenses for 95 per cent of the freight on imports and exports) was extended until June 30, 1977 (MBR No. 84).

December 27. The rate of advance import payments deposit was raised from 10 per cent to 30 per cent, with effect from January 10, 1977 (MBR No. 85). This measure was expected to absorb about Col$3.6 billion.

December 27. The minimum surrender price for coffee exports was increased from US$284.65 to US$307.60, with effect from December 28 (MBR No. 86).

People’s Republic of the Congo

(Position on December 31, 1976)

Exchange Rate System

No par value or central rate for the currency of the People’s Republic of the Congo has been established with the Fund. The unit of currency is the CFA Franc,1 which is officially maintained at the rate of CFAF 1 = 0.02 French franc. Exchange transactions in French francs, the intervention currency, between the Banque des Etats de l’Afrique Centrale (BEAC) and commercial banks take place at the rate of CFAF 1 = F 0.02. Exchange rates for foreign currencies are based on the fixed rate for the French franc and the Paris exchange market rate for the currency concerned.

Payments to the following countries, although subject to declaration, are unrestricted: (1) France (and its Overseas Departments and Territories, except the French Territory of the Afars and the Issas) and Monaco; and (2) all other countries whose bank of issue is linked with the French Treasury by an Operations Account (Benin, Cameroon, the Central African Empire, Chad, Gabon, Ivory Coast, Mali, Niger, Senegal, Togo, and Upper Volta). Settlements and investment transactions with all foreign countries, however, are subject to control. Foreign countries are defined as all countries other than the People’s Republic of the Congo.

Payments to France (as defined above), Monaco, and the Operations Account countries (as well as the purchase of their banknotes and travelers checks) are subject to a commission of 0.75 per cent, subject to a minimum of CFAF 75; exempt are payments of the State, the Postal Administration, and the BEAC, the salaries of Congolese diplomats abroad, the expenditures of official missions abroad, and the scholarships of persons studying or training abroad. Most payments to other foreign countries and credits to Foreign Accounts in Francs are subject to a commission of 1 per cent or, for foreign exchange purchased by Diamond Purchase Offices, 0.50 per cent; this commission also is subject to a minimum of CFAF 100.

Administration of Control

The Office of External Financial Relations in the Ministry of Finance supervises borrowing and lending abroad, the issuing, advertising, or offering for sale of foreign securities in Congo, and inward and outward direct investment. Exchange control is administered by the Minister of Finance who has delegated his approval authority to the Office of External Financial Relations and the authorized banks. All exchange transactions must be effected through authorized banks or the Postal Administration. Import and export licenses are issued by the Foreign Trade Office in the Ministry of Commerce, except those for gold, which are granted by the Office of External Financial Relations.

Prescription of Currency

The People’s Republic of the Congo is an Operations Account country of the French Franc Area, since the BEAC maintains an Operations Account with the French Treasury; settlements with France (as defined above), Monaco, and the other Operations Account countries of the French Franc Area are made in CFA francs, French francs, or the currency of any other institute of issue that maintains an Operations Account with the French Treasury. Settlements with the People’s Republic of China are made through special accounts established under a bilateral payments agreement.2 Settlements with all other countries are usually made in any of the currencies of those countries or in French francs through Foreign Accounts in Francs. All payments to Portugal require the prior approval of the Ministry of Finance. All settlements between Congo and Rhodesia are prohibited.

Nonresident Accounts

The regulations pertaining to nonresident accounts are based on those applied in France. The crediting of BEAC banknotes to Foreign Accounts in Francs is permitted when they have been mailed direct to the BEAC agency in Brazzaville by the foreign correspondents of authorized banks.

Imports and Import Payments

Imports from all sources require prior authorization. For imports of virtually all commodities from countries in the French Franc Area and from EEC countries other than France such authorization is given freely. All imports of Rhodesian origin are prohibited. Imports from all non-EEC countries outside the French Franc Area are subject to licensing in accordance with an annual import program; the program also includes indicative quotas for a few commodities from EEC countries other than France. This program is determined by a joint French-Congolese Committee. The import program does not include petroleum imports, for which a joint quota is set for the countries of the Central African Customs and Economic Union (UDEAC). Also outside the program are imports for the Government under foreign aid and bilateral payments agreements and imports made by the Office National du Commerce (Ofnacom). The quotas for non-EEC countries may be used to import goods originating in any country out-side the French Franc Area. Licenses for liberalized commodities originating in EEC countries other than France are issued automatically.

Imports from non-UDEAC countries of certain goods are not permitted unless the importer also buys a certain quantity of the local product (jumelage).

Ofnacom has a monopoly over certain imports, including hardware, rice, canned tomatoes, salt, and salted fish from all sources, certain cotton piece goods from Japan, and certain other textiles from the People’s Republic of China.

All import transactions relating to countries other than France (as defined above), Monaco, and the Operations Account countries must be domiciled with an authorized bank. Licenses for imports from countries other than France (as defined above), Monaco, and the Operations Account countries require the visa of the Foreign Trade Bureau and the Office of External Financial Relations. The approved import license entitles importers to purchase the necessary exchange, provided that the shipping documents are submitted to the authorized bank.

Payments for Invisibles

Payments for invisibles to France (as defined above), Monaco, and the other Operations Account countries in the French Franc Area are permitted freely provided they have been declared and are made through an authorized intermediary; those to other foreign countries are subject to approval. For many types of payment the approval authority has been delegated to authorized banks. Payments for invisibles related to trade are permitted freely when the basic trade transaction has been approved or does not require authorization. Transfers of income accruing to nonresidents in the form of profits, dividends, and royalties are also permitted freely when the basic transaction has been approved. At the end of 1976 certain current payments were in arrears. Resident tourists traveling to foreign countries other than France (as defined above), Monaco, the Operations Account countries of the French Franc Area, or Zaïre may obtain an exchange allocation of an amount equivalent to CFAF 175,000 a person a trip (CFAF 87,500 for children under ten) for any number of trips a year; any foreign exchange remaining after return to Congo in excess of CFAF 5,000 must be surrendered.

For business travel to such foreign countries, there is a special allocation of the equivalent of CFAF 20,000 a person a day, subject to a maximum of CFAF 400,000 a trip. Additional amounts of foreign exchange for business travel may be authorized in appropriate cases. The use of credit cards abroad by residents is prohibited. There are special facilities for travelers to Kinshasa who request no foreign means of payment other than Zaïrian banknotes. The transfer of the entire net salary of a foreigner working in Congo is permitted upon presentation of the appropriate pay voucher, provided that the transfer takes place within three months of the pay period. Residents traveling to France (as defined above), Monaco, or an Operations Account country may take out CFAF 25,000 in BEAC banknotes. Resident and nonresident travelers going to foreign countries other than France (as defined above), Monaco, the Operations Account countries, or Zaïre may freely take out up to a maximum of CFAF 10,000 in BEAC banknotes, French banknotes, and banknotes issued by any other institute of issue maintaining an Operations Account with the French Treasury.

Exports and Export Proceeds

All exports require prior authorization. Exports to Rhodesia are prohibited. Most exports to countries in the French Franc Area may be made freely; among the exceptions are commodities exported by the National Marketing Office for Agricultural Products (Office National de Commercialisation des Produits Agricoles, or ONCPA) or other state enterprises having an export monopoly.

Proceeds from exports to foreign countries must be collected and repatriated, generally within 180 days of arrival of the commodities at their destination. Export proceeds must be surrendered within a month of the due date. All export transactions relating to countries other than France (as defined above), Monaco, and the Operations Account countries must be domiciled with an authorized bank.

Proceeds from Invisibles

All amounts due from residents of foreign countries in respect of services and all income earned in those countries from foreign assets must be collected when due and surrendered within a month of the due date. Resident and nonresident travelers may bring in any amount of banknotes and coins issued by the BEAC, the Bank of France, or any other bank of issue maintaining an Operations Account with the French Treasury, as well as any amount of foreign banknotes and coins (except gold coins).

Capital

All capital movements between Congo and Rhodesia are prohibited. Movements of funds between Congo and France (as defined above), Monaco, and the other Operations Account countries in the French Franc Area are free, although subject to declaration; most investment operations and borrowing and lending between Congo and these countries are subject to authorization. Capital transfers to all other countries require exchange control approval and are restricted, but capital receipts from such countries generally are permitted freely. All foreign securities, foreign currency, and titles embodying claims on foreign countries or nonresidents that are held in Congo by residents or nonresidents must be deposited with authorized banks in Congo.

Special controls (additional to any exchange control requirements that may be applicable) are maintained over borrowing and lending abroad, over inward and outward direct investment, and over the issuing, advertising, and offering for sale of foreign securities in Congo; these controls relate to the transactions themselves, not to payments or receipts.

Direct investments abroad3 require the prior approval of the Minister of Finance; the full or partial liquidation of such investments also requires the prior approval of the Minister. Foreign direct investments in Congo4 require the prior approval by the Minister of Finance, unless they involve the creation of a mixed economy enterprise. The full or partial liquidation of direct investments in Congo must be declared to the Minister. Both the making and the liquidation of direct investments, whether these are Congolese investments abroad or foreign investments in Congo, must be reported to the Minister within 20 days following each operation. Direct investments are defined as investments implying control of a company or enterprise.

The issuing, advertising, or offering for sale of foreign securities in Congo requires prior authorization by the Minister of Finance. Exempt from authorization, however, are operations in connection with (1) borrowing backed by a guarantee from the Congolese Government and (2) shares similar to securities whose issue, advertising, or offering for sale in Congo has previously been authorized.

Borrowing by residents from nonresidents requires prior authorization by the Minister of Finance. The following are, however, exempt from this authorization: (1) loans constituting a direct investment in Congo for which prior approval has been obtained as indicated above: (2) loans contracted by registered banks: and (3) loans other than those mentioned above, when the total amount outstanding of these loans does not exceed CFAF 10 million for any one borrower. The contracting of loans that are free of authorization, and each repayment thereon, must be reported to the Office of External Financial Relations within 20 days of the operation.

Lending by residents to nonresidents is subject to exchange control, and all lending in CFA francs to nonresidents is prohibited unless special authorization is obtained. In addition, lending to nonresidents requires prior authorization by the Minister of Finance. The following are, however, exempt from this authorization: (1) loans in foreign currencies granted by registered banks; (2) other loans in foreign currencies when the total amount outstanding of these loans does not exceed the equivalent of CFAF 5 million for any one lender; and (3) foreign currency loans whose interest rate does not exceed 5 per cent a year and whose maturity is two years or less. The making of loans that are free of authorization, and each repayment thereon, must be reported to the Office of External Financial Relations within 20 days of the operation.

Under the Investment Code of April 26, 1973 (Ordinance No. 11/73), a number of privileges may be granted to approved foreign investments. The Code provides for four categories of preferential treatment.

Gold

By virtue of Decree No. 66/236 of July 29, 1966, as amended by Decree No. 66/265 of August 29, 1966, residents are free to hold gold in the form of coins, art objects, or jewelry; however, they require the prior authorization of the Minister of Finance to hold gold in any other form or to import or export gold in any form, from or to any other country. Exempt from the latter requirement are (1) imports and exports by or on behalf of the Treasury or the BEAC and (2) imports and exports of manufactured articles containing a minor quantity of gold (such as gold-filled or gold-plated articles). Both licensed and exempt imports of gold are subject to customs declaration. There are no official exports of gold.

Changes during 1976

January 1. The tariff preferences accorded to imports from EEC countries were eliminated from the common external customs tariff of the UDEAC.

February 10. Decree No. 76/44 made import licenses for all types of mineral water, irrespective of origin, subject to the acquisition by the importer of an equal quantity of locally produced mineral water.

March 15. France suspended its participation in the European common margins arrangement; the parity between the CFA franc and the French franc remained unchanged.

April 20. Law No. 04/76 of March 30 modified the import taxation on selected commodities. Specified meat and fish, rice, and salt were entirely exempted from import duties and taxes.

Costa Rica

(Position on December 31, 1976)

Exchange Rate System

The par value is 0.0859580 gram of fine gold per Costa Rican Colón. The Central Bank of Costa Rica buys and sells exchange in the official market at fixed rates of Ȼ 8.54 and Ȼ 8.60, respectively, per US$1. Transactions with member countries of the Central American Common Market (CACM), when settled through the Cámara de Compensación Centroamericana (a clearinghouse established by the central banks of Central America to foster the process of economic integration of their countries) are effected at a uniform buying and selling rate of Ȼ 8.57 per US$1. The Central Bank stands ready in principle to buy U.S. dollars forward at 90 days, at Ȼ 8.39055 per US$1. Some transactions in foreign exchange, including settlements for current transactions, are effected through the San José Stock Exchange at rates close to the official market rate.

Costa Rica formally accepted the obligations of Article VIII, Sections 2, 3, and 4, of the Fund Agreement, as from February I, 1965.

Administration of Control

The exchange controls are operated by the Central Bank. No licenses are required to buy or sell foreign exchange that is not subject to mandatory sale to the banking system.

Prescription of Currency

In practice, nearly all exchange transactions in Costa Rica are expressed in U.S. dollars. Payments to Poland may be made through special U.S. dollar accounts established under a payments agreement with that country. Payments to El Salvador, Guatemala, Honduras, and Nicaragua in respect of trade and trade-related invisibles must be made in Costa Rican colones through the Cámara de Compensación Centroamericana. Payments in Costa Rican colones to Mexico in respect of trade and invisibles have been suspended since September 1, 1976, pending agreement between the Central American central banks and the Bank of Mexico to resume transactions under their Agreement on Clearing and Reciprocal Credits, which previously was applicable to such transactions.

Imports and Import Payments

There is no import licensing and all import payments may be made freely, subject, except in the case of goods originating in CACM countries or Panama, to submission of evidence of prior registration (see below). However, certain imports from CACM countries require prior authorization, and imports made on a barter basis require a barter license (licencia de trueque) issued by the Ministry of Economy, Industry, and Commerce. Imports from South Africa are prohibited in principle. To be eligible for foreign exchange, orders for imports valued at over US$300 must be registered with the Central Bank upon confirmation by the foreign supplier, unless the goods originate in CACM countries or Panama.

In addition to any applicable customs duty, there are levied on imports (1) a stamp tax of 3 per cent of the customs duty on commodities not covered by the common external tariff of the CACM; (2) a sales tax of 8 per cent ad valorem, from which certain essential items are exempt; and (3) a selective consumption tax with a range of 10–100 per cent ad valorem on imports from outside the CACM and at lower rates on many CACM imports. There also exists a small consular tax on certain imports. Furthermore, most imports originating outside the CACM are subject to an import surcharge of 30 per cent of the applicable import duty, and a temporary import surcharge of 10–50 per cent ad valorem is levied on many imports from countries other than the CACM countries and Panama.

Payments for Invisibles

The prior approval of the Central Bank is required for all sales of official foreign exchange for current invisibles; for certain travel exchange this approval is given by the Central Bank’s representatives in the commercial banks, while in all other cases the approval must be sought from the Central Bank’s Department of International Transactions.

Any physical or juridical person may purchase, subject to prior approval by the Central Bank, exchange up to the equivalent of US$300 a remittance for any purpose and at any time, but not more often than once every six months, and subject to submission of evidence as to purpose by the applicant. Foreign exchange for private travel may be purchased at agent banks up to US$1,000 a person a trip for trips of ten days (US$100 a day for shorter trips), upon presentation of passport and travel tickets; agent banks may sell additional amounts of US$75 a person a day, up to a total additional amount of US$2,000 a person a trip, subject to presentation of evidence of the length of the stay abroad. Travel exchange in excess of US$3,000 a person a trip must be approved by the Department of International Transactions. Taxes of 15 per cent and 10 per cent, respectively, are levied on remittances abroad of dividends and interest; interest on certain borrowing abroad (e.g., from government banks) is exempt.

Residents traveling abroad by air must pay a travel tax of 5 per cent of the value of the tickets plus Ȼ 20 a trip; government officials, diplomats, minors, and students are exempt.

Exports and Export Proceeds

The Central Bank supervises exports to ensure that exchange proceeds are surrendered as prescribed. Surrender must take place by sale to the Central Bank or an agent bank. Nontraditional exports are entitled to tax credit certificates (CATs) corresponding to 15 per cent of the f.o.b. value, which are freely negotiable. In addition, exporters of nontraditional commodities eligible for CATs may also receive certificates for increases in exports (CIEX) for 10 per cent of the increase in the f.o.b. value of exports over that in the preceding calendar year; the certificates are redeemable against cash at the Central Bank.

Licenses from the Central Bank are necessary for the exportation of merchandise. In addition to the export license from the Central Bank, other export licenses are required as follows: strategic materials, such as armaments, munitions, scrap iron, and scraps of nonferrous base metals (from the Ministry of Economy, Industry, and Commerce); sugar (from the Ministry of Economy, Industry, and Commerce); beans, rice, potatoes, onions, cotton, meat, and purebred and other cattle (from the National Council of Production); airplanes (from the Civil Aviation Board); Indian art objects made of gold, stone, or clay (from the National Museum); tobacco (from the Tobacco Defense Board); lumber, root of ipecacuanha, certain livestock, and animals and plants of forest origin (from the Ministry of Agriculture and Livestock); and coffee (from the Coffee Office); in addition, when there is a lien on the coffee in favor of a bank, that bank’s approval is required before the Central Bank grants an export license. Exports to South Africa are prohibited in principle.

The exchange proceeds of all exports must be surrendered within 15 days of receipt or, if the goods were sold on credit, upon expiry of the term of the credit. Foreign-owned banana companies that have contracts with the Government must surrender their net export proceeds, which are calculated by deducting from their gross export proceeds (1) profits obtained during the year from their transactions in Costa Rica; (2) the allowance for depreciation on their investment in Costa Rica that is acceptable to the U.S. Internal Revenue Service; (3) the export tax on bananas payable in foreign currency; and (4) the cost of imports made during the year that were necessary for their normal business in Costa Rica. There are export taxes on most traditional and nontraditional exports.

Proceeds from Invisibles

Exchange receipts from invisibles must be surrendered at the official rate within 15 days of accrual, with the exception of the following, which may be retained and used as “free market exchange”: diplomatic and similar salaries and expenses; tourist expenditure; family remittances and other personal remittances; settlements on insurance claims, provided that the premium was paid through the free market; and commissions received by agents and representatives of foreign firms.

Capital

Inward transfers of capital may be made freely by residents and nonresidents. The Charter of the Central Bank provides that foreign capital entering through the official market may be registered with the Central Bank in order to be ensured access to that market for the transfer of interest, profits, and amortization. Private outflows of foreign capital may be effected through the official market only if so registered. Incoming capital may be sold freely or retained by the recipient if it is foreign capital that did not elect registration and surrender at the official rate or if it is national capital returning from abroad. Agent banks have authority to sell foreign exchange at the official rate for repayments on certain private and public debts and certain amortization on registered foreign capital. Registration is mandatory only for public sector borrowing abroad and for government-guaranteed borrowing abroad. The state commercial banks require Central Bank approval to borrow abroad. By virtue of the National Planning Law, ministries and autonomous or semiautonomous organizations other than the commercial banks require the approval of the Office of Planning and Economic Policy before they may initiate steps to arrange any borrowing abroad. Foreign and domestic capital transferred from abroad may freely be deposited as time deposits with agent banks in the form of specified foreign currencies1 or be invested in certificates of deposit denominated in colones; such funds may be retransferred abroad upon maturity at the official exchange rate.

Outward transfers of national capital are restricted. However, any physical or juridical person may, subject to prior Central Bank approval, purchase foreign exchange from agent banks, up to US$300 a remittance, for any purpose and at any time, but not more often than once every six months and provided the purpose is indicated. Agent banks have authority to sell exchange for certain investment operations approved by the Ministry of Economy, Industry, and Commerce as well as the Central Bank. All other outward transfers of national capital require prior authorization by the Central Bank; it does not authorize these where there is no actual obligation abroad, or where, despite the existence of an actual obligation abroad, the Bank considers the transfer to be an unauthorized transfer of national capital.

Gold

The Central Bank may purchase, sell, or hold gold coins or bars as part of the nation’s monetary reserves in accordance with regulations established by its own Board. Private physical and juridical persons may negotiate freely, at home or abroad, domestically produced gold (except national archaeological treasures), provided there is no infraction of international agreements. They may also hold gold in any form in Costa Rica. The Central Bank does not supply gold to artistic or professional users.

Changes during 1976

January 3. A temporary import surcharge of 10–50 per cent ad valorem was applied to many goods; imports from CACM countries and Panama were exempt. The proceeds of the surcharge would go to the Fund for the Promotion of Exports and Tourism (Central Bank Board Session No. 3075-75 of December 27, 1975).

January 5. Decree No. 5623-H of December 27, 1975 increased the rates of the selective consumption tax on many goods: the range of rates remained unchanged at 10–100 per cent.

January 13. Decree No. 5674-H increased the export tax on coffee from 5 per cent to 8 per cent.

January 26. A system of freely negotiable certificates for increases in exports (CIEX) was introduced. Exporters of nontraditional commodities eligible to receive CATs could in addition receive CIEXs for 10 per cent of the increase in the f.o.b. value of exports over the value of the preceding calendar year. CIEXs were redeemable against cash at the Central Bank.

May 20. Congress approved the CIEX system and stipulated that only half the proceeds of the temporary import surcharge was to go to the Fund for the Promotion of Exports and Tourism; the other half was to accrue to the central government budget.

June 6. Private commercial banks were authorized to accept time deposits in U.S. dollars, for the account of the Central Bank. The minimum deposit was set at US$1,000, the maximum maturity at one year, and the minimum maturity at six months (Central Bank Board Session No. 3117-76 of May 4).

August 9. An import surcharge of 10 per cent ad valorem was applied on fertilizers when imported as a final product.

August 10. Decree No. 6214-H further increased the export tax on coffee. The new rates ranged from 1 per cent to 18 per cent, depending on the price. The export tax on sugar was lowered and was also levied at a range from 1 per cent to 18 per cent, depending on the price.

August 24. Rice, beans, and corn were added to the list of traditional exports and ceased to be eligible for CATs with effect from August 24, 1977.

September 1. Transactions in Mexican pesos were suspended. They were not resumed during 1976.

September 22. Decree No. 6313-H restored the flat 8 per cent rate of export tax on coffee.

October 13. Trading in foreign exchange was initiated at the San José Stock Exchange.

November 3. Sorghum, coffee beans, and roasted coffee were added to the list of traditional exports and ceased to be eligible for CATs with effect from November 3, 1977.

November 6. Consumption taxes and import surcharges were reduced on some 80 tariff items. The reduction of import surcharges ranged from 10 to 50 percentage points and the surcharge on 12 items was eliminated completely. The consumption tax was abolished for 12 tariff items (Central Bank Board Session No. 3169-76 of November 2 and Decree No. 6482-H of November 6).

Cyprus

(Position on December 31, 1976)

Exchange Rate System

The par value is 2.13281 grams of fine gold per Cyprus Pound. However, no exchange transactions take place at the par value. Since July 9, 1973, the rate for the Cyprus pound has been adjusted daily with the aim of maintaining its effective relationship with the currencies of the main trading partners of Cyprus. The Central Bank of Cyprus quotes daily buying and selling rates for deutsche mark, Greek drachmas, pounds sterling, and U.S. dollars. The rate for the U.S. dollar on December 31, 1976 was US$2.4310 buying, and US$2.4280 selling, per £C 1, and that for sterling was £ stg. 1.4310 buying, and £ stg. 1.4260 selling, per £C 1. The Central Bank quotes indicative rates for a number of other currencies as well. Furthermore, the Central Bank offers authorized dealers facilities for forward purchases and sales of U.S. dollars and pounds sterling for periods of up to six months, in cover of trade transactions only.

Administration of Control

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

Prescription of Currency

Settlements with clearing countries1 must be made through the appropriate clearing account denominated either in pounds sterling or in U.S. dollars. Payments to countries other than the clearing countries (except Rhodesia) may be made by crediting Cyprus pounds to an External Account, or in any foreign currency2 other than Rhodesian currency; the proceeds of exports to such countries may be received in Cyprus pounds from an External Account or in any foreign currency except Rhodesian currency. Settlements with Rhodesia are subject to special regulations; payments for exports to Rhodesia must be received in any foreign currency other than Rhodesian currency.

Nonresident Accounts

Residents of countries outside Cyprus other than Rhodesia may maintain with authorized banks nonresident accounts in Cyprus pounds, designated External Accounts, or foreign currency accounts. These may be credited with authorized payments from residents of Cyprus, with transfers from other External Accounts or foreign currency accounts, and with the proceeds from sales by nonresidents of any foreign currency other than Rhodesian currency. External Accounts and foreign currency accounts may be debited for payments to residents and nonresidents, for transfers to other External Accounts or foreign currency accounts, and for purchases of any foreign currency other than Rhodesian currency; however, the delivery of foreign currency notes to nonresidents in Cyprus against External Accounts or foreign currency accounts is prohibited, with the exception of sales for travel purposes to nonresident individuals, to members of foreign embassies, and to members of the United Nations forces in Cyprus (up to the equivalent of £C 50 a trip).

Rhodesian Accounts are held by residents of Rhodesia and are subject to separate rules.

Blocked Accounts are maintained in the name of a nonresident for certain funds of a capital nature which, under the existing exchange control regulations, may not be transferred outside Cyprus. Blocked funds may either be held as deposits or invested in government securities or government-guaranteed securities. Income earned on blocked funds so invested may be remitted to the nonresident beneficiary or credited to an External Account without prior reference to the Central Bank. Funds can be released from Blocked Accounts in the following circumstances: on application by the authorized bank concerned acting on behalf of the nonresident account holder, the Central Bank may authorize the release of blocked funds for (1) reasonable educational expenses in Cyprus of the account holder’s children: (2) reasonable living expenses of the account holder while on a visit to Cyprus; and (3) donations to charitable institutions in Cyprus. In addition to any releases under (1), (2), and (3), amounts up to a level determined from time to time may become eligible for release. At present, the Central Bank is prepared to permit the release to each nonresident holder of blocked funds up to £C 1,000 in any calendar year.

Imports and Import Payments

All imports from Rhodesia and South Africa are prohibited. Imports of virtually all commodities may be made freely from any other country except Albania, Bulgaria, the People’s Republic of China, Czechoslovakia, the German Democratic Republic, Hungary, North Korea, Poland, Romania, Tibet, the U.S.S.R., and Viet Nam. For protective reasons, certain goods (such as some agricultural and textile products, footwear, metal manufactures, and industrial machinery) may not be imported freely; for a few of these items, no licenses are granted, while for most of them licenses are granted liberally. Imports from Bulgaria, the People’s Republic of China, Czechoslovakia, the German Democratic Republic, Hungary, Poland, Romania, and the U.S.S.R. are licensed in accordance with the terms of bilateral trade and/or payments agreements. With respect to Albania, North Korea, Mongolia, Tibet, and Viet Nam, no formal trading arrangements exist but certain barter transactions take place from time to time.

Individual import licenses are not required for bona fide unsolicited gifts (which may not be sold) up to £C 10 in value, for returned goods, or for certain special import transactions.

Payments for all permitted imports may be made freely after arrival (where documents are received on a collection basis) or after receipt of shipping documents (where payment is made under a documentary credit).

Payments for Invisibles

Payments for invisibles to nonresidents require the approval of the exchange control authorities. Profits, dividends, and interest from approved foreign investments may be transferred abroad, after payment of any charges and taxes due. Insurance premiums due to foreign insurance companies are remittable after deduction of all expenses and contingencies in respect of any claims. Maintenance remittances are allowed on application accompanied by documentary evidence of hardship. For certain categories of payments, limits are imposed, generally only for the purpose of preventing illicit capital outflow. For study abroad, the lower limit is £C 700 a year, and the upper limit is £C 2,200 a year; the amount allowed depends on the cost of living in the country concerned—e.g., for study in countries in the Middle East (defined as Egypt, Greece, Israel, etc., except Lebanon), £C 700; in Lebanon, £C 1,000; in the United States and Canada, £C 2,200; in other countries, £C 1,500. Higher amounts for student allowances may be granted on presentation of documentary evidence. However, allowances normally are granted only for study at colleges, universities, or comparable institutions. For tourist travel, the limit is £C 150 a person annually;3 for business travel £C 20 to £C 40 a day is granted in addition to the tourist allowance. The basic tourist allowance is not available for travel to Rhodesia. Resident travelers may take out Cyprus notes up to £C 10 and foreign currency notes up to the equivalent of £C 50, the latter as part of their annual basic travel allowance. Nonresident travelers may take out £C 10 in Cyprus notes and any amount of foreign currency notes that they brought into Cyprus.

Exports and Export Proceeds

Exports of potatoes are subject to control by the Cyprus Potato Marketing Board, and those of wheat and barley to control by the Cyprus Grain Commission. All exports are subject to licensing when the f.o.b. value exceeds £C 75, to ensure repatriation of the sales proceeds in an appropriate manner (see section on Prescription of Currency, above). Export proceeds must be surrendered within one month of receipt.

Proceeds from Invisibles

Receipts from invisibles must be sold to an authorized bank within one month of receipt. Persons entering Cyprus may bring in any amount in foreign currency notes and up to £C 10 in Cyprus currency notes.

Capital

Exchange control is exercised over all capital receipts or payments. Capital receipts must be offered for sale to an authorized dealer; payments of a capital nature to any destination require prior approval. Outward portfolio investment is not normally permitted, and only specified types of outward direct investment (e.g., for export promotion) are approved.

Foreign investments in Cyprus by nonresidents require the prior approval of the exchange control authorities. In considering applications due regard is given to the purpose of the investment, the extent of possible foreign exchange savings, the number of persons to be employed, the extent of the foreign exchange liability which might arise from the investment, and possible competition with existing industries. Proceeds from the liquidation of approved foreign investments may be repatriated in full at any time, after payment of any charges and taxes due.

Foreign nationals who repatriate or take up residence outside Cyprus, and Cypriots who emigrate, may transfer abroad up to £C 1,000. Any excess amount is deposited in a Blocked Account. The transfer abroad of funds resulting from estates and intestacies and of the sales proceeds of real estate also is limited to £C 1,000, with any excess amount to be credited to a Blocked Account.

Transactions in foreign securities owned by residents require prior permission from the authorities. In principle, all securities held abroad by residents are subject to registration. Foreign life insurance policies not covered by the Insurance Law must be deposited with an authorized dealer.

Gold

Residents may hold and acquire gold coins in Cyprus for numismatic purposes. With this exception, residents other than the monetary authorities, authorized dealers in gold, and industrial users are not allowed to hold or acquire gold in any form other than jewelry, at home or abroad. Authorized dealers in gold are permitted to import gold only for the purpose of disposing of it to industrial users. The export of gold requires the permission of the exchange control authorities.

Changes during 1976

August 16. Authorized dealers were empowered again to handle all payments for permitted imports without referring to the Central Bank.

November 24. The bilateral payments agreement with the U.S.S.R. expired. A trade agreement providing for settlements in convertible currencies was signed. The clearing account, however, would remain open until December 31, 1977, so that certain payments could be channeled through it.

Denmark

(Position on December 31, 1976)

Exchange Rate System

The par value is 0.118489 gram of fine gold per Danish Krone. The central rate is DKr 7.89407 = SDR 1, and Denmark avails itself of wider margins. Denmark maintains a maximum margin of 2¼ per cent for rates in spot exchange transactions in the official exchange market between the Danish krone and the Belgian franc, the deutsche mark, the Luxembourg franc, the Netherlands guilder, the Norwegian krone, and the Swedish krona. No announced margins are maintained for any other currency. Market rates are quoted daily for the 17 currencies that are used most often.1 On December 31, 1976, the buying and selling rates for the U.S. dollar were DKr 5.7835 and DKr 5.7915, respectively, per US$1.

Authorized exchange dealers may engage in arbitrage both spot and forward. Spot transactions are defined as transactions where actual delivery takes place within two banking days; transactions which mature in three banking days or more are defined as forward transactions. Spot transactions in all currencies, including Danish kroner, and forward transactions involving purchases of foreign currencies against sales of foreign currencies, may be concluded freely with domestic and foreign banks. Forward transactions which involve Danish kroner may also be concluded, but only with a maturity of up to two years; furthermore, special rules apply for the forward sale of foreign currencies against Danish kroner to foreign correspondents and for forward dealings against Danish kroner with nonresident customers. Forward premiums and discounts are generally left to the interplay of market forces, but the National Bank of Denmark (the central bank) has from time to time sold U.S. dollars forward to authorized banks. Forward transactions with residents which involve Danish kroner must cover contractual payments for goods and services or payments on authorized loans and credits, the payments covered being due not more than two years from the date of the forward contract. Forward transactions with resident customers which do not involve Danish kroner but the purchase of one foreign currency against another, must also cover either claims or liabilities in one of the two currencies concerned, but the requirements with respect to contractual payments are less strict in this case.

Denmark formally accepted the obligations of Article VIII, Sections 2, 3, and 4, of the Fund Agreement, as from May 1, 1967.

Exchange Control Territory

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

Administration of Control

Exchange control is administered by the National Bank of Denmark, which is the central exchange control authority. However, administrative powers for most payments and transfers are delegated to the authorized exchange dealers, i.e., most banks, some savings banks, and some of the stock exchange brokers who are members of the Copenhagen Stock Exchange. The exchange regulations generally do not apply to individual transactions and transfers of DKr 3,000 or less. Transfers of up to DKr 3,000 may, in any case, be made without delivery of forms. Permission, when required, for foreign direct investments in Denmark has to be obtained from the Ministry of Commerce. Licenses for imports and exports, when required, are issued by the Ministry of Commerce, the Ministry of Agriculture, or the Ministry of Fisheries.

Prescription of Currency

Payments to or from foreign countries may be made in any foreign currency or in Danish kroner. For payments to and from Rhodesia, however, special rules are applied for security reasons, in accordance with UN Security Council Resolution No. 253 (1968).

Nonresident Accounts

Nonresident krone accounts are convertible. The only exceptions are Emigrant Accounts and South Rhodesian Accounts.

Krone Accounts may be opened by authorized banks for foreign banks, insurance companies, and shipping companies, and for specified official institutions of the EEC. They may also be opened for other nonresidents, provided that the total credit balance of the accounts of an individual nonresident does not exceed DKr 200,000; any amount in excess of DKr 200,000 must be transferred abroad within two days. Special accounts not subject to a maximum balance may be opened for nonresidents provided they are only credited with the liquidation proceeds or capital earnings from certain investments in Denmark and some other funds.

Emigrant Accounts are kept by authorized exchange dealers for holding liquid assets owned by or accruing to Danish emigrants, to the extent that the amounts exceed the exchange allowance of DKr 40,000 available to each person at the time of departure. Certain payments to residents may be made freely from these accounts and the balances are in any case made convertible one year after departure.

South Rhodesian Accounts are kept for residents of Rhodesia; balances in these accounts are inconvertible.

Imports and Import Payments

Most commodities are liberalized and free of licensing from all sources. The only commodities that require a license when originating in or purchased from member countries of the EEC are a few agricultural products and unwrought and semimanufactured gold. A few items require a license when originating in Japan, the Republic of Korea, or any other non-state-trading, non-EEC country. A larger number of items require a license when originating in or purchased from Albania, Bulgaria, the People’s Republic of China, the Republic of China, Czechoslovakia, the German Democratic Republic, Hungary, North Korea, Mongolia, Poland, Romania, the U.S.S.R., or Viet Nam. No licenses are granted for the importation of goods originating in or purchased in Rhodesia.

The transfer of funds to, or for the benefit of, Rhodesia is prohibited. With this exception, payments for imports and the related shipping expenses may be made freely within five years (eight years for heavy machinery and major installations purchased for an amount of DKr 1 million or more) from the end of the month in which the goods were cleared through customs, provided that the terms of payment conform to normal commercial practice in the line of business concerned. Repayments of debts must not be made more than 30 days before the day stipulated as the latest in the contract (or before the latest customary date in the trade). However, commercial credits can be repaid at any time if any discount is obtained as a result, provided the payment is made to the supplier and conforms to normal commercial practice in the trade concerned. Prepayments linked to trade in goods and services that are in conformity with normal commercial practice for the particular line of business, may be granted to nonresidents up to one year prior to the expected date of import or the expected date of performance of the service; the permitted period is up to five years for capital goods (ships, aircraft, heavy machinery, and major installations) when purchased for an amount of DKr 1 million or more. All other advance payments for imports require prior approval by the National Bank.

Payments for Invisibles

The National Bank has delegated to authorized exchange dealers the authority to permit payments by residents, including foreign nationals temporarily working in Denmark, for most invisibles to be made freely, provided that payments of debts are not made more than 30 days before the day stipulated as the latest in the contract (or before the latest customary date in the trade); only in a few cases is approval from the National Bank required. Authorized banks are empowered to allow the transfer up to DKr 40,000 a person a year of foreign nationals’ wages and salaries earned in Denmark, provided that the person concerned has not resided in Denmark for more than three years and the transfer is made to the remitter’s own account abroad. Foreign exchange for travel is allocated freely and may be obtained for travel to any country except Rhodesia, but not earlier than 30 days before the trip if the amount applied for exceeds the equivalent of DKr 3,000.

Payments of any kind to Rhodesia, except payments for pensions, for strictly humanitarian, medical, or educational purposes, or for the purchase of news material, are prohibited.

Travelers may take out freely DKr 3,000 in Danish banknotes and coins, and any amount in foreign banknotes or other means of payment. Nonresidents may in addition export any amount of Danish banknotes and coins derived from sales of foreign currency in Denmark or brought in by them when they entered Denmark.

Exports and Export Proceeds

Exports to Rhodesia are prohibited with the exception of products intended for strictly medical purposes, educational material or other equipment for schools and the like, publications, and news material. The only commodity that requires a license when exported to member countries of the EEC is gold. With respect to other destinations, except for certain items subject to strategic controls, export licenses are required only for waste and scrap of certain metals, crude oil and some oil products, and monetary gold.

Export proceeds must be transferred to Denmark without undue delay unless the National Bank permits otherwise. However, this obligation does not apply to amounts which are to be used within 30 days to settle or to offset the cost of certain commercial expenses; otherwise, foreign exchange receipts must either be offered for sale to the National Bank or to an authorized exchange dealer without undue delay or kept in an account with an authorized exchange dealer for a maximum period of 30 days.

Proceeds from Invisibles

Foreign exchange derived from invisibles must be transferred to Denmark, unless the National Bank permits otherwise, and offered for sale to the Bank or to an authorized exchange dealer without undue delay, with exceptions similar to those that apply to export proceeds (see section on Exports and Export Proceeds, above).

Travelers may bring in any amount of Danish banknotes and coins, foreign banknotes, and other Danish or foreign means of payment.

Capital

All transactions not included in a list of current transactions are considered capital transactions. Both inward and outward transfers of capital and all borrowing and lending between residents and nonresidents are subject to exchange control and may be restricted. Licensing practice vis-à-vis residents of member countries of the EEC is based on the rules of the EEC’s directives on capital movements, subject to certain transitional arrangements, and licensing practice in respect of residents of the rest of the world (except Rhodesia) as a rule is similar. Residents have an obligation to repatriate proceeds realized from the sale or liquidation of assets abroad.

Transfers abroad may be made by residents to pay interest on, or to redeem upon maturity, or to repurchase any Danish securities denominated exclusively in Danish kroner as well as the transferor’s own bonds irrespective of denomination (provided these bonds are quoted on an authorized stock exchange abroad), to lend amounts not exceeding DKr 200,000 in a calendar year to subsidiary companies, branches, and so forth, or to a member of the resident’s family, and to buy foreign securities that do not represent direct investments in foreign commercial or industrial enterprises, provided that the securities are acquired on the basis of a subscription right to shares or the like owned by the resident concerned or provided that the resident furnishes proof that he has sold foreign securities to a nonresident for a corresponding amount within the last 12 months.

No special permission is required for residents to make transfers abroad, within certain limits, in connection with direct investments in most industries (equity capital or loan capital) or with the private acquisition of real estate abroad. The limits are DKr 100,000 a year for each foreign enterprise for direct investments of equity capital, DKr 200,000 for direct investments of loan capital, and DKr 60,000 a person for private acquisition of real estate for noncommercial purposes (DKr 150,000 for health reasons). Direct investments abroad by residents are normally approved in accordance with Denmark’s obligations as a member of the EEC and the OECD. The private acquisition of real estate in excess of DKr 60,000 normally is approved in accordance with Denmark’s obligation as a member of the EEC. Authorized dealers do not need special permission to grant loans to nonresidents for the financing of payments to residents for purchases of Danish goods and services, provided normally that the loan is granted directly to the foreign purchaser; in those cases where the National Bank’s approval is required, this is generally given when the loans are customary in the trade concerned. Normal credits granted by exporters in connection with the sale of goods or services are permitted in connection with sales for periods up to five years (eight years for heavy machinery and major installations purchased for an amount of DKr 1 million or more). Permission from the National Bank is required for most other transfers abroad of a capital nature by residents. Portfolio investment abroad is generally not allowed.

Danish emigrants are granted an exchange allowance of up to DKr 40,000 for each person at the time of departure. Remaining liquid assets must be credited to an Emigrant Account in the name of the owner and may be transferred abroad one year after departure, or earlier if the emigrant can show that he has taken up permanent residence abroad with the approval of the relevant foreign authorities.

Inward direct investment in the form of equity capital may be made without any special license if the investment concerns industry, trade in goods, handicrafts, the hotel business, travel agencies, or transportation, and if the investment does not increase total direct foreign investment in the enterprise concerned by more than DKr 100,000 in each calendar year. Inward direct investments with loan capital also are exempt from special license within certain limits. Other direct investment by nonresidents requires permission from the exchange control authorities, which is granted liberally in accordance with Denmark’s obligations as a member of the EEC and the OECD. The purchase by a nonresident of real property in Denmark usually requires a special license from the Ministry of Justice; permission is usually granted readily where real estate is to be used for industrial or similar enterprises.

The sale to nonresidents of Danish bonds listed on a stock exchange does not require a special license. Bonds denominated only in Danish kroner may be resold to residents. Nonresidents may freely purchase or subscribe to shares that are quoted on the Copenhagen Stock Exchange, provided the purchase does not represent a direct investment and is not being made with a view to subsequent direct investment in the company concerned; this liberalization does not apply to certificates of investment companies, etc., whose latest balance sheet shows that more than 10 per cent of their assets are securities other than stock exchange securities.

Nonresidents may freely grant loans for up to five years to residents to finance purchases of commodities and services abroad and to finance the granting of credits for exports of commodities and services, provided the credit is in conformity with commercial practice in the trade concerned. They may, further, grant loans of up to DKr 20 million a borrower in a calendar year to enterprises in most industries, provided that the maturity is at least five years and that the entire proceeds are used only to finance expenditure made within 6 months prior to the date the loan is contracted or to be made within 12 months following that date, for the establishment, expansion, or equipment of the borrower’s own business and/or industrial premises and for the acquisition of plant, machinery, and transport equipment to be used for its own business and/or industrial activities. Finally, they may grant loans up to DKr 200,000 a borrower in a calendar year to members of the nonresident’s family.

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

Transfers of proceeds from the sale or liquidation of all types of investments and transfers of all other liquid funds in Denmark owned by nonresidents other than newly emigrated persons are permitted freely, irrespective of when and how the original investment was acquired. Interest and repayment of principal on authorized loans, credits, and deposits received from persons and firms who are nonresidents at the time of receipt may be paid freely, with the proviso that loans and credits obtained from a nonresident generally must not be amortized or repaid in full more than 30 days before the amortization payment or repayment is due, or before the customary date in the trade.

Inheritances and gifts to relatives may normally be transferred to any country without limitation. Individual payments above DKr 3,000 as gifts to persons other than relatives as a rule require approval from the National Bank. Such approval is normally given for bona fide gifts.

Imports and exports of securities are subject to regulations, the details of which are established by the National Bank. Bona fide imports of Danish securities payable only in Danish kroner are permitted. Exports of Danish and foreign securities owned by nonresidents are normally permitted also. Danish securities held in Denmark and belonging to nonresidents may, with the principal exception of bonds denominated wholly or partly in foreign currencies, be sold freely to residents. Foreign securities held in Denmark and belonging to nonresidents may, with certain exceptions, be sold to residents only with the permission of the National Bank. Foreign securities held in Denmark may be negotiated freely between residents, provided that the exchange control regulations are not circumvented.

The net “commercial” foreign position of authorized foreign exchange dealers is subject to limitation. For any individual bank, this position must not be negative, except in accordance with the following. For all banks collectively, a “frame” has been established of DKr 600 million (until further notice). This total has been subdivided into individual “frames” for those banks interested. The latter may incur a negative net “commercial” foreign position, insofar as this results from the taking up of foreign currency loans and credits for purposes of on-lending in foreign currency to customers in order to finance Danish foreign trade. Bank advances to customers financed by foreign credit taken up under these “frame” arrangements are exempt from the credit ceiling to which the bank concerned is subject; such advances to customers must be used only for purposes permitted by the exchange control regulations. A positive net “commercial” foreign position is in principle allowed only as long as it does not exceed the higher of the following amounts—DKr 2 million or 15 per cent of the capital and reserves of the individual bank concerned. The National Bank has granted a number of exemptions from this rule. Such exemptions are granted only when necessary for the individual bank to cover a net short position in the forward market which could not otherwise be covered. Banks are not normally permitted to borrow abroad for their own account at medium or long term; exceptions are made, however, for loans with a maturity of five years or more having the status of subordinated capital.

Gold

Residents may freely buy, hold, and sell gold coins in Denmark; they may also import gold coins. Otherwise, residents other than the monetary authorities and authorized industrial users are not allowed to acquire gold abroad. Imports and exports of gold normally require licenses issued by the Ministry of Commerce; such licenses are not normally granted except for imports and exports by or on behalf of the monetary authorities and industrial users. Imports of gold in bars or coins, unless made by or on behalf of the monetary authorities, are subject to value-added tax at a rate of 15 per cent but not to customs duty. Domestic transactions also are taxed at a rate of 15 per cent.

Changes during 1976

In addition to the changes listed below, certain changes in quantitative import regulations were made in accordance with EEC decisions, directives, and regulations; most of these related to textiles or beef and veal.

January 30. The National Bank issued supplementary instructions regarding the exchange control status of nonresidents’ local business branches and agency offices, and regarding residents’ business branches and agency offices abroad. The concept of direct investment was modified by treating subordinated capital as outside capital.

January 30. The National Bank stated that the regulation of December 29, 1975, which required authorized dealers to obtain its prior approval to grant loans and credits to foreign financial institutions for the purpose of financing Danish foreign trade, was not intended to hinder the normal extension of credit to foreign financial institutions in connection with the settlement of Danish exports through documentary credits and the like. The rules concerning loans and credits to foreign financial institutions were being redrafted. Meanwhile, the National Bank provisionally approved the continued extension by authorized dealers of loans and credits to foreign financial institutions on terms that were normal until 1975. (The redrafted regulations were issued on October 4.)

March 1. The general rate of value-added tax was restored from 9.25 per cent to 15 per cent.

March 15. France again suspended its participation in the European common margins arrangement. Accordingly, Denmark ceased to observe maximum margins of 2¼ per cent for the French franc.

April 1. The National Bank announced that for exchange control purposes the national debt certificates issued from April 1976 were not bonds but special money market paper and therefore could not be purchased by nonresidents.

October 4. The National Bank announced new regulations to cover the granting of loans by authorized dealers to nonresidents for purposes of financing Danish foreign trade. Loans could be granted to nonresidents without special permission for the financing of payments to residents for purchases of Danish goods and services. Such loans were normally to be granted directly to the foreign purchaser but could nevertheless be granted to foreign financial institutions in certain more specifically prescribed cases. In all other cases, loans to nonresidents for the purpose of financing Danish foreign trade could be granted only with prior approval from the National Bank; applications could be expected to be given favorable consideration when the particular loans were customary in the trade concerned.

Since the National Bank had learned that in certain cases foreign financing institutions had accepted deposits from Danish financial institutions as security or compensation for loans granted to residents, the Bank pointed out that authorized dealers’ holdings abroad must neither directly nor indirectly be made illiquid by tying them up for any special purpose, e.g., as security.

October 4. The administrative practice was eased with respect to payments concerning the utilization of know-how or concerning patent, trademark, model, inventor’s, film, and other author’s rights. Such payments could henceforth be received or effected freely.

October 18. The central rate was changed from DKr 6.28205 = US$1 to DKr 7.89407 = SDR 1. The corresponding change in the conversion rate against the European monetary unit of account was from DKr 7.57831 = 1 unit of account to DKr 7.89407 = 1 unit of account. New intervention rates were set for the currencies participating in the European common margins arrangement.

December 29. The maximum amount that a nonresident individual person could maintain in his Krone Accounts (M-Accounts) was increased from DKr 75,000 to DKr 200,000.

Dominican Republic

(Position on December 31, 1976)

Exchange Rate System

The par value is 0.736662 gram of fine gold per Dominican Peso. The currency is pegged to the U.S. dollar, the intervention currency, at RD$1 = US$1. Exchange transactions in U.S. dollars between the Central Bank of the Dominican Republic and other banks take place at RD$1 = US$1, plus a commission of 132 of 1 per cent. Exchange transactions by commercial banks with the public also take place at the rate of RD$1 = US$1, subject to banking commissions of ¼ of 1 per cent buying and ½ of 1 per cent selling. Different effective exchange rates may arise from the requirement of a fully prepaid letter of credit for certain imports. With the exception of payments for imports made with the importer’s own foreign exchange, all payments abroad must be made through banks, and all exchange received must be sold to banks.

At times, the Central Bank may delay payment of foreign exchange to commercial banks for previously approved requests for exchange. If the request was made for an import for which a commercial bank had opened a letter of credit, the commercial bank pays the exchange and extends a credit to the Central Bank for the amount involved. If the request was for a direct payment, bank draft, or transfer of foreign exchange, the delay in payment represents a commercial arrear. Such arrears are incurred by explicit decision of the Central Bank based on the reserve position at the time of the decision. The commercial banks are required to transfer to the Central Bank all exchange purchased. There is a tolerated parallel exchange market in which the exchange rate fluctuates. The average rate in this market during 1976 was about RD$1.20 = US$1.

On August 1, 1953, the Dominican Republic notified the Fund that it formally accepted the obligations of Article VIII, Sections 2, 3, and 4, of the Fund Agreement.

Administration of Control

Exchange and trade control policy is made by the Monetary Board. Foreign exchange control is administered by the Central Bank. The Monetary Board establishes import quotas, which are administered and controlled by the Foreign Exchange Department of the Central Bank. Certain releases of foreign exchange require the express authorization of the President of the Republic. Export controls are administered by the Dominican Center for Export Promotion (Cedopex).

Prescription of Currency

Imports from the United States that are financed by the U.S. Agency for International Development must be effected under special letters of credit. Certain import commissions must be paid in local currency only. Settlements with Brazil, Chile, Colombia, El Salvador, Mexico, and Venezuela may be effected through special accounts established under reciprocal credit agreements.1 Import payments in currencies other than the U.S. dollar must be made through a letter of credit. Otherwise no obligations are imposed on importers, exporters, or other residents in respect of the method to be followed or the currency to be used for payments to or from nonresidents.

Imports and Import Payments

Imports of many goods are prohibited. Imports of certain other commodities are restricted to quotas. All commodities are exempt from quota and prohibition when they are financed with the importer’s own foreign exchange; such imports are also exempt from prepayment of import taxes and surcharges. Licensing controls are maintained over a few commodities, however, for reasons of health or security. The import controls involve exchange allocations. All payments for imports require the approval of the Central Bank, except those made with the importer’s own exchange. Insurance on imports must be effected with companies authorized to operate in the Dominican Republic.

Commodities subject to quantitative restrictions can be imported and settled with official exchange only against a fully prepaid letter of credit. The same requirement applies to some other goods that are not subject to quantitative restrictions, including many types of smoked, dried, or canned fish, olives and capers, alcoholic beverages, Venetian blinds, some perfumes and cosmetics, and certain construction materials, including plywood doors and boards. Some other import items not subject to restrictions must be covered by regular letters of credit. The commercial banks transmit to the Central Bank each day a list of applications for all imports against letters of credit. After the Central Bank approves an application, the letter of credit may be opened by the commercial bank. For prepaid letters of credit the Central Bank debits the account of the commercial banks for the peso equivalent at the time of approval of the letter of credit. The peso equivalent of other letters of credit is forwarded to the Central Bank after they have been negotiated and exchange is requested by the commercial bank.

Most imports are subject to an internal consumption tax of 20 per cent ad valorem. Virtually all imports are also subject to customs surcharges (impuestos internos) ranging from 10 per cent to 200 per cent of the f.o.b. value; for most imports, however, they are 56.6 per cent. Imports of agricultural and industrial machinery and equipment and spare parts are subject to a single import tax (including customs duties) of 10 per cent.

Payments for Invisibles

All payments for invisibles require the prior approval of the Central Bank, which is given only after careful examination of the application and if the transaction is considered genuine. The allocation of foreign exchange for travel and for insurance premiums is suspended. Allowances for family remittances and medical expenses are rarely granted. Residents are not prevented, however, from purchasing exchange for travel purposes and personal remittances in the parallel market. Airline tickets are subject to a tax of 15 per cent when the price of the ticket is over RD$200 or from RD$5 to RD$25 when the price is RD$200 or less.

Nonresident foreign nationals working in the Dominican Republic in industries and firms that contribute to the country’s economic development may remit abroad for any purpose up to 60 per cent of their salaries. For students pursuing approved courses, exchange requests for monthly maintenance allowances are approved up to US$240 for Puerto Rico, up to US$250 for Spain, up to US$300 for other European countries, and up to US$270 for all other countries; an additional allocation of US$50 a month, irrespective of country, is available for postgraduate students. Exchange is also sold for remittances to authorized students to meet expenses for tuition, books, and other fees.

Applications for exchange for contractual payments, such as interest and amortization payments on loans registered with the Central Bank, are approved in conformity with the terms of the contract. Transfers of profits and dividends are permitted only in respect of foreign investments that have been registered in the Central Bank and cannot exceed 18 per cent a year of the net value of the original and any additional investment, including reinvested profits. The Monetary Board, however, is empowered to authorize remittances in excess of 18 per cent when investments are deemed beneficial to the Dominican economy. Dividends remitted or credited to nonresidents are subject to a tax of 18 per cent.

In principle, exchange for payments for invisibles is made available within five days from receipt of the application.

Travelers are not permitted to take with them any domestic currency.

Exports and Export Proceeds

Exports of 28 products or subproducts, mainly foodstuffs, are prohibited, and 33 others, mainly intermediate goods, are subject to quantitative restrictions. Export licenses are required for sugar, coffee, cocoa, and tobacco. Within two working days of receiving payment, exporters of Dominican products must surrender through the commercial banks to the Central Bank foreign exchange equal to 100 per cent of the f.o.b. or c.i.f. value of their exports. For the purpose of exchange surrender, declared export prices must equal or exceed the minimum export prices established by Cedopex. Exempt from the exchange surrender requirements are foreign mining companies, and firms operating in industrial free zones, which are only required to convert sufficient foreign exchange to cover local costs and taxes. All exports of sugar and sugar by-products are subject to prior authorization by a special committee. Exporters may not extend credit for more than 90 days from the date of shipment without authorization by the Central Bank.

Proceeds from Invisibles

The foreign exchange proceeds from invisibles must be surrendered to the Central Bank through the commercial banks. The import of Dominican banknotes and coins is prohibited.

Capital

There are no restrictions on the inward movement of capital by either residents or nonresidents. Inward capital remittances must be registered with the Central Bank and converted into pesos at that Bank. Registered foreign direct investments are eligible for remittances of profits and dividends. Registration is permitted for investments in agriculture, livestock, mining, manufacturing, tourism, transportation and communications, and finance companies. The Monetary Board may, however, permit the registration of other investments when deemed beneficial to the economic development of the country. Registration may cover the value of machinery and equipment, as well as intangible assets such as licenses and patents. Applications for approval of outward capital remittances must be submitted through the commercial banks to the Central Bank. Withdrawals of capital by foreigners leaving the Dominican Republic are authorized in reasonable amounts, sometimes with provision for the transfer to be effected in annual installments. Applications by residents to transfer capital abroad to make portfolio investments, purchase real estate, etc., are not normally approved.

Gold

Residents may purchase, hold, and sell gold coins in the Dominican Republic for numismatic purposes. With this exception, residents other than the monetary authorities and authorized industrial users are not allowed to hold or acquire gold in any form other than jewelry, in the Dominican Republic or abroad. Imports and exports of gold in any form other than jewelry constituting the personal effects of a traveler require licenses issued by the Central Bank; such licenses are not normally granted except for imports and exports by or on behalf of the monetary authorities and industrial users.

Changes during 1976

May 27. By resolution of the Monetary Board, the mutual credit facilities between the central banks of the Dominican Republic and of Colombia were increased by US$10 million plus a margin of 20 per cent.

May 27. Quarterly import quotas for regular importers importing no more than US$1,125 a quarter could be cumulated, allowing the importer to make a single annual application for up to US$5,000.

May 27. A reciprocal credit agreement with the central bank of El Salvador was approved.

July 2. The ceiling of US$25 million on the reciprocal credit arrangement with the Central Bank of Venezuela was raised to US$40 million.

August 12. Authority to fix minimum export prices for agricultural and fishery products (except sugar, coffee, and tobacco) was delegated to the Dominican Center for Export Promotion (Cedopex).

September 2. The Monetary Board decided to suspend temporarily, or reduce, the allocation of foreign exchange to the banking system for a number of import items. These could still be paid for with the importer’s own exchange.

September 16. The swap arrangement between the Central Bank of the Dominican Republic and the Central Bank of Venezuela was augmented by 5 per cent to 20 per cent.

December 2. The Monetary Board suspended a Resolution of August 10, 1967, which excluded government imports from the existing system of import quotas and prohibitions.

December 9. The existing system of import quotas and prohibitions was extended to December 31, 1977.

Ecuador

(Position on December 31, 1976)

Exchange Rate System

The currency of Ecuador is the Sucre. On February 26, 1973 a central rate of S/ 25.00 = US$1 was established, corresponding at the time to 0.0294665 gram of fine gold per sucre.

There are two exchange markets. In the official market the Central Bank of Ecuador maintains rates of S/ 24.80 buying, and S/ 24.95 selling, per U.S. dollar, which apply to export proceeds, import payments (except for printed matter), certain invisible and capital transactions, and most transactions by the Government or public entities; however, the exchange transactions of the private petroleum companies must be conducted with the Central Bank, at S/ 25.00 = US$1, subject to an exchange tax of 1 per cent, buying and selling. Proceeds from loans granted by international agencies to the Government and to public institutions also are converted at the Central Bank, at S/ 25.00 = US$1, but are exempt from the 1 per cent exchange tax. All other transactions take place in a free market where the rate fluctuates but in which the Central Bank intervenes; on December 31, 1976 the free market rate was about S/ 28.00 = US$1.1 A few transactions eligible for the free market may alternatively be effected at the Central Bank, at its official market buying and selling rates. Applications for the purchase of foreign exchange in excess of US$10,000 at the official rate must be supported by documentary evidence regarding the intended use.

Loans taken up abroad are subject to an exchange tax ranging from 0.5 per cent for maturities of 18 to 24 months to 2 per cent for maturities of 6 months or less. Exempt from this tax are (1) loans with a maturity in excess of 24 months; (2) credits from foreign governments and international financial organizations; (3) credits granted to public and semipublic agencies; (4) investment credits for the agricultural and fishing sectors with a maturity exceeding three years; (5) credits with a maturity exceeding three years for the importation of machinery and capital goods; and (6) suppliers’ credits which do not involve an inflow of foreign exchange.

Ecuador formally accepted the obligations of Article VIII, Sections 2, 3, and 4, of the Fund Agreement, with effect from August 31, 1970.

Administration of Control

The Monetary Board has authority to shift transactions between the two exchange markets and has extensive powers with respect to import policy. The official exchange market is under the control and supervision of the Central Bank. The Central Bank also issues import and export licenses and registers foreign capital. Imports which enter as part of a direct investment and imports by foreign enterprises which have contracts with the Government require prior authorization by the Ministry of Industries, Commerce, and Integration and, when exemptions from fiscal charges are sought, by the Ministry of Finance. However, all applications for import licenses by industrial firms must be submitted to the Central Bank. Foreign investment in Ecuador is supervised by the Foreign Investment Council.

Prescription of Currency

Most settlements with the German Democratic Republic, Hungary, Poland, and Romania must take place through bilateral accounts. Payments between Ecuador and Bolivia, Brazil, Chile, Colombia, Mexico, Peru, and Venezuela must be made through accounts maintained with each other by the Central Bank of Ecuador and the other central banks concerned, within the framework of the LAFTA multilateral clearing system.2 Exchange proceeds from other countries must be received in convertible currencies. Whenever possible, import payments must be made in the currency stipulated in the import license.

Imports and Import Payments

Permitted imports are divided into two categories: List I, consisting of essential goods (Group A) and semiessential goods (Group B), and List II, consisting of less essential and luxury goods. All goods not included in these two lists are prohibited; in addition, imports of passenger automobiles and certain other vehicles are suspended.3

Prior import licenses are required for all permitted imports, with the exceptions specified below. Books, newspapers, periodicals, and printed or recorded music may be imported freely without a license; payments have to be made through the free market. Medicine and spare parts for machinery and automotive vehicles are free of license when valued at US$500 c.i.f. or less (US$500 f.o.b. or less for goods shipped by air). A few goods may be imported only from LAFTA countries, and some only from Paraguay; with these exceptions, import licenses are issued freely irrespective of the origin of the goods, provided that the appropriate import taxes (including import surcharges) have been paid, that the required prepayments of 80 per cent of import duties have been made, that an advance deposit has been made, and that a certificate is submitted showing that the insurance has been arranged in Ecuador. The licenses automatically entitle the holders to obtain exchange at the official rate to cover the c. & f. value of the imports upon presentation of the shipping documents; advance payments for imports are prohibited. Import licenses which do not entitle the importer to foreign exchange at the official rate (“no exchange licenses” or permisos de importación no reembolsables) may be issued for goods financed from the proceeds of certain international loans, provided that these have been registered at the Central Bank, but such licenses are not required to import the goods concerned.

The Monetary Board is authorized to shift items between Lists I and II and to prohibit the import of goods or lift import prohibitions when the economic situation of the country and the balance of payments situation so require.

Many imports are subject to advance deposit requirements. The deposit, which must be maintained for 180 days, is 30 per cent of the c.i.f. value for goods on List II and 20 per cent for goods on List I-B.4 There are various exemptions.

Most imports are subject to a tax of 4 per cent levied on commercial transactions. Furthermore, all goods are subject to a tax of 1 per cent of the c.i.f. value, unless they represent gifts or foreign loans. Many goods in List II are subject to an import surcharge of 30 per cent ad valorem.

Payments for Invisibles

Exchange for payments in respect of certain current invisibles may be obtained from the Central Bank at the official rate. These invisibles are in principle limited to interest on foreign loans that have been registered at the Central Bank, dividends and profits on foreign investments registered at the Central Bank, payments by the Government and public entities, and the necessary expenses of Ecuadorans studying at universities abroad. Interest payments at the official rate may not exceed 3 percentage points over the prime rate in the country of the lender or exporter and are subject to a ceiling of 10 per cent per annum, and remittances of dividends and profits at the official rate may not exceed 20 per cent of the registered value of the investment. With respect to loans to petroleum companies only, interest, commission, and other financial charges on foreign loans may not exceed the equivalent of 2 per cent above the rates of interest of the creditor country; moreover, annual amortization may not exceed the sum of undistributed profits, depreciation of fixed assets and liquidated assets, and any variation in working capital. There are also limits on student allowances eligible for the official rate; these range from US$400 to US$600 a month, depending on the type of study and on the country involved.

All other payments for current invisibles, including travel expenditure, must be settled in the free market and are unrestricted. There are no limitations on the amounts of domestic and foreign banknotes that travelers may take out. Residents traveling abroad by air must pay a tax of S/ 600 for each exit visa. Airline tickets for foreign travel are taxed at 10 per cent, while tickets for travel by ship are subject to tax at the rate of 8 per cent for departure from Ecuador and 4 per cent for the return trip to Ecuador.

Exports and Export Proceeds

All exports require licenses to ensure, among other things, the full surrender of the exchange proceeds to the Central Bank; licenses are issued freely, subject to guarantee. No surrender is required for exports effected under licensed barter transactions. Reference prices are established for exports of bananas to help ensure the full surrender of the exchange proceeds. Reference prices are also established for exports of crude petroleum; these serve as the basis for the calculation of taxes, royalties, etc. Certain exports are subject to export taxes, payable at the time the export license is received. An export tax of 15 per cent is levied on crude petroleum, one of 12 per cent on sugar, and one of 10 per cent on cocoa beans; exports of coffee beans are subject to a sliding-scale tax which ranges from 2.5 per cent to 15 per cent. Certain exports exempted from the ad valorem export taxes receive a subsidy based on the f.o.b. value. The subsidy is received in the form of a tax credit certificate form of a tax credit certificate (certificado de abono tributario) on the basis of customs documentation. There are other export taxes in addition to those mentioned above.

Proceeds from Invisibles

Receipts from specified invisibles have to be sold to the Central Bank at the official rate. All other receipts, including those from travelers, may be sold in the free market. There are no limitations on the amounts of domestic and foreign banknotes that travelers may bring in.

Capital

Capital may freely enter or leave the country through the free market. For all outward transfers through the official market in excess of US$10,000 documentation as to the purpose must be submitted to the Central Bank. Outward transfers through the official market are restricted. Most borrowing abroad is subject to an exchange tax ranging from 0.5 per cent to 2 per cent (see section on Exchange Rate System, above).

All foreign investments in Ecuador must be registered with the Central Bank. New investments require the prior authorization of the Ministry of Industries, Commerce, and Integration and/or the Foreign Investment Council. In the case of investment for which exchange was sold to cover local costs, the investor must document that the exchange was sold to the Central Bank in order to be entitled to foreign exchange at the official rate for remittances of interest, profits, dividends, and amortization. For foreign capital entering in the form of machinery and equipment, the investor must document that the merchandise has been cleared through customs and that it took the form of a “nonreimbursable” import. Additionally, the investor must present to the Central Bank the certification from the appropriate ministry that the declared value conforms to the actual value of the machinery and equipment. The Exchange Department of the Central Bank must submit a recommendation to the General Management of the Central Bank within 30 days from receipt of the request for registration in the official market and all pertinent documentation. Thereafter, taking into account the interests of the Ecuadoran economy and priorities established in the country’s development plans, the General Management of the Central Bank must approve or deny the registration for foreign exchange purposes within an additional 30 days. In certain cases, where all documentation has been submitted, the Central Bank can provisionally register the investment for a period of up to 90 days.

Similarly, loans in foreign exchange granted to the Government or to official entities may be registered for foreign exchange purposes with the Exchange Department of the Central Bank; for all foreign loans, however, registration for statistical purposes is mandatory. In the case of suppliers’ credits and similar credit for financing the importation of merchandise, no special registration procedure is required; all the pertinent information on terms of payments, etc., is contained in the import license, and that provides the basis for purchase of exchange for remittance of interest, charges, and scheduled amortization. Foreign nationals are prohibited from owning rural properties and from owning or operating mining industries within 30 miles of Ecuador’s coastline or borders. The participation of foreign capital as a direct investment in the banana industry, in domestic wholesaling and retailing, in construction, and in real estate development is also prohibited.

Foreign exchange at the official rate may be obtained for the withdrawal of foreign investment from Ecuador five years after the date of registration, on the basis of a schedule agreed by the Central Bank. Profits accumulated in previous years may be repatriated also on the basis of a schedule agreed by the Central Bank for investments which have completed the registration procedure for foreign exchange purposes. For investments registered on a provisional basis, no profits may be repatriated through the official market. Profit remittances may not exceed the limit (20 per cent a year) specified in the Foreign Investment Code of the Andean Pact.

Residents who are private individuals are not granted official foreign exchange to purchase securities or real estate abroad. Commercial banks are authorized to maintain accounts with correspondent banks abroad in convertible currencies.

Gold

Residents other than the Central Bank may export gold only in the form of filigree work whose gold content represents not more than 25 per cent of its market value. Imports of monetary gold are reserved for the Central Bank; they are treated as List I imports, payable through the official market. Imports of nonmonetary gold in bars may be made by the Central Bank or by any other resident and are also treated as List I imports eligible for the official rate. Imports of gold for the production of jewelry are treated as List II imports. Gold bars are exempt from import duty, while that on semiworked gold is 40 per cent ad valorem.

Changes during 1976

January 1. The Corporación Estatal Petrolera Ecuatoriana (CEPE) took over the marketing and distribution of petroleum products.

January 1. The import prohibition for passenger automobiles, light pickup trucks, and certain other motor vehicles was extended until March 31 (Monetary Board Resolution No. 819). It was then further extended to September 30 (MBR No. 854), and again until December 31 (MBR No. 917).

January 30. Virtually all imports from Peru, up to a value of US$80,000 a shipment, were exempted from taxes and restrictions for one year (Decree-Law No. 59-C).

February 4. The term for the payment of collections and for acceptances in respect of goods in List II was increased to 360 days.

February 4. The Ministry of Industries, Commerce, and Integration ruled that no direct foreign investment in Ecuador would be authorized for the establishment of branches of foreign banking, insurance, and financial institutions. The establishment of branches of foreign companies in other sectors would only be authorized in exceptional circumstances (Resolution No. 51).

March 11. Decision No. 47 of the Cartagena Agreement, defining mixed capital and state companies, was implemented (Decree-Law No. 187).

March 20. Fishing boats and related equipment were exempted from the 20 per cent advance import deposit (MBR No. 849).

March 31. Foreign natural persons investing in new or existing natural firms were considered “national investors” for purposes of Decision No. 24 of the Cartagena Agreement, provided they had been resident in Ecuador, without interruption, for over one year and the invested capital originated in Ecuador, or alternatively, when they waived the right to re-export the capital and transfer the profits abroad (Decree No. 239A).

March 31. Certain foreign investments in Ecuador that had not been registered by the prescribed deadline could be registered until December 31, 1976. This was applicable also to foreign loans taken up by national firms after June 30, 1971 without prior authorization (Decree No. 239B).

April 7. With effect from June 20, the requirement of a consular invoice for imports was terminated (Decree No. 281).

April 27. Exports of wheat flour were prohibited.

June 1. The ceilings on bank credit to finance advance payments for exports were eliminated (MBR No. 876).

June 2. A tax of 1 per cent was imposed on goods temporarily imported and valued at over US$100 c.i.f.

June 22. New foreign investment in construction was prohibited; real estate development of social benefit was excepted (Resolution No. 307 of the Ministry of Industries, Commerce, and Integration).

June 22. Goods in List I were exempted from advance import deposit when imported in a barter transaction involving the export of bananas (MBR No. 884).

June 22. Imports financed by external credits for public sector projects were exempted from advance import deposit, as were imports financed through external loans administered by the Central Bank and imports for priority projects (MBR No. 886).

July 6. The exchange tax on the proceeds of foreign loans was reduced. It was now applied at a range of 2 per cent for maturities of up to 6 months to 0.5 per cent for maturities of 18 to 24 months, while loans with a maturity in excess of 24 months were exempt. Previously, the tax was levied at a range from 6 per cent for maturities over 30 months to 2 per cent for maturities under one year, while most credits with a maturity exceeding three years were exempt (Decree No. 506).

July 14. The Monetary Board was authorized to direct the Central Bank to intervene in the free exchange market (Decree No. 529). Implementing regulations were issued on August 19 (see below).

July 23. Exchange allocations at the official rate for study abroad were increased from a range of US$300–450 a month to one of US$400–600 a month (MBR No. 893).

August 19. The availability of foreign exchange at the official rate for payments of interest on foreign loans was restricted to an interest rate of 10 per cent and to credits registered with the Central Bank; any excess had to be purchased in the free market. The regulation was applicable also to suppliers’ credit. There were exemptions for foreign credits taken up by the public sector, provided the foreign exchange had been sold in the official exchange market (MBR No. 909).

August 19. The Central Bank was authorized to intervene in the free market by purchases and sales of foreign exchange at rates to be fixed daily. Sales would be made for the following purposes: (1) payment of capital and interest in respect of foreign credits registered with the Central Bank, provided the foreign exchange had been converted in the free market prior to August 19; (2) payment for documentaries, films, and news services; (3) travel abroad, subject to presentation of passport and tickets, up to US$1,000 a person a trip for countries in South America and US$1,500 for other countries; and (4) other purposes, at the discretion of the Central Bank, up to US$500 a person (Decree No. 529 of July 14 and MBR No. 896 of August 19).

The Central Bank began these operations on August 23 by quoting buying and selling rates of S/ 27.40 and S/ 27.70 per US$1 for U.S. dollar travelers checks, and of S/ 27.30 and S/ 27.60 per US$1 for U.S. banknotes.

On October 1, the limits under (3) and (4) were increased to US$3,500 and US$2,000 a person, respectively. On October 20, the items under (2) became eligible for the official exchange rate (MBR No. 922).

September 1. A reciprocal credit agreement with Venezuela came into force.

September 27. The Central Bank required notification of all forward agreements to export goods (other than hydrocarbons), within eight days of the contract (MBR No. 918).

November 10. The limit on transfers of profits, dividends, and interest on foreign capital was raised from 14 per cent to 20 per cent per annum.

December 3. A reciprocal credit agreement with Chile came into force.

December 8. The import prohibition for various types of motor vehicles was lifted with effect from January 1, 1977, when they became subject to prior authorization by the Ministry of Industries, Commerce, and Integration (except certain jeep-type vehicles) and to an advance import deposit of 50 per cent of the c.i.f. value (MBR No. 929).

December 14. Bananas were exempted from all export taxation.

December 31. CEPE took over the holdings in Ecuador of a foreign petroleum producer.

Egypt

(Position on December 31, 1976)

Exchange Rate System

On September 18, 1949, a par value for the Egyptian Pound was established by the Arab Republic of Egypt with the Fund. However, exchange transactions no longer take place at rates based on that par value. Most exchange transactions take place at rates based on the official rate of LE 1 = US$2.55555. The Central Bank of Egypt’s official buying and selling rates for the U.S. dollar on December 31, 1976 were LE 0.391305 and LE 0.395218, respectively, per US$1.

Rates of exchange in a parallel market are determined in the light of prevailing foreign exchange considerations. On December 31, 1976 the buying and selling rates for the U.S. dollar in this market were LE 0.700 and LE 0.714, respectively, per US$1. In addition, certain transactions take place at freely negotiated exchange rates; on December 31, 1976 the rate in this market was about LE 0.75 per US$ 1.

Official rates and parallel market rates for 15 other convertible currencies1 are based on cross rates quoted in New York. Forward cover in the official exchange market is available for foreign trade transactions, at a charge of 3 per cent.

Banks do not require prior exchange control approval to deal among themselves in foreign currencies or to engage in arbitrage transactions abroad; nor is such approval required for transactions effected through the parallel exchange market or for balances held in specified foreign currency accounts.

Administration of Control

Exchange control is supervised by a Committee for Foreign Exchange, which is set up by the Minister of Economy and Economic Cooperation. The exchange control laws, ministerial orders, and instructions of the Minister are carried out by a Director-General of Foreign Exchange Affairs appointed by him. A foreign exchange budget is established annually. Exchange control is implemented under the supervision and instructions of the Undersecretary for Foreign Exchange Affairs and the Director-General of Foreign Exchange Affairs. The technical work of exchange control is performed by the General Administration for Foreign Exchange Affairs attached to the afore-mentioned Undersecretary. Banks are authorized to execute foreign exchange transactions, within the framework of a general authorization, without need to obtain specific exchange control approval. The Ministry of Trade supervises imports and exports. Imports are controlled by exchange allocations rather than by import licenses. Certain imports and exports are reserved for public sector companies. Port Said City is a free zone.

Prescription of Currency

Payments to and from countries with which Egypt does not have bilateral payments agreements may be made in any convertible currency;1 in Egyptian pounds or a convertible currency to the debit or credit of the appropriate Free Account; or in any other manner prescribed or permitted by the Foreign Exchange Regulations Manual. However, the proceeds from exports of raw cotton to convertible currency countries must be received in deutsche mark, Swiss francs, or U.S. dollars (in addition, in French francs and Japanese yen for exports to France and Japan, respectively).

Settlements with countries with which Egypt has payments agreements are made according to the terms of those agreements.2 However, payment to such countries for “own exchange” imports and various other purposes may be made in convertible currencies. Certain settlements with countries with which indemnity agreements concerning compensation for nationalized property are in force are made through special accounts in Egyptian pounds with the Central Bank of Egypt.

Suez Canal dues are expressed in SDRs and may be paid by debiting Canal Dues Accounts, Advance Payment Canal Dues Accounts, Free Accounts in Foreign Currency, or Free Accounts in Egyptian Pounds/Official Market. Canal Dues Accounts must be opened in foreign currency and balances are retransferable abroad.

Nonresident Accounts3

In addition to the special accounts related to Egypt’s bilateral payments agreements or to the indemnity agreements concluded with certain countries, there are four main types of accounts which may be opened by nonresidents: Free Accounts, Special Accounts, D Accounts, and Canal Dues Accounts.

Free Accounts may be opened in the name of any person other than the Egyptian Government, public authorities, and public sector entities. They may be opened either in foreign currency or Egyptian pounds (related to either the official market or the parallel market) ; the latter are freely convertible at the relevant exchange rate. Free Accounts may be credited with any convertible currency transferred from abroad or with the proceeds from the sale of such currencies; with transfers from other Free Accounts; with proceeds from the sale of foreign banknotes which the holder has declared upon entry into Egypt; with interest on the accounts; and with the equivalent of any payment authorized in convertible currency. They may be debited for payments abroad in any convertible currency; for transfers to other Free Accounts and to Special Accounts; for purchases of foreign banknotes or other means of payment; for any payments in Egypt, including those for exports; and for bank charges and commissions.

Special Accounts in foreign currency may be opened in the name of any person other than the Egyptian Government, public authorities, and public sector entities. They may be credited with proceeds from the sale of acceptable foreign banknotes; with transfers from Free Accounts or other Special Accounts; and with interest on the accounts. They may be debited for payments for imports; for either transfers abroad, or purchases of foreign banknotes or other means of payment, to cover the expenses abroad of the account holder or his family (within a limit of LE 2,000 a year); for other authorized payments abroad; for local foreign currency payments; and for purchases of foreign banknotes or other means of payment for use in Egypt.

D Accounts may be opened in the name of any resident of a country with which Egypt has a payments agreement (see footnote 2). The accounts must be designated by the name of the partner country concerned. These accounts may be credited with receipts under bilateral payments arrangements and with the equivalent of transfers authorized to the country of the account holder. They may be debited for transfers to the country of the account holder and for local payments (including those for Egyptian exports) authorized by the implementing regulations and within the scope of the relevant bilateral payments agreement.

There are also Nonconvertible Capital Accounts, to which must be credited any payment of a capital nature to a foreign national living abroad which is not remittable under the exchange control regulations. Banks may debit these accounts for charges legally due from the account holders. Accounts held by individuals may be debited up to a limit of LE 2,000 a year for use by account holders. Accounts held by juridical persons may be debited for settlement of obligations due to the Egyptian authorities and for payments to residents for services rendered, and up to a limit of LE 2,000 a year for expenses incurred in connection with the activities or residence of the holder’s employees in Egypt.

All accounts held by residents of Rhodesia also are nonconvertible; no transactions on these accounts may take place without prior approval.

Foreign Exchange Retention Accounts may be opened in the name of authorized recipients of the proceeds from certain exports and nonfactor services, and may be credited with the proceeds of such transactions. They may be debited for payments in respect of trade and invisibles related to the account holder’s economic activities (subject to payment of the 2 per cent differential between the parallel market buying and selling rates, for parallel market accounts), or for surrender of the foreign currency at the appropriate exchange rate. Any balances in such accounts on June 30 or December 31 of any calendar year must be used within three months or surrendered.

Imports and Import Payments

Imports of certain goods from any source, and all imports from Israel, Rhodesia, and South Africa, are prohibited. No exchange is allocated in practice for many goods that are considered nonessential or that are also produced locally, although most commodities may be imported provided the necessary foreign exchange is acquired outside the parallel or official markets. Imports financed under bilateral payments agreements, certain basic goods, and certain imports by the Ministries of Petroleum, Transportation, and Communications are financed at the official rate. Other imports are financed at the parallel market rate or take place under the “own exchange” arrangements.

Most imports from payments agreement countries (except those made under the “own exchange” arrangements), as well as imports of specified goods from any source, are reserved for the public sector.

A Supreme Council for the Planning of Foreign Trade is entrusted with establishing long-term policy for exports and imports, controlling the annual export and import plan, and supervising the execution of the foreign exchange budget. The ministries concerned are responsible for setting priorities regarding imports and their timing, within the framework of semiannual foreign exchange programs. Foreign trade committees in the various ministries, authorities, and other public sector entities consider import and export offers for the goods within their jurisdiction, in the light of specifications, prices, delivery dates, and means of payment. Approval by a foreign trade committee constitutes the necessary authorization for the implementation of import transactions. Private sector imports through the parallel market require approval by the Commercial Agency for the Parallel Market.

For purposes of administration, the economy is divided into several sectors (agricultural, industrial, transportation, etc.). The annual foreign exchange budget provides for a specific quota for each sector, and the authorities in charge of the sector decide upon the goods to be imported within that quota.

By virtue of Order No. 478 of 1973, all goods may be imported without an import permit; imports are regulated by exchange allocations rather than by import licenses.

By virtue of Order No. 1058 of 1975, all commodities except those appearing in a special list may be imported, provided that no purchase of foreign exchange in the official or parallel markets is involved. A special Determination Committee must first approve the terms of the transaction. Certain imported goods may also be sold for foreign currency to Egyptians and foreigners at special shops.

An economic development tax of 10 per cent of the c.i.f. value is payable on imports; the tax is 5 per cent for certain highly essential foodstuffs imported by the Ministry of Supply. A statistical tax of 1 per cent of the c.i.f. value is payable on all imports except wheat.

Payments for Invisibles

Banks are authorized to provide exchange for payments for certain invisibles in accordance with general authorizations and instructions and up to specific quotas. Egyptian nationals who have deposited earnings from their work abroad, or from services performed for nonresidents, in Free Accounts or Special Accounts, may use this foreign exchange freely, as indicated below. Other residents may purchase, through local banks and up to specified amounts, the foreign exchange required for travel expenses and certain other purposes, at the parallel market rate. Additional foreign exchange may be obtained through the free market as follows: (1) by opening a Free Account and crediting it with foreign exchange or convertible Egyptian pounds obtained from another holder of Free Account balances, after which the holder is free to use the funds thus acquired to meet expenses abroad for invisibles without limit; or (2) by opening a Special Account and crediting it with foreign currency from any source or with foreign exchange obtained from another holder of Special Account balances, after which the holder is free to use the funds thus obtained to meet expenses abroad for invisibles up to a limit of LE 2,000 a year.

Virtually all nongovernment payments for current invisibles due in convertible currency and not related to trade transactions must be settled in the parallel market. The following payments for invisibles take place at the official rate: government payments; specified types of payments relating to shipping; export expenses payable at the official rate; repatriation of amounts brought in at the official rate; dividends accruing to participants in joint ventures; reinsurance payments and indemnities due from insurance companies; pensions; bank expenses and commissions due to foreign correspondents for transactions settled at the official rate; and repayment of public and international commitments as well as the payment of amortization and interest due on transactions settled at the official rate.

Travelers may not export more than LE 20 in Egyptian pound banknotes. Egyptian travelers may take with them any foreign exchange which they have acquired legitimately; foreign travelers leaving Egypt may reconvert their remaining Egyptian pounds after deduction of LE 20 for each night spent in Egypt.

Exports and Export Proceeds

Apart from exports to Israel, Rhodesia, and South Africa, which are prohibited, and commodities required for the national economy, whose export may be restricted, exports may be made free of license. Exports of many products are organized and supervised by foreign trade committees. Cotton, rice, and petroleum are exported by the public sector only. The proceeds in convertible currencies from exports of raw cotton, cotton yarn and cotton textiles, rice, petroleum and petroleum products,4 potatoes, fresh onions and garlic, cement, and re-exported foreign goods imported at the official rate must be surrendered at the official rate. Other export proceeds are eligible for the parallel market rate; the same applies to 50 per cent of any proceeds in convertible currency in excess of the annual export targets for cement, cotton yarn, and cotton textiles.

Export proceeds eligible for the parallel market may be retained in Foreign Exchange Retention Accounts, subject to periodic surrender of unutilized balances. Export proceeds other than those of the petroleum sector must be repatriated and surrendered within three months from the date of shipment of the goods. Proceeds from exports to payments agreement countries must be obtained in accordance with the provisions of the relevant agreement. Some exports to specified countries may be settled through indemnity accounts.

Proceeds from Invisibles

The official rate applies to all receipts through payments agreement accounts and to the following receipts in convertible currencies: Suez Canal and Sumed Pipeline dues; navigation charges, ship repairs, and supply of provisions; interest on official market capital items; and local expenditures by international organizations and foreign governments. Airline tickets purchased by foreigners not resident in Egypt for at least five years or not exempted for various special reasons, must be paid for with Egyptian pounds acquired at the official rate. The parallel market rate applies to other convertible currency receipts.

Earnings abroad by persons other than the Government, public authorities, and other public sector entities may be held abroad or retained indefinitely in Free Accounts. Receipts from the provision of local hotel, transport, or travel agent services to tourists may be retained in Foreign Exchange Retention Accounts. Many public sector and other entities are permitted to retain all or part of their receipts from invisibles in Foreign Exchange Retention Accounts, and in many instances are exempt from the periodic surrender requirements of these accounts. Certain travel in Egypt by foreigners may be financed from various special accounts, such as those under indemnity agreements with certain countries.

Persons arriving in Egypt from abroad may import up to LE 20 in Egyptian pound banknotes and are permitted to bring in, and to use locally, unlimited amounts in foreign exchange, subject to customs declaration. Foreign travelers must convert into Egyptian currency the equivalent of LE 100 to obtain an entry visa.

Capital

Egyptian nationals who have deposited foreign earnings in Free Accounts in Egyptian banks may use this foreign exchange for any purpose, including transfer abroad. With this exception, outward capital transfers are severely restricted, although residents are effectively able to transfer unlimited amounts abroad through transactions in the free market (see section on Payments for Invisibles, above). Egyptian emigrants are authorized to transfer abroad funds up to LE 500 a person or LE 2,000 a family; to take out jewelry and other valuables up to LE 200 a person or LE 500 a family; and to export other personal effects and furniture up to LE 200 a person or LE 500 a family.

Authorized banks are empowered to import, export, and negotiate securities and to effect transfers related to the sale or purchase of either Egyptian or foreign securities. Brokers registered on the stock exchanges of Cairo and Alexandria are authorized to intermediate in the transfer of ownership of securities, whether at home or abroad. Transfers of accrued alimony are permitted in accordance with court orders.

An amount not exceeding LE 5,000 a family—irrespective of whether the sum is made up of capital or income—may be released from a family’s assets in Egypt to persons of foreign nationality who leave the country finally after a period of residence of at least five years. Any amount above this limit is credited to a Nonconvertible Capital Account. Any payment of a capital nature not remittable under the exchange control regulations must be credited to a Nonconvertible Capital Account.

Law No. 43 of June 19, 1974 Concerning the Investment of Arab and Foreign Funds and Concerning Free Trade Zones defines the treatment of new foreign investments. Remittances of dividends covered by this law are eligible for the official exchange rate. Requests for transfers of profits not covered by this law are considered on an individual basis, and approved transfers take place at the parallel market rate.

Gold

Authorized banks are empowered to buy, sell, and keep abroad, for the account of customers entitled to hold Free Accounts, gold (including gold coins) and other precious metals. Authorized banks may import such gold and other precious metals for local deposit and may subsequently re-export them. The monetary authorities and authorized industrial users are allowed to hold or acquire gold in any form. Other residents may only hold and acquire gold coins and gold jewelry in Egypt. There is a free market for gold coins in Cairo. With the above exceptions, imports and exports of gold in any form other than jewelry are restricted.

Changes during 1976

January 1. Port Said City became a free zone.

January 1. Following the expiration on December 31, 1975 of the bilateral payments agreements with Hungary, Iraq, and Poland, settlements with these countries were placed on a convertible currency basis.

January 6. Agreement was reached with Sri Lanka to place settlements on a convertible currency basis with effect from January 1, 1977.

February 1. Convertible currency imports of a number of commodities were shifted to the parallel market.

February 11. The bilateral payments agreement with Greece was substantially modified.

February 19. The parallel market premium and surcharge over the official rate were increased from 50 per cent and 55 per cent to 65 per cent and 70 per cent, resulting in buying and selling rates of LE 0.645653 and LE 0.665218, respectively, per US$1. Previously, these rates were LE 0.586957 and LE 0.606522, respectively, per US$1.

February 28. Ministerial Decree No. 227 restricted “own exchange” imports by nonresidents to capital goods, raw materials, and intermediate goods.

April 15. Agreement was reached with Albania to place settlements on a convertible currency basis with effect from January 1, 1977.

April 30. The bilateral payments agreement with Algeria expired.

May 1. Convertible currency imports of a number of commodities were shifted to the parallel market. The shifts of February 1 and May 1 represented (at annual rates) 25 per cent of the total imports provided for in the 1976 foreign exchange budget.

May 1. Customs valuation henceforth was based on the exchange rate applicable to the transaction; previously, the official rate had been applied uniformly. For “own exchange” imports, the exchange rate for customs valuation purposes would be the parallel market rate.

May 19. The bilateral payments agreement with Spain expired.

May 20. The parallel market premium and surcharge over the official rate were increased to 74 per cent and 79 per cent, resulting in buying and selling rates of LE 0.680870 and LE 0.700435, respectively, per US$1.

June 30. The bilateral payments agreements with Guinea, Morocco, Romania, and Turkey expired.

July 29. Ministerial Decree No. 1024 required that prior approval be obtained for all “own exchange” imports (other than goods imported under various special provisions, mainly for personal use). Previously, resident Egyptian nationals could import without prior approval consignments valued (at the official rate) at up to LE 5,000.

August 26. Law No. 81 of August 14 was gazetted and came into force. Without prejudice to the provisions of Law No. 43 of 1974, it prohibited non-Egyptian natural and juridical persons from acquiring other than by inheritance the ownership of improved real estate and vacant land in Egypt. The prohibition applied to full ownership, the ownership of control, the rights of usufruct, and leases for periods in excess of 50 years. Non-Egyptian juridical persons were held to include any company in which Egyptians did not control at least two thirds of the capital. There were exceptions for (1) companies operating under the Foreign Investment Law; (2) diplomatic and consular missions and international agencies or organizations; (3) individuals’ residences or places of business (subject to the approval of the Council of Ministers and provided that the full value was converted in convertible foreign currency at the official rate); and (4) acquisition through inheritance or prior to the law’s coming into force. Furthermore, the Council of Ministers could make exceptions to all or part of the conditions. There were various provisions dealing with an obligation to erect buildings on vacant land and with a five-year prohibition on the transfer of ownership.

August 28. Law No. 97 of 1976 on the Regulation of Foreign Exchange Transactions was gazetted, to become effective on November 29. The principal change from previous legislation was the elimination of any obligation for natural or juridical persons in the private sector to surrender foreign currency receipts or holdings other than proceeds from exports or tourism. Such persons were permitted to undertake any foreign exchange transaction, within the country or abroad, provided that it took place through an authorized dealer in foreign exchange. All export proceeds had to be repatriated within three months from the date of shipment, but this period was not applicable to proceeds from books, newspapers, magazines, and periodicals. The authorities were empowered to grant exemptions from the repatriation requirement, and to authorize the retention of all or part of the exchange proceeds from exports and tourism, to be utilized within the framework of the state foreign exchange budget. Authorized banks were permitted to undertake all types of foreign exchange transactions, including the acceptance of deposits and covering their foreign currency assets forward. The application of the provisions of the new law could not supersede the provisions of Law No. 43 of 1974, Law No. 137 of 1974, or Law No. 118 of 1975. Revoked were Law No. 80 of 1947 and Law No. 98 of 1957. The regulation of capital transactions and capital transfers, and of imports and exports of precious metals and gems, as well as various other aspects, were left to be specified by ministerial decrees to be issued within three months.

October 15. An agreement with the EEC on trade and economic cooperation was initialed.

November 27. Ministerial Decree No. 316 of 1976 issued the Foreign Exchange Regulations Manual implementing Law No. 97 of 1976. On the same date a large number of circulars were issued by the General Administration for Foreign Exchange. The main changes were as follows: (1) in the parallel market, the selling rate henceforth was set at 2 per cent above the buying rate (expressed as the domestic currency price of foreign exchange), and the buying and selling rates were depreciated to LE 0.70 and LE 0.714, respectively, per US$1; (2) a number of restrictions on retention and use of foreign exchange were eliminated, which had the effect of legitimizing an exchange market in which private sector entities were free to carry out a variety of transactions at freely negotiated exchange rates; (3) exchange allocations for current invisibles were substantially increased and restrictions on capital outflows were eased; (4) the distinction for exchange control purposes between residents and nonresidents was abolished in many instances, particularly for most types of external accounts; a number of types of such accounts were eliminated, and the regulations regarding the remaining ones were changed.

November 28. Agreement was reached with Bulgaria to place settlements on a convertible currency basis with effect from January 1, 1977.

November 29. The minimum conversion requirement for foreign tourists was increased from £ stg. 75 to LE 100.

December 31. The bilateral payments agreements with Albania, Bulgaria, India, and Sri Lanka expired. The special payments arrangement with Bangladesh also expired.

El Salvador

(Position on December 31, 1976)

Exchange Rate System

The par value is 0.294665 gram of fine gold per Salvadoran Colón. The parity rate for the U.S. dollar is Ȼ 2.50 = US$1. The rates of the Central Reserve Bank of El Salvador for transactions with the public are Ȼ 2.49 buying, and Ȼ 2.51 selling, per US$1. Exchange transactions by commercial banks with the public take place at or within these limits. A stamp tax of Mo of ⅒ per cent is applicable to all sales of exchange as well as drafts and other documents embodying a right to exchange; on amounts below Ȼ 100,000 the tax is levied at fixed amounts that may be slightly in excess of ⅒ of 1 per cent.

On November 6, 1946, El Salvador notified the Fund that it was prepared to formally accept the obligations of Article VIII, Sections 2, 3, and 4, of the Fund Agreement.

Administration of Control

Subject to any directives issued by the Monetary Board, exchange control authority is exercised by the Central Reserve Bank through its Exchange Control Department. Authority to approve certain payments, including most import payments, is delegated to the commercial banks. Exchange licenses for imports must be obtained from the Exchange Control Department. The Central Reserve Bank is also empowered to license exports, but this power has not been exercised. Exports of a number of commodities require licenses issued by the Ministry of Economy or of Agriculture. Exports of coffee are supervised by the Salvadoran Coffee Company and require licenses issued by the Ministry of Economy.

Prescription of Currency

Payments to Costa Rica, Guatemala, Honduras, and Nicaragua in respect of trade and specified invisibles must be settled in the currencies of those countries or in Salvadoran colones through the Cámara de Compensación Centroamericana, a clearinghouse established by the central banks of Central America to foster the process of economic integration of their countries. Payments to Mexico are in principle also settled through the clearinghouse, but this arrangement has been suspended since September 1, 1976. Otherwise, residents are free to make authorized payments in any currency they choose.

Nonresident Accounts

Accredited diplomatic missions and other foreign institutions or persons established in El Salvador may hold nonresident accounts in foreign currency with banks authorized by the Exchange Control Department, provided that such accounts are credited with foreign exchange received from abroad. Banks also may freely open foreign currency accounts, for any period of time and in any amount, in the names of physical persons (whether of foreign or Salvadoran nationality) who reside abroad, and, for a maximum period of six months, in the names of foreign persons staying in El Salvador for a period not exceeding six months. All nonresident accounts may be utilized freely, but the commercial banks must make periodic reports to the Central Reserve Bank of the movements on such accounts.

Imports and Import Payments

Import licenses are issued by the Ministry of Economy and are required for only a few items; these are mainly airplanes, firearms, ammunition, military equipment, dynamite, cotton for industrial use, jute sacks, skins, leather, some chemical and pharmaceutical products, coffee for seeding, sugar, and saccharin.

Imports from all countries must be registered with the Central Reserve Bank before orders are placed; orders for imports from countries outside Central America must be approved by the Exchange Control Department. For approval purposes, imports are grouped into three classes, according to their terms of payment, as indicated below.

(1) Imports for which the terms of payment do not exceed a certain maximum period (counted from the date of entry of the merchandise into a customs warehouse), as follows: (a) Imports of raw materials for industry, iron and steel products for the construction industry, hand tools, various spare parts, and greases and lubricants, when the terms of payment do not exceed three years.1 (b) Imports of basic food products and medical and surgical supplies, when the terms of payment do not exceed one year.2 Imports of the following goods are not subject to maximum credit terms: machinery and equipment for agriculture and industry, semiprocessed goods for industrial production, surgical equipment, research and educational equipment, scientific, technical, or cultural books, and fertilizers, insecticides, fungicides, and herbicides.

(2) For certain goods that are considered nonessential, the Exchange Control Department cannot authorize importation unless an advance deposit requirement is met in local currency, equivalent to 100 per cent of the c.i.f. value. In addition, the c.i.f. value of the goods being imported must be paid at the time of import registration. They include specified nonessential food products, confectionery, alcoholic beverages, tobacco, perfumes, cosmetics, watches, jewelry, automobiles, furniture, domestic appliances, and certain textiles. Small businesses are exempt from the advance deposit requirement, subject to certain conditions, for imports up to US$30,000 a year of goods not produced in El Salvador. The rules regarding the deposit requirement are flexible. The Central Reserve Bank may exempt imports of this type when they are considered essential for the economic development of the country.

(3) The purchase of imports not covered under (1) or (2) above may only be authorized by the Exchange Control Department subject to the condition that the import is paid for before the goods are registered in the customs warehouse.

Imports from countries outside the Central American Common Market that apply discriminatory restrictions against exports from El Salvador also must be paid for before customs clearance, with the exception of industrial raw materials, which may be paid for within three years (medicines from Mexico may be paid for within 90 days; this applies also to imports of spare parts from Mexico by importers that the Central Reserve Bank considers as small enterprises).

The commercial banks are authorized to provide exchange for all import payments, up to US$100 for each order, for noncommercial imports (such as medicines, various spare parts, and similar items). When suppliers abroad request payment in advance for commodities covered by (1) or (3) above, a prior deposit of 10 per cent calculated on the value of the advance payment is required from the importer as a guarantee, but industrial and agricultural firms may be exempted. The deposit requirement of 100 per cent for goods covered by (2) above serves as a guarantee in the case of advance payment. (Goods not covered by (2) and valued at US$500 or less are exempt from the 10 per cent deposit on the value of the advance payment.) Guarantee deposits are refunded when the goods arrive in the country, provided that payment in full has been made to the exporter.

Imports from other Central American countries, when covered by the Free Trade Agreement, are exempt from the exchange control regulations set forth above. Imports from Panama that are covered by the Free Trade Agreement of June 2, 1970 are also exempt.

Imports originating outside the Central American Common Market are subject to an import surcharge of 30 per cent of the applicable import duty; the surcharge is not applied to certain industrial equipment and raw materials that are duty free by virtue of the Industrial Incentives Law. Many nonessential goods are subject to a selective consumption tax. The rates of tax are 5, 10, 20, 25, and 30 per cent. Goods of Central American origin are exempt.

Payments for Invisibles

The commercial banks are authorized to sell foreign exchange, without prior authorization from the Central Reserve Bank, for medical and hospital costs abroad, subscriptions to foreign literature, correspondence courses, and memberships in professional clubs and societies. They are also authorized to sell foreign exchange for travel for tourism, business, or health reasons, as indicated below.

The basic exchange allocation which banks may make available for travel outside the Central American area (interpreted to mean the Central American Common Market) for tourism, business, or health reasons is, free from deposit requirements, the equivalent of US$600 a person a trip, on the basis of US$60 a person a day for ten days (US$300 for children under 16 on the basis of US$30 a day). The Exchange Control Department may authorize amounts in excess of US$600 a person a trip, up to an additional US$1,200 (amounts in excess of US$300 up to an additional US$600 for children under 16), provided that a guarantee deposit in local currency corresponding to 20 per cent of the excess over the basic allocation is lodged with the Central Reserve Bank; the deposit is released upon the traveler’s return. The Exchange Control Department may also authorize, in special cases, an additional amount up to US$1,800 a person a trip (US$900 for children under 16) for trips exceeding 30 days, against payment of a 30 per cent guarantee deposit; this deposit also is released upon the traveler’s return.3 Further additional amounts can be made available, on a case-by-case basis, if the traveler can provide the authorities with evidence of bona fide current expenses related to the purpose of the travel.

The Exchange Control Department may authorize the sale of foreign exchange up to US$400 a month (up to US$200 a month for children under 16), for family remittances to Salvadoran nationals abroad, and up to US$300 a month for study abroad. Local banks are authorized to sell exchange in addition to the above quotas for study purposes upon presentation of evidence of installation expenses, tuition, and other expenses.

For Salvadoran nationals traveling to Central American countries, the commercial banks have been delegated authority to provide exchange up to the same amounts in Costa Rican colones, Honduran lempiras, Nicaraguan córdobas, or Guatemalan quetzales, or a cashier’s check in Salvadoran colones (for payment through the Cámara de Compensación Centroamericana). Requests for larger amounts must be submitted for approval to the Central Reserve Bank. International sea and air passages are subject to a travel tax of 10 per cent of the price of the ticket; official or diplomatic travel is exempt.

Insurance and reinsurance premiums may be paid in foreign exchange, provided that the insurance contract was registered with the Exchange Control Department at the time it took effect. Alternatively, insurance companies may receive premiums in colones and periodically obtain from the Exchange Control Department authorization to purchase the foreign currencies they are obliged to transfer abroad. Foreign currencies derived from insurance or reinsurance contracts must be surrendered to the Central Reserve Bank or to an authorized commercial bank. Travelers may take out Ȼ 200 in domestic notes and coins. This limit is subject to modification, however, to facilitate border trade with other Central American countries. Nonresident travelers may upon departure reconvert Ȼ 200 into foreign currency.

Exports and Export Proceeds

Export licenses are not required except for a number of foodstuffs and other items of which the authorities wish to ensure an adequate local supply, but the proceeds of all exports in excess of US$6,000 must be received through a bank in El Salvador and the foreign exchange must be surrendered to the Central Reserve Bank or an authorized commercial bank. Export transactions must be declared to the Exchange Control Department within 15 days of shipment. The collection terms normally must not exceed 90 days, but longer credit terms may be authorized by the Exchange Control Department. With the exception of sales to “new markets,” exports of coffee and sugar are subject to export tax.

Proceeds from Invisibles

All exchange receipts from invisibles must be surrendered to the Central Reserve Bank or an authorized commercial bank. Travelers may bring in Ȼ 200 in domestic notes and coins. This limit is subject to modification, however, to facilitate border trade with other Central American countries.

Capital

All exchange receipts resulting from capital transactions must be surrendered to the monetary authorities. Payments abroad representing capital movements require exchange licenses; such licenses are not granted for resident-owned capital except for investments by private individuals in Costa Rica, Guatemala, Honduras, and Nicaragua. The entry of capital with a maturity in excess of one year in the form of foreign investment must be registered with the Ministry of Economy. Registration ensures (1) free remittance of net profits on foreign capital invested in industrial enterprises, enterprises engaged in the extraction of nonrenewable natural resources, and enterprises in the sphere of tourism; (2) the remittance of net profits of enterprises engaged in other activities up to a limit of 10 per cent a year of the registered capital (larger amounts may be authorized in special cases by the Ministry of Economy); (3) repatriation of the proceeds from the total or partial liquidation of the enterprise (after payment of taxes) in proportion to the participation of foreign capital in the total capital; (4) remittance of the sales proceeds of shares and other instruments representing investments or participations, including capital gains; and (5) with respect to loans, interest and amortization as determined at the time of registration. In the cases under (3) and (4) there is required, in addition to the approval of the Exchange Control Department, the prior approval of the Ministry of Economy. Foreign investments made in El Salvador prior to June 1, 1961 must also be registered by the Ministry of Economy or the Exchange Control Department in order to enjoy the same facilities.

The Exchange Control Department authorizes, without restriction, the remittance abroad of foreign currency for the payment of interest and amortization on short-term loans from abroad; foreign loans with a maturity of up to one year must be authorized by the Central Reserve Bank, while foreign loans with a maturity of more than one year must be authorized by the Ministry of Economy. The Central Reserve Bank controls the short-term foreign liabilities of the commercial banks.

Decree No. 279 of March 27, 1969 sets certain minimum capital requirements for businesses that are owned by foreign nationals and for those in which foreign nationals have a shareholding interest. For purposes of this Decree, foreign nationals are defined as persons who are not citizens of one of the five countries of the Central American Common Market.

Gold

Gold coins in denominations of Ȼ 25, Ȼ 50, Ȼ 100, and Ȼ 200 have been issued, which are legal tender but do not circulate. Residents may hold and acquire gold coins in El Salvador for numismatic purposes. With this exception, residents other than the monetary authorities are not allowed to hold or acquire gold in any form other than jewelry, at home or abroad. Imports and exports of gold in any form other than jewelry require licenses issued by the Central Reserve Bank; such licenses are granted for imports and exports by or on behalf of the monetary authorities and industrial users. In practice, imports of nonmonetary unworked gold are made only by jewelers’ cooperatives acting on behalf of their members and other users.

Changes during 1976

May 27. A reciprocal credit agreement with the Central Bank of the Dominican Republic was approved.

September 1. Settlements in Salvadoran colones with Mexico under the Agreement on Clearing and Reciprocal Credits between the Central American central banks and the Bank of Mexico were suspended. They were not resumed during 1976.

Equatorial Guinea

(Position on December 31, 1976)

Exchange Rate System

The currency of Equatorial Guinea is the Ekuele, which is issued by the People’s Bank of the Republic of Equatorial Guinea (the central bank) and is defined as equivalent to 0.0126953 gram of fine gold. No par value or central rate has been established for the ekuele. The currency is at par with the Spanish peseta, which is Equatorial Guinea’s intervention currency. Rates for other currencies are based on those in the Madrid exchange market. There are no forward exchange facilities. Exchange taxes of 17.5 per cent, 25 per cent, and 35 per cent are levied on certain transfers abroad.

Administration of Control

The People’s Bank is in charge of exchange control. Exchange transactions must be carried out through the People’s Bank or through authorized commercial banks; at present, the only authorized bank is the National Deposit and Development Bank. Import and export licenses are issued by the Directorate-General of Foreign Commerce in the Ministry of Commerce: import licenses also require the approval of the President.

Prescription of Currency

Settlements with Spain must be made through payments agreement accounts denominated in U.S. dollars, and payments to the People’s Republic of China through an account denominated in Swiss francs. Settlements with other countries are made in convertible currencies.

Imports and Import Payments

All commercial imports require an import license. Licenses normally are issued within the framework of an annual import program. They do not entitle importers to the necessary foreign exchange until they have been approved by the President, after which, in principle, exchange is automatically made available upon the arrival of the goods in Equatorial Guinea; in practice, certain delays have arisen. A state trading organization, Infoge, has a monopoly over the importation of pharmaceuticals, flour, rice, sugar, salt, olive oil, jute bags, cement, and all government requirements. Certain imports from the People’s Republic of China are made by state enterprises only.

Payments for Invisibles

All payments for current invisibles require the prior approval of the People’s Bank, which for specified purposes and up to specified amounts has delegated its approval- authority to the authorized commercial bank. At present, the approval of most payments and transfers for current international transactions by the private sector is suspended. Residents1 are in principle granted foreign exchange up to the equivalent of EK 10,000 a person a calendar year for tourist travel abroad. The standard allocation for business travel is the equivalent of EK 2,000 a person a day, subject to a maximum of EK 50,000 a trip. For study abroad, foreign exchange is in principle granted to cover tuition and living expenses; nonresidential students are allowed the equivalent of EK 5,000 a month for living expenses.

In principle, the transfer of wages and salaries by alien residents, and of professional earnings as well as dividends by all residents, is freely permitted up to 60 per cent of taxable earnings when the transfer is made to a country with which a payments agreement is in force, and up to 40 per cent for other countries, provided that annual earnings do not exceed EK 50,000. Larger transfers are permitted when annual earnings exceed EK 50,000. Transfers abroad of professional earnings by nonresidents are in principle freely permitted, but any amounts in excess of 60 per cent of taxable earnings are subject to a transfer tax of 35 per cent on the amount transferred. There are special arrangements for the transfer of earnings of Nigerian workers employed in Equatorial Guinea. In addition, nonresidents as well as Equatorial Guinean nationals residing temporarily abroad are permitted in principle to withdraw up to EK 5,000 a month from their savings accounts for remittance abroad.

The transfer of net investment income, whether by residents or nonresidents, is subject to a tax of 35 per cent of the amount transferred. Subject to this requirement, transfers are in principle fully permitted. In the event of at least 50 per cent of such net investment income being reinvested in approved projects in Equatorial Guinea, the tax is 17.5 per cent of the amount remitted. Transfers abroad in respect of patents, trademarks, and royalties are in principle permitted fully, subject to a tax of 25 per cent of the amount remitted.

Travelers may take out EK 3,000 a person in domestic banknotes.

Exports and Export Proceeds

All exports require an export license. Both specific and general export licenses are granted; the latter are available only to registered exporters. All export proceeds must be surrendered to the People’s Bank or the authorized commercial bank. The Chamber of Agriculture, Commerce, and Industry has a monopoly over most agricultural exports.

Proceeds from Invisibles

All exchange receipts from invisibles must be surrendered to the People’s Bank or the authorized commercial bank. Travelers may bring in any amount of foreign banknotes and coins but the import of domestic currency by travelers is prohibited.

Capital

All imports and exports of capital require approval, and the latter are not normally permitted. Capital receipts in foreign currency must be surrendered to the People’s Bank or the authorized commercial bank. The transfer abroad of funds from the sale of fixed assets and financial assets by alien residents or by nonresidents is in principle permitted as follows: 50 per cent of the total amount realized net of taxes may be remitted abroad immediately and the balance in 24 equal monthly installments. The sale of real estate, however, requires prior approval by the Government. Residents, as well as nonresidents living in Equatorial Guinea, are prohibited from engaging in borrowing or lending with nonresidents.

Gold

All purchases and sales of minted gold and gold bars are centralized in the People’s Bank, which also has a monopoly over the import and export of minted gold and gold bars. Commemorative gold coins in denominations of Equatorial Guinean pesetas 250, 500, 750, 1,000, and 5,000 are legal tender. Except for these coins and jewelry, residents are not permitted to hold gold.

Changes during 1976

No significant changes took place.

Ethiopia

(Position on January 8, 1977)

Exchange Rate System

The par value is 0.355468 gram of fine gold per Ethiopian Birr, corresponding to Br 2.50000 = SDR 1, and Ethiopia avails itself of wider margins. The intervention currency is the U.S. dollar. The National Bank of Ethiopia (the central bank) does not deal with the public; its dealings in U.S. dollars with the authorized banks take place at the official rate of Br 2.07 = US$1. Authorized banks in dealing with the public must observe this official rate for the U.S. dollar and prescribed commission charges of 0.50 per cent buying and 1.50 per cent selling; the resulting effective buying and selling rates are Br 2.05965 and Br 2.10105 per US$1, and are applied also in the National Bank’s dealings with the Government and certain public sector entities.

Spot exchange rates for other currencies are based on the National Bank’s official rate for the U.S. dollar and the previous day’s closing rates against the U.S. dollar in European exchange markets. Authorized banks require the approval of the National Bank to undertake forward exchange transactions.

Administration of Control

All transactions in foreign exchange must be carried out through authorized banks and authorized dealers under the control of the National Bank. All payments abroad require licenses issued by the Exchange Controller, whose office is a division of the National Bank; all exports are licensed by the Exchange Controller to ensure the surrender of the foreign exchange proceeds. The Minister of Commerce and Tourism has statutory authority to prohibit, restrict, or regulate imports and exports.

Prescription of Currency

Outgoing payments are normally made in convertible foreign exchange appropriate to the country of the recipient or in U.S. dollars. The net proceeds of exports must be received in a foreign currency that is freely convertible, or in any other foreign currency acceptable to the Exchange Controller.

Nonresident Accounts

Nonresidents may, subject to exchange control approval, open nonresident accounts either in Ethiopian birr or in foreign currencies at authorized banks. Balances in nonresident accounts may be freely transferred abroad. Transfers between nonresident accounts do not require prior approval, but the opening of transferable birr accounts and foreign currency accounts at the same time is not permitted.

Imports and Import Payments

All imports from Rhodesia and South Africa are prohibited. With minor exceptions, imports of passenger automobiles with an engine capacity of over 1,300 cubic centimeters are prohibited. No import licenses are required. However, payments abroad for imports require exchange licenses; these licenses are generally granted freely in the currency appropriate to the country of origin, or in any convertible currency that may be requested. Payment is normally authorized by letter of credit, mail transfer, telegraphic transfer, or cash against documents at sight or on an acceptance basis; however, goods which were previously subject to advance deposit requirements (about 100 items, mostly consumer goods) may not be financed on an acceptance basis.

Payments for Invisibles

Payments for invisibles require exchange licenses. Invisibles connected with trade transactions are treated on the same basis as the goods to which they relate. Foreign employees may remit monthly up to 30 per cent of their net earnings and may remit a maximum ranging between 40 per cent and 50 per cent of total net earnings during the term of service and upon final departure. Foreign nationals who are not entitled to remit monthly 30 per cent of their net earnings may remit up to 30 per cent of their net earnings for the education of their children. Residents may remit premiums on insurance policies taken out before April 1962. Subject to certain limits and to submission of evidence, persons may obtain foreign exchange for medical treatment and travel abroad. Subject to proper provision having been made for local taxation and to the presentation of the necessary documents, foreign companies may in principle remit dividends on their invested and reinvested capital in any currency.

Persons traveling abroad are in principle allowed foreign exchange equivalent to Br 125 a day for a maximum period of 30 days in any one calendar year if the journey is made for business purposes, and up to the equivalent of Br 600 a year for persons 18 years of age or over if the journey is made for pleasure. Travelers may take with them a maximum of Br 50 in Ethiopian banknotes.

Exports and Export Proceeds

All exports to Rhodesia and South Africa are prohibited. Exports of most cereals to any destination other than the French Territory of the Afars and the Issas also are prohibited. All commodities require export permits from the Exchange Controller and some require in addition the approval of specified public bodies. When applying for a permit, an exporter must specify the goods to be exported, the destination, and the value. The granting of the permit by the Exchange Controller enables the goods to pass through customs. The licensing system is used to ensure that foreign exchange receipts are surrendered to the National Bank, generally within three months, and that export proceeds are received in an appropriate currency (see section on Prescription of Currency, above).

Proceeds from Invisibles

Foreign exchange receipts from invisibles must be surrendered. Persons may bring in a maximum of Br 50 in Ethiopian currency. Foreign exchange must be declared by travelers on entry, and its re-export is subject to authorization, except in the case of temporary visitors. Reconversion of Ethiopian birr must be supported by documentary evidence of prior exchange of foreign currency.

Capital

Controls over capital movements are designed to restrict undesirable outflows, to preclude an unwarranted accumulation of external debt, and to keep the authorities informed of the country’s external debt position.

All receipts of capital in the form of foreign exchange must be surrendered. Exchange control authorization is required, and registration of capital inflows with the exchange control authorities establishes evidence of receipt, which is required for any later repatriation. There is no discrimination regarding the currencies in which foreign investments are accepted. Foreign capital may participate with the Government in specified areas, such as large-scale construction, tourism, and the exploration for and production of hydrocarbons and most other minerals. Transfers by emigrants who are leaving on termination of their employment contracts with the Government or with private organizations are limited to 40–50 per cent of the applicant’s total net income, depending on marital status and on whether the applicant has free accommodation or not. Transfers by emigrants who had operated their own business are restricted to Br 40,000 in any one calendar year.

Borrowing abroad requires exchange control approval and is restricted. Normally, evidence must be presented that all possibilities for domestic borrowing have been exhausted. Authorized banks may freely place their funds abroad, except on fixed-term deposit. They need the prior approval of the National Bank to overdraw their accounts with foreign correspondents, to borrow funds abroad, or to accept deposits in foreign currency.

Gold

The ownership of personal jewelry and articles of adornment of which gold or platinum forms a part is permitted. Unless specifically authorized by the Minister of Mines, Energy, and Water Resources, the possession or custody, in a quantity in excess of 50 ounces, of raw or refined gold or platinum or of gold or platinum in the form of nuggets, ores, or bullion constitutes an offense. Certain newly mined gold is sold by the Treasury to the National Bank. Imports and exports of gold in any form other than jewelry require exchange licenses issued by the National Bank. Such licenses are not normally granted except for imports and exports by or on behalf of the monetary authorities.

Changes during 1976

April 16. The issue of licenses to export livestock was restricted to the Ethiopian Distribution Company and four other specialized firms.

September 21. The name of the currency was changed from Ethiopian dollar to birr. No appreciation or depreciation of the currency was involved.

The following changes took place early in 1977:

January 5. The National Bank issued new foreign exchange regulations (Notice No. 1/1977).

Fiji

(Position on December 31, 1976)

Exchange Rate System

No par value for the Fiji Dollar has been established with the Fund. On February 25, 1974 a central rate of F$0.800000 = US$1 was established, and Fiji availed itself of wider margins. Since April 7, 1975, however, exchange rates have been determined daily on the basis of a weighted average of the currencies of Fiji’s major trading partners. The Central Monetary Authority of Fiji provides official quotations only for the U.S. dollar, which is the intervention currency. For telegraphic transfers, the commercial banks’ buying and selling rates for the U.S. dollar on December 31, 1976 were F$0.9341 and F$0.9491, respectively, per US$1.

Fiji formally accepted the obligations of Article VIII, Sections 2, 3, and 4, of the Fund Agreement on August 4, 1972.

Administration of Control

Exchange control is administered by the Central Monetary Authority, acting as agent of the Government. The Monetary Authority delegates to authorized dealers (only banks are authorized dealers in Fiji) the authority to approve normal import payments. Except with the specific permission of the Monetary Authority, residents of Fiji are required to offer for sale to an authorized dealer all foreign currencies they receive.1 The Ministry of Commerce, Industry, and Cooperatives is responsible for the issue of import licenses, with the exception of those for gold, which are issued by the Ministry of Finance. Export licenses are issued by the Comptroller of Customs.

Prescription of Currency

Transactions with all countries are subject to exchange control. Settlements with residents of any country may be made in Fiji currency through an External Account or in any foreign currency. The prescribed manner of payment for exports to any destination outside Fiji is payment in Fiji currency from an External Account or in any foreign currency. All payments to Rhodesia are prohibited.

Nonresident Accounts

A nonresident2 may maintain an External Account in Fiji currency or a foreign currency account with an authorized bank; such accounts may be opened without the specific approval of the Central Monetary Authority. These accounts may be credited freely with interest payable on the account, payments from other External Accounts, the proceeds of sale of foreign currency or foreign coin by the account holder, and Fiji currency notes which the account holder brought into Fiji or acquired by debit to an External Account or by the sale of foreign currency in the country during a temporary visit; in addition, External Accounts may be credited with payments by residents for which either a general or specific authority has been given. External Accounts may be debited for payments to residents of Fiji, transfers to other External Accounts, payments in cash in Fiji, and purchases of foreign exchange for travel purposes.

Imports and Import Payments

All imports from Rhodesia are prohibited. Imports of most goods are free under open general license when originating in countries other than Rhodesia. However, import prohibitions are imposed on a few commodities from all sources, mainly for security, health, or moral reasons. Certain commodities can be imported only under specific licenses, including passenger automobiles, seed potatoes, flour, tea, sharps, mild steel bars and rods, and steel welded mesh, and licenses for some of these items are issued restrictively.

Payments for authorized imports are permitted upon application and submission of documentary evidence to authorized dealers. A specific exchange license is not required. Authorized banks may authorize payments for goods which have been imported either under a specific import license or open general license. Authorized banks may authorize advance payments for all imports provided the goods are imported into Fiji within 90 days of the date the payment is made.

Payments for Invisibles

Payments for invisibles originating in any country (except Rhodesia) are permitted either under a delegated authority to banks or, where large amounts or nondelegated payments are involved, upon application to the Central Monetary Authority. Payments may be made freely for all bona fide current transactions. Residents of Fiji when traveling to other countries may obtain from a bank, without reference to the Central Monetary Authority, a foreign currency travel allowance for private or business travel up to the equivalent of F$2,000 a person a journey. For extended visits, a traveler may apply to the Monetary Authority while overseas, through his bank, for funds in excess of F$2,000 a person a trip. There is no restriction on the number of trips a resident may make in any one year. Each traveler may take with him, on his person or in his luggage, F$50 in Fiji currency and the equivalent of F$200 in other currencies, provided that these amounts are not in addition to travel allowances approved by a bank and/or the Monetary Authority.

Exports and Export Proceeds

Exporters are obliged to collect the proceeds of exports within six months of the date of exportation of the goods from Fiji, irrespective of the currency in which the payment is being made. All foreign currencies must be offered for sale to an authorized dealer. Exporters may not grant credit to a nonresident buyer in excess of six months without specific permission.

Exports to Rhodesia are prohibited. Specific licenses are required only for exports of rice, sugar, wheat bran, meal of copra, certain lumber, scrap metals, and a few other items. Irrespective of any export licensing requirements, however, exporters are required to produce an export permit for commercial consignment of all goods with an f.o.b. value exceeding F$ 1,000; this permit is required for exchange control purposes.

Proceeds from Invisibles

Receipts from invisibles must be surrendered to authorized dealers, irrespective of the currency concerned. Travelers may bring in freely any amount in Fiji notes, other former Sterling Area currencies, or non-Sterling Area currencies. Resident travelers are required to sell their holdings of former Sterling Area and non-Sterling Area currencies to an authorized dealer within one month of return.

Capital

The inflow of capital is unrestricted but must be registered with the Central Monetary Authority, unless the recipient is an authorized dealer. Foreign investment in Fiji normally is expected to be financed from a nonresident source. Such foreign investment may be given “approved status,” which guarantees the right to repatriate dividends and capital. All capital outflows are subject to prior approval. Capital transfers by residents to finance direct investments require the specific permission of the Central Monetary Authority and are normally permitted only where benefits will accrue to Fiji within a reasonably short period. All authorized banks operating in Fiji are required to obtain prior authorization from the Central Monetary Authority for transactions involving F$50,000 or more arising from (1) the conversion of foreign currency into Fiji currency whether for credit to a resident account or for an External Account and (2) the crediting of an External Account with Fiji currency emanating from another External Account (including Fiji currency accounts of overseas banks). Banks also require the approval of the Central Monetary Authority before any loans are granted to a company or branch in Fiji (other than a bank) which is controlled, whether directly or indirectly, by persons resident outside Fiji or by individuals designated as nonresidents; however, banks do not require such approval to lend up to F$ 1,000—for any period and any purpose—to individual nonresident customers. Banks may not lend foreign currency to any resident of Fiji without the specific permission of the Central Monetary Authority, and nonbank residents require permission from the Central Monetary Authority before they may borrow foreign currency from anyone other than an authorized bank in Fiji or from any source outside Fiji. The transfer of inheritances and dowries which are due to nonresidents is permitted, as is the transfer of the sales proceeds of a house owned by a nonresident. Residents of Fiji are also allowed to make cash gifts equivalent to F$500 a donor a year to nonresidents; additional funds are permitted in compassionate cases. Emigrants may take out their entire net assets on departure.

Residents are permitted to purchase foreign currency up to a maximum of F$ 1,000 a person a year to acquire foreign currency securities with the prior approval of the Central Monetary Authority. The purchase of personal real property outside Fiji is not permitted. Portfolio investment in Fiji by nonresidents requires approval by the Central Monetary Authority if payment is made from a nonresident source; the proceeds of the sale or realization of such investment qualify for repatriation.

Banks require exchange control permission to borrow abroad; they may accept deposits from nonresidents. The net foreign liabilities of banks (that is, the positive difference between balances due to banks abroad and balances due from banks abroad) are subject to a cash reserve requirement of 5 per cent.

Gold

Residents may freely hold gold coins but not gold bullion in Fiji. The export of gold coins, except numismatic coins and collector’s pieces, requires the specific permission of the Central Monetary Authority. Gold imports from all sources require a specific import license issued by the Ministry of Finance; they are restricted to authorized gold dealers. Gold coins are free of customs duty and fiscal tax, while gold bullion is exempt from customs duty but is subject to a fiscal tax of 7½ per cent. Gold jewelry is subject to a fiscal duty of 10 per cent but does not require any license when valued at less than F$200: samples of gold and gold jewelry sent by foreign manufacturers require import licenses if over F$200 in value.

Exports of gold jewelry do not require licenses and are free of export duty. All newly mined gold is sold in Australia at free market prices. Gold exports are subject to a 2 per cent export duty.

A commemorative gold coin of F$100 has been issued. It is legal tender but does not normally circulate.

Changes during 1976

January 2. Exchange Control Ordinance (EC Notice 25) regarding the surveillance of inflows of funds to Fiji came into effect. All authorized banks operating in Fiji were required to obtain prior authorization from the Central Monetary Authority before effecting the following transactions involving F$50,000 or more: (1) converting foreign currency into Fiji currency whether for credit to a resident account or an External Account and (2) crediting an External Account with Fiji currency emanating from another External Account in Fiji (including Fiji currency accounts of overseas banks).

June 2. A revised Exchange Control Notice was issued to banks delegating the authority to issue advance payments in respect of imports into Fiji provided the goods are imported within 90 days of payment being made.

August 6. Certain minor items, such as incense sticks, were added to the list of prohibited imports which require special licenses granted by the Ministry of Commerce, Industry, and Cooperatives.

September 1. Fijian residents who intend to leave Fiji to settle abroad could send F$30,000 12 months prior to their departure from Fiji to the country of future residence to buy a house.

September 17. Radar detecting devices were added to the list of prohibited imports requiring special license from the telecommunications authority.

November 16. Delegated authority granted to banks to issue travel funds was increased to F$2,000 from F$600 a person a trip.

November 16. Delegated authority granted to banks to issue funds for educational purposes for residents studying abroad was withdrawn.

November 29. Following the depreciation of the currencies of Australia and New Zealand, the rate of exchange for the Fiji dollar was adjusted from F$l = US$1.0889 to F$l = US$1.0276.

Finland

(Position on December 31, 1976)

Exchange Rate System

The par value is 0.211590 gram of fine gold per Finnish Markka. A central rate of Fmk 3.90 = US$1 has been established, and Finland avails itself of wider margins. However, on June 4, 1973 the Bank of Finland ceased to observe the lower exchange rate margin, and the upper margin was suspended on January 8, 1974. The Bank of Finland’s buying and selling rates for the U.S. dollar, the intervention currency, on December 31, 1976, were Fmk 3.758 and Fmk 3.776 per US$1. The rates for the U.S. dollar are applicable also to clearing dollars. Buying and selling rates for the clearing ruble are based on the rates of the State Bank of the U.S.S.R. for the U.S. dollar against the ruble. Quotations for other currencies are based on market cross rates.

The Bank of Finland quotes daily forward rates for the U.S. dollar and the clearing ruble at which authorized banks may cover their contracts with resident customers relating to any type of transaction permitted by the exchange control regulations; otherwise, forward premiums and discounts reflect international forward quotations. Authorized banks may deal among themselves, with resident customers, and with nonresident banks in U.S. dollars and other convertible or externally convertible currencies. The Bank of Finland concludes forward transactions for periods ranging from 3 to 12 months.

Administration of Control

The Bank of Finland operates the exchange control system, delegating authority to the authorized exchange dealers (mainly commercial banks). Import and export licensing is administered by an office subordinate to the Ministry of Trade and Industry, the Licensing Office, which is headed by a Licensing Board composed of government officials, including a representative of the Bank of Finland.

Prescription of Currency

For prescription of currency purposes, countries are divided into two groups: the bilateral countries1 and the convertible currency countries (all others). Settlements with the bilateral countries must be made in the currency of the agreement (rubles for the U.S.S.R. and Romania, Finnish markkaa for the People’s Republic of China, and U.S. dollars in all other cases). Settlements with the convertible currency countries may be made in any convertible currency or through Convertible Accounts.

Nonresident Accounts

There are three categories of nonresident accounts: Convertible Accounts, Restricted Accounts, and Capital Accounts.

Convertible Accounts are held by nonresidents in Finnish markkaa or in convertible currencies. These accounts may be credited by an authorized bank with amounts transferred from other Convertible Accounts, Finnish currency received direct from a foreign bank or imported into Finland, amounts which the bank would be authorized to transfer abroad, amounts of convertible currency received by the bank, and interest accrued on funds held in the accounts. These accounts may be debited freely and balances may be transferred abroad freely to any country.

Restricted Accounts are held by residents of countries with which Finland has bilateral payments arrangements, are designated according to the holder’s country of residence, and may be held in Finnish markkaa or the appropriate bilateral agreement currency. They may be credited by an authorized bank with amounts with which the bank may credit a Convertible Account, amounts transferred from Restricted Accounts related to the same country, Finnish currency received from a bank in the country indicated on the account, amounts which the bank is authorized to receive to the credit of a Restricted Account related to the country indicated on the account, currency surrendered to the bank and restricted to the country indicated on the account, and interest accrued on funds held in the accounts. These accounts may be debited freely and balances may be transferred freely to the bilateral country concerned.

Capital Accounts comprise all other nonresident accounts. The assignment of a Capital Account to another nonresident and the transfer abroad of funds held in such an account may be effected only with the permission of the Bank of Finland. A monetary institution may credit a Capital Account with the purchase price of assets other than foreign securities bought from the holder by a resident, funds received as an inheritance or on the basis of a will, redemption payments and interest on matured bonds and debentures quoted on the Helsinki Stock Exchange, rent on property owned in Finland by the holder of the account, proceeds from other assets belonging to the holder of the account and managed by the monetary institution with which the account is held, the amount of a loan based on a contract granting to a nonresident a loan not exceeding Fmk 50,000 in value and to be utilized in Finland, and interest accrued on funds held in the account.

Capital Accounts may be debited freely for noncommercial current expenses in Finland of and for account of the account holder, and funds in Capital Accounts may be used for capital payments for account of the account holder when the transaction does not require authorization or is authorized for transferable funds. The Bank of Finland automatically grants permission for transfers abroad of funds deposited in Capital Accounts to an account holder who has resided abroad during the last calendar year and who continues to do so.

Imports and Import Payments

All imports from Rhodesia are prohibited. Most goods may be imported free of license from the multilateral area or license-free area (i.e., nearly all countries with which Finland does not have bilateral payments agreements),2 provided that the goods are purchased from and originate in that area. Specified consumer durables, however, are temporarily subject to surveillance licensing, irrespective of origin. Certain other goods may be imported from the multilateral area under a global quota system, which provides for import licenses to be issued at least up to the amounts of 11 value quotas for specified commodity groups. The total value of the global quotas for 1976 was less than 1 per cent of total 1976 imports. Another group of goods also requires an individual license when imported from the multilateral area; these are set out in the discretionary licensing list, which comprises only agricultural commodities, coal, coke, and petroleum products. Thus, the only commodities still subject to quantitative restriction for the multilateral area are agricultural commodities, fuels, and unwrought gold and silver; the consumer durable goods mentioned above are licensed freely.

Import licenses are not required for most commodities originating in and shipped from the U.S.S.R., or originating in and shipped from the four countries with which agreements on the reciprocal removal of obstacles to trade have been concluded (Bulgaria, Czechoslovakia, the German Democratic Republic, and Hungary). Quantitative restrictions on imports from the U.S.S.R. and these four countries have been reduced to the levels applicable to goods originating in the multilateral area. In addition, many commodities originating in and shipped from the other bilateral countries are free of license. Imports under license from the bilateral countries are admitted up to quotas provided for under the relevant trade agreement. All imports of commodities originating in countries classified neither in the multilateral area nor in the bilateral area require individual licenses. The State Granary is the main agency for the import of wheat, rye, barley, oats, and products of these grains for human consumption, but individual importers may also import these commodities under license. There is a state monopoly for imports of alcoholic beverages.

Exchange is granted by authorized banks for all permitted imports on presentation of an application form, the import license if required, and the original commercial invoice, provided that the goods are already in the country or there is sufficient evidence to guarantee their importation. Payment for imports must be made within 12 months after the arrival of goods in the country; if the period of suppliers’ credit exceeds 6 months, the credit is subject to an “overtime fee,” unless specially authorized by the Bank of Finland; if the payment is made to the seller by using an import financing credit, the credit period may not exceed 6 months. Under a temporary “cash payment scheme,” however, payment for specified consumer goods and for passenger automobiles must be made, or the markka equivalent of the purchase price deposited with the Bank of Finland, before the goods are released by the customs authorities.

Payments for Invisibles

With few exceptions (relating to transport and insurance), residents are permitted to conclude transactions involving current invisibles with nonresidents. Payments in respect of authorized invisibles are not restricted. The authorized banks have general permission to effect payments for most current invisibles, subject in some cases to a maximum allowance or other conditions; for amounts in excess of the standard allowances and for purposes for which no standard allowances have been set, exchange licenses are granted freely by the Bank of Finland. All contracts involving payments to nonresidents for which general permission has not been granted must be submitted to the Bank of Finland for approval. For minor payments, authorized banks may grant foreign exchange equivalent to Fmk 300 a calendar month for each remitter.

A Finnish resident going abroad may purchase from commercial banks foreign exchange equivalent to Fmk 3,000 a trip. A Finnish traveler abroad may also withdraw foreign exchange on a bank account passbook or check issued by a Finnish monetary institution, provided that the utilized amount of his travel allocation does not exceed a total of Fmk 3,000. A resident traveler may use a credit card abroad for travel services and make the payment after return. Nonresident travelers may take out Fmk 3,000 a trip in Finnish notes and coins and any amount in foreign notes and coins declared upon entry. Resident travelers may take out foreign or domestic currency, or any combination of these, up to Fmk 3,000. For all types of travel, bona fide applications for additional amounts of foreign exchange are approved by the Bank of Finland.

Exports and Export Proceeds

All exports to Rhodesia are prohibited. Export licenses are required only for exports of scrap metal. Exports of other goods require only an export control declaration, which is approved automatically by the Licensing Office except in a few specified cases. Exports to countries that are not in the multilateral area and that are outside the scope of agreements on the reciprocal removal of obstacles to trade are allocated by means of bilateral trade arrangements. Foreign exchange acquired through commodity exports need not be surrendered to the Bank of Finland or an authorized exchange dealer. Exporters are required to repatriate their foreign exchange proceeds within eight days of collection, which may then be held in a foreign currency account with an authorized bank in Finland or converted into domestic currency.

Proceeds from Invisibles

Foreign exchange receipts derived from current invisibles do not have to be surrendered but must be repatriated within eight days of collection. The exchange may be held in a foreign currency account in Finland. Any unutilized foreign banknotes and travelers checks must be repatriated, but these are exempt from the surrender requirement up to Fmk 3,000 for each resident holder. The import of Finnish and foreign means of payment is unrestricted.

Capital

Most outward transfers of nonresident capital are subject to approval by the Bank of Finland. Inheritances are transferred automatically to the beneficiaries. Persons who during the last calendar year have resided outside Finland and continue to do so may transfer abroad their assets in Finland in one lump sum, subject to the prior approval of the Bank of Finland, which generally is granted.

Nonresidents may purchase through an authorized bank, against convertible currencies, or by debiting a Convertible Account, bonds, debentures, or shares quoted on the Helsinki Stock Exchange. When the securities so acquired by a nonresident are deposited in the custody of the authorized bank, the nonresident purchaser is permitted to sell the securities on the stock exchange through the authorized bank and to repatriate the proceeds of the sale in a convertible currency. The acquisition with funds classified as Capital Accounts of shares, bonds, and debentures quoted on the stock exchange is also permitted automatically, but proceeds from the sale of such securities may not be transferred abroad without the permission of the Bank of Finland. Any other transactions in, and the export of, securities involving nonresident interests require approval. If the securities were acquired with convertible foreign exchange or with markkaa from a Convertible Account, approval for their export can be obtained freely.

The regulations concerning inward direct investment are as follows: All incoming capital transactions must be approved by the Bank of Finland, which considers the foreign exchange aspect. The Bank grants permission liberally, unless the investment is judged to be exceptionally detrimental to the national interest or to be of a purely financial character. Repatriation of authorized direct investments is free. Foreign investments that involve a participation of more than 20 per cent in the share capital of an enterprise require the approval of the Council of State. This approval is usually granted liberally. Direct foreign investment in the forest and mining industries and in certain traditionally regulated activities is not normally permitted.

On demand of the Bank of Finland, residents must declare their foreign assets, including property owned abroad. Proceeds from the sale of securities and real property must be repatriated under the general rule of repatriation. Outward transfers of capital by residents require individual approval; investment by residents in foreign securities or real estate is rarely permitted. Authorized banks, however, are given permission to purchase specified foreign and Finnish securities issued abroad. For direct investment abroad, approval is granted on the merits of each case.

Finnish emigrants are granted an exchange allowance of up to Fmk 50,000 a person, in addition to the basic tourist travel allowance. There is an automatic exchange allowance of Fmk 1,000 a calendar month for each donor for gifts and contributions to nonresidents.

Foreign currency borrowing by Finnish residents, in the form of short-term or medium-term financial credits or by bond issues abroad, requires the specific approval of the Bank of Finland, which exercises surveillance over the terms and timing. Lending to nonresidents is normally restricted to export credits. No permission is needed for customary export credits. Medium-term and long-term borrowing abroad, other than borrowing by the State or import credits, is subject to a selective deposit requirement, the terms of which are set ad hoc by the Bank of Finland.

Gold

Residents may freely hold, buy, and sell gold in any form within Finland. Imports of gold in any form other than jewelry require licenses issued by the Licensing Office; such licenses are not normally granted except for imports by or on behalf of the monetary authorities and industrial users. The global quota list contains a quota for industrial gold, for which licenses are granted freely. Exports of gold are subject to the same regulations as exports of other commodities, i.e., an export control declaration approved by the Licensing Office is usually sufficient.

Changes during 1976

January 1. Import duties on most industrial goods of EEC origin were further reduced in accordance with the free trade agreement with the EEC.

February 15. The import deposit requirement was abolished for goods attracting a 5 per cent rate of deposit.

March 1. Importers were permitted to accept suppliers’ credits exceeding 6 months but not 12 months, but such credits were made subject to an “overtime fee” amounting to 10 per cent of the outstanding value of the credit for the seventh month and an additional 5 per cent for each of the following 4 months. Importers who were previously permitted to accept credit terms exceeding 6 months were exempted from the fee.

March 15. A schedule was announced for the gradual termination of the import deposit requirement, which would be fully terminated by the end of 1976.

March 16. The import deposit rate for goods attracting a rate of 20 per cent was reduced to 10 per cent.

April 14. Imported unroasted coffee was made exempt from import duty until July 31.

July 1. The import deposit requirement was abolished for goods attracting a 10 per cent rate of deposit and for goods that prior to March 16 had attracted a 20 per cent rate of deposit.

July 22. The exemption from import duty of unroasted coffee was extended until January 31, 1977.

September 1. Importers who are registered wholesalers were required to pay turnover tax at the point of customs clearance rather than at the point of sale as had been the previous practice.

September 15. Ten countries were added to the list of beneficiaries of Finland’s Generalized System of Preferences scheme.

September 29. An agreement on the reciprocal removal of obstacles to trade between Finland and Poland was signed.

October 1. The import deposit rate for goods attracting a rate of 30 per cent was reduced to 20 per cent. It was further reduced to 10 per cent on November 16 and fully abolished on December 31.

December 27. A surcharge, to be enforced for six months, was imposed on all imports of women’s panty hose whose price exceeded a set basic price.

France

(Position on December 31, 1976)

Exchange Rate System

The par value is 0.160000 gram of fine gold per French Franc, and France avails itself of wider margins. No announced margins are maintained for foreign currencies.1 On December 30, 1976 the representative rate for the U.S. dollar was F 4.96975 = US$1.

Fixed conversion rates in terms of French francs apply to the currencies of the following countries and territories: the Operations Account countries,2 the French Overseas Territories (except the Territory of the Afars and the Issas), the Condominium of the New Hebrides, and the Comoros. These conversion rates have been maintained at pre-August 15, 1971 levels.

Authorized banks in France and in Monaco, which may also act on behalf of banks established abroad or in Operations Account countries, are permitted to deal spot or forward in the exchange market in France. Authorized banks may also deal spot and forward with their correspondents in foreign markets in all currencies. Nonbank residents may purchase forward exchange only in respect of imports and of certain merchanting transactions, but their forward sales of foreign currency are free, whether there is an underlying transaction or not. On the import side, forward cover is available for some commodities for 6 or 12 months, and for all others for 2 months.

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

Exchange Control Territory

The exchange control regulations are applicable in all territories of the French Republic except the French Territory of the Afars and the Issas, i.e., in continental France, Corsica, the Overseas Departments (Guadeloupe, Martinique, Guiana, Réunion, and St. Pierre et Miquelon), Mayotte, and three Overseas Territories (Wallis and Futuna Islands, New Caledonia, and French Polynesia). No exchange control is applied in relation to the Principality of Monaco or the Operations Account countries, including the Comoros;2 payments between France and these countries are free of restriction on the French side and take place at fixed exchange rates. All other countries are considered foreign countries for exchange control purposes;3 all payments between France and foreign countries are subject to exchange control. The Condominium of the New Hebrides is considered a foreign country for exchange control purposes. For imports and exports of gold, the Operations Account countries are also considered foreign countries.

Certain controls that are independent of the exchange control regulations are maintained over inward and outward direct investment and over borrowing abroad; these transaction controls are not applicable to the Operations Account countries or Monaco, and those over direct investment do not apply to member countries of the EEC. Privileged treatment in respect of trade transactions is accorded to the Operations Account countries and to Algeria, Cambodia, Guinea, the Lao People’s Democratic Republic, Madagascar, Mauritania, Tunisia, Viet Nam, and the Condominium of the New Hebrides.4

Administration of Control

The Directorate of the Treasury of the Ministry of Economy and Finance is the coordinating agency in the field of financial relations with foreign countries. It is in charge of exchange control and of all matters relating to inward and outward direct investment and to borrowing abroad, unless these matters relate to real estate companies, when the Bank of France screens applications and notifications. The Directorate of the Treasury also evaluates the balance of payments, together with the Bank of France, which collects the data for its compilation. Certain exchange control powers have been delegated to the Bank of France, including the authority to license imports and exports of gold. Other exchange control powers have been delegated to the Directorate-General of Customs and Indirect Taxes and in the Overseas Departments and Territories to the Caisse Centrale de Coopération Economique (CCCE).

The Directorate of Insurance of the Ministry of Economy and Finance has certain powers in respect of matters relating to insurance, reinsurance, annuities, etc. The material execution of all transfers has been delegated to authorized banks and stockbrokers and partly to the Postal Administration. The Directorate-General of Customs and Indirect Taxes establishes import and export procedures and controls, within the framework of commercial policy directives given by the Directorate of Foreign Economic Relations (DREE): the Directorate-General also issues import and export licenses, is responsible for any legal problems arising from the exchange regulations, and in particular handles any litigation relating thereto. Technical visas required for certain imports and exports are issued by the competent ministry or by the Directorate-General of Customs and Indirect Taxes. The Ministry of Industrial and Scientific Development has certain responsibilities in respect of licensing contracts and contracts relating to technical assistance.

Prescription of Currency

Settlements with Operations Account countries may be made in French francs or the currency issued by any institute of issue that maintains an Operations Account with the French Treasury.5 Settlements with all other countries may be made in any of the currencies of those countries or through nonresident Foreign Accounts in Francs. Settlements with Algeria, Morocco, and Tunisia, however, usually take place in French francs. Importers and exporters are free to invoice in any currency.

Nonresident Accounts

A nonresident account in francs may be freely opened by an authorized bank for nonresidents, including French nationals (other than French officials) who have been residing abroad for at least two years. All overdrafts and advances on nonresident-held franc accounts are subject to general or specific permission.

Foreign Accounts in Francs may be freely credited with (1) the franc proceeds of the spot or forward sale of foreign currencies on the exchange market by a nonresident; (2) the franc proceeds of the sale of foreign banknotes to an authorized bank by a nonresident bank or traveler; (3) the franc equivalent of an authorized bank’s arbitrage in foreign currencies on a foreign market; (4) French banknotes (and those of the Operations Account countries) mailed direct from abroad to the main office of the Bank of France by an authorized bank’s foreign correspondents; (5) transfers from other Foreign Accounts in Francs; (6) any authorized payment by a resident to a nonresident, including interest on balances in Foreign Accounts in Francs; (7) the sales proceeds, income, and amortization from French and foreign securities held in a foreign dossier in France, including securities accruing in France to a nonresident by donation or inheritance; (8) liquidation proceeds of nonresident-held direct investments6 or real estate; and (9) the proceeds of the sale, through the intermediary of a notary public, of real estate belonging to nonresidents. These accounts may be freely debited for (1) spot purchases of any foreign currency on the exchange market by a nonresident; (2) the purchase by a nonresident of foreign banknotes or withdrawals in French banknotes; (3) the equivalent in francs of arbitrage abroad in foreign currencies by an authorized bank; (4) French banknotes (and those of Operations Account countries) mailed by authorized banks direct to their foreign correspondents; (5) transfers to other Foreign Accounts in Francs; (6) approved direct investment in France by nonresidents;6 (7) purchases of real estate from residents, through the intermediary of a notary public; (8) purchases in France of French or foreign securities; (9) interest on and repayment of loans granted in accordance with the relevant regulations by residents; and (10) any payment by a nonresident to a resident.

If French francs accruing to a nonresident are not transferable, or not immediately transferable, they may be credited to a Suspense Account in francs in the name of the beneficiary; balances up to F 50,000 that existed on August 9, 1973 have been released. The unremittable funds of emigrants of French nationality must be retained in resident accounts (comptes intérieurs) until they become nonresidents (i.e., until they have stayed in a foreign country for two years); emigrants of foreign nationality become nonresidents immediately and therefore may take out all of their assets upon departure.

Imports and Import Payments

Goods originating in and shipped from other parts of the French Franc Area or from certain other countries that are accorded privileged treatment in respect of trade transactions (see section on Exchange Control Territory, above) are generally admitted free of quantitative restriction and individual license. Imports of goods which originate in other countries and are not covered by French import liberalization require individual licenses. Some imports from EEC countries and some other imports from non-EEC countries are subject to minimum prices; these require an administrative visa and sometimes, exceptionally, an import license.

For import control purposes, countries outside the French Franc Area are divided into four groups according to the extent of import liberalization: (1) the former OEEC countries, their dependent territories and certain former dependent territories, Andorra, Canada, Ethiopia, Fiji, Finland, Liberia, the Sudan, the United States, Western Samoa, and Yugoslavia; (2) 46 specified countries;7 (3) the Eastern European countries (Albania, Bulgaria, Czechoslovakia, Hungary, Poland, Romania, and the U.S.S.R.) and the People’s Republic of China; and (4) the German Democratic Republic. Commodities that may be imported free of quantitative restrictions from one group of countries include all the commodities that may be freely imported from the next group of countries plus some other specified commodities. Goods covered by the import liberalization arrangements applicable to one country may be imported freely from another country, provided that the country of origin and the country of shipment both benefit from the same degree of liberalization.

Imports of practically all industrial products from countries in group (1) are free of quantitative restrictions, but such restrictions are applied to a number of agricultural products; there is relatively little difference between the lists of goods which may be imported freely from different countries in this group, these differences relating mainly to Hong Kong and Macao. Imports of certain industrial products from countries in group (2) are restricted, and restrictions are applied to these and to certain additional industrial products from group (3) countries. For some commodities, there are global quotas that are allocated semiannually and apply to all countries other than those having the benefit of bilaterally negotiated quotas or of privileged treatment. Imports from all countries of certain agricultural items and certain raw materials are free of quantitative restrictions.

Imports from non-EEC countries of most products covered by the Common Agricultural Policy of the EEC are subject to variable import levies that have replaced all previous barriers to imports; common EEC regulations are also applied to imports from non-EEC countries of most other agricultural and livestock products.

Liberalized imports are not subject to trade control formalities, only a customs document that constitutes the customs declaration being required; however, as an exchange control measure, the domiciliation of the import transaction at an authorized bank may be prescribed. For some liberalized imports, an administrative visa issued by the central Customs Administration or by the competent technical ministry is required on an import declaration. Imports of the products of the European Coal and Steel Community require licenses when originating in non-ECSC countries.

Other imports generally require individual import licenses. These are granted up to quotas determined on an individual commodity basis or for a group of commodities and applicable to specified countries or areas in accordance with trade agreements or an import plan drawn up for a definite period. Moreover, licenses may be issued under the compensation transaction procedure, which applies mainly to goods of Eastern European origin. Because of the high degree of import liberalization, imports under this scheme are of slight importance.

Payments for imports from foreign countries must be made by credit to a Foreign Account in Francs or with foreign currency purchased in the French exchange market. Import transactions relating to foreign countries and valued at F 50,000 or more must be domiciled (registered) with an authorized bank, to which the necessary import documents must be presented and through which all payments related to the import must be made. The amounts which may be transferred through postal channels are not subject to limitation, but in practice the Postal Administration does not make import payments valued at over F 50,000, as it does not maintain files for purposes of domiciliation.

Authorized banks may without special authorization allow advance payments to be made that are provided for in the commercial contract, up to 30 per cent of the price for capital goods and up to 10 per cent for all other goods. Higher advance payments require prior approval by the Customs Administration. For all imports, importers may purchase spot foreign currency eight working days before utilization; utilization cannot take place before the payment falls due. There is no restriction on the use of suppliers’ credit. Two months’ forward cover for import payments can be obtained for any commodity; for the import of specified raw materials and specified foodstuffs (unroasted coffee, corn, rice, etc.) forward cover for six months or one year is available. The foreign currency may be purchased forward at the time of domiciliation, but the maturity of the forward exchange contract must not exceed the date on which the commercial payment is due.

Payments for Invisibles

Payments for current invisibles to foreign countries are controlled but not restricted as to amount. If justifying documents are presented and certain exchange control requirements are met, authorized banks are permitted to approve applications for payments without any limitation for many categories of current invisibles, and up to established limits for certain other categories of current invisibles. Applications for all other payments for invisibles and for amounts in excess of established limits are referred to the Bank of France to prevent unauthorized capital transfers; such applications are approved if a genuine current payment is involved. Any resident may freely and at any time make remittances abroad up to the equivalent of F 1,500 a person without indicating their purpose, provided that the transfers do not constitute installments of payments exceeding F 1,500, are not for purposes subject to special allocation, and do not serve to accumulate funds abroad.

Payments which may be authorized without limitation by authorized banks include those related to approved trade transactions; income accruing to nonresidents in the form of profits, dividends, and royalties; banking commissions, patent fees, and specified categories of taxes; specified insurance payments; fees to medical doctors, lawyers, etc.; alimony in accordance with court decisions; and net salaries or wages of foreigners employed in France, provided that the transfer takes place within three months from the date of payment.

Irrespective of the exchange control regulations, certain transactions between persons or firms in France and abroad are subject to restriction; these include certain transactions relating to insurance, reinsurance, and road and river transport.

The basic exchange allocation for tourist travel to foreign countries by residents (defined for this purpose as including residents of Operations Account countries) is the equivalent of F 5,000 a person a trip, which may be taken up for any number of trips a year. The basic allocation for business travel is the same plus the equivalent of F 500 a person a day. Applications for exchange in excess of the basic allowance for any type of travel are approved by the Bank of France, provided that no capital outflow is involved. Any unutilized foreign currency in excess of the equivalent of F 1,000 must be surrendered upon return to France. Applications for travel exchange cannot be submitted earlier than one month before departure. The use abroad of credit cards issued in France is unrestricted for the settlement of travel expenditures; in addition, the holder may use them to obtain funds from banks abroad up to F 1,000 a week. All fares for trips starting in France may be paid in francs in France, as may hotel costs and other transportation expenses.

Resident travelers going to foreign countries may take out F 5,000 in French banknotes. These banknotes may be spent abroad, and any amount taken out is charged against the basic exchange allocation of F 5,000. Nonresident travelers may take out F 5,000 in French banknotes and may reconvert into foreign currency in the French exchange market any French banknotes up to F 5,000 obtained by the conversion in that market of foreign means of payment that they declared upon entry or obtained by debit to a Foreign Account in Francs; any remaining French banknotes must be deposited with the customs against issuance of a receipt.

Resident travelers may freely take out the equivalent of F 5,000 in means of payment when acquired in the exchange market against a tourist travel allocation. Nonresident travelers may not, in principle, take out more than the equivalent of F 5,000 in foreign banknotes unless they were declared upon entry and the annotated declaration form shows that the amount to be taken out does not exceed that imported minus any amounts exchanged for francs plus any reconversion of francs into foreign currencies. However, nonresident travelers may also freely take out any other means of payment established in their name abroad, as well as, subject to the submission of an authorized bank’s declaration, any amount in foreign banknotes or foreign currency travelers checks acquired in France from an authorized bank by conversion of foreign exchange in the French exchange market, by debit to a Foreign Account in Francs, or by debit to a foreign currency account.

Exports and Export Proceeds

Certain goods on a prohibited export list may only be exported if a special license is issued. Some other exports also require individual licenses, but if the total value does not exceed F 1,000 (F 5,000 for art objects or collector’s items), these exports may be permitted without any formality, subject to certain exceptions. Regardless of their value, exports through compensation transactions with certain countries8 require licenses if the commodities are those for which export licenses are required.

Exports to foreign countries are subject to exchange control. Payment must be received through the official exchange market. The repatriation9 and, where appropriate, the surrender by sale in the exchange market of proceeds from exports to foreign countries is required, normally within one month of the date on which the payment falls due but in any case within 8 working days of receipt by a French bank. Authorized banks may freely extend foreign currency advances to exporters; such advances and their repayment may be settled in the exchange market, as may the proceeds from the discounting of foreign currency drafts presented by exporters. The due date of the commercial contract (and, therefore, the due date of the export receipts) may not be more than 180 days after arrival of the goods at their destination, except with special authorization or when a guarantee by the Compagnie Française d’Assurance pour le Commerce Extérieur (Coface) has been obtained. Export proceeds must not be received in French or foreign banknotes or banknotes issued by an institute of issue maintaining an Operations Account with the French Treasury, or by debit to a postal checking account in France. All export transactions related to foreign countries and valued at F 50,000 or more must be domiciled with an authorized bank; the Director-General of Customs and Indirect Taxes, however, may exempt certain approved firms from domiciliation requirements.

Certain goods purchased in France by persons not normally residing in France are considered as exports even when paid for in Franch francs, and are exempt from taxes.

Proceeds from Invisibles

Proceeds from transactions in invisibles with Monaco and the Operations Account countries may be retained. All amounts due from residents of other countries in respect of services and all income earned in those countries from foreign assets must be repatriated and, where appropriate, surrendered, within one month from the due date and in any case within eight working days of receipt. With minor exceptions for certain types of transactions, services performed for nonresidents do not require licenses.

Resident and nonresident travelers may bring in any amount of banknotes and coins (except gold coins) in French francs, CFA francs, CFP francs, or any foreign currency; however, the exchange of banknotes issued by Algeria, Morocco, and Tunisia is prohibited at the request of those countries. Resident travelers must within a month of entry sell in the exchange market any foreign banknotes or travelers checks in excess of F 1,000 that they bring in.

Capital

Capital movements between France and Monaco and the Operations Account countries are free of exchange control; capital transfers between France and all other countries are subject to exchange control approval. With the exception of purchases of French and foreign securities abroad, outward transfers of resident-owned capital generally are restricted; capital receipts from foreign countries generally are permitted freely, provided that the foreign exchange proceeds are surrendered by sale in the exchange market (but see below for special controls over borrowing abroad and over inward direct investment). Capital assets abroad of residents are not subject to repatriation. Residents are freely permitted to purchase real estate abroad for personal use as their principal or secondary residence, up to F 150,000 a family unit. The transfer abroad of nonresident-owned funds in France, including the sales proceeds of capital assets, is not restricted.

French and foreign securities held in France by nonresidents can be exported, provided that they have been deposited with an authorized bank in a foreign dossier (dossier étranger de valeurs mobilières); French and foreign securities held under a foreign dossier can also be sold in France and the sales proceeds can be transferred abroad. Foreign securities held in France by a nonresident must be deposited with an authorized bank; French securities held in France by nonresidents need not be deposited but cannot be dealt with or exported unless they have been deposited. Foreign securities held in France by residents must be deposited with a qualified bank or broker. Residents may hold French and foreign securities abroad under the control of a French authorized bank or broker. The exportation for the account of residents of French securities held in France is prohibited, except when they are to be sold abroad.

Subject to compliance with the special regulations concerning inward and outward direct investment that are summarized below, residents may freely purchase French and foreign securities on stock exchanges abroad, through authorized banks.10 Such French and foreign securities may be held or sold abroad, but they may also be imported and then either be held or sold on a French stock exchange. The proceeds of the sale abroad of French or foreign securities must be sold on the exchange market within two months of receipt, unless used within that period for reinvestment in securities abroad. Correspondingly, nonresidents holding French or foreign securities abroad (whether acquired before November 24, 1968 or later) may freely import them into France and hold them in a foreign dossier, or sell them on a stock exchange in France and repatriate the proceeds through the exchange market.

Special controls (additional to any exchange control requirements that may be applicable) are maintained over borrowing abroad and over inward and outward direct investment. In principle, these controls relate to the transactions themselves, not to payments or receipts. At present, however, their application is in many instances affected by exchange control requirements. With the exception of the controls over capital issues in France, the transaction controls do not apply to countries whose bank of issue is linked with the French Treasury by an Operations Account. Furthermore, the transaction controls over direct investment are not applicable to member countries of the EEC, direct investment transactions with which are subject to exchange control declaration and exchange control approval only.

Foreign direct investments in France and French direct investments abroad, including loans constituting a direct investment, require prior declaration to the Minister of Economy and Finance; in relations with member countries of the EEC, the declaration is required under the exchange control regulations rather than under the special transaction controls, and prior exchange control authorization is required for all direct investment operations liable to involve a capital movement. Direct investments are defined as investments implying control of a company or enterprise. Mere participation is not considered as direct investment, provided that it does not exceed 20 per cent of the capital of a company whose shares are quoted on the stock exchange; any participation in any other type of firm may be considered a direct investment. The Directorate of the Treasury, in evaluating the degree of control, takes into account any special relationships resulting from stock options, patents and licenses, commercial contracts, etc. Loans granted by a parent company to its subsidiary are subject to the same regulations as direct investments. Except in respect of EEC countries, the Minister has a period of two months from receipt of the declaration during which he may request the postponement of the projects submitted to him. If the amount involved is more than F 1 million, documentary evidence must be submitted to the Directorate of the Treasury before the liquidation proceeds of foreign direct investments in France may be transferred abroad, and the liquidation itself must be reported to the Minister within 20 days after it takes place. As an exception to the declaration and approval requirements summarized earlier in this paragraph, the making or the liquidation of direct investments abroad by residents is exempt from prior declaration or prior authorization when the amount involved does not exceed F 3 million a year for each beneficiary firm abroad, and provided that the transactions do not involve holding companies, investment companies, investment trusts, unit trusts, mutual funds, or companies whose purpose it is to facilitate the financing or treasury functions of enterprises belonging to one or more groups. Also, certain inward direct investment up to F 1 million a transaction is exempt from prior declaration or authorization.

Foreign issues on the French capital market are subject to prior authorization by the Minister of Economy and Finance. The requirement is applicable also to the Operations Account countries. Exempt from authorization, however, are operations in connection with (1) loans backed by a guarantee from the French Government, and (2) shares similar to securities that already are officially quoted on a stock exchange in France.

Borrowing abroad by physical or juridical persons, whether public or private persons, whose normal residence or registered office is in France, or by branches or subsidiaries in France of juridical persons whose registered office is abroad, requires prior authorization by the Minister of Economy and Finance.

The following types of borrowing are, in principle, exempt from this authorization: (1) borrowing by industrial firms for the execution of works abroad; (2) borrowing by any type of firm to finance imports or exports of goods; (3) loans related to certain international merchanting transactions; (4) borrowing related to the performance of services (other than income from labor or capital), when undertaken to finance operations executed abroad or transactions with foreign countries; (5) loans contracted by banks expressly permitted to borrow abroad (these include all authorized banks); and (6) foreign currency borrowing abroad by nonbank firms, when the total amount outstanding of these loans does not exceed F 10 million for any one borrower, provided that the interest rate is a “normal” market rate, that the borrowing is not for the purpose of direct investment, that the foreign exchange proceeds are surrendered, and that each drawing against the loan is separated by at least one year from the corresponding repayment. All borrowings in Eurofrancs are subject to prior authorization.

The application of the controls over direct investment and borrowing is delegated to the Bank of France insofar as they relate to French firms that are mainly engaged in real estate business.

Lending abroad is subject only to exchange control authorization by the Bank of France, which is given or withheld within the framework of directives issued by the Treasury. Since the imposition of exchange control in 1968, authorized banks have been virtually free to lend foreign currency to nonresidents, subject to certain reservations in respect of the granting of guarantees and varying limitations on their external position, and to resident importers and exporters. Lending to nonresidents in francs, however, is prohibited, with minor exceptions.

Authorized banks’ foreign currency assets and their overall liabilities in francs and foreign currency to nonresidents are free from limitation. Authorized banks may freely sell foreign exchange on the official exchange market for the account of nonresidents, spot or forward. They are allowed to pay interest on nonresident-owned franc or foreign currency deposits. Nonresident-held franc deposits are not subject to reserve requirements, whether on balances held or on increases therein.

Nonresidents may freely purchase French short-term securities, including treasury bills, bons de caisse, and private drafts.

Gold11

Residents are free to hold, acquire, and dispose of gold in any form in France. They may continue to hold abroad any gold they held there prior to November 25, 1968. There is a free gold market for bars and coins in Paris, to which residents have free and anonymous access and in which normally no official intervention takes place. Imports and exports of gold into or from the territory of continental France require prior authorization by the Bank of France, which is not normally granted for monetary gold but usually is given for industrial gold. Exempt from this requirement are (1) imports and exports of gold addressed to or shipped by the Bank of France; (2) imports and exports of manufactured articles containing only a minor quantity of gold, such as gold-filled and gold-plated articles; (3) imports and exports by private persons of gold objects (other than medals and bars, but including both personal and other jewelry) or numismatic gold coins, provided that their combined weight does not exceed 500 grams; and (4) collector’s items of gold and gold antiques that are exported under export licenses granted with the approval of the Directorate of Museums. Both licensed and exempt imports of gold are subject to customs declaration. The import and export of certain gold objects that are considered merchandise, such as gold watches, are subject to both the regular import and export licensing arrangements and to licensing by the Bank of France.

A 20-franc gold coin, the napoleon, is traded on the Paris stock exchange. In domestic trading, purchases of monetary gold (bars and coins) are not subject to value-added tax. Imports of monetary gold are exempt from customs duty and value-added tax.

Changes during 1976

In addition to the changes listed below, certain changes in quantitative import regulations were made in accordance with EEC decisions, directives, and regulations; most of these related to textiles or beef and veal.

January 1. The restrictions of March 2, 1975 on imports of tuna for industrial processing were extended indefinitely.

January 3. Law No. 75-1337 of December 31, 1975 was promulgated. The Comoros, with the exception of Mayotte, ceased to be part of the French Republic. For exchange control purposes, however, the Comoros was not regarded as a foreign country.

January 9. The Bank of France addressed a letter to authorized banks dealing with the purchase of secondary residences abroad that are to be rented temporarily during the year. Banks were reminded that such purchases required individual approval by the Bank of France, which, however, would be granted up to F 300,000 a family unit provided that they did not represent a purely financial investment.

January 15. The regulation of April 25, 1975 which had subjected to an administrative visa liberalized imports of certain cotton yarns from countries in Liberalization Zones I and II (except EEC member states) and of certain cotton or synthetic fabrics from Liberalization Zone I (except EEC member states) was extended until February 1. The relevant Notice to Importers was subsequently extended and modified several times.

January 15. The regulation of August 9, 1975 which had subjected to an administrative visa liberalized imports of certain leather footwear from all countries (except EEC member states) was extended until February 1. The relevant Notice to Importers was subsequently extended and modified several times.

January 15. The regulation of August 9. 1975 which had subjected to an administrative visa liberalized imports of certain textile products from countries in Liberalization Zone I (except EEC member states) was extended until February 1. The relevant Notice to Importers was subsequently extended and modified several times.

February 15. Imports of certain sports footwear and leather sandals from all countries (except EEC member states) became subject to administrative visa until May 15. The same requirement was applied until May 15 to certain underwear imported from countries of Liberalization Zone I (except EEC member states), and to certain garments imported from Mauritius.

February 19. The supervision over purchases and sales of personal real estate abroad was tightened. The regulations and approval policies remained unchanged.

February 19. Decree No. 76-175 provided that with effect from February 23 the issue of currency in Mayotte would no longer be the responsibility of the Institute of Issue of the Comoro Islands, and French banknotes and coins would be substituted for the CFA franc as legal tender. French banknotes would be placed in circulation by the Overseas Institute of Issue, and French coins by the Treasury.

February 19. Decree No. 76-176 revised the charter of the Overseas Institute of Issue in accordance with Decree No. 76-175.

March 9. A further F 3 billion was made available under the credit facility of March 1975 for the financing of new industrial investment by firms expanding their export capacity or conserving energy.

March 15. France suspended its participation in the European common margins arrangement.

April 1. The tax introduced on September 11, 1975 by Decree No. 75-846 on imports of certain wines from Italy was abolished by Decree No. 76-287 of March 31.

April 7. The Bank of France issued with its Note No. 68 to authorized banks a Treasury Note summarizing some aspects of the existing controls over direct investments, offices abroad, and certain investment transactions effected by the banking sector and the insurance sector. This Note, which supplemented the Treasury’s Note No. 61 of August 23, 1974, did not introduce any major changes in regulations or approval policies.

May 24. Law No. 76-448 terminated the monopoly of the Service d’Exploitation Industrielle des Tabacs et des Alumettes (SEITA) insofar as the importing and wholesaling of manufactured tobacco (including tobacco products) from EEC countries were concerned.

June 8. Imports of tomatoes from all countries (except EEC member states) were suspended.

June 23. The geographic application of the system of import liberalization was modified. Ethiopia, Fiji, Liberia, Western Samoa, and the Sudan were added to Liberalization Zone I; Ethiopia, Eritrea, Liberia, and the Sudan were eliminated from Liberalization Zone II.

June 28. Exports of sugar beet and other animal feed-stuffs to all countries (except EEC member states) required a license. On July 10, such exports became subject to export taxes imposed in accordance with an EEC regulation of July 8.

June 29. A Notice to Importers was published providing that until September 15 imports of specified types of leather footwear from all countries were subject to administrative visa. The Notice also listed the various types of textile products subject until September 15 to administrative visa when of non-EEC origin or originating in Mauritius, and revoked the relevant Notices to Importers of April 25, 1975, August 9, 1975, and February 15, 1976.

The Notice of June 29 was amended on September 1; on September 15 it was extended until October 1, and then to October 15 and October 22. On October 22, most of its provisions were extended until December 31, and certain fertilizers (see August 7, below), discontinuous synthetic textile fibers, and certain garments were added to the products requiring an administrative visa, while velvet and leather sandals were omitted.

July 1. French and Italian footwear manufacturers agreed on certain voluntary restraints in respect of exports of leather shoes to France.

July 5. A wide variety of minor export promotion measures were announced. They included certain exchange control concessions, improved export credit guarantees, and the extension of the latter to service companies. Export finance previously restricted to exporters of heavy capital goods would be made available to small and medium-sized companies.

July 8. The Treasury announced that the Bank of France could authorize more liberally the opening of bank accounts abroad by exporters, under individual permissions. Subject to certain conditions, such permissions could be granted with a validity of one year. The facility was limited to major exporters effecting a large number of transactions and could not be renewed if the firm’s export turnover fell.

July 14. A circular of July 12 improved the facilities for forward exchange cover in two respects. In certain cases, the forward sale of foreign currency could be offset by a forward purchase of foreign currency, and subject to certain conditions, forward purchases of foreign currency were permitted to cover accessory expenses on exports of goods. The maximum periods for import cover remained unchanged at 3, 6, or 12 months, depending on the commodity.

July 19. Law No. 76-664 made St. Pierre et Miquelon an Overseas Department.

August 7. Imports of certain liberalized phosphate fertilizers from countries of Liberalization Zone I (except EEC member states) became subject to administrative visa until December 31. On October 22 the requirement became applicable also to Liberalization Zone II.

August 10. A circular of July 28 came into effect which modified the controls on inward and outward direct investment. The amount of direct investment abroad that residents could make without prior declaration or authorization was increased from F 1 million to F 3 million. The definition of a French direct investment abroad was extended to include, under direct investments realized through the intermediary of foreign companies under the control of residents, certain investments made by holding, investment, or portfolio companies and certain investments financed under the guarantee of a resident. Any physical title representing the participation by a resident investor in a foreign company had to be repatriated to France through an authorized bank, or to be deposited and maintained abroad in the dossier of an authorized bank. With respect to payments abroad relating to the liquida